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Peter King:                          Welcome to the PK Experience. My name is Peter King and in this episode, I sit down with Rob Swanson.

Rob is a brilliant marketer, a brilliant business mind and he's just really fun to talk to. He's got a great knack for storytelling but he's the guy that you want to talk to if you're interested in getting started in real estate investing or business in general entrepreneurialship.

Like I said, he's a brilliant marketer but Rob also just has a ton of integrity and watching him grow his business and living his life with his beautiful family out in Colorado is really an inspiration.

If you're the type of person who wants to create your own path and want to do it in a way where it's filled with abundance and love and joy, Rob is the go-to guy on that. I'm really excited to share this call with you and with that, my boy, Rob Swanson.

All right, we're sitting here with Rob Swanson. Rob, thanks for joining today man. I'm excited to talk to you.

Rob Swanson:                   Yeah man, absolutely. Well, thanks for inviting me on. I appreciate it.

Peter King:                          Yeah, for sure. I still remember the first time I met you and I tell this story often I call it the $30,000 breakfast with Rob Swanson. At that time, I was just getting started in real estate investing and if you remember we are out in Jupiter, Florida.

Rob Swanson:                   I do.

Peter King:                          We're sitting and talking and you and your partner were so excited and you were sharing all this stuff and the big epiphany that you shared with us is as real estate investors we're taught to go find a deal and here's how you market and here's all this and you're like, oh it's completely backwards. You got to start with a buyer. Go find your buyer and like a light bulb went off for me because you were like, look the buyer pulls it all through. If you find somebody ready to buy something, you can go service that.

I went home from that breakfast and I knew nothing really about laying acquisition and understanding but I simply just took that one simple idea, found the guy that said I buy land, what you're looking for? Got the specifics and in 2 minutes went to a seller and made an offer and then went back to him and made an offer to him $30,000 more. He said yes.

Now, I have to just sort of anticlimactic because at the end of the day the deal fell through because I was … This is why, I was so excited that when he accepted … That when the seller made an offer, I accepted it immediately and I should've like pushed back a little bit or whatever but I think he got cold feet and then realized, "Oh maybe I'm selling too cheap."

Rob Swanson:                   That's awesome.

Peter King:                          That's my $30,000 breakfast story with Rob Swanson.

Rob Swanson:                   Man, buddy that was 15 years ago.

Peter King:                          Mm-hmm (affirmative).

Rob Swanson:                   Like you and I look wiser today than we looked back at that breakfast.

Peter King:                          I hope so.

Rob Swanson:                   We were having wise conversations back then.

Peter King:                          Yeah. Well, I mean you certainly were spitting some knowledge. I'll give you that.

Rob Swanson:                   That's awesome.

Peter King:                          I tell people I can help you make millions in real estate. I'm not the guy that necessarily tells you to keep millions because to this day I'm still working on that piece with full disclosure.

Rob Swanson:                   I get you.

Peter King:                          But you are kind of known as a real estate guru. How long have you been doing real estate investing?

Rob Swanson:                   I got into real estate investing Peter in 1998. I bought my first property in 1998 here in Colorado and for three years I stumbled along trying to figure it out. Like trying to figure out how do I put the pieces together and take this thing to a true business level. Back then, I was the guy that said, "I'm smart enough. I'll figure it out on my own."

In 2001, my brother calls me and says, "Hey, these training guys are coming through town. You should go." I found myself Wednesday night 7:00 p.m., Marriott Hotel in downtown Denver sitting in a room, listening to this guy talking about how to make money in real estate and I'm three years in working land deals, kind of trying to do stuff and it's not really going the way I want. This guy makes so much sense and I'm like, "You know what, pride gone. Let me just say, 'What can I learn from you guys?'"

I ended up into a coaching program and to an educational program and from the moment I went to the first, I got the first training where the light bulb went on, which is what I shared with you on wholesaling and finding deals and how to convert stuff and flipping it to another local investor, I made $42,000 in 45 days.

Three years of "I got this," turned into after 45 days putting $42 grand in my bank when I finally said, "Okay, I'm pretty sure I could learn from somebody else. Yeah, man. I've been doing it for a long time, doing it right since 2001 and through the up and the down and the sideways of the market cycle and about 20 different states and 30 some different cities across the country, here we are.

Peter King:                          Here we are. Yeah, how many deals you think you've done over the years?

Rob Swanson:                   Oh gosh, four figures thousand?

Peter King:                          Yeah, yeah, I would imagine.

Rob Swanson:                   Somewhere north of that. I don't know.

Peter King:                          Yeah. You've been coaching others now too, right?

Rob Swanson:                   Yeah. Yeah. I've been coaching since probably about 2007 when the market started to have signs of crashing and different things, I was … Well, right when the market crashed, I put a $10 million real estate fund together and we can have this story, I call it my $30 million mistake and I'll tell you about that.

Peter King:                          I didn't realize that an investor has a sizable learning curve mistake that they have.

Rob Swanson:                   Oh yeah. Well, I can tell you my $30 million mistake. I can tell you about the time that the Colorado Department of Health threatened with a legal letter to sue me and fine me $15,000 a day. I can tell you about the time I accidentally bought a hospital building in Texas. I can tell you about the time the US Treasury Department seized the property the day after closing. I got stories man. We can talk stories.

Peter King:                          I love stories.

Rob Swanson:                   But to answer your question, I created a real estate fund in 2010 or at 2008 and I started coaching and doing some education in 2007 and I started the Colorado Property Investors Association and I ran that for about four years and it was great, man. It gave me a platform to meet a lot of cool people here in town. It was one of the catalyst things that helped me launched the real estate fund.

In 2008, we had $175 million capital partner out at Stamford, Connecticut. They came in as our capital and then we were the operators. Yeah, I've been coaching for that long.

Peter King:                          I'm just going over the list of questions here and I have a question that I wrote down. It says, how do you accidentally buy a hospital? How does that come about?

Rob Swanson:                   Yeah, I'll tell you. I'll tell you how. It goes back to not asking the right question when you do a real estate deal and the only question that you should ever ask yourself and be completely comfortable with when you do a real estate deal is what is my worse day and am I comfortable with it?

Now, the only way you can properly assess what your worse day is, is to have the knowledge and the education to properly assess it and then you have to be honest and truthful with yourself to say, "Am I comfortable with the worse day?" Here's how I got into this deal.

Some guys came to me. They had purchased an old vacant hospital building. This community had moved into a new facility. Their old facility was vacated. These guys had purchased it. They needed some rehab money. They purchased it for cash. They needed some rehab money to come in and get it renovated, up to speed and turn it into a long-term acute care center.

Well, they came to me for a hard money loan in first position to do the renovations of $300,000. Well, I vetted the whole thing out and they had a signed operating lease with a license long-term acute care healthcare provider out of Shreveport, Louisiana. I called and talked to the CEO. Everything checked out.

I'm like, "Well, this is a simple deal, three points, 14% interest, first lien position, six months term, what could possibly go wrong, right?" This was back in probably 2005, yeah 2005.

Well, what went wrong was before the financial and the housing market collapsed, there were underpinnings and a whole bunch of shakeup in healthcare and other stuff that most people kind of don't even know about. The company that had the long-term lease between the time I vetted the deal and we were supposed … They were supposed to take occupancy, file bankruptcy, broke the lease and went AWOL.

Now, I'm a first lien position holder on a … Let's see what was it 170,000 square foot two-storey hospital building.

Peter King:                          Oh no.

Rob Swanson:                   With no income. I mean it's boarded up, right? These guys made their loan payments for a while. I extended the loan. They had all these great plans. At the end of the day, they defaulted on the loan. I had to foreclose. I took the hospital building back, which then put me in a position to now … I got to deal with the real estate.

Peter King:                          Right.

Rob Swanson:                   I got to deal with the whole thing. Long story short, 2005 to 2018, I still have a stake as a minority shareholder in the operating company that ultimately came into that deal because I was a highly motivated seller.

Peter King:                          What you want to avoid as a real estate investor.

Rob Swanson:                   You want to avoid, but you know what it's inevitable.

Peter King:                          Yeah.

Rob Swanson:                   If you do enough real estate deals, in fact I was just talking with my COO here in the office yesterday that we all as real estate investors end up buying that one dog along the way or two or three or 170,000 square foot hospital building dog, that we just become a motivated seller and it's like, it's time to just exit, move on and let's go make up any loss somewhere else.

Peter King:                          Yeah. Yup, I was in it long enough to have a few of those myself and not only that but also the deal that slipped away.

Rob Swanson:                   Right.

Peter King:                          When I was first starting out, I was contacted by a woman who owned a condo in Miami, like a penthouse, beautiful condo. It needed no touching up. It was in perfect condition and the backstory was, was she was dating an NBA player and I don't know if he was a foreign player or whatever but he wasn't able to get the loan for the property. She signed the loan and took ownership of the property and they "owned it together." Well, she owned it.

Rob Swanson:                   Yeah.

Peter King:                          Of course the relationship ended. He left. She's stuck with this payment that she now can't afford and she's like, "Look, I just want to get out and I think she owed like $380 on it and it was worth probably close to a million bucks and in my infancy of getting into real estate, I heard the foreclosure and there was a mental block that said, "Oh, no I don't know foreclosures yet."

Rob Swanson:                   Right.

Peter King:                          Instead of just signing the damn thing up, I was like, "Oh, I got to learn about foreclosures or whatever." I didn't know how to piece it together. I actually bought a program called Foreclosures in your Backyard and I kid you not, while I'm trying to figure out this Miami deal, literally and you know in Florida the zero-lot-line is this, I could spit and probably hit my neighbor's house behind me in my backyard.

My backyard neighbor is going through foreclosure while I was reading that Foreclosures in your Backyard and I missed both of them and now I look back, I go, "Oh geez." It's the price of education of course.

Rob Swanson:                   Yeah, well that's right. It's interesting because as real estate investors' people get so, they get lost in these terminology things, right? Like foreclosure or short sale or wholesale or this or that.

At the end of the day, there are two kinds of real estate deals, there are short-term deals like a fix and flip, a wholesale that I just want to put on the contract and flip quick to somebody else but there's short-term deals and there's long-term deals. You buy and hold your long-term income.

One is all about equity and buying it as steep discount and the other is all about income and buying it so that the cash flow return makes sense long-term and if people could just like step back, simplify the whole business, not worry about okay, is it a foreclosure deal, is it a short sale deal, is it … What's going on and just say okay, how do I make money.

Here's the one question that I always try to ask when I look at any real estate deal. How can I make money with this?

Peter King:                          Yeah.

Rob Swanson:                   That's it. If you can figure that out short-term or long-term, now you've got a framework to make your offer.

Peter King:                          The problem of course is the traditional approach of people thinking that you buy real estate for some long-term hoping that it will appreciate that you can sell and one of the biggest lessons I learned as a real estate investor is, when I buy something, even if it is for longer term, I want to make sure that I'm making money on it today. Which means, I have to buy it at a discount or there has to be some other type of equity piece or something that allows me to have some ownership and equity in a deal from day one.

Rob Swanson:                   That's right.

Peter King:                          For me, that's kind of a personal criterion. What would say is the biggest thing that your students come to you with that you wish … That they need to unlearn?

Rob Swanson:                   Oh boy, that they need to unlearn … They need to unlearn that real estate investing is too complicated because it's really not. It's really pretty simple. There are a handful of things that you have to sort of get your hands around to do real estate investing, three numbers to analyze any deal, right? A lot of times people, I remember this. Here's a great story.

This house on Espinosa Drive in Aurora, Colorado one of my first kind of real estate deals that single family house deals. I remember as a new real estate investor driving up to this house, I don't know any better so I got a real estate agent along with me. He helped me find a deal. Not that there's anything bad about that, it's just today we do a whole a lot of lead generation on our own direct to seller.

Back then, I called a real estate agent. I said, "Hey, can you help me find a good deal?" We drive up to this house, walked through the front door, I got my clipboard in hand, I got my pen and I'm ready to go and I'm like, I have no idea and it was bright yellow and it was like this massive popcorn like texture on the walls and there was bright red and there was bright blue and it was trashed, like this place was trashed and I had no clue where to start.

I'm walking around, taking notes on whatever I can think of to take a note on it. I don't even have a framework or checklist for that but the whole time I'm thinking where do I start to figure out what I would even offer and is that a good deal, right?

I left that house and I'd never even made an offer on it because I wasn't sure where to start because I'm like, well, I got to figure out what this thing is worth. Everybody thinks of the as is value. What is the house worth in the condition that it's in today? That's the wrong value to worry about figuring out.

Here's what I learned from that situation. I went back home being the engineer that I am I said, ok where did I screw up here? I did something wrong because I don't know where to even start.

Three things you got to do to analyze any deal, answer this question. Number one, what is the fixed up value of the house? Don't look at what the house is today or the apartment or the duplex or the commercial building. Don't look at what it is today. Look at what it would be if you fixed it up.

If I'm looking at a three-bedroom, one bath, 1500 square foot house, maybe the thing is I say I could make it a three-bedroom, two baths, 1500 square foot house by adding a bathroom. I want to ask the question, what is a three-bedroom, two-bath 1500 square foot house worth fixed up?

The second question is how much is it going to cost me to get it fixed up? Now, I've got to figure in what does it cost me to add a bathroom? What does it cost me to rehab the house? Improved value, ARV the After Repaired Value, the fix up cost and then the third is the income. How much income will it produce?

On the house on Espinosa, I didn't understand those three questions. I was trying to figure out what is the house worth today in the crappy total beater condition that it's in instead of saying what will it be worth after I fix it up, how much is it going to cost me to get it fixed up and how much income will it produce then I can calculate my actual offer price.

Peter King:                          Yeah, that makes sense. That was one of the big takeaways for me when I was learning is understanding and this goes back to what you're saying before about the complexity. There's an association I think that people have with anything real estate related. Oh, you have to have a license and there's all this paperwork and contracts and mortgages and HUD statements and all.

Rob Swanson:                   Right. Right.

Peter King:                          People go into it sort of at a disadvantage because they just assume it's going to be crazy complicated, which I get to some extent it can be but the principles of the deal itself are not complicated at all and for me that was a big eye opener. I was like it's just … I try to explain to people like don't think real estate investing, think deal making.

Rob Swanson:                   That's right.

Peter King:                          You're just putting the deal together. If I came to you with a pen that was $1000 pen and I said, "Look I don't want it anymore. I'll sell it to you for $100, would you buy that pen?"

Rob Swanson:                   Yeah, that's right.

Peter King:                          It's easy. You go, of course. Even if I don't want the pen, I'll sell it to someone else for $500, make a nice little profit. That's it. That's it right there.

Rob Swanson:                   That's it. That's it.

Peter King:                          You mentioned before your students coming in. What is some of the big principles that you teach them coming out of the gate. For the person who's listening to this is thinking they may want to get into real estate investing, what's one thing that you can offer them to help them prime their thought into getting into it?

Rob Swanson:                   Yeah, the thing that set me from kind of trying to figure it out to having success was a strategy called wholesaling because I was now unrestricted from my ability to do deals and get paid because I didn't need cash. I didn't need credit. I didn't need a bank. I didn't need rehab crews. I didn't need fix up knowledge.

All I needed to do was get good at understanding what a deal is, understanding how and where to find them and then converting those conversations into a signed contract.

I need to put the paperwork in front of a seller, get them to agree to my price or my terms because then what I would do, Peter is I would just turn around and I would sell it to another local investor that had the cash or has the crews or wants to do whatever that long-term exit is.

The number one thing that I tell new students coming in is before you graduate to what everybody would call kind of that capital I investor, the landlord or the fix and flip or the whatever you want to do, get good at finding deals and get good at converting those leads into an actual good price.

Peter King:                          Yeah.

Rob Swanson:                   Master those two things, lead generation and sales.

Peter King:                          Do you find that there are different personality types that fit better with different approaches in real estate?

Rob Swanson:                   A 100% absolutely. I'm a huge personality profile guy because I've got three kids, all three of my kids from early ages we've tried to like figure out okay who is the natural, what are their natural giftings? What is their personality? We've spent a lot of time, me and my wife and my kids, evaluating personality profiles.

When I hire somebody, I have a problem in the business that I'm trying to solve. I've got a seat on the bus that I'm looking to fill and I want to talk to people that match the personality to the job task. I'm a huge personality profile guy 100%.

When it comes to real estate investing, it's an entrepreneurial endeavor. You got to wake up. Your feet got to hit the floor and you have to say I'm going to hustle it today and make something happen.

The personality types that have a struggle with real estate are the personality types that need to be told what to do on a constant basis and don't wake up and say what am I going to do.

The high driving action takers whether in the DISC profile you're a dominant person, you're influential person, you're a supportive person or you're conscientious attention to detail person, those for your high D's and your high I's, your dominant personalities and you're influential outgoing personalities tend to do the best as a real estate investor entrepreneur.

Now, from my team around here, we hire the other personalities to step in and fill gaps inside of our system. What I don't want people to hear is that if you're this other personality type you can't be successful because there's two ... You hear this a lot. It's kind of buzz worthy stuff but the entrepreneur and the intrapreneur.

That entrepreneur is the person that's the visionary, that's the go-getters going to hear the training and hear the lesson and go execute and then the intrapreneur is that person is going to take the vision and take the information and improve the process. Sometimes it's a marriage of a partnership or that somebody is stepping into a larger organization and letting their personality skills really shine.

Peter King:                          I love that you mentioned that. I find that a lot of people like you said, it's really sad when you go to a lot of these real estate seminars because you can just see that 90, well I don't know, 95% of the people they're paying a lot of money to learn this education and their personality type isn't the one to actually set the visioning though they might be better suited in the entrepreneur type position. How does one find an intrapreneur? What do you look for and where do you look for them?

Rob Swanson:                   Man, that is a tough one. If you're a business owner, you inevitably have gone through a process in your business. If you're grown to any kind of size or scale where you sort of feel like you're hitting a ceiling. What you've got to do is find that COO-type person, that operations day-to-day, systems detail person to come in alongside of you.

I can tell you here's how I did it and there was no magic to it other than mentally I committed myself to doing it. Now, it took me a while to get the right person. I've had different chief operating officers or operations managers or general managers come through my business over the years and I've inevitably made the wrong hiring decision up until about two and a half to three years ago.

Peter King:                          Oh wow.

Rob Swanson:                   I finally got myself to this place. You know what, because you have three options. You can hire the person that doesn't know the business but maybe their systems-oriented and they can come in and you can teach them the business and then they can do their thing.

You can hire the person, number two, that already does know the business that you don't have to maybe train as much that can come in and do their thing.

The first one is a lot of work. The second one you risk them coming in and just deciding I'm going to go out on my own and the third option is partner with somebody. Bring in somebody in an equity stake where they've got upside for their influence and additions to the business.

I have done all three. The one that and I'm not and let me just say this I'm not a partner's guy. Partnerships are tough. I'm generally not a partner's guy.

About two and a half ago, I brought a guy in and we set up a division of my business to run our Texas operation. I live here in Colorado. We had an operation in Texas.

I found this guy just through … When I made the decision that I needed that person like legit needed that person to get where we wanted to go in business, I just started telling everybody and I just started talking about it and I just started throwing it out there and literally was in about a month I found the right guy.

We started with the Texas operation. We set up an entity. We did equity for him on that and I wanted to see how he performed. Well, he knocked it out of the park.

I didn't give him equity in my whole business at the beginning. I gave him equity in a small division that we set up separate such that if he didn't work out, we dissolve that partnership and I continue what I was doing and he could go back and do what he was doing.

Peter King:                          That's right.

Rob Swanson:                   Well, it did work out. That expanded again and today we're 50/50 partners in the entire operation.

Peter King:                          Oh wow! Wow! You talked about or we were talking about the personality types and I'm just going to emphasize this one more time that if you're listening to this and you're not that type of person who is okay with not knowing, that was a big thing for me when I got into this is I really realized you got to be okay with not knowing, not knowing where the next deal is coming from, not knowing if you're going to spend an X amount on marketing and it doesn't materialize the way you like it too and be okay to get up the next morning and get back into the grind. That to me is I think a really big personality trait of the D and I that you were talking about earlier, the visionary.

Rob Swanson:                   That's right.

Peter King:                          Right. If you're listening to this and you are okay with that, like that makes sense I think to invest a little bit further. If you're not, then there's other ways and I recommend and Rob tell me what are your thoughts on this but just going to your local real estate investment club and starting to get to know who are the players and finding out if you can play a supporting role somehow so that you can at least get involved, start to understand the transactions and then develop perhaps the confidence so that if you want to go out on your own, you have a lot more experience and confidence to do it or like Rob was mentioning perhaps you partner up with somebody.

Rob Swanson:                   That's right.

Peter King:                          Little bit off a tangent here, what would you say has been your biggest burn? We started to get into that a little bit before but there are always good stories on that one what would you say as your best one?

Rob Swanson:                   Well, okay. I told you the three go-to like bad deals and I didn't get into the full story on them other than the hospital one a little bit but my biggest burn is in the last crash of 2008.

I put a $10 million fund together and we, all of the old school like the old school 90-year-old chain smoking, hard money and note guys in Denver are telling me, "Rob Swanson, here's what you do. You take all this money you got from this capital partner and you buy everything you can. You spend every last dime, you board them up, you sit on them, you disconnect the utilities and then you just start getting it rented as you go but just spend every dime."

I didn't do that. They all told me the same thing but my mid to early 30s, I thought, "Man, I've had some success in this business. This one feels different Bernie, I just don't feel right about it."

He's like, "Listen, son. It happened in 1973, it happened in 1991, it's happening right now. It's the same deal." I didn't listen. We fixed and flipped our $10 million like we took the money and we made a bunch of money. It worked really good. We had 65 to 70 full-time construction guys working. We had an operation. We made a lot of money.

But you know what, had I disconnected the utilities, boarded them up, slowly just tackle them at rented amount, my headache factor and my workload would have been significantly less and instead of making a nice solid 20% to 30% return on that money, I would have turned $10 million into $40 million and the difference between 40 minus 10, that's my $30 million mistake.

I could have done almost nothing to those properties because I bought them at the bottom of the crash, I could have just waited for the recovery and written it back up and every single one of those guys that had been through the ups and downs of the cycle multiple times over that 17 to 18-year wave cycle?

Peter King:                          Yeah.

Rob Swanson:                   Every single one of them said it's the exact same and in fact, the crash of 1990, 1991, the savings and loans debacle crash?

Peter King:                          Yup.

Rob Swanson:                   It's actually worse than the crash of 2008. Meaning, 3,500 banks failed in 1990, 1991 like 12. The big ones but 12 failed in 2008. It was as ugly if not worse. The last two crashes ago and every one of the old guys told me.

Peter King:                          Yeah. That's a painful lesson to learn as you're watching them creep backup. What do you think the current state of the market is right now? Do you think we're heading towards?

Rob Swanson:                   I think the current state of the market is nearing peakish numbers. There are certain markets that are certainly more peakish than others but as a whole, I'm starting to see, I'm starting to feel and see that we're up there again.

Here's the interesting thing about this, yeah, we're up there on price but price is not the thing that's going to drive the next crash. Price didn't drive the last crash. It wasn't the fact that prices got so high and then it crashed.

What drove it last time, was a loss of liquidity in the market. What drove it at that time before that, was a loss of liquidity in the market. What drove it to crash before that was a loss of liquidity in the market.

What's going to drive it the next time is a loss of liquidity in the market. The question is, what is going to be the driving factor behind the loss of liquidity in the market?

Part of the reason the prices are going up so now is because there's excess liquidity in the market. Meaning, lenders, banks even hedge funds that are playing kind of behind-the-scenes in the funding side are loosening regulations, making more money available easier thus driving up prices. What's going to suck that liquidity out of the market? Well, look at the commercial real estate side of the business right now.

The 10-year balloon commercial real estate loans that all were due in 2017 are having a hard time refinancing. Some of them are getting extended, some of them are going into default but from 2007 which is pre-crash to 2017 which was post-crash, a lot of commercial real estate was on a 10-year note.

Peter King:                          Why, why was that?

Rob Swanson:                   Because that was the financing that they were doing back then.

Peter King:                          Okay.

Rob Swanson:                   They put them on a 10-year balloon note. A lot of those loans have come due and are now commercial real estate if you understood what was happening under the rug, if you look out my window here and see all these commercial real estate, I guarantee, there are building owners right now having discussions with lenders trying to refinance, trying to renegotiate, trying to extend because it's happening all over the place. That's number one commercial real estate.

Number two, the stock market. The stock market today, the margin debt in the stock market meaning, the amount of money that has been extended to stock market investors today inside the stock market to buy stocks is two to three times what it was in 2007. There's more debt inside the stock market than there was last time. If that debt defaults in any way should it perform, that sucks liquidity out.

The third thing is the U.S. dollar. The U.S. dollar is currently the world's reserve currency, right? It's the go-to. If the dollar, if oil gets taken off the dollar or if China calls any debt due, the dollar starts, is going to crash which is going to suck liquidity out of the market.

I mean, I could go on and on and on and on about all sorts of things but those three I think are three biggies that will potentially suck liquidity out of the market and then it will crash.

Now, let me, that's my downer. Let me tell you my upper, right? The downer is it's going to crash. The upper is I wish it would crash tomorrow, okay? That said, I'm buying a lot of real estate today.

I'm not buying because I think the prices are high because I'm pricing everything that I buy based on income. Everything I buy is based on income so that if values go down, you what happened in the last three real estate crashes on single family home rents? After the crash, rents went up.

Now, this is not true for apartment buildings. Apartment buildings took a greater hit as housing prices dropped so did apartment rents but as housing prices dropped in the crash, single family home rents went up because you took so much of … You displaced all of these homeowners out of the homes that they owned into rentals but the homes that they owned were not, had not turned over and gotten to be rent-ready so there was a shortage of supply and an increasing demand for rentals. Single family home rents went up.

Everything that I'm buying today is based on cash flow so that if it crashes, my rents will theoretically if history repeats itself for the fourth time in a row which I think is a pretty good call, buy it based on cash flow, rents will likely go up.

I can't wait for it to crash. I get that that causes a lot of people a lot of struggle and grief. It doesn't have to if you listen to what I'm saying and say, "Wait a minute, the last time it crashed I really struggled, my family really struggled, you're kind of a jerk to wished that it would crash again." No, I'm not. I'm sitting here saying right now if you're listening to this thinking that do something about it. Get educated, learn how you can be part of the solution and take advantage of it, right?

Peter King:                          Absolutely.

Rob Swanson:                   That's kind of where I come from.

Peter King:                          Yeah, absolutely. Would you say or what would you say is the biggest opportunity for today if somebody was just getting involved in real estate investing today, where would you point them to?

Rob Swanson:                   Yeah. I like, I still to this day like wholesaling. If you're brand new … There are two different kinds of investors. There's the active investor. They guy or gal that says, "I want to build an active business. I want to get up every day, I want to think about real estate, I want to find deals, negotiate deals, do deals."

Then, there's the passive, the white collar guy, I call it the blue collar and the while collar then there's the white collar guy who says, "You know what, I got a high paying job. I've got a really good other business. I make money. I have cash or ability to invest." That white collar guy I would say start buying rentals and buy them based on cash flow because when it crashes, the likelihood is that the rents will go up.

Depending on where you sit, blue collar or white collar you can kind of make it a decision to say, "I want to get in and I want to do this thing on a daily basis or I want to go over here."

Now, one of the things that we've done in our business Peter and I don't even think we've talked about this much. We actually started a real estate investing franchise about a little over a year ago. I've wanted to franchise our business for I don't know 10 years and when I hooked up with the COO that's on board with us now, man, he just, he came in and he took my vision, I'm the visionary, he took my vision as the integrator and just knocked it out of the park.

We've now franchised our business. We have franchisees operating in markets all across the country. Guys and gals who have said, "I want to be an active real estate investor. I want to wake up every day and I want to do real estate deals."

Well, our franchise … For our franchisees, we have a recurring income business model that's high margin, low-risk. We've got great trending and support and we built a crash-proof model for our franchisee owners.

The product that our franchisees produce is discount income producing properties. We sell to a lot of the white collar guys discount income producing properties in good markets across the country. That's what we're doing today in this market saying, "Hey, I get where things are going to go again and I'm all in, in real estate."

Peter King:                          Got you. For the person who's listening that's maybe done a deal or two or maybe they're dealing one or two a month but they're hustling, how do you, what's the gap between that and actually getting consistent three, four, five plus properties a month?

Rob Swanson:                   Yeah, great question. Right now, about 65% or 70% of our franchisees have come through our coaching program. We coach newer investors to intermediate investors to frankly I've coached $150 million real estate funds. The sea level suite in large real estate funds, I've coached them on setting up their operations.

But all the way back to the guy or gal who says, "I want to learn how to be a real estate investor," we've created a coaching program that does just that. A lot of coaching programs, Peter will bury their students with information and try to teach you everything under the sun there is about real estate investing and people become overwhelmed, they're not sure where to start and therefore, a lot of times people struggle.

I've coached people for 10 years. Here's what I've done. We've cut out everything except the linear path that gets you to making money as fast as possible because my goal for anybody that comes through our program is that they get the return of their investment in the program back before they leave the program and in fact, we want them to be in the profit side. What we've is done is a very linear five core steps to being a successful real estate investor.

Peter King:                          I love that. As successful as you are as a real estate investor, I think you might even be a better educator and that's one of the things I've always really appreciated about you is that you were able to take the seemingly complex things and really just boil it down to the simple essence of what the transaction actually entails.

For anybody that's listening to this interested maybe in joining up Rob, I can just give you that whole endorsement because I find it a lot of trainers out there like you said either overwhelming with information, don't really connect with where that person's at and the fact that you're in the business teaching it as opposed to somebody that's just really good at teaching it, you've got your hands, your sleeves rolled up and you're in the business too.

What would you say if somebody was interested in either franchising with you or just getting started and maybe want to get coached by you, what is the advantage that you bring that give somebody else that advantage over some of the other competitors in the area?

Rob Swanson:                   Yeah. Well, I don't even know that it's competitors in the area. I think it's our approach, right? I've been doing the business every day for a long time. I've been in the business as an active real estate investor for going on 20 years. We're really good at it and we enjoy it and here's one of the differentiators, if you were to ask my wife, what is Rob's superpower?

My wife would tell you, my superpower is teaching. She wouldn't tell you that my superpower is doing real estate deals but I'm really good at doing real estate deals. She would tell you that my superpower is teaching.

Why am I really good at doing real estate deals but my superpower is teaching because you know what I do every single day around here? I teach my team how to operate in their lane, in their job, in their task at the highest level possible.

I don't care if it's an acquisition's guy trying to close a deal and he's got some weird seller situation or it's a sales guy selling a property or my construction manager trying to rehab a house and he just ran into a city, asbestos problem. I don't care what it is, I can teach my team and I spend most of my time coaching and teaching my team here on a daily basis.

The way that translates into us coaching outside people is when we're doing it every day and I just live in coach and teacher mode because that's how we operate our business, I become a really good coach and teacher for people outside of our organization as well.

My lead coach so I'm one guy, right? I can't talk to everybody at every moment of everyday. My lead coach has been with me since 2008, he came in and he ran acquisitions in my real estate fund when we put it together in the heat of the financial and housing market crash. He's been with me for 10 years.

He was our number two franchisee, number two because he said and he and I were at a conference I spoke at. We were flying back to Denver together, we're sitting next to each other that evening on the airplane and I hit him and I said, "Hey, Mike, why don't you buy a franchise?" I said, "You know how I think about real estate investing and you see our operation and our team every single day and you're coaching our students to success. Why don't you buy a franchise?" He looks at me and he goes, "Swanson, because I never thought of it." He did.

One thing led to another. He became our second franchisee and here's why. He became our second franchisee. He knows everything under the hood man, like he's got admin access to everything that I have, right? He knows under the hood the whole thing.

He became number two franchisee because he said, "While I coach everybody and I know how to coach and I know how to teach and I know how Rob thinks before Rob speaks, I've never been able to just step foot into the full system and just run it. I always had to build it. I had to learn it and then build it from scratch."

The franchise in order to be a legal franchise, we had to take that barrier away. People literally had to be able to step in and run the business. I think those couple of things kind of just snowball on each other of what sets us apart.

Peter King:                          I mean, this is getting a little bit more into I don't want to say like an infomercial or whatever but I'm genuinely curious when you are selling a franchise, what do you actually selling for an operation like this?

Rob Swanson:                   Yeah.

Peter King:                          Because there's no product, you know what I mean? There's, well sure, what exactly are you selling?

Rob Swanson:                   Yeah. Great question and I don't want it to be infomercially. I mean, this is the world I live in every day, right? If we're just talking about my day, this stuff comes up.

To answer your question, a franchise is a business system. Franchising is the franchisee owns and operates their own business and they utilize our brand and our systems to run the day-to-day and our support and coaching and training.

Here's what has separated us. I've realized that the number one thing that real estate investors struggle with no matter what the real estate market cycle is doing is lead generation.

There's a lack of consistency, a lack of knowledge and a lack of execution in real estate investor, lead generation, to find motivated sellers and find deals that you can buy at a steepest discount or on good terms.

In our franchise, we handle all of the lead generation for our franchisees. Where they pick up is with acquisition and then the whole back-end, whatever exit strategy they choose.

Peter King:                          Got it. Okay, that's interesting and just for disclosure like I take responsibility for making it sound like an infomercial because I'm asking you out of interest for myself so I appreciate the responses but I wanted to ask you, I had another note here, why did you like what was it about real estate investing that got you involved in the first place?

Rob Swanson:                   Yeah, that's an awesome question. I was, I'm highly driven type A, D person like I ping the D personality side on the DISC test. I'm like 27 out of 28 D. I always wanted to be self-employed. I always wanted to do my own thing.

I'm an engineer by background and I'm a licensed civil engineer here in the State of Colorado but I always thought man, I'm just going to own my own engineering company or own my own whatever. Well, I got, I realized that all of my clients as an engineer, all of my clients, I was billing hours and they were making millions and I thought, "Man, I got to get to the other side of the coin."

I made the switch. I got out of engineering. I got into the construction side of the world where I could use my brain to make money versus just billing hours and trying to get a higher rate.

I got into the construction side and I'm like, "Okay, if this makes a ton of sense. Like I can be smarter about what I do and increase my margin substantially just by turning on the light bulb inside my head and saying this is a smarter way to do it."

Real estate investing was I looked at franchises back in the day. Real estate investing franchise didn't really exist. I looked at stock market. I looked at commodities. I looked at businesses. I looked at real estate and the thing that resonated with me and it might be because it was the best salesman standing on stage Wednesday night at the Marriott was real estate.

I sat there and I literally said, "I can do that." That seems like something that makes, it made sense to me and I thought I felt like I could do it. What was I looking for? I was looking for financial freedom. I was looking for a time freedom. I was looking for flexibility in my life.

I wanted to be able to do what I wanted to do, when I wanted to do it with whom I wanted to do it. I know that sounds very cliché but that literally like freedom that literally was my main thing like I didn't want to get up and be stuck going to a job. I wanted to go do work that I love doing and I happen to slide into real estate and it's been really, really good for me.

Peter King:                          Do you love real estate? Do you love the deal making and all that?

Rob Swanson:                   I do. I love real estate…

Peter King:                          Because…

Rob Swanson:                   Yeah, go ahead.

Peter King:                          Because as you say, full disclosure like having gotten into real estate myself, it did get, it didn't necessarily fulfill my soul. I mean, I definitely have been into it and am into it for the freedom side of it. I mean, I'm all for that but there was a component for me personally where I was like, "Man, just [shuff 00:54:18] the papers and yes, I'm building equity and yes I'm building wealth and that's great." Like what do I, what kind of impact do I want to make and that's kind of a personality thing that …

Rob Swanson:                   Yeah. I've talked about this on other shows and on my show of different things. Your question was specifically, "Do I love real estate?" I don't do day-to-day real estate that much anymore.

I coach my team but they do day-to-day real estate. I really love doing bigger business deals, right? I like buying businesses. I like bigger business deals and I like coaching and teaching my team and other people.

A few years ago, I bought a business and it was a great acquisition. It's been very good, it's in the vertical of real estate investing, it's a software company, software is the service.

What I love about real estate investing is cash flow and income. What I love about the software business is cash flow and income and I was kind of, I'm not a really awesome landlord. I'm a bad landlord. I'm crappy at it, I don't enjoy it. If you're my tenant, don't ever call me. I don't want you to, right?

That's just my personality. I'm bad at that. I need other people in my business or in my sphere to handle that piece because I know I'm not good at it.

On the software side, I don't have to deal with that tenant but here's the epiphany, my wife comes to me a couple of years ago and says, "Hey, Rob, if you get hit by a bus and die, we're good. But if you get hit, you're right, we've been married 23 years, she can get away with it, but if you get hit by a bus and just can't work, we might be screwed.

This is that aha moment to me, right, because I had sold all of my rental portfolio in 2007 before the crash because I felt it coming so I sold and then I built other, I took that money and built other income-producing assets along the way, made a major multimillion dollar acquisition of the software company and then my wife says this to me, that statement and the epiphany for me was you know what, she's right and what I mean, what she means by that is she doesn't know how to run a software company but she knows how to a run house.

If we've got a rental portfolio and I'm gone and the furnace goes out. She knows how to call an HVAC guy and she can figure out by getting three clothes what the right price should be. She can run a house. She's lived in a house her whole life. She knows how to run a house. She doesn't know how to run a software company.

What we started to do is take income again from our other businesses and buy back up our real estate portfolio because if I'm gone, sure I can sell, we can sell the business, we can do whatever but now, she has a long-term asset that she knows how to manage that sets her up for safety.

Peter King:                          That's a killer. This to me is such an intriguing part of real estate investing, that very, very, very rarely get spoken about which is a spouse and how you guys work together.

I mean, I've talked to many people who, I talked to guys that want to make the leap and their spouses are very hesitant or just the working dynamics sometimes you get a couple that wants to work together and how does that work. What advice do you have for somebody who is listening that to help mitigate some of the turbulence with relationships and real estate investing?

Rob Swanson:                   Yeah. Increase your sales skills. No, so my wife is, my wife and I could not be more 180 degrees opposite like I will live in the world of risk, like my personality if you read some things about my personality type on this personality test, sometimes it will say that I live for that moment where like, "Fight me. I'm bored." Like, conflict, risk like I just, I'm okay with it.

My wife is the opposite. She wants everyone to like her. She wants to support people. She's a very giving and caring person and she has this security gland right here that just has to be like taken care of.

My advice is, number one, understand each other. Understand the personality of the other and while I'm really, really comfortable with risk and fast paced and go, go, go, go and change, my wife cannot handle any of that.

I can't go to her and just say, "I'm doing this and I'm doing this and here's how it's going to be and then here's my blah, blah, blah or risk," because all she hears is, "Holy crap. This sucks and now I feel nauseous." I have to learn to speak into her language in a way that she's going to be okay with.

Then when I learn to speak and communicate to her my high driving go forward fast pace in a way that she can't hear only she gets on board as all of this … Go ahead.

Peter King:                          Do you have an example of that by any chance that's fresh?

Rob Swanson:                   Yeah. No, no it's great. We're in the process of buying a new home right now. We actually are selling our home and buying a new one in the next week.

Peter King:                          This is for your primary residence?

Rob Swanson:                   For my personal house. Yeah. Yeah. I mean we buy … I don't know we probably bought three houses today, but my personal residence. My wife has nothing to do with the day-to-day of the business. She's a state home mom. She writes. She's just doing her thing.

We decided we're going to buy a new house and Denver is one of the most competitive, low supply, high price markets in the country, probably top three.

Being the real estate guy that I'm like, "Man, this is … why would we buy our personal residence now. I'm only going to do that if I can get a deal."

Well, I've said that for the last three to five years and we haven't moved because we're very particular about what we're looking for and I haven't been able to "find the deal" that qualified as a deal.

Peter King:                          That's [crosstalk 01:01:40].

Rob Swanson:                   My wife finally comes to me and says, "If we don't just do what we want to do in life, we'll never going to do it." She's like, "Can we afford it?" I'm like, "Yeah, but it goes against all of my principles." But she's like, "It's time."

We're going to go and we're going in Denver's competitive market. We're going to go pay retail for the first house that I paid retail since 2001. Not only that, but we're going to pay it at the top of the market and I'm doing it because it's going to make you happy. Got you!

Now, let's figure out then our top 10 criteria. Let's figure out. If we're going to do this, if we're going to over pay for a house because we got to have it and you're going to be happier with it and we're going to live there for the next 20 years what do we have to have.

We created a decision matrix, a weighted decision matrix. This is the engineering me that said what are the top 10 things that we must have. We didn't say what are the top 10. We said what are the things that we must have our number just came to 10.

Then we took those 10 items. This is me explaining the question that you asked. This is how I did it because she made the decision that she wanted to do it and she said let's do it.

I immediately went out and started making it happen. Then she panicked because this was going to be change. This was going to be selling the home that we love. This is going to be moving. This is going to be work. This is going to be all these things. She said it. I heard it. I immediately executed like the next day I'm executing.

I'm calling one of my buddy's up. I'm saying hey, here's what we're looking for? Where can you find it? He starts sending us a bunch of properties. My wife gets this email and all of a sudden she's like hey, "Why are we getting all these emails?" I said, "Because you told me yesterday you wanted to move and it was time and we're paying retail and we're just going to go buy what we want to buy." She said, "Well, yeah but," and then I'm like, "Babe you told me. I did what you said. You can't panic. Then I'm like okay, but telling her she can't panic makes her panic worse because that's just what I would need to hear.

Peter King:                          Right.

Rob Swanson:                   Then I said, "Well here let's do this then. Let's get really clear on we won't make the move unless it's the perfect scenario. Let's do a decision matrix and come up with our must haves. Let's create a weighted analysis and we'll come up with our minimum grade and then we'll start to compare our options and we'll find the one that fits the best." She's like, "I like that. Okay. I can handle that."

We sit down. We create this whole thing. We started looking. We start looking at our priorities. The weightings on each priority and then all of our different options, house A, house B, house C, house D.

Clearly, this one over here, this one property we walk in, we look at we're like, this is exactly it. This is it. The decision matrix had it like leaps and bounds, off the chart, better than any other thing that we had looked at.

Like our criteria were four bedrooms, three bath minimum. I've got a daughter in college. I got two in high school like they're heading out, so four-bedroom, three-bath minimum.

Gourmet kitchen, because we like to entertain and I love to cook, backyard sanctuary, because my wife is an organic gardener and that's her happy place, then the list just went down. We found the place. We made the offer and all of a sudden we end up in a bidding war because we're the most competitive market in the country.

Of course we're in beating war. Of course not only am I just going to pay retail for the first house since 2001, I'm going to get into a bidding war and I'm going to over pay and I'm going to reduce and I'm going to eliminate the appraisal contingency and just agreed to pay whatever gap in cash.

Peter King:                          Right.

Rob Swanson:                   Dude, I can't tell you how against every principle this is. We ended up being in a bidding war and my dude just calls the other agent because for five years I haven't been able to find the deal that I was comfortable with. We end up in the MLS. We ended up bidding $62,500 over the seller's asking prices to get the house and my wife is super happy.

Guess what I'm happy too. It's all good because it hit everything that we wanted to hit but the root of your question was how did I talk to that spouse about the [thing 01:07:03] and it was all about me recognizing how I operate, me recognizing how she operates and me recognizing how I need to speak to her differently than I would speak to myself.

Peter King:                          Yeah, that's I mean you can see why she would say that your superpower's teaching because that's a whole dynamic and I think most people miss regardless of whether or not they're real estate investors, how to communicate in a way that somebody that actually hears you.

Rob Swanson:                   Right.

Peter King:                          That's a powerful takeaway, right. I remember when I was investing too. I was in a similar position where we were starting to look for our primary home and I ran into the same thing. You're not an investor anymore. You're a buyer and that changes everything.

We went through a process where we were looking at homes that looking at deals that we kind of said this could work like I could be happy here but it wasn't what we really wanted, but it's still was a deal.

Rob Swanson:                   Yeah.

Peter King:                          If you're really going to do it the right way, you kind to have to take off your investor hat and put on your happy hat. What's going to make everybody happy in this situation? Well that's an interesting lesson right then and there.

Rob Swanson:                   Yeah for sure man. It's been fun.

Peter King:                          Very cool. Well we are budding up against time. I wanted to, you know what I wanted to follow-up really quick and ask your engineer brain like when you created that decision tree that you called it a what a weighted decision matrix, is that what you said?

Rob Swanson:                   Yup, yup.

Peter King:                          What … You set … You set things what are the absolute must haves listed those out and then how did you weighted?

Rob Swanson:                   Yeah. Great, great question and you can go to robswanson.com/matrix and you can go download a template that I use to create a decision tree. Here's how I weighted it.

There are four things that go into a weighted decision matrix. Number one, are your priorities. Like what are the things that we want to evaluate like bedrooms and bathrooms, mountain views, walkout basement, backyards sanctuary, or gourmet kitchen.

What your priorities and then I apply a weight from one to two like 1.0, 1.3, 1.7, 2.0, 1.5 whatever to every one of those priorities. Priority followed by weight and then down the left hand column I do my choices.

House number one and I'm going to rank, I'm going to look at, I'm going to rank house number one on every single one of those priorities. Then house number two, on every single one of those priorities. House number three, on every single one of those priorities and I'm going to look at the total weight on the right hand side.

There's a minimum weight that's acceptable. Here's my ranking of each weighted item inside the middle of the spreadsheet. I rank from 1 to 10. One meaning it does not meet our minimum criteria like bad deal for us.

Five being it meets our minimum criteria meaning it's acceptable and 10 meaning it exceeds our minimum criteria and then I'll rank one, two, three, four, five, six, seven, eight, nine, 10 somewhere.

Anything five and up is meets the minimum to better and then doesn't meet the minimum up to meets it. From there that gives me my weight.

Peter King:                          Wait, you mentioned before grading it between 1 to 2, 1.1, 1.5.

Rob Swanson:                   Yeah, that's the weight, that's the weight.

Peter King:                          Right.

Rob Swanson:                   Then I rank it 1 to 10 every one of those things and I apply a weight to each ranking.

Peter King:                          Ah, that's the weighted, got it.

Rob Swanson:                   Now, sometimes, because it can work just as good like on your top 10. Maybe super important is backyard sanctuary. We were not buying a house that did not have a backyard sanctuary such that when my wife walked out there she heard birds chirping. She just felt good, right.

Peter King:                          Right.

Rob Swanson:                   That was weighted at two because I'm going to create my weight from one to two and that was going to be a two. Then walkout basement I just left that as a weight of one because yes, like for me I wanted a walkout basement but it wasn't a deal breaker.

In fact, we didn't get a walkout basement. We got a garden level basement. My main criterion was I just wanted it to be a sunny nice basement. If you go download that thing you'll see how it works and I got a couple little descriptions on what the priority is, the weights and the choices, how it works.

Peter King:                          Yeah.

Rob Swanson:                   Yeah, I think it will be …

Peter King:                          You offer so many cool tools and ways to think about this thing. If somebody is interested in following up on that I'm assuming they can go robswanson.com and find it pretty much anything and everything that you're up to.

Rob Swanson:                   Yup, yup, absolutely.

Peter King:                          Cool man. Well, there are just so many other things that I wanted to talk to you about but we are running up against time a little bit. I wanted to thank you for spending a little bit here with me this afternoon.

Any other parting wisdom? Here's a final question for. I've been asking this lately. How do you want to be remembered and not necessarily after you're gone, but how do you want to be remembered when somebody interacts with you or interacts with your business?

Rob Swanson:                   Yeah. Great question. We have nine core values in our company that came out of just how do I live my life? These nine core values that drive our hiring decisions, our all of our employee reviews, firing decisions, like we're asking the question before this person comes in, once you're on the bus and if they're leaving, how do they stack up against these nine core values?

Our number one core value is do everything with character and integrity. I want people to remember Rob based on my number one core value in our business and how I live life that I did it with character and integrity whether it worked really good or it didn't work really good, he at least did it with character and integrity. That's it.

Peter King:                          I love that. I love that. It's certainly been my experience every time we, talk you've always been an open book. You've always freely giving away incredibly valuable information obviously the $30,000 breakfast comes to mind.

But you've just always been somebody that inspiring to me and you've certainly been making an impact on other people's lives so I appreciate it you for that my brother and again for anybody that's interested robswanson.com.

Rob, thank you today this has been great.

Rob Swanson:                   Man, thanks. I appreciate it.

Peter King:                          All right man.