0 (2s):
Light that spark Fire Nation. JLD here and welcome to Entrepreneurs On Fire brought to you by the HubSpot Podcast Network with great shows like my first million today, we'll be breaking down. How Tom Cruz, that's C R U Z not the Tom Cruz crazy cal shopping guy built a $25 million section eight portfolio in less than eight years to drop these value bombs. I have brought Tom Cruz in EOFire studios. He is a 33 year old real estate investor that grew his section eight portfolio from zero units to 390 in less than eight years. And he's now generating $400,000 a month in passive income.

0 (44s):
Some key topics that we chat about here today are his path from one to 10. So you can really start to understand how you can get going. And something like this, how he was able to put down as little as five to 10% on his initial rentals, and he works less than five hours a week. How he accomplishes that and so much more. When we get back from thanking our sponsors, looking for a business coach who has helped thousands of entrepreneurs increase profitability by an average of 104% annually, all for less money than it would cost to hire one minimum wage employee all on a month to month basis. Schedule your free consultation today with Clay Clark, a former SBA entrepreneur of the ThrivetimeShow.com/fire. stories are what help us connect and relate, which is why hearing someone else's story to success can help us clearly map out our own.

0 (1m 31s):
That's why I'm excited to share the female startup club podcast tune in for stories and insights from the world's most successful female founders today, listen to the female startup club, wherever you get your podcasts. Tom, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with.

1 (1m 55s):
What's up Fire Nation. Yeah, the most obvious thing that I could think of when I was asked this and putting that together is I think it comes back to passion. I think there's that platitude and cliche, where everyone says you have to follow your passion in order to be successful. And I don't think that's true. I think passions are great for hobbies and passions can also overlap with success, but I think the key to success is providing value. And I found that providing value through real estate and, you know, basic need is the way that, you know, I found that success. For example, I am also very passionate about paintball. I've been playing paint ball since high school, but there's no future, you know, professional PayPal or any type of income or success from, from that.

1 (2m 39s):
So I keep it as a hobby, but I would say that's a pretty big, common misconception about success that I've found.

0 (2m 47s):
Well, let's be honest. Maybe there's no way to earn revenue yet, but Hey, in this new metaverse, I mean, who knows it's going to be happening as far as Atlas star Alison's ACCE infinity and everything that's going on in this world. I mean, you know, all of these parents that are yelling at their kids were playing video games. Now all these kids are making 10 times more than their parents were ever making. I mean, it's a crazy world we live in, so you never know, but I mean, let's be honest, as I mentioned, Fire Nation in the intro, Tom is generating $400,000 a month in passive income. And we're talking less than five hours per week of work, which we'll get to at the end here. But I want to talk about your beginnings right now, your beginnings in real estate, because a lot of people in foundation like, well, this should be cool.

0 (3m 30s):
You know, I talked about what you've done in the introduction, but you know, you're already at 390 units and probably much more right now. And that's, that's a high, huge number. So let's talk about your path from one to 10. What does that look?

1 (3m 45s):
I think it's started very normal. I bought my first house. I got the Obama tax credit. I got, I did an FHA loan, which is a first time home buyer loan. I put, you know, 3% down on that property. It was a condo that kinda got me started on the path of real estate and home ownership. It was, you know, very humble beginnings. If there's like $120,000 condo here in Wilmington, North Carolina, I lived there for a little under a year. I decided to buy a dog. So I needed a bigger house in yard and they didn't allow Dobermans in that condo. So I tried to sell that condo and come to find out that I was upside down, you know, 2008 was not counting kind to the real estate market. I only had very little equity in it, so they put their little down payment.

1 (4m 26s):
So I was forced to rent it. And that's kind of where I had that aha moment. I posted an ad on Craigslist and I mean, an hour later it was pretty much rented. I had a hundred people re at responding to the ad. I just threw it up there. $500 was the rent over the, over my mortgage. So I think my mortgage is 600 and I put it up at 1100 and it rented very quickly. And at that point I was doing, you know, marketing. I was doing web design and SEO and I was killing myself for $500 a month, you know, with a client. And here I am passively making $500 a month off this condo rental for doing nothing except signing a lease with this tenant. So from that point on, I started getting into real estate wholesaling.

1 (5m 6s):
I knew that I couldn't continue to put, you know, 20% down on every property, which is kind of the, you know, investment requirement for a lot of loans. So I started doing what's called real estate wholesaling. I would find properties that were undervalued. I would put them under contract and then I would find like a flipper or a landlord that wanted that property. And I would essentially assign the contract to them. And I would, I mean, I would make five to $8,000 per deal doing that way. And that's really how I got started. I essentially took that cash combined that with my side hustle, with that, with what I was doing with marketing. And now I also had that rental income from that first condo. I would put that together and got my second unit from that point. It just kind of turned into a snowball.

1 (5m 47s):
You know, I was continuing to reinvest all that compounding rental income. And when I got about five or six units, I learned about cash out refinances. So I was able to start pulling out of those properties in order to continue buying more. I had a revelation at around seven or eight condos. That's that's when I realized that condos just weren't scalable. There's a ton of issues with homeowner association fees and condo association fees and assessments that these apartment complexes were charging. The monthly fees were eating into my cashflow, like crazy. So I knew that I had to go into the single family realm. So I started doing that around seven to 10 units. And then that's, you know, that's essentially how I grew from there.

1 (6m 29s):
And we can get into, you know, maybe 10 to a hundred units in a little bit, but yeah, that was kind of, the progression was starter home loans, reinvestment aggressively. I mean, I was living very lean during that time focusing solely on down payments, you know, but yeah, that's, that's how I went from one to 10.

0 (6m 47s):
Again, Fire Nation, you just have to take action, Tom didn't know what the second, third, fourth, fifth step was going to be when he started, you know, just that process, which is putting the ad on Craigslist and getting somebody to rent. That just was an action. He took that led him to the next step, to the next step, to the next step. And he got up every day and he just took action. And I love what you did when you just reinvested it in yourself. You said, you know what, I'm my best investment. I'm reinvesting in myself and my vision and what I'm creating here. I'm not going to go out and buy a Lambo. The minute I can afford it, I'm going to invest the money in myself because that's where I'm going to get my best return. And you did discover at one point section eight, and you have this section eight program that you really dove into.

0 (7m 28s):
The you're really able to say, okay, this is a cool opportunity. So why is section eight? And the program overall was section eight, such a great opportunity for people

1 (7m 38s):
That quick backstory is essentially I found section eight by accident. When I was probably on my 10th or 11th unit, I started buying, like I said, single family properties. I was buying 150, $160,000 houses. And 20% down there is still 30, 40 grand. So that was very expensive for me to scale. So I was like, well, let me try going on the lower end of the spectrum. So I started buying, you know, 60 and $70,000 houses downtown. They might've had some, you know, more cosmetic issues or needed more work. And I bought this house for $55,000 in downtown Wilmington. I'll never forget it. Three bedroom, one bath built in 1920s. And I had attended in there paying $1,350 per month. The landlord was retiring. He didn't want to deal with it anymore. So he sold it.

1 (8m 19s):
And on the day of the sale, he drops this bomb on me that, oh yeah, by the way, we need to switch over to the direct deposit for section eight into your name. And I said, what do you mean? Like, I, I, this is not a section eight property. He's like, yes, it is. You know, that's how you're getting $1,350 in rent on a property that should never gotten more than maybe eight 50 a month in rent. Right. So I was thrown into the deep end. If, if your listeners don't know what section eight is, section eight is essentially a federal program that will pay the rent for low income or economically disadvantaged people. So you have a lot of retirees. You have people on disability, you have a lot of people from the VA, you know, retired disabled veterans on the program.

1 (8m 58s):
So I had to scramble, I had to figure out exactly how the program worked. Essentially this, this tenant was disabled. So section it was paying 100% of their rent every month. So I simply switched over my S my direct deposit account with section eight into my name. And they began paying me 13, 50 per month. And that was the second life-changing moment was that first direct deposit of $1,350 a month. Cause at the time I bought the house for 55 grand, 20% down on that loan. And I think I, I, my, my mortgage was 40,042,000 a month or $42,000. Total was my loan on that. My payment was $280 a month. And here I am collecting a $1,350 rent on a property that I put very little down to own.

1 (9m 41s):
So then I became obsessed that that's when I really started figuring out what I need to do in order to continue getting these eight, $900 a month, you know, cashflow home runs in order to keep growing, keep growing, keep growing. So at that point I had 10 units, 11 units. I continued to reinvest that at around 15 or 20 of these properties, I started looking for partners and that would be kind of the next step and how I got started with section eight.

0 (10m 6s):
That is exactly a Fire Nation. Again, what the process is. I mean, I kind of love how you found out about that by accident. Then you're like, oh, wait a second. This is actually a thing. Well, let me double down here, let me triple down, let me really look into this and see what kind of opportunity this could be for all of the reasons that you just went into. Now, I want to get into like the partnership thing. I also want to talk about, you know, how coming up with upfront cash. It's just tough. It's tough for a lot of people. I mean, you know, what is it, 40 or 60% of Americans are living paycheck to paycheck. They're going to come up with $400 for an unexpected expense, even if they had to. So how did you find how to put down as little as five to 10% on your rentals and in some case even less?

1 (10m 49s):
Yeah, so that was a big key to my scaling. So there's two parts to that. The seller financing and being able to put limited money down and then also other people's money. And I'll get into both of those real quick. So with seller financing, that's essentially when you find a property that may have been on the market for a long time, or that might be kind of ugly. You know, there's no rhyme or reason, bad colors, overgrow lawn, whatever it is, I'll reach out to the seller and I'll say, Hey, look, man, I see that your property has been on the market for six months. I'll give you the full list price of what you're asking for, but I'm going to need you to seller finance it to me. And essentially what that means is he acts as the bank. I pay him the monthly payments every month on the property that allows you to, there's no appraisals, there's no inspections.

1 (11m 31s):
There's none of the headaches that come when you're dealing with a bank. There's no credit checks there. I mean everything, there's no income verification. These sellers want to get rid of their house. And if I can come to say, come to them and say, Hey, look, you have this a hundred thousand dollar property. I'll pay you a hundred grand. I'll give you $5,000 as a down payment. That's 5%. I'll do a five-year balloon on a 25 year amortization. So what does that mean? My monthly payment is based off of a 25 year payment schedule. So I have a low monthly payment. So I'm able to cashflow with my section eight tenants. And then in five years, I'll pay the property off, but in five years, I'm not going to pay the property off. I might do a cash out refinance. I might sell the property. I might ask him if I can give him another five grand and extend for another five years if he wants to.

1 (12m 16s):
So, and then I'll also give him a high interest rate, you know, on a $95,000 loan. If I offer him a 7% interest rate, it's a no brainer between him getting five grand down, a super high interest rate. And he also believes that he's going to, you know, get the property paid off in five years, which, which is very possible if I sell it and pay him off, or he might be able to extend it for another five years, very few people will say no to that. If they're in the position to not need the cash instantly. So that allowed me to be able to go out and buy a ton of properties without putting 20, 30, 40 grand down. And without having all this debt on my balance sheet or none of my balance sheet on my credit report because of that. So that was step one on how I was able to do less down payments and less bank involvement

0 (12m 58s):
And Fire Nation. I mean, when it comes to this kind of stuff, freeing up cash is the name of the game. Because when you have more cash, you can then go ahead in, leverage more in, go and scale more and get more properties and more opportunities and do more things with all of this. So that is why it's so critical to really say, Hey, what are all the opportunities that I can expose here and double down on to really make this happen? And we're actually going to be talking about a pretty simple hack, so you can see how much section eight is paying in your area right now, Fire Nation. And again, I teased it. We're going to talk about it, how Tom works less than five hours a week, and we're talking 400 K a month in passive income Fire Nation.

0 (13m 41s):
When we get back from thanking our sponsors, it's hard to believe we're approaching the end of another year and now more than ever. It's so important that we as business owners are connecting with our customers. It's a busy buying time and the more touch points you can create the better. So how do you create these touch points with a HubSpot CRM platform, a platform ready to help you connect the dots with your business and your customers, whether you're just getting your business up and running or scaling to what's next, a couple of ways a HubSpot CRM platform can help you connect. The dots is with brand new custom behavioral events in their operations hub enterprise. With custom behavioral events, you can get into the details of what makes your customers tick track site behavior and understand customer habits.

0 (14m 25s):
So, you know, what type of messaging to use and when and their operations hub enterprise will give your operation leads. The ability to curate data sets for faster and more consistent reporting, keeping everyone on the same page at all times, learn more about how we HubSpot CRM platform can help connect your business at hubspot.com. Looking for a business coach who has helped thousands of entrepreneurs increase profitability by an average of 104% annually, all for less money than would cost a higher one minimum wage employee all on a month to month basis. Fire Nation meet Clay Clark. Clay has been coaching businesses since 2006. Yup. Even through the great recession and he does it for less money than it would cost to hire a minimum wage employee Inc magazine reports that by default 96% of businesses will fail within 10 years.

0 (15m 12s):
Yet clique clients grow by an average of 104% annually. How's this team of possible Clay only takes on 160 clients. So he personally designed your business plan. Plus CLIs team helps you execute that plan with access to graphic designers, Google certified search engine, optimizers, web developers, ad managers, videographers, workflow, mappers and accounting coaches visit thrive time show.com/fire to watch thousands of testimonials from real entrepreneurs who Clay's helped over the years. Do your research. If you thousands of documented success stories from real people, like you thrive time, show.com/fire. Then schedule your free consultation with Clay himself to see how he can help you with proven business coaching on a month to month commitment basis, thrive time, show.com/fire, Tom we're back.

0 (15m 57s):
What is that simple hack for Fire Nation TB to look up and see and check out how much section eight is paying in their area right now.

1 (16m 8s):
Yeah, guys, simply go to Google and search F M R that's Frank, Mary, Roger, and then HUD, H U D housing, urban development. It's two simple acronyms. And once you come up, you'll see the first result is going to be the HUD website in there. They'll have a directory by county and zip code plug in the county or zip code that you want to look at. And it will tell you the 1, 2, 3, 4, and five bedroom rate that section eight will pay you every month in your county. It varies completely by bedroom count and it varies by location. And you're going to find you're going to be shocked because first of all, majority of those three bedrooms that you're gonna find, it's going to be between as low as 1300 and as high as if you're in California, 28 to three, $3,000 per month.

1 (16m 55s):
And that's where a lot of misconceptions come in. People think like, oh, you can't buy a $60,000 property and rent it for $1,400. Yes, you can. You can do it. And we do it every day because section eight doesn't care about what you paid for the property. They have a set formula that's location agnostic as far as the pricing inside of the city. So it doesn't matter if you're on the beach or if you're, you know, in the inner city, they paid the exact same on those properties. So being able to leverage low, low purchase price properties in high rental values, that's how you get this crazy cashflow. And that's how they are able to scale. So fast is because now I'm able to reinvest 800, 900 a thousand dollars per month, times 10, 15, 20 units that I put very little money down to begin with.

1 (17m 40s):
If that makes sense, John

0 (17m 41s):
Makes total sense. And this is exactly the type of steps you need to be taking Fire Nation. If you're just sitting in this type of thing, because this is a great opportunity and a great process from somebody who's been there and done that. And what I really want to end strong on Thomas, you work less than five hours per week. You've built a team that allows you to do this. How the heck did you accomplish?

1 (18m 6s):
Yeah, so it's a combination of processes and teams. So I have four full-time property managers that manage the properties. I have a property management software called Cruz control that we built out designed for section eight, because with section eight, you have two different payments. You have direct deposit, which is the payment that comes from the federal government. And then you have the payment that the tenant pays you, which is sometimes, you know, a hundred, $200. So we're able to split those payments up and collect it. And then we also streamline management. You know, we have a portal where tenants can request maintenance. We have tenants where they can see a place where they can sign a lease online. That's all part of our process, which will allow essentially my involvement to be acquisitions in big expense for, you know, approval right now that five to seven hours that I've mentioned on, on my weekly, you know, workload for my properties, it really comes to, okay, for example, last week we had a house fire.

1 (18m 57s):
I needed to deal with the insurance adjuster. So I worked with that. You know, we have to replace a new roof because there's missing shingles. Okay, I'm going to approve that $4,000 costs. So that's really where it comes down to is being able to leverage a team of people that can handle it and have these systems and processes in place with the right software that really frees up your time to be able to continue to grow the business instead of working in the business. And that's where I think a lot of investors got get caught up. I have investors all the time that are wanting to go out at one in the morning to fix somebody's toilet. That's, that's being a landlord. That's not being an investor.

0 (19m 31s):
So what would you just say of everything that we could talk about? What you'd be a whole other podcast episode in and of itself? Just one tactic, just one tip that you've really found that might be helpful for Fire Nation as they kind of start to build up their team, take things off of their plate, free up more of their time.

1 (19m 48s):
So what I do is very simple. What I, what I would do is I would go through a normal week and I would document every single thing that I do. And I just have like a little expression or saying is if the outcome is not income, then delegate it. And that's exactly what I do. So I'll have a spreadsheet and I put down, I'll find myself, for example, doing a cashflow analysis on a property. It's like, I shouldn't be doing this. You know, I should give a criteria to a property manager or acquisitions person to then do this for me. So I can no longer, you know, focus on this and focus on other more income driven activities. And then from that point on, I'll find people that are already skilled in that and make sure that it fits within the confines of what we're able to pay them and then make that offer and, you know, kind of build the team.

1 (20m 29s):
And that's how I did it. I also found a lot of entry-level property managers. I didn't want anybody coming in with preconceived notions about section eight or anything else. And I was able to train them and, you know, set them up with my policies and processes for my, for my portfolio. So that's how I was able to, to grow with that fast, love

0 (20m 46s):
That stuff. And Tom, I want you to end with a bang, give us one really key takeaway from everything that we talked about here today that you really want to make sure Fire Nation gets from this

1 (20m 57s):
Conversation. Give us a call to actions, how we can connect with you, learn more about you, any direction you want to point us in. And then we'll say goodbye. So two things, one follow me on Instagram. It's T Cruz and C it's T as in Tom Cruz, C R U Z N C, like North Carolina. I'm always answering my DMS. I love engaging with my followers and talking about real estate. And then to book a call with me. If you go to section eight, the number eight formula.com and then you select that. You saw me on Entrepreneur On Fire. I'll give you two hours of free one-on-one time. If you sign up for the course, I do have a $5,000 course and coaching program that explains every single step of the way, how to get started with section eight, how to find the best properties, how to find financing.

1 (21m 46s):
We have partner lenders that will allow you to get financing without tax returns and without income verification, all you need is a six 20 credit score. So section8formula.com.

0 (21m 57s):
Wow. Two hours of Tom's time. I only got like 25 minutes firing him. I still think about that. And I want to say, you're the average Fire Nation of the five people you spend the most time with. And you've been hanging out with TC and JLD today. So keep up that heat. And if you head over to EOFire.com type Tom in the search bar, the show notes page will pop up with everything that we've been talking about here today. Follow him Tcruznc and see on Instagram section eight, formula.com. Get those two hours of free time with Tom when you sign up for his course. And Tom, thank you brother, for sharing your truth, your knowledge, your value with Fire Nation today, for that we salute you and we'll catch you on the flip side.

1 (22m 42s):
I appreciate it, John. Thank you for having me.

0 (22m 44s):
Hey, Fire Nation today's value bomb content was brought to you by Tom and Fire Nation. Over the last decade, I've interviewed more than 3000 of the world's most successful entrepreneurs, and I've created a revolutionary 17 seven roadmap to your financial freedom and fulfillment. I put it all into my first traditionally published book, the common path to uncommon success personally endorsed by Seth Godin and Gary VaynerchukThe Common Path to Uncommon Success is the step-by-step guidance that you need Fire Nation to achieve the lifestyle of your dreams. Visit UncommonSuccessBook.com. UncommonSuccessBook.com. to order your copy and I'll catch you there, or I'll catch you on the flip side, looking for a business coach who has helped thousands of entrepreneurs increase profitability by an average of 104% annually, all for less money than it would cost to hire one minimum wage employee all on a month to month basis.

0 (23m 37s):
Schedule your free consultation today with Clay Clark, a former SBA entrepreneur of the ThrivetimeShow.com/fire stories are what help us connect and relate, which is why hearing someone else's story to success can help us clearly map out our own. That's why I'm excited to share the female startup club podcast tune in for stories and insights from the world's most successful female founders today, listen to the female startup club, wherever you get your podcasts.