Can you really live the life of your dreams? Financial coach and real estate investor Chris Larsen says it’s possible through creating passive income. Chris joins Craig Ballantyne on the Early To Rise Radio to share some real estate investing tips and so many other good things to help you build better wealth for your family. Even if you’re just starting out with a couple thousand dollars to invest, this is a really exciting episode if you are interested in generating more income and learning about real estate investing.

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Passive Income And Real Estate Investing Tips For 2021 – An Interview With Craig Ballantyne For The Early To Rise Radio

Would you like to meet my money coach, the man who is helping me develop passive income strategies and improve my overall wealth? You’re in the right place. I’m bringing on my friend, coaching client and my financial coach, Chris Larsen. He lives down in Asheville and he is going to help you live the life of your dreams even if you’re starting out with a couple of thousand dollars to invest. He’s going to show you exactly what real estate strategy to use and so many other good things so that you can build better wealth for your family. Chris is a lot of fun, down to earth guy and you’re going to learn so much and about what to do next.

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This is going to be an exciting episode. If you are interested in generating more income and also learning about real estate investing and all the cool things that my mentor, Michael Masterson, also known as Mark Ford has been talking about for years and years. It’s one of the things that attracted me to Early to Rise as it did for Chris Larsen, who is my guest in this episode. Chris, welcome to the show.

Craig, I’m fired up to be here.

It’s going to be great. You’ve come a long way down the Early to Rise Path. Michael Masterson, the founder of Early to Rise for anybody who doesn’t know who he is, you are a fan of his. How long ago did you find his stuff?

Craig, I’m going to say it’s been 7 or 8 years. I loved Early to Rise and that was probably around the time that you started to run that.

It’s been several years since. It was in July of 2011. I would have taken it over by the time that you had found them. Did you find it through Ready, Fire, Aim?

It wasn’t. I don’t know how I came across it. I’m sitting here talking to you but Michael Masterson, Mark Ford’s book, I quoted in my book. If you’re reading and you like what you read, you want to learn more, you can get it at NextLevelIncome.com. We’ve got a free book link on there. I love Mark’s vision of adding businesses and real estate to a financial plan. If you’ve heard me talk about this, you’ll hear me say, “You can’t think like $1 million investor, you got to think like $100 million investor.” That is how ultra-wealthy families make their money through businesses and real estate.

That was the first thing you said to me. Chris is a coaching client of mine and I’m a coaching client of his. I need a little bit of help in putting more Michael Masterson’s money into my life. Chris, I bet there are a few people reading who are like, “Wait a minute. I don’t have millions or whatever. I’m not ultra-wealthy.” Can you give them a little reassurance here that what we’re about to talk about is something that can be used by somebody making $50,000 a year?

If I stunned you a little bit there when I said you got to think like you have $100 million and you think, “Not only do I not have it, I’m not going to be there potentially in my lifetime.” That’s okay. I started with less than $3,000 with my first real estate investment at age 21. I was not raised with a lot of money. I was from a family of savers. I made $18,000 my first year working. I can tell you that you don’t have to start with a lot of money and that’s what attracted me to real estate, Craig. It was the ability to leverage, to partner, but more specifically to control the income and the value of what you have. That is one of the things I think that both businesses and real estate offer to investors or individuals, the ability to add tremendous value to those and grow your wealth exponentially. First off, you don’t need a lot of money to start but again, if you can think like ultra-wealthy, even if you’re only starting with a few thousand.

You have a Biomechanical Engineering Degree and an MBA in Finance at Virginia Tech. In fact, you actually still have as a time of this recording but not for much longer, a full-time job. Tell us a little bit more about that and then we’ll get into why you didn’t go into the financial services industry.

A little bit about my story and as I said, it’s in my book. Feel free to pick up a copy.

I’ve read it before, but I’m rereading it now as a client.

I started out as a cyclist. I was racing bikes. I was in college. I started racing when I was fourteen years old and that was my first true passion. I always had an entrepreneurial streak. I had a paper route. I sold wrapping paper door to door. I had not really a lawn care business, but I would take care of yards in the fall along the Chesapeake Bay. I’d make like $300 in a weekend. I felt my friends that worked at an after-school job for $5, $10 an hour were fools because I’d make $300 in a weekend.

I made $2.85 an hour for my first job. I was definitely a fool.

I started there too and I was like, “Wait a minute, there’s got to be a better way.” I always had this small business mentality, but I was taught like a lot of people, go to school, get a good job and make money. People said, “You’re going to be an engineer like your grandfather.” I did well in math and science. I didn’t think any differently. We didn’t have an entrepreneur in our family, but my father who died when I was at age five was an entrepreneur so maybe I have it in my blood but I found cycling. That was my passion. I was racing at age fourteen. I got to the point where I was a category one cyclist and I was racing with the pros. I was traveling all over the country and all I wanted to do was be a professional cyclist, but I went to school. I went to Virginia Tech. I got a scholarship. I didn’t have a lot of money but I was racing my bike. In between my freshman and sophomore years, my best friend, my training partner, my roommate died of a massive brain hemorrhage.

How old was he?

He was eighteen and I had turned nineteen. It was one of those moments where it ripped my world apart. When you’re that young, it was like, everything I had was cycling and Chris was like a brother to me. We spent every afternoon together riding on the bike. We’re going to be college roommates. He was moving in that summer and it was all ripped away. I went back to school. I was certainly depressed. I didn’t want to go to class. I’d skip class. I go ride my bike, but I got really good. I was winning a lot of races, but it was hollow.

I’ll never forget, I was coming across the finish line a year after Chris’ first memorial race, and I won it two years in a row. I win this race. I was in phenomenal shape. I can feel my skin tingling now, I felt nothing. The next week, I was at the state championships and I pulled over on the side of the road. My mother was there and she said, “What are you doing?” I said, “I’m done.” She didn’t know it but what I was telling her I was done racing for good. She said to me, “You never quit a race before,” and she didn’t know I was quitting the sport altogether.

I went back to school and I thought I got to live a life that earns the respect that I deserve, the life that I’ve been given and also that honors the life of my friend that I lost. With that came the freedom that I learned to love racing my bike, traveling all over the country and I didn’t have any money. I thought I’m going to be an investor. I started investing in the stock market and ultimately came to real estate, but I didn’t have any money. I went, found a job and ended up in the medical device industry, which as you mentioned, I’ve been doing for eighteen years and that’s how I generated the income to invest in properties and get to the point where we are.

If it’s okay with you, we go back a little bit more. You mentioned that your dad passed away when you were younger. What impact did that have on your money mindset and approach to life?

I look back Craig and I’m thankful for all the experiences I have. I grew up around my mother and stepfather who were savers and they did have some rental properties. They had three rental properties and they taught me to save money. My father, who was an entrepreneur, I didn’t get to grow up around that. We didn’t have a lot. We ate vegetables out of cans. My grandmother made our food.

I thought that was normal when I was a kid too.

This is normal. We didn’t have a lot, but we had enough and I didn’t think much of it. That’s how I was raised. I was thought to be conservative and save your money. My mother was a teacher, so she taught me and helped me get good grades in school through that. That is what I learned. I was fortunate. I had some mentors along the way as we all do, in one way, shape or form and the same individual, Clint Provenza, who introduced me to cycling, a family friend at church, gave me a Money Magazine. I’ll never forget the Roth IRA law was passed. I was about eighteen years old and he handed me the Money Magazine. It showed the miracle of compound interest and I’ll never forget staring at that page and thinking, “This is awesome.” I’m thinking, “If I can invest $500 a month, I can be a millionaire,” and that’s where it all started.

You went and you not only got the Engineering Degree, you got an MBA in Portfolio Management. Why are you not trading stocks and bonds?

There are two reasons. One as I mentioned, I want to be a professional cyclist. When I quit, I knew I didn’t want to be an engineer. I always thought I would finish school. I’d have an engineering degree. I’d go race my bike for about five years. I would make any money and then I’d come back and figure out what I wanted to do. After seeing my friends go to Europe and come back and tell me about all the stuff that was going on with drugs and the sport at that time, after training with Lance Armstrong, I got to train with Lance before he won the tour. After going through the Olympic training center, that passion dried up when I realized that what I was doing wasn’t my ultimate goal in life. I thought, “What do I want to do?”

As I learned more about investing, I loved it. I loved reading the books. I love learning about it. I got an MBA. I almost got a PhD in finance and I thought, “I’m going to go work on Wall Street.” I also enjoy being outside, having the ability to be in nature around my bike and being on Wall Street isn’t conducive to that. I started looking at other opportunities as well. What I found was the financial industry is largely driven by sales and I got a little bit disillusioned at the time and thought, “If I’m investing in index funds and I’m investing in real estate, how am I going to sell these products to clients when I don’t do it myself?”

I started expanding my horizons into different areas of sales, which I always in some way, shape, or form, even having a paper route. If you convince somebody to buy a paper, that’s sales. I came upon medical sales and my Biomechanical Engineering degree, like I said, I didn’t want to be an engineer, but I love the body. I love learning how to make things work in conjunction. I love designing the implants when we had classes on that. I thought, “How cool would it be to get to work in an OR alongside literally brain surgeons and orthopedic surgeons, and communicate this information?” I fell in love with the industry. I became a sales rep in my mid-twenties and that’s why I took that path. I thought, “I can still be an investor and do this at the same time.”

How’d you get so good at being a sales rep? This is a great question for everybody who wants to be better at sales. What are your sales tips?

I don’t even consider myself a great salesperson. I think that I’m always evolving and if you’re reading and you have that idea in your head of a salesperson is like the sleazy car salesman and my kids love Cobra Kai so we were watching the episode in the car. They were talking about sleazy car salesmen. At the core of it, sales is communication and sales is being able to communicate and understand an individual’s needs, whether it’s personally or in their business and see if it’s a good fit for your product. If you can provide value to somebody and communicate that value, you can be a really good salesperson. If you’re a teacher, you’re a salesperson. If you go to a job interview, you’re a salesperson. You’re communicating your value to that person. If you want to be good, better at your business, if you want to be better at your relationship, go take a sales course. Read a sales book, learn to communicate and listen. That is the most important thing to being a better salesperson.

You mentioned that you love the outdoors and stuff like that. You got your family now. Give us a brief background on your wife and kids, and what you do for fun. We’ll then get into how you got into real estate investing at age 21.

I still love the outdoors, Craig. We live in a beautiful Asheville, North Carolina. We’re fortunate to have a property now where I get to look out over the mountains and downtown. In my book, I have I’m analytical and I analyze where we buy properties across the United States based on a lot of criteria. A couple of years ago, I put together a spreadsheet, which some people don’t believe but if you know me a little bit, you know what a nerd I am. I was in the math team when I was a kid, I was in the marching band. I went to orchestra and band camp so all those jokes are true. I had this spreadsheet and it stack ranked places across the country. One of the most important things to me was, does it have the ability to fulfill the outdoor activities that we have?

I love to mountain bike. I still love to ride my road bike. I love to take my boys skiing. My wife’s from Montreal, Canada, so another fellow Canadian. We love to get up there. I’m fortunate that she has a similar passion for the outdoors. She went to school in Boulder, Colorado and she’s a wonderful skier. Whether it’s this time of year skiing and the small ski hills here in North Carolina, or traveling out West in the summers, we do a lot of hiking and mountain biking with the boys, even if it’s taking a walk at lunchtime with my dog. For whatever reason, being in the woods mellows me out. I have a pretty intense personality but if I can get in the woods for half an hour, an hour a day, it keeps me on the right track.

There’s something called forest therapy, I think and it is super valuable. I tell my clients as much as possible to go for walks in the woods because it gives them that time to think in that space. We’ll get to that in a moment and talk about how that you’re able to balance out this so you can be a parent and a husband. Tell us about how you got your first investment property and why should every investor own real estate as part of their portfolio?

We can make this really simple, or we can make it complex when it comes to why you should own real estate but my story, I started with single-family. I bought a single-family house. It was an attached townhouse. It was three bedrooms and now they call it house hacking. I was in college, I was 21 and I looked down the road and I saw, “There’s this townhouse for sale.” I thought if I can buy this and I can rent the rooms out for $300 a month and my mortgage is $700 a month, I can live there for free because there are tax benefits with real estate, as well. As I talk about in my book, they’re called phantom losses or paper losses. What happens is those losses can go against other income that you have depending on your specific tax situation, but after taxes, I was living there for free Craig. That’s what I would call a house hack.

If you’re reading and you’re thinking, “I don’t have a lot of money to get into real estate. What should I look into?” What we do in our show is give you different options. You don’t have to start in buy a 300-unit apartment building like we focus on. You can buy a single house, you can rent out the rooms. You could even Airbnb a house or if you’re handy, you could buy a house and fix it up. That’s how I got my start with a house hack. If you look at why you should own real estate, look at the ultra-rich. If you look at what they do, even families that didn’t make their money in real estate, they’re still putting 20%, 25%, 30% into real estate. Richard Wilson, who was on our show, talks about how these $100 million, centimillionaire families invest and it all involves real estate.

The reason is real estate is liquid so it’s very stable. If you’re buying real estate that produces income, that’s going to add income to your portfolio. It’s going to reduce the volatility that your portfolio has if it’s in the stock market, even in REITs, which are real estate stocks, essentially. It also increases the return. From a numbers basis, everybody’s shown real estate because it increases your returns and decreases your risk but more importantly, you can’t eat stocks. You have to sell stocks or you have to take the dividends to live off that and buy food. If you buy the right kind of real estate, it kicks off income. If you read my book and you listen to any of my coaching that I do with my clients, the ultimate goal is getting to the point where your passive income exceeds your active income and that’s what I call true financial freedom. That’s one of the things that real estate can provide.

How the heck do you get this all done? How are you able to do all this investing and have a full-time sales job? Now you do a little bit of coaching on this and obviously being the husband and father, what are some of the secrets that you used there to pull this off?

Shameless plug for you, Craig. I would say that a lot of the lessons that you teach have helped me and something that resonated for me. If you’re an athlete, you will understand this. Athletes schedule their races and their rest time. People that train hard or compete, you might go out and you might do three intense days a week with 1 or 2 off days. Maybe you get a massage and then maybe you do some moderate days in there as well and you focus around that. Even if you strength train, if you look at it, there are only a few reps in there that matter per workout and it’s the same thing in your life.

What I did is I took the lessons you provided Craig. I said, “What can I do to make the maximum impact?” I found the times in my day that I could do that and that’s what I scheduled first. When I was in college, I was scheduling my workouts first around my classes, so this was very natural to me. When I quit racing in 2015, I used to train at 5:00 in the morning on my trailer in the dark, in the basement before I’d go into the hospital. I was on call. I’d work from 6:30 to 7:00 in the morning until sometimes, I’d be there all night. I’d spent three nights in a row in the hospital one time on call. I worked seven months straight without a day off. I had ten days I didn’t go in, but seven months straight was my longest streak where I didn’t have a day off.

I started my business, sitting at my desk at 5:30 in the morning, uninterrupted before my boys got up and in 90 minutes a day, sometimes 6 days or 7 days a week, I was able to grow The Next-Level Income business into what it is now and that started several years ago. I will thank you for those techniques. Now, things are more complicated. We have two young boys. We have my wife’s off at a soccer practice with one of them now, but we schedule family time. Friday is family pizza movie night and our friends know, “Don’t ask the Larsens to hang out on Friday because they’re hanging out together.”

We know that one day the boys are going to be teenagers and they’re probably not going to want to do that but we’re always going to find time to do that. My wife and I have a weekly date. We love to do lunches together because it’s easier with the kids in school and do that and we share our goals. I think the most important thing is being aligned. If you’re reading and you want to start a side business, or you have something you’re working on, make sure your partner is aligned with you first and foremost, and then schedule those things that are most important to you and the rest will fill in itself.

We jump back to real estate. What do you feel are like the best real estate opportunities for the next decade after this turbulent year?

It’s been an interesting year and what I will tell you is I believe in real estate cycles and this goes back into the 1850s in the United States. You can trace this. Real estate goes on about an 18 to 19 year cycle. It goes up for that long, it goes down. There’s typically a mid-cycle slow down. If you listened to me a few years ago, I was telling people that you have to be careful of 2020 because we’re entering this midpoint of the cycle. I couldn’t tell you that it was going to be Coronavirus. I can tell you that I shorted a bunch of stocks, but liquidated my portfolio going into the end of the year because I was concerned about what was happening.

First off, we are going into the second phase of the cycle. This is the point where typically you see some strong appreciation and cool opportunities in real estate as we come out of this slowdown. You’re going to see the ability to pick up properties at a discount because you have restaurants that have defaulted. You have people that are defaulting on their mortgages and some of these properties are going to come back into the market. Obviously, there are some changes with the administration and depending on how the laws are passed, that may change these things. Nonetheless, there are going to be opportunities for the future.

If you want to know what sectors that I think are going to be strong, you can read to my interview with Glenn Mueller. He at the University of Denver. He talks about what markets are good, but I think the opportunities are going to be in short-term rentals. You see a lot of people that don’t want to stay in a hotel. They want to stay in a property where they’re by themselves. My wife and I started our first Airbnb for this reason and you’ll hear that I always put my money where my mouth is. We’re not going to tell you to do something that I don’t believe in. I think multifamily apartments are going to continue to be stable. The reason for that is you have Baby Boomers that are selling their homes and they want to rent. They need to unlock equity in their homes and a lot of them, they don’t have enough saved up for retirement.

Millennials are still renting. Do you know why they’re still renting? A lot of them still have student debt, so they can’t buy a house. They’re having to wait to form households later and 2020 pushed a lot of those younger individuals that had part of the gig economy, even further down at eroded savings, which means they might not be able to buy a house for another few years. That’s going to be good for apartments and the stability of apartments. I also think we need to start looking at senior housing. As the Baby Boomers age and as their parents age, there’s going to be a real need for senior housing in this next decade and the decade following that. In addition to multifamily, short-term rentals, and senior housing, you can also look into industrial as more and more people are getting things delivered and doing that. That’s like a high-level overview of some of the areas that I think are going to be popular in the future.

Is there anything that you’re not touching with a ten-foot pole?

It’s retail. If you look at strip malls and stuff like that, there’s a tremendous disruption in that space. Does that mean there’s no opportunity? No, but I would say, I think there are opportunities to take a mall and take it from retail into say senior housing. Think about it. You see all these old people walking around in the mall, why not put their apartment right there where they’re walking already and you’ve got it ready-made.

Also, some of those delivery centers that you mentioned before and distribution centers.

I think we’re going to see some adaptive reuse occurring and some creative ways that people take advantage of that. I think it’s going to be interesting for the next couple of years.

If you were to be a 21-year-old Chris Larson now, knowing what you know, and you had $3,000 or $5,000, how would you start? Would you do the same thing? Would you start with a single house?

I probably would have to. I would start with something like that. I would either do an Airbnb or I would do a house hack again. I think that’s a terrific way to get started. It’s low-risk. What I tell a lot of people, if you’re reading and you’re young, maybe you’re newly married or thinking about starting a family and you’re okay with swinging a hammer or maybe being an environment, I think a great way in the United States. If you do a fixer-upper, you move in. You take a house that’s $200,000, you invest $50,000. Now, say it’s worth $300,000, you’ve doubled your money. Taking a $200,000 house, put $50,000 in now it’s worth $300,000. You sell that house within five years of living in it and you lived in it two of those years, you get the profit tax-free.

Tell me anything else where you can double your money in two years with pretty low-risk in it, in something where you’re going to have to live. I would also look into that strategy as well. The other thing I would do, Craig, is I would jump into the commercial space faster. I’d learn more about multifamily and I would find a mentor who could help me in that space. I would think bigger. I had this linear way of thinking where I thought, “If I can get to ten rentals as quickly as possible and have $10,000 of income coming in after expenses, not debt service and then I can pay those off?” then “$10,000 a month in passive income. I’m good to go.” That’s how I thought initially I thought that way for several years.

What’s your experience with Airbnb so far? What do you like and don’t like about it?

I’ve been so pleasantly surprised with Airbnb that earlier, actually recorded an episode with an Airbnb expert to share with our audience. We love it. My wife loves getting a little reminder like the little requests as far as people coming in. I think you have to look at it like anything. I’m all about scalability. When I was training medical device reps, I’d say, “How do you scale your business? How do you systematize things?” I love the Eisenhower Matrix that you talk about. If you have something urgent and important, how can you get somebody that can be in place to deal with that? How can you systematize the things that don’t work? What excites me about Airbnb is you can arbitrage the difference between the long-term rental markets. A standard single-family house that you rent out, maybe for $1,500 a month, you could probably get $2000 or $3,000 for Airbnb. That’s exciting.

If that doesn’t excite you to say, “I can get twice the revenue that I would in a different situation,” then tell me what does because I would love to hear about it. What you need to focus on if you’re looking at Airbnb is how do you address the areas that are tedious like cleaning? You need to find somebody that you can trust to get in there and clean it and to turn it that does a good job with COVID-19 to make sure it’s clean. How do you make sure you have good service? You get good ratings. The best thing to do is find somebody that’s done it, that’s an expert in the area because why waste your time figuring all out yourself when you can lean on somebody that can teach you those lessons. Get up to speed and then maybe instead of doing one Airbnb, you can do 2 or 3 well.

Another thing that you covered in your coaching program is the make, keep and grow strategy. Walk us through where most people probably fall in that and what are 1 or 2 things that they should be thinking about that will move the needle in each one of those categories?

The make, keep, grow strategy is what I talk about in our book. It’s also how we structured the business. If you want to make more money, keep more money or grow your money, you’re going to have all the resources right at our website, NextLevelIncome.com. I think Craig, you do a tremendous job of helping your clients make more money. What I say in my book is our family rule is to save 50%. If you’re reading and thinking like “I can’t save 50% of what I make,” that’s why we start with make more money. If you’re spending say $60,000 a year for your lifestyle and you want to save $60,000 a year, but you’re only making say $80,000 or $90,000 before tax, let’s figure out a way to help you make another $50,000 or $60,000, number one.

Craig, you have a ton of great resources. There’s a lot of stuff out there but that’s the first thing I focus on with my clients. Number two is keep. A lot of people don’t think about this. Taxes are probably your number one expense. If you go from making $60,000 a year to $120,000 or triple or quadruple that amount, your tax rate maybe 15 or 20%. When it goes to 30 or 40%, you’re giving a lot back to the government. What you need to focus on is your business and or your investments structured properly for tax efficiency.

If you can keep more of that money working for you, then that’s going to be that much money that’s compounding into the future. That’s something that people overlook. If you’re doing taxes yourself and you have a business, I strongly encourage you to find an accountant that can give you a tax strategy. Craig, you and I have talked about this. There are a lot of good CPAs out there, but they don’t start with a tax strategy in mind. They take your receipts and they file them for you and they say, “We’re following the right laws.”