Real Estate Underground

123% Leverage and the Crash That Changed Everything with Joel Kraut

• Ed Mathews • Season 5 • Episode 190

Share episode

Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.

0:00 | 52:04

Send us Fan Mail

Joel Kraut co-founded BRRRR Loans after losing $4.2 million in the 2008 crash. He had 144 properties at over 100% leverage when the market turned. Five tenants called the same day to say they couldn't pay rent.


Today he runs one of the country's fastest-growing private lending shops, and he sees the DSCR lending industry doubling in size over the next three years.


In this episode, Joel and Ed break down:

- Why investors are rotating from Texas and Florida to Ohio, Kentucky, and the Midwest

- How DSCR loans actually work (and why 1.0 coverage isn't enough)

- The real math on leverage: why the smartest investors stay at 60% LTV or below

- Why "relationship capital" matters more than real estate knowledge

- What happened when Joel wired money on March 5, 2020 and the market froze

- His $99 training modules vs. the $35K guru trap

- The best advice he ever got: "Post that in 5 years. Shut up. Go back to work."


Joel currently reads: Buy Back Your Time by Dan Martell


Connect with Joel: brrrr.com


Real Estate Underground is hosted by Ed Mathews of Clark St Capital.

Elevista - Speed as a Service™
Elevista Connect is the first AI-powered lead conversion system built for real estate investors.

Heads up: If you find this week's book intriguing and you buy using our link, we receive a small commission that helps support the show. Thank you!

🎧 Subscribe to Real Estate Underground for weekly insights on building wealth through real estate, without sacrificing your sanity.

Additional Resources:

Social Media:

  • LinkedIn -> Ed Mathews (President at Clark St and Elevista)
SPEAKER_01

I used to own a lot of properties. At the height, I had 144. I had, in most cases, over 100% leverage. If you're old enough, you remember a bank called Wacovia. Yeah. They actually had a program that would allow you 123% of the purchase price at closing. As the buyer.

SPEAKER_00

If you're within three feet of me, we're probably talking about real estate, much to my family's chagrin. But here's the thing most people see 70% rates freeze. I see opportunity. They're waiting for the perfect deal. Well, I finalized thousands of them. Perfectly just doesn't exist. So I talk to operators across every aspect of that flippers, multifamily syndicators, no investors, and whatever else is working with. No sales pitches allowed. Just real lessons for people actually doing it. I'm Ed Matthews, and this is Real Estate Underground. Hey, this is Ed Matthews. Welcome to season five again of the Real Estate Underground. I can't believe we are actually closing in on 200 episodes. Getting there. We'll be there soon. So with me today is Joel Kraut from Burr Loans. And he's got training programs and uh, you know, he's been he's a mobile home park investor and a whole bunch of other stuff that we're gonna get into today. I'm really excited to have this conversation. And uh, you know, we uh we climbed the uh Mount Technology uh uh to uh to make sure that we got here today, and that's a long story that I'm not gonna bore you with. But um Joel, welcome to the show and uh thank you for your time today.

SPEAKER_01

Hey, thanks for having us on. It's a pleasure. We're happy to be here and share and have some fun together and just talk real estate.

SPEAKER_00

Yeah, let's go. Let's have a little, let's have a little geek out session. So, so Joel, for those folks who uh haven't discovered burr.com um or you you and your uh your partner out on uh social media, why don't you tell us a little bit about your company and what you guys do for a living?

SPEAKER_01

So we are a private direct lender. We lend all over the country, we do it without tax returns, no personal income verification, a lot of DSCR loans. That's a big buzzword out there today. Fix and flip style loans, new construction loans. We do some commercial work as well, but that's a minor part of our business. We're lending only to investors. That's key. We do not lend to primary residences. We try to keep it as simple as possible for people. Some people can close in as fast as 18 days, 17 days on a 30-year loan. For some, we have one client, the largest client we have has 15,000 doors. Obviously, they don't use us for all of that. But once in a while, they send us over. Hey, you know, we have these four left over from when we started out. Could you please refinance these for us? What they like is we never ask them a question about the other 14,000 and change doors. We're just going off those, making it simple for them. Their CFO loves it. He sends over seven documents and we go to closing. So we're trying to keep it simple for people across the country to both get into the industry, work through the industry, and grow their portfolios.

SPEAKER_00

So so for those folks that didn't pick up on what Joel was intimating, he was talking about cross-collateralization, which is a huge no-no. If any if you are ever talking to a loan officer who asks you to uh cross-collateralize uh things that you already own, walk away. In fact, I would suggest you run. So uh Joel, thank you for that. And and so um, you know, I know that you uh I want to get into the mobile mobile home thing, but you know, you're here in the Northeast. I believe you're in New Jersey, right?

SPEAKER_01

Yes, I'm up in New Jersey, but for the most part, we're investing in other areas. We're not really doing much in New Jersey.

SPEAKER_00

Yeah, I understand why. It's a it's a very interesting and unique and very expensive market. Um I am curious about, you know, one of the one of the beautiful things about being in your business is you talk to a lot of guys like me, right? And and our audience in terms of uh, you know, the deals on the on the you know, that are that are coming across our desks. So I'm curious, you know, I I have a a bit of a biased view because I'm here in Connecticut and uh, you know, there are there are certainly deals, um, but you know, nowhere near the volume that there was even four years ago, right? And so I'm curious about what you're seeing in the markets that you uh work in in terms of deal flow, in terms of inventory, uh, and you know, things like that.

SPEAKER_01

So it's interesting. For us, we always hear there's no inventory, people having a hard time finding deals, but yet every day our phone rings and new things are coming in. What we have seen is a huge rotation across the country. You know, California, Texas, Florida, South America, Middle East have now rotated and pivoted to a lot of the states that are cash flow friendly and landlord-friendly for sure.

unknown

Yeah.

SPEAKER_01

But you're seeing a huge changeover. So, to your point, four years ago when people were all in on Texas or all in in South Florida, because of the quick appreciation and then either cashing out or selling properties for a profit, we're not seeing that now. And those same investors have rotated to the exciting states not to make fun of them because they're working, but Ohio, Kentucky, West Virginia, Michigan, Missouri, Oklahoma, Alabama, Mississippi, Louisiana. So you're seeing some a big rotation in that regard. What you are also starting to see, though, now is a lot of those tertiary markets, those third-tier, not quite as big markets, a lot of investor-to-investor trades. So you really need to pay attention as an investor to see where that market is in its cycle. Because when you're down to investor-to-investor trades only, the markets get slow. And if you want to exit, it's tough. It's not necessarily that the value of your property dropped. There's just no one left to play with to exit. So if you want to, you have to force it lower, thus, undoing everything you've just done in the last two years. So you really need to pay attention to that as an investor. Make sure you really understand. I know on Instagram they make it sound really easy. You're sitting somewhere in California, you're going to get yourself a Section A tenant somewhere in America and just plug it in and play and collect your money. It can work. It does work, but it's not quite as easy as Instagram makes it out to be. So, you know, do a little homework, make sure you're comfortable, you understand how the programs work, you understand the vouchers you're vying for. If you put those pieces in place together and do your due diligence instead of just talking about it, it can work well for you. But I think you need to take those extra steps. You know, for us, we sit in New Jersey, so not far from you in Connecticut. The biggest advantage I have in my career at this stage is being able to see, just to your point, where things are happening all over the country live. That's the biggest advantage I have in the market. I'm not doing anything else more special than anybody else. My guys still go to Home Depot, get lost for three hours, still miraculously buy the wrong things and come back to the site. All the same thing everybody else do in real estate experiences, we experience. We're just trying to do it in more vibrant markets. And we're getting to see that by the flow, the order flow that you're seeing, and we participate there.

SPEAKER_00

Awesome. So so let's talk about uh loan products. Um, you know, when sometimes when when when I'm talking with uh another investor about a um a deal and you know, we start getting into the DSTR type conversation, you know, they for whatever reason assume that that's a no money down, and that is not the way it works, right? Um so so why don't you walk us through um what loan to value is uh in terms of you know how a DSTR works, um, and let's talk about the types of terms that you know you typically see in the marketplace, nothing specific, but well, we were talking off camera for a minute or two before we started.

SPEAKER_01

And we were talking about breaking things down to simple basic elements. Yep. If you want to be successful at this, no matter what road you pick, it's a business and you have to treat it as such. And no matter where you look around the country, all businesses run on money. So if you're really gonna do this, you need to start to prepare your war chest. That doesn't mean you have to have millions of dollars. But if you really believe you're gonna go at this with zero money out of pocket forever, it's a very tough business. It works great when the markets are high flying, but now as markets go sideways and some markets are down a little, you have to be more well buffeted and prepared. The products themselves, on the debt service coverage ratio type loan, commonly referred to as the DSCR loan, on a purchase, we can go to 80% of the purchase price. We can go to 85% in some states, but the interest rates jump dramatically. So when you're looking at different advertising and you see we go to 85%, you have to make sure you ask that question about what is the difference between the interest rate at 85 and 80. It's a huge swing. Same swing 75 to 80. So every time you up the leverage, you're paying dearly for it. Right. And you want to pay attention to that. So you need to be ready. You know, make sure either it's a joint venture, so someone else is bringing the capital as you get started, which is nothing wrong with. People are far too bogged down, and I need to make 100% of everything.

unknown

Right.

SPEAKER_01

Because 100% of zero is still zero. I know no one likes math, but that's easy. But two times 50 is still 100. So, you know, if I'm getting half of a deal two times and someone else put up the cash, and that's my first year in the business, hey, I'm in the business and I'm moving forward. I'm establishing myself and I'm making some money. So you have to begin to learn to think that way. Right? You're not gonna do everything yourself. And and I think one of the biggest mistakes and misnomers in the whole business, and you've been around, so I think you would agree, too many people think this is about real estate. It's really about building relationship capital. So I can call Ed and say, Ed, I got a great deal. Like, I gotta get$300,000 to the table. I can bring$180,000 real quick. Maybe you and one other guy kick in, or if you really like the deal. Like, you need to have that type of relationship out there with people. And that's only by being consistent, building trust, showing people what you're doing all the time, even when you're not asking for anything. Just get them familiar with your process so they can be more comfortable when it is that time. And people don't think that way. You know, they wait to the end when it's time to execute, and they've choked themselves time-wise. So on our product side, you do need down payments. On the fix and flip side, can we get to 100% of the purchase and a hundred percent of the renovation? In about 10 states, we can. In the rest of them, even for experienced people, 90-92% of the purchase. So you still need a few dollars, right? You know, you just have to be ready. And it's a business, it's it's unfortunate but true.

SPEAKER_00

That's you know, cash is oxygen, right? Um, so so with regard to the DSCR, you know, the and it it has varied over the years, but uh my experience it's usually 25 per north of 25 percent. Um, you know, can you talk us through uh what you know you and your underwriters are looking for when it comes to whether or not a DSCR will work, right? So 120, what I'm talking about is 125% of loan cost, right?

SPEAKER_01

So for us in our space, it's insane. Truthfully, it makes no sense. We underwrite to the lowest level possible. So we're basically just taking the rental income, looking at taxes and insurance, and assuming no other expense in the world exists. And if you can stay above 1.0 on that ratio, we can lend to you with full lungs. Not a great way to invest. Comes back to haunt us in year two and three if things don't go perfect, that investors running out of juice and now having a hard time making payments. Right. Because they really spent money, they didn't really invest. To your point, you know, people they go crazy. What do you mean 1.25 and 1.3, these ratios that are showing you that you have more than enough income and you have some room above your debt? That's how you're supposed to invest. So when things don't go perfect, you're not blown out of the game. But our industry, because it's such a large actuarial table, ignores that. I think it's a bad mistake. Our industry has grown dramatically over time, but good times the last decade. And I think now the industry is starting to see things happening out there that they haven't experienced before, where borrowers can't make payments, payments are slowing down across the 30-day cycle. Not everybody's first ACH hits on day three, perfect, and we all have to go to work and call everybody up, see what's going on, and milk it all the way to days 27, 28, 30 of the month to get the payments in. So you're starting to see that around the country. It's very important as an investor to understand that before you get yourself in that situation. Yeah. So what do you think is driving that? What are you seeing behind the behind the curtain? Well, certainly interest rates on exits have changed, right? At 4%, the markets were exceptionally fluid. At 8%, when it really exploded, the markets really seized. And now we're back kind of in the middle here. You know, I just priced something out for one of our long-term clients at 6% this morning on a 30-year 75% loan. You know, he has an 800 credit score, so I don't want to mislead anybody. He has great credit, he gets the best prices. But around here, to maybe if we could get down to five and a quarter, a half, that's a fairly fluid market for investors. Yeah. Maybe not for people who are spending money, but for people who can analyze a deal, understand what their expenses are and what they can drive income really to, that's gonna work. Yep. So we're seeing an increase of demand. That's definitely gone up, no doubt. And I believe the industry will double in size in the next three years. Wow, really? I really do. A lot of it's gonna come from people who go to banks now who are just exhausted from it. Okay. We have a lot more 780, 760, 740 credit score players than people would expect. They really own 10 properties, 15 properties. They really just want to refi these one or two. Can you just look at the one or two for me and leave me alone on the rest? Right. I don't it's not that I don't really want to give you my schedule of real estate owned. It's I don't want you to ask me questions on these nine other properties that have nothing to do with this now. And you guys will do this, you guys meaning us. So we have a lot of people turn to us, and surprisingly, they'll call us up for a 60% loan to value, 55, 50. Not as much leverage as you would think from a lot of those really seasoned players. And you know, truthfully, that's one of the reasons they're around for decade after decade. You know, they manage their own books well. So it makes it easy to lend to. Those people tend to get the best terms and conditions, which makes sense. You know, we're we're we want to include as many people as we can. But having people prepared on the credit side, telling their story successfully and nimbly, that changes everything for how we all work with you.

SPEAKER_00

Yeah, I mean, and but the but the one of the things that I that I heard, and I I think it's really important to kind of shine a light on is uh is the loan to value. You know, one of the challenges, you know, cash is so important, but also is cash flow, right? And so, you know, one of the things, could you go out and cash cash out refi up to you know 70, 75, 80 percent sometimes. Is it the smartest thing to do? And it's a mistake I frankly I've made, right? Um is uh is you know, you over-leverage uh to maybe pull out a couple extra hundred grand to go buy something else. And uh then all of a sudden that 10-unit building you have is only throwing off cash off of eight units because for whatever reason people move, whatever, um, and it gets a little tight. And so you know, if you are the the secret, and I think Joel hit upon it here, the secret here is as you pay down your mortgage, as your value increases, you want to stay in that 65 or less um loan to value. And if you can get into the 50s, all the better, and then put it under long-term debt. Um because uh that is something that is where wealth gets built. It's also where it helps you avoid waking up at 2 a.m. staring at the ceiling because you're really not sure. You know, it's day, as Joel was saying, day 27 and you owed you owed your mortgage payment 24 days ago, and you're really not sure where it's gonna come from over the next three days. Um that gets scary. And so you know, being super conservative with your cash or super conservative with your um your debt service uh and all the other things we talk about, which you know, we can get we can get into sourcing uh services like insurance and trash and all that. But um if you get those two things right, if you can if you can hold on to your and grow your cash position and keep your debt very manageable, you're gonna do very well in this business.

SPEAKER_01

For the people watching, take a look at my haircut, look at Ed's haircut. Ed is less leverage, Joel used to be super leverage. This is what happens. Ed is telling you the truth. I used to own a lot of properties at the height I had 144. I had, in most cases, over 100% leverage. If you're old enough, you remember a bank called Wacovia. They actually had a program that would allow you 123% of the purchase price at closing. As the buyer. As the buyer, as legal. And truthfully, we did it a few times. Obviously, during the 08 slowdown, debacle, whatever you want to call it, implosion, that did not work. This came to fruition. I had 500 tenants call me and tell me they were not going to pay rent. They had been laid off, they were going for unemployment, and they weren't going to give me any of their unemployment dollars. They were nervous, they were scared, they didn't know how long it would last. But the most successful people that I know in this business have done what Ed has just described. They have methodically worked their way down the leverage scale. They're in the low 60s, high 50s. I know you don't start there, I know it sounds easy, but this is a game over time. This is a war of attrition. This is not a one-week, you know, we're not throwing the touchdown at the Super Bowl and everything's magically delicious. Over time, you win the Super Bowl. But you have to be patient, grind your way through that, you know, selecting good properties so that they can cash flow and get you through those storms. Like for right now in some cities, you know, you probably need to get through the next 24, 36 months sideways. Five years from now, you'll look up and it'll still be up, which is awesome. But right now, instead of being stressed out that your value of your property went down 6% this year instead of going up 9%, if you're cash flowing it out, you're not stressed out by that. You don't end up with my haircut. And you can you can think with a clear head and keep evaluating good deals that may come up. But if you're too stressed out because of your leverage, Ted's point, you can't do that with a clear head. I'm living proof of it. That was one of my worst mistakes. I knew the values were insanely low. I knew it made sense to buy, but I just couldn't do it because I was so burdened, I couldn't deal with it. So you want to leave yourself in a position neutral, midpoint, up a little, okay, but not to the end lines. You know, don't take that rubber band and extend it all the way so you leave yourself no room. I know it sounds easier said than done, but the reality is if you think that way and you start to believe that way, and then you even act that way, you will win that way. It's really basic. But again, everybody, you jump on these podcasts, you watch something, some masterclass online, and they want to make it sound so simple, so fast, so easy. The reality is the people who've been around forever who are the big winners, they've been around forever to become the big winners. They haven't been the big winner in a week.

unknown

Right.

SPEAKER_01

You know, we got lucky. We had no idea what was going to happen in a six to six, six week to, I don't know, say 12-week period in COVID. We didn't know which way the market was gonna go, and then all of a sudden exploded to the upside. Yes, we got lucky, it was awesome. You owned the property and all of a sudden it was up 20% in month eight. Was like, wow, I'm a genius. You had nothing to do with it. You didn't know.

SPEAKER_00

Yeah, somehow I I got a lot smarter in those in that time frame. But I'm quite as smart as I was then, though. I don't know what happened.

SPEAKER_01

Right. If I talked to you six weeks earlier, you're like, I don't know what's gonna happen. I'm scared. Should I sell it? I don't know, and no one'll seem to buy it, and I can't even get out to go do it, they won't let me out of the house. So So look, we've we've now learned lessons that things can happen outside of our control, which is a good thing to understand in your overall tool bag. The black swan event can happen. And not that you want to be overwhelmed by that, but you have to realize that. And part of that black swan event is not being overleveraged, so it accelerates on you.

SPEAKER_00

And, you know, I mean, it's if you look at the calendar, uh, over the last, you know, 18, 20 years, we've had two major events, right? Where, you know, in 08, they weren't sure the economy, the economy was going off a cliff. And uh they weren't sure we were, you know, the the American economy was going to survive. Um and if you haven't seen or read Too Big to Fail, you should read it because it was scary. Uh the and then, you know, COVID, like Joel said, I mean, it it was nobody knew what was happening, right? I mean, we had no idea where the market was gonna go. We we did a trade, the last trade, March 5th, 2020.

SPEAKER_01

So we finished wiring the money to Ed's account. Ten minutes later, my credit partner calls me up and says, We can't close. What do you mean we can't close? We already wired the money. It's in the guy's account. You got to call him up and get it back. Like, oh, call him up, get it back. Are you guys nuts? I knew the borrower. He says, Well, Joel, I like you a lot, but I'm gonna call the attorney general. Oh, wait a minute, attorney general. Yeah, I heard those words, I almost had a heart attack. Yeah, I called my credit facility. I said, Listen, here's this guy's email, phone number, here's his name, here's his cell phone. You call him direct because attorney general just got mentioned, and I am out. Right. I am not involved in that conversation. Yeah, we are launching this mortgage to you. You guys need to handle this. Yeah, right. He got to keep the money, but it went on for about two weeks. Yeah. So the market literally seized and no money traded for about six weeks. Things can happen. You know, Wall Street, when when they're not happy, they just shut down. Yes, they don't kind of work it out. Oh, yeah, we got two-day window, we'll finish everything in the pipeline. No, we had to literally call people up. We're not closing. What do you mean you're not closing? We're scheduled to close today. We cannot close, we can't fund. Yep. I'll stop. It was crazy. It was just a lot of things.

SPEAKER_00

Yeah, it's crazy, nuts. Um, fortunately, I wasn't buying in those days, but I actually owned a bunch, and I was one of those lucky guys that uh looked a lot smarter in the you know week 20 of that cycle than in week two.

SPEAKER_01

But uh also I you looked smarter, but I wasn't prepared, you had but you had prepared correctly and you owned a solid portfolio. And the solid portfolio was going to work out over time, right? You just had an active guy that accelerated that time frame. Right. So had it gone sideways and down, your portfolio would have survived out that time. You would have lived to battle a different war, a different day. Yeah, and three years from now, you'd have a clear head, be moving forward, and you'd be up a couple of percent on your way to where you thought you'd be. Right on. That's what people need to make sure they're aware of when they're 100%.

SPEAKER_00

Yeah, I mean, and that's where having a cash position and not being over-leveraged really, really helps, right? That's where you know you thank your lucky stars that you're not sweating, even if people, you know, and and we had plenty of residents who um struggled to pay their rent. But uh, you know, we were really hard to rent from, and we had really good people in there, and you know, most of them communicated and we figured it out. But it got a little dicey there for a bit.

SPEAKER_01

You know, we had people on lease options, and in that scenario, they're fighting really hard to do everything they can to make the payments because they basically committed themselves mentally, emotionally, and financially to buying this property from us eventually. And they put some money in, they have some skin in the game. So those were wonderful people to work with. Yeah, they were being honest, they were doing whatever they could to work with whatever program was made available and get you involved in that quickly. So that was wonderful. I mean, look, Section 8, people can say whatever they want around the country. A friend of mine here jokes Section 8 never late, but in that time, yes, it was like a 90-day arrears, but you got all of your money. Yep. So, in those sense, in that sense, it does make sense to have some balance in your portfolio to help you, God forbid, something crazy were to happen out there. When something crazy was enough minimum cash flow. Yes. Also, I can't stress enough, especially to the younger players, regardless of your chronological age, if you've been in the real estate games for one, two, three years, you're young, right? Whether you're 50 years old or 22, doesn't matter. Understanding the concepts of relationship capital. So when you have a problem that feels unsurmountable, you either have an avenue you can go speak to about it, get some help with perspective, how to deal with it, and if you really, really need it, maybe some financial help for a short period of time on some of your properties. Yep. You you can't just do that out of the blue just because everyone all of a sudden has a problem. Right. You have to be establishing that all the time.

SPEAKER_00

Yep. Indeed. So um, Joel, you know, one of the things that I'm I wanted to mention during this this conversation and haven't gotten to yet, so I'm gonna force it in is your training program. Um, you know, one of the things that I really respect about how you approach it is uh your uh your courses um are designed to help people get started without breaking the bank. One of the things that I am it makes me crazy when I run into somebody at a local, you know, our local CT RIA meeting or uh, you know, a meetup that I'm at, and you know, they say, hey, I just spent, you know, 10 X tens of thousands of dollars on uh you know ABC training and and I feel like I'm ready. And I'm like, that was your down payment. What are you doing? Right. I agree a hundred percent. And and you know, because here's the thing, I and I always joke about it, but I'm I'm I'm sincere and I know you are as well. Uh I'm a cheap date. You know, the fact is that if you buy me a cup of coffee, or hell, I'll even buy the coffee. I will tell you everything I know about the questions that you have. If you want to get into flipping, let's talk. You want to get into wholesaling, happy to do it. You want to get into rentals, I can spend days talking about that, and I'm happy to do it.

SPEAKER_01

I feel like a lot of people in the industry, to your point, are very willing to share their knowledge for free. Yeah. You, as the person who wants to gain that knowledge, need to show up prepared and serious, and then the person will share.

unknown

Yep.

SPEAKER_01

But if you know, sometimes you're at an event and somebody comes to you with some like really flippant thing, they're like, you know, why don't you like go talk to someone else? Yeah, it'll be the last conversation we have, and that's okay. But here, you know, two, three people are standing there asking you some serious questions, they're helping each other with the questions, the questions are building towards something. Hey, I'll stand there all day and help you. I want to see people be successful. Eventually, hopefully, if it works out, one day you're gonna have some of my money in your hand. I want you to be successful. Absolutely. Right? So it's in my best interest to take care of that. So, to your point, you know, I I travel around the country a lot, get to participate in different areas and in different groups and different, you know, events, I guess, lack of a term. Look, some of the people are fantastic salespeople. I mean, people can see what I look like, they can hear what I talk like, see how I'm dressed. I'm a very regular guy. So, to me, the most important thing is to help people with knowledge and then help them build perspective so they can be confident and comfortable to go execute. Because knowledge without execution, you know, it's great, but you know, you're not really doing anything. So we wanted to make it simple. Look, we lend money for a career/slash living. We're also an investor ourselves. So I know what it feels like to be on both sides. We wanted to help you understand the lending process so you're not overwhelmed and maybe save a few bucks on how it works by asking the right questions. But also, we wanted to give you a lot of knowledge for a low price. So we built an eight-module course. The modules are like 99 bucks a shot, and you can buy them all. You can buy the two or three of the subject lines that really feel like, hey, you know, that's what I wanted to really learn about and spend$99. If you go through that and you really feel that something was not fair or wrong or you were misled, you reach back to us, we'll be happy to give you back the$99. We wanted to, to your point, help people, enable them to get started at a very low ticket price. I mean, it's crazy. You're gonna go spend some of these national guys$35,000 out of the shoot. And your point is absolute. You just gave up your first down payment. Like that's insane. It doesn't make any sense. Yeah, right? Because at the end of the day, if you buy it and you learn from it, that's great, but they're not there to help you with the day-to-day after. So spend a thousand, keep some money you know, in your pocket and your hip so you can deal with the day-to-day. Right. Right? Today we're dealing with a water leak outside, exterior water leak, going to a main, trying to figure that out so we can put a house on the market in Alabama. The contractor's there, we're going back and forth with FaceTime, trying to figure out why the hell the meter's spinning so fast. Right? That's gonna be money. I'm gonna lose a thousand bucks. Right? I'm gonna have the guy there for four hours. It's Alabama, so the labor costs are less, but four hours, some material, somebody's going back and forth to Home Depot, right? Right? We're gonna buy two parts because we've got to make sure which one works. I'm sure one will never get returned that we don't use. That'll go to some other job site. And by the time I look down, it's a thousand dollars, right? I want it to be 500, but I'm a realist.

SPEAKER_00

Yeah.

SPEAKER_01

So, you know, that's part of learning, that's part of your experience, your tool bag, your tuition, all those good, cute words, but it's real. Yep. I wanted to keep it at a low cost. I feel very fortunate that I got to make a comeback from the 08 to 10 debacle. We're sitting here. We have the opportunity to work with and help people from all over the country. When you watch people grow and you're a little piece of that, it's like the greatest feeling in the world. Some people 100%. Somebody call you back, I'm on my fourth property this year. Wow, you know, that's cool. What'd you do? Show me pictures, and you know, I before and afters, they show you what they did, they show you pictures of the problems. Those are the best pictures, by the way. Yep. Like the sewer pipe blew up. Oh my god, I'd never experienced that before. I can't believe how bad that stuff is to step in. But now you know how to do it. Right. Now you know what to look for next time before you purchase. Right. When you don't want to spend the money on the camera down the pipe, you know, exactly.

SPEAKER_00

Yeah, that that uh 280 bucks you spend to have a camera down your sewer pipe. Yeah, you will you will spend it after the first time that one one cracks on you.

SPEAKER_01

Exactly.

SPEAKER_00

So uh so Joel, let's move on to the final five. Um I'm curious about, you know, obviously you have you have uh learned quite a bit over the over your uh very short career. Um I know you're a young man. Uh and um and uh you know I'm curious about um you know when when people succeed, you know, it it and they still get out of bed and go to work on Monday morning. It's rarely about money, right? At some point, everything's taken care of, right? So to me that's purpose. And I'm I'm curious, you know, when you uh when you're waking up on Sunday or Saturday, I'm sorry, excuse me, Monday morning, and uh, you know, you're drinking your coffee or your tea or your water or however you get going, uh, you know, what gets you out of bed? What it what gets you fired up to go into the office?

SPEAKER_01

I mean, truthfully for me, it may sound corny to some people, but I I really like and enjoy the opportunity to help people. Um I feel very, very fortunate. I was very down and out uh during that time period. I lost a lot of money. I lost 4.2 million dollars. It took me a long time to be able to say that out loud. And it was never a guarantee that I'd ever be able to make a comeback. And as that started to happen and the markets just kept progressing, you know, I felt like it was sort of my responsibility to help other people. And I honestly always was a little bit shy or overwhelmed by it because you know, to come out socially and talk about problems and you know, not have you know, have I like to joke I have a face made for radio, haha, but me too. You know, you don't you don't get this pretty without taking a few punches.

unknown

Right.

SPEAKER_01

I was surprised how well people react to it. It was in my head, one of the biggest problems people have is their own thoughts. It wasn't what other people were thinking, it was what I was thinking. Yep. And during COVID, we started to do the Zoom meetings, and now everybody was in this scrunchy box, and people didn't have their makeup on, they didn't look perfect. All of a sudden I started to feel better. Like, wait a minute, I'm a lot like all those people. Yep. And it made me more comfortable to just come out, be totally myself. Uh, I was rolling through one of these, and the woman about 40 minutes into it really getting along well, and she asked me to talk about my biggest loss ever, and I had never discussed it publicly. And I talked about it. And I have to be honest, we finished, I was in shock. I didn't know what would happen, and people were calling me to connect, like they thought it was awesome. I thought I'd be mortified and horrific, and no one would ever talk to me again. And I walked around carrying that. So helping people gain perspective on things, I think is crucial. And not enough people really can break things down to simple basic elements to help them. So I like to spend a lot of time doing that for people.

SPEAKER_00

I I think that's amazing. And you know, I I I fundamentally believe we learn way more from our mistakes than we do our successes. And so uh, you know, it and given that, you know, my my list of mistakes is as long as my left arm. And uh, you know, and I'm way smarter today than I was when I first started out. And it has nothing to do with you know, the things that I've been blessed with or the successes that I've had. It's all the screw-ups. And I my list is super long. Um, and you know, it's funny when I meet with people, that's almost all the things we talk about is hey, I made this mistake, here's why I made it, here's what it looked like, here's why I thought it was attractive, and here's why it wasn't attractive. And you know, I had this mentor, his name was is uh Mike Gonerman. And uh was a CFO of a company I used to work for. And and I would sit with him and he would, you know, we would talk about uh at that point I had a consulting firm and he he he he would very graciously have breakfast with me like once a month. Um and uh I would you know spend about 10 minutes explaining how I was con I was in my early 30s conquering the world and here are all the amazing things that me and my team are doing, and then he'd spend 45 minutes talking about the 19 things I was doing to screw it up and how to fix it. And I'll tell you, man, that was also that was invaluable. So to have someone you know in your life like you or me or somebody else that is vulnerable and you know willing to talk about the things that um you know with the decisions we'd love to have back, man, that's A, it's incredibly generous of you to do that. And B, it's it's also incredibly valuable, which is probably why the people responded to you the way they did.

SPEAKER_01

I think you have that opportunity that you just mentioned where the gentleman was helping you understand the steps that he would offer, take, and implement to change or solve. That's crucial. Because normal people don't think that way. No. Once you've been through some wars, you begin to think that way. And helping people see that, you can almost see the light bulbs go off sometimes when you're talking to an audience and you throw something out and you kind of like you could see the lost look, and then you start to talk about how you solved it and the two different options you had and why you chose one versus another, and what you do. Like, yeah, you can see people like shaking their head. That makes sense. Yeah, yeah, yeah. That's good. To me, that's that's the magic. Like you're connecting with people and you're giving them something to walk away with, a real playlist, right? That they can execute upon. And then, you know, what you were doing that day was really worthwhile. That's the fun part to me.

SPEAKER_00

Yeah. So so tell me about you know, folks, you and you you had talked about surrounding yourself with with people that are you know are gonna help you along the way. You know, it's the old zigziglo thing, right? If if you help enough people get along, you know, achieve what they're looking to achieve eventually, they'll turn around and help you get what you want to achieve, right? And so I'm curious about the best advice you've ever gotten and who gave it to you.

SPEAKER_01

So in my book, there's three friends in the front forward that I wrote about to say thank you. Those were the three people that still believed in me when everything fell apart. I had a hundred best friends in 2007 and I had three in 2008. Right. This is one of the three in particular. He is a very straight, exceptionally straightforward guy who will definitely put his foot on your neck. I I went to spin class one time and I posted the picture. I got an immediate phone call. What are you doing? You're an imbecile. Post that picture five years from now when you've gone three times a week, every week for five years. Shut up, go back to work, be quiet, be humble, and be stupid enough to just be consistent as hell. And that's what Anthony told me. And uh it took him a while to bang that into my head, but since he did, it's honestly worked out tremendously well. And the hardest thing for any of us, I believe, is self-discipline.

unknown

Yeah.

SPEAKER_01

But once you start to get there and the pendulum changes, it actually makes everything easier. It just took me a number of years to buy into it. That's the truth. But Anthony was instrumental in that regard, and he's still a great friend. I just, to your point, I just had breakfast with him last Sunday, and we're still going over things, just making sure, you know, let's reinforce, let's reinforce what we do differently in the last month, you know, what's coming up. I I love sitting now and talking to him. He's an experienced guy. Uh, he's been lending his own money for 20 years, and he doesn't have institutional funds. They're really his dollars, right? Thus, it changes the dynamic tremendously. So a little more focused, right? Yeah, he's very astute. So it's very helpful.

SPEAKER_00

Yeah, that's wonderful. It's it's a it's amazing. You know, I I was telling somebody not that long ago, I was like, hey, look, I don't need cheerleaders, right? I've got, you know, if if I want a cheerleader, I'll go breakfast with my mom. She thinks I'm awesome, right? Um, and and I and I'm I adore the woman, and you know, I'm grateful for for all the time I get to spend with her. But the yeah, you know, what I want in business is somebody that's gonna hit me between the eyes with the truth, right? Just feedback.

SPEAKER_01

And right when it's going pretty well, it's easy to get lost and it's going pretty well, and you don't see the like the chinks in the armor starting to happen. So if you have you know one, two, three people, probably if you're lucky, you have three, maybe a not too many people have four, but if you have three and they're honest, not to hurt you, no, but to truly make the evaluation of what's happening and you respect them, so you can shut up and listen, and then go in your car, go to Dunkin' Donuts or Starbucks, wherever, just think about what they're telling you, and then go start to, hey, wait a minute, I gotta pay attention to this. Let me just see. Because you know what? You're kind of right. I need to make that slight adjustment, and that'll get me right back to that midpoint where I want to be again, so I can keep moving forward in a nice direct line. And those people are invaluable in your life, right? And that's not about money, that's about earned mutual respect. They're on your side, they care about you.

unknown

Right.

SPEAKER_01

And I I have a guardian, I'm a guardian to a young man who was a basketball player and he was good. And he get, oh, the coach is really on me. I'd say, dude, when the coach stops, that's when you know you reached your maximum potential, and now you have the problem. When they're in your grill, they believe you have more to give. And they're just trying to help you see the ways to bring it out. Right. So you should cherish that and nourish it and pay attention to it and go execute because that's like that that's like the good stuff, not the bad stuff. I know it sounds bad out loud, but it's not.

SPEAKER_00

It's the opposite. Yeah, when the coach ignores you, that that's a problem, right? That that you're done. That's a way to do it. When they're in your grill, that's that's good, that's all good stuff. Pay attention. Um, so uh Joel, I'm curious about uh how you take in information. Like what's the what's the book you're reading these days and and who wrote it?

SPEAKER_01

So I'm an old soul. I I actually like to buy the books, I physically read them all. I I read pretty much every day. So I go through probably 30 to 35 books a year. Wow. Um, I I really enjoy. Right now, I'm reading a Dan Sullivan. Uh actually, this one is is Dan Martell.

unknown

Okay.

SPEAKER_01

So how to buy back your time. Right. So I'm reading that one right now and trying to reinforce the concepts of getting rid of some of the low lying stuff that bogs down your day. And yeah. I know it sounds so obvious when you're reading it, but you have to like make notes in your hand and on your own.

SPEAKER_00

You know, it's funny. That's one of the books, and actually f I follow them on YouTube as well. You know, it's uh it's that's one of those books that I I may not go back and read the entire thing, but I definitely go back and read, you know, key chapters along the way because you forget, right? You you start to do stuff and and a lot and sometimes it gets built into your daily uh uh regime regimen, but sometimes it doesn't. Sometimes you forget to do stuff and you're like, oh, I used to do that. Why don't I do that anymore? Right?

SPEAKER_01

I'll underline or take notes on my phone and I'll go back and read that. Yeah, I'm an active reader as well. You know, I'll do that. I I won't go back and read the whole book. That's I would be lying to people if I said that.

unknown

Right.

SPEAKER_01

But you know, like the 30-ish pages of underlining, I will go back through those and you know, each year try to pick up two or three things from four or five different people. That's one per month. Yeah, it's doable to implement one thing a month, right? That that's not overwhelming, you're not stripping your life apart all at once, which obviously creates chaos. But one thing a month, and you look down where you are month three, then six, then twelve, it can be really, really different.

SPEAKER_00

Right on. So um, Joel, I want you to tell me how you define success in your life. I mean, the biggest thing, honestly, is having freedom.

SPEAKER_01

Right? To be able to do things you want to do when you want to do them. I I thought one of the coolest things, I spoke to a friend recently, and it was a Tuesday afternoon, and you're on the phone with them and you could hear noises, they were kind of not an office-related noises. I'm like, where the hell are you? It's like, well, I'm actually out in the woods walking with my wife. Like, what the hell did you pick up the phone for? But anyway, that's a different issue. Right. Because you're in trouble. So it was like 1:30 on a Tuesday afternoon. Yeah. To me, that's the ultimate. When you have your life organized in that manner, both emotionally, mentally, and financially, and you can go do those types of things, you're in charge. You're the coolest person.

SPEAKER_00

Yep.

SPEAKER_01

You know, we we always talk about that in the in the room in the office because a lot of the people in their 20s here. And, you know, I always give them that high school example when there was this cool guy who seemed to have the world on a string or whatever the right cliche is, right? But that guy was cool for two weeks or a month in high school. And you want to be the coolest guy from 90 minus 30, those 60 years. Yeah. Getting your life organized, and yes, it might not be that cool at that moment. You might not have a$180,000 car. Maybe you have a$40,000 car or a$30,000 car, whatever. But then investing that money and starting an automatic savings plan, even though it's boring, but you're going to end up being that coolest person. And you'd be surprised what you can attain when you're the coolest person for the right reasons, right? Changes everything. So we spend a lot of time. I'm I'm annoying. I'm like the dad here. You know, we have you know 10, 11, 20 somethings and some other people. But to those people, I make sure I'm annoying. Even if it's$300 a month or$500, whatever it is, I'm torturing them to put it away into something that can be income-producing.

SPEAKER_00

My nieces and nephews and my own two daughters, they roll their eyes every time they see me coming around the corner. Same thing. Yeah, I know it's coming, but oh my God. All right.

SPEAKER_01

It's the right food for the soul.

SPEAKER_00

Yep. Um, it's the advice I wish I'd gotten, to be honest. Me too. Uh so um, when not talking about real estate, what do you like to do? Oh, I'm a basketball junkie.

SPEAKER_01

Oh, I had I had uh I had a really interesting three years. My youngest son went to a private school, and when he was graduating, I was kind of out of kids. I it was my I had five natural kids. I'm like, what am I gonna do? I've been a dad for so long, picking up, dropping off. And there was this young man who had just transferred into school. His family lived 100 miles away, and I asked if he wanted some help with his recruiting, with schoolwork, and just general, like to have a friend, you know, to support him. So that worked out. And he was an AAU level player, so I got to travel the country to all the AAU events. Uh, people that you and I would have thought were the coolest guys on television, they're in our gyms recruiting people. We had two kids who were ranked 10th and 11th in America. So our junior and senior year, we played on national TV on Martin Luther King Day from the Hall of Fame. So we had a national type of uh schedule, and a lot of those kids are in the NBA now, about 16, 17 of them that we played against. So it was really cool just to get to follow them, and once in a while, like you're in an airport, someone goes, Hey, Mr. Kraut, you know. So that like make me feel good, like a kid remembering me. Wow, that's cool. That was a big shot, but a hundred million dollar contract, and he still remembered me. So that's awesome. That's been a lot of fun for me, and just honestly just watching my own kids do and grow, and it's pretty cool. Um, seriously, that's like the best thing I've ever done.

SPEAKER_00

So I I can only imagine. Um, so Joel, if somebody wants to learn more about you or your business, uh, what's the best way to do that?

SPEAKER_01

The easiest place to go is to burr.com. So b4rs.com. We don't use bots to get back to you, we actually use people, and I'm one of them. So I really work and I really respond, talk to people all day, every day. It's what I like to do. It's kind of the fun part of the business.

SPEAKER_00

Yeah.

SPEAKER_01

Um that that's the easiest place. And then we're on the road a lot, probably two times a month. We're out somewhere. I mean, being with the people and interacting with them, that's the fun part of the whole industry and the business to me. Indeed.

SPEAKER_00

Yeah, it is a team sport, and it's a whole lot of fun to meet people, right? Absolutely. All right. Well, hey, Joel. Um, Joel, thank you so much for joining us. I've really enjoyed this conversation. Yes. And uh, I wish you nothing but continued success. So thank you.

SPEAKER_01

Thank you very much, Ed. Thanks again for having us on. Yeah, a lot of fun. It's great. I'll see you in Connecticut at some point, I'm sure. We're in good to be good. Maybe at a basketball court, because I'm a college basketball junkie. So me too. I that to me, that's my favorite. Because I remember standing next to Danny Hurley before he was Danny Hurley. Like Coach Hurley, the senior, coached us in practice a few times. Oh, wow. It was insane. Like people were like backing off, they didn't know what to do. He threw a ball at somebody back when you were allowed to do that. The whole gym went silent. Yeah. And you know, I'm talking about kids who are 6'9, 240, shut up, didn't move, didn't know what was coming next. Here's this old guy, right? He's got the white hair, and but when he barked, man, wow, he'd commanding presence. Yeah, and even his own sons just shut up. You know, it was crazy. So that was interesting to be around, that's for sure. Very cool. I love that. So I mean, yes. And one of my kids went to Duke, he went to Duke Law. So, you know, he's been the Cameron crazy. He's bunked out for three days to get the tickets, and so we're fans, and we love that stuff. Fantastic.

SPEAKER_00

Well, uh, we'll talk about that offline. But thanks again. Thank you. All right, be welcome. Bye bye, Navy.

Head Shot

Ed Mathews

Host