Rediscovering Joy and Building Wealth: Dan Nelson’s Inspiring Journey

Transcript

[Mattias] (1:00:00 – 1:00:06)
Welcome to the REI Agent, a holistic approach to life through real estate. I’m Mattias, an agent and investor.

[Erica] (1:00:06 – 1:00:08)
And I’m Erica, a licensed therapist.

[Mattias] (1:00:08 – 1:00:14)
Join us as we interview guests that also strive to live bold and fulfilled lives through business and real estate investing.

[Erica] (1:00:14 – 1:00:18)
Tune in every week for interviews with real estate agents and investors.

[Mattias] (1:00:18 – 1:00:19)
Ready to level up?

[Erica] (1:00:19 – 1:00:19)
Let’s do it.

[Mattias] (1:00:24 – 1:08:45)
Welcome back to the REI Agent, it’s Mattias here. I wanted to talk a little bit about music. So music has been a big part of my life for most of my life.

And this is probably actually surprising to a lot of people that know me now, that know me from my real estate phase, since I started real estate, I guess. And that’s mainly because I’ve been kind of so focused on real estate and focused on other things in my life that I haven’t played as much music. But I was in choirs, played instruments all through my childhood.

When I picked up the guitar, I just learned guitar really well. And probably I joke about giving up guitar, not playing much guitar for a long time because I got the girl. So what was the point?

But I hear recently, I had used another person’s acoustic guitar pretty much the whole time I’ve been playing. And I have an electric guitar that I built in high school, which I actually have at a guitar shop, getting fine tuned to try to actually make it sound a little bit better. Because it turns out that’s a precise thing to do is to build a guitar.

And apparently, I didn’t do it perfectly. So we’re trying to get that thing up and running, which I’m really excited about. But before then, I decided to actually buy my own acoustic guitar.

You know, I was like, I’m a grown man. I can afford to buy myself a guitar. And I have loved that thing.

I have been playing it all the time. I’ve been really coming back to songs I used to play and learning new songs. And I have just had a lot of fun with it.

And the acoustics great because I don’t have to plug it in into anything. And I can just, you know, have fun. I bought a PA system that I am looking to add a amp profiler to.

So basically a pedal that will make it sound like it’s my guitar is coming out of an amp, but it’s just coming through the PA system. And I bought a looper that will allow me to loop things and sing and play guitar and play different parts over it, etc. It’s a ton of fun.

It’s a ton of fun. And I think that it’s one of those things that I’ve lost or I lost over the years. And it’s one of those areas that I really was able to get flow out of.

I was able to focus in and get a lot of satisfaction out of. Because I think that is one of those things that makes people happy. Having that state of flow, having that state of, you know, focus where kind of time melts away and nothing else matters is just so important for satisfaction.

I think that if you’re not able to achieve that ever, it’s hard. And I think that most of the stuff in our lives these days is kind of pulling us out of that state of flow. You know, getting that quick dopamine hits from TikTok or, you know, Instagram, that stuff all kind of pulls you out of that state and keeps you away from it.

So I am just having so much fun with it. I actually made a joke about forming a Radiohead cover band to a friend. And we were actually going to be jamming tomorrow to a couple Radiohead songs, which, you know, I don’t know where that’s going to turn.

Because not a ton of people, there’s diehard Radiohead fans, but then the bulk of people don’t quite get it and just depresses them. So I don’t know. We probably won’t be, you know, frontlining any venues anytime soon with our Radiohead cover band, but I don’t care.

I’m having so much fun. It’s a great, great hobby. And a while back, I talked to a guest that we talked about having, it’s just kind of a mind-body connection as a similar thing to have that state of awareness, the state of concentration.

It’s kind of like a mindfulness practice. And so I definitely feel like I get that too with the CrossFit. They were into things like martial arts.

And I think that I could see how that would also really get you into that, you know, body awareness. But for me, I’ve had to learn my body better than, you know, I’ve ever had to know it by doing CrossFit to really understand how to function optimally and to avoid feeling, I don’t want to say injury, because I know that people think that they’re going to go to CrossFit and they’re just going to hurt themselves. I, you know, I have like muscle soreness, muscle tenderness sometimes, like my back can hurt if I don’t, if I do, if I’m doing lifts improperly.

But it’s not like I’m ruined. It’s more like I got to figure out how I can do these things properly and not have that uncomfort from it. So yeah, I guess that’s my little thing of saying, if you have something that you have not done for a long time that was a huge part of your life, look into picking it back up.

I mean, you might find yourself with a lot of greater enjoyment from that hobby. Another one for me was snowboarding. I used to snowboard a lot.

Now that’s more expensive and harder, especially with kids. So I am currently, my goal is to go once a year, once a year. I have the equipment, just have to buy one, you know, lift ticket.

And if I can go once a year, I want to be happy. And so I, two years ago, went for the first time in a long time to Snowshoe, which is one of the bigger resorts in the East Coast. It’s actually owned by Interwest, which is a West Coast resort company.

They get lake effect snow, and they are in West Virginia. And so it’s a fun place to go. And I was able to go again and had so much fun, had a trip planned that never worked out.

And I thought I wasn’t going to get it last year, get my trip in. But I actually ended up going to a conference in Colorado in May. And they had, yeah, they had a, still had snow on the ground.

So I was able to go snowboarding while I was out there, which was great. This year, I hope to get a trip in, at least one trip. Maybe we’ll go back to Snowshoe this time.

So we will see. But yeah, revisiting those old hobbies that you may not have been able to do for a while. And that might be a luxury of, you know, kind of getting to a place where you feel like you’re, you know, you’re past the grind phase a little bit.

And you’re able to have the money, have a little bit more time, flexibility to do some of those things. But they really don’t have to be. I mean, there’s simple things that you could have enjoyed previously that you had to carve out time for.

Like if you were like to write poetry or if you like photography. That was another one of mine. I haven’t done quite as much here recently.

But, you know, whenever we go on a trip, I like to bring the camera along. It’s nice to have the equipment, but I’m rambling now. So anyway, let’s get back on track here.

We have a really great guest. It has nothing to do with what I just talked about. But he was a really interesting person to talk to out of the Chicago area.

Dan Nelson. Dan is an interesting person because he started out as an investor and then got into real estate sales as well. So he’s a really good fit for our clientele or our demographic here over at the REI Agent.

But Dan has unlocked or has tapped into an amazing place in Chicago where you can really find different niches, little different pockets that could be really run down and cash flow very well to not cash flow at all and have really good appreciation. So it sounds like the Chicago market is pretty unique in having a lot of different opportunity to what to invest in. So without further ado, let’s have Dan Nelson come on the show.

Welcome back to the REI Agent. I am here with Dan Nelson. Dan, thank you so much for joining us today.

You bet, glad to be here. Dan, you are a seasoned investor and now agent. Tell us a little bit about your journey in real estate.

How’d you get started? Sure, yeah.

[Dan Nelson] (1:08:45 – 1:10:08)
I did not come easily. I came kicking and screaming. My wife quit a job and came home and I said, we just bought a house.

And I said, what are you going to do for a living? And she said, I think I want to start flipping houses. Wow.

Like, okay. I really had never heard of it. It was a long time ago.

I was like, that was not a strategy I was aware of. And at the same time, I had gotten involved in a poker game that was with a lot of players. I had a lot of money and weren’t very good.

And so I was bringing in all this cash. I had all this cash for the first time in my life. And I was like, okay, I think we can do this.

And we started on the property we were in. Then we moved to another one. We just kept buying them and moving and doing that.

And then at some point, I got really actively learning about real estate because I didn’t know anything about it. We were just learning along the way. And then I was like, we really should start buying long-term hold properties because this isn’t really real estate.

This is a job. It is a hard job. But also, if any of these fail, we’re going to go bankrupt.

So we need to have something else. It’s funny because I got into long-term investing because to protect us against what she was doing as a living. So then I started getting on the long-term investing side.

And she just kept flipping. And we still do both of those to this day.

[Mattias] (1:10:08 – 1:10:15)
Okay. Now, can you please write a book about how to get into investing through poker?

[Dan Nelson] (1:10:17 – 1:10:33)
It would be a lot funnier today. So poker changed a lot over the years. There’s just a lot more talented people than there was when I started.

But even now, if you know basics, and you’re playing with someone that doesn’t know what they’re doing, it’s pretty easy to take their money.

[Mattias] (1:10:35 – 1:10:55)
That’s amazing. Yeah, just that’s not a path I’ve ever would have considered that it was lucrative enough to get started flipping. That’s amazing.

So now you are doing flipping and buying holds. Are you using the BRRRR method as well as you go through this process? If there’s one that you want to keep?

[Dan Nelson] (1:10:57 – 1:11:30)
Yeah, I would say our first investment property funded our next two investment properties. So yeah, obviously my wife’s a flipper. So it’s very easy to tap into her resources.

So we buy properties, rehab them, and then refinance them or get a home equity line. Now we mostly get a home equity line as opposed to refinancing. So we have that both to protect the property.

If something goes wrong, we don’t have to save any money. It’s sitting there on top of it. And also to fund other properties.

But yeah, so that’s what we’ve done. That’s how we built up our portfolio and our business.

[Mattias] (1:11:30 – 1:11:50)
Break that down a little bit for me. So you’ve accumulated enough cash from the flips to buy and fund a whole deal in cash. And then instead of getting a refinancing that money out, putting it on a traditional mortgage, you’ll put a HELOC on it and just pull out money as needed?

[Dan Nelson] (1:11:51 – 1:12:38)
Yeah, so when we started, we weren’t buying anything with cash. I had the poker money, but it wasn’t a fortune. Yeah.

So we got a mortgage on all of our properties. So we did get a mortgage on them. But then instead of refinancing them, we just got home equity line on them and use that.

Now, to me, the advantage of refinancing them is if you can get a lower rate. To me, that’s the advantage of it. Because the home equity line, you can deduct your interest payments on it.

So there’s a lot of values that also, you only owe that money as long as you don’t pay it back. But as soon as you pay it back, it becomes a bank account again that you can have there and access. Does that make sense?

[Mattias] (1:12:39 – 1:12:59)
Yeah, totally. I guess I never really thought about doing that. That is really interesting because, yeah, I mean, I fund a lot of my deals through equity lines myself.

But as far as whenever I burr something, I always am considering putting it on a traditional mortgage. And right now, the interest rates are so high anyway that it’s tough.

[Dan Nelson] (1:13:01 – 1:13:26)
I mean, I always think of one of the great things about an investment property is you figure out it makes sense for you. Whatever your goals are, it’s cash flowing or it’s a long-term appreciation play. Whatever it is, you figured out it makes sense to buy.

But then you just hold on it. And then one day, the interest rate drops to a point where it makes sense to refinance. And then suddenly, you make a lot more money than you ever planned to.

So that’s how I view refinance.

[Mattias] (1:13:26 – 1:14:29)
Yeah, Dan, that’s such a good point. You don’t know how many times I’ve told this story, but people were just like, oh, this is not a good time to buy. It’s not a good time to buy.

Interest rates are too high. And I explained like, well, here’s the thing. My friend had about 20 or 30 refinances when the interest rates dropped like crazy back in like 2021 or whatever.

And there’s no way he could have bought that many properties at that time. But he was able to refinance them all. So he made out like a bandit.

I mean, like he got all those properties, just cash flowing so much more on super low interest rate loans. He could choose what kind of, you know, he could choose his retirement date, basically. Like it’ll all be paid off by this date.

So some of them might be on 20-year mortgages, 23-year mortgages. You know, there’s all sorts of things you can play with on that. So yeah, that’s a really good point.

Interest rates will come down. They don’t stay the same. So it is something you can count on in the future to make things better.

[Dan Nelson] (1:14:30 – 1:15:18)
Yeah, I mean, absolutely. It just has to be, as long as it makes sense today, as long as it makes some sense today, it’s going to make a lot of sense down the road. And the idea of holding property for a long time is you get to choose what to do with it and when to refinance it.

And it’s just a great opportunity that you don’t have to do anything else. It’s funny when people talk about like, it’s not a good time to buy because I swear in my life, the only time anyone ever said this is the best time to buy was 2006. In 2008, 2009, 2010, 2011, we said, we don’t know where the bottom is.

Like, we were buying not as aggressively as we would if we knew what we knew now. We didn’t know. Like, we didn’t know.

It could be a depression that went on for 30 years. Like, we all know in hindsight now. But so you just buy when you can and everything else will work out.

It’s long term. I mean, you know that.

[Mattias] (1:15:19 – 1:15:46)
That’s the key there, too, that what you said is that, you know, as long as it makes sense now, right? Like, it has to pencil out. You have to be cash flowing and you have to count on all those other things.

There’s extra stuff that people don’t always add into their cash flow analysis, like, you know, vacancy rates and all that kind of stuff. So that makes a lot of sense. And are you focusing on single family rentals?

What are you focusing on for your portfolio?

[Dan Nelson] (1:15:47 – 1:15:58)
Mostly it’s two to four unit, but we also have single families as well. So it really depends on whatever makes sense. But anything between one and four units is pretty much what we buy.

[Mattias] (1:15:58 – 1:16:05)
Okay. And have you explored anything like going bigger, having bigger multifamily properties or rolling things into bigger properties?

[Dan Nelson] (1:16:06 – 1:16:40)
So you have a wife and you know that, you know, if you want to really do this well, you make the choices that are best for both. You know, both feel comfortable. Keep in mind, she’s not really that interested in investing.

What she likes to do is take something ugly and make it pretty. That’s what she likes to do. And she’s been incredibly successful at it.

So what I want to do and what she wants to do is completely separate. So yes, I would love to get into 100 unit properties and all the challenges. It sounds really exciting.

But that scares the life out of her. So I’m happy. We’re in pretty good shape.

So it’s kind of hard to complain.

[Mattias] (1:16:41 – 1:16:58)
Yeah, I mean, there’s no magic answer that one’s better than the other. And you could, you know, start rolling stuff into other people’s syndications and not have to lead it. And having properties that are appreciating and paying down the debt is a great position to be in.

You got a lot of choices.

[Dan Nelson] (1:16:59 – 1:17:00)
Yeah, exactly. That’s how I feel.

[Mattias] (1:17:01 – 1:17:09)
Okay, so you did this for a while and then you actually became a realtor as well, right? Tell me about how you got into being on the sales side.

[Dan Nelson] (1:17:10 – 1:18:10)
Yeah, so of course, I know that a lot of what you have focused on in the past is like a, I mean, I will say a good life to work balance. So for 15 years, I worked in corporate world and I’m crazy workaholic. So my wife did not see me that much.

So she wanted me to become a realtor because she wanted to see me more. And she made the case, look, you can do our own deals. And I said, that doesn’t make sense to be a realtor.

I also said a realtor is not a real job. I don’t want to do that for a living. And so I’ve been in learning development my whole life.

And I got a job training real estate agents and managing brokers and all that. And I saw real estate completely differently than what I did before. And I would come home and tell the stories.

My wife would say, that’s why you have to do it. And she finally convinced me to start. And I started.

I’m so glad. I wish I had listened to her 10 years before I did because I enjoy it so much. But yeah, that’s essentially how I got into it.

[Mattias] (1:18:11 – 1:18:29)
Okay, that’s really fascinating. Yeah, it’s one of those things that it can be a gift and a curse. I mean, when I first got started, especially when I’m really in the grind phase, I always joked with people.

It’s like, yeah, I get to choose my own schedule. I get to choose what 16 hours a day I work, right? Yeah.

[Dan Nelson] (1:18:30 – 1:18:57)
I mean, I do think it is important that you figure out how you’re going to manage your life. Because it can just eat you inside out. And you can be going along, be so happy.

Then all of a sudden, you’re like, I don’t want to get out of bed this morning. Because you just deal with so many people that are in the most stressful part of their life. And it’s very easy to take that on yourself.

And so you do have to find ways to manage that.

[Mattias] (1:18:58 – 1:19:34)
Yeah, 100%. And I think if you’re building up a portfolio of rentals as you go, you can take some of the stress off of you. So I mean, if you have your living expenses covered by your passive income, you don’t have that commission breath when things are going sideways.

And you really desperately want to make this deal work out because you need the money. You don’t have to be in that position if you’ve got that rental portfolio. So are you focusing on investor people for your sales?

Or you do a single family for living in as well, primary residencies?

[Dan Nelson] (1:19:34 – 1:20:03)
So yeah, we always live in our house. Since, well, for 20 years, we lived in a property. In the beginning, we moved a lot.

And now we move every two years to take advantage of the capital gains. So we live in our house. But now that we’ve enjoyed a little bit more luxury, my wife will rehab it before we move in.

We used to rehab it as we lived in our house. So now it’s a little bit easier life than it used to be. But yeah, so we move essentially every two years.

[Mattias] (1:20:04 – 1:20:15)
Okay, and I meant more on your sales side when you’re selling to clients. Is that for investors or just people that want to be in their primary residency?

[Dan Nelson] (1:20:15 – 1:20:33)
Obviously, you have a sphere of influence. So people tap into you for their single. But 90% of my business is investors that are looking to buy anything from $99,000 condos to large complexes.

But that’s mostly my business.

[Mattias] (1:20:33 – 1:20:43)
Okay. Okay. Yeah, that makes sense.

And you’re in the Chicago area, right? Yeah, yeah. Okay.

So what are people looking for typically that you help?

[Dan Nelson] (1:20:45 – 1:22:17)
So I got two different kinds of clients. So you would be surprised the average age of my client is 28 years old. Really?

I never anticipated that. Wow. Somebody comes and meets me and they talk about buying an investment property.

And they’re over 35 and they have a full-time job and have a family. My chance of selling them investment property is about 10%. Really?

If they’re under 30 and they weren’t born in America, my chance of selling them a property is about 80%. Because they come to the world way differently than I did. Probably you did too, which is go work for 30, 40 years, retire with your 401k.

That’s the life you’re supposed to have. But they grew up with just access to information that I didn’t have. And they just see it so differently.

And if they weren’t born in America, they don’t even come from that standpoint. They came here to live a different life than where they came from. So they’re looking at everything.

So essentially, I have somebody that has a portfolio and wants to continue to grow that portfolio. And generally, they tend to be outside of Chicago areas like California, Washington, New York, anywhere on the East Coast where it’s really difficult to buy an investment property that makes sense to buy. And they’re buying here in Chicago.

And then I have young people that are looking to buy their first property. They’re going to borrow it. They’re going to live in it probably for a year and then refinance out and then move on to their next property.

That’s interesting.

[Mattias] (1:22:20 – 1:22:31)
How well does property cash flow? I know that BiggerPockets likes to throw around the 1% rule. I would imagine you’re not getting that in Chicago, but do tell.

[Dan Nelson] (1:22:32 – 1:23:37)
Yeah. So Chicago is a little different market. I mean, it’s a big city.

So it has all the advantages of a big city. But it doesn’t have a market like New York or San Francisco has where it’s just impossible to buy anything. So we have a wide range of properties.

So we have much more affordable properties. And then we have what I call sort of that mid-range where you’re going to cash flow a little bit. But you can see the path where if you make improvements, you’re in an area that’s appreciating.

It’s going to cash flow more over the next five or 10 years. It’s kind of easy to see that. Most of the time, those kind of properties, they’re selling them.

The owner has owned it since 1980. It’s paid off. And they’re renting like a two bedroom, one bath for $800.

But they could get $1,800. But they’re doing so well, they don’t know. So you buy the property, you get the rent for $1,800.

And then it cash flows. So day one, it’s not going to. But down the road, it will.

So there’s ones that cash flow from day one. There’s sort of those middle ones. Then obviously, there’s appreciation plays here as well.

[Mattias] (1:23:38 – 1:23:44)
Sure. So those middle road ones, what type of price range are we talking about? Are we in the 200s?

Like, what would that look like?

[Dan Nelson] (1:23:45 – 1:24:30)
No, I mean, you’re not in the 200s in Chicago. I mean, that middle range isn’t going to be 200s. It’s going to be somewhere between 350 and 550, depending on where it is, the neighborhood.

I mean, Chicago really is like, it’s 72 small towns. So I mean, they’re not really small towns or neighborhoods. But every neighborhood has its own sort of value and average rent price.

So it really depends on where you’re buying and what you want to do. So for most of the younger clients, they’re looking to live in a neighborhood that’s appreciating the values going up. And for that, like I said, somewhere between 350 and 550, depending on what they’re looking for and how many units.

[Mattias] (1:24:31 – 1:25:55)
Okay. Yeah, that makes a lot of sense. Yeah, you talked about the whole 401k thing.

And I’ve had this internal battle still. When I got into real estate and I got into investing, I was still doing myself employed 401k. And just trying to maximize that out as much as possible.

Then I just started being like, but I don’t want to spend that money on that. I want to put that into an asset that I can use now. And I mean, I think being a real estate professional, there’s some more incentives to do so with being able to accelerate, depreciate the properties that you buy so that you can get right off more of your taxes.

But yeah, it’s just more tangible. Like, I know what property, I can feel it. I don’t know Apple.

I know Apple pretty well. I have almost all the products, right? But I don’t really understand how they work.

And if I’m buying stocks, that’s essentially would be the goal, right? Is to fully understand that business and know what you’re buying. But real estate, I feel it a little bit more.

I understand that better. And yeah, I don’t know. I get more and more why real estate investors seem to be like tunnel visioned, only going to real estate, not really putting money elsewhere, because there’s a lot of advantages to it.

[Dan Nelson] (1:25:55 – 1:26:51)
Yeah, I’ll tell you. I told you I had a corporate job. So for 20 years, I put the max into my 401k.

And so, I mean, the stock market’s been a historic run, right? So my 401k is awesome. I started investing in real estate later and started buying those investment properties later.

My portfolio, which I have not invested nearly as much money, is worth three times what my stock portfolio is. And people will say, well, yeah, the real estate markets had a historic run too. But that’s quite different.

In the same time, those things have happened. Obviously, it depends on where you buy, what you buy, and whether you improve it and all that. But I would never discourage someone from using the matching part of a 401k.

If your company is matching, you should definitely do it. But I definitely think you have to diversify. And real estate makes so much sense to me.

[Mattias] (1:26:51 – 1:27:36)
Yeah, no, I think, especially when you get into some of these strategies, like the BRRRR method. I think at one point, I realized I had about a 700% return on my investment. I think putting a 3.5% down on my first house that I turned into an investment property, got a relock on it. To my second house, I put $30,000 down on it and put a relock on it as well. And at the end of the day, using all that to turn into a real estate portfolio with the BRRRR method, it’s just like, yeah, you can really accelerate stuff when you get creative and have some of those value add opportunities.

[Dan Nelson] (1:27:37 – 1:29:26)
Yeah, for sure. And I’ll tell you a story. It was one of my first couples I ever met with.

It was, I think it was the very first couple I didn’t know. And they met with me. And I’m just explaining, I’m answering all their questions about real estate, and why I invest in it, why it makes sense, and how I do it.

And I’m all done. And they were immigrants. And their first language wasn’t English.

And the whole time I was talking, they would stop and talk to each other in their language. I had no idea what they were saying. And I couldn’t tell if they were understanding me.

And then they were all done. They said, we have a question for you. And I said, what is it?

And they said, you told me that you buy a property, and then you might make money off of it from the tenants. And I said, yeah. And they said, and then the property goes up in value, right?

I said, yeah. But you said, OK. But you’re telling the IRS it’s going down in value, right?

I said, yeah. But meanwhile, the tenants are buying this building for you, right? And I said, yeah.

And they said, and you don’t pay for it, right? And I said, OK. I don’t know what happened.

But no, no, you have to pay for it. And they said, no, no. You said we pay 5%, or 3.5%, or 25%. I said, right. He goes, I can’t put 25% down on Apple stock and ask other people to pay for my Apple stock. Exactly.

I said, oh, yeah, that is one way to look at it. And they said, why doesn’t everybody do this? I don’t know.

But of course, this is not a culture where we’re growing up, learning about this and doing this. Go to college, learn this degree, and spend the rest of your life working for someone else. But yeah, the freedom that it gives you if you can figure out how to make it work is just incredible.

[Mattias] (1:29:27 – 1:29:56)
Yeah, totally. I had somebody else to further that line of thought. I had somebody else explain, if you’re buying $500,000 worth of Apple stock versus a $500,000 house, you’re putting $100,000 down on that house, right?

Well, they both go up by 20%. You have realized a 100% gain on your real estate because you only put $100,000 in it, and it’s now worth $600,000 worth of stock. You’ve realized 20%.

Yeah, that’s that magic of leverage, I guess, right?

[Dan Nelson] (1:29:57 – 1:30:38)
Yeah, and when you talk about different prices, it doesn’t matter to me. We have $200,000 properties in Chicago. You can buy those.

Likely, in 10 years, they’re going to be worth $250,000. If you buy a $500,000 property, likely, it’s going to be worth $800,000, $900,000 in that same period of time. So one of them, it’s going to be worth dramatically more than the other.

So as you think about these things, we focus so much on cash flow. And keep in mind, I didn’t know what I was doing when I started. What made sense to me, I did.

And to me, I’ve had more growth from that than I have from cash flow. Cash flow has been great, too.

[Mattias] (1:30:39 – 1:31:52)
Yeah, I was just talking to an agent out of San Diego, and we had a long conversation. And then that prompted me to do my intro about just taking advantage of whatever market you’re in. Because I think the honest, you don’t have to invest in your own market, right?

But if you’re willing to hustle, I mean, it can be the easiest way to start, right? Kind of like what you all did, is you moved into a place, and you fixed it up. So I mean, if you are able to, this agent was able to buy a four-bedroom condo, and fix it up while living in it, and rendered out three of the rooms.

And still had to pay. It wasn’t like making cash flow on it. Still had to pay, but it was cheaper than her rent.

And then, obviously, that property now has quadrupled in value or whatever. And so whatever market you’re in, there are advantages. If you’re in a cash flow-heavy market, there’s a great advantage of getting your basic expenses covered with cash flow.

But if you’re in a more coastal market, typically, you’re going to have more appreciation-heavy areas. And there’s definitely a benefit to that, too. I mean, you can get immense wealth through appreciation.

[Dan Nelson] (1:31:53 – 1:32:09)
Yeah, yeah. I think it’s just good to realize all the opportunities there, and make a choice. Rather than just focus on one strategy, and then say, well, this doesn’t work here.

I think it’s important to realize what all your options are.

[Mattias] (1:32:10 – 1:32:36)
Yeah. And not to be defeated by it. If you are in San Diego or whatever, there’s hope.

You can still invest in real estate. Call Dan up. He can tell you about the different properties that, if you want to do an appreciation play in a better cash-flowing market, it sounds like Chicago is an awesome market if you choose what area you want to be in.

You want to be in an appreciation area, or a hybrid area, or a cash flow area. That’s pretty cool.

[Dan Nelson] (1:32:37 – 1:32:47)
Yeah, yeah. I’m very happy that we’re here, and that we built it all up there. It’s been great for us.

And it’s great to help other people do the same.

[Mattias] (1:32:48 – 1:33:03)
Yeah, yeah, totally. So now that you’ve gotten out of the corporate world, and you are in the full-time real estate world, how have you built back in time for yourself? Have you found more work-life balance?

[Dan Nelson] (1:33:04 – 1:34:58)
So I don’t manage the properties at all anymore. We moved everything to apps. Simply by not having the time, it allowed us to be way more efficient.

I don’t know what your personal experience is, so I’d be interested in hearing this. When I had more time, I worried a lot about things that I couldn’t control at all. Somebody’s upset about another tenant or whatever, but I don’t have time to worry about that.

It’s all in the app. If it’s something that we have to worry about, my wife basically takes care of it. But I’m always like, is it something we can fix?

And if the answer is yes, then we just connect whoever the person is going to fix it and send it over. And if it’s not, we just say, that sounds tough. Hope we can work it out.

Hope you work it out. So that part has really changed dramatically, because that was something I said a lot when I dealt. But as far as a realtor, building is the hardest thing.

Once you start getting it going and building, you can focus just on your clients. But as soon as you stop building, it’s really difficult to find time for yourself. So always got to find efficiencies.

With me, it was people. So I started adding people to my team and started saying, what are the things I don’t want to do that I don’t like to do? And then finding people that could do that.

And some of that is people that are here in Chicago, and some of it is VAs. And that helped a lot. I’m still always trying to figure out how to make more time for myself.

Because as you become more successful, you do get more people that want to talk to you personally. And that’s the best part of the job, is talking to people and trying to help them. But it is hard to find the time to do all that.

So it’s something I constantly struggle at, but I’m always trying to solve the problem with more people.

[Mattias] (1:35:00 – 1:35:03)
So let’s dive into that a little bit. What was your first hire?

[Dan Nelson] (1:35:05 – 1:35:10)
So I was at, what did you say? On the what side?

[Mattias] (1:35:11 – 1:35:17)
On the sales side. When you started building a real estate team, how did you start? What was your first hire there?

[Dan Nelson] (1:35:18 – 1:36:44)
So I knew I needed someone. I was exhausted, and I was continuing to grow. And also, I am really good.

My skill is really the sales side and talking about investing. What I’m not good at are the details part of it. As you know, no one that’s working with clients likes writing contracts and doing all the paperwork.

That’s not why you got into it. So I was looking for somebody that had that side, was comfortable with that side and looking and struggling. And then I sold a property to somebody that moved from California.

And she said, I’m an agent in California. Will you give me a referral? And I was like, oh, okay.

I thought that I was going to get off scot-free. And I said, sure, and I gave her. And she goes, okay, well, if I’m getting the referral, I should do the work.

And I was like, what? And so she filled out all the paperwork. She did.

I was like, I’m going to hire this person. And I was just like, I’ve never seen anything like this. And I was just like, when do I tell her?

When do I tell her? So I was like, wait till she closed. But I couldn’t.

I was like, hey, I had this opportunity. What do you think? And she had a newborn baby.

She was like, I really can’t. I mean, I just want to be at home with my kid. And I was like, this is for real.

And it’s been phenomenal. So I mean, it was, I was looking really hard and very careful who I chose. And so it was pretty easy for me to figure out.

So that was my first hire. And so she’s a real estate agent. But mostly, she focused on everything back end, transaction.

Really, she manages everything.

[Mattias] (1:36:45 – 1:36:56)
That’s awesome. Did you do, I mean, so you just kind of had a sense that she could handle it. You didn’t do any kind of assessments about personality or work traits or anything like that?

[Dan Nelson] (1:36:57 – 1:37:38)
I didn’t do any of that. So I was a manager everywhere I was for a long time. And I always had a lot of people that reported to me.

And so there was a lot of things I learned early on. And try to figure out early on. And that sort of became secondhand.

So I mean, you’re still going to make mistakes. But I did feel like I had a pretty good sense of who’s going to fill it out. Also, I will fire quick.

You know, I don’t, you know, if it doesn’t work out, I’m going to make a quick decision. So I’m going to, yeah. So I’m going to spend some time trying to figure out if they feel comfortable.

But I just feel like I have a pretty good sense of that. But if it doesn’t work out, then I just move on. But that’s what I’ve done with other team members.

[Mattias] (1:37:39 – 1:37:46)
Yeah. So then from there, did you start bringing in people to help with the buying side? Or what did that look like?

[Dan Nelson] (1:37:46 – 1:38:49)
Yeah. So, you know, I am mostly minus sales. It’s very few listings.

Not that I don’t have some. But most of the listings have a fear of influence. So you can imagine that that’s mostly what I do.

It’s a lot of traveling. It’s a lot, you know, and the investor is a lot different than a single family home buyer. They require a lot more, a lot more detail and a lot more expertise.

So, yeah, I had to bring people on the team. So some of that was figuring out, you know, in the beginning, I made some mistakes in the beginning. Because, you know, I was still new to real estate.

So what really you needed, it was hard to tell. It’s also hard to tell who wants to hustle and who doesn’t until you, until you find them. And this is a, if you’re going to work with investors, you know, you have to be willing to work hard.

It’s just no other way. Because, you know, you’re, they’re not looking like, do I like the countertops? They’re trying to figure out, is this going to make sense?

And is this the best property? And where should I be looking? Like, there’s a lot that you have to, like, weed through that you don’t necessarily have to do if you’re selling someone a condo.

[Mattias] (1:38:50 – 1:39:09)
Yeah. Yeah, that makes a lot of sense. Yeah, it’s a, that whole skill set.

So coming from a managerial background, that probably really helped you get that kind of rolling and have a good idea of how to keep it running well. And so you’ve also taken on, taken on some virtual assistants.

[Dan Nelson] (1:39:11 – 1:40:13)
Yeah, so that’s been great too. You just have to figure out what you can give them and what you can’t give them. And you have to have someone managing them, you know, for the most part, the VA part has been just about like, so the person that runs my team manages the VAs.

So I just say, this is what I want to run. And then she decides, is she going to do it or is the VA going to do it? And then she manages that part of it.

So I really don’t. And it’s funny because that was not my plan. I was like, okay, I’ll manage her.

And we had a daily meeting. And then one day she pulled me aside. She said, what are you doing?

Like, this is, this is not how you should spend your time. That’s my job. You shouldn’t, like, not in a, like a way that’s like, she wasn’t threatened or anything.

Like, she was just like, this is such a stupid waste of your time. What are you doing? And it was so great.

She’s very protective. And so that, that was great. Like, I mean, as you bring people on, it can, it can tear all your time away too.

So you really got to figure out, that’s part of the challenge. Are they helping you or are they hurting you? And I, you know, I learned a lot along the way about that too.

[Mattias] (1:40:14 – 1:41:04)
So that’s one of those things that you can, yeah, you can, you can talk to different agents and the way they’ve handled their businesses, how they’ve grown their businesses. And if they’ve gone the team route, if they’ve not gone the team route, and I think that there’s definitely a clear distinction that people who have not have still worked at ways of kind of freeing up their time and making, you know, if they’re referring out buyers more, just taking that, you know, referral fee, or if they are delegating other tasks, they don’t enjoy as much. But, but yeah, there’s, there’s definitely, there’s something to hiring people.

I mean, if you have people on your team or, you know, even just assistants or whatever, they, they, you’re going to have an element of oversight with them. And that, that is a type of work you have to be willing to take on.

[Dan Nelson] (1:41:05 – 1:41:42)
Yeah. And I definitely refer out to, depending on where it is. And I work for a lot out of, out of Chicago too, to other markets.

But it’s the same thing. Like I care so much about them being successful that whoever I send to, I got to feel really confident that they’re, you know, they’re going to treat them the way that I think they should be treated so that they don’t just like get an easy sale, but the person doesn’t really realize what they bought. You know, that’s the biggest challenge to me is, you know, that referral partner has got to be somebody that I can feel really confident.

And also, you know, the nice thing about investors, if you treat them right and they often buy again, you know, so part of it too.

[Mattias] (1:41:44 – 1:42:13)
Yeah, no, totally. That is, that is true that you could probably get a good stream of business from one person more than a single, somebody just buying to live in a house even. Cause I think they, they used to be that people would move every seven years.

It was kind of like the average, but I think that’s increased as well that they’re staying in their houses longer. Certainly now there’s a lot of people that may kind of want to move, but they’re like, I’m not taking on that new payment for those interest rates. I’ll just deal with this smaller house or whatever for a little bit longer.

[Dan Nelson] (1:42:15 – 1:42:31)
Yeah. And you see people that like, or they have a big house and they want to move to a smaller house, but the smaller house, the payments are going to be the same, even though it’s more affordable because of, yeah, the interest rates. So yeah, you definitely have, it’s, you know, we definitely still have a problem.

We don’t have enough properties on the market.

[Mattias] (1:42:32 – 1:42:46)
Definitely. Now when you’re sourcing deals, I know that your wife does flipping. Is she buying from wholesalers?

Is she doing direct marketing? Does that overlap with your, you know, buying holds at all? Are you looking for off-market deals as well?

[Dan Nelson] (1:42:47 – 1:43:41)
So yeah, I mean, kind of everything that you can imagine. She does buy things on the market too. Like everyone, other people, other realtors that do this and it’s crazy.

Why are you doing that? But if a deal makes sense, it makes sense, you know? Right.

And that’s part of it is like, if you get so focused on off-market deal, you might miss something that makes a lot of sense. And, you know, especially now, I mean, anyone can go online and see, you know, theoretically what their property is worth. So a lot of the off-market deals, they’re off-market for a reason.

Like they couldn’t really sell them to a traditional person. Something’s significantly wrong with them. Or it’s in an area where like there is really no resale value.

And so, you know, I never close the door on market deals. Obviously, I’d rather get it before it hits the market. But yeah, so it’s a portion of, it’s both.

[Mattias] (1:43:42 – 1:44:08)
Okay. Okay. And have you, I guess you’re not doing a lot of listings, but I’ve wondered if there’s any kind of approach you’ve taken to kind of give people multiple options.

Like say, here, I can buy this from you for this price. We could test the market at this price. If you have the money, I can help, you know, provide you some contractors to try to get, you know, top dollar.

Have you ever tried any approaches like that? Oh, yeah. Yeah.

[Dan Nelson] (1:44:10 – 1:45:32)
And all of that has happened. I find it’s a lot harder now than it used to be because I’m not an idea. Like I think the best way to source your deals is, of course, if you’re full-time wholesaling and all that, then, you know, you’ve got probably a lot of strategies going on.

You have more. And I don’t have the time to do those kinds of things that I did when I first started. But I find it a lot harder.

For me, it’s like getting to know the area where I own the properties and work in all the time. Get to know the owners around there. Hey, when you’re ready to sell, I’m ready to buy, you know, and all that.

I used to be able to say, you know, exactly that. Hey, this is what I would pay for it. You don’t have to worry about anything.

We don’t have to list it. You don’t have to pay any commission. And I’ll just take it off your hands.

And that was a very appealing thing. And now they’re like, well, Zillow said my house is worth this. So even when I argue, well, you know, Zillow isn’t, let me show you some comps.

Then you’re still, I mean, to give you an idea of my next door neighbor selling their house, like, and we said we’d buy it day one. And she wants $200,000 more than I could sell it as an agent, you know? So I think it’s a lot more challenging than it once was.

But of course, yeah, even though I’m not traditionally a listing agent, I’m still looking for listings all the time. I’ve still got things going their way. It’s just a small portion of what I do.

[Mattias] (1:45:33 – 1:46:52)
Yeah, I’ve thought about this a few different times. If people are coming across deals and they simply can’t get the numbers to work on a purchase. And basically, what’s the most ethical route to go with somebody if you are going to potentially want to buy it?

And I think that, A, you probably need to disclose that you have interest in buying it. At the beginning. But, you know, I think there’s a good, there has to be a good way there where you can kind of provide them options of, you know, this is how I want to, if I bought it, I could do it for this.

And you have to understand that I’m taking on a lot of risk. I’m going to have to do all the work. I’m going to have to be paid for the work I’m doing on the house, right?

And the risks that I’m taking on. But this probably, this will be the easiest, fastest thing for you. But it will not be the most, probably the most money for you at the end of the day.

And so here are the other options. So I think there’s different ways of doing it. I’m always curious if people have explored that with having the, you know, fiduciary duties.

Even if you’re not, you know, in a signed representation agreement with them yet. I feel like you should probably still operate with, you know, high integrity for anybody that you interact with when they come to selling their house.

[Dan Nelson] (1:46:53 – 1:47:51)
Yeah. I mean, I really don’t judge anybody what they do unless they’re, you know, committing a crime. But yeah, it does, it does weigh on me, you know, you know, I, for me personally, you know, it is a challenge, but yeah, I’m very honest.

Yeah. Hey, this is going to be a good deal for me. But what it allows you to do is not ever have anyone come in this house and walk out.

You don’t have to do a thing or worry about it. If we put it in the market, these are the things that have to happen. And then there’s going to be, and I don’t know, I mean, I hope it sells in a week, but it might sell in three months and this is all going to go on.

So it’s just up to you what you want to do. You know, then that begins the negotiation. And that’s why part of it is like, I call it being the mayor of the area.

So if they see you as somebody that they like and care about in the area, sometimes they’ll give you a deal just because they like you, you know, that’s why it’s harder when you come in cold, you know, but obviously people are still doing it and being successful at it.

[Mattias] (1:47:51 – 1:48:17)
Yeah, the cold part is not a business model I really enjoy. So I like your approach. That makes a lot of sense.

I have to ask if you have any books that are, you know, fundamental for you that you think that everybody should read, or if you have any books that you currently were really impactful for you that you’re really enjoying now. Anything that comes to mind there?

[Dan Nelson] (1:48:18 – 1:49:51)
Um, well, it’s funny when you ask that, because when I think about this, I don’t think about traditional books. Like, obviously, I read Rich Dad, Poor Dad. And I’ve read, you know, all the Gary Vee books and all that.

And they’ve all had impact on me and a lot of real estate books. But a lot of the things that have had the most impact on me are books like The Jungle by Upton Sinclair. And The Jungle is about, it’s written a long time ago, but it was about the people that worked at the stockyards in Chicago.

But a long time ago, there wasn’t as much regulation about real estate. And they showed you how you could really be taken advantage of as a buyer. And it might not sound like something that would be valuable to you.

But it’s helpful to remember where we came from. Because we spend so much time in the present thinking about, this is how real estate is. This is what it is.

But to remember how it was all created, it helps you. Just putting those blocks together, it helps you just see it completely differently. Like, no matter what you think is a problem, or no matter what you’re coming across, things are way different than they used to be.

Some things are better, and some things are worse. And today’s problem isn’t necessarily tomorrow’s problem. It might have been something that was solved in the past.

So, like, all those things help you, like, really, when you’re in the moment, it feels like a problem at the moment. But, like, there were bigger problems in the past. And there are other solutions that we don’t think about, because we’re just worried about the moment.

[Mattias] (1:49:52 – 1:50:31)
Hmm. That’s really interesting. I’ll have to check that out.

That’s not been one that’s come up before. But, you know, I think a lot of people are struggling with changes, with the settlement, and all that. And having to really explain their worth to their buyers, their buyer agents for the first time, maybe.

And I think that, you know, any kind of fodder you have, any kind of additional information you have for that conversation could make a lot of sense. And having a historical overview of, you know, how things were, it makes a ton of sense how that would be beneficial in that kind of conversation.

[Dan Nelson] (1:50:32 – 1:50:56)
Yeah, I think… No, go ahead. I was gonna say, yeah, I mean, I agree with you.

And I think, you know, that’s part of it. Real estate changes all the time. That’s all it does is change.

And if you get so focused on the, you know, like this, but if you can sort of put some perspective on it, I think it’ll help have those conversations.

[Mattias] (1:50:58 – 1:51:05)
Well, I got another one on the reading list. Dan, my reading list is too long. So thank you.

And why’d you do that to me?

[Dan Nelson] (1:51:07 – 1:51:14)
You bet. Well, definitely make sure you’re wide awake when you read it, because it might be a little slow, but I really think it’s an incredible book.

[Mattias] (1:51:15 – 1:51:26)
Okay, cool. Well, Dan, if people are interested in investing in the Chicago area, have any questions, maybe even about the Chicago area, is there a good place to follow you?

[Dan Nelson] (1:51:27 – 1:51:38)
Yeah, so it’s @danloveshouses everywhere, danloveshouses.com. Zillow, TikTok, Instagram, everywhere you look, it’s danloveshouses.

[Mattias] (1:51:39 – 1:51:53)
Okay, cool. We’ll put that in the show notes as well. But Dan, hey, thank you so much for being on the podcast.

This has been a really fun conversation. You’re making me want to become a historian. Awesome.

Great to meet you.

[Erica] (1:51:54 – 1:51:56)
Thanks for listening to the REI Agent.

[Mattias] (1:51:56 – 1:52:00)
If you enjoyed this episode, hit subscribe to catch new shows every week.

[Erica] (1:52:00 – 1:52:03)
Visit REIAgent.com for more content.

[Mattias] (1:52:04 – 1:52:06)
Until next time, keep building the life you want.

[Erica] (1:52:06 – 1:52:12)
All content in the show is not investment advice or mental health therapy. It is intended for entertainment purposes only.