Creating Holistic Wealth Through Real Estate: Invigorating Lessons from Donato Callahan

Transcript

[Mattias]
Welcome to the REI Agent, a holistic approach to life through real estate. I’m Mattias, an agent and investor.

[Erica]
And I’m Erica, a licensed therapist.

[Mattias]
Join us as we interview guests that also strive to live bold and fulfilled lives through business and real estate investing.

[Erica]
Tune in every week for interviews with real estate agents and investors.

[Mattias]
Ready to level up?

[Erica]
Let’s do it.

[Mattias]
Welcome back to the REI Agent. It is your super fly, super wise guy, Mattias Klimer, host of the REI Agent podcast. I don’t know, man.

I am a little burned out right now, I think. I’ve been speaking, had a couple podcasts today. My voice is a little tired.

Did some vocal warm-ups this morning with the kids. It was kind of fun. I was singing and they were singing along with me.

They found it very humorous. Maybe they will not find that as humorous if I keep doing it. But so far, so good.

But yeah, and actually have another band practice after this evening where I will need to be singing as well. So hopefully my voice handles it all well. I have been having fun.

I actually took a vocal coach lesson this week, which was interesting. I had signed up for some random like, you know, dollar intro thing for a couple week trial of a video course, then also kind of a group coaching thing. And it was good.

I mean, everything’s been good so far. I just am thinking about how many different ways I’m being coached on a weekly basis. And, you know, I might have 10 hours of individualized coaching and whatever in a given week.

So not every week, but if you factor in like CrossFit and being coached at the CrossFit gym, you can add up some more hours there. But anyway, it’s kind of cool. It’s kind of fun.

I kind of want to get another one, another coach. And I think it’s just one of those things that, you know, it is clear and obvious in the sports world why you need one. It’s clear and obvious, like in a physical sense, why a gym coach or some of the personal trainer, for example, would benefit you and why you would do well to have one.

Obviously, money is a factor there. Not everybody can afford it, but group classes are kind of like that. And you can kind of have group coaching.

You can have masterminds where you’re kind of getting together and working towards your goals together, etc. But I don’t think as many people outside of this business space and I guess real estate space too, Realtors will do this as well, really seek to find coaches for themselves. And I think coaches, I think counselors are often that too for people.

And you really don’t need to have an acute mental health issue to benefit from that kind of coaching or that kind of therapy. So yeah, take care of yourself first. Make sure that you’re right so that you can be there for your family and be there for your career.

So that’s my little PSA about that. I am in a phase of not being as ambitious with all my goals currently. I’m kind of setting my sights towards 2025 and taking a little bit of a breath from as much discipline as I have had this year.

Very proud of this year. Very proud of everything that I’ve accomplished. Definitely some things that I need to finish and wrap up, aka my book.

But very proud of how far I’ve come and very excited about 2025. I’m very, very excited about the direction that’s going and looking forward to seeing all these things come together, getting me towards my guiding North Star, the reason why I’m doing everything. But anyway, we have a great guest today, Donato Callahan.

Donato is a very smart guy. He very ambitious, very big go-getter. He will explain what he did in the real estate space, how he started investing, and how quickly he moved into more complex deals, which is probably one of the fastest I’ve heard actually.

So that’s really cool. And he’s also got a software solution for people that real estate agents can benefit from and also investors can benefit from. So definitely something you should be paying attention to.

We get a little deep, a little philosophical on the real estate investing side, if you will. So definitely stay tuned for that. But without further ado, we have Donato Callahan.

Welcome back to the REI Agent. I am here with Donato Callahan. Donato, thanks for joining us.

[Donato Callahan]
Thank you for having me here. I’m happy to do it.

[Mattias]
You are an interesting one.

[Donato Callahan]
Well, thank you. I appreciate it.

[Mattias]
You’ve got a couple of things you’re into, all of which are interesting.

I mean, where do you want to start? Should we get into your backstory about how you got into real estate investing?

[Donato Callahan]
Sure, yeah. I can go throw back all those years and years ago to my tender days of my youth. We can go talk about that.

[Mattias]
Yeah, let’s start there.

[Donato Callahan]
Yeah, so it started when I was in college. I was recruited by the Department of Defense to come work for them by the end of my freshman year of college. So basically I was a sophomore and I knew where I was, as long as I didn’t fail and I didn’t get in trouble.

I had the college taken care of and I had the job taken care of. So I was pretty much just kind of sitting there at 18 saying, well, this can’t be it. This isn’t everything I’ve worked for.

So I started looking for ways to kind of grab my independence and wealth creation that came through real estate. So I spent a year trying to learn how to wholesale while getting a job with a property management company while talking to agents and learning everything I could through paid mentorship to be in the real estate game. And that led to my first remote wholesale deal.

And then that led to my first four-family house hack that I still live in today. It’s a great deal. Which led to my first 172-unit building which became my 200-unit building.

And then I just got equity in another 300 units like a month ago. So that’s the journey.

[Mattias]
Wow, okay. You took some jumps.

[Donato Callahan]
Yeah, absolutely. I mean, I’ve always had a concept in my mind that success leaves clues, but failure leaves landmines. And the people that you’ve spoken with and have been around with for years and years and years, you say, you can go back in time and do it all over again.

What would you do differently? They’ll throw their hands in the air and say, if I could do this one thing differently, here’s exactly what I would have done. And when you go talk to 10 people who have 10 years of experience on you and you take all those landmines that blew up in their face and you bring them to where you are right now, out the gate, you have this map of exactly where to walk in 100 years of collective wisdom guiding your decision-making process.

So enough people told me, if I could go back and do it again at a house hack and I get big stuff faster. Because everyone that wholesales goes to flipping who then goes to rentals, who then goes to bigger rentals, who then goes syndication every single time without fail. It always happens.

So why not just skip all the stuff in the middle and 20 years of grind and just go to the big stuff? So I did.

[Mattias]
Yeah, that should be motivating. That should be encouraging for people listening to this. That’s really awesome.

Even if you’re not necessarily in that investing space fully to set big goals, because if you don’t, you’re gonna be settling for meteorography. I just totally butchered that word. But anyway, I’m not gonna try it again.

But no, I think that’s really, really, really interesting. Because I know that, I think Brandon Turner talks about it often. The kind of like the doubling method where you might start with a single family and then go to a duplex and go to a quadplex and go to an aplex.

But if you went from, you said, fourplex to 172 units. Yeah, that’s a pretty big jump. Yeah.

Was it? Okay, so getting past it though, like what I hear often is it’s like, basically, it’s the same thing, just bigger. Like you’re doing the same thing.

If it’s like about you’re putting in money to increase the value like a flip or like a house act that you’re slowly improving. But it’s just at a bigger scale. Like, I mean, was there a bigger learning curve for jumping in that quickly?

[Donato Callahan]
Yeah, it’s pretty much the same process. Now, there’s a lot more pieces to that process that you have to go through. But it is the same thing.

It’s identifying a deal, doing a due diligence, getting your capital, closing on it, doing your renovations, and then refinancing it or selling it. It’s very simple, but it’s just large, simple in theory, difficult in practice. It’s a larger team, larger dollar figures, and a bit more complexities that are in place.

But the reason that I like doing this type of work is that you can do it with a team. So like, I’m a member of a team. And when I first started, we had six people on my team.

And our job was to find opportunities, underwrite them, do market research, do the due diligence, write the offer, get the debt quotes, talk to property management companies, get insurance quotes. After two years of doing that, I no longer work with that team. But all those roles, I now do by myself.

I have seven people’s worth of roles in me that I just do. And so now I have a four-person team. And one person does what I do, which is me.

One person does the capital raising. One person does some of the asset management. And so I can get really good at what I do.

Someone else can do it so that I really don’t care about doing. And then someone else do the other stuff I don’t care about doing. And so I don’t have to do the entire, I guess, one to 10 of the process.

I can just focus on the parts that I’m really effective at and then outsource the other people with the roles that they’re really good at. So that’s really valuable when it comes to scaling up.

[Mattias]
Yeah. So one of the parallels I can think of here is oftentimes I think people in the real estate sales world, they definitely think they have to do everything themselves. And if they’re not good at something in the business, some people, they say that often there’s personality agents that people are kind of naturally drawn to.

Then there’s systems agents that basically seek out people and are very good at systematically reaching out, touching base with people. And that’s how they get their business. Two different ways of doing things.

But I know that a hybrid of both, it could be an ideal, right? And so I think oftentimes somebody that is like, let’s say personality oriented, will really beat themselves up for not being good at the systems. And I think all this to say is that another way to look at it is if you build a team that has strength focus, like you’re talking about, you can be that person that has a personality that goes out and talks to people, et cetera, without having to do maybe the marketing or the database management that is reaching out by emailing or doing market analysis.

Whatever it might be. And I think that’s really something that team building for scale is a way to have longevity, I think, in the business, in any business, because you’re not getting burned out doing the crap you don’t like. But also it’s just going to play towards your strengths.

You’re going to feel better. You’re going to do better because you’re doing the things that you’re good at. And then if you have somebody that does the things they’re good at that you don’t like to do to compliment you, it’s kind of perfect.

So if you are starting a team, if you’re working on a team, if this is resonating with you at all, focusing on your strengths and not trying to overcome your weaknesses by being more disciplined or whatever is another model that could really work well. And so I think that’s one of the things that I’ve been attracted to in the commercial investing space, and it sounds like exactly what you’re doing, is really leaning into what you’re good at and having a team of people that are good in other areas that you don’t find as much energy or joy in doing.

[Donato Callahan]
Exactly. It’s a place where there’s a pretty big pie. Everyone can take a piece of it, and it makes a lot of sense.

People always ask me to know what are the numbers on a commercial real estate deal, and I’ll tell them my first deal, I didn’t put in any cash, right? I was 22, and all I did was pour in my time and energy, and I learned. And I owned 5%, 20%, 30% of an entire deal, right?

But that 5%, 20%, 30% paid me $35,000 the day that we closed it, and it was all tax-free. So in your mind, if that’s what that tiny sliver means, you can get a pretty good idea of what the whole pie looks like. And so to get paid that much cash when your first job out of college is for like $52,000, it’s like, okay, well, that’s all tax-free now, and I got paid to learn that, and I can just keep doing this over and over again.

So that’s what I’ve been able to roll into by partnering with the right people.

[Mattias]
That’s amazing. Yeah, those partnerships are great and such a key. And the beauty of that commercial real estate space is that, yes, it is more complicated.

It is definitely something not to do lightly. There’s usually a lot of money at play. So obviously, a lot of risk because you’re often using other people’s money too, and nobody wants to lose money for their investors.

But it’s just a different game. I mean, there’s a lot of money that can be made by taking a rundown apartment place and making it nicer. I mean, you’re essentially kind of flipping it or just managing it better, right?

You’re just making it more profitable, and the power of cap rates will make that property worth millions more depending on the size of it. So it’s a pretty cool investment vehicle.

[Donato Callahan]
I completely agree. I mean, I tell my clients all the time, folks who are getting into the commercial space, that if I increase the income and property by 100 grand, I can add $1.5 million to my property’s value. Based off how commercial real estate works.

So it can be really cool. On one hand, it’s a benefit because you’re in control of the property’s value. But on the other hand, you’re in control of the property’s value, which means it doesn’t matter what the one down the street sold for pretty much.

What I care about is how is this property performing? Because in commercial real estate, right, there’s the property and there’s the business. So the property could be in a really great condition, great grounds, great structure, right?

But it could be a very horribly operating business with bad margin and poor cash flows that have to be improved. And so both of those are things we have to look at when we’re trying to make an investment decision.

[Mattias]
Yeah, totally. That’s a good point. It is much more of buying a business than like buying a single family houses.

You really do need to have that operating, the operation going smoothly. So that’s well said. Now, on top of the investing world, you are also in the software world.

Can you talk about that a little bit? Absolutely.

[Donato Callahan]
So as a result of my own struggles and problems that I faced as a real estate investor with the residential commercial side, I wanted a way to be able to quickly say yes or no to deals in seconds, not just from a numbers crunching perspective, but from a market perspective, an area perspective and a deal perspective. So that led me to co-found a software company, Bright Investor, which is all about saying never buying a bad deal again and being able to do that nationwide. So we pretty much take all the market data you want, appreciation rates, rent growth, crime stats and mapping, where the best local franchises are, school rankings, put it on a nice map for you so you can find the best spots.

And then we also have the property data. So you can either look for deals both on and off market on our platform, or you can enter an address and look it up. And we pull the sales comps for you.

We pull the rent comps for you. We then get an insurance quote on that deal for you. We then analyze the deal for six different strategies for you.

And that allow you to put all that information into a nice branded report with your name and logo on it. And send it out to your clients. So buyers, agents love us.

Brokerages love us because it’s a differentiator when they’re recruiting agents. And investors love us. And PMs love us because it takes everything they’re already using and wanting to get access to and puts it in one place.

[Mattias]
And for people that are not familiar with some of this investing world, you might understand that if you know your market well, you invest in your own backyard, that you may not need to know some of these details that he’s talking about here. But often when you’re getting into multifamily space and you’re getting into commercial space, you’re exploring multiple markets. And so a tool like this could really help you understand what that market looks like, if it’s a good opportunity, if that location is good in that market itself.

Is that correct?

[Donato Callahan]
Yeah, I’d say so. So we get a lot of folks who are being honest to investing and they’re trying to understand what’s going on on the ground. But a lot of folks who are trying to buy just locally to them, a lot of people think they know what’s going on in an area until they actually check the data and they often find that they’re pretty wrong.

So looking at people having perception of, oh, this is a good area, this is not a good area, or you won’t make money there or not because their friends, mothers, brothers, college roommates, cousin, told them something about real estate five years ago. And so when they start looking up what we have on Bright Investor, they start finding opportunities where they previously thought there weren’t and they avoid areas they would have previously thought were great because they have a cleaner insight. So that’s something that we do is remove the noise and allow people to get really clear cut on.

Instead of doing a real estate deal and feeling like you’re jumping into the unknown, we are basically turning on that flashlight and saying this is exactly what you’re looking at. It’s exactly what you’re walking into. You know what you’re going to get into before you ever get to the closing table.

[Mattias]
I love it. And obviously there’s always work involved with getting comps and doing the analysis. I mean, so there’s a ton of value there for, yeah, anywhere.

That’s really cool. And that’s up and running now? That’s available for anybody?

[Donato Callahan]
Yeah, it’s available for anyone. So we launched it basically end of March, 2023. So we’ve been on the market for about a year and a half.

So we just launched property data less than three or four months ago. So that’s been pretty new. And we’ve been in pretty much every major real estate mentorship group.

And we got voted one of the top real estate investing softwares of 2024 this year. So we’re pretty new, but we’re coming out swinging, turning heads. So it’s been fun.

Anyone can come check us out at brightinvestor.com. We have a free trial. Anyone can come check us out and start investing better today.

[Mattias]
Yeah, that’s awesome. Yeah, I mean, that’s finding deals, knowing that they’re good deals. I mean, that’s such a critical part to this process.

So making you have more confidence in it, that’s definitely huge. I know that a lot of people that would be thinking about whether they should even just buy a single family home or whatever, it can be daunting to know what’s a good deal and what’s not. So that’s really cool.

[Donato Callahan]
Absolutely. And then on the agent side, we have a lot of agents who post this in our lawsuit are kind of struggling to not provide value, but maybe communicate their value effectively. And justify why should my commission stay 3%, not 2%, 2.5%, 100% or lower. And so what we’ve been able to kind of showcase is that if you have a difference between agent A and agent B, and this agent is over here allowing you to say, you know what, I know you’re looking to buy this property now, but let’s talk about your three, five, 10 years from now.

Let’s talk about how this property is going to serve you now as your primary occupancy and potentially as an investment later on and show all the different ways that this could be the right decision for you. I know you want a property that’s going to be close to your morning Starbucks run and close to little Jimmy’s school in the morning to drop them off for class. Well, let me show you where all those areas are and where they overlap.

Also where the appreciation is highest in this area so we can get you guys a nice passive return on this property while also making your dream home. Now here’s a quick report showing you everything that I’m seeing as far as my valuations and what I think this property can be worth and what we’re going to do for it. And you can go ahead and click this button.

You can send me an email whenever you want and let me know if you’re interested in buying this one. Right? And it’s something that allows agents to set themselves apart really quickly.

So it’s why we pursued partnerships and then with the eXp Realty, Keller Williams, Next Home to be able to showcase that in a exceptionally competitive landscape in today’s marketplace, being able to set yourself apart a little bit easier, a little bit better is something that allows a lot of folks to be able to one, go after repeat clients like investors and to stand out in the both retail and investment space.

[Mattias]
Hmm. Wow. Yeah, I can see that being very helpful to promote your own value when you’re sitting down at the buyer presentation or whatever people are doing to get that brokerage agreement signed. And then also I’m sure it’s really helpful for a listing as well.

You could use data to help support your list price suggestion.

[Donato Callahan]
Absolutely. So like list price, we’ll get folks all the time because we’ll track days on market in PSQ and a zip code. So we’ll have listing users all the time saying my clients are just refusing to move the needle on the pricing.

We need to drop this or we need to raise this for whatever reason. So they can come in and say, hey, Mr. Client, I know I’ve given you my arguments here, but this is our third party provider. This is what we look at.

I want to show you exactly why this property is not moving and why we need to take these actions in this way and work for this to make sense, right? As agents, you need properties at the closing table, not sitting on market. So in order to get clients to that table, here’s how you can do it.

In a way that we’re backing you up. So my kind of my line for agents we’re using Brian investors, why do you use us? It’s all their credibility with none of the liability.

[Mattias]
Okay. So you can blame you.

[Donato Callahan]
It’s like I hear it, right? I understand the words coming out of my mouth, but yeah, let me blame me. I mean, it’s like, because what I want you to be able to do is sit down and say, hey, look, I’m going out there.

I’m doing the painstaking work of, you know, you’re going to clicking to go to brightness or clicking a button, but you’re doing the painstaking work for your clients, put us all together. It’s not you, it’s them. Like, this is what the data says.

Like, hey, I’m sorry, but this is what it is. Like, I wouldn’t be doing my job if I didn’t give you the truth, right? And I’m going to give you the truth no matter what.

And so blame me. And so when you’re an agent that has an unruly listing, blame us. If you are a buyer’s agent and your client’s saying, I really don’t want to buy this property, don’t make it make sense.

You say, actually, I ran the numbers. Here’s what I think, or vice versa. If you’re a property manager and you’re trying to work with an agent and they’re asking your opinion on a deal, blame us.

Here’s why, for better or for worse, isn’t always bad. You can blame me for good things too. But we’re this place where you can get all the credibility without any of the liability.

And that’s really attractive in today’s place.

[Mattias]
Yeah, I’ve often, so I have a spreadsheet that I use to analyze properties, et cetera. And I definitely, the more I can lean on raw data, the better. I think that you, because like when you’re just comparing, for example, like a square footage or number of bedrooms or baths, that kind of stuff, you’re not adding your own personality, your own opinions in there.

That’s just data, right? So like a smaller house is going to sell for less money if it’s right side by side with this other one and everything else is the same. So, I mean, I think that’s what I’m basically getting at is that that’s really nice to have this data that you can actually just lean on that you’re not needing to say, well, I think if your curtains were not pink, then it would probably sell.

There could be truth to that too, but that’s going to be more of a personal kind of comment that they might take offense to. And that might be directed as you just don’t like my house or you don’t like me or whatever. Data is data.

It just, it is what it is.

[Donato Callahan]
Exactly. Like this is what it is. And so if you’re telling me that your goal is to sell this house, then this is where we need to be.

And if this is not where you want to be, then you’re likely not going to, and selling your house probably isn’t the most important thing for you. You know, and throw it right back at them and say, this is my goal is to get you your goals done. So if you tell me what your goals are and we’ll use what we have that are available to hit them.

[Mattias]
Yeah. And I think also we probably, all agents have come across going into a listing presentation and having multiple agents competing for the same listing. And then somebody throws out some crazy number that doesn’t make any sense.

And then the seller’s like, oh, I’m going to do that one. And if you have more information in your presentation to support what you’re saying, you can help maybe discredit, not discredit, but just prove what you’re saying is accurate versus the other person who’s just maybe intentionally, maybe unintentionally, just way overshooting the value so that they could get the listing. And it works.

And I had this happen here recently, I think the person would have probably earned about $20,000 more had they listed it at my price to start with than going, you know, $50,000, $60,000 above what they should have and sat on the market for a while and had it slowly come down and then finally took a low offer.

[Donato Callahan]
It’s one of those situations where like if I were to go to a personal trainer and they said, I can make you look like Arnold Schwarzenegger in three months, instantly you’d go like, yeah, definitely not. But when it comes to money or your pricing on your house, people go, oh, okay. It’s the same thing.

It’s the same thing. It’s just folks, and then it’s a very basic concept of people who are over promising and under delivering. Yeah, and you know, to be an effective agent, you want to say, look, I think we’re going to shoot for this.

And with the hopeful goal that we’ll get to this point, but we’re going to plan for X. And this is why I think we can do that. And so if you want to gamble, go that way.

If you want to get this thing done and on your merry way, you’re going to come over here and talk to me.

[Mattias]
Yeah. And then we’ve all been in this situation too, where you’ve had somebody who wants to list higher than what you suggest. Even all this data, you know, supports what you’re saying.

They’re like, no, I don’t really think we should list here. You know, you can use this still to kind of remind them like, hey, like we’re not getting showings. Hey, everybody that’s coming to see the house isn’t interested.

There’s a problem here. We can control marketing. We can control the property condition and we control the price.

Which one of these is a problem? Do I need to do something more in my marketing? Maybe we do a combination of a price reduction and an open house.

And that together might, you know, get us over the hump to get a contract on this. But if you think there’s anything else I can do with my market, I’m happy to explore that and talk about that with you. If there’s anything we need to do about the condition from the feedback, let’s take a look at it, right?

Let’s see if we need to take those pink curtains down. But most likely, it’s just that the price is too high. And pretty much every time.

And I tell people too, like, I mean, if you’re looking at, if you want to sell your house a million dollars over price, it might eventually sell. It might just take, you know, 60 years to sell, right? You might get it eventually.

Or if you want to sell your house for a dollar and it’s worth a million, it will sell immediately. So like, you know, pricing is also time, right? Like, so like, it won’t sell for a dollar.

It will sell immediately for a lot more. There’s going to be a ton of interest. It may not get up to the, what it’s actually worth.

It’s to be determined. It’s kind of like an auction at that point.

[Donato Callahan]
I was just talking to some colleagues about that, that, you know, pricing is a reflection of, you know, time. In the sense that when people are saying, I want to be buying investment properties, you know, all the time, the only way that works because market cycles are a thing is if you can buy at a discount. And by buying at a discount, all that means is you’re buying it at yesterday’s price.

So I can buy constantly in 2024 if I’m buying at 2019 prices. Or I need to not buy until such a point that market conditions turn in my favor. Same thing with the listing side, right?

If someone came to me and said, I don’t actively invest in California, right? But if someone came to me and said, Donato, I will, you can buy every property in California from the worst D-class, you know, just horrible situations to the most premier luxury A-class living apartments. I will sell you every property in California for $500 million.

Instantly, I’d say yes. Yes. No, yes.

Yes. I’ll figure it out. Yes.

And now it’s not about how, it’s not about like, should I do this? It’s how do I get $500 million?

[Mattias]
Right.

[Donato Callahan]
Because I know I’m buying prices at a time when the last time that was around was like the 1800s, right? It’s all just about a, if you’re overpricing, you’re asking someone to pay 20, 35 or 20, 40 prices for a property. If you’re underpricing, you’re letting them go back in time.

And so if you want to sell it in 2024, then let’s price it for 2024.

[Mattias]
That’s a good way to think about it, to talk about it. That makes a lot of sense.

[Donato Callahan]
I’ve had decades of experience have, you know, rolled themselves into my mind.

[Mattias]
I had another, I just sold a house. It was a client that owned it for 65 years. And it was their first house.

And then they turned it into a rental and they sold it for $310,000. And I was like, okay, so what’d you buy it for? Do you remember?

They’re like $1,750 maybe. And I was like, you were probably squabbling over $25 when you went into the contract.

[Donato Callahan]
Yeah. Honestly. I mean, I talked to my grandfather and he was like, when he bought my first, he bought his first house, that would have been 19, like, oh, 1970.

1970, yeah, 1970 or so. He’s like, the bank wouldn’t give me a loan for $31,500. They wouldn’t give me a loan for $30,000.

I’m like, are you kidding me? Are you kidding me? Like you’re going to get, the bank would lend you for 31,500.

They’ll lend you 30 grand. I was like, yeah. He’s like, but your interest rates today.

He’s like, you know, they were higher back then. I’m like, I don’t care if you had a 20% interest rate. He bought it for a potato on a hard rock.

And like, that’s a phenomenal return, but you know, he bought it in 1965. And then that’s fantastic. Good for him.

[Mattias]
That’s the other factor here too. Like with that time thing you’re talking about is that, you know, time heals most wounds. I mean, you may be not at a current moment.

If you, you know, if we do have a dip or something, it might, you might find yourself underwater or something for a period of time. But overall, historically, if you own an asset for long enough, if you own real estate for long enough, it’s going to heal any kind of price corrections or whatever that may happen. So yeah, like, you know, people, I often say like, it’s like kind of like planting a tree.

The best time was 20 years ago. The next best time is right now. So if you are owning and that’s with interest rates, you mentioned interest rates.

Like, you know, this is another thing I tell people is that if you wait around for interest rates to drop, like then it’s going to just increase the competition. You’re going to have a hard time buying. Whereas my friend who owned 20 houses, when the interest rates dropped, he refinanced them all and he would have never been able to refinance or sorry, buy 20 houses in one year, but he refinanced 20.

So it’s like, yeah, picking up property, ideally at a good price that makes the pencils out that works is, you know, something we should be kind of striving for all the time.

[Donato Callahan]
Absolutely. I mean, I’ll like, I’ll go on, like, I’ll go and write a message and I’ll look for properties that are in the market for 30, 60, 90 days. I found one, you know, they wanted, you know, two, 30 or something for it.

And I’m like, nope, I’ll pay it 190 for it. And I go and tour it and do a seller financing and give me $40,000 discount on this deal and seller finance it. And they’re like, well, I can’t seller finance to you, but I’m open to doing that price conventional.

Like, great, there’s $40,000 reduction. And so it’s, a part of it is you got to be unabashed and just, you got to send it. You got to send it.

And especially on the residential side, like on the commercial side, sometimes brokers get a little frustrated with you when they stop, they, cause they’re, you’re sending lower offers. And I’m like, I mean, for those who don’t know cap rates, this metaphor, this example won’t mean as much, but you know, I had a property sent to me the other day and they were saying, hey, we want to sell this thing and it’s off market. We’re shopping it around a little bit.

I’m like, well, I see they bought it for 32 million two years ago at a three, eight cap. Like has something happened in the last two years where they want to sell it for market cap, which is more on like six, five. They’re like, no, no, they need to get out of it.

What they put into it. I’m like, oh, so you want me to buy this for a mid three cap in 2024. Like, so the answer is no, I’m not going to do that.

And it’s like, you know, people, people will always try to, you know, move those properties off on you, but you got to stick to your guns and, you know, do the right thing. And I do think honestly that the best thing anyone could be doing is putting offers out all the time because objectively it’s going to be harder 25 years from now, even five to 10 years ago, we had a lot of folks looking at, you know, the US economy and looking at markets like London and other major Western European cities and looking at larger renter population there and predicting that US is going to go rentership, largely renter demographic and homeownership will become less and less prevalent.

And with the rise of built rent communities with the rise of interest rates, we’re now owning a house can be as much as a 40% premium. We are seeing some people choose to rent longer and longer and it’s the exact wrong thing they should be doing because making that easy choice right now, this is one of those things that your grandkids are going to look back and say, I wish I could have called grandma and grandpa back in 2024 and tell them that they should have, they should have been the hard bullet for themselves right then because now it’s literally impossible for us. And that’s, I’ll be honest, that’s how I live my life, right?

Whether that’s right or wrong, I am just one link in a very long chain. I can look back and see decisions that my great grandparents made. I can look forward and say, I’m going to have great grandkids someday.

And at some point in time, I’m glad that my great grandparents did this choice has got me here. If I want my family to be in a position where they’re going to be able to be taken care of and secure at a long time, and I’m not married, I don’t have kids yet, but that’s what I think. And so I need to be able to do things right now to where 30, 40, 50, 60 years from now, my family tree is in a completely different branch because I took a hard choice that was like difficult right now, but it was doable as opposed to impossible for future generations.

And it’s a little bleak, but it’s also I think reality that no one’s coming to save you and no one’s coming to save your grandkids if it’s not going to be you. So if you’re not going to get it done, then you need to be willing to acknowledge the fact that your choices are intentionally harming everyone else that comes after you for the rest of your life. And that’s a big statement, I know, but it’s how I feel.

[Mattias]
Wow. Yeah, one of the things I could say too about getting in, owning more real estate now, owning more assets now is we know about appreciation, we can wrap our heads around appreciation, but if you flip it around a little bit and think about it this way, it’s really that the dollar is depreciating and the assets are actually going up because the dollar is worth less. And you can see that as a direct thing that happened when they were printing money over the pandemic, right? All the house prices shot up immediately because people were able to, the value of the dollar was less and they were able to buy more with it.

And so naturally everything shot up because there’s still only so much demand. I’m sorry, only so much supply in the marketplace. And so obviously construction’s needing to happen and it’s gonna be a long time until we can catch up with the demand.

But yeah, to your point, it’s just, you know, it’s kind of like gold, right? It’s just gonna, you know, kind of stay growing. It might, the value itself might not necessarily change, but the value of the dollar goes down and the price goes up essentially.

So it’s another way to look at it.

[Donato Callahan]
Absolutely. I mean, there are many, okay, kind of getting deeper here on this conversation, but let me know if I need to lighten the mood at all. You know, it’s very easy to go back in time and look at great empires, right?

Netherlands, China, UK, what have you, and look at the rise and fall of economies. There’s some great books on this. I think Ray Dalio has a great, you know, video on this.

The Rise and Fall of Nations. I think it might be called The Rise and Fall of Nations. I watched it a while ago and looked at the concepts there.

But there’s a very predictable cycle. And what always gets me, I love, I love pointing this out to people, is that when they say stock market’s always gonna be there or it’s how it’s always been, like you mean 200 years. And stock market, as you’ve known it, maybe 150 years, maybe forever.

And it’s always returned. This means for this blip of a blip of a blip of human timescale. Do you know how long modern retirement has been a concept?

Like 60 years, 70 years. You know what it was before that? Move into your kid’s home and they put you in a corner until you pass away.

Like this, nothing, none of this is guaranteed. None of this. What is guaranteed is I can own this piece of land or I can own this property, right?

And I can take this. That’s a thing, right? It’s a real tangible thing.

That’s part of the reason I’m not super bullish on things like cryptos and XYZ, right? I think there’s value there. I think there’s something cool.

But at the end of the day, none of this is guaranteed beyond the fact do I have a place that me, myself, people I care about can live in and occupy, get our basic human needs met while also being able to generate some level of income based off the concept of demand and rent and the fact that some people will never want to buy and they’ll want to choose to pay me to use my property instead. That’s a fundamental human truth. Landlords have been around a lot longer than the S&P 500 people.

You can quote me on that. It’s a good point. Yeah, landlords have been around for a heck of a lot longer and that’s never going away.

[Mattias]
At the end of the day too, you know, you could always plant crops on land.

[Donato Callahan]
Exactly. A landlord at one point was just, hey man, I’ll pay you to use these acres or you’re gonna pay me X percentage to be in this land, right? That’s what a landlord is.

Now it just includes air conditioning and dishwashers. It’s a different concept, right? But it’s the same basic principle.

And so you want to understand how humans have been able to generate income for themselves and provide generationally since the times of King Arthur and beyond, own the stuff that other people need. And there’s no way for me to own all the dollars, but there is a way for me to own all the real estate in a certain place that people need to be able to get access to to live there.

[Mattias]
Yeah, yeah. It is certainly one of the, I mean, it’s one of the basic needs, you know, that Maslow’s hierarchy of needs, shelter is one of them. And I think it is wise to invest in things like that.

And you just understand it better, right? I mean, like, you know, I have almost all the Apple products they have out there for sale, but do I understand how that business really works? No, you know, like I would understand that business better than a lot of businesses, but do I really understand their operations?

No, and I can much more easily understand real estate. I can understand the rental that I own or even something more complex, like a multifamily that I am a limited partner in and, you know, invest in passively. So yeah, I think it makes a lot of sense.

And the beauty of it is too, is you have options now, like, you know, as a real estate professional, you invest it passively in a syndication, you can take a tax write-off now like you can with some retirement packages, but you can also use the dividends for whatever you want. You can take that money and then when you get paid out, you can reinvest it into something else or not. Exactly.

I mean, you just have more control, you have more options. And I think, yeah, it’s just investing into retirement vehicles. If you’re getting matched or something, there’s probably some good reasons to do it still.

And, you know, it’s probably good to diversify and obviously this is not financial advice, but yeah, it’s tangible. You have access to it now, you can sell it now, you can do a lot of creative tax things with it now. And it is a great thing to have when you retire.

[Donato Callahan]
Yeah, I mean, I agree. I mean, I’ve already been more edgy than I normally am. Someone must have spiked my coffee this morning.

But, you know, I’m giving you the raw unfiltered cuts. I hope this is fine for your audience here. But I mean, another point that I’ve echoed before on other podcasts is any retirement plan that is beholden to your age to start kicking in is not for your benefit.

That’s a fundamental truth, and I personally don’t care what anyone else has to say about it as far as that is a 100% truth. It is quite literally the dangling of the carrot. And I don’t care how much window dressing you put on top of it, that is a carrot that’s being dangled in front of you 40 years in the future.

Yes, tax-free growth. And also tax-free refinancing a property and pulling that income out as debt, right? You know what else you get is tax-free depreciation through cost segregation, right?

There are so many ways. So I worked as a geospatial analyst at the Department of Defense for two years out of college. And I would sit there and I’d talk to people and they’d say, man, I’m going to retire.

I’ve been here for 17 years. Donato, I’m going to work another 17 years. Okay, what’s your goal there?

Well, I’m going to retire and I’m going to get my 401k and my TSP. It’s going to pay me $3,500 or $4,500 or $5,500 a month for my social security and my TSP. Okay, to be clear, this rental property that I bought at 22, I live in it for free and it cash flows me over a thousand bucks a month.

And when I move out of it, it’ll cash flow me $2,200 a month. So to be clear, one property purchase is going to be 50% of the income that you plan to take after a 40-year career. And then when you say that to someone, you watch their brain melt.

Mic drop, wow. It’s a mic drop moment because it’s true. And I feel like I got to tell people, I got to shake people and say, look at the math.

You’re smart people, look at what this work. But the thing is at the end of the day, it was something I discovered. And this is for everyone listening right now, this is a differentiator.

It’s not about the money, it’s about the effort. And many, many, many people, whether you’re an agent who’s trying to sell properties and you’re sitting getting to investing, whether you’re an investor that’s trying to buy properties, whether someone who’s been traditional 401k investor or what have you, most people would rather delay retirement or put it outside of their control in exchange for less effort now, even though it’s worse for them in the long run. And so that’s the conversation, the mental piece that has to be overcome.

If you want to be someone that can continue to do this and really establish your own life or what REI agents supposed to be all about, right? A holistic approach to life, your real estate, you want to achieve that. It means the exchange of effort now for greater returns later.

[Mattias]
And I would agree with you and also say that I think it’s also just been sold to people as the safe thing, as the right thing. You go to college, you get a good job with a good, they’re gonna match your 401k with good benefits and that’s the safe route, the good route. And then you go to a financial planner, they’re gonna sell you on more of those stocks and things like that too.

And yeah, it does take some self-knowledge, the effort to learn these things and learn how it is. There’s other ways to be financially independent. And, but again, I mean, I think that’s where really, where syndications can be such a sweet spot, right?

Like you can have so much less effort by investing passively as a limited partner in a syndication. There is some knowledge, some effort you need to do, to do your due diligence, to not just blindly put your money into something and understand the risk that is involved with it. But when it’s done well, it’s beautiful.

I mean, it is, you just sit back and collect checks and tax write-offs.

[Donato Callahan]
Yeah, it’s not bad. And so like the folks I work with, so folks who are on the residential space, they’re trying to go to commercial. I work with people one-on-one.

I do apprenticeship. I don’t do group stuff. I don’t do videos.

I don’t do modules. It’s me and that person in the trenches for six months, getting them spun up and getting their deals done. And that’s why I don’t do large marketing forage just for the people who’ve come through.

So I’ve got six people I work with currently and they go from, I’ve been in residential, I was an agent, I was a PM, I was XYZ, I was a portfolio, I don’t want to get syndication. And by the end of this apprenticeship, I’ve got folks right now who are, they got law offices funding their deals. They’ve got property managers in place to manage them.

They’ve got insurance posts coming on. And now all we’re doing is submitting offers together. And it just, in the four to six months, they just fast track themselves and it’s a whole new asset class because they see it.

And it’s something where I’m really passionate about helping those folks out because I’ve gone through the $50,000 programs. I’ve gone through the big things that are pretty critical to get to learn what you need to know. And I want to be able to help people elevate that status.

So whether someone’s on the residential side and I can serve them with Bright Investor or whether someone’s on the commercial side and I can serve them with the knowledge that I’ve been able to accrue, I want to take people and shake them and say, you can do this. All you have to give me is your effort.

[Mattias]
I love it. That makes a ton of sense. Absolutely.

Where do people reach out to you if they are interested in something like this?

[Donato Callahan]
Yeah, so if you’re interested in Bright Investor, you can go check it out. Go to brightinvestor.com. Super simple.

If you’re interested in talking to me about commercial getting started and what you need to do in order to start collecting those kind of checks, you can email me at [email protected] or go to donatocallahan.com and you can book a time on my calendar.

[Mattias]
Okay, cool. And I do have to ask real quick, if you have a favorite book, a fundamental book that you think everybody should read or one that you’re just currently really enjoying?

[Donato Callahan]
Business-wise, Who Not How. It’s critical. The one caveat I’ll give is that you need to know how to do something before you turn it over to another who, but you need to get another who.

You’ll know what I mean when you read the book. As far as personal, I really love the Dungeon Crawler Carl series by Matt Dinniman. It is truly phenomenal.

It’s a guilty pleasure. It’s like a fantasy sci-fi magic kind of just fun role-play book. And it is delightful.

So that’s what I’d say for my two.

[Mattias]
All right, cool. Hey man, this was a fun conversation. I think we probably went and sat down some rabbit holes we weren’t expecting, but it was a good conversation nonetheless.

Thank you so much for being on the REI Agent. Thank you so much. I appreciate it.

[Erica]
Thanks for listening to the REI Agent.

[Mattias]
If you enjoyed this episode, hit subscribe to catch new shows every week.

[Erica]
Visit REIAgent.com for more content.

[Mattias]
Until next time, keep building the life you want.

[Erica]
All content in the show is not investment advice or mental health therapy. It is intended for entertainment purposes only.