With a half-a-mile high stack of business cards from all his failed ventures and false starts, it would be easy to dismiss Mitch Stephen’s entry into the real estate business. But, for the author of My Life & 1,000 Houses: Failing Forward to Financial Freedom, the journey to financial freedom has since led hundreds to seek out the advice of this former bartender who made good.
At 21-years-old, Stephen jumped into the real estate game when he bought his very first condo to live in while bartending for work. He quickly got into his second condo after reading how he could pay for the property by renting out the second half of the condo, opening up rent-free living space for himself.
“Then I got some offers,” he said. “I made some money on one [condo], and then about a year later, I sold the other one.”
In spite of the money he was pulling in, he hadn’t realized real estate might make a great profession until someone else suggested it to him.
“Someone said, ‘Why do you even bother going to work when you make more money in real estate in very little time then you do at your job working 40, 50, 60 hours a week?’” he said. “I reviewed my books, and I was like, ‘This guys is right. What am I doing?’
Like many of us, Stephen dove in and devoured every single book he could find on the subject, plus some. From Napoleon Hill’s Think and Grow Rich, to a host of others, he consumed a lot of information, but none as important as Robert Allen’s Nothing Down. And then he waited.
“It took me seven years from the time I read the book to really own the concept of Nothing Down in my heart,” he said. “It’s really easy for my lips to say it, but it’s a difficult concept to own. But, once you own the concept that you can buy real estate and do real estate with literally none of your own money, suddenly you can buy the world.”
Tenants and Toilets
With his new mindset in place, Stephen set out to secure cash flow as a landlord and using the buy and hold strategy, bought 25 properties expected to generate $300 a month per door.
“I only required about $3,500 to $4,000 in living expenses, so I quit my job after I bought that 25th property,” he said. “I had this huge cushion every month, almost double. Yet, at the end of the year that I quit my job, I lost money. I didn’t even break even.”
With the liabilities of maintaining these properties set so high, Stephen thought he was looking at another failed business on his hands. He almost gave it all up, that is until he decided he would try one more thing: hiring a mentor.
“I paid my last bit of money I had to this guy, and he straightened me out,” he said.
Owner financing, the mentor said, was a strategy Stephen could employ to achieve cash flow through down payments while simultaneously removing the liabilities that were sucking Stephen’s bank account dry just a year earlier.
Stephen collected $3,000 down payment on each of his 25 properties – $75,000, and set PAYMENTS so he would continue to clear $300 per month per door (exactly what he was trying to clear collecting rents). And suddenly, Stephen’s eyes were opened to all the possibilities.
“That 25 x $300…$7,500 that was supposed to hit my bottom line, actually started hitting my bottom line, and it stayed,” he said, with a laugh. “The mentality of [my residents] was more enthusiastic. They were owners. They were staying for a longer time, and they were fixing up my houses instead of tearing them down.”
But, that was just the beginning. When a note buyer approached Stephen, he cleared an additional $15,000 by selling him the note to one of his properties. Then, he asked, “Is it possible to do this 24 more times in a row?”
“Little old Mitch Stephen, who wanted to get out of the business of being a landlord and who wanted to get out of real estate, suddenly had $450,000 in the bank,” he said.
He was hooked. Stephen said he ramped up the model, and completed 450 deals in less than four years.
Naturally, the people around Mitch Stephen were excited.
“I had a few friends that wanted to know what I had done, and I decided to help them,” Stephen said. “I saw them transformed, and one after the other quit their jobs, and I felt like I did a really good job coaching these people through.”
Whereas Stephen spent several years declining invitations to get paid to be a mentor, he suddenly began to say “yes.” The real benefit, he said, was his.
“I thought I was getting paid to help them, but I learned I was also learning a lot from my students,” he said. “I became revitalized, I became more enthusiastic about my business. I was trying to help people, but it ended up helping me.”
Get a Mentor… and Other Advice from Mitch Stephen
Today, Stephen operates a multi-million real estate operation, from acquisitions to training, and will soon release his second book, My Life & 1,000 Houses: 200+ Ways to Find Bargain Properties. But none of this would be possible without the mentor he attained at 28, he said.
“You’re going to pay for your education one way or the other,” he said. “You can pay for it in mistakes, you can pay for it in dollars you’re walking over that you don’t even see, you can pay for it in hesitation of not being confident.
“Hesitating for 6 hours can cost you a $30,000 deal in a heartbeat. There are so many ways you are going to get charged if you don’t have a mentor, and it’s going to make a mentor look cheap.”
Stephen advises anyone starting in real estate to learn about all the strategies available to them, from owner finance to small apartments and all points in between, and to get every training they can for free. Find the one that excited you most, he said, and then drill down until you have exhausted all resources. That’s when you’ll open your checkbook, and “immerse yourself in one strategy.”
You can pick up a variety of free resources and learn more about Mitch Stephen’s coaching business at 1000houses.com.
Here are a few other tips to help you along the way:
Visualize Success: Spend 5 minutes of each day and picture who you want to be, and what you want to do, Stephen said.
Develop Systems and Automate Your Business: The best and highest use of your time is spent on your business, not in it, he said. Look for automate one section of your business until it works, then move on to the next.
Build Your List…and Activate It: A solid list of sales leads is absolutely vital to the real estate business. Stephen said he has experienced impressive results using LiveComm.com, a text messaging resource that helps prequalify leads, increases down payments, and decreases the hold time for houses and other real estate.