Epi 69 - John Papaloni
===

[00:00:00] Ashley: Welcome to the Money Mindset Podcast, where you will find the inspiration and motivation you need to manage your money better so you can stress less and live the life you want. It's Ashley with Budgets Made Easy and another episode of the Money Mindset Podcast. Today, I am really excited to talk to John Papaloni, who is, uh, from Canada, but he's a real estate agent and we are going to dive into getting started with Real Estate Investing. Now I'm in the us, he's in Canada, but the concepts and the, um, overall strategies are the same. And a lot of the things work the same way as well. So, uh, the advice and conversation is still relevant and a little bit about John. I was just on his podcast, uh, recently as well. And, you know, he really has a commitment to his clients that is unmatched in a passion to deliver top value through mastering all the latest technologies and engaging in the most effective marketing campaigns.

[00:01:18] And I will tell you that based on our conversations together, that is so true. You can tell that he really has a passion for helping people, uh, start investing and manage their money better and that quality and those relationships are incredibly important to him. Now before you wanna get started with real estate investing, I would highly encourage you to improve your credit score. Start paying off debt, maybe get rid of all of your high interest debt. For sure. Before you wanna start actually investing in real estate. Now we're not talking about your primary house. We're talking about investing in real estate. Uh, And if you need help with getting started on paying off your debt, then go to budgetsmadeeasy.com/debt for your Free Payoff Debt Starter Kit. And that'll help you really get going on this journey to longer term investing strategies. So here is my interview with John. 

[00:02:22] Hi John. Thank you so much for being with us. 

[00:02:25] John: Well, thank you for having me. 

[00:02:26] Ashley: Absolutely. Now I was recently on your podcast and you were sharing with me that you are, um, a realtor you're into real estate and real estate investing and those types of things. So I thought it'd be fun to bring you on and talk about, you know, how to kind of get into real estate and maybe some things that, uh, people that are just kinda getting started should think about and maybe should do kind of best practices. Uh, but I do wanna clarify that you are in Canada, I'm in the us. So I think the overall concepts and, um, just the general guidelines, things like that'll generally be the same, but just to clarify, like, if there's anything, uh, that may be different in Canada versus the us. And I know we have, I have listeners from all around the world. So just keep that in mind as we're talking that he's in Canada. 

[00:03:16] John: Right, right.

[00:03:18] Ashley: So how did you kind of get into, um, real estate invest? 

[00:03:23] John: Um, well, all this is the thing my parents were landlords. So then, um, when, um, I went through many transitions throughout my career and I didn't know what I wanted to do, but then I thought, cuz my parents were landlords. Why don't I just get my realtors license? And you know what I mean? I, I didn't know what else to do. I had a couple years off cuz I, uh, I, I kind of quit working, uh, And while I was, uh, while my, my dad got ill and, um, then at some point in time, I said, oh, okay, well, the time has passed now. I've kind of gotta get back into the game. So, uh, I got my realtor's license and, um, from there things kind of progressed, right.

[00:04:01] And you know, there's many people out there that, uh, preach on how they should invest and how they should do all kinds of stuff. And, but you ask them about, you know, what, what they're doing and they're renting and you're going, okay, well, wait a minute, buying real estate is the best investment you can make. Yes. But you're renting. Well, I can't get in right now. But then how do you expect others to get in? You know what I mean? It's sort of, kind of contradictory. So I didn't wanna be one of those contradicting contradictory people tend to tell you that real estate's the best investment you can make. And I own zero.

[00:04:37] Right. So it made no sense. I mean, you get into a product that you believe in and if you believe in you should be doing it. 

[00:04:45] Ashley: That makes sense, right? Yeah. That makes absolute sense. And with this market, and I'm, I'm sure Canada's kind of similar to the US right now. Uh, the market, you know, has just been going insane, like it's higher and higher and higher and higher. Now it seems like the, maybe the last week or, you know, month or so. It's kind of starting to stall out and maybe go down a little bit, um, as the economy and the market and everything starts to change. Are you seeing that as well? That like the prices are just insanely high. 

[00:05:14] John: Well this is the way. Yeah, well, this is the thing, right? I mean like a lot of times we think what's happening is just a local market. And normally that is the case. I'll give you an example. In 2008, the States pretty much the housing market tanked, right? I mean, pretty much people were losing their homes left and right in Canada, it wasn't so bad. gotcha. You know what I mean? There was a little bit of a pause, a stall, but it didn't last very long. It lasted a couple months and then we were back to heated. 

[00:05:37] Ashley: Oh, wow. Yeah. That wasn't like that here. For sure. 

[00:05:40] John: No, not at all. Right. So, and, and that's the thing, right? And that's why I, the, I think what's happening now has to happen. We've had such a long period of growth. 

[00:05:51] Ashley: Mm-hmm 

[00:05:52] John: That it's impossible to sustain. Like COVID, uh, exactly. In 2020 we had 26% increase last year we had, uh, 14% or it was like 13.8 or some stupid number like that. So think about it over a two year period. Real estate went up 40%. That is totally not normal.

[00:06:12] Ashley: Yeah. It's not sustainable. I mean, people can't, even, at least in my area, even just renting is insane. Like it's $1300 a month for a one bedroom apartment. It it's craziness. Like who can afford that? I mean, unless, I mean like people that are working low income jobs, you know, that need a place to live. Like they still need a place to live. Like there's nothing to rent around here that they can. 

[00:06:35] John: Yeah, like guess total madness. So I, I don't think it's just a real estate market. That's going to, to, uh, go through this pause or adjustment. I mean, I think that's just one of the things I think we're gonna hit a bit of a recession for a while. Um, and that's just my perspective from what I'm seeing and you never know, cuz the future can change. We don't have a crystal ball. 

[00:06:55] Ashley: Yeah. 

[00:06:55] John: But this is the trend we're heading towards. And, and then which goes to the point of what the whole real estate question from before I've, uh, bought numerous places when they appreciate it. I sold them. I, I started off with condos. Then I dumped the condos to buy houses. You know what I mean? It's sort of like what I tell all my clients to do is that you're not gonna get your single family detached home with the white picket fence on your very first purchase. That's just not gonna happen. It's not realistic in today's society. It's just, the prices are just gone way out. Even with the claw back, the prices are still ridiculous. Right. So right. You have to start somewhere. So I started by practicing what I preach. Start off with a condo, they buy one condo. Then you bought a second condo. Then, you know, I took the two condos, sold them, converted it to a house step and repeat. Right. So, and, and you build up, you know what I mean? Cause, and it's not an overnight thing. There's not something you're gonna do in six months. This conversion that I'm telling you about where I went from condo two condos converted to a house, two condos converted to a house. This is over a seven year period. 

[00:07:57] Ashley: Right. So it's not gonna be, I mean, sometimes people expect or they want things to be like instant and real estate. Isn't that? It's more of a longer term. I mean, not as long term as maybe the stock market, but it it's not. It's not like gambling where, you know, you might make a bunch of money tomorrow. type of thing that that's exactly a marathon instead of a sprint, I guess, is what I'm trying to say. 

[00:08:20] John: Absolutely like the, the thing is with real estate, we have a saying, don't wait to buy real estate. Buy real estate and wait. 

[00:08:28] Ashley: Oh, that's good. 

[00:08:29] John: Right? Yeah. So, and that's the thing, right? Like even now with my own, uh, experiences, like if I were to suggest people start off, like I did, like I said, start off with a condo, wait for it to appreciate when it gives you a big enough of a down payment to move to the next thing, go to a townhouse. If you can't go to a full detached, then we, again, when I repeat go to a house again, I like then go to your detach. Just keep upgrading. Now my suggestion is the home you live in is not a real investment. Right. It is a home you live in, you gotta live somewhere. Yeah. Now the only reason that I encourage buying over renting is because at least when you're paying your mortgage, you're, you know, I think the ratio is like 60, 40. So you're putting 60% of the money that you're paying towards your mortgage goes back into equity. And 40% is interest where if you're paying rent, it's a hundred percent interest. You know what I mean? Cuz it's all gone. It's not yours. 

[00:09:22] Ashley: Exactly. 

[00:09:22] John: You're paying someone else's mortgage. So the idea of your own home isn't cuz it's an investment cuz if you cash out where you're gonna live.

[00:09:30] Ashley: Exactly. 

[00:09:31] John: Right. Exactly. So it's more of the fact that you're just building equity for a future time when you're, you're gonna downsize or going to a retirement home or whatever, or should an emergency happen, at least you're not completely out in the dark. You have something to rely on. 

[00:09:45] Ashley: Exactly. 

[00:09:46] John: So the investment starts on the home that you purchased the second, when you get the rental units. 

[00:09:51] Ashley: That makes total sense. So yeah, the friend, my friends and I, we were talking cuz the housing market here is, has just been crazy. It's actually started to go down. But like I, you know, I'll get the Zillow reports about my house and it's like in like, nobody's gonna pay me that much for my house in this area because we live near the lake and I'm not, I'm not on the lake. Like nobody's gonna pay me that because they could buy a house on the lake for that it's dumb. And then it, you know, we're like, well, where are we gonna live? Cuz then we just have to buy another house in this market and we'll just be at the same place we were like, that makes no sense. So yeah. 

[00:10:24] John: That's exactly what it is. When you live in a, when you live, when you, the only home you have is the one you live in. You're not. You're not cashing out high and buying low. What you're doing is making a lateral move. So the only reason you would leave the home you live in is if you needed to move to a different area, or if you have a two bedroom and, you know, you got another one on the way you need a three bedroom.

[00:10:44] Ashley: Exactly. 

[00:10:44] John: You know what I mean? Like, or you're, uh, got you got an offer, uh, like an employment offer. That's gonna take you to the other side of the, uh, city and you know, it's gonna be too much of a commute, so there's gotta be a purposeful reason to move. Not because you think you're making money. 

[00:10:58] Ashley: Exactly. Yeah. So for those that wanna get started, and maybe they're just a little nervous about the details and like, for me, I get nervous and hesitant about doing it, um, when it comes to dealing with renters and like what if they come in and just damage everything. So can you give us some, maybe some advice about that?

[00:11:19] John: Well, absolutely. Now here is again, depending on where you're starting from right? If you're starting and you just want a second property, then, it's very easy. I mean, like in term, like one thing is always use a realtor because it seems like, okay, what am I paying commissions for? Well, when you're the buyer, you don't pay it. The seller pays it. Um, the second thing is the fact that, uh, there's expertise out there where, um, they're gonna know what to look for and it comes even when it comes to renting, you know, cuz you have to do your due diligence. So you're gonna purchase your property. Um, Whatever it is, whether it's a single family home, whether it's a condo, a townhouse, it doesn't matter.

[00:11:58] You're gonna purchase the place and then you're gonna get it ready to list for a, to rent. And that's why you want to use a rental renter, a real estate agent and not, uh, and not try to do it on your own because a real estate agent will know how to vet. They will know how to do the credit checks, um, check the employment and, um, and when they check references, they're not gonna check their friends. They're gonna look up the people they're, uh, you know, egg calling. To make sure that it's not buddies giving out a good word. Uh, but again, there's also a credit score, right? That we look out for a certain one. Um, one of the things is that, for example, when I, you know, when I rent out, uh, homes for my investors or in my investor clients, I, uh, we do a credit check. And if it's a, if the beacon score is less than 700, I won't even look at it. Um, it's just the way it is. Right? So you pick the best of the best. Um, and, um, again, and now that even comes in the pricing, right? Like we'll know what the market is like and where the price and the, you know, what gives you the best of value for your buck?

[00:13:02] So, I mean, sometimes getting the most, isn't always ideal, but sometimes, but going too low, isn't ideal either. You wanna maximize, right? You wanna maximize out there and get the best possible, cuz ideally you would love to have the, a long term client not repeat every year. 

[00:13:20] Ashley: Yes. Yes. That would be the best situation. So you're not having to redo all of that stuff. So what I hear you saying is to use like a property management company. That's what. Have here, uh, they're realtors. Uh, but they do like the property management type stuff and they deal, I think the usual, right from what I've heard anyway around here is like around 10%. Does that sound about rough? 

[00:13:45] John: Everyone's different and you gotta check, right. Um, you could use a property, man, like you said, there's realtors there, but I go directly to the agent with an agency brokerage, but um, 

[00:13:54] Ashley: Okay. Gotcha. 

[00:13:54] John: The issue with that is, is that if you're calling just for a rental, like the reason why they'll suggest a property manager, cuz we have that here as well.

[00:14:01] Ashley: Okay. Gotcha. 

[00:14:01] John: Is that a lot of direct realtors don't want the rentals and let's be honest. It's actually, uh, the paperwork on the rental side is actually double than it is for a buyer or. 

[00:14:12] Ashley: I can imagine it's a lot more work and headache because it's an ongoing thing, not just like a right time deal and, and it's, um, 

[00:14:19] John: Exactly. So it's a lot more work, the more paperwork and there's, uh, more liabilities going on. And as a result, You also get less pay. Cause if to get the place rented out, it's usually, uh, cuz you know, it's first and last month's rent down. Mm-hmm the realtor will take the one month rent as the payment. Oh, okay. I didn't know that for, to, to rent it out. Then you would get a property management to manage the business, the property if you wanted that. Oh, okay. Um, but. The benefit is that the realtor that works for the brokerage just generally does a better screening job, cuz remember their objective isn't to just, uh, paw it off because, uh, you know, or I'm not saying that property managers will paw it off, but property managers make money by having people in the building.

[00:15:04] Where a realtor, isn't gonna be looking at your rental. We're not looking at it as an example. Just say, you came to me, I'm not looking at you as and saying, okay, Woohoo, I'm making a thousand bucks. Woo. You know what I mean? I'm not looking at that i, in fact, to be honest, the commission on that, on that, uh, lease is the least of my, uh, worries, because, uh, when you factor in the marketing, when you factor in the, uh, the, the cost for the brokerage, cuz they get a percentage of everything. When you factor in the, the fact that you have to pay photos and stuff like that. Mm-hmm when you put all those into it, uh, your pay is quite little, but what we, why say go to the direct realtor versus just the property manager, is that when you're going directly to the realtor, he's looking at you and saying, this is your first rental.

[00:15:45] If this goes, you know well for you and it works out well for you and you're happy and you're making a return. You're gonna want to do it again. So I'm not looking at this commission. I don't care about this commission. I'm looking at it and saying that if you're happy, you're going to buy another one. And in hopes that the fact that I've held your hand all the way through on this one, you'll call me again. So on that second buy, I'm going to make the $9,000 commission from the. 

[00:16:11] Ashley: Oh, that makes sense. Yeah. 

[00:16:12] John: Right. Because we're in a relationship business, this is what it comes down to. And if you have a realtor that you talk to, that, that you feel is just looking to get your, their hands in your pockets. Mm-hmm, find another realtor. They get paid to service. You know what I mean? That's what our business is. And if they, and if a person doesn't understand relationship, they don't understand long term chances are they're either too new. Or they're greedy and you don't wanna be dealing with that person. Cause then their intent is just to collect the commission quickly and paw you off cuz they can't see past that. 

[00:16:41] Ashley: Exactly. Yeah. 

[00:16:42] John: So who you work with really matters? 

[00:16:44] Ashley: Oh, I couldn't agree more. I actually had a, really, a really bad experience with the realtor. One time. It was, it was terrible, but we have, um, some, uh, a good one that we use now that we used we've known her for like ever. Almost 20 years, maybe like 15 years, something like that. And, uh, at the time, She wasn't, uh, working. She was at home with her son, um, with some health issues. And so we had to go with somebody else and it was a total nightmare. Like it was, it was bad, really bad. Uh, but anyway, so I love that, you know, building a relationship and getting to know your realtor because you really do need somebody that's knowledgeable and knows what they're doing. And has have, uh, the people skills to deal with you too, 

[00:17:35] John: For sure. 

[00:17:36] Ashley: Now I'm curious, and now this is probably, um, will depend on where you live, but I I've always been curious about like how insurance works for like the damage, like, is there, um, now I know, like the renters can have rental insurance and then you have like your overall homeowner's insurance, but when it's for you know, profit or when it's like a rental, is the insurance different or will they cover, is there insurance for covering damage? 

[00:18:05] John: To a point depends what the damage is for and that's each policy will be different. What you have to ask for. The one thing is for rental and rental insurance will be a little bit more than normal, like living health, you know, insurance. And that even your mortgages will we'll look at rentals, uh, differently, like more, let's be honest. Uh, when a bank lends out to a business, they're charging just say eight, 9% interest when they rent to a more, like when they lend out to a mortgage. , you know, they're doing three, 4% interest, right. So clearly, where do they really wanna lend out to? 

[00:18:39] Ashley: Yeah, exactly. 

[00:18:39] John: Right. And with, with that being said, they're willing to lend out to your primary home, the one you live in because facts and, and stats will show you that if you live in the house, you will be very diligent and more than likely you'll never miss a payment, right.

[00:18:56] Because you live there and you, you can't afford to, you know, ruin that. But a rental unit, people are more, much more willing to walk away from. So they're gonna be less hesitant. So you'll notice you'll get an approval for a home you live in as an example for an $800,000 mortgage, but then you'll go for a rental unit and all of a sudden you're, you're only getting five 50. Oh, okay. Yeah. You're going, why? Yeah. Right. Because there's more risk for them because they know that it, when crap hits the fan, for lack of better description, you'll do everything in your power, take a second job, borrow money from your parents, whatever, to not get thrown out of your home. But when it's a rental unit and it's like, mm I'm not gonna, uh, risk giving myself a heart attack over this. Take it, see ya, right. 

[00:19:44] Ashley: Yeah, exactly. 

[00:19:45] John: It's what it comes down to. So they're very, very, more. Adverse to, uh, lending for rental properties, not impossible. It's just a little bit more of a workaround. 

[00:19:55] Ashley: Gotcha. 

[00:19:55] John: So with that being said, also like even the things I said now I'm telling person a person how to start, but once you got used to that one unit, I would stop doing single family homes or one unit rentals. Once you get to the point that you're at two or three, I would cash out of all three of those, then I would get into multiplexes because the return on them is, uh, just the same and the risk is a lot less. And here's what I mean by that. For example, you buy a three, uh, you buy three homes, three single family homes. Just say there are a million dollars each for a lag for easy numbers. That's $3 million. Now what end up happening is the financing on that is a lot harder to get than it is on a multiple. And here's why, because those single families, homes are basing it on your income and your debt, uh, debt, uh, debt equity ratio, right? Like they're basing it on you when you get into a six plus and up, they're basing it on the performance of the property. Oh yeah. 

[00:20:55] Ashley: That makes sense. 

[00:20:56] John: Right? You still have to have a good credit rating. There's no way around that. Right. If your credit rating stinks, it doesn't matter what your down payment is. And it doesn't matter whether it's commercial property or residential . Yeah. Right. So now the downside of a multiplex is the down payment is a little higher, which is why I said, you know, you have your one or two or three homes before you convert. 

[00:21:19] Ashley: That makes sense. 

[00:21:20] John: Yeah. And at that point in time, cuz then you'll have then the proper down payment for it you, even though that 3 million for the three homes, the multiplex might cost you four and a half million. It's actually easier to get the four and a half million dollar mortgage on the multiplex than it is to get a 3 million on the, uh, residential. 

[00:21:37] Ashley: And your profit will be your profit margin would be higher if you've got six units versus three.

[00:21:42] John: Correct. And on top of that, you have a buffer. If you have two people not paying rent, you still got four people that are paying rent. So you're not missing the payment. What are the odds that all six people are not gonna pay? 

[00:21:52] Ashley: Yeah, that's a good point. yeah, exactly. It's pretty low. Hopefully. 

[00:21:57] John: Right. So all you're doing is, uh, is mitigating the risk.

[00:22:01] Gotcha. That makes sense. 

[00:22:02] Ashley: Now, uh, one thing I did wanna mention about insurance while we were talking about that was, um, I remember years ago with the housing market crash in 2008. And like, after with people like moving and, um, you know, finding jobs elsewhere, like they would, um, rent out their, their home. Because they moved like across the country or something, but yes. Um, I believe now, correct me if I'm wrong, cuz you know, you're the expert here. There was some issues with their insurance because they weren't living in the home anymore. It was actually a rental. So they needed to, but like maybe not contacting their insurance company, like you need to do that to make it change from a rental or single family, home to a rental.

[00:22:48] John: Well, here's the thing when you're having a rental unit insurance will change. It will be higher than if you live. Um, typically you, it's not a major deal, but it, it's not gonna be cheaper. Put it that way. And, um, where the problem is that before you make this move, you have to have a signed lease where someone's gonna be living in there, because if not, you're gonna have what they call vacant possession. And when it's completely vacant, many insurance companies do not want to ensure that because what happens is that you're away. What if there's a, a pipe burst in the house and there's a flood, who's gonna stop it. Right. So that's a bigger risk for them, cuz by the time people notice it, the neighbors are gonna be calling and the whole house will be damaged. Where if somebody lived there more than likely you'll see it and it'll be minor damage. 

[00:23:38] Ashley: That makes sense. 

[00:23:39] John: Right. So they don't like vacant properties and I know you're gonna say, well, you know, it's vacant now, but the four lease sign is on. So it'll be rented within a couple of months, but that's two months of vacant possession. Right. And they don't want that. So if you're still there and you're trying to rent it while you're still there, even if you've moved out. You're still somewhat going there. You just don't tell the I wouldn't. Oh, I'm not gonna tell people to know what to prevention but the idea is that you can make it like a, like, so there's an overlap.

[00:24:08] Ashley: Yeah. 

[00:24:08] John: You know what I'm saying? Right. As you, as you're getting ready to move and you start moving your stuff out, that's when I would start getting the, uh, people to come in to see it for rent because gotcha. You're still there. So legally you're not lying cuz you're still there. The fact that you're moving out is kind of irrelevant. because you're still there. 

[00:24:28] Ashley: So basically, so that's where I call the gray area rented and have the lease signed before you contact, you know, and change insurance correct. 

[00:24:36] John: Or change the terms because once you have the lease signed yeah. That means you're gonna be fully moved out and they're gonna be moving in.

[00:24:44] Ashley: Gotcha. 

[00:24:44] John: Yeah. So at that point in time, you're just converting it from homeowner's insurance to rental insurance. 

[00:24:51] Ashley: Makes sense. Now I do wanna touch on, uh, and then we'll kind of wrap up here. The credit score. So as you know, um, I followed Dave Ramsey a long time ago. I have since moved on. I'm not a big Dave Ramsey fan. His concepts work helped me get outta debt, all the things. Uh, but I don't really agree with him on a lot of other things, including credit score. So, and I'm gonna assume that you don't either based on what you've already told me today. So if somebody is following Dave Ramsey's device and quote, unquote, does it have a credit score? Which really means they just have a really low credit score. How are they going to school? 

[00:25:29] John: No, no, no, no, no. Let's be clear. There, there there's a low credit score is very bad. Right? Right. You can technically have no credit score, like 

[00:25:39] Ashley: No history at all. 

[00:25:40] John: Like zero. Like if you go seven years without using any credit whatsoever, you don't zap credit. You don't do any credit checks or anything. You can have a zero score. And believe it or not, zero is better. Well, chances of the person is going through Dave Ramsey's program. Yeah. Has such bad credit. They're not buying anything anyways. So let's be honest, right? Like, yeah. So the point I'm getting at is it's okay to have a zero score. You have to either have zero or good. 

[00:26:11] Ashley: Mm-hmm 

[00:26:11] John: There's no in between, on this right. So, and that's what it comes down to. Obviously, if you have a really good credit that is better because that's easier.

[00:26:22] Ashley: It's easier way easier, right? Faster, because it's easier to process what you can. 

[00:26:28] John: If you have no credit whatsoever, you can get a manual underwriting done. it's not easy. And a lot of the new people get in the mortgage, you know, their mortgage license don't understand it or know. Right, right. Cause it's just not taught and it's not practiced anymore because let's be honest, 98% of the, uh, population runs with credit. 

[00:26:47] Ashley: Mm-hmm right. 

[00:26:48] John: So with that 98% learning that what you'd be learning it for 2% of the people. Exactly. So a lot of the new people don't what ends up happening is the ones who still do the manual. Underwriting are old timers that are on their way out anyway. So, and I'm not saying that's a hundred percent Bulletproof, I'm going by stereotype and typical. Right? Right. So it's, again, you could get, do all this with zero credit, but it's gonna be a mission.

[00:27:18] Ashley: And it's gonna be hard for a most of the people, if not all the people listening to get down to a zero credit score because their credit score is going to really low through that process of getting down to zero, right? 

[00:27:33] John: The people who's got people who have zero or one or two people, new people who've never had credit whatsoever and they haven't started mm-hmm or people that were in trouble and went through the Dave Ramsey program to get outta trouble. So both end points. Yeah. Will get you to zero. But none of them not, well, not having any credit right from the get go is probably the quickest. 

[00:27:56] Ashley: Yeah. 

[00:27:56] John: Cause mean they've never had credit. So if that's the route you want to take, don't apply for anything. Don't get credit ever. If that's the route you want to go. Um, but the other people, well, if it takes seven years, it takes seven years, whatever jam you put yourself in, you're in, right. Like there's no way around it. Yeah. Yeah. right. So either, uh, wait to get to zero or find a way to get back up to 700 right. 

[00:28:19] Ashley: Like now what is there option? Yeah. What, what about trying to rent? Because you said that, um, uh, yes. Um, you wanted a 700 credit score now that's gonna be hard to do if you don't have any credit.

[00:28:32] John: Absolutely. And this is gonna be, this is going, going to be make for one time in life. It's gonna make realtors look good instead of bad. And because here's what it is. There's still a lot of landlords out there that are just against realtors and it doesn't matter how much you try to help them. It's those Dan realtors. You know what I mean? Gotta avoid those commissions. You know what I mean? Like and those are the type people, so they will never use a, a realtor. You could show them how I can get you just say $3,000 a month for your house. I could show you how I can get you $3,000 a month with a good tenant. You're just after your commission, you know what I mean? Like, and that's it. And they'll get 2200. You couldn't have got 3000. I only got 2200 that's because you're in the wrong spot. You know what I mean? But again, you can't, it's I it's just like a sales process. People believe I'm gonna sell them. I'm gonna convince them. You're not convincing anybody, anything. You know what I mean? Like you're just educating them and they're just deciding that's what it comes down to. Yeah. And so these landlords who are anti realtor and will only use them if they run out of options in, in life. They will never use realtors and therefore they don't know what they're looking for they're gonna trust my gut. I meet people and I know what they're like. And well, if you get what we call the professional renter, which is they're professionals for a reason, they're gonna talk to you and you're gonna think, oh, they're the sweetest person in the world, you know? Oh, we could be friends. Like that's how great they are. I mean, I'm surprised we're not even family. They'll make you, their, their masterpiece is manipulation. And with that being said, you're going by gut feeling. You don't. If these guys are professionals, you don't think they're gonna give you the best feeling in the world. You gonna, you can't understand why they wouldn't be, you know, nobody would rent to them.

[00:30:21] What, what are they talking about? They're they're the best. Once you get into the house, good luck and getting them out. And because you're dealing with emotions. What ends up happening is you can get easily manipulated that way. And therefore, if you have lower credit, look for those renters there's websites out there that are just for landlords to post their rental properties, go through them. They, there are gonna be a bunch of people that hate realtors and power to them because they take away some of the pain we have. Right. And I mean that, you know what, because let's be honest. I don't look at somebody and says, ha you have a 400 credit score, you're a bad person. That's not the way we look at it, right? I mean, everybody's gone through something in life. Let's be honest. Right? Mm-hmm if anybody says I've had the perfect life and nothing's ever go wrong, the only thing I've learned is that you're the biggest liar of meth. Right? So with that being said, we've all had those moments. So if we're looking after our clients, cuz that's what our job is as a realtor, looking after our clients, which is usually the landlord, we have to give them the best option possible. That would cause them the least amount of problems. Even though you have a 400 credit score, you might not be that person that are causing problem. You might be again through that stroke of luck that just had a bad moment and be reliable, but we can't sit there and wait 10 years to figure out whether that's your story.

[00:31:46] We gotta get the place rented. So we gotta go with the probability and the probability of people with 700 credit score and higher are worried about their credit. They're worried about the credit. They're not gonna miss the payment. Right. So that's what it comes down to. So we look at it and again, like I said, I don't look at all these bad people. No, they had a bad luck and now what do they do? So the fact that there's people that hate us as realtors is great. It gives people opportunity. Cuz I think everybody should have the fundamental right of having shelter mm-hmm and I feel bad that you can't help 'em but what, what do you do? Right? Like something's gotta give somewhere.

[00:32:23] Ashley: Right, exactly. 

[00:32:24] John: Right. So the fact that these options exist is phenomen. 

[00:32:28] Ashley: Yeah, absolutely. Now, as we wrap up here, is there any last words of wisdom or anything you want somebody to take away from this episode that maybe we didn't touch on yet? 

[00:32:39] John: Absolutely. One thing I'm gonna say is when you're looking to invest in real estate, this is the way I look at things. If you have the ability to get in, that is fantastic, but I wouldn't, if it's gonna put you in financial ruin, If you're spending your last dime, if any little thing goes wrong, like a thousand bucks, I'll put you out of the deal, don't buy. You gotta be able to buy and still have a couple months worth of reserves to compensate just in case. And then you gotta remember this closing cost, like lawyers, fees, transfer fees, you know what I mean? You gotta make sure you have that. That's usually it depends on what you buy. That can be anywhere from 10 to 25,000 rough. Depending. Now, if you're buying 10 million homes, it's a different fee, cuz it's usually a percentage of whatever it is. Right. But mm-hmm, on average, we're taking the average home price. The average sale is going between 10 to 25 K for that, for all those fees.

[00:33:32] Ashley: Wow. 

[00:33:33] John: So you have to have that aside plus in a couple of months of living at least. So if you have that aside then over and above the down payment, I mean, then you could, then it's a good, you know, good idea to get into the market. If you don't have that, just hold off. Share prices could go up, but what's the difference. If you end up buying something and lose it in six months, anyways, you're still behind. You're worse off than you were. So you're better off to wait. And that's one thing. The second thing is another opportunity you may have is maybe buying by yourself may not be the right answer, but get into a joint venture. It's possible. You can, you know, if there, especially if we're talking about rental properties versus the one you live in. Mm-hmm , if you're talking about rental properties, join with somebody, go into a partnership because even if you're getting half 50% of a million dollars, as an example is still a lot more money than a hundred percent of 0.

[00:34:34] Exactly. 

[00:34:35] So, yeah, that's, that's another way to get into the market. 

[00:34:38] Ashley: That's great advice. Now, I always ask everybody at the end of the episode, if you have a favorite nonfiction book, just for, you know, self-improvement or learning, educational, um, those types of things. So do you have a favorite book? 

[00:34:54] John: I would say the compound effect by Darren Hardy.

[00:34:58] Ashley: Awesome. I, I feel like I've heard of that one, but I haven't read it yet. So I'll have to look that up and I will link to it in the show notes as well. Now, where can people, uh, find you reach out to you follow up if they have any questions or just wanna, um, you know, connect. 

[00:35:14] John: Well, you can look me up just by my name on Google and I'll show up on all of it. Or you can just go to it's the truth. Um, or you can go to instagram.com/johnpapaloni and I'm right there as well. 

[00:35:25] Ashley: Awesome. Well, thank you so much for taking the time to share this information with us. I found it very valuable. I learned a lot, so, uh, I don't feel so, uh, fearful of maybe investment property. So maybe that'll be something I add in the future.

[00:35:41] John: Yeah, which would be great. Hey, you know what, if you're nervous in the beginning, it goes back. You have the option of that, uh, joint venture, right? So it's half the risk. It's two people, two minds together might be a lot easier to, uh, handle . 

[00:35:53] Ashley: Absolutely. Thanks for being here. 

[00:35:56] John: Pleasure. 

[00:35:57] Ashley: If you loved all that great information from John, go check out his podcast. The John Papaloni Show, he, uh, has lots and lots of great episodes on real estate investing and different things to look for when searching for a house and all kinds of different advice. So go check that out. And if you are just ready to get started paying off debt so you can eventually invest in real estate, don't forget to go grab the Free Debt Payoff Starter Kit at budgetsmadeeasy.com/debt. And I will talk to you guys next week.