Welcome to The Accelerated Investor Podcast with Josh Cantwell, if you love entrepreneurship and investing in real estate then you are in the right place. Josh is the CEO of Freeland Ventures Real Estate Private Equity and has personally invested in well over 500 properties all across the country. He’s also made hundreds of private lender loans and owns over 1,000 units of apartments. Josh is an expert at raising private money for deals and he prides himself on never having had a boss in his entire adult life. Josh and his team also mentor investors and entrepreneurs from all over the world. He doesn’t dream about doing deals, he actually does them and so do his listeners and students. Now sit back, listen, learn, and accelerate your business, your life, and your investing with The Accelerated Investor Podcast.

Josh: So hey, welcome back to accelerated Investor, Josh Cantwell here. So excited to be with you. Whether you’re in the gym, your in your car, you’re out for a walk, wherever you’re at, learning to level up your life and your real estate investing, your entrepreneurship and leadership skills, and we’re just excited to come into your ears, into your head and give you a few tips and strategies to make optimizations in your life and your business. For everybody who’s been sharing, talking ratings, reviews, sharing this on social media, we really appreciate you. Thanks so much. Today we’re going to talk about real estate finance. We’re going to talk about building sales teams and we’re going to talk about the mindset of real estate entrepreneurs.

Josh: My guest today is Aaron Chapman. He is a mega mega producer. He has over 22 years of real estate experience and real estate finance experience. In the last 12 months, he’s closed over 700 real estate transactions on the finance side is a real estate lender. He’s got a massive team. He also leads an amazing life, amazing outdoor life in Mesa, Arizona, spending time outdoors, fly hunting, just spending time doing what he enjoys as an outdoorsman. It’s an amazing opportunity. I was referred to Aaron by one of my contacts and friends, one of my passive investors, a friend named Nitten and Nitten speaks super highly of Aaron. So we met a few months ago. We’ve been trying to get this podcast scheduled up. Aaron, thanks so much for joining us today. What is going on in the real estate finance world? How are you?

Aaron: Hey Josh, how you doing brother? Real estate finance world, man, it is constantly evolving constantly on the move. You’re always forced to adapt and you’re trying to just be as nimble as possible. It’s like you literally have to have some sort of a mental yoga every single day, conform with what they’re doing, be able to be able to mold around it and still be successful because it is one of the most highly regulated industries in the world. You’re talking about at least the work, the park that I’m in, I’m in a conventional side, right? So, you know, that particular part of it’s very, very, very heavy duty.

Josh: You bet. You bet. So, so many real estate investors use leverage. I know guys that are, that love leverage and I know real estate entrepreneurs that like to try to pay all cash for things and it’s really tough to scale. So Aaron, you know, you do all kinds of conventional lending, you know, you know, rental loans, VA jumbo loans, all different kinds of loans. You’ve been doing it for a long, long time. And you know, we’re sort of at the mercy, if you will, of the big institutions they’re trying to project out the next three months, six months, couple years, what’s going to happen in the economy, in the real estate world. And things then change for us as far as what kind of products we can offer. But the products really are not as important as the actual operator. The mindset of the operator. What is that real estate investor trying to accomplish? So when you work with your clients who are a lot of real estate investors, what’s your first thought in working with them, talking with them about their goals, their mindset about building their business?

Aaron: My initial conversation includes one, reminding them that they’re stepping into what can be one of the more miserable experiences of their life, right? So that first conversation gives us the opportunity to decide whether or not they’re working with miserable people. And I get that same opportunity. I said, you know, I’ll give them the same courtesy if I find that there’s just no way that we have a continuity, I’ll let them know. But for the most part, getting them from the mindset of I’m a consumer now preparing to spend money and go into debt because that’s what we’ve been molded to think. We’ve been molded to believe that when we’re going into a real estate transaction, you’re taking this money out of your pocket, you’re lumping down 20% plus costs, and now you’re going into debt for the majority of it. And many people come at that with the perception that they need to accelerate that payment as fast as they can. I want to get that loan paid off quickly.

Aaron: Or can I get a 15 loan or is my rate better at 15 years? And my goal in that first conversation, at least let them take that mindset. They have set it on the shelf. Let’s start talking about this as they are now considering becoming the CEO of a real estate investment firm. And when you’re the CEO of something, you have to look at things differently. I’ve heard many CEOs say they were successful because they believe and they recognize they were the dumbest person in the boardroom, right? If they were the smartest person in a room with every role that needs to be filled, then they are in the wrong room. And so when I have somebody introduced to me through, whether it be one of the networks out there that does turnkey investment real estate, or multifamily real estate in the conventional world, or it be a provider or a turnkey provider out in a different market, I want to help them to understand.

Aaron: Those people they’re not your antagonist. They’re not a person selling to. Sure they are going to sell you something cause they’re your business partner in a way. They’re basically like your regional operations division. They’re going to source, acquire, rehab, manage and maintain your business. And literally that person gets that whole operations division for free. Now they have a hard time with that concept because they see somebody selling me an object, they’re making a profit off of me, and then they’re going to manage it for me and they’re going to make a profit off of every single payment that’s made by my tenant. But when I explained to them, you’re going to spend where you’re going to buy that object out there that cashflowing business, which is the residence of the house from somebody. And if it was a realtor that you bought from making you drove down the street, you see the perfect house, you think that’s going to work well, it’s going to rent.

Aaron: You see the sign out there, you take your phone, you take a picture of it, you call that sign. Later you talked to that listing agent and then they close on the deal with you, right. You just bought it at market value. And it was oversold to you about it being the elegant home that it was. In reality, it’s just a shack that you rent well. Well then after closing, you know they’re going to introduce you to maybe some property managers and you’ll go through two or three of them before you find a good one that’s interested in you succeeding. After about a year or so, where is that realtor at?

Josh: Right gone. They sold the property? The property managers now trying to take care of it and make sure you keep your cashflow moving.

Aaron: Exactly. At best you’ll get a picture of her and her damn cat at Christmas time, right. In fact, I mentioned that one time to a client and he literally starts laughing. He goes, dude, you’ll never believe what I have in my hand. He goes, I have a picture of my realtor and her damn cat. And it has a stupid sweater on and it was hilarious. So the reason I bring that up is the people who are providing an investment real estate, well that’s only one part of their business to sell the real estate. To manage that business for the person who just bought it, that CEO of that little firm is a second part of their business. And if they fail in their property management, then their business starts to fail and they start to fail. The investor starts to fail and investor starts to fail I start to fail, and I don’t participate in failure, pissed off or that kind of stuff.

Aaron: I do not allow them to fail if I have any say in it. So then what I after I explained that, I’ll let them know I’m applying for the fractional CFO job. I’m not going to be sitting in there doing spreadsheets for them. My job is to have helped them to understand what they’re getting into and have those quazi board meetings, if you will, when they face a question or a scenario or a decision they’ve never faced before, which all of them are facing new decisions. And when you consider that the experience is a really big deal, have you ever heard the statement good judgment comes from experience. Experience comes from bad judgment.

Aaron: Well, that’s great with low stakes, right? When you’re talking about going through grade school and you learn that the one dude, you don’t kick or flick the ear because that guy is crazy and you’ll kick your ass. That’s a low stakes environment. You’re talking about real estate, very high stakes. You can’t go walk around making mistakes to learn. So what I explained to them is you got to reach out to me. I’ve been doing, you know the, I’m what they call a licensed loan originator. There’s 300,000 people in the United States that do what I do. When you look at the average out there of those people that are doing this same job, they close between three and four transactions per month. That’s 36 to 48 transactions per year. Right now we’re going to refi boom. So we’re probably doing more, I don’t count refis.

Aaron: Any jackass can do refis. Big banks, they improve and you can take a monkey out of a cage. You given a phone and training, it’ll close loans, right. Selling the rate is not business. That is shooting fish in a barrel. In reality selling low rates, as far as I’m concerned, and making people refi per rate is thievery. I’ll get into that later if we have time. But when it comes to my side of it, so compared to the other people out there, I’ve been doing this since 1997 as you explained, I did a 707 transactions last year, 676th year before it was almost 90% I think it was 98% real estate investment. I’m not chasing first time home buyers. I’m not chasing people that are building, trying to purchase the perfect house on the perfect street, not far from the yoga studio and it’s their right as an American to buy this house even though they can’t afford it, right.

Aaron: I don’t, I’m not chasing that. I’m not getting involved in that. So since I have seen that many transactions, I have seen a lot of people’s decision making skills at work or they failed or they’ve succeeded. So when an investor comes to me and they come with a question, they come with a decision they’ve got to make. My goal is to able to give them practical data that they can think through before making that decision based upon my experience, I’ve seen others fail and others succeed. And as I said, I don’t participate in failure. I will give them as much information as I can and that’s where I’ve seen a lot of success happening with these guys.

Josh: So Aaron, when you’re, when you’re dealing with the client, imagine, you know, you’re doing a lot of stuff that’s turnkey where some other provider in a specific city where there’s good cash flows like Cleveland, where I’m from. There’s investment opportunities. Somebody’s finding that deal, what you’re really talking about ultimately is this massive shortcut, right? So this operations team that exists for you is potentially a turnkey rental provider or turnkey. Maybe they’re providing singles or up to quads or maybe even small balanced commercial apartments. They’re turn keying them. And that operations team is essentially coming for free because they’re finding the property, they’re marketing to motivated sellers, they’re acquiring the property, they’re rehabbing the property, they’re finding the tenant, and then they’re selling it to one of your clients. The client is probably somebody who maybe owns a software company or a tech company or somebody who owns an eCommerce business or as a doctor or a lawyer or somebody who just wants to own turnkey real estate but has probably a full time job or a career doing something outside of real estate and they want this massive shortcut.

Josh: That’s the operations team, which is essentially the turnkey provider. And then you come in and help that e-comm owner that doctor, that attorney, that tech buyer who wants to own real estate for tax deductions and for longterm appreciation, longterm depreciation, you’re providing that financing for them. And you’re kind of selling not just you know, the product which is the loan, but you’re selling, listen, you’ve got this, this operations team that’s taking care of creating the deal for you. I’m essentially your part time CFO providing you 80% of the financing that you need and the property manager if you find a good one, is doing maintenance for you and management for you. So really that’s a true turnkey operation, a true turnkey opportunity. Write the check for 20% down and you’ve got everything else pretty much taken care of.

Josh: What sticks to me though, Aaron, is making sure you pick the right team, right? So if you pick the right loan provider, someone like you at Secure National Mortgage Company who can give them that proper loan that fits their needs, pick the right turnkey provider, pick the right property manager. So that owner operator, who is the doctor, who’s the attorney, who’s the ecomm business owner, their job at the end of the day, is to pick the right team to work with you being part of that team. So you built your own sales teams, you built teams before. What? What elements of those teams are important that you’ve seen your clients that are buying 10 20,30,50 turnkey rentals a year? What success stories have you seen? What have they gotten right with the teams that they’ve selected and the things that have gone wrong? What have they done wrong? What team did they pick wrong? What didn’t go well?

Aaron: Well, one I believe is the lip service side of it that people, all of us are guilty of. We hear something that sounds awesome and we just run with it. We don’t do the research. So I failed in this very recently, just in the last year. I took a person’s word for things. I sent the inspector out there, he gave me a list, I gave them the list, they said they fixed it. I needed to get the money to deployed for the end of the year. I went ahead and move forward on what their word was and then we’re having a hard time collecting rents on the already rented property. You know, it already had a tenant, I was in hell the whole time, three months later we got our kicked out and a lot of that stuff wasn’t done. I had to spend 5,000 grand and get that rent ready for the next guy.

Aaron: It shouldn’t have happened that way, but I cut that corner. That’s my fault. So I have to own where I didn’t do my part, I took lip service. I should’ve followed up. Every single person needs to, one, find who you need to you work with that you can get along with. And then to verify everything they say. If somebody says something they better damn well be billing. Be willing to be held to their word that you’ve got a person that pushes back even a little and they say, Hey, I’ll give you my word and you can do a little bit of verifying on their word. They push back on you and take offense. That’s some bitch is pulling something. So you back your stuff into corners. You don’t get stuck in the ass and you go move forward somewhere else.

Aaron: You know, the other thing is getting teams that will stay in their lane. You know? That’s actually a hard concept for me when I created my team. I’m the sole originator on my team. A lot of people think, well, if you’re doing 700 transactions a year, you must have a sales team. No, I got me. I’m the sales team. I’ve got 14 operations staff from an assistant who sets up my calendar. She just, she handles every second of my day. I’m beholden to a 20 year old that has me on the phone half hour, right. So I am running like a mad man. I got to get up at 4:30 in the morning just to have time to myself. And then at 8:00 AM I belong to my calendar.

Josh: Well I’m on your website though, Aaron, by the way, on my other machine. I like this 20 year old. S which one on your team is she?

Aaron: That is Samantha.

Josh: Samantha. Okay, cool. Cool. I just want to pull it up, there you go. Okay. So she, you basically work for Samantha, huh? That’s how it goes. She sets up your calendar and your role?

Aaron: Basically. That’s just kind of how it runs. Well, how I hired Samantha is my daughter Isabelle was working for me and I was creating this role. Man, I get 500 plus emails a day. I need somebody to tell me what’s important and then somebody to book my calls and to book, you know, these, these podcasts and that kind of thing. Well, Isabelle was one, she hated the business. She just wanted out. She was tired of dealing with people. She now works at the ER of my wife. My wife has a charge nurse and a trauma nurse and all that kind of thing. So she is now an EMT and works as a tech at the ER. Which to me is amazing. She couldn’t stand talking to people and their drama, but she could handle going in there where people who got puke and crap all over, right.

Aaron: I have no idea how that works, but she’s okay with it. So when we were deciding how are we going to replace her. I remember my daughter was really big into the acting in school, you know, the plays and that kind of stuff. And they hit me one day and was like, who ran the stage? Was that your teacher or was it a student? She goes, I don’t know a student ran the stage. And so a student was managing all the props and the actors getting out on time and all that. She goes, yeah. So who was it, who that was my friend Sam, I said, call her and bring her in here. Because if she can manage, if she can manage 40 you know, high schoolers, she could hopefully manage me.

Aaron: And so that’s how that came about. Well then I’ve got team members that they go through every stage of the process. I’d built it like go into Chipotle and get a burrito, right. You can’t, you’ve got to have different people at different stages to be successful and burrito building. So I figured if that’s the case, I got to have different people at different stages to be successful at building an intricate financial instrument. So me as the store manager, right. If you will, I may want to make sure the store is clean, that the people feel welcome in there, but I can’t be the person running around building the burrito. I’ve got to let those people do their job.

Josh: You’ve got to get people in line, right? You’ve got to get people to come in the front door and get in line, which is what you said you’re doing with Samantha running your schedule every 30 minutes you’re on a podcast or you’re talking to a client or you’re talking to a group or you’re pitching your services and that’s ultimately the one thing that only Aaron Chapman can do in your business, and I think this is where a lot of entrepreneurs go wrong, Aaron, is they feel like they’ve got to do everything with everyone. They’ve got to touch every part of the business and so they’d have trouble scaling. The difference between that and a really successful entrepreneur like you is you realize that there’s a certain part of the business that only you can do that drives a tremendous amount of revenue and you’ve got, like you just said, you’re on the phone every half hour doing that and Sam is charged with making sure that that’s all you do 24/7 or as many hours in a day as you want to work. You’re just driving revenue. You’re getting people in the Chipotle line.

Aaron: Exactly. And then you’ll realize when you’re driving down road and you try to eat your burrito and all the contents fall in your lap, that the store manager stepped out of his role and went into the line and he shouldn’t have done that. The other thing is some people get frustrated. Like I’ve got like five different people that have communicate to me like, well you wanted one point of communication, how successful would it be to build your burrito if your yelling back to the tortilla girl that, hey, I want you to tell this person to put chicken on here instead of Baracoa and then you know, let your person over here know that I’m okay with the upcharge for the guac. And then you want to bitch at the other person at the beginning of the line that your guac person got really stingy with the guac, which is what they do every time they tell you the up they take a massive scoop and then they tell you it’s an upcharge.

Aaron: You agree to it. And then I hit it on the thing and then you get like this a little bit. But, so you can’t, it doesn’t, it’s inefficient. And I have to explain to them guys, it’s not that your store manager doesn’t love you. They want you there, they want you happy, but how they make you happy as they have an efficient process. So communicating with those people as if you’re communicating with me. And that was how I built that. That team and it will work awesome. Now I’ve got everything from the appointments being made. The pre calls are being reviewed by somebody would underwriter background. 35 years of doing this. I’ve got processors in here at four processors and processor assistants helping them and processors have an average time in the business of 27 years. I’ve got two underwriters that redo every single loan to be sure it’s done according to the rules and that we’re not bending any of them. I’ve got two funders that get checks, so the exact people every single time. No going to another department. There’s no begging for clemency from the manager of that department. That’s me and we worked together to be sure that things are done accurately.

Josh: That’s fantastic Aaron. So awesome job and explaining, I love the Chipotle sort of analogy because everyone can sort of identify with Chipotle who hasn’t been in a put Chipotle, right? And you see the one person and just working down the line like a conveyor belt. And people don’t realize that a big business of whether it’s making loans, whether it’s selling cars, whether it’s investing in real estate, whether it’s wholesaling, real estate, buying commercial buildings, it can be run the same way, right. As long as you have people in each role knowing exactly what their swim lane is, staying in their swim lane, running down their checklist, and then handing it off to the next person in the next swim lane. So Aaron, let’s pivot the conversation for a second back to real estate finance because now that we’ve talked a little bit more about your team and what you do and how you built your successful business, let’s talk about your customer. Let’s talk about your clients.

Josh: So Aaron, there’s these two schools of thought. There’s the school of thought. I’m going to go buy turnkey rental properties. I’m going to get as much net free positive cashflow as I can get right now and I’m going to buy properties where I can pay off my debt service, pay my expenses, get tons of net free cashflow. The other school of thought is this kind of working man’s retirement. I had a student of mine bring this to me and she was explaining, hey, what I, what she’d like to do. Her name is Shawn. She’s actually from Phoenix, Arizona down by you. And she says, hey, what if I just go buy 15 properties over the next 15 years with 15 year mortgages and 16 years from now, every single year I’ll have a property paid off, free and clear, and I can either refinance it or just live off the cashflow.

Josh: And instead of taking free positive cashflow, now I’m going to take no positive cashflow now and I’m just going to pay down those mortgages and chunk down those mortgages. So these two different schools of thought, I’m sure after all your experience, you’ve probably seen different models and seeing how they’ve worked. What are your thoughts on, you know, do they both work? Are they, is there one model that you’ve seen in the real world that works better? What are your thoughts on those?

Aaron: So there’s one model that I tend to really focus on and when people get into the 15 year consideration, all that, the reason I’m not a big fan of it, I don’t get into the 15 year thought processes because with a 15 year loan I can get where you’re saying, hey, I can sacrifice the cashflow today for a brighter future tomorrow. I understand that, but the problem with that, when you put all your cashflow into paying it off within 15 years, what happens when it’s not rented? What happens if you’ve got 15 year property or you know, 15 properties or at least five properties and three of them go unrented. Your business is not taking care of itself. You have to jump in and take care of your business. I tell everybody, if you’re running the type of life we’re talking about you’ve got a professional life and now you’ve got your future that you’re building with real estate, letting your professional life continue to fuel your life and fuel the down payments for the next property, right?

Aaron: Continue to drive the next property. But let the properties you have take care of themselves and be able to build the future of the growth of your business. And the only way to do that is with 30 year mortgages. Because when you start doing the short terms, like I just said, you’re going to be forced at some point to go to your pocket. You should never go to your pocket to fund your business to fuel your business. Your business should fuel itself. So what I have found, I was theorizing about this because I got that back and forth all the time. Well if I don’t want the cashflow, I can build faster and I get paid off faster. Like let’s think about you’re proposing to do to yourself with that, one we just talked about one consequence, the second consequence, if you’ve got free and clear properties, you’re a target.

Aaron: That was a big target. 2008 August 8th 2008 I was in a motorcycle accident. 17 year old kid took me out at 80 miles an hour, shattered my legs, put me in a wheelchair, collapsed lung, a bunch of busted ribs. I was in bad shape, memory loss. I can only remember every two minutes at a time. I was resetting my memory every two minutes. And so, my attorney went taking a look at, okay, what kind of assets do we have to attack here from the person that completely destroyed your life? Took everything from me. He had his parents had a house, but it was highly leveraged. There was not a lot in it, but we still couldn’t take it. There were still about 80,000 grand. He goes, we can go grab that. And I was like, no, I’m not going to destroy another life. That’s not going to make me whole.

Aaron: It makes no sense to turn another family apart just to Band-Aid my family. No, let them be. But when you think about that, if they had that house free and clear, what would have happened? My lawyer wouldn’t have asked the question, you would have went after it, right? He was, he’s like a pit bull on coke. So when you, when you consider what would have occurred there, they would have been a target. They were not a target because that leverage, so leverage high and leverage law. So one of the things I theorized before about on other podcasts was the, we live in an inflationary environment, correct?

Josh: Right, we do.

Aaron: Do you know what today’s rate of inflation is?

Josh: Two and a half, roughly.

Aaron: Two and a half percent. So or you know, two, two and a half, maybe three. And that comes from the official numbers from the fed, right? They use the CPI, the consumer price index and the PCE, which is their favorite metric, which is the, what was that one? Personal consumption expenditures index. When you look at what they factor in there, they’re not factoring in energy costs, food costs, and they are not factoring in our taxes. What was the last time you paid less per kilowatt hour used on your power bill? Never happened, right?

Josh: Never happened.

Aaron: When was the last time you paid less per dollar earned on your taxes without a tax deduction. It’s never happened, right. So we know when I’ve gone to a place called the ShadowStats.com where they will take national averages of a real cost of living. It’s over 7% nationally. You can get into certain markets, there’s a place called the Chaplain Index. You go into like San Jose, California, it’s 13%. Southern California, 11 ½ percent so we’re in the highly inflationary environment. The reason I bring that up, we get to rent to raise rents as investors to patient inflation, right? The problem was most people’s plan for their business on real estate is they’re looking at the pro forma for today, so the performance serves one purpose. That’s to take a stack of pro formas from one provider, not comparing multiple people. Figure out who you want to work with based upon the right team, and take their stack of pro formas and sort through them as to which properties as best for your business. Throw away the others. Take that pro forma that you’re looking at, you think is the best one. Look it over, wipe your butt, was it, and throw it away because it’s not real.

Aaron: Every bit of it is fake. It’s all conjecture, right? So it’s completely made up. Then you get down to really seeing what’s my cashflow. Because since we get to raise rents, the national average is 3.6% let’s say you bought $100,000 house renting for 1% rent to value ratio. That’s a $1,000 right? If you raised rents 3% you’re raising your rent by $30 a month, right? Well, if you’re getting $200 a month in cashflow, you raise your cashflow by 30 bucks a month. Correct?

Josh: Correct.

Aaron: 3% was not sexy, but your cashflow went up by 15% right. That got sexy and it’s a compound effect as often as you raise rents. Now that’s over here, the loan for 30 years, do they get the raise the payment on that to the patient over that 30 year window?

Josh: Fixed baby, it’s fixed. They do not raise it.

Aaron: Exactly. You’re paying the same dollar amount. So what happens to the value of the dollar with inflation?

Josh: Value of a dollar goes down. So the cost of that loans going to get declined.

Aaron: Yeah, continues to decline. So let’s say it’s 5% let’s say you’re able to keep your inflation of 5% because you’re a financial which right. So because of that you get to raise rents. We know that you’re getting this cashflow increase but you’re paying it back with an instrument that’s losing value every year. So when you recalculate the value of every single payment that you make over 30 years and compare that to the values of the dollar the day you borrowed it, when it’s worth it’s most anytime there the ownership of that property. We’ve run the numbers. We actually show that you are not paying back to a hundred and I would say a $80,000 loan is going to be about $151,000 between principal and interest over 30 years.

Aaron: People are like, Hey if I can do this in 15 I’ll pay off. I won’t be $151,000 I’ll be paying like $120,000 right.

Josh: $110,000 $120,000 right?

Aaron: Yeah. Something like that, so their thinking they’re getting ahead. The problem is when you’re paying off in 15 years, you’re paying it off with an instrument that’s worth more. So I was theorizing about this on a podcast and I got a call after that podcast aired from the professor of accounting at Kennesaw State University. He says, you got to come speak to my students. I’m scheduled to be out there on the 13th of November of 2019 to speak to the students at Kennesaw State. Then he and his students created a tool for me as a project for the accounting degree that shows that in the 30 years when you recalculate and just that a fifth at a 5% inflation, only 5% you’re not paying $151,000 you’re paying back an actual dollar value of $77,000 in change. Your paying less than you borrowed.

Josh: Less than you borrowed. Wow.

Aaron: When you factor that 15 years, even with a half a percent lower interest rate cause everyone’s like, well my rate will be lower on a 15, right? Sure. But when I factor in 15 years you’re not paying $77,000 you’re paying like $83,000. You pay more money on a 15 years.

Josh: It’s actually slightly more. Yeah, because the future value of your cashflows is not worth as much because you’re not able to extend those cash flows in year 16 through 30 right. Because the inflations…

Aaron: The instrument you’re paying, right has more value during the first 15 years then it does in the ladder 15 years is a compound decline. So you’re literally getting free money. So I tell everybody leverage high and leverage long and understand that you’re creating a tremendous amount of wealth and this is not debt. This is the greatest asset of the deal. When everybody says, well, I asked them, where are you going to make the most money? Well it’s probably going to be an appreciation or in cashflow. No, it’s not. Cash on cash return is 100% fictitious.

Aaron: Where your real value is, is to embark taking somebody else’s money now at today’s dollar value, buying an instrument that’s going to create, create cashflow for you and slowly paying them back with something that’s worth less and less and less. It’s like taking and giving them gold and be able to shave gold off all the time as you give it back. And if you’re able to do that, why would you not do that? Or would you not go to the movies and sit in the middle of the aisle, right? And have people passing food back and forth and you get to take what you want as often as you want. And then when you leave, they give you your money back, right. That’s basically what you’re doing, right.

Josh: I love it. I love the analogy.

Aaron: You get to watch a kick ass movie. You’ve got to have a hot dogs and popcorn and nachos and all the drinks you could stand, you have the funds to get everything. And then when you sell the property, not only did you get to get full and get to get entertained, but then they pay you your price of your ticket, because they’re down payment. The money that you thought you spent, it’s not spent. It’s sitting in there. You get it back when you sell. So do not pay that off early. Do not finances short term. Fan as long and as high as you possibly can and get, quit letting the media when you around. I talk about being like a bull on a chain. They’ve got a ring in your nose and they’re forcing you to go around, you know, people refinancing every four to five years.

Josh: That’s insane.

Aaron: Wonder why, do you want to know why they’re doing that.

Josh: Why?

Aaron: Because they’re being forced into it. By mentally being coerced. What does an amortization schedule look like? The first five years?

Josh: Yeah. Interest. Interest. Interest. Profit per the bank. Profit for the bank. Profit for the bank. Right.

Aaron: Profit. Profit. Right. And they have convinced these people it’s how often you do it. I spent 10 hours every week trying to calm people down saying, yes, the rates went down 1% but quit it, quit calling me about that because all you’re doing is you are then putting yourself back into a reset interest, heavy position at a bullshit rate. That doesn’t matter anyway because the rate of inflation’s far exceeds it and then you’re paying them fees to do it. You’re giving them money to put you back in bondage. Quit that shit, it drives me insane.

Josh: That is awesome advice, Aaron. I love that. I love it. You know what’s interesting too, with all my single family rentals, I don’t have many left. I didn’t want about 2200 units of apartments now. So I don’t have as many single families as I used to. I’ve been slowly selling them off, but with my single families, amazing. Like I, you know, have some loans with Wells Fargo properties that I bought long ago. Now I’m like in year 15 year 20 of my pay down schedule, those properties are nearing being paid off and sure enough now it’s like weekly, monthly. I’m getting phone calls. I’m getting letters like refinance, refinance rates are down, rates are down. So my rates on those other ones are at like six 6.5% because I bought the property years and years ago when rates were higher and I’m not entertaining refinancing those because they’re all principal pay down now. Id be insane to refinance them at this point.

Josh: The only reason I will endorse a refi is if you can pull $20,000 grand out. If can you pull enough money out to buy another property, hell yeah. If your getting another property at the deal. You keep taking somebody else’s money to expand and then, I mean the tax benefits of owning more real estate. Think about that. If you’re able to leverage every single bit of it, refinance one, pull your down payment out, buy another, put that money into it and then finance the other 80% now you have two properties, a hundred percent leverage. None of your money is in it anymore, right. And now you’re getting all that tax deduction on an interest rate. And I keep the higher rates myself because I get to deduct more as somebody else is paying the rate. So we’re creating financial freedom and the freedom is the freedom from taxes.

Aaron: You know the government has set it up to where if you are creating jobs and creating housing and contributing to the whole, you don’t pay tax on that money, right. People say that we’re avoiding tax. No we’re not. We’re doing our damn part. So if you want to sit on your cooler and you want to drink freaking beers and you want to watch football and want to do your fantasy football bullshit, you want to do nothing for the rest of the world to help yourself to pay your freaking taxes because you’re on my roads, you’re on my streets. You’re using my streetlights that I’m paying for by creating jobs out there, right.

Aaron: So you better pay your part. You’d better not bitch about the taxes that you pay. You and I were out there building jobs. We’re creating these, we’re using our money to build for our future, but we’re also building for everybody else. Not only do I have 15 employees get how many people we do loans for, but can we be people, send us business, look at the amount of properties I am pulling handyman out there to work on things. I’m employee electricians, I employee plumbers, I employee, roofers I employee all these guys. We’re contributing to the whole, we bet or gamble get a tax break.

Josh: Absolutely. And you know what, if you can drink beer and do fantasy football on top of owning a successful business, then even better. Because I like those too, but I don’t sit on my butt to do it. We work hard, we work long, we contribute to the, to the system. We provide a lot of value. And yes, we get a ton of tax deductions. And yes, I like to drink beer and play fantasy football so.

Aaron: And the thing is, I have no problem with people that do but don’t bitch to me about what’s going on. When you don’t want to get off your ass, right? You’re the only person that’s going to move you. And if you want, if you’re like, Hey Aaron, I respect what’s going on over there, but I’m just going to, I’m going to hang out and do this too. This is what I want to do. Cool. Have at that. That’s awesome. You’re living a life you want to live. If you’re living that life and your the person say this sucks, you have it easy. The hell I have it easy. Are you kidding me? 4:30 every morning I have this, I’ve got to stress over things. I’m bandaging wounds every day because I’m bleeding out just trying to keep going.

Josh: Right. And you know what? The people that are providing tons of value, they’re creating tons of jobs. They own lots of real estate. They’re employing lots of people that are putting money back into the system. The tax code has been set up for eternity to benefit landowners, to benefit people that own real estate, whether it’s commercial, whether it’s residential. It’s been that way with the longterm tax deductions, depreciation are amazing. That’s why instead of bitching about the other people that don’t pay any tax and take advantage of the system. Because the system is designed for people that own real estate. There’s only so much land to go around. Buy as much of it as you can, leverage it long, leverage it high like Aaron said, and use the system to your advantage. So if you want to continue to run your eCommerce business, continue to be a doctor, a lawyer an accountant.

Josh: Continue to be a nurse or a teacher, but buy more real estate and leverage it long leverage it high. I love it. Aaron, listen. I want to give you an opportunity to tell all of my listeners and subscribers where they can get ahold of you. Where are the y an they work with you? Consult with you, get loans from you. I know your website, which is AaronBChapman.com. It’s Aaron with the A A R O N spelling, AaronBChapman.com. Is there any other place that you want to point them to, to connect with you, to work with you? Tell us more about that.

Aaron: That is the best place. AaronBChapman.com will always be alive. I finally got my hands on AaronBChapman.com. Email me and then set up a time to connect with this. You know, I always email my team or myself, Aaron.BChapman@SNMT.com. So then you can also go to the NMLS Nationwide Mortgage Licensing System and look me up my, you know, the NMLS ID, it’s like a prison ID. 267844 for verify who I am verify that I can do what I can do. Verify what I what I’m about. But yeah, reach out to us and you get to that website, AaronBChapman.com. You see a redneck sitting on a cabin porch, that’s my office in Missouri. You’re in the right spot, your not at the wrong spot, just know that. I’ve got list of podcasts which will have this on the media page. I’ve got another one there. I’ve got some writeups of some cool stuff we’re doing. So we’ll spend some time cruising around in there.

Josh: Fantastic. And I’ve got, like I said, I met Aaron months and months ago through a mutual friend Nitten who is used to Aaron for a number of loans and is building, you know, Nitten is that classic case of an in e-comm tech guy who’s, you know, doing really well in that business and buying turnkey real estate on the side using Aaron to help fund and finance that and create tax deductions. And then, you know, looking at my company to make passive investments and active investments in both residential and commercial. So Aaron listen, had an absolute blast of doing this. I love your approach. I love your energy. I love your conviction for what you do. It’s amazing. So for all of my subscribers makes you check out AaronBChapman.com use Aaron for your financing needs. Aaron, definitely want to have you back. I think we’re just kind of starting here to kind of peel back the onion on several different other topics that we can have. So let’s make sure we get you back on the podcast very, very soon.

Aaron: Heck yeah, brother. Thank you. Appreciate it.

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