j scott real estate investing

J Scott is a bonafide legend among online real estate communities.

Over the past decade, J has bought, built, rehabbed, sold, lent-on, and held over $60 million dollars in property all around the country.

He was the first to author a book published by BiggerPockets, namely, The Book on Flipping Houses, and shortly thereafter, The Book on Estimating Rehab Costs.

He and his wife Carol are extremely active in the BiggerPockets community and even host the BiggerPockets Business Podcast.

J is an insanely inspirational figure in the real estate investing world and he can shed a lot of wisdom on the things happening in the world right now. In this interview, we're going to get his insight on a host of different things going on in the real estate industry right now. With any luck, you'll walk away with a lot of new things to think about, just like we did.

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Episode 90 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 J Scott. So, for those who might not know, J Scott is a bona fide legend among online real estate communities. He was the first author of a book published by BiggerPockets, namely the book on flipping houses and shortly thereafter, The Book on Flipping Houses, and shortly thereafter, The Book on Estimating Rehab Costs.

And over the past decade, J has bought, built, rehab, sold, lent, and held over $60 million in property, all around the country. J and his wife, Carol, are extremely active in the BiggerPockets community and even host the BiggerPockets Business podcast. So, they're kind of a big deal. And J is insanely inspirational and can shed a lot of wisdom on Madison, the real estate business. His blog at 123flip.com was one of the first I ever started falling back on in the early days of REtipster. And like many others I've just got a huge amount of respect for this guy. So, J, how's it going? Welcome to the show.

J Scott: Wow, with an intro like that I'm going to come back here often. I appreciate you guys having me and for anybody that doesn't know, yes, Seth, you and I go back like 10 years now. I found your blog early on. You found my blog early on. And we haven't had the opportunity to kind of do any deals together, but I think we've been following each other for a decade now.

Seth: Yeah, for sure. Yeah, I remember it was way back in the day I reached out to you. I don't think we had talked prior to this, but I noticed your resources page on your blog. And I was like, “Hey, would you ever want to link back to REtipster?” And you actually did it. And you were the first significant link I ever got back to my site. I remember seeing like a few people that they would click through that and come over. And it was like, “Man, I've really hit the big time. Now I'm actually mentioned on his blog."

J Scott: Well, it's funny because I remember that email and I remember thinking, “Wow, somebody actually wants me to link to that." So, it worked both ways.

Seth: That's awesome. I'm glad it worked out. It was a win-win situation.

J Scott: Absolutely.

Seth: So, as we kick off this conversation J, a few months ago, I noticed on Facebook, you had posted something about the difference between assets and liabilities. And it was a fairly long post, but what it boiled down to, ultimately, was that in your view, an asset is something that would make you happy to have and sad to lose. Whereas a liability is something you would be sad about having and happy to lose. Is that accurate? Am I assessing that right?

J Scott: Yeah. I wrote that post in response to, I had seen a whole bunch of Facebook posts in the days previous talking about “Is your personal residence an asset or liability?” And there's this discussion all the time. And it's funny because before, 15 years ago, before the book “Rich Dad Poor Dad” came out, I don't think that was ever a discussion. Everybody was like, “Yeah, your personal residence is an asset. It’s a house." But “Rich Dad Poor Dad” came out 15 or however, 20 years ago, I don't know how long it was. And Robert Kiyosaki basically had this attitude that if it's not making you money, it's not an asset.

And I get the concept. The thing I didn't like was that he kind of co-opted the word “asset” and “liability." Those words have very specific meanings in the accounting world. And he kind of took those words and said, I'm going to redefine them in ways that it makes sense. There are a lot of things he said about owning a personal residence that makes it seem like it shouldn't be an asset, but I found too many people that kind of latched on to that “Rich Dad Poor Dad” thinking and stop thinking about assets and liabilities the way that I felt like they should be thought about, which is the more traditional sense.

So, I wrote this post that basically explained that an asset, again, like you said, is if you'd be happy to lose it, it's not an asset. You don't want to give away that bar goal. You don't want to give away that house. You don't want to give away your car. You don't want to give away your kid’s Barbie doll, necessarily. These are all things that have some value to them.

Now, conversely, if it's something you'd be happy to give away, well, that's a liability. So, what am I talking about there? Well, a good example is the loan you have against your house. I'd be happy to give you my loan. I'll keep the house. You take the loan. The house is the asset. The loan is the liability. The loan against your car—that's a liability. Anything that you owe, anything that you're like, “Wow, I'm paying on this every month,” that's the liability that you want to get rid of.

And so certainly for a lot of people, that idea that your personal residence is a liability, in some ways, that's right because for a lot of us, we don't own our personal residence where we own it, but we have a mortgage against it. And for some of us, our mortgage is almost the full value of the property. So, in some respects, it's kind of like, we almost don't have an asset. And then when you add in, you're paying your utilities and your lawn care and your maintenance costs and your insurance and your taxes. When you add all that in, you actually may be spending more money every month than what your house is worth.

But at the end of the day, the house is still the asset. And if you have a loan against it, that's the liability. And so, don't kind of get confused in these terms that “Rich Dad Poor Dad” uses. We can talk about “Is having a personal residence the right asset for you?” For a lot of us having a personal residence isn't the right asset. Take that money, take that equity and put it into something else. That's a good discussion. Not, “Is it an asset or a liability?” Is it the right asset for you right now given where you are in your life, what your goals are, how much cash you have? And all that sort of thing.

That was kind of the reason that I had that discussion. And so, I just wanted to clarify that point. And yeah, I took a lot of hate for that because there are a lot of people who like that redefinition of asset liability. But I can promise you that Robert Kiyosaki, when he goes to talk to his accountant or his tax advisors, I can promise you that they talk about his personal residence as an asset and not as a liability.

Seth: The thing about happy vs. sad. What if you own an asset that you hate? Say, if you have a really stressful business or you inherited a house that's just a total pain. I mean, it is an asset technically, you could sell it for cash, but it doesn't make you happy to own it.

J Scott: Yeah. But if you can sell it for cash, it should make you happy. Get rid of it and then take the cash. Here's a good question as opposed to happy and sad: If you own a house that you hate owning, would you give me that house for free? If the answer's no, it's an asset. How much do you have to hate something to be willing to give it away and lose money on it?

Seth: Yeah, I guess that's a good point. Because I know this is not uncommon with land and especially with land, because land is something that yes, you could technically sell it, but sometimes it's harder to sell it or people don't know it's not that liquid. And sometimes in order to sell it, you gotta mark it way down. Sometimes people will literally give it away for free. I've had people offer to pay me to take the land before. It's not common, but it can happen. But I guess that's sort of a measurement of just how much somebody hates their asset if they're actually willing to do that.

J Scott: And I would argue that if they're willing to pay you to take it, that means they probably couldn't sell it. Maybe they could, but they just want the ease of the transaction. But a lot of times it probably means they couldn't sell it. It's that illiquid. And so, by some definitions, even accounting definitions, that could be considered a liability. Yeah. Obviously, there's a gray area and I wouldn't go talking to your accountant about, “Yeah, I hate having this. Therefore, it's an asset or liability." They'll tell you. “Nope. That's not the definition." But by the same token, I don't like the “Rich Dad Poor Dad” definition either.

Seth: I'm going to tell my accountant that they're wrong because J Scott told me that.

J Scott: J Scott told me that this makes me unhappy. It's not an asset.

Jaren: Why do you think J, that so many people in real estate consider their primary residence as a liability? Obviously, you mentioned Robert Kiyosaki, but I get it from a practical standpoint too. In my mind, I think the assets make me money and liabilities cost me money. If we define the assets and liabilities in that context, then you could make a case that your primary residence isn't an asset.

J Scott: Okay. So, let's go with that example. If I offered you a hundred million dollars in gold and I said, “Here's physical gold, but you need to store it someplace. So, let's get you someplace to store it.” And you're going to have to pay me a thousand dollars a month to store that hundred million dollars in gold. That hundred million dollars in gold isn't making you any money. It's now losing you a thousand dollars a month. Do we call it a liability?

Jaren: Very good point.

J Scott: No, I think most of us, we consider a hundred million dollars in gold an asset even if we're losing money on it every month. That's still an asset. So, we have to look at the bigger picture. The question is, and the way I like to define it, and I guess the way a lot of accountants define it as well, “Can you trade it for currency that can then be used to buy something else?” So, it's not so much is something an asset or a liability, is it the right asset or liability?

So, sure, maybe having a hundred million dollars in gold, losing a thousand dollars a month. Maybe because it's losing money every month, that's not the right asset for you. But you can take that hundred million dollars. You can trade it for a hundred million dollars and then you can go buy rental property or apartment complexes or a skyscraper. And so, if that's an asset that you like better because it's making money every month, great. But you've used that asset that you didn't like to buy an asset that you do like. You can't buy an asset with the liability.

So, if that hundred million dollars in gold was a liability, well, then you probably couldn't have used it to buy something that's an asset. The fact that you can convert one thing to another, if the thing you convert it to is an asset, well, the thing you converted from was an asset also.

Jaren: Interesting.

Seth: It's kind of funny. Similar to how when you measure calories. They are very low-quality calories and high-quality calories. Like a calorie is not a calorie. In assets, I remember back in the days of what was it, the late 90s or something when people would buy these beanie babies and collect them and think I can sell these for more or baseball cards. It's almost kind of presumptuous to call certain things an asset because you're assuming that somebody is going to want that and pay money for it. But what happens when you try to do that and all of a sudden, nobody wants it? I guess you were just lying to yourself all that time, right? Or be misguided.

J Scott: That's part of it. And you have to figure out what the true value is. And I think that's where people sometimes get confused. I have a relative who likes to collect watches and he thinks these watches are going to be worth a whole lot of money at some point in the near future. And they probably are not. He considers them assets because he has this false notion of what they should be worth and what he can sell them for. Because he's like, I'm buying them for a lot of money, therefore, I should be able to… No, I tell him, go try and sell it and you'll find out they're not really worth what you think they are. So, part of it is figuring out what the market value is of whatever it is. 

But Jaren, to your point, if you think that your personal residence is not an asset, well, the fact that you could sell it and then buy something you think is an asset, it says that your personal residence is an asset because you can convert it to something else that you do want.

Now it might be the wrong asset for you. Maybe you're at a point in your life where you're thinking, “I don't want something that's going to cost me money every month. I don't want something that's not putting money in my pocket." There is nothing wrong with that. Personal residence may not be the right asset for you right now. But that doesn't mean it's not an asset.

Because for me having a personal residence right now is very much an asset. And for me having a personal residence, it's not just an asset from a financial standpoint, it's not just I could trade it for cash, I could do a refinancing and get cash out, I could do a heel locking and get cash out. I could sell it and get cash out. I could probably fractionalize it and sell part of it. I could trade it to somebody. I can trade my house for some amount of gold. So, my house is an asset. And for me, it's also an asset from the standpoint of I'm in a good school district. So, my house is an asset that allows me to put my kids in the schools I want to. It allows me to live in a location where I want to live. So, it's an asset from those standpoints as well.

But again, even if I hated my house and even if my house was costing me money every month, I can trade it for a rental property. I could trade it for a classic car. I could trade it for some gold. I can trade it for some other asset that maybe I like more.

So, the question isn't “Is my personal residence an asset or liability?” It is an asset. The question is, “Is it the right asset for me right now or should I be trading it for a different one that more suits me based on where I am in my life?”

Jaren: So, bringing up the example you had of your friend who has the watches. Do you guys know from an accounting standpoint, obviously, I know none of us are CPAs and this isn't accounting advice, et cetera, et cetera. But just curious from an accounting standpoint, on a balance sheet, would that be considered an asset?

J Scott: I believe it is.

Seth: That's like a personal financial statement. I remember seeing that in banking where people would, what it's actually worth is a little bit subjective, but people can put jewelry and precious metals and stuff like that as an asset.

J Scott: Typically, on your personal financial statement, let's say you're going to go to a bank and get a loan and you have to fill out a personal financial statement. You'll put your jewelry, you'll put your car, you'll put your personal residence. You'll put anything of value. Whether the bank chooses to consider that part of your net worth based on the liquidity, based on how much it might depreciate, based on how volatile it is in price. Yeah, they might just count that, but it's not wrong to put it on your personal financial statement. I keep a personal financial statement. And basically, I have on there, everything I own that's of significant value. And as the value changes, I change the value on there.

So, I have my cars on my personal financial statement and every year or two, maybe even more frequently, I go and I update the value of those cars based on the Kelley Blue Book value because ultimately, I can trade those cars for cash. I can trade those cars, maybe for a rental property. I can trade those cars for gold.

So just because they're in a form that feels like it's not as valuable as a rental property or gold or whatever, it doesn't mean it's not. Whether I have a $20,000 car in my personal financial statement or $20,000 in gold, the banker doesn't care. It's $20,000. It's something that can be converted to $20,000 that can then be used to secure whatever loan that I'm trying to get.

Seth: It is interesting though, when some people will put the value of my business or the value of my brand name is worth $500,000 when it's like, really, I mean maybe. But certain assets definitely are more measurable and definitive than others in terms of their value.

J Scott: I'll tell you, there are some things that we need to know what the value of our assets are. So, for example, let's say you want to invest in a business or a syndication and you need to be an accredited investor. And what accredited means is you need to have either a certain level of income or you need to have a net worth of at least one million dollars, not including your personal residence. Oh, and by the way, the fact that the SEC says your net worth is your assets minus your personal residence. The fact that they have to specifically say not including your personal residence, says that they consider that an asset too. If they didn't consider it an asset, they would just say your net worth.

Seth: Why do you think that is excluded exactly?

J Scott: From what I've heard, it's the liquidity issue. Because it's your personal residence you can't move easily, because you have to go move somewhere else. And so, it's much harder to give up a personal residence than it is to sell off a rental property or a vacation home because ultimately it needs to be replaced. You can't just liquidate it. 

So anyway, you need to have a million-dollar net worth to be considered accredited. If you want to say that my business is worth a million dollars, or my brand is worth a million dollars, what the SEC would say is you need to go get that substantiated somewhere. You have to get an appraisal. And just like we get appraisals for houses and just like we get appraisals for other things in real estate, you can get an appraisal for a business. There are business appraisers. And there are even appraisers out there that we'll do appraisals for things like your brand.

I mean, Donald Trump claims that he has a brand that's worth, I don't remember, it's either $4 billion or $10 billion. Let me tell you something. There are people out there whose job it is to figure that out and they will figure it out just the same way you will praise a cash flowing real estate is what amount of income is it generating you? What is that brand generating you? And at what rate do we capitalize it? So, we can use the same formulas we use to value real estate, to value a business, to value a brand, to value anything. But at the end of the day, it needs to be generating you income, if you can't just sell it. You either have to be able to sell it or trade it for dollars, or you need to be able to prove that it generates an income stream for you.

Seth: Yeah, definitely. That makes sense. So, switching gears a little bit. It would be kind of crazy for us to not start diving into the nuts and bolts of real estate now that we have it here. So, you've done a lot of house flipping in the past. When I think of J Scott, I think house flipper. That's kind of just what I associate with you. But you've been branching off a little bit into apartments and that kind of thing. So why the switch? And are you still flipping houses? And help us understand where you've been going in the past year or so.

J Scott: So, one of the things I love about real estate is it kind of can quench my appetite for diversity. I get bored easily. I don't get bored in the shiny object syndrome that a lot of people get bored. Like I don't do something for a week and then say, “Okay, next." For me, I'll do something for a couple years. I'll get to the point where I think I'm pretty good at it. I'm a big fan of the 80/20 rule. Like get to the 80 as quickly as possible, and then I'll move on to something else. 

And the nice thing about real estate is after you've gotten good at something, typically a lot of those skills and knowledge are transferable to other areas of real estate. So, I did. I flipped houses for about five years before I kind of branched out and started doing rental properties, but the flipping allowed me to be better at the rental properties. And from there, I branched out to notes. And from there, I branched out to doing various things.

But most recently we've started doing multifamily syndication. So far, I've only done one deal. We closed on a 150-unit property in Houston a couple of weeks ago. Luckily, I have a very good partner who has a lot more experience than I do. So, she's kind of been guiding me through the process. It's quenching my thirst for something new, new challenges.

Jaren: That's actually really interesting because a lot of people talk about focusing on one strategy. I actually used to work for a real estate wholesale operation in Indianapolis. And I remember whenever he would venture out and try to start flipping houses that was like without fail almost every single time when we would lose money. And it was when he really doubled down and focused on just doing what he does best and scaling that, that we really saw exponential growth.

I'm kind of with you too. I prefer to be more diversified in my strategies because frankly I'm all over the place in my personality and I just like learning new things. But how do you weigh the kind of the tension there of, okay, you need to focus on one thing enough to get it working before you take on something else. But at the same time, is it okay for people who have a track record of being successful in a certain area to branch out into new areas that interest them?

J Scott: Yeah. Well, I'll start with, you have to work with what you're given. You have to work within your personality and trying to be somebody that you're not is a good recipe for failure in the business world, in the investing world. So, I would love to be Warren Buffet or Bill Gates, somebody that can say for the next 50 years, I'm going to focus on one strategy or one company. And for anybody out there that has that mindset that basically over the next 20, 30, 40, 50 years, you can focus on one thing, you are a better person than I am. Let me tell you something, that's going to serve you well. And if you have that mindset, do it, focus. Because Warren Buffet will be the best business investor in history because he's got 50, 60, 70 years of experience that can't be replicated. Bill Gates. I mean, with Microsoft, somebody that it's not going to be replicated because he's got 40 or 50 years in that business.

And so, if you have the mentality that you can focus on something for the next 20 or 30 or 50 years, do it because you will be better than anybody else and it will pay off. But then there are people like you and me who… I would want to do that. I would love to focus on something for the next 50 years, but I'd go out of my mind, I'd be miserable. And there's no amount of money that I could make that would be a worthwhile tradeoff for being miserable for the next 30 or 40 years.

So, for me, I have to do different things. To get to your question of how do I balance that? A couple of things. One, I try and do things that are somewhat related so that I can build transferable skills. I didn't do real estate and then decide to be a bodybuilder and then decide to open a restaurant. In those things, the skills don't transfer. But going from flipping houses to rentals, to note, to multi-family syndication, I can take a lot of those skills with me. A lot of those skills are transferable. A lot of the experience is transferable. Even more importantly, the network is transferable. I'm sitting here talking to you guys, you don't care if I'm flipping houses or if I'm doing multi-family syndication but if I were out there bodybuilding right now, and I know by looking at me, you kind of wonder, well, maybe he does.

Seth: I assume that's what you're doing.

J Scott: If I were doing that well, my network goes away. None of the people that follow me in real estate or want me on their real estate shows are going to care if I go do bodybuilding. So, this allows me to build up those transferable skills.

Number two, like I said, too many people kind of jump around too quickly. And they say they're jumping around because they're bored. But what I've tended to see is they're not really jumping around because they're bored, they're jumping around because they're lazy. They get to the point where they have to put in the hard work and they say, “Oh, okay, it's easier just to go start to do something else." Because when you start something new, it's always fun and exciting and easy. And so, I think a lot of people, that shiny object syndrome isn't necessarily boredom. It's just a way to avoid the hard work.

So, what I recommend people to do is don't give up until you get to the point where you have a feel for whatever it is you're doing. And again, you don't have to be 99%. You don't need to be the best in the world before you move on to something else. But again, I like that 80/20 rule. If I have 80% mastered something, I've probably built up enough skills that I can transfer those skills to something else. And number two, I've probably built up enough skills and experience that I can fall back on it.

So, I've flipped houses enough that if I go do something else, I can continue to flip houses because I had that skill. I've built it up enough that it's never going to leave. Same with rental property, same with note, same with mobile homes, same with a bunch of other things that I've done. I've built up those skills enough that I can always fall back on them as opposed to getting 20% of the way there and giving up. And now I just wasted that time. I can't fall back on that skill. I can't leverage the time I put in. So, get to the point where you can forever leverage that time that you put in and the effort that you've already made.

Jaren: Yeah. I really love that a lot. Actually, what you said reminds me of somebody that I knew back in Indianapolis, who was a real estate investor, who was like a living embodiment of like Tim Ferriss, like a four-hour work week kind of lifestyle. He literally spent like two years literally being a traveling nomad. And he was a true serial entrepreneur. He started three multi-million-dollar companies. But when I asked him about it and I was like, well, the whole concept of the one thing is kind of an opposition of a serial entrepreneur because by definition they have multiple businesses.

And what he said is when you're building the business that you're working on right now, that's your one thing. You live in a one-thing paradigm on building a particular business. Then metaphorically, once the plate is spinning, then it's okay to go and start a new plate.

So, the high-level principle there is to double down and focus super hard until you have momentum built in a particular area and then keep it spinning. Because once the momentum is there, it can kind of perpetuate itself. But then when you go into a different arena, again, put the blinders on, hardcore focus, until it has momentum and then move on to the next thing. And I think that is pretty much exactly what you were saying. And it just totally reminded me of my friend's story there.

J Scott: Yeah, absolutely. It's not one thing. It's one thing at a time. And part of being successful in doing lots of things is first that one thing at a time. Only focus on one thing at a time and get everything else. Don't move on. I guess this was kind of the third principle. Do things that are transferable and get 80% of the way there.

The third thing, I guess, that goes along with that, is build the systems and processes that allow you to continue doing that thing, but in a whole lot less time. And there are ways that I still flip houses, but I spend very little time doing it. At this point, I have other people that do it for me and I have my systems and processes down. I don't spend a lot of time dealing with my flips. I don't spend a lot of time dealing with my rentals. I don't spend a lot of time dealing with my notes.

Today in real estate I'm focused on the multi-family because that's the new thing for me. And that's where my focus needs to be. Everything else is automated to the point that I still do a little bit of work on it. It'll never be completely passive, but it doesn't take up head space. And if I can't get to it today because I've got something I have to focus on, that's okay. It can wait until tomorrow or the next day. So automating is definitely key. If you don't automate, you'll never be able to step away and do the next thing.

Seth: I'm curious with all the weird stuff that's been happening this year, Covid-19, the presidential election, which at the time of this recording has not yet happened. By the time everybody hears this, it will be done. So, you're going to know who the president is.

J Scott: And congratulations to everybody who won.

Seth: Yeah, exactly.

J Scott: Whoever it is.

Seth: Yes, exactly. Do you think we're heading into a downturn anytime soon? Do you have any crystal ball predictions about where the real estate industry is going in the next 6 to 12 months?

J Scott: I will answer the question, but I need to start with the disclaimer. This is not a prediction. This is a guess. I want people to be clear that nobody knows what's going to happen. You can talk to the best economists in the world and they all disagree. So, don't think J Scott somehow knows more than anybody else out there. I'm happy to venture my guests, but it's just a yes.

So, my take is, I was saying my guess a year ago was that we were headed for a downturn. Now a year ago, things were pretty good. Economy looked good. Unemployment was lowest ever. Stock market was booming. So, there were definitely some indicators that the economy was rolling along nicely. But we also saw some things that gave us some concern, that caused some pause. And the three biggest were yet the economy was rolling along, but we were doing three really big things that kind of were helping the economy roll along.

Number one, we were dropping interest rates. Lowering interest rates. When the Fed lowers interest rates, that, historically—for various reasons—tends to spur the economy. You drop interest rates, you encourage people to stop saving and start spending. You encourage people to start borrowing more money because rates are lower. So, dropping interest rates is going to spur the economy.

Number two, we were cutting taxes. So, back in 2018, there was a big tax cut and obviously tax cuts are going to spur the economy. Anytime you put more money in the pockets of, and this case, it was business owners. And I think if you're going to cut taxes, that's the right place to start as business owners. That encourages business owners to start spending money on infrastructure and inventory and warehousing and expanding their operations and hiring people—that helps the economy. So, number two, we cut taxes.

And then number three, we were running trillion-dollar deficits in this country. Basically, the government was spending more money than it had. We were printing money and all of that printing money is going to cause the economy to do better. If there's more money flowing through the economy that's artificially created and that's going to spur the economy.

So, between those three things, and there hasn't been a time in history where we did kind of all three of those things to the extent that we did over the last couple of years. So, between dropping interest rates, cutting taxes and running federal deficits, we should have expected the economy to be absolutely booming. We should expect affected GDP, which is the total output of the economy to go to 4% or 4.5%. And for anybody that remembers back when we went through the tax cuts in 2018, that was the prediction. We're doing this to spur the economy and get growth to 4%, 4.5%. We never got to 4%. Growth basically stayed at 2.5%.

What we saw was an economy that was growing at 2.5% a year, which is great, nothing wrong with 2.5%. The problem is a 2.5% growth rate in normal times is good. 2.5% growth rate when you're cutting taxes, stimulating the economy, and lowering interest rates is not good. We were in a boat that wasn't sinking, but it wasn't sinking because we were constantly bailing it out. And as soon as we stopped bailing the water, the boat would have gone down. And we were getting to the point where we couldn't cut interest rates much further, we couldn't cut taxes much further and we couldn't run much bigger deficits.

Basically, we were getting to the point where we couldn't keep bailing the water out of the boat. And my take was that you are going to see the boat start to sink. About a year and a half ago I wrote a book called “Recession-Proof Real Estate Investing,” which wasn't predicting a recession or anything, actually, that was just a catchy title. The book was about economic cycles and the book was about how to invest at different parts of the cycle. But in the book, I basically threw out my guess that I felt like in 2019, we were closer to the end of the boom cycle than we were to the beginning of the middle of it.

The other thing to note is that typically these economic cycles last five, six, seven years historically. We've had 33 of them in the last 160 years. Divide 160 by 33 and on average were for six years per cycle. We were 12 years into the cycle. So, it doesn't mean we had to be getting close to a downturn, but if you believe history is a good predictor of the future, and I do, we were probably pretty close to a downturn.

So, a year ago I was saying, I think we're going to get there. Covid comes along. That certainly wasn't a prediction of mine. I don't think too many people could have predicted that.

Seth: How did you not know that?

J Scott: I know. I know. I know. I put my crystal ball down for a couple of months and see what happens. So, Covid happens. And here we are eight months into Covid and the stock market is booming and unemployment is coming back down. And there's still a lot of things that look much better than we should expect them to look.

Basically, in Q2, we saw the biggest drop in GDP in history. We saw the most unemployment or the biggest gain and unemployment numbers in history. And the fact that we're kind of still treading water and especially in the real estate market. Anybody that's listening to this is probably in real estate. You're noticing that around much of the country, real estate is as hot as it's ever been. It's hotter than it was last year.

So, for a lot of us, it's kind of like, head-scratching, “What's going on?” And so, what is going on is over the last six or seven months, we've printed about $4 trillion in stimulus. We've literally handed checks to Americans for $1,200. We've literally given money to small- and medium-sized businesses. We've literally bailed out big businesses. We've literally increased unemployment payments so that some people are making more money on unemployment than they were making working a job. And so, we've been propping up this economy.

As surprising as it is that things are as strong as they are and the real estate is as strong as it is, in some respects it's not surprising at all. I mean, if you print $4 trillion, here's an interesting statistic. If you look at the stock market from the low back in what was it? April. To where it is now, the stock market has gained about $4 trillion in value. Well, we've printed about $4 trillion in money. So, is that a coincidence? To some degree yes, but to some degree no. That money that we're printing flows into the economy. And typically, it will flow into the hands of wealthier people who will put it in the stock market and equity markets will do well.

Long story short, I think things are much, much worse than they currently look. And I think that as soon as we see the stimulus start to dry up, and I think we will see that after the election, regardless of which candidate wins. I think when that happens, we're going to see a softening in the economy. It’s going to be as bad as it should be right now but isn't because we're propping it up. I think we're going to see a softening in the real estate market. Now just a guess, not even a prediction. But I don't think it will be a 2008 type event. I don't think it will be a 1930s type event. I think that a lot of the fundamentals coming into this downturn in real estate were actually okay. We weren't having any real estate related foundational issues like we did in 2008. I think we will see a softening. I think we will see a downturn. But if I had to guess, I would say it won't be a 2008-type event.

Jaren: Well, that was very, very insightful. I'm curious to see what's going to happen in the multifamily space, particularly because I feel like in the next six months to a year, there's going to be a lot more deals that come on the market. But there's a lot of people that have been saving money because of multifamilies, particularly large multifamily syndication, that whole space. I've been doing a lot of research in that space recently. And it feels like there's a lot of people chomping at the bits just like savings, just ready to buy a deal. So, I wonder if that's going to inflate what's going on or I don’t know. It's just going to be really interesting to see what's going to happen.

J Scott: There are so many things and so many factors that it's really hard to kind of figure out what's going to move the needle and what's going to… I could give you a hundred indicators that say multi-family is going to be strong over the next few years. I can give you a hundred indicators that say multi-family is going to be weak. I think at the end of the day, we don't know which one of those are going to impact the most.

And we also have to realize that not all multifamily is created the same. I wouldn't want to own condos in New York City right now. I probably wouldn't want to own a multifamily in San Francisco right now, but I'm comfortable owning in Texas and Florida because that's where people are moving. I wouldn't be comfortable owning class A right now because typically when there's a downturn and when people are losing their jobs and wages are dropping, when unemployment is going up, we typically see that impression that ranked impression highest in the class A. So, rents drop much higher in class A units than they do in class B units. Then they drop higher in class B units than class C units.

So I would say, I wouldn't want to be in class A right now. That said, the general rule of thumb is, during a downturn, move down in class. Move from A to B or B to C because the farther you go down in class, the more secure you are. Class C rentals historically have done very well during downturns because everybody needs a place to live. So worst case, they move out of their luxury apartments down into their class B, or they move out of their class B down into their working class, class C.

But when you get to the class C units, there's not really any place to go. People either need to be homeless, or they have to move in with family or friends. So, class C tends to be pretty resilient. But this time around things might be a little bit different because one of the big things we're seeing during the last eight months is we've seen an eviction moratorium and we've seen a whole bunch of people that are not paying rent, literally millions of people, millions of families that aren't paying rent right now, but they're not getting kicked out of their homes. And if you look and see who is it that's typically not paying rent right now, typically the lower in property class you go, the C class properties are seeing higher economic loss than B class. And B class is seeing higher economic loss than A class.

This isn't your typical recession. A year ago, I would have said recessions come and buy C class. Now I'm looking and I'm saying, okay, don't buy C class, but also don't buy A class. I really like B class right now because that's kind of the middle ground. You're not having a lot of people not paying, but you're also not going to see a ton of rent compression.

This is part of what I recommend to everybody to understand how these things work. And it sounds like you've been doing a lot of research and I know other people have started doing research. But understand how economic cycles work and understand how downturns work and then go to the next step, which is looking at what's specifically happening during this crisis and how is that potentially going to change everything that's happened in the past. Because this recession, this downturn—and we are in a recession, even though it may not feel like it sometimes—this recession is not necessarily going to play out like all the other ones because there's some unique situations and features.

So how is multifamily going to play out? I think some multifamily is going to stay pretty strong. I think interest rates are going to stay low for several years and we can talk about that if you want. But I think there's plenty of evidence that interest rates aren't going up over the next five or six or seven years. So that's going to be good for multifamily. But then they're going to be other types of multifamily. There's going to be other locations for multifamily and classes of multifamily that may not fare as well. And certainly, there’s gonna be people that overpaid and that are going to need to get rid of their properties and are going to be selling you the discount. So, I think multifamily like a lot of things right now, there's no one answer fits all. Even if you had all the information. 

Jaren: And I think that's actually an interesting segue because in the multifamily space, I've noticed that there's not a lot of people that go direct-to-seller when it comes to finding deals, they kind of utilize brokers. And to segue a bit, I want to talk to you about ways to find deals in today's climate. Because I know speaking as a land investor, direct mail is tried and true. It works like a charm. It's still working. There's a little bit more competition. And some things are changing, but blind offer, direct mail specifically is kind of... by and large, I don't want to speak for every situation or every person, but as a general rule of thumb, that's a really good way to go in the land space.

But I hear in other types of real estate that direct mail is considered dead by some people. They say direct mail is like old news. It's too saturated. It doesn't work. You've got to find other ways to get deals. So, I just wanted to grab your kind of perspective on that. Do you feel like direct mail is dead in a lot of types of real estate? And if so, what's kind of the best alternative?

J Scott: Yeah. I'm going to use your exact words to kind of indicate what my thought is. In the same sentence you said direct mail is dead and it's saturated. Those are two very different things. There's dead meaning nobody uses it and saturated meaning everybody's doing it. And I think that's the problem that we're seeing. It's not that direct mail doesn't work. Direct mail still works, but if everybody is doing it, can you do it better than everybody else? Can you stand out? Can you make an impact? Because there's still plenty of deals being done via direct mail. The problem is with so many more people doing direct mail, those deals are being spread out over to more people. So, you might not get a hundred direct mail deals next year because there's a hundred times as many people doing it so you might get one deal. They're just as many deals in aggregate being done over direct mail that it's just much harder for any one person to be getting a lot of those deals.

And I would say that about pretty much any marketing strategy. Certainly not every strategy works in every market. Some markets are going to be better for direct mail. Some market's going to be better for cold calling. Some markets are going to be better for this or that.

But generally speaking, most strategies work to some degree in any market. And what's going to determine whether or not you can be successful with it. Well, a couple of things. One, how many other people are doing it? And two, how good are you at it? What I tend to tell people is don't say direct mail is dead. Say, “Is direct mail popular in my market and how good am I at it?” If it's not very popular in your market and you're really good at it, well, I think there's an opportunity. If there's a ton of people doing it, it doesn't matter how good you are at it. You probably don't have much of an opportunity.

Start with what you're really good at. Are you good at picking up the phone and calling people? Are you good at sending letters? Are you good at putting out signs? Are you good at knocking on doors?

Second, look at what your resources are. Personally, my favorite way to get deals these days is wholesalers. And my deals are a little bit thinner. I'm paying more money for them, but where I am right now, I can afford to pay a little bit more for deals, whereas a lot of people, you can't. So, I'm using that point of leverage I have over other people. And that way I don't need to be sending mail and I don't need to be making calls. I don't need to be hiring people to do those things.

So, you have to ask, what are your skills? How much money do you have? How much time do you have? And then you need to leverage all those things and figure out what's the best medium. And then, like I said, secondly, you need to figure out what's most popular in your area and probably stay away from that. Find something that's less popular. Find something that frankly is a little bit harder. I know a lot of us hate cold calling. A lot of us hate door knocking. It sucks. I can't do it.

But let me tell you something. There are so many people out there that refuse to do it, that if you can do it or you're willing to do it, there's probably opportunity because you're willing to do the thing nobody else wants to do. So, yeah, it's one of those things that whenever somebody tells me, I can't find deals, my general response is “Yeah, well, you're not working hard enough or you're not doing the things you don't want to do where you're not getting really good at something.”

Because there are deals out there. There are plenty of deals out there. We've picked up more flips and rentals in the past two months than we have in the past two years. And we know what a deal looks like. So, it's not like we're just buying bad deals. So yeah, they're out there, but they're not easy. And what I always say is, when it comes to flipping houses and comes in real estate in general, it's always either going to be easy to buy or easy to sell. And there are so many people out there that are waiting for the perfect time to get into real estate because they want to get in when it's both easy to buy and easy to sell. That never happens. Seth, when you and I started, it was easy to buy houses. We could throw a dart at the MLS and whatever it hit was probably a great deal.

Seth: You really couldn't mess it up. That's true.

J Scott: But then you go out and you try and sell a property and you might sit for two or three months because there weren't many buyers out there. And I remember back then thinking, “Oh my God, this is horrible. Real estate is so tough.” Here we are 12 years later and wow, I wish we could go back to the days where it was easy to buy it and hard to sell. Today it's easy to sell and hard to buy. So, you got to work with what you're given and don't wait for the perfect time. And don't think that there's an easy strategy out there that you're missing because there's not. This business is hard work. And if it weren't hard work, well, everybody would be doing it and we couldn't be successful.

Seth: And now that’s true. You sort of have to be careful what you wish for, if you want it to be easier one way or another. It's like there's always a cost to that. And there's always a curse tied in with every blessing. Segue onto our next question here. So just sort of a high-level question. If you were to go back to the beginning of your career, J, just given everything you've experienced, everything you've done. You have a wealth of experience. If you could give yourself one piece of career advice, what would that be? What would you do differently in the path that you've taken? Any key lessons or takeaways that you wish you could share with yourself back then?

J Scott: Yeah. Of the 450-ish houses that we've sold over the past 12 years, I would have held about 400 of them. I regret selling most of the houses I've sold. And I was warned when I started this. I was mentored by somebody else that had flipped a lot. And he basically said one day you're going to regret every house you ever sell. And that day has come.

I regret most of the houses I've sold. And not just because they'd gone up in value, but just because I've realized the value of cash flowing assets. I've realized the value of, of holding hard assets. It's a lot of work when you're flipping, you start over every couple of months. Same in the land space, same in the wholesaling space. You start over every few months. And I wish I would have realized that there was going to come a time where I was going to get sick of doing this. Back when I started, I was just like, “Yeah, I'll flip houses for the next 40 years. How could that ever be a bad thing making $20,000 - $30,000 - 40,000 a pop?” And here we are a few years later and I'm sick of doing this. And if I would have held a couple dozen, hundreds of those houses that I sold, I could be making a million dollars a year in rental real estate, without having to think about it.

These days I'd love to buy enough rental real estate to make a million dollars. And I can't find the deals. So that would be the biggest piece of advice I'd give myself is hold on to a whole lot more assets than I've purchased because a little bit of money every month actually has some advantages over a big pot of gold every few months.

Seth: Yeah. That's a really valuable lesson. There's got to be an end game. The end game is not to just work yourself into the ground. The end game is to get the cash flow. And it is sort of easy to miss that when you're just in the thick of it. And you're just working your tail off all the time, but it's like, if it's not going towards something like that, unless you're just a glutton for punishment and you just love the work.

J Scott: You hope you never get sick. Hope you never get burnt out. Hope the market never changes. Yeah.

Seth: For sure.

Jaren: That was a really good insight there. I'm glad you asked that question, Seth. I wanted to follow up. I think that this is nearing the end of our interview here, but I was curious about you writing books and the impact of you writing books on your success in your career. Do you feel like it was a major turning point? Do you feel like everybody who's pursuing success should write a book? What's your thoughts there?

J Scott: So many thoughts. I was extremely lucky. I wrote the right books at the right time to kind of propel my name and my brand. And I didn't do it on purpose, but it's provided me some benefits that I couldn't have gotten anywhere else. Let me start with, I am a tremendously introverted person. For me to walk into a group of strangers, whether it be an REI meeting or a party or a networking event and hold a conversation with somebody, that is the most difficult thing in the world for me.

Seth: I would not have guessed that. You seem really good at it. 

J Scott: Everybody says that. And it's because I put on a brave face, but let me tell you something. I'm doing a bunch of interviews today. By tonight I am going to be absolutely mentally exhausted. I'll sleep for 12 hours tonight because this just takes everything out of me. I enjoy doing it. I'm having fun right now, but this is like mentally draining for me. And that's just my personality.

Seth: I'm the same way. I totally get it. I understand.

J Scott: Yeah. My wife on the other hand, she could do this for 10 hours and just be like, okay, let's do it. Another 10. And so, for me, it was always difficult to kind of go and network with people and talk to people because I'm introverted. The fact that I've kind of built a little bit of a brand in real estate and people know who I am, that makes my life so much easier. I go to an event, people come up to me and they talk to me. And so, I never have to start a conversation. I never have to insert myself in a group of people. For me, that's been tremendously valuable. It wasn't the reason I wrote the books. I actually wrote the books because I'm introverted. I remember I was getting to the point where people were texting me and calling me and emailing me constantly saying, “Hey, can I take you to lunch? Can I take you to dinner? Can we grab coffee? Can we talk on the phone?” And I couldn't do it. I couldn't do two or three meetings a day talking to people, even if it was valuable to both of us, I couldn't do it.

And so, my wife at one point said, “You have all this information on the website. You have all these people that kind of want the information organized. That's why they're calling you because they want you to organize this." Like, how do I get started for them. She said, “Why don't you just write a book and tell people, go buy the book. And that way they won't want to take you to lunch, or you tell them, read the book and then if you have questions, I'll take you to lunch and nobody's going to read the book anyway so it doesn't matter."

So, I went out and I wrote a couple of books and started selling them. And really the goal was just to have people stop asking me to go to lunch. And here we are six, seven years later, and we've sold a quarter million copies of those books. And it's helped me in so many other ways, but that was never the goal.

So, to your next question, should people do this? There are certainly some benefits. I mean, it does give credibility. First, I would say to anybody that's thinking about writing a book, they have to answer one question first. Why are you doing it? And typically, there's two reasons. One it's to build a brand and credibility or it's to make money. If you're writing a book today to make money, give up. Maybe you can do it. But especially in the real estate space, there aren't too many books out there that haven't been written and written well.

And so, if your goal is to make money and publishers don't pay anything. If you can get a contract with BiggerPockets, you can make some money, but that's not easy to do. If you're looking to build a brand or gain some credibility. Yeah, absolutely. If you have the time and you think it's something you would be good at, and you have information that you can share with people, I've seen plenty of people write books that they just give out to others, and yes, it builds some credibility. “Oh, this person's written a book." Does that mean you're good at what you do? Not necessarily, but to a lot of people that provides some level of, “Okay, this isn't just somebody that's out to take my money. This isn't somebody that decided to do real estate today and then tomorrow is going to do something else." So yeah, there can be some benefit there, but I hope nobody fools themselves into thinking that writing a book is going to help them make a lot of money these days.

Seth: No, that's actually given how many copies you've sold. That's actually a very rare feat. My uncle is a publishing agent and I was talking to him about this. And it's like the vast majority of books sell hardly anything. People don't make money. It's kind of a losing proposition unless you somehow blow up and kind of sounds like you have. And that's a lot of sales of that.

J Scott: Well, here's the crazy thing. I've written four books. And so, you look at the numbers—quarter million copies. Have I sold 62,500 of each book? No, it's actually two of the books I've sold 80% of those quarter million and the other two I've sold 20%. And so, I was very fortunate. The two books I sold a lot of are the book on flipping houses and the book of estimating rehab costs, they have such broad appeal. So many people wanted to start by flipping houses. And flipping houses was the biggest book for five years, 2013 to 2018. And now the estimating rehab costs is the biggest book because there's no other book out there that does that.

Jaren: I was going to actually say, I read your book when I first got started in real estate. And it was by far the best book and I still think it is on the subject. Because rehab costs are actually really hard to wrap your head around. Because it's really subjective to what market you're in and a bunch of different variables. So, I understand why, and I would encourage our listeners to go and check it out if they haven't yet.

J Scott: I appreciate that very much. Thank you. My general philosophy, I remember growing up and listening to music and hearing people cover other people's songs. And a friend of mine always used to have a saying that 90% of all covers are crap. And his rule of thumb was you don't cover a song unless you can A) Do it better or B) Do it differently. That always kind of stuck with me. And I've always said, I'm not going to write a book in real estate unless A) I can do it better or B) I can do something that hasn't been written.

The book on flipping houses, I honestly think the book I wrote is really good. I'd never found a book that was as tactical as what I felt like I could write. So, I was proud of that book. The book on estimating rehab costs. That didn't exist. So, I wrote that because it was different. Nobody had done it. The book on negotiating real estate, that was another one that didn't really exist. There were no real estate negotiation books out there. And then the recession-proof real estate, there were no good real estate economics books out there. There was basically nothing.

So, the first one I wrote, because I thought maybe I could do it better. And the next three, I basically wrote because there was a gap. So, what I would tell anybody is if you're going to write a book and your goal is to get wide readership, it's not just a vanity project, do something better than what's out there, know what's out there and do it better, or find a gap that doesn't exist and write that gap.

Seth: That's awesome. Very good insights on that. So, as we wrap this up, we've got three final questions, just kind of spitfire around here. We asked these on most of our shows when we have time just to get some final insights on our guests and understand more about how they think. The first question here, J is, what is your biggest fear?

J Scott: Letting down my family. We got into real estate, my wife and I got into real estate for family. We quit our corporate jobs and we got into real estate because we wanted a lifestyle business. And my biggest fear is that sometimes, a lot of times, I don't do a good job of balancing work and life. I should be doing more life and less work. And I talk about it a lot, but I don't do a good job of actually doing it. So, one of my biggest fears is my kids are going to grow up and say, “Yeah, dad, you could have done a better job of that.”

Seth: Yeah, I can totally relate to that. It is interesting how a lot of times we have these ideals in mind, but it's almost like, “Do we really mean that or does that just sound good and that's why we're saying it?” We actually have some other ulterior motive or it gets lost in the shuffle.

Jaren: So, the next question is what is something that you're most proud of?

J Scott: I'm going to say the same thing. That while I don't always do a great job of it, my wife and I have worked really, really hard to build a life that allows us to raise our family and to kind of focus on family and focus on kids. And again, not always successful to the extent I want to be successful, but by most measures, we've been very successful at being able to put family first and business second. And so, I am proud of what we have created.

Seth: Awesome. And what is the most important lesson you have ever learned?

J Scott: So many of them. But one that's served me well is that you only get one reputation and once it's gone, it's gone forever. So, don't ever compromise and don't ever do the wrong thing because all it takes is one compromise or one wrong thing. And you're basically going to negate everything you've done in the past and your crusher ability to do it again in the future. So yeah. Take your reputation seriously.

Seth: That's powerful. I live in fear that sometimes you work so hard at it and it's like, “Man, what if I stumble or mess something up?”

J Scott: Or somebody tries to take it from you. Yeah, I'm right there with you.

Seth: Yeah, man. I hear you. Great answers. I appreciate that. Well, J, again, thank you so much for talking with us. I know you're an in-demand guy. You've got a lot of knowledge and experience to share with people. If people want to find out more about you, I know you're sort of active on several different places on the internet, but where should they go to learn more or to read up on what you got going on?

J Scott: Yeah, so I'm really active on MySpace. If anybody wants to find me, obviously I'm on BiggerPockets. I write a lot of articles on Facebook. That's kind of my medium of choice. Though I did just hit 10,000 Instagram followers. So, jscott_123flip. I haven't really figured out how to do Instagram. So, don't ask me how I got to 10,000 followers. And then my websites, you mentioned 123flip where basically I detailed my first 50 flips in gory, gory detail and I've left those up. So, if anybody wants to read about my flips from 2008 and 2009 it's there, and then jscott.com is my other website. And I can be reached by email at j@jscott.com.

Seth: Thanks again, J. Appreciate it. Wish you all the best with the podcast that you got going on, your websites.

J Scott: Oh yeah. The BiggerPockets business podcast. Thank you. Can I mention that real quick?

Seth: Yeah, of course.

J Scott: I'm very proud of that. We've had some amazing guests over the last year and a half. Small entrepreneurs, all the way up to really big entrepreneurs, some big authors in the business world, some big names in the business and real estate world. So, I'm very proud of that. So, if anybody who wants to become a better entrepreneur, business person, and if you're in real estate, you're an entrepreneur and a business person, it applies to you. Check out the BiggerPockets business podcast.

Setg: And what a great handpicked member of the community to do a podcast like that. I really can't think of anybody better than yourself to do it.

J Scott: Oh, thank you.

Seth: That sounds like a wise choice on behalf of the powers that be at BiggerPockets. I'll link to all of this stuff in the show notes at retipster.com/90. Links to all of J Scott stuff and other various things we talked about here in this conversation.

Well, there you go, folks. That was our interview with J. I always love talking to him. I've enjoyed listening to him and reading his stuff for years. It was really cool to finally get him on the show. Do you have any other added thoughts on that, Jaren?

Jaren: What was refreshing about the interview with him was how balanced he was. When he got into the economy stuff, I really liked how he didn't say any hyperbolic statements and he was very level-headed. I could be completely wrong about this, but this is kind of what I'm feeling, or this is kind of what I see things are going based on trends but at the end of the day, I don't know. And I just appreciate that humility because a lot of people out there in the world just make a name for themselves by being very emphatic and this is what's going to happen and they make these really big statements. And I know that that's something that you appreciate as well. And I felt like J was very much level-headed in that regard.

Seth: Yeah, I agree. And I’ve been following his Facebook posts for a while. Not intentionally, they just kind of show up whenever he puts them out there. And they're always the kind that, like my brain has to think a lot about what he's saying. Like do I agree with this? Or where's he coming from? I don't know. Just very thought-provoking stuff. So, he's pretty good at thinking up that kind of content for social media stuff.

Well, let's do our little question that we usually do at the end of these episodes. So, the question is this. Which age, when you turned, was the most difficult for you to accept?

Jaren: Probably right now. I'm approaching 30. And I actually had over the last couple of weeks a little bit of I don’t know, like a quasi-midlife crisis or something. Because I've been thinking a lot about it.

Seth: Really?

Jaren: Yeah. I just feel like I want to be a lot further along in my life by 30 than where I'm at. There's actually a political commentary guy named Michael Knowles that sometimes comes up on my YouTube feed and stuff. I found out that guy was 30 years old and I about like cried. I was like, how can this guy who's like a world-renowned talk show host, regardless of whatever side of the political aisle you're on, the guy is super successful. I mean, that's very, very true. And the guy is my age. He was born in 1990. I was born in 1991. And the guy looks and talks like he's like 50. And I was like, there's no way.

Seth: Yeah. I'm looking him up right now. He does look a lot older. I mean, I guess when you tell me that, I guess I can see it now, but I never would have guessed that just looking at him.

Jaren: Yeah. So that really, shocked me. And I was like, man, there's so much that I still feel like I need to accomplish that I've been trying to accomplish over the last 10 years of my life. But I came to terms with it. The reality is, you are where you are and you can be upset about it, or you can just be like, “Well, the only way to change it is by just getting more clarity, more focused and better goals and keep going after it." What is your alternative being upset about the level of success that you're at or where you're at in life? Good, bad or ugly, there's really no point. It's just much better to just be like, well, I'll just go create the life that I want and just get busy.

Seth: It'd be interesting if those other people weren't there for you to compare yourself to, like if it was just you in a vacuum and nobody else in the universe, would you even really care? Are you upset because you're contrasting yourself to other people? Or do you think just objectively you're not happy with where you're at?

Jaren: I think it might be a little bit of both. It's probably definitely heightened because there are other people to compare myself to. But I still think I'm a very idealistic person. I thought I was going to be a world-changer. I had teachers write my yearbook, I know somehow, you're going to change the world. And I was always like, “Yeah, I've got to change the world, change the world." And I'm like, “Well, I'm about to be 30 years old and haven't really changed the world yet." So, yeah. I don't know. I just felt like maybe a little bit of reality is sunk in that there are very, very few people that make life-altering, world-altering actions in their life. I still think it's worth continuing to pursue that because that's where I personally draw fulfillment and purpose and all of that.

But I think that there's definitely a degree where I was like, “Well, I thought I'd be a lot further along by the time I was 30." But it's crazy for me to say this because obviously I'm like the co-host of the REtipster podcast and all things being equal I'm pretty successful compared to some, but it's all relative. And so, I think my Enneagram type 3, wanting to be significant and pursue success at all costs and drawing my sense of worth from that, it’s how I'm always going to be dissatisfied with my accomplishments. I don’t know. I think it's my superpower and my Achilles heel in my personality.

Seth: I know what you mean. I'm not the type 3 myself, but I have some of that in me and it's really like a blessing and a curse because you are never really content, but still that really does push you to do great things that you wouldn't otherwise do.

I've had a similar thing. I remember this was like 8 or 10 years ago now. I was at a Detroit Tigers baseball game and Miguel Cabrera. He was one of the best players on the team. He got up there and it was getting up to bat and saw his stats up on the scoreboard. And it said that he was the exact same age that I was. And I'm like, “Man, look where I am and look where he is. What have I done with my life?” Granted, I don't play baseball so what's the point of even comparing myself to somebody like that? But I got that same kind of thing where it's like, man, there's always going to be somebody else out there who's just a little further along. Or you kind of look up to in one way or another.

Jaren: I feel like being 29 has been such a waste because every other year in my twenties I've been young and inspirational and pursuing my future and all this. But I feel like the entire time I've been 29, I've just been dreading the fact that I'm about to be 30. I don't know. That's how it's been for me.

Seth: For me, man, the thirties have been really where things started happening in life, just in terms of like, I felt I finally started getting traction and getting somewhere and even just like family stuff. I'm 37 now. Man, I can't believe how old I'm getting. But it's just been an awesome time of life. So, I'm actually excited for you. I think you're going to have a lot of amazing things happen in your thirties just because you're actually a little ahead of where I was, but you're in that spot of life where, in one way or another, I think amazing things will happen for you.

Jaren: Oh, thanks man.

Seth: Yeah, for me, I don't know if there's like… I haven't really dreaded any of my birthdays that I can remember, but I do know as I get older, I'm sort of getting to that point where getting older doesn't really give me anything new. It just means yeah, you're getting older and you're getting more decrepit and you're going to start falling apart soon. I think I felt it more than ever this year when I turned 37, for some reason, I mean it's a totally arbitrary number, but for some reason going from 36 to 37 just felt like a big jump. I'm not unhappy with where I'm at or anything, but I think going forward every additional year, it will become more and more real that life is finite. This isn't going to go on forever, get your stuff in order because there's going to come an end to this party at some point. And hopefully I'm not anywhere near that, but still I think when you're younger, that thought doesn't really even enter the picture. Just didn't for me. I didn't really think a whole lot about like, “Well, I'm going to die soon." It was more just like, “Oh cool. I can drive now. Oh, I can vote now. And there's things I can do now." And a lot of that excitement is kind of gone. It's more just like every new year just sort of means you're getting closer to the end.

Jaren: Yeah, man. I'm really curious about the forties because I feel like that's a decade that not a lot of people talk about. Because when you're 50, it's kind of like, you're the young-old people. Like when you're over the hump of 50 it's like, you kind of lived well. But forties, I feel like is an interesting decade in people's lives that people don't really talk much about. I'm really betting on a lot in the next 10 years of my life. Especially since I'm like, okay, I'm not where I want to be by the time I'm 30, but by the time I'm 40, I better really hit it hard. But then what am I going to do when I'm 40? I'm going to have in a whole another year before I'm on the other side of old. So, what am I going to do there?

Seth: I know what you mean, man. I am with you on the forties. Just like age I feel like I don't want to hear a lot about that. Like, oh, goodie my 40-whatever year. I don't know if people just don't like talking about it or what, but I just don't hear a whole lot about that particular decade.

Jaren: Maybe people are just busy because it's like a lot of kids, I don't know. But it just depends on when you had kids and stuff. If you had kids in your thirties, your kids would be like 10 years old. So, you'd be hitting like teenage years. I don’t know.

Seth: I think that is part of it though. Just generally speaking, not everybody, but a lot of people in their forties, that's the season where their kids are maybe elementary to middle school, the high school age, and there's just a lot going on and they probably don't even think that a whole lot about their birthdays. So maybe that's what it is.

Jaren: Interesting.

Seth: I hope you guys enjoyed our conversation with J. I know I did. And he's just a great wealth of knowledge and information and he's got a lot of great things going on. He always has ever since I've known him. So, he's a good person to know about.

If you guys do want to stay up to speed on what we're doing with retipster.com and the forum and the podcast and the blog and all that stuff, take out your phone and text the word “FREE." F-R-E-E to the number 33777 and you can get access to some stuff that not everybody has access to. Thanks again everybody for listening and we will talk to you next time.


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About the author

Seth Williams is the Founder of REtipster.com - an online community that offers real-world guidance for real estate investors.

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