Buying 120 Homes While Balancing A W2 With David Vernich

David Vernich: [0:00] My 45 year old wake up call. I had educated myself even past the Carleton Sheep's course. And then the third thing that was happening, this was 2007. And as a banker, I knew that there was going to be a once in a lifetime fire sale on real estate, a la The Big Short, if you've watched that movie.

Dan Austin: [0:19] Hell, yeah.

David Vernich: [0:20] So I knew it was gonna come. I wasn't the smart guy who bet against Yeah. The collapse of the entire financial system and made a billion dollars, but I was smart enough to say there's going to be a fire sale. It's now or never.

Speaker 3: [0:33] Welcome to the collecting keys real estate investing podcast with your host, Mike DeHaan and Dan Austin From wins, losses, horror stories, and tactics for optimizing your business, Mike and Dan take a real uncensored deep dive into the ins and outs of running a full time real estate investment and wholesaling business.

Mike DeHaan: [0:55] On this episode of the collecting keys podcast, we have David Vernich, who is the author of middle class to millionaire. And he has, like, I don't know, man. Like, if you look at everyone that says their w two job is the reason that they're unable to start investing, he is the antithesis of that. Because this dude has grown so unbelievably well, has absolutely crushed it. And he did that, like, kind of a I would say, like an older age, like, really that old, but he started messing when he was 45. Now he's 60. And his the rest of his life is gonna look so different because of what he did.

Dan Austin: [1:30] Yeah. He completely changed the trajectory of his life and his four kids lives because, like he said, he's getting them into real estate, and that they are going to be the benefactors of his, right now, 119 house portfolio, which is legit. Like, he's great. The thing I like about him the most is that he doesn't swing a hammer, he doesn't do anything, he literally just connects people. He connects financing to people willing to do the sweat equity piece, and then retains a portion of it. It's like a I like I quoted in the podcast, it's like a mini syndication, right, for each property. Yeah. It's really cool the way he's doing it. Very unique in my Yeah.

Mike DeHaan: [2:02] Exactly. And if you, like, listen to the end too, he even talks about how you can sort of find that different niche depending on whatever you're doing. And he didn't even try to, like, reinvent the wheel or do anything crazy. He literally said, this is my basic skill set, and sort of have the epiphany of like, this is how I can use this, you know, this ability to make connections and know people to start getting together with all these people and, you know, build a really large portfolio over a relatively short period of time.

Dan Austin: [2:30] With partners, which I love.

Mike DeHaan: [2:31] With school. With partners. Exactly. So anyways, guys, go ahead and enjoy the show. If you do enjoy it, please go subscribe to this podcast and leave us a five star review wherever you listen to your podcast and share it with anyone who might find this interesting. Aside from that, you can follow us on Instagram. I'm at mike underscore invest, and as at investor man Dan. And you can if you wanna learn how to invest like Dan and I do, where we buy discounted properties, and you can be just like David, but buy things at even bigger discounts than he has, you should go and check out the instantinvestorprogram.com. Schedule a call with one of us. And we'd love to chat with you and see if you'd be a good fit for our program. So thanks so much, guys, and enjoy the show. Yeah. What's going on, guys? On this episode of the Collecting Keys Real Estate Investing Podcast, we have David Vernich, who is the author of Middle Class to Millionaire. And he has cracked the code on how exactly to be a real estate investor without having to sacrifice your soul and all of your time to do so. So David, thanks for coming on the show. We appreciate having you.

David Vernich: [3:33] Hey, guys. Thanks a lot for having me. It's gonna be fun.

Dan Austin: [3:35] Yeah. Yeah. Absolutely.

Mike DeHaan: [3:37] Yeah. So first off, I want to just start off talking about, like, right off the bat, what you sort of told us right before we hopped on to this recording is, you kind of like, when you first started investing, I feel like you were or so many of our listeners are and where so many people are in general, when they sort of start to have an interest in investing where you were 45. Working for a bank, you had four kids, your wife was a stay at home mom. And that was the point where you decided that you wanted to pursue this. And I feel like that is literally the most difficult place to be when you make that decision. So what's up with that, man? Like, like, how how did that even come together? And how are you able to be successful from that position?

David Vernich: [4:18] Well, success is one of those things where it's nice to have some pressure to make you successful, whether you want to be or not. And the pressure I had, and I used the analogy of four quarters in a football game, instead of I was at the halftime, so I had to make some halftime adjustments. So I look at a person's working career being forty years, you know, from age 25 roughly to age 65. So there you got four quarters, and I was at 45. There, I was going into the tunnel, running with my coach saying, okay, I think I did pretty good so that first half, but I don't know what the score is. Let me kinda tabulate my score. And so I pulled out my four zero one k balance, and I put up a spreadsheet, and I started doing some projections. And I'm like, oh, crap. If this is where I'm at at halftime, I am in deep, deep trouble. In the book, I said to this myself, you know, I'm gonna have to really cut my standard of living in retirement if I don't do something differently. In fact, I'm gonna have to do what Chris Farley did on Saturday Night Live, live in a van down by the river, you know, eating government subsidized cheese.

Mike DeHaan: [5:18] Hey, hey, to be fair now, as a millennial, I feel attacked, because there are many millennials where that is the new life goal.

Dan Austin: [5:24] I love that.

Mike DeHaan: [5:25] You know, you put your Instagram tag on the back of the van, you know, you go and you park in random camping ground parking lots and have your business. That's not a real thing. Think it is.

David Vernich: [5:34] Yeah. But are you motivational speakers? That's the question.

Mike DeHaan: [5:37] Yeah. That's true. Yeah. Yeah. Exactly. Yeah. Yeah. God. Motivational for who? I don't know.

David Vernich: [5:42] So so as I was looking at my looking at the true numbers and and doing a lot of reading about personal finance and being a banker, I just said, I'm not gonna stop doing what I'm doing. So I was saving for retirement diligently, cutting my expenses, doing all the right things. It just wasn't working. And primarily, it wasn't working because I was making, you know, $80,000 a year, and I had four sons to put through college, and my wife wasn't working. So it's just there wasn't a ton of income after even when you started saving what you could afford to save. So when I I did that little, shock therapy on my numbers, and then I said, you know what? The reason I got into banking wasn't to be a banker. It was to run away from my first job out of college that I hated, actually. So I kinda got into banking and then said, well, I'll park myself here for a little while because I can be exposed to all these different businesses because I like to run a business one day. And essentially, after I got to know all these business owners on a one on one basis, each one of them told me the good, the bad, and the ugly about running your own business. And I heard so many bad stories. I basically said, maybe I should just stay and be a banker. But when that forty five year old reality check hit me, I said, okay. Putting a gun to my head, if I had to choose somebody to swap places with, who would it be? And across the board, I could only come up with one answer.

David Vernich: [7:03] It was the real estate investors I had lent money to. These guys were actually retiring much earlier, vacationing, enjoying life, and I'm like, that's what I need to do as well. However, there was one glaring problem, and that is I hate everything having to do with real estate.

Mike DeHaan: [7:23] Yeah. Right. Yeah. Well, I mean, I'm glad that you chose a reasonable person to try and emulate because if I do that same exercise, I'd probably have picked the rock. You know? And I don't know if I can necessarily hit that. That's kind of unrealistic expectations there.

David Vernich: [7:35] So my wife is an interior designer now, and every now and then, she'll ask me to do something like, would you hammer this painting into the wall for me? And, you know, so I can hang this painting. And I'm like, honey, please, I beg you. Let me use my favorite tool in this tool belt.

Mike DeHaan: [7:50] It's called a checkbook.

David Vernich: [7:51] Let me just pay someone to do this correctly because I guarantee you, I will put six holes in the wall. I'll be cussing like a sailor. You have to pay someone more money to come fix what I've destroyed. Just let them do it. You know? So I don't know anything about handyman work. I don't enjoy any handyman work. I don't wanna even learn how to do handyman work. So, basically, I don't even wanna be around the contractors who know the handiwork. So I had all these hangups about it, plus the fact that it's like I was a banker and ten years prior to my age 45, I actually was watching the Carlton Sheets infomercials. I don't know if either one of you remember those.

Mike DeHaan: [8:29] Oh, gosh. I know who

Dan Austin: [8:30] it is. Yeah.

David Vernich: [8:32] I mean, this was running, like, twenty four seven, and I was like, man, I gotta get that. That sounds so cool. And when I got them, I was 35 at the time. I got them. Kids were really young at that point. And when I put the first tape in, I said, well, you, you know, you put your first house on a credit card. And I was like, what? There was a banker, and I was like, what you just said was sacrilege, and, you know, I'm not that's blasphemy. So I sent it back. I sent that course back, and it took me reading, rich dad, poor dad to understand the difference between good debt and bad debt to start, like, motivating me to say, okay. Let me I wasn't educated enough when I got that first introduction to real estate investing.

Mike DeHaan: [9:09] Yeah. Fascinating. That's some of those old, I guess, like, and those sort of things, they're so it's so similar but different than how stuff's done now. Yeah, Carlton Sheets. I've seen those ones are like, you guys ever see David Vu? He was like a big real estate investor guy. Have you seen those ones? Dan? So funny. He's like, he was this Asian guy, super strong accent. And his whole thing was like, I used to be poor. Now look at me, beautiful women. And he would just be like on a boat. But like, which is funny because people make fun of that. But that's not any different than what people do on Instagram now. It's just a different media.

Dan Austin: [9:42] It's the exact same thing. Yeah, absolutely.

Mike DeHaan: [9:44] Right. Even talking about buying houses with credit actually just did this Instagram video yesterday, kind of ranting, because the new current thing I've seen everywhere recently is them people saying, start an LLC, go get a line of credit for your new business, right, you can get one up to $50,000 then just start another LLC and go to a different bank and get another line of credit. And you do that five times and you can have $250,000 to go and start flipping houses. And it's like, that is just as risky, if not more, than going and putting on a credit card.

Dan Austin: [10:14] I'm pretty sure the banker at you, David, has something to say about that. Maybe illegal.

Mike DeHaan: [10:18] I don't know.

Dan Austin: [10:19] What's

Mike DeHaan: [10:19] wrong Yeah. With

David Vernich: [10:21] It doesn't take much time for a banker to come up with if you've been in banking for thirty plus years like I have, you realize real quickly I mean, I can talk to somebody on the phone and probably tell you within three minutes if I can extend credit to them. Yeah. You just have the sixth sense about things, and you just ask a few questions, and the answers are so far wrong, you're like, we're done.

Dan Austin: [10:42] Yeah. Exactly.

David Vernich: [10:44] I just need to wind this call down a little bit real quick.

Mike DeHaan: [10:48] Yeah. You're right. It is funny. I worked for a hard money lender for a short period of time, and it was the same thing. Someone would be calling in to get a hard money loan, and you knew within the first thirty seconds on the phone if they were gonna be able to get a loan. So nice. So so you went through the Carlton sheets of, like, you sent them back. You decided that wasn't for you.

Dan Austin: [11:05] Oh, yeah.

Mike DeHaan: [11:05] Went into the David Rams zone and like the more, I guess, traditional sort of thinking of things. And where'd you go from there?

David Vernich: [11:12] Yeah. I was listening to Dave Ramsey at the time, you know, because he's from this area. I'm in Nashville. So Dave Ramsey's here. And so I was listening to Dave and, yeah, debt's evil, blah blah blah. And then the rich dad, poor dad kind of converted me to, wait a second. I'm a banker, and nobody's taught me these basic things like good debt, bad debt, and how can you afford something that I can't afford something. I mean, these were, like, super big mind shifts for me. So, essentially, I did halftime adjustment at 45, kept educating myself about real estate, even though I knew I didn't want to do real estate. And all this time, guess what I was doing? I was trying everything but real estate. So I tried starting a business from scratch. I tried buying a business. I tried Amazon physical products, you know, buying things from China and coming over here and putting on Amazon. And I even tried the dreaded multilevel marketing. Essentially, what happened on each of those cases is none of them worked. Yeah. And so I would still be doing them if they worked. And then it came to, okay, this confluence of several factors. My 45 year old wake up call. I had educated myself even pry past the Carlton Sheep's course. And then the third thing that was happening, this was 2007. And as a banker, I knew that there was going to be a once in a lifetime fire sale on real estate, I'll, the big show out if you've watched that movie. So I knew it was gonna come. I wasn't the smart guy who bet against the collapse of the entire financial system and made a billion dollars, but I was smart enough to say there's going to be a fire sale.

David Vernich: [12:48] It's now or never. So when I decided to do, there was actually a rich dad education event in Nashville to teach you how to flip houses and do real estate. And it was $20,000, which I didn't have, by the way. Yes. And so I slapped down my American Express card for 20 and thought and I was sweating bullets, man. It's just like, this better work because this is a lot of money if this doesn't work. And you had a three day cooling off period where you can get your money back. And while I was driving away day one, I thought to myself, what am I doing? This company is out of Coral Gables, Florida. They know nothing about Nashville, Tennessee. They flew in here with a really flashy speaker who could get everybody to run back of the room with their credit cards. But how is this going to work? And I'm an idiot. I'm a banker, and I literally know people who do this for a living. Let me call them. So I rescinded the $20

Mike DeHaan: [13:49] Take it to him.

David Vernich: [13:50] Save that money.

Mike DeHaan: [13:50] Yeah. Called That's crazy.

David Vernich: [13:52] Called called a guy that I had helped get started with real estate. He just got out of the navy. He was in the he was in a submarine part of the Navy and got out and was really handy. And a good customer of mine said, can you help this guy out? He doesn't have two nickels to rub together, but he's a hard worker, I'll vouch for him. And so I lent him about a $100,000 on a line of credit. That guy turned into a multimillionaire because of it, because he got in really early. So I said, hey. Can we go to lunch? Took him to lunch and quickly I said, hey. This is what I want. Because I was confident he was gonna say yes. I need you to teach me how to do what you do. And he looked at me and stopped for a minute, and he said, no, Dave. Can't do that. And I was like, dumbfounded. What? He said, yeah. I'm a one man show, and I do everything on on my own. You need to meet with these people. And I introduced you to these people. These people have been doing real estate for fourteen years. They were they were in it before I was, and they actually have a class. So I took them out to lunch the next day. And, essentially, their deal was you pay us $6,000, still better than 20. And you come to our house in Nashville for six Saturdays in a row, and then we're gonna do a house together. And that house, you gotta have all the money to do it. We're not giving you any money. So throw you right into the fire. You know?

David Vernich: [15:12] So I thought that's a better deal than what I had just a few days ago. I'm I'm gonna do it. So I wrote a check. I did have $6,000 on a line of credit. So I wrote a check for 6,000 off this credit line, still didn't have much money, And went to the house for six Saturdays. Finally did our project house. We ended up renting it, not selling it. And then they said, okay, Dave. You know how to do this. Go do it. And then I did the time out. I'm not going to do anything that you showed me what to do. And they were like, what? You spent all this time and all this money. You're not gonna do anything? I said, no. Because what I was trying to figure out this whole time was where did I fit in the equation of bringing value. And I broke it down into four steps. You gotta be able to find the house, finance the house, fix the house up, and then either flip the house or fool with the renters. Okay? I didn't wanna do any of them except number two, finance because of the capital that's required. So I said, let me be the guy who brings all the capital to your deals. You get half the deal. You put no money in there, but you do all the work. And they said, well, are you independently wealthy? And I was like, no. Do you know how I got the money for my first house? They said, how? I said, well, I'm a banker. Right?

David Vernich: [16:32] So I could look around and say, okay, who are the bankers that I've known for years? And which one of them do I have no banking relationship with whatsoever, and I know that they have at least $100,000 loan approval authority. Bingo. Here's the guy. So I went to him and said, hey. Can you lend me a $100,000 unsecured? What are you gonna do with the money? We're gonna buy a house. Then what are you gonna do? I'm either gonna flip it or rent it. Well, if you flip it and pay me off, I'm good. If you don't sell it, then I need to put the mortgage out of it. And I said, that's great. That's how I got my first house. I didn't put any of my own money in because I didn't have any.

Mike DeHaan: [17:06] Yeah.

David Vernich: [17:06] So I actually did the Carlton Sheets thing, but I did it with a bank unsecured line of credit versus a credit card at 18%.

Mike DeHaan: [17:12] Yeah. Wow.

Dan Austin: [17:13] Interesting. I love that.

David Vernich: [17:14] I basically pitched them with the idea that, no, I'm not independently wealthy. I had no money, but I do know how to get financing. And I do know people, many people that are doctors, dentists, business owners, w two people that have either money or credit, but don't have the knowledge or the time to do what you guys do. So if we married us as a team and we each get a percentage of the deal, the best thing in the world was the BRRRR method, which I didn't know was called BRRRR back then, but basically finance this person's money out and repeat the process. So today, with all the groups that I'm involved in, we have a 119 properties. Wow.

Mike DeHaan: [17:53] Wow. Good for you. That's super amazing. Yeah. That is incredible. Scale.

Dan Austin: [17:58] David, I am like I'm very impressed. I'm like listening to this because for a few reasons. The first is, you get some balls. I mean, you just dropped 20 g's on not that you wouldn't have learned, because I do actually think there's a lot of successful people that come out of the Rich Dad program, but you you just, you're like, the thing you realize that most people don't, is you have this critical moment where you're like, the numbers just don't work out. Like, I'm okay now, I'm pretty, you're probably living within your means, but when you got to 65, when you wanted to stop working, your life was just not what you wanted. And I think it's all too easy for us to just not, just to keep pushing that out, just keep pushing that out, but hey, that's tomorrow's problem, today's problems are these. So, you recognize that, and then you took action, like immediate action. And so, your education basically ended up costing you base $6, right, that's what you paid, and I love that you did it through action too, and those six people were obviously pretty good people to do that. That's a good deal, in my opinion, to do that for $6, and then show you how to do it, you got through it, and then the best part is, is you realize you didn't wanna do that part of it. It was worth the $6, every bit of it.

Dan Austin: [19:05] It helped you figure out where you wanted to be in the puzzle, that's amazing.

David Vernich: [19:08] Yeah. It's pretty easy when you can't do very if you think what you're a talentless hack like I was, and really the you know, I knew that before going in there. What I didn't realize was that my unique ability on financing was a unique ability. Yeah. I thought everybody could do what I just did. I thought this is a walk in the park. And as a result, when I kind of figured, well, I gotta pitch this idea because I'm kind of the glue that holds the whole thing together. The people that are out doing the work don't have time to find investors if they're busy doing the work. And the investors don't have time to find the people doing the work because they're too busy in their jobs and don't even know it exists. And then I'm the guy that says, hey, a plus b and plus c equals x, you know, 10 x of what we could do individually. And so after I figured that out so my original goal when I didn't understand that was I wanted to buy a house at 45, do all the work, own a 100% of it, a house at 46, do all the work, own a 100% of it. So I was gonna buy 10 over ten years. Okay? And then my thought process was when I'm 65, because I put twenty year loans on these, my first house will be paid off. Okay?

David Vernich: [20:18] And every year after that, a house will be paid off. So I will have 10 paid for houses, cash flowing about a thousand dollars a month, you know, per house with no debt. So that's a $120,000 a year in retirement income. That's what my goal was. When I kinda hit the brakes on that and said, well, this isn't gonna work because I can't even hardly do one without vomiting in my mouth. What am I gonna do now? Well, then I came up with this plan. I said, okay. Now I'm I'm gonna get a small piece. In this case, I took 25% of each house, okay, as an equity partner. 25%. So I need four houses to equal one. But guess what? Instead of me doing all the work and hating every minute of it and being bad at it and taking six months to get this thing, do you know how much time it takes for me to do my part?

Mike DeHaan: [21:03] Nothing.

David Vernich: [21:04] About fifteen minutes.

Mike DeHaan: [21:05] That's a no brainer.

David Vernich: [21:06] My fifteen minutes is like, hey, Dave, we've got a house because I don't have to find them. We need a $100,000 to buy it. We need 20,000 to fix it up. Make sure the wire there is there on Tuesday. We're closing with cash. That's my job.

Dan Austin: [21:19] That's great.

David Vernich: [21:19] And so I just reach out there and say, hey, guys. If you're up, you wanna do a house? Of course, I've got several investors now that are like, when do I get my next one? When do I get my next one? Because their money is not locked in the last one. I've already given it back to them for the most part, so they're anxious to increase their passive income.

Dan Austin: [21:37] Wow. That's a you're really close to buy initial. When I first bought my first rental property, I was cash flowing almost $1,000 a month. And I was like, this is amazing. I'm just gonna do this 10 more times, and I was literally $10,000 a month, $120 a year. I was like, perfect. Didn't turn out that way, because then I realized, kinda to your point, it's actually kinda challenging to do that. For me, it was more market conditions that were more challenging to do that, and then I was like, wait, if I leverage other people and leverage other skills, I could do way more than 10 houses, and so that's kind of the journey, the path I diverted. Yours was a little different, but I do have one question. So, when you're talking about these finances, so you're a banker, so now are you using your banking relationships and finding wealthy people in the community and using them as private money and putting together basically funds for other folks, and then those private investors get a piece of the equity, you get a piece of the equity, and then the people doing the work get equity, how's that work?

David Vernich: [22:31] So we are doing it so that every person that's invested with us is doing a house or houses depending on their financial, and they're actually having a percentage ownership in the house. So they're a full partner owning the house, And essentially, my job is to get them all their investment dollars back as quickly as possible. Not these days, it's hard to get a 100%. In the early days, we were getting them a 100% of their money back and just turning the money as quickly as we could find a house.

Dan Austin: [23:00] Right. So if they come to the table with $100,000 that's what you needed to make this happen, then you can refinance it, and then their profit is an equity stake in that property.

David Vernich: [23:10] Yeah. So they will get once we start doing distributions, they'll start getting their percentage of the cash flow that's distributed as well as the profit if we sell it. Correct.

Mike DeHaan: [23:18] That's great.

Dan Austin: [23:19] That's amazing. That's like and if I misquote this, then please tell me. But you're it's almost like you're doing miniature syndications per single family home or per property. I shouldn't say single family home. I don't I don't know. I can assume that. But kinda like mini syndications, and as part of that, you're getting by connecting all the dots, you're getting a piece of that pie.

David Vernich: [23:36] Yes. Because at the end and we've to, you know, make adjustments for certain individuals who some like, for example, doctors tend not to wanna sign Yeah. Of course. Personal guarantees on loans. And so we'll say, well, we can work that out. We don't have to have you on the note. But if you're not on the note, then you can't be on the title, and you don't get the depreciation. So it's your choice. And then they're like, well, I do want the depreciation because that's really a pretty good tax break. Can I put my wife on there as the LLC owner? And we say, absolutely. So we can we can make it work to get them what they need if they understand that they're giving up something if they can't do something. But generally, all of us are on the loans for these mortgages with these banks because these are not nonrecourse deals. But I had a banker friend of mine who actually left one bank and started another. I said, I'm doing this real estate investing. Can I bring you a few deals? And he said, sure. We do real estate loans. And I gave him my financial statement, my personal financial statement. There's this box called contingent liabilities. Yeah. Basically, it's contingent liabilities, for those who don't know, are not direct liabilities in your name. They don't show up in your credit report. These are loans that you guarantee through because it's the borrower is a partnership or an LLC. So he looked at that and said, hey, Dave.

David Vernich: [24:54] You made a mistake on your contingent liabilities. And I'm like, why why? What does it show? He goes, the show is, like, over $8,000,000. And I said, no. That's correct. Yeah. He he is like, how do you sleep at night? And I said, I sleep extremely well. And I said, you know why? Said, I you're a banker. You understand this. First thing the bank's gonna do is they're gonna foreclose on the property before they try to get your guarantee to be paid off because that's where the asset is. That's the collateral. And I happen to have over 16,000,000 in appraised value securing that eight. So what is my exposure? It's zero.

Dan Austin: [25:35] Right. Yep.

Mike DeHaan: [25:36] Yeah. It's funny. And that's getting out of that, like, Dave Ramsey mentality of, like, all debt is bad too. Exactly. Which is challenging to do for some people. I mean, I just pulled up our portfolio here, and I think as of right now, we have what about $6,000,000 in debt that we personally guarantee across our portfolio. And but I mean, like I said, the total portfolio value is like almost 10. Right? There's plenty of room there for them to come and like claim things that they really needed to. And then Right. Also, because it's all being covered by rent. And I think this is the thing with real estate that a lot of people don't realize is I I use with my opinion with real estate is, if you're gonna do it, you gotta kinda go big. Because if you only have, like, one or two houses, and something goes sideways with one of them, it becomes a liability. You have, what'd you say, a 110 properties. If you have like 10% of those that aren't paying rent, like it sucks, but it's not the end of the world. Yeah. You know, they kinda, like, carries itself, and you're in it for the long haul at that point.

David Vernich: [26:32] Plus, you have partners, so you never 100 a 100% of the loss, you know, even that case. And so to me, it's like you see all these commercials, like investment commercials. We do better when you do better. And then you look at it and say, well, do you do worse when I do worse? I mean, do you actually Exactly. Do you reach in your back pocket and pay me money for that is lost out of my portfolio? And the answer is, well, no. Of course not. Then I was like, well, it's always good when you want heads I win, tails tails you lose. But at the real world is this is an asset, and we all we all have our interests are in total alignment if we all gain when the thing works, and we all have to pay something if it doesn't.

Dan Austin: [27:10] I love that because I tell this to people that are talking about trying to partner or not partner. I'm like, yeah. You limit your upside. Like, you cap your upside a little bit. You're splitting it fifty fifty or 25% or whatever, but you're also limiting your cap and your downside. If if you not doing this deal is because you're worried about the risk and a partner could reduce that risk for you, if you're not gonna do the deal, it's like, just partner up. That's such a better a better thing to do, and then Alright. And like you said, you just realized you needed to buy 40 houses, and instead you bought a 120, like, so.

Mike DeHaan: [27:39] Yeah, right.

Dan Austin: [27:39] So, you're good, you definitely exceeded your goals, but you just, you just had to adjust some of the numbers, and that's what I love about you being a banker, David, is like, I think you get the numbers, you're like, all these are numbers, and we just have to adjust and then manipulate numbers, and do these in the right way to reduce risk, to increase our growth opportunities, and to do something that you can do instead of having to swing a hammer. And on the same topic before we started recording, which I love about this, the idea of partnerships, as you said, you know, at that point in your life, you really couldn't afford to take that risk or afford to make that which would have been like, I paid $20,000 now I'm quitting my job, and I'm all in. Like, that's a huge risk for a lot of you. I'd love kind of to talk about that a little bit too, what you meant by that and, like, how you got over that.

David Vernich: [28:22] Well, the risk was that I would be living in the van down by the river if I didn't do something. And then the other side of the risk is if I did it and it didn't work, which, like I told you before, I always was trying to do things that just didn't work, but I never bet the farm on any one thing. And so this is way more capital intensive than most other things, but you also have an asset that secures it. So for me, the bottom line is if you don't overspend on the purchase and the renovations, you could probably get out with hardly any of a loss or at least break even if you've done the fat part correctly, just the one thing correctly. And so as a banker, I think I really appreciate risk more than the typical person because I see what happens. I've seen people go off the deep end financially. I've seen bankruptcies. I've seen foreclosures. I've seen what people do that were risky that they thought, well, there's no other way to mitigate the risks, so I'm doing this. And to me, it all came down to, I can't screw this up. I really I can't. I just can't. And if the answer is you're gonna flip a coin and either I'm gonna make it or I will lose everything, then I will choose not to flip that coin.

Mike DeHaan: [29:32] Got it. Yep. Yeah. Well, and also to you, sort of adding on to, you know, what the answer to you, you did that in a way that, you know, fit your skill level, fit your risk tolerance, Whereas, like so many people, they get in that same situation, and they give themselves an ultimatum of like, I have to jump off the deep end or this isn't gonna happen. And that's where it gets kind of scary. But you, you know, you found your skill set, you knew your connections, you know, like you said, you sort of built the four F's that you have that you found which one of those fit you and you just sculpted your investing opportunities around that, which I think is really, really impressive and harder to do than most people think. And I think it's because there's, you know, the collaborative nature of that isn't necessarily easy to figure out with people. And then also, too, most people don't necessarily know which of those zones they would be able to fit in themselves. But you, you know, figure that out, and you went after So, I mean, that's that's super awesome.

David Vernich: [30:27] Well, I was just gonna say the funny thing is, you know, looking back, all the ingredients, including the people that I had to I had to do this with, were already in place. I just didn't recognize it. I was doing financing and banking for a living. Every day, I was shaving in the morning, looking at this dude in the mirror that was like, I wanna work as a banker today. Not thinking, can you take those same skills and do real estate investing with it? So all those things were all laid out before me, and I've had them years before I figured it out. And that to me was the one V eight moment where I wanted to smack myself in the head with a brick and say, what is your problem, you moron? Why did you take so long to figure this out? You had literally every piece of the puzzle was there. You just sat there like, duh, I don't know what to do with this.

Mike DeHaan: [31:15] Yeah. Yeah. Exactly. And I think everyone can sort of find that within themselves in the different parts of the real estate process that they really look deep enough. Right? Like, I don't know, let's say you have like a service job, you know, like you're a bartender, or you work in a Nordstrom's or whatever, and you want to get into this, maybe you'd be really good at the sales side, right?

Dan Austin: [31:32] You're good

Mike DeHaan: [31:32] with people, have people on a regular basis. So make that the thing that you bring to the table, become the deal finder. You know, maybe you're an artist, right? Sure, you don't necessarily know anything about how to build houses, to get financing. But can you build a really strong brand and a marketing process around that to find those opportunities? You know, there's a there's always different ways that you can sculpt your skill sets around this business. But I think you sort of have to think outside the box. So that's awesome. So I'd love to pivot over to your book, and hear some more about that and kind of what your goal is with that book and give us a basic rundown about what you talk about in there.

David Vernich: [32:08] Yeah. I I basically have written this book so that if I had a time machine, I would go back twenty years and hit myself in the head with this. Yeah. Yeah. So really what it is is, you know, I feel like once you have figured out something that's really difficult in life and you know that there's a lot of people that have the exact same problem, it's incumbent upon you to go throw a rope back to those people and essentially say, you know, you don't have to find figure this out the hard way. I've already figured it out. Here's what I did. So that's the primary reason I wrote the book. I've got four grown sons that are all slightly getting into real estate in various forms and fashions right now, not as quickly as I'd hoped. I also told all four of my sons, you know, one day, you know, this real estate that I have is going to be passed down to you. It's going to be paid for real estate like an ATM machine spitting out cash. And if you mess this up, I will literally come back from the grave, find you, and murder you.

Mike DeHaan: [33:09] Man, and that and that motivates him?

David Vernich: [33:10] I don't

Mike DeHaan: [33:10] know, man. If my if my dad's like, you're gonna get an an ATM that's printing money, I think that might be a little bit of a demotivator for me. I'm like

David Vernich: [33:20] Well, that's why I want them to do it now. Number one, told them I'm like, like, you'll get this when I'm done with it, but I'm not done with it. You know, my wife and I just took an entire month and went to to Greece.

Mike DeHaan: [33:29] Oh, nice.

David Vernich: [33:30] Because we turned 60, and my plans are to live as long as I can and to enjoy all this. And I want them not to be sitting there like buzzards on a branch waiting I for us to want them to say, you know, you could have this too. Let's just do some real estate together. You know, tag into your dad. And one of my sons so I got all three of them. Three of the sons were really easy to get on board because they I made them play the cash flow game. I I made all four of them play cash flow. But I had one son that was just, he wasn't getting it. And finally, he came to the house one day and I said, so tell me what your hang up is. Why can't you do some real estate? And he said, don't have the money. And I said, okay. Let me ask you this. Would you read a book from Brandon Turner called how to buy real estate with no money little or no money down if I give you the money to buy the book? And he said, well, yeah, but I don't like reading books. I like Audible. And he goes his girlfriend was sitting there, and she said, just he'll listen to the book because he has a drive to into work. And he goes, yeah. I've got credits on my Audible right now. I'll download it right now. Because he doesn't read. He'll he just listens. So essentially, I called him after a while, I said, okay. Did you listen to the book? He goes, yeah.

David Vernich: [34:37] That that guy's voice was annoying, though. I'm like, okay. Let's get past the voice and look at the message. Second thing he said was, yeah. That guy says a lot of the same things that you do, dad.

Mike DeHaan: [34:49] But Yeah. Right.

David Vernich: [34:50] And I'm like, okay. Okay. And I said, well, so tell me, after listening to the book, what's keeping you from doing real estate? He goes, I don't have the money. And I was like, did you just listen to the book? He goes, yeah. And I said, okay. Let me break this down for you. Okay. Let's say we do a house together, and I can find a house for $140,000 all in. Okay? Who do you know that's your father and a banker who can probably get you an 80% loan? Okay. I got 80%. Well, I don't have the 20%. Who do you know that will partner with you in this house $50.50? I will. Okay. So that's let you down 10%. I still don't have that much money, dad. And he looked up. He said, you? And I'm like, ding ding ding ding. If he had said he had no money, I'd say, son, you need to put up some money. You know? Then I'm doing it all for you. You haven't done anything. But I wanted him to say, I can afford to put 2,500, and he had to put that in first. And then I said, I'm gonna sweep all the rents. I'm not gonna give you half of the rent until that other person's rent pays off your down payment. After you have 10% on the house, you'll get that money. And so he's like, wow. That's really cool. And I said, yeah. It's really cool because I showed you the answers to the questions that you had in your mind that you wouldn't ask me even though I wanted you to talk to me about this.

David Vernich: [36:21] I'm not gonna carry you across the finish line, but I definitely want to help you out with this.

Mike DeHaan: [36:26] Yeah. Nice. So, like, it was that your youngest son?

David Vernich: [36:29] No. That was my number two my second oldest son. Yeah. Number two?

Mike DeHaan: [36:32] Oh, really? That's interesting. Usually, I feel like it's the youngest one as always, but Different one, yeah.

David Vernich: [36:38] My oldest son jumped on with both feet. He has he has eight eight rental houses with me.

Mike DeHaan: [36:42] Nice. That's awesome. Oh, great.

David Vernich: [36:43] Very cool.

Mike DeHaan: [36:44] Awesome. So I guess just to rehash, the book is the book that when you got started before, you know, when you're 45, before you bought all these properties that you have now, everything that you wish you would have known back then, and so people can go and check that out and learn everything that you've learned without having to pay $20,000 to go to Rory Kiyosaki's three day course. Where they jump around and have you do chants, you know, and like, get all hyped up, but don't teach you anything actual.

Dan Austin: [37:10] Wow. Let me ask you this. I I don't think we've asked this, David, so, I mean, the whole premise too is of your stories, and you did this while working at w two job, which is amazing. Do you still work at w two, or have you retired yourself early, or where

David Vernich: [37:22] are at in that stage? So I still work my w two job, and everyone gives me crap about this. They're like, how much more money do you need? I'm like, it's not about the money. It's about staying busy. I said, I'm never gonna retire. I don't golf. I don't hunt.

Mike DeHaan: [37:37] I

David Vernich: [37:38] don't fish. I do like to travel, but after about a week, I'm ready to go back to work. And it's not that I'm a workaholic at all. I mean, I like to get to work probably around nine and leave at three. I'm a banker. You know?

Mike DeHaan: [37:49] Yeah. Yeah. Yeah. I have

David Vernich: [37:51] a really cushy, you know, Monday through Friday. I don't work. I've never been a workaholic. I've never worked overtime. I've never been stressed, you know, except when my bank gets bought out, which happens every few years. But bottom line is I'm gonna keep working, and I might retire from my career as a banker at some point, either voluntarily or involuntarily, but doesn't matter because I've built this runway over fifteen years.

Dan Austin: [38:17] Right.

David Vernich: [38:17] And so I've more than replaced my bank income. And so I got the best of both worlds. Everything is just working out so perfectly, and that's what makes me think this can't last much longer.

Dan Austin: [38:28] It's too good to be true, Conan.

David Vernich: [38:30] It's too good to

Mike DeHaan: [38:31] be true. Stop it. Stop the press. Awesome.

Dan Austin: [38:33] That wow. Now, I think that's really valuable, especially for folks out there that are still in their w two. They've either started or they're trying to start that, you know, a, you know, you don't have to necessarily quit your job and still do big things. You can I mean, 120 houses, but b, like, if you like your job, like, there's still opportunity for you to continue to invest in real estate or start investing in real estate? Like, it it's not it doesn't have to be the the linchpin in your process that has to be removed because, I mean, again, 120 properties is pretty, or 119, sorry, I'm rounding up, I'm sure you have a 100, by the end of this call you probably own 120, that's pretty great.

David Vernich: [39:09] I have a 100, number 120 under contract closing next week, yeah, will be 120.

Dan Austin: [39:13] There you go, okay, we'll give you credit for that one. But I do think that's, I just, I think that's really cool, as many of the listeners know, I worked W two jobs still, and I'm kind of at a, I was at a point when we started our business where I couldn't afford to take a mistake, I have two small kids, wife, all that sort of stuff, and so it's like, for me, I have other other goals in life as well, but not taking that risk and then figuring out how to still do things at scale was a big part of my journey, so I can I can really, you know, vibe with what you're saying, David?

David Vernich: [39:40] Yeah, I think it it does resonate with a lot of people, and I do want them to listen to this and basically have hope that if this idiot who stares in the mirror every day doesn't understand that he brings value to the value chain in real estate, everybody has something they could bring. They just have to figure out what lane is theirs, what value they bring, and then fill in the fill in the holes with people that are better than them at those those skills. And man, it becomes so much easier, and it's so easy, and it's so fun. And if I hadn't done this, I would've invented a time machine so I can go back and

Mike DeHaan: [40:13] get myself in the butt.

Dan Austin: [40:15] Well, it's never too late to start, right? Mean, at 45, I mean, that's not like you're super old at 45, but I mean, still, there's a lot of people out there that they've just succumbed. They're 45, I guess I'll work till I'm 65, they're gonna put off that number in their head that doesn't exist, the seven figure, I'll just get $1,200,000 or retire. In reality, it's probably not gonna be that. In reality, it's probably not gonna be enough for you. So, yeah.

David Vernich: [40:39] Yeah. And basically, it comes down to, you know, you can start now or you can start twenty years from now, but you're still gonna take the same amount of time to get this thing scale to scale up. So you always start with one house. And if you start at one house at 26 or one house at '66, you're just on that same trail. You just have lost all those years. You could have started much earlier. Yeah.

Mike DeHaan: [41:01] But it's also now, you know, like Dan said too, it's not too late. I think especially now in the the age of Instagram and social media, you see this all the time. I think these people that are, like, in their late twenties, and they're super bummed out that they're not rich yet. It's like, come on. It's like, you got so much time left. And that's hard to realize when you're that age. I mean, I'm only 31. But, like, when I was getting into my twenties, I was approaching 30, I was like, man, I'm, like, getting old. I'm not worried about it.

Dan Austin: [41:24] But now that I'm 31

Mike DeHaan: [41:25] and we've had some success, I'm like, man, I got tons of time. Time Right. To do stuff. Yep. Right? You do. It's hard for people to to realize that sometimes. So awesome, David. Well, gonna go into our final questions here as we start to wrap up. First off, crowd favorite question. What is your craziest real estate investing story? And this can be a good story. This can be a bad story. This can be whatever you got. Let's hear your craziest story.

David Vernich: [41:51] Well, the craziest house we ever I ever bought with one of my partners, he called me and said, Dave, I need some money for this house, and I'll partner with you on it. And I said, okay. Well, what is it? He told me he goes, unfortunately, I bet you guys haven't had this one. Can tell me if you have. Okay? The guy that lived in the house was a widower, had no kids, no family, passed away, natural causes, and fell on the kitchen floor and had his body had decomposed.

Mike DeHaan: [42:19] Oh. There we go. There we go.

Dan Austin: [42:21] In the kitchen.

David Vernich: [42:22] Yeah. In the kitchen. Linoleum floor. Can actually see the outline of his body.

Mike DeHaan: [42:27] Yeah. We had one like that. It wasn't on the floor. It was in the bed that they had left there. Oh. So we have, like, the body print in the bed. But so they to like run through the the floor and all that sort of stuff too.

David Vernich: [42:41] Well, you know, the body started to decompose and that got cleaned up, as you can see, you know, I get I don't know what happens when your body decomposes. It's probably not a pretty thing, but, you know, it was also in the summertime. So I don't know if the house still had air conditioning, but essentially, it was just that's kind of a scary thing. But when you're demoing the house, it doesn't really matter to you. It's just one of those freaky things where you're like, that that gets burned into your memory when you see that floor.

Mike DeHaan: [43:05] Yeah. Yeah. Absolutely. Was this in Nashville? Yes. So in the state of Tennessee, do you have to disclose if somebody died in the house, or do you guys basically just, like, sweep under the rug?

David Vernich: [43:15] No. You do not have to disclose it, especially if you renovate it. But the we had major, you know, issues on getting title because, you know, it was titled in his name, and we had to go find the guy had to fly out of state to a niece. I think it was a niece that they had found in the title search and doing a name search or whatever. And we were gonna try to buy the house from two people that we found in in out of state. And one agreed. He goes, yeah. I mean, I don't really know him that well, and I wasn't expecting to get anything, but the house was paid for. And, the niece basically slammed the door in his space, and we sent certified letters. Like, literally, what we're trying to do is give you money

Mike DeHaan: [43:55] Okay.

David Vernich: [43:56] If you'll sign this piece of paper. And she's like, I have no interest in this whatsoever and never did. So we couldn't get clear title to the house, which caused the the value of the house to go way down. So we ended up pay buying the other gentleman's portion out and just renovating it and renting the house out.

Mike DeHaan: [44:14] So you just bought the gentleman's portion. Is that were you still on title?

David Vernich: [44:18] No. They switched over. They just said, you will not be able to give someone seller's title until you what is it called? The quiet claim period that takes so many years before that if because they we can show they've been notified. We sent certified letters. They got returned. And then, basically, with that process, we will have title to the house, I think they said three to five years, and then we could do whatever we want with it. But right now, we're renting it, and we got basically, the price of the house got chopped in half because of that.

Mike DeHaan: [44:46] Yeah. Title stuff like that gets weird. That's a big part of what we deal with all the time. We had this lead that we were trying to get for a while, and there was six people on title. Five of them were dead, and the one that was alive was a drug addict. And it was How wonderful. It was very challenging. We couldn't get it done because, like, there was just no way to do it. You know, probate for five separate people, and then the one surviving party is not able to

Dan Austin: [45:15] coherently work with you properly.

Mike DeHaan: [45:17] Yeah. Yeah. So now that that's interesting, though, that you got the quiet title. At least you're holding it long term. Makes perfect sense. So cool. Oh, yeah. I like it. Yeah. Yeah. Imagine at the end of it. Awesome. Alright. So second question, what is the number one piece of advice you would give to someone who is either looking to start their real estate journey or has already started and is looking to take it to the next level?

David Vernich: [45:40] So all I can answer that the only way I can answer that is the way I did it for myself is my number one piece of advice is obviously to get educated through podcasts and books as much as possible, but that's not the end all be all. That's really to get your mindset correctly that this can be done because so many people believe that it can't be done. And if you believe it can't be done, it can't for you. But the truth of the matter is there's lots and lots of people that have done it successfully. And if you don't believe me, go to your local bank, go find a commercial loan officer, and say, do you have anybody that's a successful real estate investor in your portfolio? Yeah. And I bet they have several. So kinda get that mindset to turn over. The next thing is to take action, which you've addressed before. Taking action is the thing that separates the people that, complain about their how hard things are, how difficult things are, or how unfair things are. But the people that take action are not looking for excuses. They're looking for ways to make things work. And if you understand that it can work for you and you'll go out and take action and align yourself with people that have the same goals as you do, you have no choice but to succeed eventually, in my book.

Mike DeHaan: [46:53] Yeah. Absolutely. I mean, it's see everything else, repetitions over time, you know, and if you're intentional about it, you will eventually find success. Awesome. I love it. Cool. So last question, David. Where can people find you and follow you if they wanna do that? And where can they most importantly, where can they find your book, Middle Class to Millionaire?

David Vernich: [47:11] It is on Amazon. So my name is pretty simple from the standpoint that there's nobody else in the entire United States Of America with my name. David, yes. But I actually checked on so LinkedIn is my preferred method. Everybody that has a w two is probably on LinkedIn. I'm still on LinkedIn. I still have my w two, but it's David Vernich, spelled v as in Victor, e r, n as in Nancy, I c h. So just hook me up on LinkedIn and check out the book. And if it resonates with you, just reach out and say hi.

Dan Austin: [47:42] Cool. I love it.

Mike DeHaan: [47:43] I love it. I do. Right on, guys. Well, thanks so much for listening everybody. And if you guys enjoyed the show, please go subscribe and leave us a five star review. And aside from that, anything else from you, Dan, David? Nope. I'm good.

David Vernich: [47:55] We're good. Awesome. Great. Thanks a lot.

Mike DeHaan: [47:57] Well, thanks so much for coming on, David. Thanks for listening everybody. Talk to you guys next week.

Mike DeHaan: [48:00] Thanks for listening, everybody. Please make sure you subscribe and leave us a five star review wherever you listen to your podcast. Also, please make sure you go and you share this with other people within your network. We are really trying to grow this thing, and the best way for us to do so is by you telling other people to come and check us out. You can also follow us on Instagram. I am at Mike underscore invest. Dan is at investor man Dan. You can follow the podcast at collecting keys podcast. And if you wanna learn how to make real money as a real estate investor or you want to grow your already existing real estate investing business, please go and check out instantinvestorprogram.com and book a call with either Dan or myself, and we will see if you'll be a good fit. Thanks for listening everybody, and talk to you next week.

Speaker 3: [48:44] Thanks for listening. Please leave us a review on iTunes or wherever you get your podcasts. And check us out at collectingkeyspodcast.com for tips and guides on starting your own real estate investment and wholesaling business.