00:00 - 05:00

Intro:

Welcome to the military millionaire podcast where we teach service members, veterans and their families how to build wealth through personal finance, entrepreneurship and real estate investing.

I'm your host David Pere. And together with my co host, Alex Felice. We're here to be your no BS guys along the most important mission you'll ever embark on your finances.

Roger Vick One Oscar Mike.

David:

What's up military millionaires. I'm your host David Pere. And I'm here with Alex felice, who is well it might as well be hosting this episode if you're in the intro he gave Lucas beforehand but real quick just so you get like the actual bio. Lucas is the founder of Landlordology.com, which is a real estate Landlord Education website that serves over 5 million people a year.

He's also head of industry Relations at cozy which is used by over 500,000 landlords and nationwide process to over 3 billion in rent annually and a whole bunch of other stuff. He's a speaker project management professional experience landlord just all around cool dude, who one of my favorite memories with Lucas is that I somehow got what I was like in the lobby at the right time at the right place. And Fin Con and him and Seth Williams just snagged me and I got to like, hang out in DC all evening doing dinner and wandering around. And Lucas showed us around cuz you should live there. So just just a good dude.

So, Lucas, this is exciting, a long time coming. I even created a special Facebook group called peer pressuring Lucas to join the podcast and it worked. So thanks for joining us, buddy.

Lucas:

Thanks for having me. You guys. I just feel like we go back so many years. So this is an honor to be on your show.

David:

Appreciate it.

Why don't you tell the audience a little bit about your story and how you got started in real estate and all the crazy stuff you got into this is good.

Lucas:

Yeah, sure.

So I wasn't always in real estate. I used to work for the Department of Defense, literally working with rocket scientists to build ballistic missile defense systems. And that was cool. But it just was a regular W2 job. And I decided to think about real estate. The reason why I decided to think about real estate was that I met this girl, I was 24. She was, I was 23. She was 24. And we happen to see each other maybe once a week or so. And so I just happen to say, Hey, you know, how's it going? How's your weekend? She's like, Oh, it's really good. I bought a house. And at the time, I thought that's nuts. Because we were so young. And I couldn't understand how she did it.

Well, so she started diving into it. She said, Hey, you know, I bought a house, I went and found a bunch of roommates. They're moving into the rooms, and they're paying my mortgage. And like I'm even grossing, or netting like $400, right. And I just thought, Oh my God, this, this girl is crazy, smart and crazy, pretty. I need to get on board with this.

So I did the next best thing, next logical thing. And I hired her sister who happened to be a real estate agent. And I just told her sister, Hey, can you help me find a house and I want it to be in her neighborhood. And I want it to be as close as possible to her house.

So we spent the next, you know, 30 days or so scouring houses in that area where I could do the same thing where I, I could house hack it, I could move in and then find a bunch of roommates who would pay my mortgage. And so the house ended up being about seven blocks from her house. Pretty, you know, DC has short small blocks. So it wasn't that far. And sure enough within like, like 45 days, I had that house and another 15 days I had roommates moved in and it was great. They were literally paying all of my expenses and then some and I think I impressed that girl. So we dated for about three years and we've been married for 11.

David:

Story would be a lot creepier if you had not ended it just ended terribly.

Lucas:

Oh, yeah.

David:

Oh, yeah. I totally moved into this neighborhood.

Lucas:

I mean, it worked. I totally would have been a soccer right, like that is how it comes across. So I like to say that, you know, diamonds are a girl's best friend, then real estate is a very close second.

David:

I feel like if you didn't have a chance the sister wouldn't have got you a house that close would have...

Lucas:

probably right.

Alex:

I have 8 homes and no girlfriends.

So is it the, am I buying the wrong areas or what's the deal?

Lucas:

I don't know. But I continued that path. And so after about a year and a half at that house, it already had 60 to $70,000 worth of equity, which is just what happens in Washington DC. And then I took the equity out and went and bought a condo that I could live in and then eventually converted that to a rental and just kept doing that and then that condo was only about 400 square feet. And I actually moved out of that one because my wife now thought, Hey, we could live there. And she's like, No, man, it's like 400 square feet. There's not enough room for my shoes. What are you talking about?

So we ended up getting a bigger house. And then I just kept buying real estate with the equity that we have in our properties.

05:00 - 10:00

Alex:

Sounds easy.

I just came from DC. I did. I filmed a little series there for BiggerPockets. It's a market out there. It's crazy. It's incredible. You know, it's incredible to see that. I say, the economics that go on there. I don't know how long ago this was. But you know, what's the average house from DC now? For 500? grand at least?

Lucas:

Yeah, it really depends. I mean, DC is a very small area, right? It's like predefined areas, not as big as a state or even a regular city.

So the prices are pretty high. I know that. I would say the average is closer to 600.

Alex:

Yeah.

Lucas:

And that's like, maybe two to three bedrooms.

Alex:

Yeah, they're still making money though. House hacking and doing exactly that. I mean, it's crazy.

Lucas:

Yep. For sure. And hey, your videos, I've watched a few of them that are awesome. Like, just totally top quality. So cheers.

David:

Well thank you. I appreciate that. Maybe Alex can get on my level someday.

Oh, wait, sorry, you’re talking about alex’s videos.

Keep your ego on the level playing field.

Oh, yeah, no. So house hacking in an expensive market. And you were doing it before it was househacked, before it was trendy, which is...

Lucas:

I’m sorry, before Brandon coined the term right. I get more time for that.

David:

I love that strategy. I think that's one of the best strategies that you can use for getting started.

Lucas:

Absolutely.

Alex:

How did you parlay this real estate experience? You obviously had some tech experience. And then how did the website start? Or which one came first? Did you work in a cozy or were you set on the website first?

Lucas:

Yeah, great question.

So after sort of buying into properties, people started coming to me friends and family, I'm sure it happens to you where they look at you. And they're like, Oh, my gosh, you're you know, you're buying properties and I see your growth. So how do you do that? And I kind of got annoyed with the questions. And so I just decided to start blogging my heart out and I bought the domain landlord, ology and started building a simple WordPress blog, and just pouring my stories into it. And the lessons I learned along the way, and I didn't really think it was going to do much, but it ended up growing really fast. And then shortly, like, maybe six months into it, one of my posts got featured on life hacker as a way to like research landlord tenant laws. And I mean, I saw a like a, like, I think I was getting close to like 300 hits a day. And then it went up to 17,000 hits a day from that.

So became pretty popular pretty fast. And then I started making it into a resource website, right, an ultimate resource where I could earn affiliate income, I could teach people, maybe coach people, it was just really a lot of fun.

Well, about a year and a half into it. Cozy approached me and they said, hey, we've been watching you, we love what you're doing. And we wanted to build something similar as our content education platform. And instead of doing that, we just want to talk about maybe acquiring you and acquiring your brand, and just making that our platform.

And so after negotiations, we agreed to it, and they bought the asset, they bought the collateral, and then they hired me full time to continue to grow this, like this baby of mine, and make it into something gigantic, right. And so now I had all this angel investing money that that we could do things with, and I had a full time job doing what I loved and what I was doing, you know, in the middle of the night sometimes, and so I got to continue to run it and I got to quit my other job my consulting job with DOD, and just do what I loved.

So that's how I got started with Cozy. I was one of their original employees. And then I continued to use my subject matter expertise to grow cozy and build what I think is the best software out there for independent landlords and it's free.

So that's how I got started with cozy.

Alex:

Bro, this is a side hustle dream.

But let me go off and do this thing that I really want to do. And I don't care if it pays me. I'm going to do it anyway. And then somebody comes along and says, Hey, we want you to pretty much do exactly what you're doing. We want to put our name on it. Kinda like wanting to own your own cup. And then we're gonna pay more.

Lucas:

Yeah, no, it was awesome. I got paid out for it. Then I got a regular job. And then you know I got that income and then I also got equity in Cozy so you know, base level equity.

So in 2018 when we sold Cozy to Apartments.com, I also got paid out again. So I ultimately got to sell this baby website. I built landlord ology twice over and get paid. All the while, like building it, so it's pretty sweet.

10:00 - 15:00

David:

Under that 17,000 hits a day is quite baby website material. I mean, I don't get that in a month yet. So and by the way, I like that you hit on my entire content marketing strategy, which is like, oh, man, I'm getting sick answering this question. I'm gonna do a YouTube video about it because then I can like, watch this. Did you watch this?

Lucas:

Exactly, exactly.

David:

It works.

Lucas:

Yeah, right for it. Yeah, sure. Yeah.

That's awesome.

Alex:

That's similar to why I started my website like, I was doing it. And I was like, I just, let me write this out in long form. Otherwise, I'm texting people, you know, 1100 words.

Save this.

David:

And the other huge benefit to it is, obviously, there's a huge benefit. We all know to document and talk about what we're doing and being able to answer questions, we're getting a lot so that other people can use it. All of that's great.

The other piece that I love is if I want to learn a subject, like, it's very easy to be like, oh, yeah, I wish I knew a little bit more about this. And then just kind of like, watch a few videos and be like, okay, cool. I think I have an idea. There's a whole different story when you're like, I wish I knew a little bit more about this, because I'm getting asked about it. So now I'm going to really dive deep on the internet and learn everything I possibly can so that I can write about it.

It's like a whole nother level. So it's really actually been probably one of the best things I've ever done for my education too. Because instead of just understanding like a quick definition, you have to like to understand the whole concept of something which is really cool.

Lucas:

There's a famous quote, which I don't know who said at the top, you know, on top of my head.

David:

Alex?

Lucas:

But it says that if you really want to understand something, teach it. And I think that's so true, because then you have to figure out how to write a 10,000 word article on a topic that you didn't know about. And then by the time you're done, you truly can apply what you've learned. So that's been my approach.

Alex:

There's another famous saying, I'm not sure who said it that says those who can't do, teach.

Lucas:

I always thought the quote was those who can't do it. Read.

So guy with the book club.

Alex:

Lucas?

Lucas:

Ah, yeah, of course.

David:

Question though, is, have you read the book? Or do you just like the cover?

Alex:

Actually, this book, since we're on the topic, is he coming?

Lucas:

Oh, geez.

David:

The whole book?

Lucas:

Yeah, literally.

David:

You haven't read every line in that book, though. I you know, I mean.

Alex:

That's every line. I love this guy.

This is the entrepreneurial guy. He goes on Amazon. He writes nothing, right? He writes nothing. He sells it for $12. And I bought a copy.

Goodness gracious.

Lucas:

Yeah, talk about that. Wow. That's great. I wish I was that smart.

David:

Oh, man.

All right. So Lucas? How does a rocket scientist guy who transitions into real estate, which, you know, Alex, and I always say real estate. So easy. Look at us, we can do it. I don't know that you could really get away with saying that.

But the application side. Like, I'm curious. Like, how did you get into this technological technological side of real estate investing? I'm curious kind of what how that changed your investing game? Like did getting to see the data and the back end of all that change your strategies? Or how is that kind of morphed through the years?

Lucas:

Yeah, I mean, when I started out, I wasn't savvy enough to even run the calculations on a single family home, you know, like the calculators that BiggerPockets has, and elsewhere. Like, those are fantastic. I wasn't using any of those, right, I was just using rules of thumb that I had heard from, from realtors and friends who had been doing real estate. And in DC, I'll give an example.

In DC the rule was that if you wanted a house hack, you had to get a bedroom out of the house that represented $100,000. So if I wanted a $600,000 house, I had to make sure there were six bedrooms in there. And that's how I could potentially get enough rental income so that that's all I was doing. Like I was really good at math for mortgages, I could figure that out very easily. And I was caught down quickly. So at least I was not getting into financial trouble. But it wasn't until like my third property that I was actually looking at cash on cash return, you know, after repair value, and those things that I think I know really did help increase the profit of the rental properties and, but it's a learning game. If you don't have to be savvy with numbers to get started. You really don't, you know, sometimes you just take a leap of faith and it'll probably work out if you do enough. Talking with your friends and specialists who can kind of guide you.

15:00 - 20:00

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Alex:

Dude, it's amazing in this life. It's amazing how much trying works. Like try and be surprised what you can do. If you try like, I get that right. Hey, look, I wasn't that I wasn't you. Like I said, I'm not you weren't set up for real estate. It's like, you know, you plug away at a little bit each day, you get a little better, you get a property, you get better at the next one, blah, blah, blah. And the next email, you know, two guys are like, how did you do this? And you're like, Bro, I just, I tried. I tried.

Lucas:

Yeah, and I mean, in my first house in DC, when I was 25, I earned more equity in that house in a year and a half. And I did my annual salary, right? Like I couldn't, it's not liquid. So I couldn't pull it out necessarily that easy. But I mean, that's just the power of real estate. And once I realized that, I was like, this is gold, right. And so I still have a Wtwo jobs working for coast guard or Apartments.com.

And I use that two income to provide the backing for the mortgage and for them to run my DTI and and make sure that I can qualify. But without those Wtwo, then it would be a lot harder to get these mortgages. And I just use the rental income to store up, you know, savings and reserves and just use it to fix property and keep a little nest egg there and kind of keep it separate.

So it's one approach. It's not necessarily best for everyone, but eventually I'll probably have enough rental income where I could truly just live off it. And that'd be kind of a fun day, I think.

David:

I think that's a really cool realization when you, people forget, like you mentioned your equity piece, right. And people focus so much on cash flow, which is great, right? Like, that's a great move. Like I do my net worth every month. As you know, I figure the whole like you focus on it, you know, improves.

It's really interesting because I always forget to factor in things like appreciation and principle when I'm doing my math on things like cash flow and stuff in my head. But then when I put it out on paper, I'm always like, oh, yeah, so like you said, it's not liquid, you can't touch it, you know, it's not a guarantee or whatever. But it's a pretty powerful piece of real estate that people seem to neglect a lot when they talk about real estate.

Lucas:

Right

I mean, you can't assume you're gonna produce equity but generally speaking, it is real like it's a real thing. And so you know, it definitely affects your net worth and opens up doors for you. You know, you can pull out key locks and then you can use that money to go buy other things. It's just a thing that I don't think enough people leverage.

Do either one of you have short term rentals?

Airbnb’s and such?

David:

Alex loves them, but I am doing it out of my I've got a bedroom in the house that I'm currently in Airbnb.

Lucas:

Yeah.

David:

It’s fun!

Lucas:

Yeah, Alex, do you?

Alex:

I don't, I want to change some mine to Airbnb. Mm hmm.

I haven't screwed with it. And like, you know, uh, I don't want to be in the hospitality business.

Lucas:

Right.

Alex:

I want to be in the hands of investor, passive investor business. And so that's my only hesitation is that I have to go do it. My property manager does everything now. So if it's like, I go to Airbnb, he's not gonna do that. So the apprehension has been like, I don't want to go out and get myself a job for some more money. I'd rather do some, I don't know.

Lucas:

I'll tell you Airbnb ease and nightly rentals are one of the most labor intensive projects and so you know, I wouldn't even do it either. But I do have one vacation rental in Vail, Colorado that I was very intentional about buying because it was a huge, short term rental market. And so there are just a plethora of short term rental managers who will take it on for you and build that into the cost and then you don't have to worry about it like it's truly hands off. Because it can be a pain if you have to deal with nightly check ins or like giving towel extra towels for somebody at midnight. You know, that's just not fun.

20:00 - 25:00

Lucas:

But when I was looking for a place I had looked at a bunch of cities, especially ski towns like Park City, Vail, Beaver Creek color up, you know, a couple of places like Jackson Hole. And I just, I was frustrated because I couldn't find something that was going to cover itself. And then I found a pretty good deal comparatively in Vail, and we moved on it. And the numbers worked out in such a way that if I could rent it for 100 days out of the year, you know, sometimes 120 days out a year, then it'll pay for itself, riight.

And that wasn't that hard to do. I mean, sometimes we don't get 120. But, you know, for the most part we do, and then it pays for the mortgages and pays for all the repairs and expenses. And short term rental managers don't charge 10%. Like typical property managers, they're usually 30 to 50% of your income. And they'll take right out of the bat. And that's not cool. But that's just the way it is. And so this guy charges about 30%, they have a whole system in place for cleaners and everything. And they'll take online bookings, which is great.

So if I rent it for 120 days a year, then it pays for all of that and, and we break even, and maybe we'll make a little bit of money, but the real benefit is the other, you know, 200 days a year like we get to go use a condo in Vail, right? Whether it's winter season or summer season.

So I think a lot of times people don't realize Airbnb’s, if you buy something in a desirable location that you and your family would love to have anyway, then it can also be a vacation home for you. And you can still get it covered. Like you can go on a trip and have it paid for because it's raking in rental income the rest of the year.

And somebody else's cleaning it for you like it's just kind of the best of both worlds.

David:

Yeah.

Alex:

I love this idea, cos I own one in Vegas, because I love going back to Vegas all the time. But I got to practice. I have the properties here. I should probably just turn one over and get a manager like you said, I think some I think Shelby only pays 20%.

Lucas:

That's great.

David:

I might call. I might try to see if I can get Julian to do it. You know, the problem is I have a super good relationship with my property manager. And it's like he's my partner. And it's like, I really don't you know, he takes such good care of me. I don't want to take any money out of his pocket to make a little more. I don't know, I got too kind to break that.

Lucas:

Just talk to him because he might not even want to do short term rentals, right?

Alex:

He doesn't want to.

Lucas:

Yeah, no problem.

Alex:

Well, but, you know, he's, I'm gonna, I'm gonna be taking 90 bucks a month out of his pocket.

Lucas:

That's true. That's true.

David:

Just give him 90 bucks a month.

Alex:

Okay.

And then, you know, now everybody wins.

David:

There you go.

Lucas:

Yeah.

Yeah.

David:

Would you just go you just go find some business for your property manager. You're like, hey, I got you this referral and oops, breakeven.

Alex:

Bro. Bro. I give him so much.

David:

Exactly. So he'll be cool.

Alex:

He went from 40 properties when I met him to 350 now.

David:

I think one of those is probably worth 90 bucks.

Lucas:

Holy moly.

Alex:

Yeah, I'm good.

David:

Oh Alex.

Lucas:

I mean, he should be paying you like a monthly stipend, right? He should be buying your groceries.

Alex:

We were very well together.

David:

Oh, man. That's awesome.

All right. So question for you. I don't know this is really a direct question. This is how Alex asked questions sometimes. So I'm gonna roll with it. S

Speak to me about Tenant Screening?

Lucas:

Tenant screening? All right.

So I've only written about 120 articles about this analogy.

David:

You sum them all up right now?

Lucas:

Yeah, actually, I can actually sum everything up that you need to know about tenant screening, is that if you pick the right tenants, and you do a good job screening, you generally speaking won't have very many problems on the back end.

Like the people you always hear about, you know, having tenant issues, it's generally because they didn't do a good enough job screening. I generally look for somebody who hears my two rules, at the highest level, sum it all up.

I look for people who have the ability to pay, and then have a willingness to pay, right? Because it's hard to get both. Sometimes you get people who don't make enough but they're like the most genuine people, then sometimes you get people who make more than enough, but they also have a chip on their shoulder. And those are the types of people that will quickly jump to saying, hey, I heard there was like this eviction moratorium, so I'm just not gonna pay rent because I got a chip on my shoulder and it just, you know, I'd rather go on vacation, right? Because you can't catch me. And those types of people are even worse because then you'll have all kinds of problems.

25:00 - 30:00

Lucas:

So there's a bunch of stuff involved in that. But generally speaking, that's what I look for first, then, you know, I tend to go into credit reports and background checks and income of, you know, two to three times the monthly rent amount, I look for, I look for people who have never had a criminal record, or I shouldn't say that criminal is fine. If they have a violent criminal history, that's a deal breaker, because I'm going to be the one walking up to their door eventually, and I don't want them to get angry.

I look for people who've never had an eviction ever, ever, ever, ever. And when I say that, I don't mean that they got kicked out of their place, I mean, that they actually went to court. And they actually said, I feel like I shouldn't have to pay or you can't kick me out. And the judge ruled against them, and actually put it on their record.

So those types of people are just horrible renters, generally speaking, because they, they feel like they're owed something. And then I spend the time to do verification, you know, call the last two landlords like, you never really want to call the existing landlord, because that person hasn't moved out yet. So you never quite know if they're going to leave a balance on the account. Or if they're going to trash the place before they leave. I like to call the one prior to that and say, ask him simple questions. But then ultimately, the last question I ask is, would you rent to them again, and that is a nice summary of their opinion of this person.

And call, you know, call or verify their income through pay stubs, or if you have two bank statements and tax returns. I know that's a little far-fetched, but you'd be surprised what people will Photoshop. And in fact, I mean, they teach Photoshop in middle school. So you know, like, a 15 year old can probably make up a pay stub that will blow your mind. So you always have to verify.

There we go to tenant screening and 3 minutes.

Alex:

That was a special asset in banking.

So alright, it works. So yeah, I've seen a I've seen used right, yeah, like you said.

David:

I was gonna say I was a recruiter.

Alex:

Hey let me ask you this, though. Um, what about before you get to a tenant buying the right property? Right.

So a lot of people nowadays out of state investing is popular, and somebody will do this little, this little deal where they, they go off the internet, and they search for a place that they've never been to, and they find a deal through a wholesaler, maybe even an MLS, and the numbers look really good. But they've never been there. And so they buy this place. And then they find out that no tenant that you just described, will rent that place.

Lucas:

Yep. Right.

You have to buy something that you'd want something that somebody it's kind of like dating, like you have to be the person that would attract the type of person that you're looking for. Right? And the same with renters, you have to buy the house that would attract the good renters.

So I'm sorry, I cut you off. What's your question?

Alex:

No. Well, well, that I really liked. He said that actually, because I think it's a fantastic point.

But also, let's say for the person who has already made the mistake and bought, you know, I say the, you know, the C minus class because nobody's ever bought a D class property. This is class property. And out of state, I had a girl called me a few months ago, she's like, hey, about this place, and the property manager of the day one, some gangster walked across the street and showed her a gun and said, That's her, their turf, don't come back. And she won't go back. It's another girl sitting there with a house that she can't get anybody to go manage. And I'm like, you can she's like, but the numbers on paper were so good. And so.

So maybe not that bad, right? But somewhere where you're like, okay, I bought this place, and it's hobbling along. Can you speak to like, look, I can't get the best tenant, how do I mitigate this disaster that I've got myself into?

Lucas:

You mitigate?

So yeah, if you buy a lemon, you can just make your property the best it can be.

So I mean, you can't control your neighborhood necessarily. So if you've already bought it, and you're stuck to it, you just fix up your property as best you can, like be that shining star in that neighborhood, right? Because people will generally respect them even the people who will show a gun to somebody walking down the street, right, like they have some sense of decency, and will generally try to respect if you're trying to make something better, right. That's their neighborhood, too. That's not always the case. But that's what I found.

I mean, I have two properties on Capitol Hill in DC and some parts of Capitol Hill are really awesome. And some parts of it like you don't want to go out at night. And so one of the houses was in that area for about four years until it kind of turned over. And it's rough, you know, that you got to find tenants who are willing to take a risk. The thing that I actually think with, I rent to a lot of young tenants kind of right out of college, and if you have kind of a rough area, sometimes it's okay to turn it into kind of a group house. I mean, they're all on one lease. But you typically can convince a group of guys who are younger without kids, right? And who wants to live together. And there's kind of power in that community, right?

30:00 - 35:00

Lucas:

If you have four kinds of football players living in a house, they're not going to really care, you know, what's going on next door. Whereas, you know, it might not be so true for a group of girls, they might not feel as safe, right? Because they might be smaller or whatever, you know, I'm not trying to be sexist. I'm just saying that, in the rougher part of the area, I certainly had more showings to groups of guys than I did to families or, or groups of girls. And that's a way to kind of cater to it.

So I think in that situation, you obviously can't discriminate on sex or anything, but you might have more luck, catering to younger groups of men until that neighborhood turns over and fix it up and make him proud to live there, you know.

David:

Man cave in the garage?

Alex:

I like that.

Lucas:

Gotcha.

David:

I just know who could come to rent this house.

Lucas:

So it might not be the best solution. But that might be the audience that might be comfortable living there.

Alex:

Yeah, yeah. It was a tough question. Because there is no good solution.

A good solution is like the, like, we've all well, I've made this mistake. I can't speak for everybody. But yeah, I mean, don't buy the property that looks good on paper that doesn't run good. because like you said earlier, it's like the tenant screening is important, cuz we have a good tenant there things go well, if you get the lousy tenant in there, it's like, oh, yeah. And so this brought me this is kind of what I was also thinking of, um, you know, the, would you speak to the difference between the people whom the first mistake I made with my rental, my first rental was I needed to get it placed immediately. Empty, I need to get some warm body in there. And I learned along the way, it's like, that's the wrong answer. You need to get the right person in there, even if it takes a little bit longer.

Lucas:

Right.

Yeah, I mean, if you could also, if that was a scenario to where you're kind of bleeding money at first, like, maybe you could get a short term lease, maybe like really get like a three month lease, or a month a month, with a really good tenant, like, like, maybe, you know, I don't know, we get somebody that you think you actually could terminate when the time comes for you to sign a longer lease or, or if to do repairs.

So it doesn't, it's not necessarily a bad thing that you put somebody in right away, it just limits your options.

Alex:

Yeah. Yeah, I won't do that again.

Lucas:

Yeah.

I think with housing, you know, especially when long distance rentals are becoming more and more popular, you know, not viewing or, or going to houses like, I've seen people buy it sight unseen, or at least, you know, they seem like digital photos, but that's it. It's like, why would you? Why would you marry someone if you've never been on a date with them, right. And that's kind of what you're doing when you're investing hundreds of thousands of dollars in a house that you've never actually, like, gone to.

And I think if you can, if it's allowed to spend the night there, I mean, even if it's unfurnished, like, go get your sleeping bag, and like, or cot or something, and literally use the shower, you know, get it obviously meet inspectors while you're there and get like it fully checked out. But like, just live in it, because that's what your tenants are going to experience. And so, you know, a chef would never give out food before tasting it.

So I kind of feel like that's the same thing you're doing. And if you feel comfortable there, and you'd get to see what happens at you know, 11 o'clock at night or two in the morning. If you hear gunshots, then your tenants are going to hear those two, or you wouldn't quite notice until you know if you went in at 4 o'clock showing and you're out by 4:15.

So you try before you buy for sure.

Alex:

Yeah, if you're looking to buy a property in an estate area, you know, people telling us I'm like, well see I bought property sight unseen, but I know that I know the market.

Lucas:

Sure.

Alex:

I know the market. So like people, they buy houses in areas that they'd not stand in, but they never even been to the area. And I'm like, Bro, you can't spend five bucks on a cloud there at least take the property managers hand so he knows who you are and see the area. Anyway.

Lucas:

Right.

Well, you know, this is a relationship business.

So I mean, if you are hiring a property manager, and he doesn't know you or feel loyal to you, because you've never taken the time to meet him. I mean, he is not going to go to bat for you at all.

David:

Yeah, and if you go to the team and like Alex said, you know the market right I'm if the lady will send the papers back today. I'm going under contract hopefully today on four houses that I've never been inside. I've never seen I may never see the inside of I don't know.

But my property manager met her and walked through three of them today on this for the fourth one tomorrow's before I sign so like, hey, I know that I know where the houses are. My property managers walked through and said, yeah, I'll manage this.

Lucas:

Right.

David:

Except she did say that Sanford from Sanford and sons lives in one of them. So he probably won't be leaving anytime soon since he's got like an entire Museum in the house. But you know, whatever house was It's clean as a hoarder.

Lucas:

It's great..

Cross that bridge when you get there, I guess.

35:00 - 40:00

David:

Yeah, the other I mean, I'm getting a lot of equity in the deal. So it's whatever.

Lucas:

I think that? That's a great question. That's a great point that like, if you do find, if you want to invest out of state and you don't know the area, the probably the best thing to do is to spend your time investing in getting to know property managers with good reviews, and then having long conversations with them and basically ask, I'm not really sure where I want to invest, you know, in this town, but where would you feel comfortable moving your family to? Right? And they might be able to give you a little sub neighborhoods that they say, well, this is really good. This is where I'd feel comfortable. And you know, because it's going to school, and it's quiet, or whatever, and use that, you know, Hackman makes that list. And then that's, that's your list of where you invest. And that's where you, you highlight and, and do the research.

Plus, you'd probably feel comfortable using him as a property manager. And he would feel comfortable taking that house because he's already said it's a great area. So that's one way to do it.

David:

I agree.

All right. So you know, I should have asked this question way earlier, but we didn't even touch on because we just assume everyone knows.

Can you give a brief overview of what Cozy is and does? I know, we don't know that we actually mentioned that I yeah, I hate to assume that there might be someone who doesn't know what it is. But there might be.

Lucas:

Cozy is online property management software.

So it's all online, you don't have to download anything. And it's, it's completely free. With it, you can list your property for rent or your unit, you can collect online applications, you can get full credit reports and detailed background checks and credit scores. And then collect rent online, they can pay by, you know, renters can pay by credit card or by ACH transaction, which is just a bank to make the transaction, then you can track your expenses and your maintenance requests. And all of that is completely free for you as a landlord.

So we make our money on charging for the credit reports and background checks from the tenant, they essentially pay 40 bucks when they apply. And then they get a copy of those reports so they see what you see. And they have something they can take with them for their money, which is not always the case. And it just simply works, you know, Cozy processes about $3 billion, I think it's three and a half million dollars in rent. And it's used by hundreds of thousands of people.

So that's what cozy is. That's what I helped build from the beginning. And then, and then in 2018, we sold Cozy to Apartments.com, because they essentially wanted to do the same thing. And instead of building it, they just acquired cozy. And we're in the midst of rebuilding and improving on Cozies framework behind the apartments comm brand.

So you actually get even today, you can sign up today, you get other things that cozy never did like, like state specific leases that you can digitally sign a line. So we actually paid millions of dollars to hire lawyers in every jurisdiction, not just a state, but every legal jurisdiction to make sure that the lease would work according to those local laws. And so you get something that you know is going to work. And then you can get it signed online for my body through our DocuSign integration. And that is also free.

The whole thing, the whole freakin thing is free. It's just mind blowing.

David:

Yeah, that's awesome. And the fact that like the jurisdiction jurisdiction piece, look at that I use the big board. That's, that's cool. I mean, that's, I get asked those kinds of questions all the time, right. So now I can send people over to apartments.com and say, hey, like, this is better than what I have.

Lucas:

Exactly.

Alex:

You're sending them over to him before?

Lucas, I thought you guys are friends?

Lucas:

Apparently.

David:

I seem to recall him just saying that was a new feature.

Lucas:

Yes, it is.

David:

So no, no, I'm sorry. I wasn't sending him people that weren't gonna be able to, then we're just gonna bug him. Dave said you could do this thing that you don't offer yet.

Trying to set me up for failure.

Alex:

So now what do you do? Now you just, I saw the answer. I was like, now you just..

David:

He rose on the floor.

Alex:

And sell a Cozy cup.

Lucas:

So I work, you know, my employer is apartments.com. And I'm actually a product manager for, for, for what's their version of Cozy so I'm actually kind of it's really fun. Actually, I get to take all the lessons we learned with Cozy, and then apply them so that what we're building in apartments is like version 2.0. And where, you know, you might not know this in tech, when you build something. Some of the code gets out of date within a few years like in that framework that you might build software on is now kind of old news, right? And there's better ways to do it.

40:00 - 45:00

Lucas:

So when you start to have hundreds of thousands of customers, it's not so easy to kind of just redo the framework. So software kind of goes out of date for a while. And while cosy still works very well, we're now building on it's faster and cheaper. Like even in apartments, the ACH transactions are just happening within one to two days versus five days with Cozy so you get your money faster, and that's still free, which is pretty amazing.

So, you know, we're getting a chance to fix the things that we never could fix it with cozy.

David:

That's awesome.

What are you most excited about with it?

Lucas:

You know, I'm excited because apartments.com gets over 30 million hits a month. And all of that traffic can get funneled into this tool. So this thing that I'm using, since there's no price barrier to entry, and it actually lets you manage your rental properties effectively.

Like for example, I, like I said, I've got, I've got a total of three properties in the Washington, DC area, and I manage all of them by myself from Colorado, and I rarely have any issues. I mean, even maintenance requests get submitted to this thing.

So, you know, super easy, it's empowering, it gives me strength, to grow my portfolio, and it doesn't cost me a dime. So that idea of having that power and giving it to 30 million visitors a month like that, that power and that gift, right, can actually help create financial legacies for for millions of families, right, they're going to have something to pass on to their kids kids, because they have the right tools to grow financially.

So that that's what kind of wakes me up and gets me going in the morning is knowing that, you know, I can change the world like or at least I can change the United States and, and make legacies for families.

David:

I feel like a schmuck.

Alex:

Yeah.

David:

And Lucas is why is better than all of ours? No, that's awesome. That's really cool.

Lucas:

Thanks, man.

David:

So you've come a long way from, you know, buying a house to live next to a girl.

Alex:

Yeah, yeah, the why has definitely got some bigger goals.

When did you buy the first house?

Lucas:

First house was 2005.

So then landlord ology was built in 2012. Sold to Cozy in 2014. And we sold cozy apartments in 2018.

David:

That's pretty cool.

Alex:

What's up with a co-star?

Lucas:

Yeah, co star is the parent company that owns apartments and Cozy and a handful of other brands. They are primarily a commercial data company.

So they are like the MLS for commercial real estate. They're a private company. They're not, you know, like a franchise like the MLS is. But they have all the data. So if you buy commercial properties, which are you know, any property or business or any property that's got five units or more, you're probably going to see the listing on co star.

Now, it's not free. It's a subscription, you know, and the price varies based on where you live, but it can be expensive. I mean, when people ask, I like to say it's usually a car payment, right every month. But you know, if it gets you a 100 unit apartment building, and you know, $10,000 a month in net revenue, then, you know, certainly workers' bread. Yeah,

Alex:

Yeah. I was just curious. I knew that was part of it. I didn't know.

David:

That's exactly. Thank you. Thank you, Alex. I mean, you were one of the first guests.

Alex:

I was?

David:

Yeah. Well, because I deleted the first episode or two. So now you're left as one of the first two.

Anyway, and then we had to, you know, like two years later, and a little bit of heckling. We got Lucas. So look how far we've come.

Alex:

Peer pressure works.

Lucas:

Well, I'll say this. You guys are some of my favorite people to hang out with at conferences. It's just, it's just a lot of fun.

Alex:

That sounds like a really lousy compliment. I'm just saying What? You guys are my favorite people that I see once or twice a year.

Lucas:

But I don't like it enough to see other times. Yeah. We're just all in the same circles. It's fun. It's just a lot of fun. So.

Alex:

How are you? How are you taking everything that's canceled?

Lucas:

Yeah, I know. That sucks. It really And I don't have any events lined up to go to or speak at, even through 2021.

I mean, no one's no one's taking on that risk of actually scheduling a conference. Just not happening.

David:

I was gonna get to just drive. Yeah. So like my first fin con was in Orlando, and I was in Hawaii. So my first leap of faith was like a $2,000 round trip and whatever.

Lucas:

I remember that.

45:00 - 50:00

David:

I’m so excited. I'm like, yeah, Long Beach right around the corner. I'm gonna drive up there. It's gonna be great. It's gonna cost me nothing. No, yeah, it's not gonna happen. I can't get away with that.

And I don't think they're ever gonna come to Missouri when I move back there. So.

Lucas:

Oh, man, when nobody does?

David:

About eight months, or a year. So yeah, not too long.

So, all right, Lucas, I got a few questions. I always ask everybody on the show.

Lucas:

Sure.

David:

The first one is if 18 to 19 year olds walk up to you asking you for advice. And usually that's real estate advice, but life whatever. What are Lucas's words of wisdom today? What would be the one thing that you feel like they need to know?

Lucas:

A one thing.

You know, I, there's a lot of one things, but the one that comes to mind is you are what you eat. And I don't mean food. So whatever you consume, and whatever you put in front of your eyes, whatever you try to take in, is going to define who you are. And, you know, if you're spending the time playing video games all day long, like, you're just going to be a gamer. And you're not going to have any opportunity to build wealth, or to build a platform for yourself. But if you you know, if you consume books that help you understand finances and understand real estate, or whatever you're interested in, I mean, if you want to start a zoo, like read some books on that, or connect with whoever does that, so whatever you consume, is what you're going to be.

Alex:

Bro, I love this.

David:

Yeah.

Alex:

Yeah, I'm an avid reader, if anybody wants to get on my book list and try to keep up with me. You can't but it'd be fun to watch you try. But I love this advice, right.
Like, uh, you know, I tell David, I still in nearly the day, a lot of times like, you can consume content or you can produce content. And kind of goes along with that. Like, if you want to produce content, that means you need to be consuming high quality content, you can't consume video games, and then spit out something smart doesn't work that way.

You can't watch nonsense on Netflix, and then have anything good, valuable insight to give the rest the world. So consume high quality content, and then you can maybe help the next person.

David:

Yep. And Alex's book club is solid. There's some good recommendations in there, some great books, but I will also say that you might be a better reader than you will believe after hanging around some of the titles that he throws around some of that stuff. Thus spoke Zarathustra, and Alex reads books that I'm like, oh, this is an awesome book, but I could not read the title out loud. It took me a long time to practice. I'm pretty sure I messed it up. So.

Alex:

Bro, you said it right, said it right, Zarathustra. And uh, that's 1886 reject nature, and it's amazing. And everybody should read it, but they won't. So that's why anyway.

David:

Alex books just to be like, yeah, you didn't have the fortitude to read this one. so.

Alex:

Anyway, I don't mean to steal your thunder love. I love that. I love that.

David:

That's, that's probably the best way I've ever heard that summarize. So we appreciate it.

Alright. The next question is, what resource would you recommend? Well, this book, course website, whatever, for anyone looking to get started in real estate today.

Lucas:

Ooooh, you know, I was, I'll tell you this. And he doesn't know I'm saying this. But I've been super impressed with Chad Carson's real estate, start school. He just, this is not a plug. But like, ironically, he's got the open enrollment right now. But he just lays it out in the way that like a sixth grader could understand. And I think that's really how you learn, right? You got to grab these basic concepts. And then and then his, his outline course. I mean, he starts there, but he really gets into the details and really wants you to buy your first property.

So he's one of the greatest guys I know, and will ever truly be like the heart of a teacher. And so I've just been super impressed with the quality of it. And I can't say that all the real estate courses are even a small portion of real estate courses.

So if you're just getting started, that's a good one to check out or at least have an intro conversation with him.

David:

You know, not only is chat and oh, let's see Alex looks like he had something.

Alex:

Have we had Chad on this show yet?

David:

No, he's in the works.

Alex:

Just, you know.

50:00 - 53:31

David:

Yeah, Chad, Chad's awesome. In fact, I was gonna say not only is Chad an awesome person who I definitely enjoy talking to and would recommend he did something to me that is kind of like what happened to you with whatever company picked up your landlord ology blog. Not that it was nearly 17,000 views a day. But Chad was probably one of the first like legitimate backlinks I ever got of someone saying, hey, check out this website if you're military and there was a noticeable traffic bump, and I just never forget that because I was new to the blogging world. And it was like, I was like, where's this traffic coming from? And I go through, like, oh, Holy smokes. Hey, thanks, dude. He's like, oh, yeah, you know, so he's just a cool guy. I like Chad.

Lucas:

And he, he's living it too like he, he's buying real estate. And he's living off of his investments. And he and his family can travel the globe, you know, most of the year, at least when his kids want to do school, right. And his rental properties pay for all that. So, you know, that's eventually I think we're most real estate investors want to get to.

David:

One of the only real estate educators I know who will tell you that his biggest mistake was buying too many houses and needing to slow down.

Lucas:

For sure.

David:

Anyway, so, good recommendation. I like that. And yes, Alex will have to talk to chat as well about getting him on the show.

But Lucas, where can people get a hold of you? Other than like Cozy or apartments or you know, where they have to fight and fight through the corporate rail?

Lucas:

You know, I'm kind of old school. I'm still mostly on Facebook.

David:

I sense MySpace.

Lucas:

Oh, geez. No way.

Yeah, no, I've got a pager. You can just page me and that'll be cool.

So no, just find me on Facebook. And then I've got you know, you'll find me on landlord ology, too. But you know, Facebook's a little more personal.

David:

Indeed.

ALex:

You have a great profile picture.

Lucas:

Oh, yeah. You took it. I've had that for almost a year. Because I just can't, I can't part with it.

David:

Oh, that's the one that was one of that's one of the ones you threw out here as a potential for the blog podcast. I guess I'm gonna have to use that one. I guess. Just for Alex. It's a good photo.

Lucas:

Yeah, Alex is a great photographer.

David:

You know why? It's a good photo.

Lucas:

Why?

David:

Cuz you had no idea it was happening, which is why Alex gets all these crazy shots. And you're like, oh, I look normal when I don't know there's a camera in front of me. But nobody knows the cameras know the cameras are a whole different story.

Lucas:

You want to know well...

Alex:

Like a handsome ninja.

Lucas:

The little secret. If you ever want to tell somebody is fake smiling. Look at their eyes. Look at the sides of their eyes. If there's a lot of wrinkles there are like crevices and then it generally is a fake smile. If, if it's generally relaxed around their eyes, then it's a genuine smile. It's just how the face works. And it's muscles..

David:

On off that you might like to talk to.

Lucas:

Yeah. I'm just getting old.

David:

Lucas, thank you so much for joining us today. I am glad that we finally got to do this. This has been just awesome.

Lucas:

Yeah, thank you so much. It's so fun to hang out with you guys.

David:

Yeah, maybe next year we'll get to do it like in person.

Lucas:

Sure. Absolutely.

End:

Thank you for listening to another episode about my journey From military to millionaire. If you liked it, be sure to visit Frommilitarytomillionaire.com/podcast to subscribe to future podcasts. While you're there, we'd love for you to rate the show. Give us a review on iTunes. Now get out there and take action