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Real estate investing has long been a popular path to financial freedom. But where does someone with no background in real estate even begin this often intimidating means of building passive income? That’s exactly what Dustin Heiner, CEO of Master Passive Income, had to figure out.
Now, through his journey from employee to "successfully unemployed", he’s outlined the actionable steps that anyone can take to create a thriving real estate investing business. With over 30 properties generating consistent cash flow and years of experience coaching thousands of students, Dustin’s proven real estate investing strategies serve as the ultimate playbook for achieving financial independence. Ready to start your own wealth-building journey? Let’s dive in!
What Is Passive Income and Why Does It Matter?
“Passive is working one time and then getting paid over and over and over again.”
In contrast to the traditional "just over broke" (J.O.B.) model of trading time for money, passive income allows you to generate ongoing revenue with minimal ongoing effort. For Dustin, real estate investing became the vehicle to escape the "rat race" and create financial stability for his family.
By leveraging assets like rental properties, you can generate recurring income without constant work. Dustin emphasizes that identifying the right assets and creating systems that ensure consistent returns are critical for success. With real estate, your property becomes the asset that does the work for you, generating income month after month.
The Importance of Building the Business First
“The problem was, I did not build the business first. I just went and bought a property.”
Dustin compares real estate investing to starting a convenience store. You wouldn’t open your doors without shelving, employees, or cash registers. Similarly, you shouldn’t buy a property without first assembling your team and infrastructure.
Here’s what you should do instead:
Hire a Property Manager: The cornerstone of your business. Interview multiple candidates to find someone reliable who understands the local market and can handle day-to-day operations.
Assemble Experts: Build a team that includes contractors, inspectors, and real estate agents. These professionals will help ensure your properties are in good condition and comply with regulations.
Understand Your Market: Use local experts to identify the best areas for investment. A property manager or realtor familiar with the area can provide invaluable insights about rental demand and property values.
" The number one person that you need on your team, that's going to help you, is your property manager," Dustin notes. " They're going to make sure that you do everything right."
Creating Cash Flow: The Heart of Passive Income
“ I don't pay my mortgage on any of my properties. I don't pay my taxes. I don't pay my insurance. I don't pay for repairs. I don't pay for my property manager. My tenants pay for all of those.”
When evaluating properties, Dustin ensures all expenses — including his desired cash flow — are covered by rental income. For beginners, he advises aiming for a minimum of $250 per month in cash flow per property. This threshold ensures that your rental income not only covers operating costs but also generates a profit.
To achieve this, Dustin recommends calculating all potential expenses upfront, including:
Mortgage payments
Property taxes
Insurance premiums
Maintenance and repair costs
Property management fees
By doing this, you can ensure that the property will be a profitable investment from day one. " I don't just hope I'm making a minimum of $250. That's an expense item. My cashflow is an expense item." Dustin states firmly.
Scaling Your Portfolio Strategically
“If I bought one property, that may be $250 a month in passive income. That's $3,000 a year. I said, if I just scale it, if I get to more properties, then I could be making $60, $70, $100,000.”
Dustin’s method for scaling involves reinvesting profits and using creative financing to acquire more properties.
Here are some of the financing options he suggests:
Home Equity Lines of Credit (HELOCs): Leverage equity in existing properties to fund new purchases. This approach allows you to scale without requiring large amounts of cash upfront.
Seller Financing: Work with sellers who are willing to finance the property themselves, often offering more flexible terms than traditional lenders.
Private Money Lenders: Partner with individuals looking for better returns than traditional investments. These partnerships can provide quick access to capital for new acquisitions.
Dustin also highlights the importance of recycling capital by refinancing properties to access built-up equity. This strategy enables investors to purchase additional properties while keeping their portfolio cash flow positive. " I've literally done 15 different ways to get creative financing," he explains. " I didn't have to make money from my job to buy these properties. I literally recycle it."
Navigating Challenges and Avoiding Pitfalls
“ The biggest [pitfall] is not building the business first, and that's how I lost the most money.”
Dustin’s early missteps taught him valuable lessons. His first property manager even stole from him because he hadn’t established proper systems.
Here are some of the common pitfalls he’s encountered and learned to avoid:
Skipping Due Diligence: Always research the market, property, and management team thoroughly. For example, verify rental estimates with local property managers rather than relying on online tools like Zillow.
Ignoring Cash Flow: Never rely on appreciation alone; focus on properties that generate consistent monthly income.
Underestimating Vacancy Rates: Account for potential periods where the property might be unoccupied, as these can significantly impact cash flow.
"When you build the business first, you find the right people in your business," Dustin explains. "Then they make sure that you step over those landmines."
Final Thoughts: What Makes Real Estate Truly Passive?
“ I have awesome, expert property managers doing all the work for me. I can just have fun on podcasts, play with my kids, and build other businesses.”
For Dustin, true passivity comes from two things: owning the right assets and delegating management to trusted professionals. By building systems and hiring experts, Dustin spends less than 30 minutes per month managing his portfolio.
Real estate investing, when done correctly, allows you to create a business that operates without your constant involvement. This freedom enables you to focus on scaling your portfolio or pursuing other ventures.
…Class Dismissed!
Real estate investing isn’t just about properties; it’s about creating freedom, stability, and a legacy for your family. With Dustin’s strategies, you can take the first steps toward building a thriving passive income business today!
Want to hear the full interview with Dustin? Click here!
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Transcript
Dustin: [00:00:00] Passive is working one time and then getting paid over and over and over again. Active is what we do when we work a dead end J O B, a just overbroke job. What you're doing is you're selling your time. You're selling your life for money. Cause if you don't work, you're not going to get paid.
Brien: Welcome to the Millionaire University podcast. I'm your host, Brian Geeran, back in the saddle with you today. And on this edition of the MU pod, I'm joined by Dustin Einer. He is the CEO of Master Passive Income, a real estate investing education and coaching business that helps people achieve financial freedom and independence and live the life of their dreams, running their own real estate investing business.
Dustin, I'm going to let you do a little bit more of intro on yourself, but. Welcome to the show, man. This is a pleasure.
Dustin: Hey, Brian. Thank you so much for having me, man. Yeah. I just, I love podcasting. I love sharing with people how I became financially independent. I like the term successfully unemployed because I started telling [00:01:00] people I was retired at 37 years old.
They're like, well, what do you do with your life? Well, I do plenty of things. Well, but now I am a real estate investor, love investing in real estate. But yeah. I have so much time because I don't work for somebody else. And I could come on podcasts and talk to great people like you. So thank you so much for having me on your show.
Brien: Yeah, my pleasure, man. This is going to be great. So we're going to dive right in. We're going to talk about how to create a six figure passive income with real estate investing. But first I want to set the stage a little bit for our listeners and talk about your origin story How did you find yourself where you're at today totally?
So
Dustin: I didn't start out being an investor. We were middle to lower class family didn't inherit any money just started on my own but I started just like everybody else has started. We literally are taught to go to school, get good grades. Then you take those good grades. You go to a college, a university and get good grades again, getting thousands and thousands of dollars into debt and hopefully get a piece of paper called a degree.
And then you go to companies or organizations and try to get a quote unquote career and then work 40 plus years of your [00:02:00] life and retire and live on 40 percent of what you managed to say that entire time. Well, I'm following that exact same path. Yeah. But I've always been entrepreneurial, you know, starting businesses and that type idea.
So I had a newspaper route. I had a graphics and website design company, convenience store and a pizzeria, started them all from the ground up, but I bought one rental property and that one rental property made me money without working. I started investing back in 2006 before the crash 2008, but this is the story.
I got to walk you on a journey of how I got catapulted into this real estate investing. So my wife and I. Are having kids, you know, started having one, two, three. And we, by the time we had our fourth child, I'm working at a local county government in California doing technology. So the most stable, secure job you can ever think of technology, California and the government.
So it's not going away. And so we had our fourth child and then I want opportunity to leave when my wife had our fourth child. That's where their dad stays home with the mom. Changes, poopy diapers and all that good stuff and bonds with a baby. Well, two weeks later, go back to [00:03:00] work. And on Friday at 3 30 in the afternoon, just getting back from the paternity leave, I get a call from my bosses, bosses, bosses, secretary, like the top dog.
And she says, Dustin, would you please come to the office? I said, sure. And I paused for a sec. I thought, why in the world did they call me the office? Like this isn't normal. And I've seen plenty of movies. 3 30 on Friday is not a good time to be called the office. And then I also paused and thought about two months before I went up attorney leave, there was some rumors just from run things go on that there could potentially be layoffs in the County because the County wasn't having good budgets, so I immediately shook it off though.
No way. I've got great seniority, 10, 15 years here. Bosses think I do a great job. So I shake it off and I get up and I walk down the hallway to my boss's office. And this hallway isn't very long. In fact, it's kind of short, but every single step I take, it feels like the hallway gets longer and longer and longer to feel like, feels like my feet become lead bricks because they thought of potentially losing my job was starting to crush down on me while I get down the hallway.
And I turned the corner and [00:04:00] I see my boss's door, his doors closed. And I see a secretary there, super sweet, nice old lady. And she kind of sheepishly is grinning at me, trying to console me with her eyes, because she knows everything about what's going on. I know nothing. And she says, Dustin, would you please have a seat?
So I go and I sit down and I think about my life as I'm sitting there. I started thinking, Oh my goodness, this career path that everybody's taught, I was taught. If I get laid off right now, did I just waste my life doing this? And, oh my goodness, we just had our fourth child. If I don't have a job to make money, how am I going to provide for them?
Does that make me a failure as a father? Does that make me a failure as a husband, as a man trying to provide for his family? Well, as I'm sitting there, my hands get all clammy. My forehead gets all sweaty because the nerves of losing my job is crushing down on me. Well, the boss's door opens up and a coworker of mine, who I Comes out of the office, holding a piece of paper in her hands.
She is noticeably distraught, noticeably upset, but not necessarily crying, but you could tell her world has been walked. [00:05:00] So my boss says, Dustin, would you come to the office? So I get up and I go into his office and I get laid off. And remember, this is the government. Nobody gets fired or laid off from the government, but I did.
And this is the reason why I tell the story. So I take that layoff notice and I go and I sit down and I realized two things. Number one, I need to get another job. I need to be able to provide for my family. So I was really blessed praise the Lord to find another job in the same County. A different department wasn't having the budget issue.
So check got that. But the second thing, sitting in that chair, just getting laid off. I realized I need to make sure that this never ever happens to me again. I need to make sure that nobody has the ability to take away my ability to feed my family. So right then and there, I realized whenever anybody would ask me the question, we all get this question.
Well, what do you do? I would reply my job. I would say, Oh, I work for the county doing it. Well, I'm basically projecting out to the world. What value that I put on myself is coming from my job. No, I realized my value doesn't come from my job. My [00:06:00] value comes from my God and for myself and for my family. So right then and there.
I made a decision. I'm going to tell everybody that I am an investor. It may so happen that 100 percent of my money comes from my job. That's now my part time job. I am a full time investor. So fast forward the story, started buying property after property, after property, each one make me 250, a month in passive income where I get experts doing the work for me.
Eventually I had 30 plus properties. And I thought, you know what? Why am I working? So last part of the story, I went to my new boss, good boss and all. I said, Hey boss, I'm laying you off. You know, jokingly, we both laugh. He says, well, Dustin, what are you going to do? I said, I don't have to do anything. I have real estate that real estate works for me.
And now I have passive income. So the last part of the story, I would walk to and from my job every day. Every day, a mile and a half, every single day to, and from I've done this a thousand times, but I, the last time walking away from my job for the very last time, I felt like I was walking on clouds because I knew I would never, ever need a job again, as opposed to [00:07:00] walking down that short hallway, they got longer and longer and longer with lead bricks.
Well, different is because now I knew that my financial freedom was in place. And so everybody listening, I want you to realize this. Your boss is not paying you what you are worth. You are worth so much more than anybody could ever pay you. This is how you'll know your boss is paying you just enough to keep it working without quitting, but not so much money that takes money out of their pocket.
If they paid you what you were worth, they would go broke. So what I do instead, and what I did instead is I put the life back in my own hair, my life back in my own hands. And I created a business that business makes me money. And now I have 40 plus hours of my life back so that I could create more businesses and provide for my family.
So I'll pause the story. Cause you probably got plenty of questions.
Brien: No, I mean, that's an incredible story. And I'm sure that resonates with so many people and it resonates with me too. Cause I remember. The last time I held a real job, it was very similar. It was one of my first jobs out of college. It was one of those 3.
30 on a Friday. It was a sales job. I was, I sucked at [00:08:00] it. It was awful. And it was my first, like, long walk down the hallway to, Hey. You stink, you no longer work here. Or, you know, there's like you get one month and I was like, you know what? No, I'm out. This sucks. I'm out. So yes, I've been there. I can resonate.
I'm sure so many people have, but that feeling you mentioned of walking on clouds on the way out of your last quote unquote real job, I mean, that, that has to be the most euphoric feeling knowing that you now control. Yourself and your destiny and your earnings, your people, your family. And that's, that's one of the most, possibly the most rewarding thing about entrepreneurship is a not having to report to another grown ass man or woman that, Hey, I want to go on vacation or, Hey, you hold my future in your hands, like a little bird, right?
Like that's the worst feeling in the world to me, hence why you and I are entrepreneurs. But yeah, so real estate investing and passive income, obviously it's been around a while. I, you know, I think when people first think of passive income, they probably think of real estate investing. So [00:09:00] when you first got into that, that was kind of on the side.
So how do you start this? What was it like for you when you were first like, okay, I've got this job, but I'm interested in this entrepreneur thing. I want to do something that's a little passive. How did you first get that foot in the door with real estate?
Dustin: Yeah. So it's really interesting. So in 2006, I was, you know, like all employees do, you just watch TV and I was watching TV was really late at night.
An infomercial came on where this quote unquote guru, real estate guru said, Hey, we're coming to your town free two hours. Someone, our teacher had invested in real estate. I'm like, that's great. I'm going to go. I went to that, but it was horrible. It was all sales pitch, all hype. Then they say, now run to the back.
It's normally a million dollars, but it's a thousand dollars a day for a two day seminar. So I paid, I ran to the back, I spent that thousand dollars and then I went to that two day seminar. It was even worse. It was two days of them sales pitching their 80, 000 course, their a hundred thousand dollar course or whatever it was just, it was just.
It's all about making money, but I did take what little bit they told me about how to buy a property anywhere in the country, [00:10:00] rent it out and make passive income. But I did that. And the sad thing was my property manager started stealing from me within six months because I did not know what I was doing.
But here's one interesting thing. If I would have hung my head and said, Oh, it just doesn't work. It doesn't work. I'm not going to do it. I wouldn't be sitting here today. But I did think people have done this in the past. I'm not the first one to ever do this. But let me approach this from a business mindset, an entrepreneur mindset.
And the problem was, was I did not build the business first. I just went and bought a property. And instead, this is what I tell all my students we've coached or I've coached over thousands of students. Now we have a conference where we bring all real estate investors together. Like it's all about helping people to invest.
And every single time I tell them. What you need to do is you need to build a business. I did it the wrong way just by buying the property first. You need to build the business first. Let me quickly give you an example of what that looks like. So if you're going to start a convenience store, you know, candy bars and soda machines and all that good stuff.
Well, you're not going to sign a lease on a location, open the [00:11:00] doors and set a box of candy bars in there on the ground. You wouldn't do that. You go out of business in two seconds. But what you would do is you would build the business first. You get the gondolas, those are shelving units that all the candy bars go on, the countertops, cold storage, bank accounts, cash registers, employees, insurance, everything in the business before you buy any inventory.
Same thing with real estate investing. You build the entire business. You get experts in the city that you're investing. I invest in five cities now. My students, we invest all over the country. We don't list, we don't invest necessarily where we live. We invest all over the country, but you build the business by finding the experts in the city that you're investing in, hiring them or getting them in your team, in your business.
So that when you go buy a property, you don't buy a bad property that they're the ones doing the work for you. Does that all make sense? Like you build the business first and then you buy the property and that property is your inventory. See, I did it backwards. I bought the inventory first. And then I tried to build a business and I have so many people say, Dustin, I bought a [00:12:00] property, spent thousands of dollars to fix it up, spent thousands of dollars buying it, found a tenant, and then try to find a property manager.
And all the property managers said they would not manage it because they get shot there. Like, well, you don't have an asset anymore. You have a liability now. So instead, how much better would it be hiring experts, building your business first, instead of calling a property manager and saying property manager already spent thousands of dollars buying and fixing up, would you manage the property, they say no, instead you say I'm looking to buy this property, tell me how much will it rent for, what's the vacancy factor like, how much, you know, what type of tenants, how much will it rent for, If they say they won't manage it, then you don't waste your time and money.
But if they say they do manage it, then you'll have great information so that you know you can make passive income. And I suggest 300, 500 a month in passive income. So, does that all make sense as we build the business first? And that's what I didn't do, but then I figured out the hard way how to do it right.
Brien: So build the infrastructure, everything you need to be considered a business. And then it sounds like the biggest task in [00:13:00] here is finding a property manager or is it a management company? Is this like a company that acts as a vendor? Is it a single person who's like Rick the expert in these five neighborhoods in Atlanta?
How does that work?
Dustin: Really question most people don't ask that question. So I really love your question. So most people skip over the property manager They'll jump right to financing, you know getting money because that's people how to get money to it or finding I need a good property and I need money to buy the property That's but that's honestly like on my youtube channel on my podcast for master passive income Those are the most downloaded ones because that's what easily people think too.
They think that's the limiting factor in my opinion No, no, it's not. In fact Those are the most downloaded, but the ones that are the least downloaded are the ones that they need. It's how are you going to run the business or have somebody else run the business continually? It'd be like starting that convenience store that you spent all this time building up and then you're, you start having customers coming in, you have money and all that sort of stuff.
And you find somebody across the street and say, Hey, you got a pulse, come on in and manage my [00:14:00] money, manage my customers, manage my inventory, manage my business. No, you wouldn't do that. You would hire them very slow. So the quarterback, the main person on your team. Is your property manager. They're going to be the ones making sure you're buying the right properties.
They don't want to manage a property that is bad in a bad area. They want you to buy the right properties because they're going to be managing property for five, 10 plus years. My property managers work for me forever. And I never talked to them, which is great. I just make money. And so you're a hundred percent, right?
The number one person that you need on your team, that's going to help you is your property manager. And my suggestion, when you're building your business, just like hiring a manager for a brick and mortar business, like the convenience store, You're going to hire slowly, but fire fast, which means slowly interview, lots of property managers, interview them multiple times, ask lots of questions till you find the right company.
And it, like you said, it could be one person that is a property manager. If that's the best one you could find, then go with them. I've used smaller, you know, one person companies or big nationwide companies, or, you know, city or statewide companies. I've used those too. [00:15:00] But it's all about interviewing them and finding the right company for your business.
And so when you find a right company, that's going to manage your properties, they're going to make sure that you do everything, right. They're probably going to have contractors. They're probably going to have plumbers and roofers and people in the business to make sure it's done, right.
Brien: Okay. So sticking on the property management thing here, because it sounds like if you don't knock this one out of the park, then you might be dead in the water with your investment.
So there, I guess in cities across the country, and it sounds like there's national companies too, they basically act as a vendor where you call them up, say, Hey, I'm going to be a property owner in town. I'm looking to pair with somebody like you and these companies, are they structured with like a management team that they're kind of like the brains of the bunch where it's, these are the neighborhoods we recommend.
Tell me what house you're looking at. Okay. That's a good investment. We would do that for you. And we charge, how does that work? Is it X percent of your income off the property? What does that look like?
Dustin: Here's how I like to do it is I don't give too much information when I'm calling them. I [00:16:00] literally call up property managers, you know, a newbie, a new person would say, Hey, property manager.
I'm getting into investing in real estate. I'm building my team out and they get way too much information. You know, me, I have 30 plus properties now, hotels, apartment complexes. When I look for a property manager, I call up, Hey, property manager. I'm an investor. I'm looking for a new property manager. Tell me about your services, just straightforward.
And that puts them where they're like, Ooh, this person knows what they're talking about. They're not just kicking tires and acting like an investor. So with that, you ask great questions and you have no property managers will try to give you information. You need good information and how you get a good information is by asking good questions.
You have a good idea, but the way to get this information out is, and here's a great question. Every, I take this one on one coaching. This is what I give all of my students. If you're going to be talking to a property manager, a brand new one that you've never talked to before, you want to get out of them.
Where is a good area in the city that you want to invest that you should invest in? You ask the question, Hey, property [00:17:00] manager, remember this is one on one coaching I give to my students. If you were to invest your personal money in this city, where would that be? That gets them a good understanding of how to answer the question.
If you just ask them, Hey, where should I invest? They're going to say, Oh, there's here, here, and here, and here, and here. Or if you ask the question, where should I not invest? They'll probably say, I can't tell you that that's discrimination, blah, blah, blah. They I've had people, property managers say that. So a great question is where would you invest your money?
But then there's at least 20, maybe 25 questions. That you need to ask and the proper answers. In fact, I give all my students all the 20 plus questions that they need to ask from, you know, like fees that they're going to charge, what are they going to do if there is a property that has a vacancy, like, how are they going to get it rented?
What if there's a 2am phone call about a toilet? You need to ask all these questions so you know how they're going to respond to take care of your properties. And then quickly, one last thing with the property managers. You need to make sure that you give them your personal [00:18:00] systems and processes.
Meaning I tell my property managers, however, you deal with your other landlords that own properties with you. That's fine. You deal with them. How, but my properties, you need to do. What I tell you to do, give you example, the rent is due on the first, it's laid out for the third, and then you give on the fourth, a three day notice for all my properties to completely do a three day notice that they have to pay.
And after those three days, you start the eviction like clockwork because it's the most Actually, it's the least discriminatory practice because we're treating everybody the same. But that's a system, that's a process that we tell our property managers, and when you have a property manager that knows your business system and process, you literally have an automatic business, a passive income business.
In fact, there's a fun book, last thing I'll share, quickly shares. There's a fun book called four hour work week, really good book. The premise is try to make your life so you could work four hours a week. Well, in my opinion, working four hours a week is for suckers. I don't want to work four hours a [00:19:00] week.
I don't even want to work four hours a month. I maybe work 30 minutes a month on all my properties because I have awesome expert property managers doing all the work for me. And I could just, you know, have fun on podcasts, play with my kids and building other businesses.
Brien: I love it. I love it. So this leads me to my next question.
Maybe this is a little bit meta, but. What makes this truly passive? Is it the people that are involved? Like, because I know a lot of people, there's a lot of passive income is a farce, or it's always semi passive, but it sounds like this is, like you said, besides maybe 30 minutes of checking in, is it the systems?
Is that the answer?
Dustin: A lot of people say they start picking hairs on what is passive income. My personal belief, the only like truly, truly passive income is if you're like Michael Jackson or Stephen King or the Beatles, like you worked a ton, made lots and lots of songs or wrote lots and lots of books.
And then because it's already out there, then people just buy, like Michael Jackson still sells songs. It's going to keep going. That's really [00:20:00] the only true passive. But here's my perspective on what passive is. Passive is working one time. And then getting paid over and over and over again. Active is what we do when we work a dead end J O B, a just overbroke job.
A J O B is you're living just over broke. Well, what you're doing is you're selling your time. You're selling your life for money. And so that's active income. Cause if you don't work, you're not going to get paid. Passive income is working one time, getting paid over and over again. So the secret sauce is two things.
Number one, you need an asset that makes you money. Just like if you wrote a book that just continually sells. Well, that asset is doing the work for you. You're not having to do that work. When I buy one property. That property is doing work. My property manager is not doing the work. My property is doing the work.
So that's the first part of the secret sauce, having a good property, make sure it's nice and you're not slumlord and all that sort of stuff that you have a good property people want to live in. The second thing is how do we manage that asset [00:21:00] to make sure that continually makes money? Just like if you wrote a book, put it on amazon.
com. Amazon's your property manager, you're your book manager selling the book for you, making sure the distribution, all that sort of stuff. Same thing with real estate. You make sure that your asset is managed well by having a property manager that is trustworthy, that has good communications, can be able to take care of your property.
Brien: So you said you're in five different cities. Are you mostly investing in single family homes? Is it multi family dwellings? What does your portfolio look like and what do you recommend for somebody who might be just getting their feet wet in real estate investing?
Dustin: Yeah, let me start it from how I was able to become financially independent or successfully employed.
So I asked my wife, I said, hey, honey, What are our expenses? Like how much money do we need to make a month to cover our expenses? So I don't have to work anymore. And I completely remember the number. It was 4, 200. Like in my, I just knew it for some reason, like it stuck with me, mortgage, insurance, food, and all that sort of stuff.
I was like, Hey, 4, 200. Well, if I bought one property. [00:22:00] That may be 250 a month in passive income. That's without working. That's 3, 000 a year. 10 properties at 250 a month. It's 2, 500 a month. 30, 000 a year. If you had, if I had 20 properties at 250 a month, that's 5, 000 a month. That's 60, 000 a year. I said, if I just scale it.
If I get to more properties, then I could be making 60, 70, a hundred thousand dollars. I have properties now. Remember the 250 was the minimum 250 a month. I have properties making me a thousand dollars a month because when you buy a property over time, rents go up. The values go up. You pull money out, refinance, pull the money out, buy properties, buy more real estate.
And so that's how I scale. Now, I personally. 30 plus properties. I literally just bought three properties last year, Airbnb, a midterm property, a couple of long term properties, but I also invest in apartment complexes. I have a 355 unit apartment complex, invest in hotels, but I didn't start where I'm at now.
I started small by buying [00:23:00] one single family home and for me, and this is how it is true for literally all, you know, thousands of my students. Proving to yourself that it's possible. That is that first property. That's the, always the hardest, like the 355 unit apartment complex was so much easier compared to the first one.
First one's the hardest. Cause you got to get over yourself. Once you buy that first one, it's like the floodgates you're like, Oh my goodness, it's like riding a bike. It was easier than I, now I could do it. The second one comes much, much faster. The third one. And then you start scaling and you scale by recycling your money, which means you pull money out of your properties, the equity that you have, and you buy more properties.
It could be a quick example. So two of the properties I just bought. It's in Akron, Ohio, each for about 130, 000. I have another property that I have a home equity line of credit. Well, it's 250, 000 home equity line of credit. I was like, man, I could take all of that equity, buy these two properties, these two properties now I own cash free and clear, and they pay off that home equity line of credit, [00:24:00] and I make another 1, 000 a month in passive income from these properties.
So that's the way, what I'm thinking of, or helping you to understand. There are so many creative ways. Remember when I said financing and funding are two of the easiest parts or there people think it's the hardest part. They go and download those videos and all that sort of stuff. But that's the easiest part.
Finding the deals is very, very simple. In fact, I have lots of people send me deals because they know I'm an investor. And I also have lots of people that want to invest with me. So the financing is so easy because I have people that want to invest with me. So the harder part is making sure you're making money every single month that you're You're continuing to take care of the assets by having the property managers.
But the easier part is getting the financing and I've literally done 15 different ways to get creative financing. Like, I didn't have to make money from my job to buy these properties. I literally recycle it. And one quick last thing I'll say, we make passive income. That's what my family eats. We make money every single month.
Cashflow is probably the better word because, you know, passive income, but cashflow [00:25:00] every month, my companies make money, just like if I bought a candy bar for 50 cents and sold it for a dollar, I'm making 50 cents every single time. I would not buy it for 2. And sell it for a dollar. I'd lose money, but the beautiful thing about real estate investing, you buy it for 50 cents, sell it for a dollar.
But what if you don't have that 50 cents? Well, let's say it costs you 25 cents to borrow 50 cents. You're out of pocket, 75 cents. You still make 25 cents cause you sell it for a dollar. That's what real estate investing is all about. We recycle our money, build our portfolio, my bread and butter, residential.
Four units and below love those, but then once you have those, then it's easy to scale into bigger and larger apartment complexes and hotels and play monopoly in real life. Wow.
Brien: So when you're looking for a property, do you do fixer uppers or is it when you go out and buy, it's gotta be something that's livable or at least minimal updates need to be made to make it livable type of thing?
Or is it like, it's gotta be moving ready for me to invest in this?
Dustin: I'll give you the route that I go. Number one, I'll buy any property if it's, you know, if I need to fix it up, but I buy [00:26:00] and hold, I will literally give these properties to my kids. It's generational wealth. Like I'm not going to sell them.
If I sell them, I lose money because I don't make it anymore, but I will give them to my five kids. Now, what we do though, is we buy the right properties. And we make sure we're making money. But now if I'm talking to a brand new student, that's wanting to invest in real estate, they say, Hey, Dustin, there's this house.
You know, I'm going to buy it for a hundred thousand dollars. It's going to be about 60, 000 to fix up lots of renovations. They lost the fixing up. I usually steer them away from that because there are other properties that take less time to fix up. So if you're brand new, I would not personally suggest buying a fixer upper because you have a lot of money tied up, you need a quick win.
You need a quick win to help yourself in your brain, because that's the hardest part of getting past yourself. It works. It can, I can do it. Once you have 10, 15 properties, then yeah, of course, buy those fixer uppers, save a ton of money, make a ton of money by buying it for cheaper, fixing it up, you capture all that equity, you force the appreciation up, the value up.
Yes, because you already have the business going. [00:27:00] When you're first getting started, let's buy one that needs maybe 5, maybe two or three weeks to fix up, so you can get a quick win and get that cash flow coming in.
Brien: So let's talk, speaking of cashflow, let's talk margins of a business like this. Now I know they're, they should be pretty high, I'd imagine, but there's expenses that come with home ownership.
You might own your own home that you and your family live in, and now you own this other property that's now an investment property. How do you avoid the pitfalls of what goes into home ownership on a second home, your very first investment property? And then what can you reasonably expect with, in terms of margins, in terms of your costs?
I know that can vary a lot, but Is this something like where, Hey, let's just make 250 bucks to start, or should I expect a thousand? So
Dustin: I make it very, very simple. I, at least for me, I make it simple for me and then break it down for you. So I'll say it this way. I don't pay my mortgage on any of my properties.
I don't pay my taxes. I don't pay my insurance. I don't pay for repairs. I don't pay for my property manager. I don't pay for any of that stuff. Meaning, I [00:28:00] don't got to get a job to pay for my property manager. My tenants pay for all of those. Now the money comes into me and out to all my bills, all the expenses.
But I account for all those expenses before I buy the property. And here's a key thing. I also make sure that my income, the cashflow, the passive income that I make is an expense line item. I don't just hope I'm making a minimum of 250 or let's say I need 500. I don't hope that I'm going to make that.
That's an expense item. My cashflow is an expense item, just like your mortgage, insurance, taxes, all that stuff. My cashflow is an expense item. So I just add all those up and make sure, because I hired the experts, I make sure that I could rent it for more than that. And that's how you make cash flow. So when you're talking about, you know, like your overhead, your, I don't have any overhead cause I have property managers.
They take, they have their own employees, but I just pay them 10%. Usually every property manager is 10 percent and they take a [00:29:00] leasing fee on top of that. And they have little fees here and there. That's why you got to interview a lot of property managers to find the right ones. But I make sure that every expense.
Is accounted for before I buy the property so that the tenants rent coming in is going to pay for all those expenses and give me money so that I can feed my family.
Brien: Okay. Gotcha. Yeah. So it's making sure that before you do the deal, the cashflow coming out of this is going to cover everything and leave enough profit on top.
Even if it's not a ton of profit to start with, there's something there.
Dustin: Well, yes. Well, here's the thing. A lot of people might say, well, you want to invest for appreciation. You know, for the value to go up. I said, no, no, no. In fact, in 2006, that's what people were doing, but I knew I could not feed my family with appreciation.
I need money to feed my family. So I was solely going for cash flow and I don't buy the 500, 000 homes and hoping to make 250. I know I buy the hundred thousand dollar homes. People still want to live there. It's still great houses and make 250, 300, 500 a [00:30:00] month in passive income. And so when I buy a property, I look for properties that are going to be making cashflow.
Now the appreciation is great because I pull the cash out to buy more properties and those properties pay off those loans, the new loans that I get. And once that loan's paid off, I now have both properties making me even more money.
Brien: Wow. Okay. So, and you mentioned also taking out basically like a home equity line.
So The funding part, and I know we haven't touched on that too much, but you said it's the easiest part because there's creative ways to do it. Is that just a matter of, you know, doing your research and understanding these creative ways? Or is it more of a, you need to be like, you need to know a lender or somebody who's in the business and knows about all these different ways, obviously you're one of these people, but you're just starting it out.
What does it look like?
Dustin: Yeah, it's a mixture of both. A lot of them, you can say half of them. You can just call up companies like private money lenders, hard money lenders, CR debt service coverage ratio. It's like a business loan. It loans on the [00:31:00] value of the property, how much money it makes in. So there, there are those, you just call them up and you can get those.
Other ones would be because people know you're an investor. I get people like I raised one and a half million dollars for the apartment complex that I bought recently. And it's because I knew people and then people knew me as an investor. I put out there, Hey, I'm buying a property. If you want to join me, go right ahead.
And so people invested in my deals. And so out of the 15 different ways, I would say maybe a third of them, you just call people up and you can get those like a signature loan from a bank. You just go in a bank and Hey, can I have an unsecured line of credit? Yes, they'll give it to you. Not a high dollar amount, but it's a lot of fees.
But if you need that money, just like if you sold a candy bar for a dollar, you buy it for 50 cents, but it costs you 25 cents. It doesn't matter how much the money costs you because you're still making money as long as you can do it right. And so you want to also be letting people know that you're an investor.
Another great way would be seller financing, finding somebody who doesn't need to sell right away that they want to be the bank and make more money. Another way would be somebody, they're, they're struggling. Maybe they're getting a [00:32:00] divorce, maybe the last job and they have a good mortgage on it that has a low interest rate.
You take over the payments. It's subject to the mortgage. You get the lease or not least the title in your name. You just take over the payments for them and you have the property. There's so many creative ways, but you're right. It comes with education, knowing that these options are out there and how to use them.
That's one of the things that, so I've got lots of students. And my students have then become coaches here at my, at Master Passive Income because they've done so well and they see the vision of helping people. And what's great is what we do as coaches, we show all the options. Like I don't tell any student, Hey, do X, Y, and Z.
Now I give them the principles, the step by step process, but on a specific property, I'll tell them, here are your options. Here are the different types of funding options. Here's a different ways to buy the property, all that sort of stuff. You need to figure out with your risk tolerances, your goals, your financial, wherever you are financially, you need to pick what's best for you.
I'm going to give you the, all the options. [00:33:00] And then help you, whichever one you pick. And I'm going to give you the outcome of each one. Cause I've done just about all of them as well. I've seen all of them, but yeah, that's the entire process is educating yourself or getting to know what's out there. But in my opinion, I like fast tracking success.
And if you think about it took me nine years to quit my job by doing it the hard way, school of hard knocks, figuring this all out, my students, Quit their job, become financially independent in three and four and five years, because I've cut the, all the learning curve. I've given them all the steps. I also help them out, all that sort of stuff.
And so I would gladly pay money to get five years or five, six years or seven years of my life back rather than me spending 30, 40, 50, 000 doing it the wrong way. I'd rather pay somebody, you know, a thousand dollars for a course or, you know, whatever it might be like a hundred bucks a month for a membership, or I'd much rather do that because then I get my time back and you hit my life back.
Brien: Mm. Absolutely. So especially when you were starting out, what are some of the pitfalls of [00:34:00] some of the landmines of real estate investing? Have you stepped on any in your business? And what are, what are some of your top ones?
Dustin: The biggest one is not building the business first. That's by far the best, and that's how I lost the most money.
My property manager started stealing from me. And so when you build the business first, you find the right people in your business. Then they make sure that you step over those landmines. And so that is probably by far, if you're gonna take anything away, you build the business first. Hiring the right people, experts in the area, like Zillow, realtor.com, like all these websites, they're just databases.
They're not experts. Who is the expert? The people there on the ground, like a property manager, like you go to Zillow and say, Hey, Zillow, how much can I rent it for? And they'll give you a number. They're a Zestimate. What rents estimate that they give you it's so much better if you call up your property manager, Hey property manager How much can I rent this for and they say?
Oh, we have a property that's right around the corner. We tried to get 1, 300 Zillow said it was gonna be 1, 300 We can only get 1, 100 Well, if you bought thinking you can buy or rent it for [00:35:00] 1, 300 But you can only rent it for 11 that cuts into your your profit by 200. It's so much better getting the Professionals the experts doing the work for you
Brien: Absolutely.
Okay. So make sure you get those experts. Is there any pitfalls when it comes to the funding side of things? I think the, as you said, the funding is usually people's biggest question is like, how do I get into this? Do I need money? What are a couple landmines when it comes to funding to avoid? Yeah.
Dustin: A landmine
Brien: can,
Dustin: I'll give you a couple of them.
So when you start getting a little more I wouldn't say aggressive, but like professional. You start getting hard money lenders, which are short term loans, like 12 month loans or private money. They want their money back in three to five years. Let's say grandma, they want, she wants her money back in three years.
A pitfall is you get these hard money loans. And your tenants are paying for it because it's, you know, part of the rent that you're, you're accounting for your expenses, basically what I'm trying to say. And the pitfall is 12 months comes up and then, oh my goodness, now the interest rates jack up because it was only supposed to be a 12 month loan.
That's the pitfall [00:36:00] is you get stuck in these really high interest loans because you didn't do it right. My goal, or what I say, tell everybody. It's great to use hard money loans or private money loans, but you want to before this is right. This is one on one coaching. I'm giving you before you get this hard money before you signed your name on the hard money or the private money, you need to 100 percent know how to get out of that hard money.
You want to have at least two different lenders. lender, I'm going to get this with private money or hard money. I need to get it to a 30 year fixed. You need to get into a 30 year fixed loan as quickly as possible. What do I need? So that as soon as I sign, I can quickly get it to you before I get run into the problems with higher interest rates.
That's by far one of the biggest things I see people get hiccups with.
Brien: Okay. So speaking of interest rates, obviously pre the rebound from COVID interest rates were delicious. Right. If you will. Now that we're in an environment where interest rates are much higher than they [00:37:00] were three years ago, and there's probably no sign of them coming back down.
I don't think we'll see, you know, 2%, 3 percent interest rates maybe ever again, but at least for a very long time and historically speaking, like the five to seven isn't awful. So when it comes to the interest rates and somebody who's getting into real estate investing, Is that just, it's part of the gig and you got to account for that?
Or are there ways to, I know you can buy down points and things like that, but for an investment property, what type of play does an interest rate have when you're looking at a deal?
Dustin: So you're going to hear me say this and it's contrary to everybody else that you probably ever hear about interest rates.
I am so excited. Rates are going up. I am so pumped. I'm just like ecstatic. Here's a big reason why. Who is my biggest competition when it comes to buying single family homes? It's homeowners. Well, homeowners are literally priced out of the market. Prices have to come down because they don't have as much money.
They only have certain amount of money every single month to pay for their mortgage that has interest and everything. But what's great for me is I don't care if interest rates [00:38:00] are 20 percent and that's the growing interest rate. I don't care why, because my tenants pay for those. I buy the property, making sure that I can afford Or that the property pays for the interest.
Now, here's what's going to happen. Let's say it goes to 20%. Prices must come down because people can't buy it at 20%. So prices are brought down. And I just know I don't buy a house unless the interest is paid for out of the rent and I still make money. So what's going to happen if your interest rates keep coming up, prices must come down.
So it's all a win, win, win for me as real estate investors. So my biggest suggestion is making sure that you make money. On day one, when you buy the property, I started investing back in 2006 and I make money if the market goes up, if the market goes down, or if the market goes sideways, because I invest for cash flow.
Now, the greatest thing is when 2008, when people were losing their jobs, all the real estate investors were going bankrupt. It felt like I was the only one that was not going bankrupt because I did not care about [00:39:00] appreciation. It was only cash flow. And the sad thing is people lost their homes because they lost their jobs.
They had a foreclose, but what does that do? It turns them into renters. So my rents went up. I made more money in 2010, 11 and 12. So if you do this business, right. There are so many ways to actually win.
Brien: I love it. I love it. And it's, you know, everybody needs shelter and there's plenty of renters to go around, so I'm sure it's not difficult to keep your properties continually rented.
Dustin: Not at all. Now it's just a cost of business. Like one thing that we have to do is account for a vacancy factor. How much of the year it's actually not going to be rented with a turnover. You know, new tenants coming in, you account for that as well. It's part of your numbers, what we do, but in everything, I think Like, honestly, I don't, I never lose money on any of my properties because I buy them right.
You make your money when you buy the property, you realize it when you sell it, but then again, I don't sell it because I make money every single month and I'll give these to my kids.
Brien: Right. Exactly. And if you ever did [00:40:00] have a property where you're just, you're tired of it or you don't want it anymore and you want a little bit of liquid cash, you can sell
Dustin: it, right?
Like it's just, it's totally up to you. Here's what do you do? I never sell it because if I want liquid cash, I refinance it and get a tax free loan of tax free loan. If I sold it, I have to pay taxes on it. Capital gains tax. They can take, you know, 20%, 30%. Instead, I refinance it. So here's, I'm going to give you what the rich do.
This is what the ultra ultra rich do. They make, let's say 5 million a year. Well, they buy real estate with that cash that lowers their taxable income. Then they refinance it, pull that cash back out to buy things that they want, go on lavish vacations, all that stuff. That's a tax free loan. So they're getting out taxes by buying things that cut their taxes, getting a tax free loan to spend on more things.
Brien: I love it. That's the, that's the secret here, folks. You heard it here first, how the ultra rich do it. That's genius. I mean, that's obviously why they're ultra rich. [00:41:00] It works. Awesome. Well, Dustin, I could go on for hours with you, but I know I got to get you out of here. You're a busy man. So, building things that you can do with your passive income, of course.
So, I want to make sure that all our listeners, if they want to reach out to you, if they want to learn more about master passive income, What's the best way to follow you? And what's the best way to check out all the programs and coaching services you offer?
Dustin: Yeah. So my goal is to help 1 million people to invest in real estate.
Do you mind if I give everybody just a free course that they can get started? And yeah, absolutely.
Brien: We're all about abundance here. Awesome.
Dustin: Yeah. I'd love, I just, I make my money through real estate. So just free, get all that stuff out. If you text the word rental, R E N T A L rental to three, three, seven, seven, seven rental, the three, three, seven, seven, seven, I'll literally give you my course, show you how to find an area of the country to invest.
How to make sure you're building the business, right? How to get financially free because you're scaling your business. You can even go to master passive income. com master passive income. com forward slash free course, all one word for a free course. You'll get that there. You could also find me. I have my own podcast.[00:42:00]
I started back in 2016, the master passive income podcast. It's like pretty much a solo show. Me just teaching how to do this ins and outs, everything. So find out master passive income YouTube as well. But one quick last thing. I actually really enjoy Instagram. I've been getting better and better on there.
I don't know, you know, 40, 000 followers now, but I love getting DM. So if you want to follow me on Instagram, see all the fun stuff. I love memes. I love teaching all that stuff. The Dustin Heiner, T H E Dustin Heiner. You'll find me on there, but you know, send me a DM. Let me know. You listen to the show. The millionaire university is such a great show.
And so I'm glad you're listening, but I just want to see more and more people invest in real estate.
Brien: I love it. Awesome. Well, Dustin, this has been so cool. Thank you so much for stopping by the show today. You brought so many nuggets of knowledge that I know our listeners are going to walk away with. So this has been an absolute pleasure and I can't wait to chat with you again in the future.
Dustin: Thanks buddy. I appreciate you, Brian.
Brien: All right. And that is a wrap for our show today. Big thanks to Dustin for coming on down and chatting with us about building a six figure passive income with real estate [00:43:00] investing. I hope you got all sorts of knowledge from this the way I did. I think my knowledge pail is filled to the brim.
Dustin brought the noise and I mean, passive income. Who wouldn't want that and with real estate investing it's achievable. It's doable. So hope you guys enjoyed the episode today. I do have one favor to ask. If you enjoyed this episode, please share it with your friends, families, colleagues, whoever you think would enjoy this.
Hit the old text message, link, click thing in your pod player and send this episode to somebody who you think would enjoy it as well. All right, guys, that's it for me, Brian Guerin signing off. I cannot wait to see you on the next episode of the Millionaire University podcast. I want you to all go out there and crush it today.
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