1. Leveraging Real Estate Investing: The episode underscores the power of real estate investing as a means to generate passive income and build long-term wealth. Gorden Lopes journey exemplifies this, showcasing how he successfully built a real estate portfolio from scratch, leveraging techniques such as buying rental properties, cash-out refinancing, and remote property management.

2. Importance of Action and Networking: The podcast episode highlights the crucial role of taking decisive action and forging meaningful relationships in the real estate world. As shared by Lopes, establishing trust with property managers, having a solid network, and being proactive can significantly influence the success of your real estate investment journey.

3. Strategy and Understanding Market Dynamics: Lopes emphasizes the significance of understanding the market dynamics, property valuation, and cash flow versus appreciation. The episode also touches on the concept of cash-out refinancing and its potential benefits for investors. Lopes's story suggests that successful investing is not only about purchasing properties but also about implementing strategic techniques to maximize returns.

0:00:00 - Vikas Gupta

This is the Hacking Real Estate Podcast, episode 18. 

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Gorden Lopes

For long distance investing, trust and communication are like the two important piece of the puzzle, and those are my non negotiating terms with any of my property manager, like, if I text you, I need a response immediately or within a day, like that's the expectation that I set. But things become easy once you have the trust already established. 

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0:00:26 - Brandon Hall

Welcome to the Hacking Real Estate Podcast, where we dive into the stories of seasoned hands on and tech savvy real estate investors. We'll learn the strategies and tools they use to maximize returns and minimize hassle, all while navigating the rapidly changing real estate market. I'm your co-host, brandon Hall, and managing partner of Hall CPA, and I'm sitting alongside my co-host, vikas Gupta, ceo of Azibo. With our combined 15 years of experience in real estate investing and entrepreneurship, we're here to help you up your real estate game. Let's get hacking. Hey everyone, welcome back to another episode of Hacking Real Estate Podcast. 

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Today we're joined with Gorden  Lopez. He's a seasoned real estate investor and senior software engineer based in Silicon Valley. He grew up in India and he moved to the US in 2007 to pursue his master's degree at Clemson University. Gorden 's focused on a buy and hold strategy. He owns several single family residences, a small multifamily property in Huntsville, alabama, and his real estate investing journey began back in 2016. Since then, he's achieved tremendous amounts of success. He's executed six BRR strategies and he manages everything remotely. Gorden , welcome to the show, thank you. 

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0:01:36 - Gorden Lopes

Brandon, thanks a lot for having me Really excited to be here and share my story with your audience. 

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0:01:43 - Brandon Hall

Absolutely. We're excited to have you here. So just kind of walk us through your journey. You came to the US in 2007. You pursued your master's degree at Clemson. What happened after that? Did you move out to Silicon Valley after that? Let me, before we start, right Big fan. 

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0:01:56 - Gorden Lopes

I've been listening to your other podcast, brandon, for the last five years. You have had like a great, great influence on my real estate journey and you have totally made like taxes great again, man. 

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0:02:10 - Brandon Hall

We try to make taxes fun. The other podcast Gorden 's referencing is Tax Smart Real Estate Investors. Go give that a listen. But Gorden  tell us about your journey. So you came to the US 2007. You got your master's degree. What did you do after your master's degree? 

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0:02:23 - Gorden Lopes

Yeah, so I graduated in December 2009, the peak of the Great Recession but I ended up getting a cool job offer from Intel as a software engineer, and so I've been in the tech industry then, but that was in Portland, so I moved to Bay Area in 2012 and been in Bay Area ever since and been in the tech industry ever since. I call it like the high tech, high pay job that comes with high stress, and that's basically the high stress part of the job got me into this journey of generating passive income, and I can talk more of how I actually executed that strategy. 

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0:03:06 - Brandon Hall

Definitely, definitely, but for all of our tech listeners listening to this. So 2012 to 2016,. What were you doing out in the Bay Area? What was kind of your day job? 

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0:03:14 - Gorden Lopes

Yeah, so I have worked for companies like Oracle, amazon so currently I'm a staff engineer, but mostly I've worked at a cutting edge technologies like developing kernel operating system. So I was working for Oracle, where I was working on some of their like software operating systems that run on these servers, and then same thing at Amazon. I was working at kernel and bias level developing softwares. So, yeah, that's that's the high level I can. I can go deep and talk more about my work, but yeah, mostly developing kernel level and operating system software. 

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0:03:53 - Brandon Hall

Perfect. And then, in 2016, you decided to dip your toes into real estate. What made you want to invest in real estate, like what was the big idea? 

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0:04:03 - Gorden Lopes

Before that, I actually got introduced to the concept of financial independence, as they call it fire. In 2015, when I had my first kid. I think long changing diapers night basically made me realize that there's more to life than my nine to six job, and around that time I had read this book called your Money, your Life by Vicky Robbins, which is almost like a Bible. In the fire community, I was pursuing fire by 2015. 

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And around 2016, I had a super high stress job at Amazon with an hour 15 minutes long commute, and I realized that this is not scalable. I mean, I can't do that. It was a tough time in my life mentally because we were about to have our second kid, and so during that commute time, I started listening to podcasts real estate podcasts like the real estate CPA, bigger pockets, right and I was convinced that real estate is a way to generate passive cash flow and long term generational wealth in a tax efficient manner, and so I was convinced then, and then it took me like six months of basically just acting on the advises that the podcast was giving right, and basically that's how I ended up selecting Huntsville, alabama, as my place where I need to buy rental properties. 

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0:05:30 - Brandon Hall

So walk us through the first deal that you purchased back in 2016. What was the purchase price? What did it look like? If you had to do it all over again, what would you change? 

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0:05:39 - Gorden Lopes

Yeah, so my first deal was a single family in Huntsville, alabama. It was a three bedroom, two bath, 1350 square feet. I still have it and it's one of my best performing properties. It was listed for 110. I bought it for 102,000 dollars and there was a $5,000 basic rehab needed of, like changing floors and paint. 

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I did that in a fairly quick way, like you know. One month time I purchased it and that did the rehab and then my property manager was able to find a tenant pretty quickly so it got rented then for $950. So that's where my journey started. It was off MLS, we did basic negotiation but for the first time we're buying rental property out of state. It was super scary and so many of my friends relatives basically were trying to talk me out of it, but somehow I just had that conviction and I went ahead with that. Now, five years down the line, it is renting for like $1,500 per month. I have a 30 year mortgage at 3.5 interest rate and my monthly everything right, pity right, they call it principal insurance taxes is around like $600. So that was my first deal. 

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0:06:58 - Brandon Hall

And so I'm assuming that, since it's your best performer, you wouldn't actually change anything about that first deal. 

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0:07:04 - Gorden Lopes

Yeah. So that's where luck actually is a big factor, right, in these kind of situations. It turned out to be pretty straightforward Tenant went in, tenants were awesome, didn't have much issues after that. What if, like, that first deal had like a HVAC issue or some roof went down, right. So there's a factor of luck that it just happened to be a smooth sailing and I was like, wow, I can do this often, right, and I then kept on doing it every two, three, six months. 

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0:07:34 - Brandon Hall

Yeah, that's interesting Because my so I bought a three unit in 2015. And I've been asked this question before what would you do differently? But it is also my best performing property, so I wouldn't do anything differently either, but that was my first one. I've since learned a lot, because I've made a lot of mistakes with additional deals, but, yeah, I got really lucky on that first one. 

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0:07:53 - Gorden Lopes

Yeah, and like the first deal will not make you rich, right, it's not going to be like a home run. So my first deal, my goal, was that I shouldn't lose money out of it. If I make money, that's a added bonus. But I wanted to kind of build that rapport, that networking and stuff right. So I had a very low bar when I started because I was like I just don't want to lose any money out of it. And then I started figuring out how, what are the worst case scenarios that can happen, and once I had it covered, I just like took the plunge. 

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0:08:24 - Brandon Hall

How much have rents appreciated on that property since you purchased it back in 2016? 

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0:08:29 - Gorden Lopes

Yeah, it's. It's crazy like Huntsville just took off after that, like many other cities, midwest cities, right. So I started with 950 per month and right now it's at 1500 per month. So 30 40 percent. 

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0:08:44 - Brandon Hall

So you still have the same, the same mortgage on it. 

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0:08:46 - Gorden Lopes

Yeah, so I did refi when the mortgage rates were at around like 3.5, so currently I have a 3.5 on it. 

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0:08:53 - Brandon Hall

Oh, so you did you. You refied out of what like a five and a half that's about what rate for back then. 

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0:08:59 - Gorden Lopes

Yeah, yeah, around 2016, 17. Right, it was five and a half Interest rate, and then I refied into a 3.5. 

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0:09:07 - Brandon Hall

Good for you that. See, that was smart. That was one of those learning lessons that I did not execute on. So I still have my five and a half percent interest rate on that 2015 property no, that's good. So I like this aspect of real estate, talking about these types of numbers, because you you bought with a 950 gross rent per month and I presume that it cash flowed at the time. 

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But look what happens right, your debt and if you don't refi, your debt stays the same. You're your PI or your lease, your principal and interest stays the same. Insurance and property taxes will increase over time, but your, your debt payment stays the same. If you've got a fixed year or fixed 15, 30 year debt, but your rents have increased to almost almost doubled. That are all 70% or 80% increase, which is pretty incredible, but again, your debt payment stays the same. So your profits start to get bigger and bigger, your cash flow starts to get bigger and bigger and Gorden  even refied that was really smart Move refied when the rates were lower and got an even smaller I presume an even smaller monthly payment on that loan. 

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0:10:13 - Gorden Lopes

Yeah, plus the added icing on the cake was the appreciation like right now the property Can easily sell for like 210 220k so, which is almost like double. So can't complain. Do you ever look at return on equity? I know there's a concept of return on equity where there's a huge equity in that Property. I need to basically use it somewhere. So I do think about it. I've been basically talking to my lender to see if I can open a home equity line of credit on these group of properties that I have and so that I have that equity ready to trigger. So that's something that that I do consider, because in the last five years we just got lucky that we had seen one of the craziest appreciations in real estate market. So, yeah, that's something that I do do take in mind, but I have a plan. But we'll see. 

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0:11:45 - Brandon Hall

Okay, okay, that's good. Yeah, it's funny because every once in a while I'll bring this topic up with different real estate investors in my network and some of them don't look at it at all. They just look at the return on their initial investment and any additional cash they put into it. But for me, if it's been five years and we, the values run up and we now have all this additional equity kind of baked into the property, is the cash flow we're getting really doing that well for us anymore, or should I be redeploying that equity somewhere else? So that's what I always go back and forth with. It kind of sounds like you're figuring that problem out. All right, so that was the first rental. When did you pick up rental number two? 

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0:12:22 - Gorden Lopes

So in three months, once that the property was stabilized, I purchased my second property and that was off market. Like in the three to four months I started making more network connections through bigger pockets, talking to local investors, realtors, right, and in like four months time I did my second property. That was my first burr. Okay, how'd you buy off market? So my realtor friend basically found this guy who was staying three hours away from Huntsville and he got this property through the will like his parents had died and he was not there in Huntsville. So there was around like 15, 20k worth of rehab needed on that property. I used all cash. 

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So there was another strategy, right, where my primary residence had around like 100k of equity. So I had to open the HELOC on there and so I purchased that property 83,500, all cash. I was anticipating around 20k worth of rehab floor paint, the electrical panel. Luckily I purchased it at 83,500 and we were able to finish the rehab in $15,000. So my all-in was 100. I then went to a bank and it got a price for 145 then Nice, so you're able to pull your 100 back out. 

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then basically yes, and that too, again right, like just there were luck factors involved. But my first two deals were like I was like this is amazing. Like I put in like 100k, I got my 100k out and I was like I need to do this again. 

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0:14:02 - Brandon Hall

So let's explain how this concept works for people, because I've noticed that in real estate circles when you start explaining this concept, everybody gets it. But when I'm trying to explain this to like friends and family members that don't invest in a lot of real estate or have much real estate, it's a complex topic to understand. But I think that we can break it down. So what Gorden 's talking about is if you purchase a property all cash for 80k and then you put another 20k into it and that's just your cash, then you've spent $100,000 on this property. Right. But if you then go to the bank and you get a loan from the bank and the bank says okay, we're going to go out and we're going to appraise the property, because that's what banks do. They're not just going to give you debt or money. They're going to go and they're going to go and appraise it and make sure that that it's worth what they think it's worth. So they go and appraise it and they say, oh, wow, it's worth $150,000. We'll give you a loan for $110,000. So now the bank literally cuts you a check for 110k and you get to pull 110k cash out of the property. So you put $100,000 into the property and now you get a check for 110 from the bank and you still have 40k of equity in the property because the property is worth 150. That's the way the bank's looking at it right. So, and that's effectively what Gorden  did On the flip side you could have already gotten a loan. 

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So maybe I purchased this $100,000 property with conventional financing and I put 30% down, so I put 30k into it and then the bank put 70k into it. Give me a 70k loan when I do this rehab and they appraise it for 150 and they cut me a check for again let's just call it 110, the new bank does. Of the $110,000 of cash, $70,000 is going to go pay off the original mortgage. The remaining $40,000 I get to pocket because there's no additional mortgage to pay off. So that's what a cash out refinance does If you're not doing a rate refinance. Oftentimes in real estate we hear about cash out refinances, but that it's a way to take money off the table, take your chips off the table after you've already put in a lot of effort to improve the value of a property. So whenever we're talking about the BRR method, by what is it? By rehab, rent, refinance, repeat, is that what it is? Rent? 

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0:16:38 - Gorden Lopes

refinance and repeat. 

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0:16:39 - Brandon Hall

Yeah, yeah. Whenever we're talking about that or whenever we're talking about cash out refinances in the background, that's what's happening A new loan is being written and it's going to pay off the old loan if there is any and then any additional cash left over, I get to pocket. So in Gorden 's case, he put 100k into the property and then he got the property appraised for 145 and it sounds like he got about 100,000-ish loan that he then got to pocket, and by pocketing it he effectively pulled his $100,000 out of the property. And now you get to recycle it, right? So did you take that and then go buy property? 

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0:17:14 - Gorden Lopes

number three yes, but just to add to that right. So the difference when you buy all cash is. So in my case the buyer wanted quick cash, like he could have easily rehab that property. Waited three months, put it on the MLS and could have got 140, right, waiting four to five months. But the ability to buy quickly. When you involve bank in the purchasing, they have their own process, right so, of appraising the property. So buying all cash gives you the leverage in the negotiation saying that, hey, I'm going to take a look at the property and I can close in seven days, right. So that's the benefit of buying it all cash versus using a mortgage first time. Plus, there is a I think Fannie Mae requirement that once you have a mortgage on a property they have to wait for season six months seasoning period, right. So to do a cash out again you'll have to wait six months, but if you buy all cash you don't have that seasoning period. So just wanted to kind of point that out as well. 

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0:18:25 - Brandon Hall

That's actually really good to know, that's great to know. That's great to know Because that is often the issue that's brought up in real estate circles is you have to let the property season for six to 12 months before you can get any sort of conventional financing. But that's good, that's good to know. So you took the cash, then you went and bought property number three. Walk me through that property. 

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0:18:44 - Gorden Lopes

So then during that time I was like I need to have a bigger pocket in terms of my HELOC. So at that same time my Bay Area property was appreciating. So I opened another HELOC, like basically same, from my same HELOC company. I raised that to 200. So now I had a 200k of HELOC equity ready to trigger. And so at that time I was also networking with wholesalers, which are like the important piece of the puzzle in the real estate domain. 

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So I found this wholesaler who had listed a quad, a quadplex in Huntsville, and I had known that zip code pretty well. So it had listed for $244,000. Each unit was a two bedroom, one bath. It had around like $500, $550 per month rent, so the gross were around $2200. It's a crazy story. So I spoke to my lender. She said you can get a four and a half interest rate. I was like okay, and I talked to the wholesaler saying that hey, can I get a conventional financing on this if you're okay, because some of the times the wholesalers need all cash to close the deal. But this wholesaler was like okay, you can take a conventional mortgage. So I got into a contract. 

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I paid $1000 earnest when I started the mortgage process. The lender comes back and says oh, it's a, it's a four unit. Sorry, we can't do 4.5. We have to do five and a half or something like that, six. And that changed the whole number game, right, and I got super nervous and I went back to the wholesaler saying that, hey, I'm really sorry I screwed up. Here's my $1000, but I can't do this deal. I was willing to walk off and then, strange thing happened. He wanted to close quickly or he didn't have any other buyer. So he came back to the negotiating table. He said, like how much do you want to pay for it? And so I ended up buying that property for 222K and I got that mortgage. I have all my properties. I haven't sold any of them yet. So right now the rents on each of the units is 850. And I net around like 3400. My mortgage is around like property insurance taxes, is around like 1300 on that. 

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So it it like? I still remember. I still remember that night, like I, I was like, oh man, I need to call the wholesaler next day morning and tell him that I'm backing out of this deal. I couldn't sleep that night. I woke up at like 630, called him saying that hey, I'm sorry I cannot make this deal. I know I was. I was wrong here. Here's my thousand dollars. You can keep it. Maybe the fact that I was genuine, maybe he he got convinced that, like, maybe he's a genuine guy and that's how he came back to the negotiating table. When did you purchase the four unit in 2018, 2017? And okay. 

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0:21:44 - Brandon Hall

So basically in a year and a half, you went from owning no rentals to three rentals and six units. 

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0:21:52 - Gorden Lopes

I think initially, when you mentioned that I bought in 2016, I started like reading about real estate in 2016, but I actually purchased my first property in like around March 2017 time. 

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0:22:04 - Brandon Hall

Okay, oh, wow. So you, I mean you went, so you bought three properties, you added six units of your portfolio all within like eight months. 

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0:22:13 - Gorden Lopes

Yeah, In around, like your one, your one, basically I I got lucky with the the quad yeah. 

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0:22:20 - Brandon Hall

Good for you. You know, I know if somebody's listening to this right now they're probably like, okay, well, how did you like buying the four unit versus the single family home? So I mean, like, what are the key differences between owning multi-family and single family homes? And now that and I guess once you and maybe the rest of your portfolio, answers this question but after you experienced each type of asset, did you start to favor one or over the other? 

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0:22:45 - Gorden Lopes

So my quads are definitely. I have two quads and they are doing really well because, simply for the fact that when the rent increases on each unit cumulatively, you get like a huge bump in the the rents and obviously, right, like all four units going out of like tenants. The chance of that happening is almost zero if you're buying in a great location, right. So I wish I had bought more quads or like more multi-family, for the fact that Fannie Mae allows you only like 10 mortgages, right? So those are like the check boxes. So I would rather buy a mortgage of like 400, 300 K rather than buying a 100 K mortgage, because one of the advantage of being a W2 employee is that my credit history is super strong. So banks, like are more than happy to lend me money, but I'm limited by the number of mortgages that I can take. So I would rather buy a 400 K quad that gives me a cash flow of like 1000 or 1200 K, rather than buying like four single families, because I'll be ending up having four mortgages. 

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0:23:56 - Brandon Hall

That makes sense. Okay, do you have 11 properties? 

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0:23:59 - Gorden Lopes

So right now I have 14. It's me and my wife right, my wife is also working. So when we started, our goal was to basically each one of us will have like 10 mortgages 10 mortgages. Basically, that's how we had planned. So right now she has around like seven mortgages on her and I have around like six mortgages on my name. 

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0:24:19 - Brandon Hall

Okay, so the four of the 14 properties how many? Are multifamily. So I have two quads, just the two quads. 

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0:24:26 - Gorden Lopes

Yes, and let's all a single family. 

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0:24:28 - Brandon Hall

Okay, interesting. So you have 12,. You have 12 single families. 

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0:24:31 - Speaker 3

Yes. 

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0:24:32 - Brandon Hall

Okay, have you sold any product you said you didn't sell? You have not sold any properties yet. 

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0:24:37 - Gorden Lopes

I haven't sold, but I have done a flip in Huntsville and that will be my last flip. 

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0:24:43 - Speaker 3

I'll give you the reasons. 

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0:24:44 - Gorden Lopes

Flipping is not for me. I mean it's a completely different ball game. I didn't lose much money, but I didn't make any money, like I said, like everybody else made money except me in that flip deal, but yeah not as easy as they make it look on HGTV, huh yeah. Buy and hold is so comparatively easy than flip and it's like a people say right, real estate is a forgiving investment, like, even if you pay 5000, 10,000 more in your one, eventually, if you buy in a great location, right things will be fine. 

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0:25:21 - Brandon Hall

So why haven't you sold any of your properties? 

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0:25:24 - Gorden Lopes

So I don't have any reasons. Like they're all doing well, appreciation has been great. I have three and a half three percent rates on most of them. I'm getting great cash flow that I'm basically using to buy my next property. So I haven't seen any reason, unless I see like a great 30 unit apartment deal for, like, say, $10 million. That needs a huge chunk of money from my pocket. Maybe I'll think of like doing that or doing a 1031 exchange, but at this point they're all performing really well for me. 

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0:25:59 - Brandon Hall

Ok, and so are all of your properties in Huntsville. Yes, what made you pick Huntsville? And so that's my first question. My second question is how do you manage the properties remotely? I'm moving into that a little bit, but why did you pick Huntsville? 

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0:26:12 - Gorden Lopes

That's a good question. So in 2016, while I was listening to podcasts, right I got to know that Midwest cities are where there is cash flow. So I had picked like three, four cities Kansas City, indianapolis, birmingham, huntsville and I used to one common term that time was the turnkey providers. Turnkey providers and I thought, maybe it's easy, because I have a stressful job, I will start with the turnkey route. So I spoke to a couple of turnkey providers and they mentioned that Birmingham and Huntsville and he mentioned Huntsville is like a hybrid market of cash flow but there's also appreciation. 

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So I had these two markets and then, as I was sharing my thing with people saying that, hey, I wanted to buy property in Midwest, in Huntsville, one of my friend's cousin was basically studying in Huntsville area in one of the universities and that was a stroke of luck, man. 

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And so I was like, oh you, your cousin, is in Huntsville, let me talk to him. So when I spoke to him because I had no idea where Huntsville is, where Alabama is, and I had my own, like limited notions, right so I spoke to him and he's like dude, this place is awesome, like it's, it's almost like an OSS in the middle of desert. And so he put me in touch with another investor who was investing in Huntsville and he mentioned about there was like a huge investment coming by Toyota and some of the some of the other investments that were coming in. So then I started zooming in and looked at the population growth, then the average income, some of the basic like city level data right, and basically I got convinced that Huntsville it is because it had kind of a appreciation opportunity as well and also a decent cash flow. 

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0:28:05 - Brandon Hall

Okay, and so how do you manage your properties remotely? What is the process? 

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0:28:11 - Gorden Lopes

So I have property managers. Now that I have like three property managers that I've spread across my properties, so I don't have a single point of failure. Initially, like I started through investors networking right I got certain referrals. And there was another interesting thing that I did and I found my main property manager, which manages around like seven properties. So I visited Huntsville and I decided to stay in an Airbnb room rental and the thought process there was I wanted to talk to locals right, and if someone is renting a room, he might be a hustler or an entrepreneur, right. So I decided to stay in an Airbnb room rental when I was doing my third burr and it so happened that the person who was renting that room was a property manager. He was just starting with his property management business and I stayed with his family, had dinner and till this day we have a great relationship. He manages seven of my rentals. There's another one who manages four of my pro, like five of my properties, and there's a new one that I'm trying who manages like three of my properties. 

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0:29:23 - Brandon Hall

That's great. How do you structure your relationships with your property managers? Do you just say, manage my properties and walk away, or are there any sort of checkpoints, that that you want them to be a part of? 

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0:29:33 - Gorden Lopes

Things become easy when you trust. You build that trust right. So I gradually increased my properties to my property manager and it gives you a leverage of negotiation right. So normally there's a 10% property management chart, but with that many properties you can easily get it down to like six or seven percent you can trust but you need to verify. So there's like a monthly statements that comes in right and there's also I need to make sure that anything about 300 or $400 in expense right Is raised immediately so that there are no surprises between. So communication for long distance investing right. Trust and communication are like the two important piece of the puzzle and those are my non negotiating terms with any of my property manager. Like you have like, if I text you, I need a response immediately or within, say, within a day, right, like that's. That's the expectation that I set. But things become easy once you have the trust already established. 

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0:30:31 - Brandon Hall

Do you ever go and visit the properties? Do you ever go walk them? 

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0:30:36 - Gorden Lopes

So not when I'm buying them, like initially, when I purchased my first house, I did a trip to Huntsville. I looked at the property. Then I had gone like I have totally made like four trips to Huntsville. But the goal is to just meet the people right who are managing, meet the team, kind of build that rapport. I don't actually walk through a deal that I'm looking at because that's kind of the easier part, right, like your property manager or your boots of the ground. My realtor does a video walkthrough. You can easily find the age of the HVAC, the roof, right, and then they are more. They are the experts in walking through our house. Like I don't have anything special right. Like they, when they walk on a roof floor they can say, oh, it's a little wobbly. So I rely on my team to do that. My goal is to basically make sure that I'm having that rapport with my team where there's a win-win relationship. Like they, they are also growing along with me. 

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0:31:34 - Brandon Hall

That makes sense. If you were to look back on your time investing, let's go all the way back to 2017, when you started picking up those first few properties. Knowing what you know now, what advice would you give to your beginner self? 

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0:31:50 - Gorden Lopes

I initially was a little skeptical buying properties in the 200 and up range. I wish I had more properties in the higher range, the class A neighbors, like. My investment strategy was focused on just like cash flow, cash flow, cash flow. But if I had purchased some properties right during that time, given the fact that right now we are at like 7% rate, like if I could have bought those three and a half percent mortgages at 300k properties right, that would have been a little more rewarding for me. So, yeah, just taking a bigger jump because of the appreciation. 

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Yeah, yeah got it. 

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0:32:35 - Brandon Hall

So there is a trade off. With higher cash flow you kind of get less appreciation. Is that your experience? 

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0:32:42 - Gorden Lopes

Yeah. So I stayed in the class B neighborhoods, right, like the way you determine is by school ratings or the rental prices, right? So if I have to do it all over again, I'll still buy the cash flow properties, but I will also look at these class A properties which might not cash flow in your one year or two, but they have a huge demand. 

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0:33:06 - Brandon Hall

Yeah, you know, that's interesting. They're kind of a lunch with my experience as well. So my multi-family properties they cash flow great and they have appreciated pretty substantially just because of the market, but not nearly as substantially as the single-family properties that I have. That did not. You know they don't cash flow amazingly well because I paid a lot more for them. But I bought them in Raleigh, north Carolina, and Raleigh is a big, a big city. So the appreciation has far outpaced, you know, any cash flow that I received from those tertiary markets. And so it's kind of an interesting, you know, dilemma. 

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And for me my thought process over time has kind of shifted. Whereas I was originally I have to be heavy cash flow because when I bought my first couple of properties the idea was I want to retire, right, and then I started my CPA firm and that went out the window. But that was the idea is I want to retire. So what do you retire on? You retire on cash flow, you can't retire on equity. So I bought for cash flow. 

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But I've kind of shifted a little bit where I want the appreciation Ideally I want forced appreciation, so kind of like what you're doing with the burr right. That's awesome, but the more appreciation I can get, the better, and I'm willing to take less cash flow. It still needs to cash flow, but I don't now. I look at cash flow almost as like a cover for just to hold the property until that appreciation really starts kicking in or until I can force that appreciation on the entire asset. And I think you see this too whenever you get into the larger assets as well. They'll buy properties specifically to force the appreciation. Yes, they need it to cash flow, but that's not what they're in the game for for themselves or any of their investors that are coming in alongside them. So it's interesting that you bring that up. I think a lot of us experience that as we continue to scale our portfolios. 

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0:34:59 - Gorden Lopes

Yeah, no, I mean, I totally agree. Like cash flow is not gonna make you wealthy, like what's gonna make you wealthy is that crazy appreciation. And those happen in like cities like Raleigh, right, which has, like a tech hub, huge population growth. In fact, I was trying to expand to Raleigh but just got lazy and things were so easy in Huntsville that I ended up buying more in Huntsville, like I was looking at Raleigh, florida. Those are like the high appreciation markets, but still within the range of like 300, 500k properties, right. So, yeah, good for you, man, raleigh is a great market. 

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0:35:39 - Brandon Hall

Yeah, it's definitely been interesting. I bought like one of the homes that we bought was an 1,100 square foot home, two bed, one bath for 250K, and now it's like 380 and I can't get anything under 300. So I'm just like, exactly, that was like three years ago and it's just, it's insane. 

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0:35:56 - Gorden Lopes

So yeah, Even the new bills, like that's such a simple strategy that many people did like four years back, three years back, and I was like man, there's no equity here, I wouldn't buy that, just buy those new bills. Well, you need to understand the economic cycle where you are in the cycle Now those time is gone. Like now that time is gone. Now you can't do that, but maybe if this cycle repeats right, we are ready for the next set of like action. Then I'm waiting for that. 

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0:36:27 - Brandon Hall

I will tell you what one thing that I have learned and this is not investment advice for everybody that's listening, but for me one thing that I've learned not only running my business through this market, through the market cycle that we've had, but also owning a real estate portfolio. When rates are low, buy everything in sight, just buy, just get the cash. Buy as much as you can Use good debt. You don't want to use floating rate. Yet that's what's going to tank. I think a lot of the big multifamily syndicators here over the next 12 months is the floating rate debt that they use to acquire their assets. But get 30 year fixed and just buy everything in sight, because, man, once those rates go up, it becomes a lot more expensive to own assets. 

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0:37:12 - Gorden Lopes

So yeah, I think the party is over right, like I don't see rates going back to that three person or three and a half in the next three, four years at least. So the party is over man. 

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0:37:26 - Brandon Hall

I totally agree. You know, I was hashing this out on Twitter with somebody the other day because they were like, no, you just buy and then rates will go back down. And I was like that's a heck of an assumption to hang your hat on rates going back down. I just don't. I don't see it. There's no reason for rates to go back down right Like right now. The Fed is trying to curb inflation, and to curb inflation, they have to cool off the labor market. Well, the labor market hasn't cooled off, it's just gotten even hotter. It feels like the Fed's freaking out. So there's no reason to reduce rates. There's no reason to speed the economy up. I think the economy is still going strong, and so what that means to me is we shouldn't expect any sort of major rate decreases for five years. I mean, it's a long ways out. So this is the new reality. How do you play in their 7, 8, 9% interest rate game? 

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0:38:19 - Gorden Lopes

Which is true, right Like. So. It's similar to appreciation. If the rates come down, well, that's icing on the cake. But you have to run your numbers and make sure at current rate the deal makes sense. For whatever your investing strategy is, there might be an opportunity, right Like the rising rates. Might be an opportunity for people who want to sell quickly but they don't have now. The market might cool off. It might be an opportunity for investors like you and me to buy those properties which are in great neighborhoods. They're not cash flowing a lot at current rate, but in five years, 10 years down the road with compounding, I think you should be fine. 

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0:39:00 - Brandon Hall

Yeah, yeah, absolutely. I love that you keep referencing the compounding. By the way, I think that's something that gets lost in the shuffle whenever we're acquiring property. But, Gorden , let's go ahead and move on to our three closing questions. So the very first one is what is your favorite book? It can be real estate, non-real estate, what comes to mind? 

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0:39:20 - Gorden Lopes

There's so many awesome books, but actually I have a trilogy of books that are by all time favorite that have helped me as an investor. There's a book called Predictably Irrational by Dan Ariel. That book introduced me to this notion of genetically psychological biases built into humans and that introduced a completely different facet that I didn't know before. I had read that book four years back and I'm still rereading it. Then, after that, I read this book by Charlie Munger, the poor Charlie's almanac. It's another Bible for stock market investors. So that book basically gave me how these biases causes smart people to make dumb mistakes. What are these biases and what are some of the things that you need to watch out for. So these two books have been game changers but are a little heavy to read. The third one that I've gifted a lot to everyone, I'm sure you know about it. It's called Never Split the Difference. So these three books I tell anyone who's interested they will make you a better investor for sure that's. 

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0:40:34 - Brandon Hall

great thanks for sharing that. The question number two is and we kind of talked about this a little bit what do you feel is more important if you had to choose one cash flow or appreciation? 

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0:40:43 - Gorden Lopes

Like four years back I thought this was a no brainer with the obvious answer of cash flow. But I think with everything in life, I guess the answer depends where you are in your journey. But I think cash flow is like the foundation that you have to build before you go to appreciation Generally. But let's say an example right, like a Bay Area couple working in tech industry. Right, the average salaries here are 700,000 to 1 million per year. So for them, if they buy like four properties or five properties with like $255 cash flow, it's not gonna change their network needle a lot. What's gonna change is those four, five properties appreciating at four to five percent rate in the next five years is what? So I know why appreciation is important, but if somebody puts a gun on my head, I would still go with cash flow man. 

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0:41:39 - Brandon Hall

Yes, still cash flow. Yes, you like to really protect that downside, then is what I kind of gather from that. 

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0:41:44 - Gorden Lopes

And I think cash flow is easy to calculate. Like you can never say, if I ask you how much is your property going to appreciate in the next five years, it will appreciate, but you don't know how much. But with a certain bit of accuracy you can say, okay, my rent in the next five years is going to be if it's 1600 now, it's going to be maybe 1850, 1900. And you can see, okay, how much is your cash flow. So it's within your like circle of competence that you can gauge how much the cash flow is going to be. 

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0:42:15 - Brandon Hall

Yeah, yeah, I respect that answer. Very good answer, Alright. Last question is what last piece of advice would you like to leave our audience with? 

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0:42:24 - Gorden Lopes

Yeah. So I have three different advises. So one is for your listeners who are just starting out and who are convinced that real estate is a way to basically build cash flow or long term generational wealth. I think it's important to take action, like because all the data, all the information is there in the universe, on internet. But the key is to take action and, of course, do your due diligence. But then at the end, there is a leap of faith that you will need to take and you have to take that leap of faith. So take action, I think. Second advice is for investors who have one to four properties already. 

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The advice I have is build relationships and long term partnerships. That is going to take you from one to four units to 15 to 20 doors, so that's what has helped me in my journey is those long lasting relationships. And third is for immigrants like me who came to US right and who are on a W2 job with H1B visa right, my advice is if I can do it, you guys can do it too. 

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0:43:38 - Brandon Hall

I love it. Gorden , thanks so much for coming on the show today. It was a real pleasure speaking with you. If people want to reach out and talk to you, where can they contact you? 

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0:43:48 - Gorden Lopes

I am trying to be more active on my Instagram handle that is Gorden FI, so at G-O-R-D-E-N-F-I, I'm finally getting over my imposter syndrome and like trying to post more information out there. I am also active on bigger pockets at Gorden  Lopez. So I reply to forum threads and try to add value whichever way I can. So these are the two main ways people can get in touch with me. 

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0:44:15 - Brandon Hall

Love it, Go follow Gorden , everybody. Gorden , thanks so much for coming on the show. Thank you man, Thank you Vikas, Thank you Brandon. 

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