Elevate Your Equity

Ep 103 - Leaving A Large Salary for An Uncertain Future And Thriving with Chris Larsen

July 21, 2022 Season 2 Episode 103
Elevate Your Equity
Ep 103 - Leaving A Large Salary for An Uncertain Future And Thriving with Chris Larsen
Show Notes Transcript

With a lot of experiences, positive mindset and persistence. Join us today on Elevate Your Equity podcast with Chris Larsen. Chris is the founder and Managing Partner of Next-Level Income and he has been investing in and managing real estate for over 20 years. On this show, he shared:

• How he managed himself to keep cool under pressure and the techniques he used to be calm during difficult times.
• The mindset of working in the W-2 while investing in real estate.
• The metrics when evaluating an investment purchase - both as LP and as GP

More about Chris. While still a college student, he bought his first rental property at age 21. Chris then expanded into development, private lending, buying distressed debt as well as commercial offices, and ultimately syndicating multifamily properties. He started doing syndications in 2016 and has been involved in over $500 million of acquisitions. Chris is passionate about helping others become financially independent.

We thank you so much Chris Larsen for coming on the show!

Unlock 3+1 degrees of freedom (time, location, financial + health) with our 5 Point Blueprint! https://elevateequity.org/podcastgift

If you really enjoyed this content and are looking for more, you can continue to learn more about us in several different places for free!


If you'd like to have a FREE copy of our 7 Ways Commercial Real Estate Syndications Protect and Build Wealth, simply click the link below. We are here and vested in your long-term success! elevateequity.org/7waysEbook

Introduction:

Welcome to the Elevate Your Equity podcast where we, as married busy professionals, leverage real estate investing to unlock the three plus one degrees of freedom, health, location, time and financial.

Derek Clifford:

Today, we've got an amazing guest on the show got Mr. Chris Larsen. He is the founder and Managing Partner of Next Level Income. Chris has been investing in and managing real estate for over 20 years. While still a college student. He bought his first rental property at age 21, which is awesome. Chris then expanded into development, private lending, buying distressed debt, as well as commercial offices and then ultimately leading to syndicating multifamily properties. And he started doing these syndications in 2016, and has been involved in over $500 million worth of acquisitions. And Chris is extremely passionate about helping others become financially independent. Chris, this is so great to have you on our show for a change. It's great to have you here. How are you, sir?

Chris Larsen:

Derek, I'm amazing. It's so good to see you again.

Derek Clifford:

You too, sir. So hey, let's go ahead and talk about this very lengthy, and also nonlinear direct route to, to multifamily. And also all the other things that you've done in your past. Walk us through where you got that passion first at age 21 to buy your first rental property and then kind of how you got to where you are today as the nickel tour.

Chris Larsen:

Yeah, so I'm a little bit of a nerd. So I like to say life is curvilinear not linear. Certainly is. It goes up and down. And there's maybe some exponential or logarithmic curves thrown in there as well. But yes, I was an engineering student, when I bought my first property, if you can't tell, I was also in the marching band. So I got to two really good doses of nerd kind of layered on top of one another. But um, yeah, so some of those again, nerds ruled the world. I was like, Okay, maybe that's, you know.

Derek Clifford:

I do.

Chris Larsen:

But I, I've always loved numbers, like, I was pretty good at math. And, you know, went into engineering because I really wanted to race my bike. So I raced bicycles, that's what I did in high school did that in college. And I love the fact that you could like dive into the analytics. And you could look at your heart rate and your power output and the training programs. And I could squeeze a percent here and a percent there. And that's really what appeals to me about commercial real estate, like you squeezed out a percent here, percent there, and the numbers really go up. But before I got into commercial real estate, framing, and real estate, I was day trading in the stock market. And I was making like $5,000 a month when I was a junior in college. But I was also losing a lot of sleep laying there one morning at 3am. I was 20 years old. And I thought if I'm if I'm doing this 20 years from now, like this is like what financial independence or success looks like, that's not what it should feel like. And I get, I get pretty passionate about things, I get pretty focused on things. So it was hard for me to be involved in the stock market and not not be that way. But stock markets always on, right, like it's always there. So I thought, Alright, what else is out there. So I started on this mission, I read 250 books, I ended up getting almost a PhD in finance, I got an MBA in Portfolio Management. And along the way, I discovered this magical thing called Real Estate. And what I love about it is that you have your number one control, you can control the price that you buy it at, you can leverage it, you know, you can actually increase the value of it. And depending on what you have, you can have more or less control with respect to that. And it's like owning a little business, you know, and I love that too. So I bought my first property at 21. I rent out the rooms, we call it a house hack now, bought the place next door ultimately built up a portfolio of single family rentals, but I needed money. So I ended up I spent 18 years in the medical device industry. So I took my biomechanical engineering degree, I joke that my advisor pulled me aside one day and said, We got a problem, Chris, you're not smart enough to be an engineer, and you have too much personality as well. So maybe you should look at something different. So I ended up in sales. So I got to work. I was really fortunate. I got to work with surgeons, most of my career in the O R. And it was just it was wonderful. It's also pretty lucrative career. I was very disciplined. So we saved about 50% of what we made. And I just plowed that money into real estate. So as you mentioned in the intro, you know, eventually transitioned out of the single family space sold all those properties by 2015. And 100% of the proceeds went into commercial real estate.

Derek Clifford:

Yeah, so that's an incredible story. So one thing that's kind of near and dear to my heart is the engineering background. Right? But you also had the foresight when you're 21 I assume that you are still in college to be able to say, hey, you know, this is they're going back to those days. What about it about real estate that just sparked you up right when you were 21? Because I know that you were young and impressionable at that age, like did you have any examples? Or did you just find a book one day or how did that come about?

Chris Larsen:

Yeah, I think there's two things. So first book I read was called Buy and Hold. I remember that book specifically. And it's like there's this guy in California is older gentleman. He just bought properties like hold on to them, pay him down and it'd be worth millions of dollars. And I was like, that's cool. I'll just buy. I'll get enough properties of $10,000 a month coming in. It was predictable. Derek, right. So I'm a planner. So I'm really good at assimilating information, formulating a plan, and then I'm disciplined to execute the plan. So for me, it worked really well like stock market, it's too it's too crazy to kind of make a play like that, you know, it's like, oh, safe withdrawal rates? 4% Oh, no, it's 5%. No, no, it's 3%. That doesn't work for me. Okay. But before that my father passed away when I was five, he was 41 years old, that really left an impression on me. It didn't really dawn on me until a few years ago, I was reading Malcolm Gladwell book. And it talked about how there's this correlation between success and people that had lost their parents. It was like the super high number of like presidents. And I was like, Whoa, like, that's crazy. And again, the engineer and me said, Well, if time is a function of the number of days you have left is the denominator, if you think you're gonna live forever, if time is infinite, your value is zero, right. But if that denominator is relatively smaller, just a little bit smaller, the value goes up exponentially. So I told you, we talked about some exponential logarithmic curves here today, for those people that are like that sort of thing. But also, my best friend died in between my my freshman and my sophomore years. That's why I quit racing my bike. So I had this point where I was like, Okay, now I don't want to be an engineer, I'm not racing my bike anymore. So the thing that basically define me as an adult, as a human, at that point in my life, it was gone. And my best friend was gone, my training partner was gone, my, my roommate was gone. My life as I know, it was was gone, I was depressed, I was like, What am I going to do, but I knew one thing I was going to live every life every day of my life to the most, I was gonna get everything out of it. But the unfortunate reality that we have in this world is you have to have money to be able to do that. So I present you with an opportunity, you have to have money to say, take three weeks off and go to the Grand Canyon, like I did, okay. And like this picture here. That's why I have that on the wall, you have to have money to be able to pay for therapies to pay for healthcare, to pay for supplements to pay for good food. Like, if you want the most out of life, you have to have financial resources. And I knew that. And that's, that's the big reason why I went, I had the motivation to live every day to the fullest. But I also wanted to make sure I had the resources to make it happen.

Derek Clifford:

What I love about this story, Chris, as the motivation is the underpinning behind all of it, and the realization that you had that life is short, right? And you've got to find a way to brushes, you know, yeah, you have to like time is all ultimately what we have. And in order to take full advantage of the time, you need to be able to find some way to create income while you're doing that. And one thing that I wanted to pause and just commend you for as well is the fact that at age 21, I'm thinking back to where I was at age 21. And thinking back to what a typical human being is age 21. I mean, let's think about it. Age 21 is the age that here in the United States are allowed to drink. It's the age in which.

Chris Larsen:

I remember that too.

Derek Clifford:

Yeah, absolutely. I'm sure I'm sure. Or maybe not, depending on, you know what day it was right? Because you're 21, yeah. So you know, you're making this transition from underclassmen to upperclassmen in school. And I can't help but think to myself, I have all these distractions, right, with the magical age of 21. And also the fact that I'm already busy in engineering school. So just want to commend you for taking full advantage of your time while you're young. I know plenty people out there that are listening to this podcast wish that they had started at your age as well, in real estate investing, and liquid. It's taking you today. So let's talk about what you have going on today. And then I have some questions for you about your superpower. So let's go ahead and do that. So what do you have going on right now? Chris, what have you as all of this led to?

Chris Larsen:

Yeah, so first off, if you want to really dive into the story and learn all the shortcuts to get where I am, but do it say 15 years faster. It's all in my book, which you guys can get for free at next level income.com Get a copy. It's free. It's a short read to. Yes. So we mentioned kind of picking up there we sold all those single family properties moved into multifamily now I was working 40 6080 100 hour weeks, I was on call for 12 years in my career, I worked an average six days a week for most of my career. And I had a plan to get out be out of that life when I was 40 years old. And a big portion of that was selling off the single family rentals because I what I effectively was able to do was double my returns and get a more passive income stream by moving into multifamily. And then after doing that for we started, you know, we did that for about three years. And then people started asking, it's interesting people ask you, you know, what do you do with your money where you that like, Oh, you have an MBA in finance, like what? How do you invest now actually, I do a lot of real estate. And it's like, well, what type of real estate Oh, how do I do that? So then first partner, my foreign partner and I we realized we're like, hey, this group, we're investing with MCs, you have more experience in real estate than they do. And you're we're pretty smart guys. What if we brought them on board became partners and did this ourselves? So that's where that first syndication came from. And it started off slow. It's like, you know, getting that wheel turn in that huge flywheel, right. So we started off with, you know, a handful of investors. And, you know, now now there's 100, we work with hundreds of investors. And we still focus largely on multifamily. So we're actually buying a property currently in Nashville, Tennessee, amazing markets, just a wonderful market, great place. If you're young person starting out and getting your career started, or especially the music industry writer just to visit, we also have self storage. So we've we've moved into self storage as well, mobile home parks, and actually we just closed on her first car washes here as well. So yeah, if you look at all these, thank you, if you look at all these things, what we focus on, we focus on cash flowing, the car washes, they have more of an operational component than, say, a multifamily or an apartment building. But we focus on cash flowing real estate businesses, that have some sort of efficiency or inefficiency, that we can exploit that we can add value, either to operations or through capital expenditures. And that's our model. And I say, it's kind of like the Warren Buffett model of real estate. You know, we're buying these businesses, we're approving the businesses, and it's about as sexy as Warren Buffett, you know, you're not getting these aren't like investing in Facebook that you want to talk about at your cocktail parties. Although, as you know, Derek, real estate has provided some pretty spectacular returns here in recent history.

Derek Clifford:

It has and also there's tax benefits, and all of that stuff that we can get into later on. But thank you very much for giving us like a background or the nickel tour of who you are as an individual. What I want to touch on next is a superpower I've asked you before the show what it is that makes you outstanding at what you do. And if you had to say to someone what it is that you do. That's excellent. And first class, it would be staying calm under pressure. So I have a couple of questions to ask you. And the first one is, can you tell us a time when you really had to keep your cool under pressure? I just want to hear an example of what that looked like for you.

Chris Larsen:

Yeah, I mean, I can give you a lot of examples. When I was in the ER, things were going wrong. And you know, tempers were hot, or people were upset or something wasn't, wasn't right, you have to be the common person that helps figure things out. I think it helped me there. But I'll give you the most recent example. So about a month ago, my older son was making a protein shake before bed, and we had a new hand mixer. And he wasn't quite familiar with it. And when he went to clean it, it was still plugged in. And when he was turning it to clean it, he hit that one button and that blade, it cut the tip of his finger very seriously. He cut it about as bad as he could check the bone. But he cut about as bad as he could without having to have it surgically, like repaired like in the ER, he had to have it repaired. But he did it under local anesthesia. So he showed it to me and he's like the head can you fix it and glue it back together to get surgical glue in our house. That's the tip of the day. By the way, if you have kids, go buy some sterile surgical glue. It's just like it's basically just like super glue. You don't have surgical glue and you cut your finger today. Just stick it in alcohol and then use some superglue to fix it. But circle was amazing.

Derek Clifford:

Oh my god, there's a thing as surgical glue. This is all new to me.

Chris Larsen:

You got it. You gotta get some you can buy it right on Amazon. It's awesome. So you gotta have it, especially if you have kids, or even I've cut my own finger and used. So but I'm not a doctor, I didn't stay at Holiday Inn Express.He showed it to me. And I was like, alright, you know, maybe because I've been in these situations before, but my wife pointed this out to me years ago. She's like, Chris, she's like, the worst things get like, the calmer you get like, it's, it's weird, because you know, I can get upset with my kids, I get upset because I forgot something, you know, I get upset. But she said the worse things get, she's like, you just get almost unnaturally calm. So I said, Hey, let's like we're going to put some pressure on it, put a bandage on it. I said, grab another paper towel, you want to believe in the car. And he was in the or I'm sure he was in the ER and in this in the surgical procedure room within about seven minutes, then, you know, he was like, You were super calm that and so people have pointed out over time. And I think as whatever business you're in, I mean, I've meditated over the last six years to kind of give me space in my mind to help me, you know, through our daily moments where I need more calm, more peace, more mental space to make the right decision. But I think you know, when things really get bad people tend to look for people that can help calm the seas, so to speak.

Derek Clifford:

Yeah. And I think that that's very useful to everyone around you. And definitely being that person, it takes a form of leadership to be the person says, Okay, what needs to happen next, with a very clear mind, knowing that, okay, the reality of the situation is what it is, you can't really go back and fix what's here. So there's no reason to worry about it. And I think leaders like you understand that inherently. And that's where the calmness comes from. But you must have read my mind, Chris, because the next question I was going to ask you is, what techniques do you use to keep yourself calm? And what advice do you have for people who maybe are struggling with this?

Chris Larsen:

Yeah, so first off, I think it's may even be a function of growing up in a fairly chaotic household. So not to get too deep in my childhood, but my father passed away when my mother was dealing with two children and she got remarried. But yeah, things were pretty stressful at times, and things weren't always calm in my household. So maybe I'm used to a higher base level of kind of activity going on, I don't freak out when others freak out around me, because maybe, maybe my senses are dulled in that expense. So, don't go through what I went through to get to that point. But I will tell you, you know, there's a lot out there on meditation, and some people are like, Oh, meditation, it's an amazing tool. And again, what you want in your life as you want a little bit of space between stimulus and reaction. So if something happens, you just need, what you can do, just take a breath, if you just focus on your breath, and take a deep breath, before you think before you speak, before you take that action. You know, this can work in your personal relationship with your partner, your spouse, it can work with your children, it can work, you know, if you're alone in the car, and you punch the steering wheel, so you don't break your hand. I mean, there's just all these little things, just take a breath and think about it, you know, slow down, calm down, oftentimes, you'll make a better decision. And it's like, you know, now if I get if I'm getting frustrated, I'm on hold or waiting on something, I just count to 10. And I say, Okay, this is this is a gift I've been given to help me become more patient. Now, that's not sometimes I still get upset. But I'm still working on it. I'm not a I'm not a perfect. I'm not a perfect specimen by any means.

Derek Clifford:

And I'd be very suspicious if you said that you would. So I totally understand that.

Chris Larsen:

You should be, you should be. If you hear anybody say they're perfect. They're not. Oh, yeah. That's the number one rule.

Derek Clifford:

That's the thing. Definitely. Yeah. Or they're psychopathic, maybe, you know, that could that could also be I know,

Chris Larsen:

I've known I've known some of those people, too.

Derek Clifford:

I wanted to bring up one thing here, too, that made you remind me because you mentioned the 10 second thing twice, I believe that there's a book out there called 10 seconds, or I forgot what the name of it was, I can look it up and put it in the show notes.

Chris Larsen:

Maybe I'll write one. Sounds that's a good idea.

Derek Clifford:

I would totally agree with you there, especially with your experience in dealing with this, you know, from every angle in your life. But I would say that that distance between the stimulus and the response, they say that 10 seconds, if you can remove yourself from the situation or just be in the moment for 10 seconds, your reaction couldn't go from something that's potentially irreversible, right? Something you do the fly off the handle to being a well informed, logical and calm, something that basically has other people put more faith in you. So there's something to be said about that. So I just wanted to mention that there's a book out there that does talk about this.

Chris Larsen:

Somebody should have given that book to OJ Simpson.

Derek Clifford:

Oh, for sure. Yeah. Or many of these world leaders out there who are issuing commands to invade countries and stuff like that. It is what it is. We don't want to get involved in that political. Yeah, for sure.

Chris Larsen:

No argument there before they send out tweets or whatever it might be.

Derek Clifford:

So for sure. So let me ask you to in the business world, what would you say that keeping a level head has allowed you to do that most wouldn't be able to just talk about advantages here?

Chris Larsen:

Yeah. So I think, again, like specific to my career in the medical device space, like you have to, you have to negotiate, you know, I was I was in a sales and service role. So you know, in a very high stress environment. So I think I'm gonna go very specific. Now I'm gonna go really broad. So we talked about next level income, our strategy is how to make more money, keep more money and grow your money. So it's make keep grow, you want to make a lot of money, I tell my kids, this unit provide value. The reps, I used to work with the sales reps, I used to work with, oh, my gosh, med device where we did so many problems, right? You're dealing with surgeons, you're dealing with staff, you're dealing with hospitals, and people don't want to pay you and instruments don't show up. And you know, all these problems. And I used to say, hey, if we didn't have these problems, you wouldn't have a job, right? And my point is, people get paid to provide value and to solve problems. So you want to solve problems and do it better. You need to be able to think clearly, and you need to prepare. So you have to prepare ahead of time. You need to be able to think quickly in the moment, but you also have to think rationally. And when other people aren't being rational, you have an advantage there. You either have an advantage if you're in a negotiation, or you have an advantage to provide that value in that moment. And people will like you said, Derek, people will look to individuals like that. They're able to make those those rational decisions, but you have to prepare for it right. And then, you know, wince when something doesn't go right. So COVID hit, right COVID hits, surgeries, get cancelled. Renters stop making payments. My tenants in my office building call me and say, Hey, we're closing our business. You can try to evict us but we're not paying our rent. It's like okay. All right, take 10 seconds. Like you said, this is the new reality. What are we going to do? We're going to take money out of our, our emergency fund out of our opportunity fund, actually, we talk we talk to you about straight like we use cash value life insurance was wonderful strategy to have that type of emergency. We make a plan to say, Okay, this is the plan. And then you know, what we did, we communicated very frequently with investors, I communicated, I sat down with my tenants, I said, alright, you're suffering, your business is suffering. I gotta pay the bank. What can we do here? We put a plan together, then I went to the bank. And I said, Hey, I was like, I don't know what's going on, or what your plans are this before. They said, Hey, you don't have to make any payments. I said, but my tenants aren't going to pay me. I know, you want me to pay you? Can we come up with a plan. So just very rational, this is what the situation is, and come up with that plan. And if you want to get really good at this, I think a great book is never split the difference by Chris Voss, he talks about just being calm, being very straightforward, and letting other people communicate and you communicating to come up and solve problems. And that's what it's really all about.

Derek Clifford:

I love this, because the calm, straightforward thing, not only is it something that people look to for leadership, and of course, leadership means more responsibilities and solving more problems and having more influence and then which could lead to more income. I love the fact that if you had not stayed calm in this situation, you would have not received or gotten some sort of path forward with this COVID tenant situation. And there's a potential that you could have lost the property and upset investors. And I think that that's super important for people to consider who are out there that maybe are struggling with this, like it is worth the squeeze, just taking 10 seconds to control your emotions for a little bit. Look at things from a detached, factual manner, which I have to admit Chris, as engineers, we have a knack of doing that, because that's what we've been trained to do. But also as as, of course, but also as real estate investors, we have a responsibility to be on the human side, because we deal with people, there are team, there are residents, there are investors, everyone is people, and they all have different things driving them. So I think that having this tool in the tool belt is fantastic. So I want to pivot just a little bit, right. And let's start talking about while we have a few minutes left here in the show, I want to talk about what advice you have for those in the W two world, right that say that they don't have time or energy to do what you did. So this is kind of a different situation. But we're kind of doing a little bit of a jump off point from your skill of patience and staying calm under pressure. What would you say to those who just say they don't have time, right? And it's just too much effort to start doing the stuff on the side?

Chris Larsen:

Yes, so look, everybody wakes up. And everybody's got the same 24 hours in the bank. And it's a question of how you spend it during the day. So talking to somebody that was on call for 12 years, I worked every other weekend. You know, I was also training and racing my bicycle during that time, I had two kids. And I had a real estate portfolio that I was running. So when somebody says to me, Oh, I don't have time, it's like, well, there is the time, it's not a question of time, it's a question of priority, right? So love it. First off, I'll give you a gift. Email me Chris at next level income.com. My coach, my friend Craig Valentine, he's got a great book called The perfect week formula. I'll send you a copy, email me, Chris at next level income.com. But perfectly formula in the subject, and I'll send you a copy. If you put your address in there. That's a gift for me. Craig will help you go through how to prioritize and make time. But if you want this in a nutshell, I've actually written I've written some blog posts on that how to create more time, you can search on there. But here's what you need to do. First off, you decide what you really want in life. Okay, you need to decide what's important. I had external reality thrust upon me, which basically said, Hey, Chris, like, you know, time is short, like we were talking about earlier, Derek. And I had this this pressure to really live not my life, but also life that would honor the life of my lost friend. So I always had this motivation there that came. But you got to think what's important, is that your kids is your relationship? Is it your health, like what is it and then split your day up into three chunks. Okay, so let's say you're awake for just to make it easy, 15 hours a day, that's a lot. You know, it's nine hours of sleep. Let's say you're awake for 15 hours a day. So that's three five hour chunks. Pick one thing you want to change in your life and prioritize it, you need to put it in that first five hour chunk, okay? That's when you're, you know, you're going to have the most motivation to get it done. And you're going to have the least inhibition to do that. Make it easy for yourself to do and then make it try to make it the first thing you work on during the day. You have to plan as well. So put it in your first five hours of your day. But start off your week. Every Sunday, I get up and I spend 30 minutes, sometimes an hour looking at my week and putting in those things that are most important that I need to work on. So whatever is most important in your life that you want to change, put that in your calendar first, then put things like a date night with with your significant other time with your kids, workouts, whatever goes in to those spots, work fulfilled the rest of the time. Now, you might have some uncomfortable realities. Okay? Delete the Facebook off your phone. Get rid of the news that's on your computer or the or the Apple news, you know, notifications that pop up. Hey, sports fans, I got bad news for you. If you got something that's important, you know how much time you can waste on football or other sports. We just don't watch you know, cut the cord. Don't watch, you know, don't watch TV. Or like Grant Cardone said this, his buddies, Washington football and his buddies complained about being broke. He's like, why aren't you out there work and he goes, the Lord says I shouldn't work on Sundays. He said, The Lord wants you to work until you don't have to work on Sunday, then you can go watch football, because the Lord doesn't want you to be broke. I thought that was that made me laugh. So again, you got to have priorities. And the reality is you can make it happen. But first, the first thing, you have to have good health. So you have to have that energy. Life's all about energy. It's an energy game, focused on your health, make sure you eat right, do the best things read The Lifespan by David Sinclair.

Derek Clifford:

Yeah, these are really important practical tips. And thank you for sharing these. Sounds like this is kind of an instruction manual for a blueprint, the way that you did this. And one thing I want to touch on here, too, is, this seems like you've been doing this for a long time. And obviously, since age 21, you know, it's been so many years since then, or at least I don't want to put in a number to your age.

Chris Larsen:

I'll be 44.

Derek Clifford:

there we go.

Chris Larsen:

I'll do it for you, Derek.

Derek Clifford:

So it's been 20 plus years that you've been thinking like this, and I just want to express to the listeners, if you want a life like Chris's, you know where there's it's life of potentiality life of possibilities and the life of expansion. This is what it takes. Because Chris, I hear you know, your work ethic and what back when you were working your W2 40s, you were working 60-80 hours a week, right? And that was on your full time stuff, and then also on the stuff on the side. And it takes clear priorities to make that happen. Do you have any advice besides breaking up into five hour blocks of time? How people can find what their priority is? Like? What did you do to find what those priorities are? Because sometimes when you're starting out, you just don't know what's important to you, or you don't know where to start? What What would you say for those folks?

Chris Larsen:

Yeah, and I should have started with this. So the first thing the coaching clients I work with, we start with one thing, we go back to it all the time. It's it's a magnet, it's also a filter. And that is a three year vision. So if you don't know what your priorities are, take the weekend, take a trip, you know, go out in the woods, get somewhere that's not like your desk or your your normal house, change your environment. Let your mind be free. Think about what your ideal life looks like. Write it down. What is your health look like? What is your wealth look like? Your finances your career? What is your social situation look like? Are you married? If you're single? Do you have like one of my coaching clients, one of his goals in the next three years is to get married. That's a goal. And there's nothing wrong with that. Some people be like, oh, you can't make that a goal. Yes, you can. Because he prioritizes these things. And he has a filter for who He goes on dates with. And then the last thing is like personal enrichment, this can be reading this could be buying the sports car of your dreams. This could be going on a vacation like I just got back from a couples health retreat with my wife less last week, that tremendously enriching, right? Put those four things down and talk about what your ideal life is like three years from now. I call this like the Goldilocks timeline. In one year, people think too big like, it's, you're like I tried so hard, and nothing really changed five years, like it's a long time you can you can change your life in three years, you can change your body in three years. So figure out what you want your life to look like in three years, then work backwards from there. That's the first step. And again, you might have to look in the mirror and say I'm not in the right job. But use that as a filter. People get into this situation where they have these midlife crises, because they're like, I'm chasing the title, and I'm chasing money. And it's like, well, why are you chasing that? I want to feel better. I want change. It's like, Well, does that really take you where you want to be three years from now? And they keep starting that clock over over and over and over again. So you gotta be real clear on that.

Derek Clifford:

Yeah, I love what you said about everything here. I'm totally eating this up and making tons of notes here too, because I realized that over the last five years, five years ago was 2018 right or 2017 depending on what you what you count. Right? And in 2017.

Chris Larsen:

We had one 100 unit property.

Derek Clifford:

Yeah, that's crazy.

Chris Larsen:

3,000 units now, yeah.

Derek Clifford:

Chris, at the beginning of 2017. I had one single family and I'm up to 350 units right now across the country. So over five years.

Chris Larsen:

Yeah, love it.

Derek Clifford:

And there's no way that I would ever thought that I'd be that far right. And that's that five year timeframe is crazy. So I love the three year goal there because that's like you said the Goldilocks zone of like okay, you can basically do almost anything you want if you have a strong enough focus, right? And so I love that that that three year time frame, that's something I'm definitely going to take with me for sure. So I have one last question here. It's loosely related to all the other things that we talked about. Because you have all this experience. You've been doing this for a long time, I really respect to fellow engineers opinion, and someone who's been doing syndications for a very long time. Can you talk about what metrics you look for when you're evaluating an investment purpose, both as an LP and also as a general partner? So doing one yourself? And then also one for limited partners?

Chris Larsen:

Yeah, absolutely. So and again, you can go through this, like I got all this criteria in my book. So let's start. Let's start with the limited partner, because this is this is going to be easier. So my framework, so if you're, if you're an investor, if your limited partner out there, and you're looking for your first deal, you're looking for good deals, number one, you need to pick your strategy, you know, do you want to be in multifamily? Because you like the way, you know, the risk adjusted returns? Do you want to be in? I don't know, like a Bitcoin mining fund, because you you want to own Bitcoin? And you like the tax advantages? You know, what, what strategy do you want? If it's real estate specifically, the next thing you want to do is pick a geography like what geographic regions, but really the most important thing, after the strategy is the operator, the operator is the most important part, people come to me with deals like Chris, what do you think of this deal? Like, why do you want to be in this market? Who's gonna operate the deal? Like, you know, I don't know, I don't know why I want this market just looks like the numbers look good. It's like, well, there's 25,000 people in the city, this is a 200 unit apartment. That's not a lot of demand. You know, like, what happens if this one business closes and takes 5000 employees away? Oh, I didn't think about that. So you got to you got to think about why you're going to be in a market, but you really need somebody that's going to operate that deal. And then ask them, Why are you in that market? Like why Nashville, Chris? Well, it's one of the top four markets in the country, you know, you're over your rent growth, and then look at the deal as an LP. So then, like, how do we as GPS, look at areas? Number one is demographics, demographics, demographics, demographics, demographics are the lifeblood of real estate. Okay? Again, I've written about this on my blog, where are people moving? So if people are moving to a state, that's a really good sign, if people are leaving a state, that's a bad sign, you do not want to be buying properties? In places where people are leaving? You're swimming upstream. Okay? Don't be a salmon. Be the bear, sit in the stream and let the deals Let the money come to you. Okay, be the bear. Not the salmon. All right. I like to eat salmon. Number two, you look for the economy, local economy, is their job growth. So is their demographic is their population growth? Is their job growth? Where's the job growth coming from? Is it a diverse economy? Is this a town where you have, you know, one major employer? Or is it a town like or a city like like Orlando where we acquired two properties last year? People are like, Oh, it's Disney. Oh, it's so much more than Disney. You have Disney you have you know, travel, you have leisure. You also have, you know, government contractors there you have technology there. Oh, guess who else is moving to places like Florida hedge funds are moving their financial industry is a very diverse economy. That's that's coming in there. And then you look at the local market, how much do people make. So if you have an apartment, it's renting for $1,000. But the average income in that area is only $30,000, you're gonna have a hard time raising rents, compared to an area where people are making $100,000 in rents might be $1,500. But you can potentially raise rents to 2000, it's still going to be affordable compared to that area. And then you can look at supply and demand. So we're in a really nice time, where we have a ton of demand and not enough supply. So it's pretty easy to go into almost any market and know that it's under supplied. And again, all these things that I talked about, this is something if you're an investor, ask the syndicator ask the operator, hey, ask all these questions. And then also the structure, how are they paid? How am I paid? You know, why is it like that? Have you invested? And then the final Great question, what's your worst deal? What happened? Why did it happen? Why is this you know, how have you put structures in place or systems in place? So you can avoid that from happening again? What have you learned you want? You want operators that are humble, right? Perfect, bad. Perfect. Bad. That's not it never happen. That's a red. Perfect red flag.

Derek Clifford:

Yep. Absolutely. Yeah. And I love this. And I think all this is fantastic advice. I love that advice about what happened with your last deal or the worst deal that you've done and what did you learn from it. And, you know, I want to underscore the point, again, that a lot of people that I talk to are very educated, right, and they're looking for the best returns. And so they just simply look at, you know, offering flyers, and they take the financial return section and they put them side by side and say this is the one that I want. And that unfortunately is a fallacy because one of the operators that I really respect that I've done a lot of limited partnership stuff with and wanting to do general partner stuff with him as well. He puts in in all of his deals 13% IRR 6% cash on cash, that's it. And then he ends up doing 25 or 30% IRR and does 12% cash in cash, right? So the way that the underwriting goes and the underwriting that they present to the investors, it's it's an extension of the personality of the operator. That's what I mean to say. And if you have an operator that doesn't think about risks or doesn't, I mean, you can try to get as many people as you can, by putting up the returns really high and making it unachievable. Or you can be humble and surprise and delight. So it's up to you, which person you're looking for you rolling the dice, or you're going with someone that you've worked with before, or have a lot of experience or references to and have a track record of doing excellent work. So just wanted to pitch that out there. Hopefully you agree with that sentiment?

Chris Larsen:

I was just talking to an investor earlier today. And he's like, Hey, there's like a return range. I'm like, Look at the lowest look at the low end of that. And ask yourself, if you're comfortable with that might go higher, you know, but could the low end? So I was, yeah, I think that's great. You know, you can always hopefully, under promise and over deliver.

Derek Clifford:

There you go. I like that. Chris, honestly, like, we could be sitting here and talk for hours about this stuff. But I want to make sure that I'm respecting your time, and also the listeners time as well. So let's go ahead and head into the Rapid Round, which is five questions that we asked every one of our guests, and it's meant to be answered in about a 32nd duration. So are you ready for it?

Chris Larsen:

I'm ready.

Derek Clifford:

All right, let's do it. Number one, what book has had the biggest impact on you throughout your career? And why? And we ask that it not be Rich Dad or the Bible?

Chris Larsen:

Oh, that's good. Yeah, Rich Dad always comes to mind. I mean, Buy and Hold and I mentioned that earlier. I gotta go back to the health aspect though, okay. And I've been very focused on health since I was young, I was racing my bike. And this is a newer book. It's called Lifespan by David Sinclair. And if I could go back and I could have read this 20 or 30 years ago, I would, because I think, again, when I mentioned health, wealth, social and personal enrichment, I mentioned health first, because you have to have health, it's at the base of everything you do. So if you haven't read it yet read less Lifespan by David Sinclair.

Derek Clifford:

Excellent book, super, super cool book. And my wife, by the way, is a naturopathic doctor, right? And she's read that book, and she's nerded out on this. And we take NAD plus, and we do all all these things that we talk about, right? And I think it's a very strong foundation. All right. Number two, if people wanted to emulate your success, what is the first actionable thing that they could do to follow in your footsteps?

Chris Larsen:

My book is free. You know, again, I put everything we talked about today, put the shortcuts in there. But hey, if you're gonna do one thing, save 50% of what you make. And people were like, but Chris, I can't do that. Well, okay, then your first step is you need to make more money to get to the point where you can save 50% capital will give you opportunities. And again, you want to make more money, find ways to solve more problems, bring more value, get a second job, do what you got to do.

Derek Clifford:

I love this. And you know, as you do this, you're becoming a bigger person, because a bigger person solves more problems gets more income, and then that's going to have this compound effect, it's just going to push you up the rest of your so excellent stuff loves it.

Chris Larsen:

Certainly will.

Derek Clifford:

Number three, what is one tool process or hack in the last three months, that's helped save you time and or effort?

Chris Larsen:

So if you've caught a glimpse of my left arm or hand, I have an aura ring, and I have a whoop strap on here. Pick one, I love it. But sleep is the foundation of so many things. So you know, if you can, there you go. If you can improve your sleep, then you're gonna perform better you can you can actually create more time in your day. So I track you know, I track my vital metrics. And both those technologies are things that helped me get better night's sleep.

Derek Clifford:

It's incredible. It's a really great thing. That really is what Sophie talks about is, my wife. She talks about sleep being the foundation of performance for entrepreneurs, but also hydration, those are the two main pillars of because hydration and sleep they go for that. Yeah, hydration and sleep, they go hand in hand because the number one reason that people get tired throughout the day is they're dehydrated. So anyway.

Chris Larsen:

I was talking, I was talking about Tom Brady and how he has been able to perform earlier today with somebody and you know, he's in his 40s he's still a high level performer. If you want to perform in any area of your life, you got to treat your body like it's a professional athlete. And if you're an entrepreneur, you have to work out less you have to focus just as much on health. Bring your stress level down so you can focus that mental energy life is an energy game

Derek Clifford:

100% man good stuff. All right, number four. If the people that know you had to describe you with one word, what word would that be?

Chris Larsen:

Probably relentless. Whether it's in a political discussion or chasing after a goal or in a bike race or whatever it might be like I just yeah. I can be patient. I can be disciplined and that's what I credit a lot of my success to is just showing up one more day than the person that stopped showing up with for me.

Derek Clifford:

Yeah, I gotta say, Chris, I'm just not surprised with that answer. That makes sense. Number five, what small thing do most people not know about you?

Chris Larsen:

Yeah, I'm a pretty open book. So this is tough. Oh, I met my wife in yoga. So I think that surprises some people. There we go. We talked after class and yeah, so there's just an energy there.

Derek Clifford:

So that's very cool, man. All right, cool. Well, hey, Chris, this has been awesome having you on the show. I've had such a great time talking with you. And then it's been my pleasure to have you on the show. But before we let everyone go, including you, why don't you tell the listeners a little bit more about how they can find out more about you in general and what you have going on?

Chris Larsen:

Thank you for that. Yeah. So, nextlevelincome.com. Almost everything we've talked about today, Derek, I have on the website in some way, shape, or form free for your listeners. So if you're listening today, check it out. Again, get a copy of the book, just click on the Book link. If you put your address in. I'll even send you a free copy.

Derek Clifford:

That's so awesome. Thank you, Chris, for coming on the show. It's been a pleasure having you here.

Chris Larsen:

That's been my pleasure, Derek, always great to see you, my friend.

Derek Clifford:

You too. You too. And for all the listeners out there. Thank you guys so much for listening. We really appreciate you and wherever you are, if you could please just like comment, subscribe, or just leave a review on wherever you're listening to this or wherever you're watching it. We definitely appreciate that so that we can get more exposure to more individuals and get more in favor with the algorithm Gods that's always a good thing. Right. So thank you so much for listening. Chris, thank you so much for coming on.

Chris Larsen:

My pleasure.

Derek Clifford:

All right, this is Derek signing off. Take care everyone!