If you’re in a place where you’re struggling, you can choose to turn hopelessness into helpfulness. You put the focus on something you can control. Helping others is one of those things. And you’d be surprised how much less fearful and anxious you are after you’ve helped someone else or taken the time to make them smile.
As a part of my series about “Investing During The Pandemic”, I had the pleasure of interviewing Nathan Brooks.
Nathan Brooks is the CEO of Bridge Turnkey Investments, a Kansas City-based company renovating and selling 150 turnkey properties every year. He is an active investor, speaker, and educator — teaching investors about real estate as part of his passion for helping other people. He resides in Kansas City with his wife and two children where he enjoys the outdoors, MMA, and coming up with new business ideas to crush.
Thank you for doing this with us! Before we dig in, our readers would like to learn a bit more about you. Can you tell us the “backstory” about what brought you to the finance industry?
Although people may not traditionally think of it as the finance industry, real estate is, in many ways, an investment vehicle with more proven, stable returns than many other options. The statistic is something crazy like 90% of millionaires make their money through real estate. But for me, it wasn’t actually the financial aspect of real estate that drew me to it.
I was always fascinated by the materiality of it, the approachability and creativity of it. When I was a little kid, I often went scavenging on my bike and looked at job sites where new construction was happening. Contractors gave me excess materials and I brought them to my parent’s house and built structures under their deck. I was fascinated by it, and I guess you could say that fascination has carried me through to today.
Sure, I had stops along the way: I made my living for almost a decade as a professional musician. I also worked in churches for a period of time, including the largest United Methodist church in the U.S., but I always found myself coming back to real estate. The thing is: real estate doesn’t just build wealth for people, it gives them a different kind of life.
When I made the decision to go full-time into real estate investing, it was just off of the holiday season when I worked in the church. As I’m sure you can imagine, the time commitment, planning, and stress of putting on multiple Christmas Eve services at a massive church for thousands of people is extremely taxing. I was exhausted and barely seeing my family, and I realized I wanted to live a different life. I knew real estate could give that to me. So, I made the leap the following year to launch a real estate business that would build wealth and freedom for not only myself, but my team, and the clients we serve, as well. And honestly, I’ve never looked back.
Can you share with our readers the most interesting or amusing story that occured to you in your career so far? Can you share the lesson or take away you took out of that story?
As I mentioned, I dabbled in real estate here and there for several years before starting the company I run today. One of the big reasons why those ventures generally failed was because of my inability as a manager. I worked with numerous people that I met through BiggerPockets, an online platform for real estate investors to connect with one another, but it never worked out.
Once I decided to officially quit my job at the church and go full time into real estate, I made a new connection on BiggerPockets. Within weeks, he and his wife flew across the country so we could meet in person, and he ended up being the perfect business partner. He has the complete opposite skillset of mine — a perfect compliment to what I bring to the table — and yet the same spirit, goals, and dreams. To this day, our colleagues see the relationship and ability we have to operate within a shared vision and yet be completely unique in ourselves, and they are shocked at how well it works.
The absolute happenstance nature by which we met still amuses me to this day. And I think it only reinforced for me what I already knew to be true: I couldn’t and shouldn’t do any venture on my own. Not because I’m not capable, but because we are all so much better, stronger, smarter, and more focused, when we have shared accountability, diversity, and a TEAM approach.
Are you working on any exciting new projects now? How do you think that will help people?
Yes! Our whole team is very excited to be launching our New Construction division at Bridge Turnkey Investments. Although we’ve been buying, renovating, and selling more than 400 homes in the last few years, new construction has been a totally different thing to learn over the last 12 months. We’ve learned a lot, made mistakes, and now we have the foundation for what will be an incredible new construction machine that brings well-designed homes to the market, both for build-to-rent investors and retail buyers.
From a financial perspective, the new construction division has a huge upside to help investors. People with diversified portfolios have less risk and by bringing this option to the table, we are able to meet that need.
Additionally, there’s still a high demand for great places to live and not everybody wants to buy a home. These properties offer the opportunity for someone to live in a beautiful new home and not have to buy it. Or, if they do want to buy it, be able to do so at a reasonable price. With affordable housing continuing to be an issue of national concern, I love that we get to be on the front end of helping solve that for people.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
I will never forget a lunch I had with one of my early mentors, Rob. I had spotted his business on Craigslist or somewhere where they had posted one of their homes for rent. So I went looking online for what he did and reached out to him and asked a number of times if I could take him to lunch. When he said “yes” and showed up, he was driving a Subaru. He didn’t wear a fancy watch. He ordered the special off the menu (which I sincerely wondered if it was something I could even pay for at the time). He acted like a regular guy.
He told me about the secret to stability in his business: the legs of the stool, or multiple income streams to hold up the whole. Literally to this day, I still think about him and that lesson. He also laid out what his business looked like. From project management to renovation and flipping houses to owning rentals. He was a big inspiration to me in understanding what his life looked like and how real estate can be a great resource for others. He continues to be a great resource and inspiration to this day.
Let’s shift a bit to what is happening today in the broader world. Many people have become anxious from the dramatic jolts of the news cycle. The fears related to the coronavirus pandemic have understandably heightened a sense of uncertainty and loneliness. From your experience, what are a few ideas that we can use to effectively offer support to our families and loved ones who are feeling anxious? Can you explain?
One of the things I’ve been talking about with both my family and my team in my business is journaling. Keeping record of the things you’re experiencing and checking in on your state. It’s something I try to do regularly. If I catch myself feeling anxious or catch myself being upset about something, I try to think through what it is and then work through it and understand what is causing it.
Second is meditation. Using a simple app on your phone like the Sam Harris Waking Up app (my personal favorite), to be calm and thoughtful and be in the moment. If you are in a good place yourself, you are in a good place to help other people.
Finally, if you’re in a place where you’re struggling, you can choose to turn hopelessness into helpfulness. You put the focus on something you can control. Helping others is one of those things. And you’d be surprised how much less fearful and anxious you are after you’ve helped someone else or taken the time to make them smile.
Ok. Thanks for all that. Let’s now jump to the main core of our interview. As you know the stock market and the economy in general have become extremely volatile and uncertain. Many people “dollar cost average” and put aside a monthly sum into a long term savings plan for retirement, college, or a home purchase. If a loved one or a client came to you and said, “I have been saving and investing $500 every month in an S&P 500 index fund. Over the next few months until the dust settles, should I be doing something else with my money?”, what would you say to them?
If that’s what they’ve been doing and that is their only option, I’d tell them to keep doing it. Investing in something is better than investing in nothing. There are so many people that don’t have retirement savings at all, it’s still very positive to do. With that said, I prefer alternative investments where I can have better returns and more control over the value of an asset class I understand.
Because of my experience and the long-term, overarching stability of real estate as an asset, I will almost always lean toward real estate as the investment I’d recommend. So, in this case, I would tell this person, if they had the means, to save the $500/month until they had enough for a downpayment on a home. If it’s a primary residence, the person can buy a home to live in with an FHA or VA loan for as little as 5% down. Consider a $100,000 house (which you can get great ones in my market of Kansas City), you’d only have to put $5,000 down to own the home. By saving $500/month, you’ll have that down payment ready to go in less than a year. Then, house hack that home. So, get a roommate to live in it with you whose rent covers your mortgage and you’re living for free.
If the person weren’t in a position to house hack and already owned a primary residence, my advice would be similar except I’d point them toward owning a cash-flowing rental property. A down payment on an investment property needs to be 20% of the price of the home. So, in our same $100,000 example above, they could own that home in a few short years by saving $500/month toward the down payment. Then, once they own it, they’d start immediately seeing a return on their investment through the cash flow of that property.
Eventually the economy will recover and rebound. Certain sectors, like travel and hospitality might be hurting for a while. But other sectors, like technology and healthcare, might do very well. If someone wanted to prepare today to take advantage of the future recovery, what would you suggest they do?
It may seem like I’m beating the real estate drum, and it’s because I am. Real estate is a great investment in any market cycle, if you know WHAT goal you’re trying to accomplish and you’re willing to take action toward that end. As we know in Maslow’s hierarchy of needs, food, water, and shelter are the very basis of existence for anyone. Although many other sectors may come up and down, everyone will always need a place to live. Current interest rate terms make real estate investing even that much more exciting right now. And that’s one of the many reasons my company and my clients are not only investing right now in that asset class but doubling down efforts in scaling real estate portfolios.
So, I’d suggest, if they’re in a position to invest today, they do it. And if they’re not, that they save up cash reserves and set a clear goal, so they know when it’s time to take action.
Are there sectors that provide exciting and lucrative investment opportunities today, specifically because of the volatility and uncertainty?
Absolutely there are sectors providing exciting investment opportunities today because of the volatility and uncertainty. I know many people who have put money in the stock market who are experienced investors who have already done very well due to the volatility. I also know many folks who have bought real estate deals who have done very well. There are other unique opportunities, as well, in small businesses where owners need help or no longer have liquidity. There are incredible businesses that will be for sale or need help over the coming months and years.
Are there alternative investments that you think more people should look more deeply at?
If you understand oil and gas, that’s pretty interesting right now. Potentially investing in metals such as gold and silver. I have many friends who have done very well in cryptocurrencies, as well. And, I’m sure this will shock you, but people should absolutely be looking more deeply at real estate as an investment, if they haven’t already. Above all, it’s important to understand what you are investing in and have a real clear game plan of both your buy criteria and your exit plan.
If a person in their thirties and forties came to you today and said that they have $10,000 that they want to put away today for a long term investment what would you advise them to do with it?
If someone is handy, or wants to manage something themselves, they could use some creative financing to purchase a rental property that needs work, renovate it, rent it out, and then refinance it with a bank. In this situation, you could likely get your $10K back, own the asset, AND have equity in the cash-flowing asset.
If they aren’t handy or don’t want to manage the renovation themselves, I’d recommend they find a real estate turnkey provider that solves all of those things for them. Basically, keep saving money until they have enough for the downpayment and then purchase a cash-flowing rental property, which continues to produce passive income for years to come.
Ok, thank you! Here is a more general finance question. You are a “finance insider”. If you had to advise your adult child about 5 non intuitive essentials for smart investing what would you say? Can you please give a story or an example for each?
- Do your homework: For anything we do in our life, business, whatever, we have to first start with the idea and use the tools and resources around us to be educated. At Bridge, our clients have decided they want to own real estate as an investment tool, but now they’re doing homework on what market they want to invest in and what company they want to work with. Doing their homework in this case means understanding price range and rent rates and type of construction. Understanding if they’re Investing for cash-flow, appreciation, or some balance of both. Doing the homework is an essential part of being confident in taking the next steps with an investment opportunity.
- Understand the investment and the associated risks that you’re taking. Continuing on the real estate path, you might be able to invest and buy a much less expensive home, but it might be in a much less desirable area. Or you might try to buy something that is very nice but after doing the numbers, the property, even after renting the property out, is not cash flow positive. The risk in the first place being that you get a property that is hard to keep rented and in the second is a property that, though it will be worth a lot in the future, the returns are so low that if anything happened or repairs need to be done on the property, you might have a hard time recovering that cost. One time at Bridge, we failed to do this very thing and it cost us massively. We got in a rush to lock up and purchase a property because there were many other interested buyers who we were competing against to own it. We went through the entire process of buying it, renovating it and had a buyer all ready to purchase it when we learned through inspections that the property was not on city sewer. It also wasn’t on a septic system. It was on a holding tank. This surprise caused the buyer to back out of the deal, and it became a difficult property to sell until we fixed the issue. We ended up spending almost $20,000 to put in a sewer. That’s an expensive mistake that could have been avoided had we understood the risks better at the get-go and not allowed ourselves to be rushed into a decision.
- Seek guidance from professionals who are doing exactly what you want to do or have the end result that you want. Early in our business and continuously still, I seek out mentors in my life to ask for help and understanding around things I want to do that they are already successfully doing. One great example of this is our new construction division, and how we spent a year talking with our friends who have built hundreds of homes to understand the types of properties, layouts, costs, and building processes that achieved the result that we were looking for. Because we did that homework and took our time to learn from professionals, we were able to get our new construction division up and running at scale faster because we were able to utilize our friends and mentors who could help us learn from their mistakes and what worked well for them.
- Lay out a game plan for both short-term and long-term. We do this at Bridge by laying out our 10-year, 5-year and year long goals and then breaking them down all the way into weekly goals. This way we understand what we’re driving at as a team, but also each important milestone along the way that will help us get the end result. Without the achievable weekly goals, the 5 and 10 year goals seem too big to even grasp. The short-term goals help keep us focused on what it will take to get to the big ones.
- Take massive and consistent action. Just like we tell our clients, we believe the best day to invest in real estate was yesterday and the second best is today. Although there is an ebb and flow in any market, any cycle, we know that by taking action today, the results (wealth and income) compound over time. Thinking about a rental property: over time the property appreciates and the cash flow grows as the debt is reduced. It takes a long vision to see what the result in the future will be, but also the short term decisive action to save the money and invest today.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
My favorite “Life Lesson Quote” is a Jerry Rice quote: “Today I’ll do what others won’t so tomorrow I can accomplish what others can’t.” This quote constantly reminds me that in order to achieve the goals I want, I have to do all of the things we’ve talked about prior — work hard, do my homework, lead my team well, grow as a leader, and set massive goals. I’m inspired by stories of other people’s success. Truly successful people who have long-term wealth, prosperity, and happiness, have worked on all those areas with the blood, sweat and tears to accomplish it and made those dreams come to fruition. I want to live that story, too.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. 🙂
Learn, invest, build wealth, give it away.
It’s all the things we’ve talked about already: how we go about learning, educating ourselves, growing into who we want to be, and harnessing what we can control into manifesting those goals into reality. Leveraging our skills and other peoples for good. One of my dreams that will really be my biggest accomplishment in life, my BIG goal, is to give away a million dollars a year before I’m dead and have it set up in a way that it can continue on for generations. I truly believe that no amount of money matters if you don’t do something good with it. So not only have I been highly motivated to make a great living and a great life for my family, my team at Bridge, my clients, and people who are less fortunate, but I’d be honored to inspire others to not only grow their wealth but have a heart for giving it away.
Thank you for the interview. We wish you only continued success!