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Chris Pratt: We’re here today with a really special guest. He’s created more than $4 million in equity with rental properties. He’s flipped almost 200 houses, bought and owned more than 30 rental properties, sold more than a thousand houses. And he’s the founder of Invest Four More. Welcome to the show, Mark, how are you?

Mark Ferguson: I’m great. Thanks for having me, Chris. I’m happy to be here and excited to talk about real estate 

Chris Pratt: Mark. Your dad. I’m assuming. And by the way, last name is Mark Ferguson. So your dad, I’m assuming mr. Ferguson, uh, you told me a little bit before the show that, uh, you didn’t initially want to follow in his footsteps and he had been in real estate. Can you start us off by talking a little bit about how you got into real estate and this story with your dad? 

Mark Ferguson: Yeah, so my dad was an agent from before I was born until he retired in 2013. And I remember sitting under his desk sleeping under his desk when I was three, four or five, just at the office all the time. And so I remember growing up in middle school, high school, um, you know, he did well as an agent and be like, Oh, are you going to be an agent too? Are you gonna, you’re gonna do that as well. I’m like, no, I don’t, I don’t want to do it. I want to make my own career. I wanna do my own thing. I don’t want to be in real estate. And I ended up in high school. I’m doing pretty well. So I got into the engineering school at the university of Colorado. Did that for a year realized I really liked lower level math. 

I loved math, but I hated calculus, especially calculus two. And so I just thought to myself, I don’t want to do this the rest of my life. This is not what I want to do. So I switched to business, um, got a business finance degree.

Chris Pratt: Wow.

Mark Ferguson:  And did summer school ended up graduating in four years. And then after I graduated, I kind of looked around. It was about 2002 when I graduated. And, um, you know, I’m like for a finance job, it seemed like my options were limited to working in a bank as a teller, like starting out. Um, and just, wasn’t a whole lot of options. And I didn’t want to just be a stockbroker and start off in a stock agency. That wasn’t what I was interested in. And so I thought, well, I’ll just go home. I’ll figure it out. I’ll work part time for my dad and figure out what I want to do with my life. 

So I moved home. I was an onsite manager at an apartment building. My sister actually was a property manager for and helped my dad do random tasks, different things. And he would flip houses once in a while. And that part I really liked and, um, started helping him flip houses. And then I’m like, okay, I see my other friends in the corporate world. They’re just starting out, they’re miserable. And here I am kind of working when I want, you know, out in the sunshine, driving around, doing all kinds of different stuff and I’m making similar money to them. And I thought this isn’t such a bad gig after all.

Chris Pratt: Yeah.

Mark Ferguson: So I ended up getting my real estate license, um, and just kind of went full board into real estate. And I’m super happy. I did that. That’s for sure. 

Chris Pratt: Okay. So there’s, I think a lot to unpack here. We really want to talk to, um, to younger people and kids in high school and college and, and young professionals early in their career and really help them understand their kind of journey through life. So I think this is really like insightful stuff for them. And one of the things that you hear all the time, and I think it’s true of everyone, even if they think they know is that they don’t know what they want to do, you know, whether it’s what they want to major in when they go to college, what they want to do when they graduate college or even, you know, in your thirties, forties, right. There’s always opportunity to grow and change. So I think that just this story alone, not even getting into your success in real estate and, talking about real estate investing quite yet, I think that is amazing. And it’s really super inspiring. So congratulations just on doing that and being able to find that path for yourself. That’s, that’s really awesome. 

Mark Ferguson: Oh, thank you. And one thing too is when I was a kid, like I loved houses, right. I used to draw floor plans of houses on graph paper. I used to love going to see them with my dad. Um, it was more of a, kind of a rebellious thing to not want to do what he did. And it’s like, when I think about it, like, man, that was what I love to do. Why didn’t I just do that to start with?

Chris Pratt: Well, I’m, I’m chuckling a little bit because both of my parents were in the legal profession. Well, they are in the legal profession. My mom works in academia and, um, and uh, my dad actually practices. And so, you know, you’d have take your kid to work day and I would go, first of all, you know, five, six, seven, eight year old kid, doesn’t really know what you know, law is. Second of all, I would go into their, you know, their office. And I would just sit there while they’re looking at papers, reading documents and stuff. So I always, for very a young age, it was like, I am never going to be a lawyer. I’m never going to get into the legal profession and I’m never going to go into academia. Um, and then I got to college and I majored in computer science and I started to learn like just how important law actually is and how valuable what they do is, and I’ve been told more than a number of times that the way I write is like a lawyer.  

And I don’t read, you know, I haven’t read any of their, um, you know, their documents or anything like that. So I, you know, I don’t read a lot of, um, a lot of legal material. Uh, so I’ve been, I’ve been, I’m not going to become a lawyer. I don’t, I’m not as interested in the briefing and just the work, the kind of day to day work that a lawyer has to do, but  I’ve lost that kind of rebellious. Like I’m not going to be a lawyer because my, you know, my that’s what my parents did and I’m not, I don’t want to be like them. I’ve definitely shaved that away. Um, and so I encourage anyone who is thinking, I don’t want to do what my parents did or what this or that parent did to really just, you know, don’t worry about the fact that your parents do it. 

And, and we can talk about this a little bit. I wanna, I want to jump back to kind of your, your decisions in college, but if you have a parent who is in a profession that can actually be a really great advantage for you, because they can show you the ropes, they have connections in the profession, and they can really help you in that regard. I know one of my big concerns was that I didn’t want to be, I didn’t want to, um, you know, be under the control under the thumb of my parent, but you can go in and work at a different company and seek them out for advice in the same field. So, you know, it’s, it doesn’t always work out that way, but before we get into more of that, I want to jump back to college. So you said that you, um, you switched majors. Can you talk a little bit about that? 

Mark Ferguson: Yeah, so I, you know, I went to the university of Colorado as living in the dorms with a good friend from high school. He was a business major. We met a real, another, um, really good friend there while we were there. We were kind of three buddies that hung out all the time. He was a, uh, Oh, an international affairs major and then switched to business. But, um, you know, as in the engineering school and, you know, lots of math, lots of science and I, I just was not feeling it like, you know, I mean, part of it was me being an irresponsible college student and not wanting to study all the time. And, but part of me not wanting to study all the time was I really didn’t like what I was studying. So it was kind of that same thing you’re talking about, you know, do what you like really find out what you love. Well, I kind of found that out by process of elimination by doing it. I did not like engineering. 

Chris Pratt: So can I ask, like, like, was it that you, you weren’t doing well in your classes? Was it just that you didn’t find it interesting or maybe there was a kind of a causal relationship going back and forth with a bunch of different things? 

Mark Ferguson: It was a lot of different things. So I found, I did not find the classes very interesting. Um, that was number one. I just, I was doing okay in them. I wasn’t getting straight A’s or anything, but I was passing everything.

Chris Pratt: Right.

Mark Ferguson: You know, I was, I was doing the tests I was going to class.

Chris Pratt: So it wasn’t like you were going to flunk out and, you know, basically had to switch. Right? 

Mark Ferguson: No, I think in calc two, I ended up getting like a C minus and that was the worst I ever did. And I had to scrounge hard to get that C minus. Um, but no, I was passing, uh, it was just a matter of, you know, and I didn’t connect with anybody in the engineering department either as far as students or faculty. And that could be a big part of it. And so why my other good friend, Justin, um, switched from international relations or affairs to business as well. 

And he, and I’m like, that’s why I was really started thinking about it. And so I’m like, I, I need to do something like this. Isn’t going to work out for the next three years with me doing this. Um, so I switched over and it fit me so much better. Like I just, I got along with the faculty much better. I got along with the other students much better. And it just felt like a better fit for me. And everything clicked as far as the material and the information I was interested in. I’m like, Oh, like the economy, or, you know, entrepreneurial class. I’m like, Oh my God, this is the best class ever. So it would just fit me so much better. 

Chris Pratt: And so was that your first year of college that you switched? 

Mark Ferguson: I finished one year as an engineer, and then I transferred that summer, um, as I was going in to be a sophomore. 

Chris Pratt: Got it. Okay. And did you find that to be the transfer itself? Did you find it to be a laborious process or was it pretty easy? 

Mark Ferguson: It was pretty easy. It really wasn’t that hard. And the funniest thing was like the first math class I had in the business school, I think they’re called math modules and it was doing algebra. I’m like, really? I have to do algebra and like, yep. You do. I’m like, I just pass calc two. They’re like, we don’t care. You’re still doing. I’m like, okay. So 

Chris Pratt: Were you able to still, um, graduate on time? Did you have to take, you know, more credits than you normally would by switching majors? Anything like that?

Mark Ferguson: Um, I think.. it’s a long time ago.

Chris Pratt:  Yeah, whatever  you can recall,

Mark Ferguson: Right. I didn’t waste too many credits if any, because I transferred so early.

Chris Pratt: Yeah.

Mark Ferguson: Almost all of my classes counted as general electives. So, and I did take summer classes. Um, I’m trying to think, not that first year, but, um, my junior year I took summer school, so I could get it done in one that four years. And I did end up graduating on time, but, um, the transfer wasn’t that hard in, honestly the business school was so much easier than engineering that it was kind of like, Oh, you know, we can do this, we can get through this. And in part of that was, it’s interesting to me, so I wanted to do it. 

Chris Pratt: Yeah. Awesome. So then you graduate with, with a finance degree, right? 

Mark Ferguson: Yes. There’s business with an emphasis in finance

Chris Pratt: Business with a finance emphasis focus. Yep.  Okay. Then what happens? 

Mark Ferguson: So then, like I said, I was, um, graduating as done. I tried, I applied to a few jobs. Um, most of them were in debt. I’m from Greeley, which is 50 miles North of Denver. Uh, most of the jobs I was finding were in Denver around that area. And I just, you know, everything, I looked for, everything I applied for, It seemed like the boringest job in the world. I’m like, uh, you know, being a bank teller, working in a bank, it’s kinda like, yeah, it’s the whole attitude of get yourself an entry level job, and then work your way up over the years. And that was kind of what college prepared you for too. And it just, I don’t know if it’s in my subconscious or me being lazy, but it I’m just like, that’s not what I want to do. That’s I don’t want to work my way up for years and years and years in the corporate world, I have to find something else. 

And so then I’m like, I’ll go home. I’ll work for my dad for a little bit. My parents see what happens. And then that’s kind of when I realized, Hey, I don’t work well. Um, with other people, like I can work with other people, but I don’t do well. Having a boss telling me what to do all the time. I needed some freedom and I really have that entrepreneurial spirit. And once I realized that, then I was like, Oh yeah, this is what I should be doing. I have, I need my own schedule. I need to be my own boss. I’m self motivated. I can do this.

Chris Pratt: Okay.  Really curious if you can recall what the, what the exact timeline was. Right. So like how many months after, or years after graduating, did you get into real estate? 

Mark Ferguson: It was immediately, it was immediately. Oh. So like I was looking for jobs before I graduated, you know, I was looking at stuff because, um, our lease was up at the place we were living at the time, um, uh, that summer. So the summer after graduating, we had like a month, maybe, maybe two months to live there. And then I had to find a place, a new place to live. So, um, you know, I didn’t have a whole lot of money. I didn’t have a whole lot of resources. So I like, well, um, you know, I can either get this entry level jobs, struggled to find an apartment, really kinda, you know, go that route or, um, I can go home and, you know, I was talking to my sister a lot. Who’s, um, she’s actually 10 years older than me. And so, um, she would help me out with different things and she’s like, you know, I’m starting to manage this big apartment complex. Um, it’s going to be, it used to be a hotel. They converted it to apartments. We need an onsite manager. I can give you a good deal on rent if you want to come be the onsite manager. And so I thought, Hey, that sounds great. I can get cheaper rent. I can work for my parents. I know I have some money coming in and then I can figure out what to do. And that was, yeah, literally right after I graduated. 

Chris Pratt: Wow. Okay. That’s, that’s, that’s like, uh, an awesome story. I know, uh, for me having recently graduated, it’s always a super stressful, um, uh, situation to be in. And when you’re in college, like I feel like the first three years of college, you might be thinking about what you’re going to do after, and even planning for it. But you really don’t shift gears and start and start actually getting the feeling of, Hey, I’m graduating and have to start living real adult life and put my big kid pants on. I’m telling you like senior year of  college. And I find that a lot of people who didn’t even think about going to grad school, they hit their senior year of college and they’re like, yeah, I’m not ready to go into the real world. And so then they go and they jump into, uh, into grad, uh, graduate school, which is a digression. But, um, so I think that’s really awesome that you found something immediately after college. And, and so this was working with your dad, right? Yeah. 

Mark Ferguson: Yeah. So he was at the time he’s a real estate agent. That was his main career, you know, 90% of his focus was on selling houses to first time home buyers. Um, you know, he’d built up a big database of clients over the years. And then he also, like I said, he’d, he’d flip a house once in a while. So, um, I started helping him just doing manual labor to start with, like, he owned a little bit of land and he’d always have to, you know, go out there and mow the weeds down and water some of the trees and do random things out there. So I took over doing that on some of the flips. Maybe I’d go in there and paint. Some of them put in light fixtures, do different things. And so I just started out with the manual labor side of it. 

And then eventually I started to see, you know, learn more about the real estate side, the agent side. And I thought, okay, you know, I can do that. And he really encouraged me to do that too. He’s like, you got to get your real estate license, like over and over, just like you got to get your real estate license. And so eventually I’m like, yeah, you know, I decided this can work. This is probably a good career for me. I went and got my license, which took me, Oh, probably three or four months of online classes and passing the test and getting fingerprinted and all of that. And then once I got my license

Chris Pratt:  You need to be fingerprinted for your real estate license?

Mark Ferguson:  Oh yeah. Yep. They Take it serious.

Chris Pratt:  Geez. Geez. Okay.

Mark Ferguson: Yeah. Cause you have to pass a background check, um, get fingerprinted. Um, they, uh, they take it pretty serious now. I think they just started doing that right before I got my license. But, um, so yeah, if I, if I commit a crime, I’m in the federal database now. Yeah. 

Chris Pratt: Yeah, Can’t do that shoot. No. 

Mark Ferguson: So, uh, but yeah. Then I just started kinda chugging away as an agent and I never did like the whole agent side as much the traditional agent, but I love the investing side. 

Chris Pratt:  Okay.  So being an agent, agents don’t necessarily invest.

Mark Ferguson: Right.

Chris Pratt:  So how did you, how did you balance those two and how did you get started really with the investing component of it? Right. Cause being an agent is really, it’s just a job. Right. And, um, uh, and it’s just something to make a paycheck. So if we’re speaking generally, but investing is a whole different thing and you know, everyone has to have a job, but not everyone has to invest, even though everyone should invest. Not everyone you don’t technically have to. So how did you get into investing?  

Mark Ferguson: So, It took a long time, actually and your right as an agent, you know, you technically don’t have a boss, you’re technically a contractor, but, um, I think the stats show more than 50% of agents don’t even own a house, let alone invest in one. So it’s crazy. Um, but yeah, it’s not really encouraged to be an investor when you get your real estate license, there’s almost no information on investing. And the only reason I knew anything about flipping houses was because of my dad. Like you said before, you know, it can be a huge help, um, to do some of the things as your parents. And so he taught me how to flip houses. I earned a very small percentage of each flip after a while, and then started kind of doing more and more on that side of it, of learning, how to find the deals, finding contractors, working on the financing aspect. 

But again, even flipping is kind of like a job too, because you buy a house, you sell it, you get your paycheck, but then like, that’s it, right. You know, once you sell the house, you’re not going to get any more money from it.

Chris Pratt: Right.

Mark Ferguson:  And what I really consider investing is when I bought my first rental property and that wasn’t until 2010. So I was in the real estate business for six, seven years before I even bought my first rental. And, you know, that’s one of the biggest things I would change right now is I would go back and buy my first rental as soon as I possibly could. 

Chris Pratt: Yeah. Okay. So, um, you mentioned that you didn’t start investing until 2010. So what was it that made you say I’m going to buy my first rental? 

Mark Ferguson: Right. So during my real estate career, like I said, I was not a real, I was okay at selling houses, but I don’t like talking on the phone. I don’t like, I’m kind of an introvert, but I’ve overcome it. But, um, you know, it’s not my strong side. And what really clicked with me on the agent side was I started selling foreclosures in 2006, 2007. Um, you know, we had the housing crisis here in the United States and I thought, man, I should get into this business. I started cold calling banks really went outside my comfort zone and I started to sell foreclosures for banks and HUD. And that’s when I started selling all those houses.

Chris Pratt: What’s HUD? Housing and Urban Development?

Mark Ferguson: Yup. The department of.. it’s a government agency. And so if you have an FHA mortgage, which is the federal housing administration, it’s insured by the government. 

And if that property goes into foreclosure, a lot of times it becomes a HUD home. And so the government sells that house. And so, yeah, when I was, when you said I sold over a thousand houses, 90% of those were HUD homes and foreclosures back during the housing crisis. But I loved it. Like it was system oriented. I was emailing the banks all the time. They gave me certain tasks I had to do, like you had to be on your game, you had to do things fast. You had to complete reports for them list the properties. But I loved it. It was awesome. And I was making good money, but I wasn’t, I didn’t have anything to show for it. Right. So I’m like, man, I’m making good money. Like my whole life I’ve thought, man, what if I, what if I make a hundred thousand a year or more than that a year, I’m going to be rich. And then you start making that much. It’s like, where’s all my money. I should have more money than this. And then I’m like, I need to find a way to invest it better. And that’s when I started, I researched real estate franchises, stocks, bonds, businesses, anything I could. And it kept coming back to rental properties and I’m like, okay, that’s what I’m gonna do. I’m going to buy rental properties even though it’s 2009, 2010. And everybody telling me real estate is the worst thing ever. That’s what I’m going to do. Yeah. Yup. 

Chris Pratt: Before we get into the investing and the, and the real estate investing part, I just want to highlight a really quick point that you just made that I think is really important, especially for our young, our younger, listeners and audience. You mentioned that you wish you would have, if you could go back, you would have invested in real estate sooner, right before you were making six figures, you were making good money. You wish you had started investing. Is that a fair statement? 

Mark Ferguson: Yes, for sure. Um, and I can expand on that just a little bit because I bought, I was onsite manager at that apartment complex for a year and a half. Um, I bought my first house when I was 23, right after moving out of there, but it wasn’t an investment. It was just a house to live in. I’m super glad I did it. I loved owning that house. I’ve done very well with the houses I owned, but looking back on it now, I’m like, you know, I wish I would have bought a house, lived in it for a year, turned it into a rental and just kept repeating that process over and over. Just because when you buy as an owner occupant, you can put three to 5% down. Whereas if you’re buying as an investor, you’re putting 20 to 25% down. And when you’re young, you know, you don’t care about moving as much. You don’t care about doing a little bit of work. Once you get older and have a family, everything gets much trickier. 

Chris Pratt: Right. So, All right, so this is  getting really interesting. the point I wanted to address. And, before we get into the investing part, because that, that is really important, then that’s where we’re going. The thing I wanted to address first is that you don’t need to be making a ton of money to start investing, right? If you think about, you know, all the plans out there, uh, I talk a lot about Dave Ramsey and his baby steps, right? Baby step two is to get out of debt. Uh, baby step three is to save up an emergency fund. And then I think baby step four is to start investing in retirement. Right. And you know, there are a ton of other plans, right? that’ll say invest in your 401K before you get out of debt. But the point is that you should start investing as soon as you possibly can. 

And, it’s less to me, uh, about the math. I think that the math matters looking back right when you’re 50 and you look back and you’re like, man, if I had started investing at 20, I would’ve had, you know, 10, 20, extra years of accumulation. Right. It’s less about that. And to me, it’s more about the habit and the behavior, because there are, I would say you’re an exception to the rule in terms of, of you getting into investing. Um, well after, yeah, you started your career because most people, their incomes aren’t going to change dramatically throughout their career. They might go up gradually. Um, and if they shift careers, they might change or what not, but on average, you know, their incomes are gonna stay relatively the same, right? Most people aren’t gonna 10 X or five X, whatever two X, even their income, uh, at least  in a short period of time. 

So it’s really about the habit and about not making excuses. If you make 50,000 a year and, uh, and you’re out of debt, you could still invest. Maybe not as much as someone who makes $120,000 a year, maybe it will be, uh, maybe you won’t be able to buy as big of a house. And we’ll talk a little bit about real estate investing specifically, but you can invest. And it’s really, what’s really important is getting into the habit. Yes. The math matters. The earlier you invest, the more you’ll have, you know, later in life and in retirement. And that is really important. I think that also, it’s really important to do it for behavioral and habit, forming reasons. And at the very least, if you’re scared of investing or for whatever reason, you don’t want to invest at the very least you should be developing savings habits. 

The other reason I think this is important is because I hear a lot of people say, Oh, when I graduate from college, I’ll do this. When I, you know, finish this, I’ll do that. When I have been working for three years, I’ll start saving money. It’s like, why don’t you start saving money now, are you paying off debt? That’s a, that’s a valid reason. Uh, or is it just that you want to be able to spend all of your money? And you’ll say, I’ll do it later. Right? It’s like, it’s like losing weight. It’s like, Oh, I’ll lose weight in next year. Like, I’ll, I’ll set a new year’s resolution and lose weight and then you don’t do it. Right.

Mark Ferguson:  Exactly. yup,

Chris Pratt:  when’s a better time to start. The, now it’s not just about the numbers. If you make $50 a week, save $5, right.  It’s not going to be meaningful mathematically in 50 years, but that habit is going to, uh, is going to serve you so well, uh, throughout your life. Right. I started saving and investing with literally dollars that I would get from, you know, birthday parties and what not when I was a kid. And, um, well, I didn’t even invest real money when I was a kid, I would invest on paper and that habit has served me so well. Uh, even at the beginning of my career. And, uh, I can just, I just want to make sure, I stress  that point, that, folks you got to start now, I don’t care how much money you make, um, to me really. And we can talk, I’d love to hear your thoughts to me. Really. The only thing that should keep you from saving is if you literally can’t right, like you need to eat, you need a roof over your head, right. You literally just don’t make enough money. You make $30,000 a year, whatever. Or if you have debt and you’re paying down debt, which to me is like another version of investing, right? It’s like almost like a precursor to it. 

Mark Ferguson: Right. And my son, I have nine year old twins and a one year old right now. And I make them save like, I’m like every month you save 10 bucks, like you can spend money, but you have to save it first because otherwise he spends his money so fast. Like as soon as he gets it, it’s out. His I’m like we got to work on this man. Like my daughter is really good about saving and I didn’t give her that rule because she’s so good at saving on her own.

Chris Pratt: Yeah.

Mark Ferguson: But I’m him. I’m like, you got, if you want to spend that money, you make sure you’re saving something first every month, because otherwise you’re going to be in debt your whole life and never have anything. 

Chris Pratt: And it’s not even about like the want and desire of it, right? Like, like weight’s a great example. I don’t know how many, uh, people who are overweight that don’t want to lose weight. They’re just addicted to food. They’re very sedentary. May, you know, maybe they have some, uh, other health implications that, restrict their ability to lose weight. Right. But in terms of their habits, they just have bad habits and they can’t shake those habits. And the older you get, uh, the harder it becomes to change your habits and to adjust your habits, it’s never impossible, but the harder it gets. So I really encourage people to start now. Okay. So 2010 hits and, or, or the, the whole 2008 financial crisis hits for those who are young and who, who were young, or maybe not even born, uh, when the crisis started or when the crisis happened, the financial crisis had a major impact. 

Well, it didn’t have an impact on it was caused by the housing market. Right. Um, and I’ll probably, I probably don’t know nearly as much about this as you do Mark. Uh, so I’ll let you, I’ll let you append to what I say. And, uh, housing prices fell and everyone thought that, that the housing market was bust and that, um, and that investing in homes was not going to be, um, a good idea. It’s trying to think of an analogy to today with COVID. I mean, COVID is so pervasive. There’s not like a single industry that’s like hit. Well, a great example is, um, is commercial real estate today? Everyone’s saying, Oh, everyone’s going to be working from home after, COVID. So the commercial real estate market is going to be a caput, but the reality is we don’t really know what’s going to happen. So prices are going down. I think I saw that in New York city, um, there were 13,000, um, uh, vacancies and I think residential real estate, uh, which is like double the maximum that they’ve seen, the maximum average they’ve seen in, in New York city, real estate. So everyone’s trying to make predictions, but long story short prices went down in the, uh, in housing, in the financial real estate. And my guess is that you capitalized on that. 

Mark Ferguson: Right. And ironically, I’m investing in commercial real estate now, so I haven’t stopped. Um, yeah. So, so basically they overbuilt houses. They built way too many houses because financing guidelines were so loose. They were literally giving loans to almost anybody. It was the wild West. Like people use that analogy, but it’s so true. You could do basically whatever you want. And so eventually that can’t be sustainable because people who are getting loans should not have been getting loans. Then all of a sudden the banks realize, Oh man, what have we been doing? They stopped lending altogether, which made it even worse. And everything kind of collapsed because they’re just too many houses for how many people there were. So, yeah. So in my area, um, it actually started in 2004 to five. When our market went down, we kind of start a little earlier than some of the other areas. 

Um, but prices dropped, you know, 30, 40% in some neighborhoods, some neighborhoods saw prices drop 50, 60%, um, is all over the board in some areas of the, country’s not worse than others, but basically, um, I looked at it when I was investing in 2010. I wasn’t trying to predict anything. I’m not like, Oh, prices have to double or triple, you know, it just has to happen. I was looking at it like, okay, this property cost me $97,000. I can rent it for a thousand to $1,050 a month. I can cashflow a few hundred, $400 a month after all my expenses, plus I know how to get a really good deal. So I’m going to build equity into it right now. You know, I’m going to buy it for 97 and it’s actually worth one 25, one 30 with a literally $2,000 in work. And this is, these are the exact numbers on my first rental. 

And so I looked at it from that standpoint of this is a good investment right now. It cashflows, it’s a good deal. If prices go up, that’s a bonus, but I’m buying this rental based on today’s numbers. And that’s how I’ve always bought my rentals. And even my flips, like I’ve never counted on prices going up. In fact, you kind of have to protect yourself against them going down if anything. And so that first rental I bought for, like I said, 97,000 in 2010, I had a pretty good bonus because I sold it last year for a 275,000.

Chris Pratt: Wow. 

Mark Ferguson: And then ended up using a 1031 exchange, which is a tax deferral program to buy a $600,000 commercial property.

Chris Pratt: So did you, did you pay cash?

Mark Ferguson: No, I did not. So I got a loan, so ironically, um, I said I was making good money, but I still, just, as you mentioned, was not a good saver. Um, I had my second personal house, which I got an amazing deal on too. And I did a cash out refinance on that house. So I was able to take out $50,000 more than I bought it for basically. And I use part of that $50,000 to buy my first rental.  And I put 25% down. So I put like 27, $28,000 into the property after closing costs and making a few repairs, um, to buy that $97,000 house. 

Chris Pratt: Okay. And, and, um, is that standard to put 25% down for, uh, for a rental property, 

Mark Ferguson: If I could have put 20% down and I should have looking back on it now, but my lender convinced me to do 25. Um, it was like a eighth of a percent less interest rate, but, um, you can usually do an investment property for 20% down. Um, it can go up to 25 with certain banks, or if you have a lot of different loans, but for beginners and people just getting started, uh, you should be able to do 20% down if it’s a straight investment and you’re never living there.

Chris Pratt: Yeah Okay. So there’s, there’s a lot here and I find that people think real estate investing is, pretty scary. And that’s why they never do it because it’s a, it’s, you know, it’s a big responsibility and it’s a lot of debt. Um, you probably agree with this. I think that mortgage debt is probably some of the best debt that you can have, um, if you’re going to have debt. Uh, so can you talk a little bit about interest rates? Like you mentioned that gap between 97,000, I forget what you said, 124,000, or what have you, how did you do those calculations to say, Hey, I do $2,000 of repairs and it’s going to be worth this much. And my interest rate on the loan is only that much. Could you walk through that? 

Mark Ferguson: Yeah. So being in the real estate industry was a massive help for doing all of this, right? Um, well, first off there were a lot of agents telling me I was not the smartest person in the world for investing, but as far as knowing the market, it was a massive help. So like I, I watched houses all the time. I always looked at new houses coming up for sale. And this is before like Zillow in the online stuff. So I had access to, um, the multiple listing service, which is where most real estate agents list their houses for sale. And then Zillow actually pulls data from the MLS systems when they listed on their site. But, you know, I had all this access to data where I could, I knew the neighborhoods, right. I was, I was always in neighborhoods, looking at houses, looking at prices, knowing what things were worth. 

That was my whole life. My whole career was houses. So I, when I saw this one pop up for sale, I mean, I’m like, Oh, that’s worth 120,000, at least like, I, you just, once you immerse yourself in the, in the world and in the business, you kind of know. So you basically, you know, you, you look at what other are selling for. Like, this is a pretty cookie cutter two story I could look and say, Oh yeah, there’s one just like it this old three months ago for 125,000, right? Maybe it has one more bathroom. So this one might be worth 120, but I can see, Hey, I can look at the pictures and see what condition it was in. I can see how long it took to sell. And then you’re like, Oh, there’s another one it sold for 127. There’s one that sold for 123. 

And it’s really not rocket science or that hard. Once you kind of get into the neighborhoods and focus, and you’re not trying to do like an entire, you know, metropolitan area all at once. You can figure out what prices are. You can figure out what those good deals are. And for people who are just beginning and thinking, Oh my God, that seems like a crazy amount of work. Like that’s what real estate agents are there for too. Right? That’s their job is to know values, to know prices. And if you have no idea and you want to get into this finding a really good agent is like the first step of, Hey, you know, is this a good deal? Am I wrong? What am I missing? And they can, if they’re good, they’re like, Hey, no, it’s a good deal. Or no, well, this one has no garage, right. That one does. So, um, it’s not hard, but just like anything, right. You have to get into it, you have to learn it. You have to really immerse yourself into the business. 

Chris Pratt: Yeah. And I assume that, you know, teaching all this stuff is the reason why you started invest four more in 2013. Um, and you’ve also written a number of books on real estate and real estate investing as well, right? 

Mark Ferguson: Yes, no, that’s exactly why I started Invest Four More. It was the name itself means I’m getting more than four loans on mortgages invest four more. Cause it’s a number four spelled out. Um, so it’s all about financing. Um, and you talked about interest rates and that’s another part of it. Like we can, you know, talk about this for hours and hours. Um, but yeah, and then I’ve got nine books, um, ranging from rentals to flips, to being an agent. And then, um, you know, you mentioned your young audience. I wrote a, a nonfiction book, uh, last year, all about a guy starting out basically after college, trying to find his niche, his world, and then I’m buying his first house and making it an investment property. So I’ve tried to cover that exact scenario for young people out there trying to get started. 

Chris Pratt: Absolutely love that. What’s it called ?

Mark Ferguson: Into Success.

Chris Pratt: Into Success. All right. Yeah. Check that out. Um, so what would your advice be for millennials or, um, uh, maybe older gen Z’ers who are interested in learning more about investing in real estate?

Mark Ferguson: Um, I would Say don’t get discouraged. There’s so much negativity out there right now with everything. Like not just real estate or business, but, um, there’s so many marketers and gurus out there with their taglines, trying to sell stuff like houses are bad investment. You should only rent in. Do the research yourself, really look into yourself. Don’t just take what these guys say. It’s surface value and go with it because buying a house is one of, like you said, one of the best ways to leverage money, like 30 year loan, 3% interest rate, like you’re almost beating inflation and you might be based on how much money the government is spending on different things right now. Um, it’s crazy.  How cheap that money is.

Chris Pratt: You mean that just taking out the loan, you might be beating inflation, right? 

Mark Ferguson: Right Exactly. Because it’s, the interest rates are so low, right. Um, and then you can put literally 3% down or three and a half percent down with an FHA loan. Um, if you happen to be a veteran or active military, you can put zero down with a VA loan. Um, if you buy in a kind of a rural area, you can put zero down with a USDA rural development loan, 

Chris Pratt: Just to make sure everyone’s clear on what we mean by down, that’s a down payment. So that’s basically, you put a percentage of the cost of,  the cost of the home, uh, of your in cash and your own cash, uh, down as a down payment, um, uh, kind of as a proof that that you’re able to pay for the home. 

Mark Ferguson: Right. And so like, well, we’ll do an example, like say you’re buying a $200,000 house if the down payment is three and a half percent, you know, at $7,000, but there might be some closing costs too, to get the loan and different things, which could be another 3%. So you might need 10 to $12,000 to buy that $200,000 house, but there’s also down payment assistance programs. So you can ask the seller to pay those closing costs. And there’s literally ways to buy a $200,000 house for $5,000 or less. So, um, when you couple that with like getting that really good deal, we talked about, you know, it’s, that’s why I wish I would have done this when I was younger is just kinda kept using this process. Um, it’s so there’s so few opportunities out there for, um, young people to really build wealth like that with very little money. And that’s why, as you can tell, I’m pretty excited about real estate and still am, you know, all these years later, 

Chris Pratt: How do you, how do you manage the debt? Like at what point would you say this is, this is, this is too much debt. How do you, how do you pace it? Right? Like, cause obviously I’m not going to want to have a hundred real estate properties in my first two years of investing in real estate. Is it just something that, you know, work at a pace that you’re comfortable with? What do you recommend? 

Mark Ferguson: Yes, for sure. And honestly, the banks will manage your pace for you. If you’re using traditional banks, they’re not going to let you just go buy a hundred houses. Um, you know, they want to protect their money. They want to, you know, protect their loans. And if they see people getting overextended, they’re just going to like, okay, we’re not giving you any more loans until you get your debt to income ratio better. Pay off some debts

Chris Pratt: But The banks won’t necessarily protect you like personally a hundred percent of the time, right? You don’t want to rely on them for, Hey, you can take out this loan that doesn’t necessarily mean you should. Right. 

Mark Ferguson: Right. Exactly. Like if you go to the car dealer and they say you can buy a $60,000 car, that doesn’t mean it’s a smart decision to buy a 60,000 car. Yeah, no. And that’s something that each person has to come up with themselves about what they’re comfortable with and how much they’re willing to take on. And the cool thing about rentals if you’re using that debt for rental properties is if you buy good rentals that cash flow well, and that basically means you’re making money every month after all expenses, your mortgage, your taxes, your insurance, any repairs that might come up, if you’re paying for property manager, um, you’re basically covering that debt. And then you have quite a bit extra, you know, as a cushion in case things go wrong and something else the banks will require too, which is very smart is they make you have reserves. So like, if you want to buy three rental properties and you’re using every last penny, you have to get that down payment. The bank’s not going to give you that loan. They’re going to be like, Hey, I want to see six months of reserves for each mortgage payment you have, before we give you this loan in case something goes wrong. So you’re going to need that down payment. Plus, you know, 10, $15,000 in the bank is like an emergency fund. Um, so getting 

Chris Pratt: Another great example by the way, another great example of why you should develop a savings habit. if you want to build wealth, 

Mark Ferguson: Right, and buying that first owner occupied house, you know, you don’t have all these requirements as much easier, but once you start buying rentals and stacking those houses, that’s when all this comes into play. And so, um, in a way the banks do protect you some, but you can’t depend on them. But, um, the real key is making sure you have great cashflow reserves in case something goes wrong. And, um, I am not at all opposed to starting off slow and buying, you know, one house your first year. That’s what I did. My first rental. I bought one rental that year. I’m like, okay, I got this, I know what’s going on. Now. I can start to, you know, look at expanding and buying more. 

Chris Pratt: Yeah. Can I ask how much, uh, you make on your rentals, just in passive income every, every month or every year.

Mark Ferguson: It’s tricky now with the commercial stuff. And that’s a whole nother discussion because I have a bunch of, of value add projects where I buy vacant properties and fix them up and get them leased. But right now I think we’re right about 15,000 a month of passive income coming in. And that’s after paying property management, all expenses and everything.

Chris Pratt: So that’s the net. 

Mark Ferguson: Um, yeah. And we still have like, uh, a 70,000 square feet of vacant space right now because I’ve been on a kind of buying spree lately. So it’s always a look into the future, but there’s a lot of growth there as well. 

Chris Pratt: That’s absolutely amazing stuff. Folks. Hope you’re. I hope you’re listening here. All right. Um, so last thing I want to talk a little bit about today, a little bit about what’s going on with COVID. Uh, there was a recent study from OJ O labs and it concluded that 80% of buyers postponed or stopped their, um, housing search during COVID in the same study, showed that buyers are still looking at listing photos and taking virtual tours of properties. So what is your take on the future of the real estate market and the future of real estate investing? I know you said that it doesn’t really matter what’s happening in the future, but I’m curious what, just what your personal, uh, what you think, 

Mark Ferguson: Right. Um, really hard question to answer, but I’ll do my best here. Um, first off we in our market in Colorado have actually seen prices go up during COVID. So, um, there has still been buyer demand. I think there’s been less buyer demand, but there’s been even more sellers take their properties off the market. So there’s been less supply and relatively speaking, more demand. And we I’ve heard that in a number of different markets across the country where prices are actually going up because sellers like, Hey, I don’t want to sell right now, or I don’t want to move right now, or I don’t want people in my house right now. So they just took their house off the market. So our properties, you know, we’re still actively flipping our selling right away. No problem. Um, can that change for sure? I think that there are a number of people who are, um, economically challenged right now from not being able to work or losing their job or not be able to work as much, you know, just so many things going on. 

And so that could affect prices in the future. But one thing I mentioned before that is what I believe that the real driving factor of the housing market is how many houses there are versus how many people want to buy a house. And they overbuilt like crazy before the last housing crash. They have never gotten back to a point where they were building at an average pace before the housing crash. Like they have never caught back up to how many houses they need to build for how many people there are. And that’s why we see prices keep going up and up and up. So I could see things slow down. I could see prices decrease just because there’s a good chance. There will be more foreclosures, more defaults, but I don’t see a crash. I don’t see like a massive crash like we had before, because one there’s a lot of investors like me waiting, you know, for good deals. 

Um, the government will do everything they can to stop foreclosures. They were even doing that in the last housing crash, you know, at the end of the crash, they were pumping money into keeping the banks from foreclosing. Um, and they made it very dis- advantageous. If that’s a word

Chris Pratt: disadvantageous. yes. That’s a mouthful,

Mark Ferguson:  right. To sell their foreclosures. So, um, I, in the banks learned, Hey, if we dump all our foreclosures in the market at once, we just killed the real estate market and all these houses. So we’re shooting ourselves in the foot. Yeah. So, um, it will, it can slow down. It can drop, but I don’t see a crash. And then, um, I think there will always, you know, there are always ups and downs even before the housing crash, but a lot of people don’t realize that last crash was the worst crash in the history of the United States.

Chris Pratt: in 2008.

Mark Ferguson: Yeah. It was worse than the great depression real estate wise. So it was not something that happens often. And a lot of people think, Oh, the next crash is coming, next crash is coming. Um, it, it took it an extraordinary like event sequence for that to happen. It was just insane. 

Chris Pratt: Yeah. And there are a ton of, uh, great movies on it that they dramatize it a little bit, but they do a great job of explaining it. I forget what the, which one, uh, I know there’s Margin Call, there’s one with Steve Carell.

Mark Ferguson: The Big Short,

Chris Pratt:  The Big Short, yeah. That’s, that’s a really, um, entertaining one that also does a really good job of explaining what happened. 

Mark Ferguson: Yeah. And if a really good one too is 99 homes, if a lot of people haven’t heard of that one, it’s really good. It’s about a foreclosure agent like me, I’m selling houses in Florida and it was really good. 

Chris Pratt: Wow. Okay. Great recommendation. 99 homes. My last question for you before we close out your real estate investor, do you have any other investments, non real estate investments? And what are your thoughts on, on investing outside of real estate? Maybe a little bit of a pro-con contrast compare, contrast. 

Mark Ferguson: Okay. So I get a lot of flack about this cause I posted it on Instagram and YouTube and different things. And this is not, I don’t say everyone should do this, but I am not a huge fan of diversification. I have almost 100% of my investments in real estate. So I don’t have any stocks. I don’t have any bonds. Um, I have an IRA and I literally turned it into a self directed IRA and bought a house with it. So, um, I am all about the Carnegie quote of put all your eggs in one bag. 

Chris Pratt: IRA. your retirement account. Right. So, you turn that into a self directed IRA. So you’re investing in real estate directly in your retirement account. 

Mark Ferguson: Yup. Yeah. Yup. And so, uh, I, um, I don’t, I wouldn’t mind starting a few more businesses for per se to have some, a little bit different things going on just for fun. And actually, um, one of my latest commercial property purchases was a small bar and I’m thinking about running that with my project manager ourselves as a business. So we’ll see. But, um, for the most part, it is real estate rental properties and that is about it. And well, unless you count some of my cars, which I’m a big fan of exotic cars, but I don’t really consider an investment. They’ve just turned out to be a good investment. 

Chris Pratt: Yeah. Yeah. Okay, Great. well that is all that we have time for. Thank you so much for coming on the show, Mark. Really great insights. Obviously you’re a fantastic realtor investor, flipper, author, Car lover, you’ve been with a lot of great insights so folks, I highly recommend you check out Mark Ferguson. He’s on pretty much every social media platform. You can find his website invest four more.com. That’s four spelled F O U R not the number he’s on Instagram and at invest four more, he’s on YouTube Mark Ferguson – invest four more he’s on LinkedIn, and pretty much every social media platform out there. So make sure you guys check him out, check out his books and all the information he has to offer. Thank you so much for coming on the show Mark. It was great to talk to you and great to have you on. 

Mark Ferguson: Well, thank you Chris. It was a blast, really, really happy to do it. And I hope it helped out some people.

END TRANSCRIPT

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