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May 29, 2023

I'm Selling My Real Estate! (Here's The Emotional & Logical Reasons Why)

I'm Selling My Real Estate! (Here's The Emotional & Logical Reasons Why)

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Transcript
Speaker 0: What's up, beautiful people, welcome back to another episode of the Action Academy podcast, the show that helps you get rich, happy, successful and free with a capital F in your life and business. So you guys read the title of today's podcast episode and probably thinking what the hell, brian, what are you doing? What are you on? What is going on, man? You run a real estate podcast and you're selling your real estate. What I know, i know, i know. So today what we're doing is I'm sharing my logical reasoning behind selling my real estate, that I'm going to share my emotional reasoning behind selling my real estate and get into what's next and what this next season of life holds for me, for you, for us together as an Action Academy family. The reason I'm recording this podcast episode today is I sent out my decision making in a newsletter last Thursday, which you guys should subscribe to if you don't already, and a lot of people email me back and said that my story helped them a lot and it helped enforce some decision making for them and it helped them move on to a new season of their life. So hopefully this podcast episode has a similar effect. So let's begin.

Speaker 0: I have four units in the northern suburbs of Atlanta, georgia, and they're co-living properties. So they perked out about $3,400 a cash flow when they're fully rented out, and a house had both of these properties. So I put 3% down on the first and 5% down on the second one and I lived in them or occupied them for over a year. The first one I bought in 2019, the second one I bought in 2020. And so they were able to appreciate like freaking crazy through the COVID boom And, as all you guys know, when you house hack, you're living for free. So not only was I making that cash flow, but I didn't have to pay rent, i didn't have to pay a mortgage, so my expenses were essentially non-existent And this is what helped me get out of my corporate job and go travel around the world full time. And that's where things started to get a little shaky with the house hacks. So I was supposed to have somebody replace my unit at my house. When I went to go travel, a buddy of mine and he backed out the last second the day that I was flying to Greece And so that was vacant while I was traveling. So I said, okay, this is fine, i'm still cash flowing. Things are good, honky Dory, let's rock. So I did the whole trip. Come back, got a brand new pipe and hot, vivid vision for Action Academy both the community that was brand new and the podcast and everything that we're going to do. We're going to help a million people leave their corporate jobs by December 1st 2025.

Speaker 0: So before we get into the logical portion of my decision making here, i want to begin with the emotional side, because a lot of you guys are going through the same thing and you're in the process of changing seasons and identities as well. So before I was in the camp where I live in the house hack I live for free I was living 40 minutes north of Atlanta, georgia, in the basement of a house, so I'd never actually lived in a house. Basically, i would buy these houses. I'd live in the basement with no windows, and it was still a good existence, but it wasn't anything crazy until I had gone and traveled full time around the world And I'd seen the impact that living in beautiful places in my environment, my physical environment, had on me And I realized how important that was. So that was my first key change was recognizing the ROI on my life as opposed to just numbers on a piece of paper. So, yes, the house hacks and living for free got me the ability to go get this nice apartment in Austin Texas. So I lived in a basement for three years, guys, three years. I lived in a freaking basement in my own house to earn the right to do this. So I think sometimes people get that backwards.

Speaker 0: So fast forward the story a bit and I'm in Austin Texas, i'm in the new area, i'm not in Atlanta whatsoever anymore. Tenant decides to stop paying rent. Tenant I've had for three years Just decides hey, screw this, i don't feel like paying you anymore, i'm out. And so she was squatting and I had to evict her. Go through that entire process. We finally got her out, had to put $15,000 of cosmetic rehabs on the property And basically I looked down on the sheet of paper.

Speaker 0: I said this just killed our cash flow. Dude, like. This was our cash flow for the year. We weren't making good cash flow and we were accounting for CapEx, you know all that stuff. And I was just like why are we even doing this anymore? Why am I even thinking about this house anymore? And that's what leads to really cool concepts. That's candidly new in my life, which is ROE. We talk about ROI all the time return on investment or cash on cash return, roe, return on energy, roe, return on effort. Now keep in mind, no property managers would take this.

Speaker 0: I interviewed five different property managers to handle these houses for me and nobody would do it. And I thought about hiring a friend to do it, but it was just still mind space for me that I had to think about. And anybody that has real estate knows you still have to manage your property manager. All right, you have to manage the manager. There's never true passivity until you get into the big leagues. There's just degrees of passivity.

Speaker 0: So this entire process ended with me throwing my hands in the air saying, okay, cool, we're spending $14,000, got to do a full cosmetic rehab, full landscaping, get new tenants, screen them, manage them, do all this stuff with co-living. That sounds miserable. So a buddy of mine, cody, just said Hey, won't you sell them? What's your return on equity? There's another ROE. I thought about it and I said you know what? The marginal use of my time is better spent making money through Action Academy than even thinking about real estate whatsoever or these two properties. So we did the math and selling each of these properties will net about $230,000 to $250,000 of cash. And I said, hell yeah, i could take that money. Don't know what I'm going to do with it yet, but I can file what's called the Homestead exemption. Where I lived in each of the properties, two out of the last five years tax-free. I don't even have to do a 1031. I can just sit here with like a quarter million dollars of cash and deploy that into the next thing, whatever that may be.

Speaker 0: But here's my dilemma. My identity was that of somebody that does not sell real estate. Buy and I hold, i hold forever. That's what you're supposed to do. How many mentors do I have in the back of my mind right now screaming at me and saying low fixed rate interest real estate debt is an asset in an inflationary environment. right, you buy and you hold. You become a millionaire by buying a million dollars worth of real estate and having other people pay it off. Right, and these were low interest rate houses. There was like a 3.7% on the first and a 2.5% on the other one, and they were cash flowing. So what the hell? right?

Speaker 0: And this leads to the quote that informed my entire decision-making process, which is my buddy, mike Ayala, who was one of the reasons I created the podcast in general. So once again, i was golfing with Mike which good things tend to happen in my life when I golf with Mike and I asked him about this and I was like dude, i feel stupid for even considering selling these. Like the cash flow, everything's rocking and rolling. And he says, okay, so over the next five to 10 years I don't think we'll see that much appreciation in the market. Do you want to continue building a portfolio of co-living properties over the next five to 10 years? And I immediately said, oh hell, no, that sounds terrible. I don't want to do that at all. That does not fit my vision. That doesn't fit anything that I'm trying to accomplish, anything that I'm doing. That would just be a distraction to me as opposed to moving me towards my vision and towards my goals with Action Academy. And we also zoomed out a bit. And he goes dude, in your investing journey and your investing career, these two properties are going to be a blip on the radar. He's like you're going to do so many other big things in the future. You're going to completely forget that these two houses even existed. but they got you here. That's awesome, but what got you here is not going to get you there. So that is what made my decision.

Speaker 0: Essentially, it all boils down to what I talk about on this podcast all the time, which is the importance of having a really crystal clear, defined vision, and I'm all in on building the Action Academy community and growing this podcast. That is literally when I wake up in the morning. That is all I think about, that's all I want to think about. When I go to bed at night, that is all I want to think about is Action Academy. I don't want to think about tenants, i don't want to think about anything else that has to do with real estate. All I care about is growing this community and growing this podcast and this platform. That's it.

Speaker 0: Guys, a lot of you are listening and you're operating not one business, but two businesses, four businesses, five businesses, 10 businesses, and maybe you're just now starting your side hustle, and you don't have one side hustle. You have three side hustles and four side hustles. Guys, focus on one thing. Keep your one thing to one thing. You know wouldn't be easier to generate a million dollars income per year in one business that you're absolutely rocking a rolling on and you're focusing all your time, energy and effort on that. One thing, as opposed to four different things. Like, one business printing out a million ARR is better than four businesses that you have to operate printing out 250k If that makes sense. And also, you get increasingly difficult to beat when this is the only thing that you're focused on.

Speaker 0: Like for this podcast, i can get really cool guests and make really cool, heavily edited episodes and do five episodes a week because this is my one thing that I focus on And that's why it works. I can grow the community into hundreds and hundreds and thousands of people that are all getting personalized white glove concierge service because it's my one thing, as all I think about, it's all I do all day is my community, action Academy community, which you guys should join if you're a cool kid, like right now. We're planning a Costa Rica weekend in September for Action Academy. It's going to be our first in person event that's only for Action Academy members And it's going to be probably $100,000 to throw this thing, because we're going all out And I was like man if I was focusing on a bunch of other things at the same time.

Speaker 0: There's no way that we could pull this community or this podcast or this event off with the precise detail that we need to make this vision come true. So, anyways, that's what it all comes down to is ROE return on energy and effort. So I'm cashing out in June and July, we're getting the sales completed and I'll have the cash sitting and I'm stacking cash through Action Academy, through our operating account. So, going into 2024, once Action Academy has a full team in place, everything's rocking and rolling and the systems and processes are airtight and we have a we do it instead of just me doing it, then that is when only then will I pick my head up and say cool, this is rocking and rolling.

Speaker 0: Now I can move into the next stage of my real estate investing career, and then that will be the big deals, where we're not doing the small deals anymore. We're going to do really large, probably commercial, industrial space, whatever the market is allowing for. That's what we'll do, and I'll do it with a bunch of really hard hit and operating partners and throw like a million dollars of cash into there, like that's the game I want to play. I don't want to play the small games anymore. I want to play that kind of game.

Speaker 0: So so in closing, some of you will think that I'm an idiot. Some of you will understand what I'm doing at the end. This is just my personal decision and how I'm thinking about this. That's best for my life, because how I want to feel in my business is light. I want to feel excited and energized. I want to grow wealth and make money the way that I want to do it. That's super fun for me, and managing those co-living house hacks It's just not where I'm am anymore. It's just a new season of life.

Speaker 0: So my challenge to all of you is to examine your portfolio and look at what you've got right now and say what do I want to hold on to for the next five years? What do I want to let go of? Because, guys, there's going to be so much opportunity coming up in the market for people that are well capitalized and connected. And, in closing, i'll share a quote that my mindset coach, my business coach, shared with me, and I really, really like it, and that is if you're on monkey bars, you can't hold on to the monkey bar behind you and still swing forward to the new one. You have to let go of the other monkey bar to reach for the new one, to keep moving forward, and so for me, this is what that looks like I'm just swapping out my houses and monopoly for a hotel eventually.

Speaker 0: So that is my rationale. That is why I did it. I thought long and hard on it, i talked to a bunch of people and this is my decision. So, guys, if you want to partner next year, i will be ready, willing and available, but until then, keep your one thing, the one thing. I'm keeping my one thing, the one thing, my one thing. If you want to talk about Action Academy, i'm your guy. If it's not about Action Academy, i don't have time to talk. I'm locked in and that's what I'm going to be for the rest of this year. So buckle up, let's get to work and sit tight for an amazing lineup of podcast guests this week. Talk soon.