Anton Ivanov is a US Navy veteran, real estate investor, and entrepreneur with a 40-unit rental portfolio spread across 4 different states. His portfolio generates over $12,000 per month in passive income and requires less than an hour per week for him to manage.
We have a lot of questions for Anton about how he managed to build this, how long it took him, why he decided to invest in the markets where he did, how he pulled the financing together. The idea of making over $10K per month WITHOUT having to constantly keep pedaling to keep the money coming in is really the dream that a lot of real estate investors are after, and we’re going to find out what it took for him to make this happen.
Another interesting thing about Anton is that he’s also the founder of a company called DealCheck, which is probably the best rental property calculator I’ve found online. It’s the leading real estate analysis platform for quickly analyzing and comparing rental properties, flips, and commercial buildings, used by over 100,000 real estate investors, agents, and professionals worldwide.
Links and Resources
- DealCheck (Use Promo Code RETIPSTER for 25% Discount!)
- The Beginner’s Guide to Buying Rental Properties (A Case Study)
- House Hacking Explained
- What is Turnkey Real Estate?
- What is a Fourplex?
- What is a Real Estate Broker?
- VA Loans Explained
- FHA Loans Explained
- What is Creative Financing Exactly?
- How to Find the Right Property Manager
- Why Hire a Property Management Company?
- How to Buy 10+ Rental Properties in the Next 5 Years by Anton Ivanov
- What is a Cap Rate?
- ROI Calculator
- Real Estate Wholesaling Explained
- House Flipping & Rehabbing Explained
- Dare to Lead by Brene Brown
- 99Designs Review: Watch me get a new logo!
- Metallica & the San Francisco Symphony Orchestra
Episode 89 Transcription
Seth: Hey everybody, how's it going? This is Seth Williams and Jaren Barnes, and you're listening to the REtipster podcast. In today's episode we're talking with Anton Ivanov. Anton is a U.S. Navy veteran, a real estate investor, and entrepreneur with a 40-unit rental portfolio spread across four different states. His portfolio generates over $12,000 per month in passive income and requires less than an hour per week for him to manage.
And just from that right there, I think there's a lot of great questions we can ask Anton. Everything from how he did it, how long it took him, why he decided to invest where he did, how he pulled the financing together. I mean, when we think about this idea of making over $10,000 per month, without constantly keeping peddling, to keep the money coming in, and this is really like the dream that a lot of real estate investors are after. So, we're going to figure out what it took for him to make this happen.
And another interesting thing about Anton is that he's also the founder of a company called DealCheck, which is probably the best rental property calculator that I've found online. It's like the leading real estate and analysis platform for just really quickly analyzing and comparing rental properties and flips and commercial buildings. It's used by over a hundred thousand real estate investors, agents, and professionals worldwide.
So, I've got a pretty comprehensive blog post actually explaining how the software works and how I used it for an actual house that I was looking at. And I'll link to that blog post in the show notes, in case you guys want to get a closer look at DealCheck. You can find the show notes at retipster.com/89. And you can also check out DealCheck at retipster.com/dealcheck. We do have an affiliate relationship with them and you can get a discount if you go through our link. So, I’m just going to put that out there. But with all that out of the way, now that you have a primer on who Anton is, let's get into the interview. So, Anton, how's it going?
Anton Ivanov: It's going great guys. Thank you so much for inviting me to the show. It's good to be here.
Seth: Absolutely. So just from your accent, it sounds like maybe you're not from the U.S. Is that accurate?
Anton Ivanov: It definitely is. I'm actually originally from Russia. So, I was born in Moscow, right in the capital, in the late 80s. And then I moved to the United States with my family right about the year 2000. So, when I was about 14-15.
Seth: Cool. Where'd you guys move to? Like what part of the country?
Anton Ivanov: We moved to San Diego, so right there in Southern California. And that's basically where I stayed for most of the time that I lived here.
Jaren: That's so interesting. I have a brother named Jayman, who was in the Navy for a number of years and he actually left the Navy and moved to San Diego to start a Thai restaurant. His wife is from Thailand. I think that he predated your service. I know we talked beforehand, where you were sharing a little bit about when you were there, but it's a small world. I guess San Diego is a destination for Navy guys.
Anton Ivanov: It is. Yeah. And there's a big Navy base here. So, a lot of folks finish their tour right in San Diego and then settle down here.
Seth: Gotcha. So why don't we just jump right into it. These 40 rental units you have. So maybe you can tell us, when did you start building this portfolio and how long have you been at it? What was the origin story about how this all started?
Anton Ivanov: Absolutely. So, I wasn't always interested in real estate. Honestly, it wasn't even on my radar. When I was in my early 20s, I started being really interested in passive income, wealth building, kind of the personal finance side of things. Read a lot of books and that is when I kind of started my personal finance education, so to speak. I started my budget, emergency fund, all those good things. I start investing in the stock market and the equity, like through 401(k), IRA.
And then what happened is while I was serving in the Navy, I was actually stationed in Japan. Unfortunately, both of my parents passed away. And they had a condo in Southern California where they used to live, that I inherited from them. So, it was kind of an unfortunate circumstance. It happened really quick. It wasn't expected, unfortunately.
But basically, I had this property that I had no clue what to do with, and at first, I wanted to sell it. I'm like this young guy in my 20s. I'm in Japan, again, I'm in the Navy. So, I don't have a lot of time to do really anything. I wasn't sure what to do. I talked to a few folks that I knew, I guess that were my mentors of the time, older guys. I was like, “Hey, what do you think I should do with this property?” And they said, well, why don't you not make any drastic decisions and just hold onto it, try to find a property manager to rent it out. Maybe you'll get some income to cover the loan payments and other expenses. And then if you get back to the states from Japan or you leave the servicing and decide to get rid of it, you can always do so.”
So that's actually what I did. I became kind of an accidental landlord, I guess you can say, under unfortunate circumstances. But sometimes you just have to go with what life throws at you. And I didn't actually go through the process of buying this property, but I did end up remotely managing it through a property management company. But I started getting the statements, started dealing with tenants, with maintenance issues and kind of got my firsthand look at what real estate is all about, what owning rental properties, especially remotely, is all about.
And that went on for a few years, probably I think like three or four years until I finished my tour in Japan. I moved back stateside with my wife and we kind of settled together in San Diego, transitioned to a more normal civilian, as they call it, lifestyle. And I still have this one property and all through the years it wasn't a great rental property. Southern California is a very hard market for cash flowing real estate. Crisis here is high, cash flow is not really there. So, I was getting a little trickle from it every month and it wasn't much, but what it did, it really kind of opened my eyes to what's possible in real estate if you scale it.
So, I realized that it's probably not a great passive income source if you just own one or two rental properties, but if you can build 10-20, maybe even 30, then you get that compound at cash flow effect, price appreciation, that just economies of scale kick in a little bit. And that's when me and my wife really decided that, hey, real estate is a very good strategy for building wealth and building passive income because that was really what we were after. We liked our jobs. We're happy about what we're doing, but we didn't want to work until we were 50 or 60. We didn't want to depend on social security, or a 401(k). We really wanted to basically retire early, which I think a lot of people do, but we were realistic how much income we needed for that.
And we kind of set our initial set of goals right out of that time. Our first set of goals was actually to build a 50-unit cash flowing portfolio of 50 rental units. We figured if we get about $150 - $250 per month in cash flow from each unit, which at the time we thought was a realistic, kind of conservative, we’d kind of reach our yearly passive income goal that would allow us to retire.
Jaren: Anton, I have a couple of questions about that because it's extremely fascinating. Did you, when you built this portfolio, are you primarily buying condos or did you say, “Hey, I really like economies of scale so I'm going to go look for like 10 units and 15 units at a time?" How did you kind of break it up and then where did you buy? Because I agree with you, I think $150 to $200 of cash flow per door is reasonable, but maybe not so much in Southern California.
Anton Ivanov: No, definitely not. Once we set that goal and after we've owned that condo for a while, we went through several different strategies that got us where we are today at our 40 units. So we, actually, soon after moving back to San Diego, would try it house hacking. So, we bought our first property. What we actually bought was a very nice duplex here in San Diego. And just like you said, San Diego is a terrible market for cash flow but we never bought a property. We were a little bit scared to just go in and start buying out of state or buying larger buildings. We didn't have the capital for that either frankly. So, what we did is we house hack the duplex. And if you guys are not familiar, that's where you live in one of the units and run out the others.
I personally think it's a great strategy to get started in many markets, usually multifamily. Cash flow is a little bit better, even in the area like San Diego and Southern California. And you were kind of also there, you're living there so you can hands-on take care of some maintenance issues or if you've never owned property before.
We went from house hacking a duplex to then we actually started looking at the market locally here and we realized exactly what you said. If we're wanting to buy 40 units that cash flowed, number one, we're probably not going to find that good cash flow here. Or number two, the capital that we would need to buy property in San Diego is just tremendous. If we're putting 20% down and properties go for $300,00 - $400,000 per unit to start, there is no way we can build it.
So, we actually transitioned to buying out-of-state properties and we bought three turnkey single-family homes in Atlanta and Birmingham. And the reason we went turnkey with our first out-of-state investment was kind of a confidence builder for us. We bought property locally. We've never bought property out of state. We were kind of comfortable with it, but not really. And we also didn't have a lot of connections to build a local team, do rehabs.
So, we did the turnkey route, which a lot of people badmouth. There's a lot of bad turnkey properties out there. I'm not crazy about turnkeys. I do think it's a decent acquisition strategy if you still research the market, you research the property. If you're buying good property, you're paying market value for it. You're not getting a discount off the purchase price, but if it's an appreciating rental market than long-term, your returns will be fine, which they are for us. So, we went from that.
And then finally in the last couple of years or so, we transitioned to buying larger multifamily, mostly fourplexes. So, four-unit properties in Kansas City. So, this is our fourth rental market. We started in San Diego, we did Birmingham, Atlanta, and more recently Kansas City. And over there, we did a more traditional approach where we actually spend the time networking, building a local team. And our niche has kind of been to buy value, add multifamily property. Not in a terrible condition, not like a full gut-out. I didn't want to deal with that. But where we can go in and do about 5,000 - 6,000 worth of cosmetic repairs, mostly per unit, increase the rents usually quite a bit, and then kind of stabilize the portfolio.
Nowadays that is the bulk of our portfolios, multifamily. And I think going forward, we will continue to buy multifamily as opposed to single-family because of the economies of scale. It’s just a little easier if you're trying to build a 50-unit portfolio to own 10 or 20 multifamily than 50 single-family homes.
Seth: So, you mentioned you got at least a handful of them through turnkey providers. The other ones, did you just find those on the MLS or were they all turnkey? How'd you get the other ones?
Anton Ivanov: Yeah. Actually, four single-family. I think I said three. It’s four single-family. Three in Birmingham, one in Atlanta. The multifamily that we're buying in Kansas City are not turnkey. So, for those, we did a more, I guess, traditional approach where we source deals. They're actually mostly bought off the MLS although we have looked in the MLS. We had some really good success with direct mail, very small targeted, direct mail campaigns as well as actually through connections. So, I got on really good terms with brokers, with property managers. I bugged them all the time every week saying I'm really interested in buying property. So, we actually closed on a few deals that they had a client that was selling. They didn't want to list it and we agreed on the price. So, we bought those that way.
But we looked at a lot of different lead channels, but it wasn't turnkey. We kind of bought the property from the seller. They needed work. So, we typically did about $5,000 - $6,000 rehabs per unit, mostly cosmetic items brought them to a more run rate, I guess, stabilized condition, if you would.
Seth: I'm curious, what year did all of this happen? The reason I ask that is because I know the real estate market has changed a lot from 10 years ago. It's just a very different world. The direct mail that may have worked back then might not work as well anymore. So, I'm just curious, what was the context of what years were these purchased?
Anton Ivanov: Right. We started at—not counting the condo that I inherited from my parents—that must've been around 2009. But we didn't start buying real estate until I believe it was 2014 when we moved back to San Diego. So, 2014 I think is when we bought the duplex. 2015-2016 is when we bought the turnkey single families in Birmingham, Alabama. And then these multi-families have been the last two years. So, about starting with 2017-2018 going into 2019.
So, they're fairly recent purchases. I definitely didn’t live through the 2008-2009 crash. We've been fairly fortunate I would say to start on that upswing in the markets, I've definitely noticed it's getting much harder now to find good deals. And it was for the last, even couple of years in Kansas City, that's why we bought a lot of property off market.
Seth: And with that direct mail strategy, where are you getting your lists? How exactly were you filtering them? Help us understand what you were doing to find the deals?
Anton Ivanov: So that was actually, and I wrote a post on it, I think on BiggerPockets because a lot of people were interested in it. It was a very unique thing we did, or at least I say unique because I don't hear a lot of people doing it normally. And I've looked into it. Normally direct mail is like you said, I go, I buy a list 10,000, 100,000 addresses, maybe absentee owners or something like that, send out some blanket postcards.
We did it completely differently. I actually flew out to Kansas City. And in Kansas City, property was developed in batches so that they build like multifamily here, single-family here. So, I actually flew out there and I spent two days driving through several neighborhoods that I really liked. I liked certain zip codes. I drove through them and I actually found where they did pockets of these multifamily properties that we wanted to buy. I got some tips from my property managers and brokers. They're like, “Hey, check these streets or these streets.”
I drove around and for two days I probably made a list of about a hundred addresses by hand while I was using my phone to kind of ping it and stuff, but didn't really use any software. Actually, I made those hand lists of property addresses of exactly the properties that I wanted to buy. I physically saw basically all of them from the outside And they were very typical. It was kind of like, again, a developer came in and built like 50 fourplexes spread out over a whole couple of zip code communities.
So, I've identified those addresses and I wrote a very detailed (not handwritten; it was typed up, but it was detailed) letter to each owner. I got their owner information from county records again by hand, but it was about a hundred so it was manageable. I wrote their exact address. I got a picture of their home from Google Maps. I did the street view kind of screenshot. So, it was a very personalized letter. I put their name. As much information as I could. It probably took me like a weekend to do that or something like that, kind of go through all of them. And then I hand mailed them myself.
And our response rate was crazy. It was something like 15% to 20% callback rate. And then out of that, out of a hundred, we closed on fourplexes at about a 4% close rate and 15% to 20% callback rate. And I had good terms in there. I offered a kind of some incentives, no agents. Most of them I did in an as-is condition, which was fairly risky because I didn't see inside these properties, but I did actually inspect some of them before. Again, it was kind of like a weird situation because I think a developer went and built a bunch of very similar properties around the same time. So, their layouts were pretty much identical. Their condition was very comparable. So, I felt comfortable. I kind of knew what I was getting.
Seth: Did you have offer prices on these initial letters?
Anton Ivanov: I actually did. I did give him an offer price, which was below market by about 20% of maybe what they would have got if they listed it. But I felt it was fair. It wasn't like a complete low ball. And again, I had some of those really nice incentives on there. Like no closing costs, as-is condition. So, I think it really resonated with people. And maybe we got lucky, but we didn't have any issue. The as-is condition was my biggest worry obviously, because I was like, okay, we're going to get this property and it's going to be terrible, but maybe we'll act out. But we didn't have any crazy things. Like it was a gutted-out property or something.
Seth: So, this issue of putting offers in the initial letters. Because I know that's something that most wholesalers don't do. They don't just put a number out there and you're able to do that. This is not what we would call a blind offer because you actually knew pretty specifically what was going on. But were you including a full-blown contract in this letter or was it just like one line in your letter?
Anton Ivanov: No, we weren't agreeing on anything. It was a letter. It was an offer letter kind of, I guess, informal. If they said, “Sure, I'll take it,” I wasn't under any legal obligation as far as I knew to actually draft them a contract. And it was, I would say a fairly educated effort. All in all, I probably spent several months on actual research, background work. And obviously I knew these areas well. I bought property there before. I've toured some of the property before for this specific type of property, the multifamily.
So, I had a very good idea for what the prices were, the market prices for these buildings, again, what their condition was, just generally who built them. So, I definitely would not recommend this if you don't know the market well, if you don't know the properties well, if you're not comfortable buying. If you don't want as-is condition, you don't have to put that on the offer letter. I always encourage people to put the terms in the offer letter that you are comfortable with. So, if you want to go on the property and see it, then put that in the offer letter. I don't think there'll be a big deal breaker.
The goal of the offer letter is just to get them to call you. And I think the personalization, the picture of the home, the offer price, they all contributed to such a high rate because it's not like a letter you normally get. I get them all the time myself and, and you guys probably do and anybody who owns property does nowadays. You get that postcard or the yellow letter looking thing and it's like, “Call me, I'd love to buy your property.” Well, I put them in the trash and I imagine most people probably do.
Really, the goal is to capture the owner's attention and, in some way, make them say, “Okay, this guy actually put in some time. He's serious. He researched it. He got a picture of my house right there. He got my name, he got my address, obviously.” So, once he calls you, then you can start your negotiation and then the offer process.
Seth: That offer price you mentioned it was at a discount. How much of a discount was it? Like, say if you determined the property was worth $200,000. What would your number be?
Anton Ivanov: It was about 15%-20% off of what I thought they could get if they listed it on the market and if it was in a good condition. Obviously, I didn't know the condition of the property as well, because I didn't look inside of all of them. So, I kind of guessed on that. But it was a discount. It wasn't a crazy discount. It wasn't like 50% off, but it was kind of what I felt was fair.
Seth: Yeah. And then if somebody came back and said, “Yes, let's do this,” at that point, does the rest of this process just happen remotely? Like you were doing this from San Diego and getting a local inspector to do it, or do you fly back out for each deal to inspect it more?
Anton Ivanov: I try to do them in batches. I have a really good property manager that I have in Kansas City. By then, and especially now I'm comfortable with asking him to go and look at it so I don't have to go. I did fly out I think once, like after this batch was bought just to kind of look at all of them together. But I have a good team on the ground. I have a team that does the rehabs. I have the property manager. I have people that I'm really comfortable with saying, “Hey, can you go look at this property and tell me what's going on or do an inspection, send me photos.” But I've been to that area. I know all these buildings. So, I didn't feel like I absolutely needed to fly out for every single property.
Jaron: I wanted to jump in there and ask about why specifically you went from a condo to single families to four units and didn't venture into larger units. And why you shied away from condos. I mean, I understand the turnkey single families. I think that was a wise move and it was kind of a way to dip your toe in the water into an out-of-state market. But I'm just curious because your first rental was a condo. Do you feel like there is a good opportunity in that? Maybe not since you didn't continue buying condos, but what are your thoughts on condos? And then why did you end up settling primarily on four units instead of going into a more commercial larger property?
Anton Ivanov: I don't have anything against condos. And the markets that I looked at, I've found them to be… Well, first there's not that many of them in some areas that I looked. So, basically, I wasn't restricting my search to condos. They just didn't come up as often. Maybe there wasn't as much condo development. I also did find at least in some markets that just the cash flow from condos and the price points that they were selling it at, it was not as attractive as single-family homes.
It was because of the HOA fees. They tended to be, especially for example, I know in San Diego here, there's a good amount of condos and they're very desirable. So, there's a lot of demand from them from home buyers, which just drives up the prices. If you're an investor and you're looking for an investment property, it often puts the condos just outside of your price range and then the rent-to-price ratios just don't work, right? Because the prices tend to be more dependent on the demand from homeowners whereas the rents are kind of, I found them a little more stable across different areas.
So, I think it depends. I've talked to investors who love condos, who have been very successful with condos and who found kind of pockets in a market where condos are prevalent and they're not selling for crazy prices. Then you can get them to cash flow. There's the HOA fee, but oftentimes that may be offset by not having to do outside maintenance or landscaping and other things. So, I think if you can make it work, there is nothing wrong with them. It just didn't work out for me in the way where I've found condos, where I was looking at that were attractive for me. We kind of went more with just the single-family detached home route.
And your second question about multifamily. In Kansas City, we actually have looked at kind of the 10 to 12, to maybe 15-unit properties. We have them look into this whole town. We actually put in an offer on a couple buildings last year. They fell through, but they would have been on my radar. I just found these buckets or pockets of these fourplexes they were built kind of almost like a little apartment community, like on the same street that I really liked. They were nice to manage because they were together.
So again, it was more kind of a natural thing for us to do. We could get a good deal on them. They were good properties. We probably could have been just as successful with larger families. So, in my kind of view and my strategy, I don't try to limit myself to exactly like a very specific building class. I found it that a little flexibility and just kind of playing it by ear and seeing what's more attractive in your local market can land you a good deal.
If you're buying multifamily, fourplexes do have some of that economies of scale that a larger building will have as well. Obviously if you're trying to go for a hundred plus units or even several hundreds of units, it would make sense to start transitioning to larger and larger properties. It would just save you time. You can build up your portfolio much more quickly. So, I think it's a good progress from single-family to multifamily, to even larger multifamily.
Jaren: I like the way that you ended up approaching it because it feels like your unit size grew with your comfort level. And I think that that's a really healthy way to approach real estate investing. And a lot of people hear these super inspirational podcasts or watch a YouTube video and the guy's like, “I just bought a hundred units." But if a lot of people start off that way, they're going to be biting off more than they can chew. And I think that it's healthy to just kind of, you started with what life kind of threw at you and then slowly but surely built up and you're continuing to build with that.
So, I really appreciate that approach because you're not knocking any level. You're not saying condos are bad or super big stuff is bad. You're just saying work with what makes sense and as the deal is present themselves. So, I wanted to follow up with that and ask about financing. What kind of financing are you using for these? And have you ever encountered any barriers or loan limits as you've been building up such a big portfolio?
Anton Ivanov: My wife and I, we've basically done this journey, this portfolio building ourselves. So, we didn't have partners. We didn’t have any outside investors or syndicates. All of our properties have been, I guess, self-funded, if you will. Obviously, the condo that I had inherited, that was a special case. We started with the house hacking duplex that we bought. We got that on a VA loan, which is a loan available to active duty and veteran military members. Similar to the FHA program that's available to non-military members. So, you can put in a very low down payment. And that was actually the reason we used it. We didn't have that much cash to start with. And obviously San Diego prices are very expensive. So, we got that one with the VA loan. The turnkey single-family homes that we bought in Birmingham and Atlanta, we got on would regular conventional 20% financing. And the down payment capital came from our savings mainly and some of the cumulative cash flow.
We're super big on living a fairly frugal lifestyle, even now. We meet people like, “Hey, 40 units, you guys are driving Maserati or what.” And we don't spend that much money. We save a lot with, save a hundred percent of our cash flow from our rental portfolio still. And we save money, we still work full time. We save all of that money. So, this kind of habit of saving really allowed us to finance a lot of our properties, especially at the beginning when your rental cash flow is not as substantial. You add your personal savings to it and it becomes a snowball over time.
I meet a lot of folks who they're like, “I don't know how I'm going to give money, how do I get down payment money” and the whole like no down payment movement is super popular obviously. Everybody's looking for a way to put zero of their own cash into a deal, which I don't have anything against. If you can figure out how to use creative financing, if you have friends and family that want to pitch in like, hey, great. We didn't go that route. We didn't feel the need for it. We had adequate savings and it just worked out for us.
More recently on the larger multifamily we did run into kind of conventional loan limitations as you kind of hinted at. Once you get closer to 10-ish or so conventional loans. We actually found out once your debt-to-income ratio gets to a certain level it’s just much harder to get a loan from a conventional lender, especially on an investment property, especially in an out-of-state investment property.
And we also kind of want it to keep a little reserve in case we want to move and buy our home for ourselves. So, we didn't want to fully max out our conventional loans. Let's say we want to buy a house for ourselves then we can't. So, more recently we transitioned to using commercial financing on these multifamily properties and commercial financing. It's a little different than conventional, typically shorter long-terms with 7 to 10 years or something like that, balloon payments, higher interest rates. Higher down payment or requirements usually is 25%-30% with the lender we're using. But it hasn't been bad to be honest. It was a good strategy. It's very quick. We found a good lender that can do it quickly. They don't ask a lot of questions. They underwrite the asset instead of your kind of personal debt-to-income ratio. And that's what we've been using so far and probably will continue for at least the near future.
So, I would say financing is always definitely a limiting factor. I would encourage everybody to use conventional loans. Conventional financing, your bread and butter 30-year mortgage loans will always be the cheapest, the easiest to get when you're first starting out. There's really no need to do any other financing in my opinion other than conventional loans.
Then as your portfolio grows and you start hitting some of that ceiling, basically for conventional loans, you can look into commercial financing or portfolio financing, which is another great choice. We just haven’t approached and just kind of play it by ear at that point. You should be more experienced, and you'll be able to find an appropriate financing option for the asset that you're buying.
Seth: Yeah. Cool. Switching gears a little bit. I know good property managers have been a pretty critical part of this for you. And just out of curiosity, since you're working in four different markets, you've had to do this again and again. How do you find good property managers? Because I've got some experience with this as well, and some of them are terrible. And I've had to fire them before. I'm just curious, do you have any hacks for that? Or what do you look for when you can decide this guy is going to be good or this person is going to be terrible? And then have you ever had to fire them? And what made you decide to do that if so?
Anton Ivanov: Property management, in my opinion, other than finding a good property is probably the most important thing, especially if it's out of state, but even where you live. Like I personally don't manage the property we have in San Diego and I live here and I probably never would manage. It's just not something that I'll be willing to work with. And especially if you own property out of state, I personally don't think it's realistic to self-manage a large portfolio, especially out-of-state.
Finding a good property manager is absolutely essential. It's a very hard question. If I have any hacks, I would say probably the biggest thing you can do when you're looking for property managers is only get them through a referral from other investors. I probably say that that has been the biggest helper for me. Instead of kind of Googling, looking for product management companies or going to some online forums or something, actually try to reach out to local investors, for example, BiggerPockets, or YourWebsite is a great place to network and meet people that are actually investing in the areas that you want to invest in.
So, I try to connect with them first and then ask for referrals. If you can't do that, at least try to get a referral from maybe your agent or your broker that you're using. Try to get basically like a warm lead to a property management company that at least some people that you know have been successful with, as opposed to just cold, getting some random lead and then just go point with them or going with whoever's cheaper, for example. So that has definitely been helpful.
The other thing that I do with our property managers is I try to stay fairly active in monitoring how things are going. I've met investors who kind of fall on two sides of the spectrum. There's one group who they like to micromanage things. They're going to go in and they're going to ask for a receipt for every maintenance request. You know what I'm saying? They're going to be there in their business every day.
Then there is another camp who just gives them the property and says, “Hey, you got it. So, I'll talk to you next year." I don't think either of that is quite the right approach. I think there's a good medium there and I try to stay in there, which is basically let your property manager do their job that you pay them for. Lead them to do the day-to-day management, the maintenance, the tenant screening, all of that. But at the same time, don't be afraid to kind of monitor it.
Think of yourself as the CEO of a company. A CEO doesn't necessarily go and micromanage every department, every employee, but if there is a problem or if he notices a trend that he doesn't like, he shouldn't be afraid to go step in, review the process, review what's going on and work together with that team or in your case with the property manager to find a solution. And that's exactly what I try to do.
Over the years I've built fairly good rapport with my property managers, to the point where they know that I will leave them be, let them do their job. But at the same time, if we have an issue, if there's kind of something out of the ordinary going in, I'm going to go in there and we're going to work together to basically find a solution that benefits all of us.
And I think it's important to find a property manager that is willing to do that. Who is responsive, who is willing to listen to your feedback, your criticism sometimes, and not just say, “Well, this is how we do things. So, you either like it, or you find a different property manager." Which I did have to do in one case actually before. I had to let go of a property manager and go with a different company, just because I didn't feel like they were responsive to what I was asking them to do, which was not unreasonable. I think a property manager should be able to go to some lengths to work with their clients, even smaller clients if there is some issue going on.
Seth: Do your property managers handle improvements and renovations and do they go that far or is it just managing the tenant and the cash flow?
Anton Ivanov: It depends on the market. In Kansas City where the bulk of our portfolio is, and we have these multifamily units, we actually do have our property manager be the project manager for the rehabs. And it took a while to get there. We had some issues getting started with that, but we developed a very detailed checklist of exactly what items they should do. We developed the material sheet of basically what materials they can use and basically like a budget that works for all of us.
And now we're at a point where I'm comfortable. When there is a term and we need to do a make-ready repair and it may be a little more substantial than usual, I know they'll just take those checklists and they're going to go with it and I know what the costs are going to be and what the quality is going to be. But it's not something that happens overnight, definitely. It's not a normal thing that property managers do. So, we had to use, in the past, separate contractors to do more significant repairs.
I just think it depends on, again, the property manager, what they're comfortable with and what you're comfortable with. If you can find a property manager that does this, which not all of them do, then I think it's great. But if not, then you shouldn't be afraid to use a separate contracting team and have them do the repairs.
Jaren: I wanted to ask, do you feel like the biggest quality to look for in a good property management company is promptness in their response to you and their communication with you?
Anton Ivanov: Well, they definitely should be responsive. If your property manager is not returning your phone calls, is not returning your emails, that is a big red flag to me. And you can sometimes kind of judge this if you ask them ahead of time how many units they have under management. But I've found that if a company has more than a hundred units or so per leasing agent or per property manager, things start to get lost. Some of the larger outlets, they may have several hundred units per person, basically. And at that point, I just don't think it's possible to have very effective communication with each owner. So, you can kind of judge it by that, but a lot of this unfortunately will be more evident after a few years that you had on with.
But I would say communication is one of the keys. The other key, like I alluded to earlier, is they're kind of willing at least to modify some of the things they do, or at least get your feedback on things. So instead of them just saying, “This is how we do it, this is our tenant criteria, and this is what we do for make-ready inspections,” or something like that. They should be able to say, “Well, what do you think, Anton? Let's review these checklists that we have." And if you would like to make any changes or modifications, they should be responsive to doing that. So, they should be able to have some flexibility.
Again, I don't think a property owner should be micromanaging every task, everything they do, but if something is not working for your particular property or a group of properties, or maybe it's like a little niche neighborhood or market that requires some sort of unique screening criteria or a little extra attention or whatever it is, your property managers should be kind of attentive and flexible enough to accommodate that. Unfortunately, that's a lot of times almost impossible to judge ahead of time, as you can imagine. So, it's something that will surface itself several years down the road.
Jaren: I think that's gold, man. I really appreciate you sharing that.
Seth: And I know you've done, just given that you're in a few different markets here. Something else you have also done a few times is picking a good market where there's not only a good potential for cash flowing properties, but also potential for growth in rent prices. And it's kind of like a couple of different prongs to that. And there's not necessarily the same things to research to get both answers. What exactly are you looking for to determine “Yes, this is a good market for these reasons and here's how I know that?" How do you know that? What systems do you use to figure that out?
Anton Ivanov: The system is almost very complex, unfortunately. I have this whole checklist, but I'll try to boil it down to fairly simple terms. In the U.S. at least, most real estate markets fall on this spectrum. They're on one end, they are high appreciation, kind of low cash flow markets that also tend to be very cyclical. These are like your basically high-dollar areas. Like the coastal areas, maybe New York, New Jersey, and then on the West Coast, you got California as kind of a prime example.
Usually they have very strong price appreciation historically. It's kind of volatile. It goes up and down a lot during recessions. But usually they're so high in demand by the homeowners primarily that the cash flow there is usually very low, sometimes even negative. So that's kind of one end of the spectrum.
The other end of the spectrum is your super high cash flow markets. If you look at turnkey companies, this is where they're in. This is like Ohio, Indianapolis, all those cities where if you see a 20% cap rate or something ridiculous like that, that would be in that market. The cash flow looks great on paper, prices are very cheap, very deflated, and they're usually kind of easy to spot.
The problem with those markets that I've found is that if you look at the fundamental factors of what's going on with the economy, with the job growth, with the population growth, they're very depressed. They're not the best cities to live in. They're not the best cities economically. And there's a reason why the price-to-rent ratio, like your 2% rule that people quote, is so high is because people are either leaving those areas or just that the properties are in bad condition. Rents look good compared to the property prices, but historically there has not been a lot of rent or price growth in those cities. Which means that the property you're buying now, you're buying a $50,000 property, very common in a lot of these areas. Say, old cash flow is $300 a month. In five years, chances are that that property will still be worth $50,000 because there's just very little growth in those areas and the rent will probably be the same because there's also not a lot of rent growth due to demand in those areas.
And what happens is your expenses, all of your property taxes tend to inflate over time. Property is depreciating as it gets older. But if you look at your total ROI if you were to sell the property of the same price you bought it, subtract closing costs, subtract higher expenses, you might end up losing money on that deal. You might not get any money back that you paid for originally because of closing costs and your cash flow in a few years from $300, it might be $200. Or if you had like a big capital expenditure come up, replace the roof, replace the HVAC system, it could evaporate a couple of years of cash flow.
What I found to be kind of the sweet spot are markets that tend to be more linear. So, they're not very cyclical. They're kind of stable, appreciating markets. A lot of them tend to be in the Midwest of the United States. Markets like Atlanta, some part of Texas, Charlotte, North Carolina, Kansas City, that I'm very familiar with. They tend to fall into this category. They're not the most super attractive high growth cities. They're not San Francisco, but they have a very stable economic situation. They have very stable job prospects. People are moving to those cities or at least not leaving. There's a lot of different economic sectors that are in that market and there's population growth in that market. And that's what causes in my experience, the prices and rents to appreciate over time. Maybe not as high as in some of the other markets, but what you get is much lower price points. They're not as low as Ohio, but they're going to be much lower than for example, San Diego.
So, you get this very nice balance between kind of fairly attractive prices and attractive for you as an investor. So, your loan payments are not as much and you are actually going to generate fairly decent cash flow. But the real benefit of them is that in 5 or 10 years, there’s a very high chance that both your price of the home, as well as the rent, will appreciate fairly significantly.
As an example, I bought one of the turnkey properties we bought in Atlanta. And like I said, turnkeys, you're buying it at kind of market, maybe the cash flow will not be as high at the beginning. We bought a nice single-family property in Atlanta, in a suburban community. And when we bought it, I think it was back in 2014 or 2015. It was renting for about $900 a month, which was generating a few hundred of cash flow per month. It was good. Nowadays the rent is $1,250 a month. So, it went from $900 to $1,250. And as you can imagine, our cash flow grew by almost that whole amount and the price of the home grew as well. So, it's a very nice combination in my opinion.
And if I had to kind of boil it down how my market selection works is, try to find these middle markets that are not as expensive as some of your hot areas. They're not as cheap as some of the areas where turnkey companies like to be in. They're kind of in the middle. They have very strong, fundamental factors, which is basically job economic and population growth. If they're good on those and they fall in that category, I think that creates some of the best conditions for a long-term rental buy and hold scenario. Because you'll be able to buy a property at a fairly good valuation now, but five years from now, it will be even better because that rent will go up, the price will go up and your total ROI will be excellent without all the volatility that you may get in a much more cyclical situation like California.
Seth: Is there any kind of a button within DealCheck where you can just click a button and it's like, “Hey, tell me exactly where these things are true?"
Anton Ivanov: It's highly requested actually, believe it or not. Well, you probably can believe it. It's a highly requested feature kind of market analysis, market insights. And we do have something planned probably for later next year that will at least help our users. I can't tell you like this is the best market and it's a hard judgment call again, because a lot of people look for different things. Exactly some people really like that cash flow in Ohio. And when I talked to those people, I'm telling you, “Well, look, is that cash flow going to be there five years from now?” And they don't care. Other people really like California. They say, “Well, I'm not getting much cash flow, but in 10 years my property value's going to be 50% more." And that may be the case.
So, I think it does come down to individual preference. And I always encourage folks to kind of try to understand how different markets work, how they affect your returns. DealCheck is a great way to run a couple analysis in completely different markets and compare them side-by-side and look at what portion of your ROI comes from cash flow, what portion comes from price appreciation and look at the buy and hold projections, which we show up to 35 years into the future. And actually see, what is your performance going to look like 10 years from now because focusing on just the first year you're missing a lot of the big picture there.
Jaren: Anton, when it comes to what you were saying about the Midwest, I think is very true. However, you mentioned Indianapolis and I actually used to live there for a while. I live in Indiana now. I'm in the Chicago land area. I don't know how much you've looked into the Indianapolis market specifically, but I feel like the Indianapolis metro is one of the few places within the Midwest that actually does have a lot of appreciation. Even there are some spots within the city where you can still buy properties in the ghetto for like $20,000 - $30,000 or what have you. But by and large, the city over the last four years from when I first moved to Indiana has been growing.
Anton Ivanov: I definitely might've missed the mark on that one and I apologize. It has been a few years since I looked at all the markets in detail. But what you said, you live there or maybe you have relatives or folks that live there and you do see maybe there's a turnaround because markets change. Maybe it wasn't that great an area before, but if you see that population growth come back, the economic growth come back, the job growth come back. I think that is a very good sign.
Jaren: There are places in Indiana, like Anderson is a good example. Even Anderson's grown a little bit, but there are places right now where you can buy a property for $12,000. And that sounds crazy, but you can buy it. And then they ran out for $250 - $300 a month like you said. Sometimes even $500 a month. But it's very true. You're going to buy that kind of property and then 10 years from now, you're going to probably sell it for like $8,000 to $12,000. You might even lose money on the thing. And it's not that it’s in a super war zone, crazy area. A lot of cities in the Midwest are completely becoming ghost towns because factories have dried up and for a number of different factors.
I'm curious what to do about Chicago, because I'm settled here more for lifestyle factors, more than anything, but from a real estate standpoint, I'm like, well, there's good cash flow in the South side, and there's some things going on in Chicago, but there's also a population decline there too. And there's a number of factors that are kind of against Chicago as a market. This is a very timely conversation because I'm like kind of a rock stuck in a hard place. I'm like, “Okay, well I'm here and there are apartments and there is decent cash flow, but there's also extremely high property taxes, high crime." By and large, there's certain areas that are growing within the city, but by and large, Chicago is at a population decline. Do I capitalize on the fact being here or should I just look elsewhere?
Anton Ivanov: It's a hard question. I'm not overly familiar with Chicago just to pre-phase all of this, but I've found that even within each city and if you're kind of looking at just all the cities in the United States, it's easy to overlook things. Like I definitely could be wrong on Indianapolis or have been wrong in the past, just because I didn't take enough time to research it or maybe the factors that I looked (which are very kind of general, like you said) pointed me away.
But within each city there are different neighborhoods. And when you live there, you start to realize, or if you do the research enough that even within different neighborhoods, there are different microeconomic situations going on. There are areas that are doing much better, there are areas that are doing much worse.
Real estate is a very local endeavor. A lot of your returns as a buy and hold investor, in my opinion will actually be, well, actually, it's not really my opinion. Everybody says location, location, location, right? It's kind of cliche, but I think it's very accurate. The city, the state and the neighborhood that your property is located, long-term will probably have the prevailing impact on your returns and your ROI. What's going on in your community, what's going on in the city. If there is a major factory and then it closed everybody left, prices tanked, rent tanked, crime moved in. I’m just kind of generalizing here, but that could happen and that could have tremendous impact in your returns.
And that's why coming back to what Seth said, it's almost impossible to say like, “Hey, show me the best zip to invest in rentals in the United States right now, or show me the top five." It's such a dynamic and complicated question. And we all as investors attempt to simplify it or systematize it in some way that we think works. And sometimes it works, sometimes it doesn't. But I do think there are a lot of inefficiencies that you can capitalize on. There's a lot of almost like local insider knowledge that you may have, especially when you live there.
And a big reason I ask a lot of people to look if people come to me for advice and they say, “Anton, where should I buy property yet?” My number one answer is always locally. No matter where you live. I always say, we'll have you look at your local market. Even folks here in San Diego, like, is it impossible to find good cash flowing property in San Diego? No, I think there are very specific pockets, they may be in that multifamily market where it is possible to find decent deals. Now you can find probably better deals elsewhere, but I think it's worth looking, especially if it's your first investment that you're just starting out.
Same with Chicago. If you're living locally, I think you have almost unfair advantage over other investors or other people who may be coming from out of state because you know so much more about the market and you're in a better position to identify perhaps some better areas or trends that are going on that you see early but other investors don't, which will allow you to actually purchase property there earlier and then capitalize on that upswing of whatever fundamental factors are pushing the rents or the prices up in an area before other investors move in, because they're looking at just kind of general price trends and they see prices go up. You already bought there, but they might be already buying too late, so to speak.
Jaren: Yeah, very well put.
Seth: Have you considered selling off any of your properties, just given where prices are right now in general? Has that ever occurred to you? Like “Hey, maybe I should just cash out?" Or is it just like, “Nope, stay in the course no matter what?”
Anton Ivanov: Our horizon set has always been super long-term. I'm not the type of an investor who always wanted to frequently sell properties. We almost have an outlook where we buy and never sell when we buy a good property. Unless something turns the other way. Maybe the area starts to decline, the cash flow goes down. We never really intended to sell. Now, lately, since we kind of have been moving to the more multifamily market, just for economies of scale, we probably will end up selling some of our single family, like those turnkey properties that we bought originally and just reinvest the money into more multifamily, maybe more concentrated in the good market, like Kansas City that we like. And that's more for economies of scale and kind of management simplicity than necessarily because they're really bad investments.
But I do think it's very good to look at your portfolio. I do yearly accounting of all of my returns. I tally up all of my cash flow, their returns for all my properties. And I look at all of them. I have a graph. I have a spreadsheet that I've been doing since we started. So, I can see kind of how each property is doing. And if you start to identify like, “Hey, maybe this is one of the best investments, I definitely don't think it's bad to sell." And nowadays, especially, probably after the pandemic is over, will be a great time since the prices are so high, kind of allow you to consolidate your portfolio a little bit or maybe get rid of the investments that just didn't work out, or they turn sour after a while and reinvest that money into something else.
But we're definitely not liquidating our whole portfolio. I'm still a big believer in real estate as kind of a multi-generational wealth building and passive income building vehicle. So, I don't see us liquidating our portfolio any time soon.
Seth: Yeah. And just our last question here. Obviously not everybody gets to the point where they have 40 cash flowing rentals like you do. And it just makes me wonder what in your opinion, have you done differently than most people are willing or able to do? What do you attribute that to in terms of where you are? Why are you so awesome, I guess, is the question?
Anton Ivanov: If I have to look at what is the limiting factor in building a rental portfolio, if I had to pick one, what is the one factor that we were able to overcome that stops a lot of other people. And I would probably have to come back to the down payment capital. There are other things, but I think it’s the down payment capital. Because obviously real estate, rental homes, no matter where you buy, they're fairly expensive. Even if they're $50,000, that's $50,000 or if it's $100,000 you need 20%, that's $20,000. So rental properties do require a fairly substantial capital that I think most people don't readily have just sitting around. And I think if we look at just the general population on what stops them from building a 10-20-30 unit portfolio, it is the down capital because I think the other things can be overcome with enough education and persistence and effort on your part.
And that's why I wanted to come back to kind of how we did it. Again, a lot of people reach out to me and they start asking me, “Did you use creative strategies? Where'd you get the money from?” And it's a little cliche, but I point people to their existing kind of personal finance situation. I think that to be a successful real estate investor, especially a large-scale real estate investor, if you're just kind of a normal guy or girl don't have crazy amount of cash laying around, your biggest source of down payment capital will come from your personal savings for several years until the cash flow from your rental property overtakes that. So, it's very important to go back to all the stuff that they teach you in the personal finance books, like having a budget, having a frugal lifestyle, saving money. When I say it, it sounds so cliche I don't like saying it.
To me, everybody should be doing it regardless of their situation, but I find that so many people are not. And it's like one of those things that “I know I should be doing this. I probably should have a budget. I probably should put some money aside. I probably should have an emergency fund.” And yet I find so many people that don't do it.
And I think if you focused on that, if you built a good personal finance foundation, if you're able to increase your savings rate, that will basically supercharge your real estate portfolio growth like it did for my wife and I. It is essential to have the down payment capital. Even if you're using some creative strategy, you need it for repairs, you need it for maintenance, you need it for closing costs. You probably still need to put some money down, even if you're syndicating or whatnot. So, I think that this would be the answer to your question. I think it was, kind of the not sexy, not cool, budgeting and living a frugal lifestyle that allows us to save a lot of money from our personal income, not allow lifestyle creep to come in and kind of overtake it. So, doing some sacrifices in our lifestyle to allow us to have the money to buy more rental properties.
Seth: Yeah. I assume you and your wife were both working regular jobs this whole time. Like, do you have a huge income? You've been in the Navy. It's not like you're getting paid a fortune from that.
Anton Ivanov: Yeah. And then the AVR income was fairly low. Nowadays I work as a software developer. My wife works for the department of the Navy as a civilian employee. So, our income is not low. We are on a good salary and we have worked this whole time. What we did from the beginning, I don't think it matters how much you earn. I think everybody can increase their savings through budgeting, through a frugal lifestyle, all those topics that there are many great books written about.
So, we did that from day one. We have been doing this even before we really got into real estate and we don't have any plans right now to quit our jobs. We probably could and live off our rental income, but we still didn't get to our 50-unit goal and we still feel like we could be working. We don't want to just sit around, do nothing. And we're basically saving tons of money every month because we're saving a hundred percent of our cash flow, our income from our jobs, obviously income from other ventures, like DealCheck. And it's really a big snowball now that generates a lot of savings that we can then reinvest into our real estate portfolio. But I think it can be done at any level, I guess my point is. A lot of folks don’t earn six figures or maybe not yet.
And yet I think it is in all of our power to affect our savings and savings rate directly. It's something we can, probably all of us, can control. Something like getting money from friends and family, other cool strategies. They're all great if you can get them to work, but they're kind of like external. Your savings rate again, it's not sexy, it's not like the cool thing to do, is to put money aside. But guess what? If you want to build a large real estate portfolio, if you want to build it quickly, I think this is probably one of the most readily available tools that all of us can use because it's something we can directly control.
Jaren: For people out there, who might be in a situation where, well, that's great for Anton who's a software engineer and has a career and has all these things going for him. I would actually encourage those listeners. Sometimes the better route to wealth is to do whatever it takes right now to develop your skill set, to start getting paid more in your day job or in your career. Because if you don't have a lot of skill set, that's high pain, it is hard. I mean, you can make money. And that's why a lot of people become wholesalers or they go become real estate agents and they make their career real estate so that they can earn as they learn and so on and so forth.
But for those out there that think that they have to go the creative route or they have to complicate the waters, you really don't. You can just take a year to go become a nurse and do like an accelerated nursing program. Or you can figure out ways to drastically increase your income if you're running thin. So, I really love what you said there, man. That was one of the best answers I think we've had on the podcast.
Anton Ivanov: And I just wanted to follow up on that. I think you hit the nail on the head. You sometimes see posts on BiggerPockets and somebody is like, “I want to be a full-time investor” or something like that. Personally, I don't think buying rental properties is a full-time job. It is a source of wealth generation. It is a source of passive income that takes many, many years and a lot of real estate to build. But it's not something that I feel should be your full-time job that actually generates income that you can then reinvest into real estate. Because real estate is basically an investment. It's not a job.
Now, like you mentioned, if you want to wholesale properties for the extra income, if you want to flip homes. Some folks I've met, they start a flipping business and then they take the proceeds from that and then buy rental properties. Or another great idea that I fully agree with you is why don't you look at your job. Maybe you can get a promotion. Maybe you can get another degree and move up in your field or transition to a whole other career, because that is something that is 99% of the time will be much faster than buying one rental property at a time and building income that way. Because again, in most cases, you'll get a few hundred dollars a month after financing and maintenance. Whereas if you go to school for a year, you could increase your income by $50,000 in some cases overnight. And if you keep your lifestyle the same, then guess what? You just gained $50,000 a year in savings that you can put into one property or two properties a year going forward.
Jaren: Seth, what about that promotion?
Seth: Yeah. So maybe tell us a little bit about DealCheck. I know we sort of mentioned it earlier at the show, but just the quick 60 seconds summary—what is it, why use it, where can people find out more? And I think there's some kind of a 25% off thing, right?
Anton Ivanov: Absolutely. Actually, you've written that you mentioned a super awesome post on DealCheck with great screenshots and I think you even put together a YouTube video review. So, they will probably be in the show notes if you want to go check out Seth using DealCheck.
But DealCheck is a property analysis platform that I've built over the years that is really geared toward an all-in-one software platform you can do to analyze rental properties, house hacks, turnkey properties, flips. If you're kind of rehabbing and flipping properties. Multifamily, commercial. Even wholesale properties, it's something we've added in the last few months.
So, we've tried to build this all-in-one tool that you can use on your phone. If you download the DealCheck mobile app for iOS or Android, just search for DealCheck on the app store, or you can use it online at dealcheck.io in all your data syncs. We'll build a lot of cool things like importing all the property data automatically for you, showing you sales comps, showing you rental comps, obviously showing you all the cash flow projections, all your long-term buy and hold projections that we mentioned earlier. You can print reports. You can look up owner information.
Basically, it's an all-in-one platform for doing your due diligence, researching properties. Really trying to zero down on a good investment because obviously they say you make your money when you buy real estate. And the way you do that is by analyzing the cash flow projections, your exit strategy, your acquisition strategy, and figuring out if this deal would actually make you money long-term or not.
And specifically, for you guys, we have a special 25% off promotion. So, you can use dealership for free, right? You can get started for free. We have some upgrade plans that unlock more features if you need them. And if you put the RETIPSTER promo code, so that's RETIPSTER promo code. When you upgrade online, you'll get a 25% discount on any of our subscription plans, which will make it in some cases less than $10 a month. So, it's like a couple of cups of coffee. RETIPSTER promo code, get 25% off or just use DealCheck for free at dealcheck.io.
Seth: I've spent a lot of time on that app and it's awesome. You guys have really done a great job and I don't know of a better one out there. I know everybody has some random janky spreadsheet that they use and there's other form calculators out there that are, I don't know, just not that thoughtfully put together.
Anton Ivanov: Well, that was the whole point. We actually built it. It's like when you're a new investor and you have so many things going on, the last thing you want to be doing is messing up how you calculate cash-on-cash return or something like that. And DealCheck takes all that out for you. It's going to be consistent, it's accurate, and you can actually focus on doing all those other million things you should be doing.
Jaren: Yeah. So, to just chime in there. I’ve actually been doing a lot of research on apartment syndications, probably over a year now. And every education camp has a slightly different deal analyzer spreadsheet. And I was looking at DealCheck earlier today in preparation of the podcast and I was blown away at how easy it was and then how much you can actually customize the output. If I want to run an analysis for cash on cash or IRR or whatever, I just click a button. and it was a really seamless process. So, I'm a big fan. I'm definitely planning on checking it out and using it in the future.
Anton Ivanov: Absolutely.
Seth: Cool. Anton, we appreciate your time. It's been awesome to talk to you. This is like, I think I'm one of the better episodes I can recall. I feel like your answers have been super rich and detailed and kind of opens my mind up a little bit. I appreciate you sharing your insight and I have a newfound respect for you. I know we've emailed for years, but never actually talked like this. But it is really cool to get to know you more and learn about your origin story.
Anton Ivanov: Thanks for having me guys. I'm always happy to share my story, what I learned, help other investors. I'm a big believer in kind of information abundance and sharing the knowledge. So, hope you enjoyed the episode and you can actually email me directly if you'd like at firstname.lastname@example.org. That's email@example.com. So, if you have some specific questions, I always give my email out and you're more than welcome to reach out.
Seth: Man, I really liked that conversation. I thought he had a lot of good insights to bring to the table. A lot of it was pretty down-to-earth. It's not that it was surprising necessarily. It was just a good reinforcement of things we all ought to know and internalize as real estate investors. Do you have any other thoughts about it?
Jaren: Yeah, I literally texted my wife because we normally do these outros. When we take a break, go use the restroom, whatever, and then do the outro a little bit after the fact. And I just texted my wife. I said that was probably the most practical podcast interview I've ever had. Like I thought that his insights were very actionable and very realistic and I just really enjoyed it for sure.
You seemed a little perturbed about my joke there at the end though. I was like, “Hey Seth, let's talk about that promotion and increase my income." And you were like, ignore.
Seth: Well, to be clear, you didn't say the words “increase my income.” You just said promotion. And in my mind, I thought that meant, “Okay, promote DealCheck." So, let's do the DealCheck promotion.
Jaren: Oh, okay. I got you.
Seth: I had no idea what you were talking about. It totally went over my head.
Jaren: It was just going on and on about like, yeah, figure out ways to increase your income. So, I was like, “Yes, Seth, what about that promotion?”
Seth: You're talking to kind of a slow person. You need to be very clear about what you mean or I'm not going to understand. That’s how my brain works.
Jaren: I definitely would not call you slow. I would call you detail-oriented. And so, I think sometimes if I admit certain details, it's hard for you to gather the whole picture, but I don't think that that's slow. I think that's actually a superpower. It's the reason why your blog posts are better than everybody else's.
Seth: It's a superpower that makes a lot of people really annoyed at me, including my wife. This happens on a daily basis, at least a few times where she'll just like say something and I'm like, “What? Huh?” Connect the dots. I'm not understanding you. And she gets so annoyed at me. So, it's not just you. There's a lot of people that have this thing.
Jaren: Well, I have the opposite problem where I just don't give a lot of contextual information. I just assume people know what the heck I'm talking about.
Seth: It is weird though, because it must be unusual because the fact that anybody thinks that I'm going to understand what they mean and I don't, that must mean that other people do understand, which means they are able to somehow draw conclusions that I'm not. So, I'm just wondering, like, how do other people think? Do they make assumptions and fill in the gaps with what they think and move forward?
Jaren: I think it’s super heavy on assumptions. I think most people assume way too much. And it's actually not a good quality to have because everybody jumps the gun before they understand. And that's why again, to your personality, I think that it's a strength that I admire a lot because I wish that I was more slow and thorough before I come to conclusions. So, I really want to knock yourself on it at all, man. I think it's a superpower. It's more beneficial than it is harmful. Even if it is a little annoying for spouses.
Seth: Yeah. This is kind of along the same vein, but a little bit different. But I've been reading this book called “Dare to Lead” by Brené Brown and in it, or maybe it was her Netflix thing. But anyway, something I heard her say was this whole, she was given a story from her life about how she and her husband were out swimming in this lake in Texas. And he responded a certain way that she sort of felt was off-putting. But it was really just a very simple response. It was like a few words and then he went off and kept swimming in the lake.
And she got really upset and offended by it. And about an hour went by and at the end of it, she was just fuming, like angry at her husband. And the whole reason she was angry it was because she made up this narrative in her mind about what he actually meant when he didn't say that and didn't do anything to make her believe that.
But this is something I think a lot of us do when we don't have all the information. We maybe have like a little clue here and there and we start telling ourselves this story of what this person was actually trying to say through that and we get all worked up about it. And it’s actually really messed up because I know I've done it, but that's kind of the danger of assumptions and just moving forward without actually having all the facts, there's unnecessary hurt and pain and judgment.
Jaren: I think it's super healthy to seek understanding. I have a friend named Tim John, that actually has a really similar personality to you, Seth. I think you guys have the same Enneagram type and you guys operate very similarly. That's something that hanging out with him and doing life with him a little bit has kind of rubbed off on me or at least it's highlighted it more thoroughly. He always, if he doesn't understand something, even if it's a certain term, he'll say, “What do you mean by that?” And “Oh, that's interesting." And even with conflict that he had with his significant other, his mode of operation and conflict is seek understanding, seek understanding.
And then there've been a lot of times where at face value things have seemed pretty messed up, but after he's gotten more clarity and more explanation, it wasn't messed up at all. People use different terms and certain terms can mean very offensive things to other people. And they can mean something completely different to other types of people. So, I just think that it's something to be admired for sure. To be able to think before you speak and to seek understanding before you come to conclusion and all that stuff.
That's a great idea. Just a good phrase to have in the back of your mind is “What do you mean by that?” There's probably so many times in life where we could just ask that question and clear up a lot of confusion instead of saying “What's wrong with you?” That’s what I used to say. I got to remember that. That’s pretty good.
Seth: It's funny. Tim, I know who you're talking about. I had made a super long, like way too long, video review about 99designs earlier this year where I wanted to be thorough. And so, I just included tons of information, but as a result, it's like 20 or 30 minutes long, and a lot of people don't have the patience to stick with a video for that long. But what he did in the comments is he just timestamped like the bookmarks of when I start talking about different things in the video so people can skip around to the things that actually care about. That comment has the most likes on it, of everybody underneath that video. And I've started doing that now in my videos. Whenever a video goes over like 10 minutes long, I rewatch the thing. I think about, okay, now I've just shifted gears to talk about this and now I'm moving over here and I make these timestamps now because of Tim. So, thanks Tim, if you are listening to this.
Jaren: I'll definitely let him know that. I think he'll get a kick out of that for sure. Well, what's our question for today?
Seth: You got a question, don't you?
Jaren: I do. Yeah. I wanted to ask what is our favorite classical musical instrument? So, for me, it's cello. I absolutely love the cello. And it's interesting because I'm pretty eclectic when it comes to music. For a long time, the only genre of music I really didn't listen to, it was country music. And then me and Seth went to Nashville to the BiggerPockets conference, and it just clicked. We were actually at a venue and it just all made sense to me and I got country music. And so now this last, I don't know, two years, whatever, a year and a half or however long it's been, I've been really getting into country music.
So, I find that there's a little bit in every single genre of music that I really enjoy. And classical music is the same. A lot of people feel like at face level it's boring or outdated. And I just don't think it's true. I think that especially when we get into sound score or a movie score and soundtracks from movies, I think that some of the most beautiful music that we have right now is coming out. Like, the Lord of the Rings soundtrack, like, oh my goodness, man. Some of those songs, I'll put that on when I'm like writing or editing softly in the background. And it's just really incredible. And for me out of all of the orchestra instruments or orchestra instruments, the cello, I just love the sound of cello. Like if I'm sad or I'm down, I'll just put on some soft cello music and it instantly lifts my spirits up for sure.
Seth: Have you heard a Yo-Yo Ma or 2Cellos?
Jaren: Yep. Heard both of them.
Seth: Yeah. Are you a fan?
Jaren: Yeah. Yeah. I like them both. The 2Cellos guys, they do like pop music, right? Yeah.
Seth: I think so. There's a few of them like that out there. There are piano guys. I don't think that's cello.
Jaren: I think they have one cello guy in the piano guys.
Seth: You know who is an amazing composer? It’s Hans Zimmer.
Jaren: Yeah, I like his stuff.
Seth: He's done just tons of huge movies. And for good reason, I mean, the guy is a genius. Like his songs… Man, they just do something to me. I think he did “Interstellar." He did “Lion King," “Batman," a lot of these. Like “Gladiator” I think, it was another one. Some of the best movie music I've ever heard that comes around.
Jaren: I think the classical musicians are listening to this right now and are all upset because you called it songs and not pieces.
Seth: Oh, really?
Jaren: Yeah. I watched TwoSet Violin on YouTube. A lot of their videos are so dumb, but if you like cringe-worthy like kind of nerdy humor you should definitely check out TwoSet Violin because they're two classical musicians, Australian, Chinese guys that are just really, really funny. And they kind of let you into the culture of classical music. Like apparently everybody hates on viola players and I don't understand. I feel like that's super discriminatory, but I don’t know. It’s like nobody ever aspires to be a viola player and everybody in the orchestra, they're the brunt of every joke.
Seth: It sounds like the bass player in most rock bands. The bass player outside of The Police and Rush, the bass player I've ever been is the one that nobody remembers and nobody cares about for the most part. There are probably a few others out there.
Jaren: Flea is pretty popular too from Red Hot Chili Peppers.
Seth: Oh, that’s true. Him too as well. Like I said. I think I've heard before entire orchestral arrangements that are performed by nothing but cello players. Like everybody in the symphony or everybody in the orchestra is just playing cello, but they play like different notes and stuff. So, it sounds full.
Jaren: Wow. I bet that'd be awesome. It's in my bucket list to go to a live orchestra. My wife would never go, she finds it so boring, but for years like every year for my birthday. I'm like, “Can we go to the orchestra? Can we go to the orchestra?”
Seth: I can’t believe you've never been to one, man.
Jaren: I've never been to one. Yeah.
Seth: Yeah. You know what? I bet what you should do is go to some kind of theatrical production where there is a live orchestra playing along with it. Because I know when I was in elementary school, I used to actually play the violin. I was in an orchestra and we used to go to orchestra concerts or symphony concerts at the Grand Rapids symphony. Almost every single time I find myself falling asleep before the end of the thing. I think it was because really good music is like that. Like it's very soothing. I mean, not always, it's not always meant to be that way, but it just kind of puts me to sleep. When you're actually watching a theater production, it’s a lot easier to stay awake.
Jaren: Yeah, I would definitely. Do you know who Michael Hyatt is?
Jaren: There's a podcast that he used to do for a number of years called East versus West or East meets West or whatever. It's like a theological podcast. And one of the ones that he talked about, he talked about the beauty of music and all this stuff. And he explained he visited an orchestra, but was able to stand where the conductor stands. And he says, being that close to the music was so moving that several people who were there as tourists just started weeping.
Seth: I could see that being right in the middle of it.
Jaren: Yeah. So, I don't know. Maybe I have like rose-tinted glasses, but it just sounds very exciting to me.
Seth: Yeah. Do you know what? I actually found that my wife and I went to see Brian Regan, the comedian. Have you ever heard of him?
Jaren: I haven't heard of him.
Seth: He's like one of these pretty funny clean comedians for the most part. And I've seen plenty of standup comedians on TV and every time I do, I'm just like, I never laugh.
Jaren: They're not that funny.
Seth: It's just not that funny. Something about being there live, I don’t know what it was, but I was laughing so hard I was almost crying. There's something about being there in person that just changes it somehow.
Jaren: I've never been to a live comedy show either.
Seth: Yeah. That was the only one I've ever been to. But, it's kind of cool. The interesting thing, the tickets for some of those shows are crazy expensive. Like over a hundred bucks. They fill up like entire arenas sometimes to see one guy just sitting there talking.
Jaren: That's awesome. I love that.
Seth: It's not like you are paying a whole band or anything. There's just one person who's somehow getting paid a ton.
Jaren: That's awesome. So, what about you, man?
Seth: Yeah, so for me, I mean, like I said, I used to play the violin when I was a kid, but I don't think that's necessarily my favorite thing. That's just what I was sort of forced to play when I was a child, but I really liked the cello as well. Are we talking specifically orchestra here or can it be like the woodwinds in the horn section? Like the tympani. Can it be that?
Jaren: You're speaking above my pay grade because I didn't know there was a distinction between the two. I mean, all of the instruments that are commonly played in classical music.
Seth: Yeah. Because when it's just strings, that's orchestra, but symphony is like everything, I believe. If somebody out there is smarter than me on this, feel free to leave a comment and tell me I'm an idiot. But if it can be anything across the board, I actually think the French horn sounds really, really good. Do you know what the French horn is?
Jaren: Yeah, yeah, yeah.
Seth: Obviously I've never played it myself, but I have heard it's a challenging type of instrument to play to make it sound good. I remember when I was in middle school and we had a band at school, I remember hearing people play the French horn. It sounded awful, but I think if you're a professional, it really sounds amazing. So, I think I would pick that one.
Jaren: Yeah. The Star Wars theme has French horn in it, right?
Seth: I don't know. I'm not sure, probably. Is there a movie that stands out to you as like the best classical music or the best score?
Jaren: Well, two of them. I love the Pirates of the Caribbean film score. I actually listened to it almost every day. And then there's the Lord of the Rings, The Fellowship of the Ring. Especially that one song or piece, whatever, where they're entering into whatever the town is called, where all the hobbits live, like the opening scene.
Seth: The Shire?
Jaren: Yeah. The Shire. Yeah. I just absolutely love it. I just feel super nostalgic and it brings me to a place in my heart and in my mind of dreaming and being hopeful for the future. So, I just really enjoy it.
Seth: I think if I had to pick a single score, man, that's hard. I don't know if I can do that. I mean, John Williams is pretty amazing too. A lot of the hallmark Indiana Jones and Star Wars and the list goes on and on and on and on. He's composed so many great scores. Is that the right terminology? Pieces?
Jaren: Pieces. I don't know. Everyone's getting all mad at us right now.
Seth: You know what it's actually really awesome? I discovered this in high school. Metallica did a whole album with the San Francisco symphony orchestra.
Jaren: Are you serious? That sounds awesome.
Seth: Nobody would think of that because heavy metal and classical, like nobody would think that those go together, but in a way, they're sort of linked. And I think actually a lot of the original composers, like Mozart and Beethoven, when you listen to their music, some of it almost sounds like if they had had access to electric guitars and drums of today, they probably would have written heavy metal music, but they didn't back then. So, they did the best they could. But it's just an awesome combination of two very different things like that. They did a really good job of putting that together.
Jaren: I have to check that out. I'm going to google Metallica's high school album after we jump off here.
Seth: Cool. Well, that was a good wrap up convo. It was fun, Jaren. Thanks for answering those questions with me or that question. So, if you guys want to learn more about DealCheck or investigate that any further, we do have an affiliate link to them, retipster.com/dealcheck, all in one word.
You can also find a lot more information in the show notes for this episode, retipster.com/89. And don't forget if you do end up signing up for any kind of paid level of anything with DealCheck, use that promo code of RETIPSTER to get a little 25% discount on that.
And if you guys are listening on your phone, text the word “FREE” F-R-E-E to the number 33777, and you can stay up to date on what we're doing, special things that are coming out and get access to some stuff that isn't normally on the blog or the podcast. So, thanks again for listening. Thanks again to Anton for talking with us and we'll talk to you guys in the next episode.
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