biden tax changes impact on real estate investors

From Marine to 9-5 employee to entrepreneur and now a semi-retired real estate investor, Kevin Christensen has done it all.

Brian interviews Kevin about his experiences as an entrepreneur and later a real estate investor, and finally how he retired young on rental income.

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live off rents podcast transcript

Brian: Hey, guys. Happy Tuesday, it’s Brian Davis here from Spark Rental, and I am joined today by Kevin Christensen. Kevin, thank you so much for joining us.


Kevin Christensen: You’re welcome. Thanks for having me.


Brian: Absolutely. So, Kevin was referred to us by Tim Dooley. He’s been a long-time audience member with Spark Rental and has worked with Deni and myself, helping us test the software and stuff. So, Tim is definitely a friend of the show and a friend of Deni as an artist. And he is friends with Kevin as well. So, you refer to him over. And Kevin, I’m so excited to talk to you today about your real estate investments, your transition to retirement at a young age. So, you started your career in the Marine Corps and then you transitioned to civilian life and got into real estate investing. So, talk to us through kind of how you got into your real estate investing in the first place.


Kevin Christensen: So, I started in the Marine Corps and then I went into programming and climbed around in the banking world for the last 15 years or so, 16 years and. About seven years ago, we got into e-cigarettes, so the vapor industry. My wife was a smoker. I’ve never smoked in my life, and I really wanted her to try it. Somebody, we know, tried it and it worked. So, I ordered it for her without even telling her she loved smoking and I hated it. In six days, she quit smoking and July twenty-fifth was her seven-year anniversary of not having a cigarette. It immediately made me think there’s something to this. And my brother and I had been talking about investing together for a while.


Brian: And also, a marine before that, right?


Kevin Christensen:  He was a marine before that, correct. We were kind of thinking long term, what’s something that we could build up? Real estate hadn’t even entered the picture yet. We had kind of talked a little bit about maybe buying some commercial space or something, but we didn’t know anything, so we really didn’t pursue that. Although our holding company is called smash and Crash Properties, because the original intent was to buy property. And it’s just kind of fate that it came back around four or five years later to doing real estate. But anyway, we were in a scenario where. We needed to find a way to get a vape shop opened and do it quickly, so the closest one to me was about an hour drive. And if I was going to, this was literally about my wife. It was never about money. In the beginning, it was about keeping my wife from smoking. So, I said, well, how do we open one closer, and we can help other people in the process? We, my brother, put up a pretty substantial sum of money. We basically form, like I said, July. Twenty-fifth was when she quit smoking. I signed our first lease on September 1st.


Brian: In a retail shop?


Kevin Christensen:  Correct. So, a month and a week later, we had developed a brand, developed the mission statement. Develop products. We were manufacturing our own e-liquids, hired staff. And then we had the shop built out and we formally opened on December 1st. We unofficially opened the weekend before Thanksgiving, and we had a hell of a ride. I mean, we went from one location to five in three years. We were the largest chain in the state. Unfortunately, it is that industry is being just thrashed by the government. There’s a lot of false information there. They’re making regulations that are heavily restricting that business because it has tremendously impacted big tobacco’s financials. For anybody that doesn’t know, Big Tobacco is a massive income stream for the United States government, so they use their lobbyists in ways that little guys like me can’t afford to do, and they regulate us out of business with legal loopholes and garbage. I suspect September 9th the results of the deeming regulation came down just this, you know, a couple of weeks ago. I suspect you’re going to see many; many vape shops closing over the next six months to a year. Only the ones that are well-capitalized and very efficient. And I’ll be the first to admit, you know, I had never run a retail business before. I’m not. I don’t believe for a second. I did it perfectly. I’m sure there’s things we could have done better, but we were doing very well at our height. I was making more money than I’ve ever made in my life by a lot.


Brian: How did you transition from retail to real estate investing?


Kevin Christensen: So, in twenty-sixteen, they came out with this thing called the gaming rig, which is just what came down on September 9th. And it basically was them saying that every manufacturer, which is what we were, we had thirty-six hundred SKUs of our own liquid that we created. You had to submit all that for testing and be approved by the FDA. Anybody that is in any industry that’s in the FDA approval process knows that the whole process is a scam. It’s a way for the government to take your data in and say yes or no. Are you hurting our business, which is big tobacco? So, of the thousands and thousands of submissions from vape shops across the country? To my knowledge, they approved four and all four of them are owned by big tobacco companies. So, it was clear in a way that there’s a system set up for failure for the little guys. It is what it is. But when they announced that in August of 2016, we kind of had a feeling that the deck was stacked, it was not going to go our way. You can’t beat the government. I don’t care what industry you’re in. If the government wants you done, you’re done.


Brian: Well, that’s true.


Kevin Christensen: And yeah, it was. It was really hard to swallow. We are the Delaware ATF and the DEA. We’re the staple that tells every other shop how they should act in 7 years, five locations. We’ve never sold to a minor. We’ve never done a straw purchase that we actively knew about. We’ve never let somebody buy without ID. So, we’ve done it the right way and the ethical way from day one.


Brian: So, talk us through how you got into residential real estate investing from opening retail shops.


Kevin Christensen: So, what happened is when that red came out in 2016, I called my brother up and I said, I think instead of continuing to expand because at the time, that’s what we were doing. We were just opening shop after shop. We did it all ourselves. We built them out, physically, built out the bars, everything ourselves. So that was my introduction to construction. I learned how to build these bars. I said to him, I think we had about 40 grand in the bank at the time and played with the money, I guess. And I said, I think we should take this money and we should go after some type of real estate. I feel like the nail is in the coffin at this point for the vapor industry. And I was really worried that if we spend all this time and energy on vaping, we’re going to lose everything. So, let’s diversify a little bit and I started doing some research in August or September. I had to be late August because the gaming rig came out in August and then September. I started kind of just looking around and actually, I’m sorry, it was 2018 not 2016, so. We. Or not, really, we are just me, I got really interested in wholesaling. I saw that there was some opportunity there to make some money without spending a bunch of money. I felt like we had enough to do a property with 40 grand, but we didn’t have enough to really scale or do something busy. And I’ve been an incredible salesman my whole life. I was number one at Bank of America for a long time when it was still MBNA in the department that I was in, and I felt like there was an opportunity to meet these sellers, get them under contract for a good price and then do my thing. So, I spent about three or four months just consuming everything I could consume. YouTube videos, podcasts, a lot of Macs. Maxwell just wholesaling 101


Brian: You were telling me about your first wholesale real estate deal where you approached an 8-year-old couple that was interested in selling their home.


Kevin Christensen: Correct. So I walked up, and I explained to them that I was interested, and I told them, look, I’m an investor, I appreciate it. Your home is beautiful, your home. It was actually 2 houses. What can I? What’s the bottom line? What’s the best number you can give me if I was to pay cash? And the guy said, I got to make my money, too, but I really like you. You didn’t come in here and pick the house apart like every other guy who’s come here, he said. But I couldn’t go a dime under 190 and my jaw was on the floor. I kept my composure. I said, I’m going to have to think about it. And in my head, I’m jumping around doing back flips because I know this house needs almost nothing. He was already asking 60 grand under what it was worth. And now he knocked another one hundred off just because I was nice to him. I went home, and I was all excited. I’m amped up telling my wife like one of my little, short-term goals with the wholesaling was to pay my student loans off. And I only had about thirty thousand in student loans. So, I’m telling my wife like, I’m going to sell this thing to somebody for 250, make a sixty thousand wholesale fee and be in and out of this deal in no time flat.


Kevin Christensen: And while I’m getting all amped up and excited and thinking about paying my student loans off, my wife is like, why don’t we keep it? Like, who gets the other hundred k? And I said, well, whoever buys it gets that equity. That’s their, you know, that’s their benefit for being the buyer. And she said, well, why would you sell it then why wouldn’t we just keep it? And this is after, by the way, she spent months telling me she did not want to be a landlord, so it kind of threw a wrench in it. And that deal ended up. It was my first offer, but it ended up being probably my fifth or sixth closing because once I put it under contract, it took almost 11 months to close because of the layout of the property. There are two parcels on one deed and the 12-car garage stretches across the two parcel lines. So basically, the first two banks wasted three or four months each of my time and then at the end said, we need you to tear the garage down in order to make this deal happen. And I mean, we’re talking about an eighty thousand garage.


Kevin Christensen: I was like, Yeah, there’s absolutely no chance of me tearing this garage down. So fast forward, I found a bank to do it. They did it as a commercial loan. They put all the debt against one side of the property and basically ignored the other side. I did have to sign paperwork saying that if I sold anything, it would be sold together so I cannot separate them and sell one, which is fine. It’s a local credit union and I have no intention of ever selling them anyway. And you know, I rent the rear one out. Actually, I rented them both out. I think the debt service on the property was like eight hundred and forty bucks and the rear rent was fifteen hundred and fifty a month and the front rent was fourteen hundred a month. So, I was pulling twenty-nine hundred off that one unit. And they don’t use the garage. I use the garage for all my storage. I mean, I got a free four thousand square foot storage unit on top of all of that. So the front unit is now the tenant moved out and that property has become a short-term rental and probably generates thirty-five hundred to forty-five hundred a month. So yeah, it’s been very well


Brian: Now since then. Have you continued buying properties to hold long term or have you been doing more wholesaling? How has your strategy kind of evolved over time?


Kevin Christensen: Yeah. So, a little bit of everything. I’ve done two or three wholesale deals. I have 14 long term rentals total and I have now. I just finished my fifth and sixth short term rentals. So, yeah, I’m up to almost like about 20 properties. I’ve done about twenty-six or twenty-seven deals, but the last couple have been with partners and I’m starting to realize that I can get a lot more done if I don’t try to be the solopreneur. And do everything myself.


Brian: Absolutely, yeah, there’s always something to leverage other people’s time, not just other people’s money. As a real estate investor. So, you actually retired earlier this year. So, tell us, walk us through kind of that transition to retirement and you know how you were able to scale up your portfolio to get to that point?


Kevin Christensen: Yeah. So, in October, well, I guess we’re in October. This will be. Three years, I believe this month I’ve been doing this. My goal, seven years ago when I started with my vape shops, was to retire by 45. I’m 39 right now. I had the vape industry not taking a downward spiral. I would have retired probably two or three years ago in a very, very comfortable lifestyle. The vape industry, like the initial trajectory of that business, was so skyward. It was very exciting. I mean, I was very my brother and I both probably would have retired from our parents. It was a very, very lucrative business when it started. That all fell apart. We pivoted the real estate at the right point. I would think that. I probably could have dragged my job out for another year, once I started, like escalating in real estate, I started scaling. I changed my goal from 45 to 40. I wanted to retire by the end of my 40th year, which was. So, I’ll be 40 in May. And then a year from that, so by May of 23 my goal was to retire by then.


Kevin Christensen: However, life throws curve balls sometimes that you have to prepare for. I live my life with a pretty high level of integrity and honor, and I mean, it’s a marine core principle. But my mother was a marine, both my brothers are marines. It’s the way we were raised, and I treat people with kindness even when they don’t deserve it. I try to treat people better than they deserve to be treated. I was on the phone with my boss about something, and he was very disrespectful, and he hung up on me. And it was just one of those things where my passive income was already exceeding my day job and I had a pretty good day job, a six-figure corporate job. And I just couldn’t swallow him hanging up on me. And it may or may not have been a good decision. Only time will tell. It’s definitely impacted my ability to scale for the last six or seven months because now I’m pulling a significant amount of income from my business in order to pay my bills


Brian: Rather than reinvesting it?


Kevin Christensen: Right? I worked for that company for almost the entire time or just more than the entire time I’ve owned my vape shops. I started there on February 14. I started vape shops on August of 14. So, I was there just a little over seven years and I had never woken up and been you know like most people. They get up and they dread going to work. I loved my job. I loved what I did. I work from home full time. There were people at the office I didn’t really care for, but I didn’t have to interact with most of them. I was in a silo most of the time, doing my own thing. So, the morning after he hung up, he hung up on me on a Thursday and the next morning, when I went to get out of bed, I was just like, I don’t want to do this. Like, why am I putting up with this? This is nuts. And I sat down and talked with my wife and, you know, if it was up to me like I wanted to do, like the World Star Exit, I was going to call them up and cuss them out and tell them every which way, what I think of him as a human being. he had taken some real unprofessional shots ever since he found out I had a side business. He had taken some real unprofessional shots at me and meetings and during my reviews, and I had swallowed it all because at the end of the day, I still had that income coming in. I didn’t care.


Brian:  That’s the beauty of passive income, right? That means you’re not reliant on your nine to five job to pay your bills.


Kevin Christensen: No. And him being rude and offensive, you know, that doesn’t define me, that defines him. So, I swallowed it for probably two and a half to three years. And my mother, who is still one of my biggest supporters and my wife talked me off the ledge and they said, Listen, put your two weeks’ notice in. Do it the right way. You know you’re a better person than that. don’t go in there and make a scene and. And that’s what I did. I put in my two weeks’ notice and he was absolutely stunned. I was the only guy in the company who did what I did. So, they were in the middle of launching a new operating system for the whole company, and I was an integral part of that. So, it was very, you know, it’s going to be stressful for them, for me to walk. And because I had so much access and it was, you know, a, you know, an animosity leave. They fired me the next day. They I mean, essentially, they kicked me out of the company the next day, which is what a lot of big companies do. When I left Bank of America, they did the same thing. They basically locked me out of the system immediately and then gave me two weeks of pay plus all my vacation. So, I ended up getting paid for more than another month, which wouldn’t have happened if I had stormed out and flipped the desk over like I wanted to.


Brian: So that’s your mom and your wife knowing a thing or two?


Kevin Christensen: Yeah, they saved a little bit of money in my pocket and. You know it. I really haven’t even thought about it other than when someone brings it up. I truly wake up every morning when I feel like getting up and I either go to work at one of my properties. If I’m in the mood to or if I’m not, I stay home and spend time with my wife or my kids. Or, you know, I just spent a month in Florida renovating a short-term rental property that I bought with a partner.


Brian: Nice. Nice. Well, so you know, before we wrap things up, I just want to give you a chance to share any main major investing lessons that you’ve learned over your time as a real estate investor. What are the things that you have learned that you wish you knew a couple of years ago? That you wish you knew when you were, you were just getting started. What would have made a big difference for you if you’d known what you know now?


Kevin Christensen: Yeah, we don’t have enough time in a session for that. But I would say that taking action is and I say this in the forums, all the time on bigger pockets. You’ve got to take the leap. Like there’s so many times where I’m scared, I’m worried, I’m nervous, I’m using so, you know, the house I just did in Florida, four hundred and thirty-five thousand dollars cash. A hundred percent of it my partner put up. I did not put up a dime and I picked the house. I, I renovated it, I furnished it and I put it on Airbnb all telling this guy what I think is going to happen with this property. And it’s terrifying. It really is. I mean, you’re betting a large chunk of someone else’s money. And even if it’s your own money, either way, it doesn’t matter. The point is it’s very intimidating. And if you just see it through and you know, the marine thing is adapt and overcome, that’s really how I live my life in real estate. You’re going to have problems. You’re going to have bad days. I just had two of my employees call me in the last two days and told me that they’re moving on to different jobs and I’m in the middle of a couple of major projects. So, I’ve got to hire a couple more guys.


Kevin Christensen: And it really is just taking action and being patient with you. You will see the light on the other side of this if you stay patient and be kind to everybody. I love his face. Tony Robinson has that kind thing in the background and that is the thing that guides me in just about everything, no matter how bad. No matter how mad I get or how angry I get, I try to stay positive. I try to stay patient, and I treat everyone with kindness and karma comes full circle and lands me in the right place on my feet every time. And Partner, that’s the other big piece of advice, don’t be a solopreneur, like I do everything with my brother, but he’s been in Iraq the entire time as a contractor, so it’s shared money. But one hundred percent, my effort and I’ve gained a lot more in the last 12 months by partnering with people than I did in the last two years, doing it all by myself. Yeah, there’s just not enough hours in the day for you to do everything, and I don’t care how smart you are. I’m a pretty smart guy. I’m good at everything I do. You’re always going to have people around you who are better than you,


Brian: And you only have so many hours in the day. I mean, you know, you can only do so many things yourself. So, you know, Deni and I say all the time, real estate investing is a team sport. You know, you imagine going out and trying to play football against a whole team. If you’re by yourself, you know, I mean, it’s the same concept. You need a team of people around you who you can trust, and you know, to your point about being open and honest in all of your dealings with people. That’s how you end up having good partnerships, right? It goes both ways.


Kevin Christensen: And it plays. I just had an estimate for a construction gig yesterday where the people asked me to fluff the invoice because it was in an opportunity zone, and they wanted to get more kickback from the opportunity. And I said, absolutely not. That’s not who I am as a person. I said, if that’s what separates me from getting this job, then it’s going to have to be somebody else because I don’t lie to my wife and kids. I don’t lie to my friends. I’m certainly not lying for a stranger. I’ll do the job for you, I gave you a good price, but I’m not going to pay an invoice to help somebody make more money, whether it’s right or wrong, you know, I’m sure there are plenty of guys that would do it. It’s just not me. That’s not who I am and I’m not a real religious guy, but I’m a firm, firm, karma guy. And I believe that what goes around comes around


Brian: Me as well! So to speak to that point of yours, I think when you approach all of your business dealings with that level of integrity, it ends up weeding out the potential partners. That would be bad partners, right? The people who don’t have that same sense of integrity. So, you left working with people who kind of reflect back your own values and it just makes your partnerships that much stronger. I’m a firm believer in that.


Kevin Christensen: I hope that’s the truth. And I, you know, I’ve only got two partners at this point. My brother and a guy named Micah and Micah and I are very aligned, and I think that’s why we get along so well. And my brother and I, obviously, we came from the same household, so we have pretty good, similar values. And I’m a principal over everything guy. you could offer me $10 million if there’s a string attached to it that I don’t believe is ethical, I’ll walk away without even thinking about it and not feel one second of guilt or regret.


Brian: Well, Kevin, before we wrap up, is there anything else that you want to share with audience members, maybe people who are just getting their first deal, second deal, third deal, you know, anything that you want to share to call this episode complete?


Kevin Christensen: Yeah. Don’t be afraid to spend a little bit of money. I mean, I think the biggest thing that caused that hamstring to me in the beginning was I wanted to do everything myself and I wanted to save every dime. And there’s a time and a place for that. My first couple deals, I did everything myself. It worked out great. I came in under budget, but you can get a lot more done if you’re willing to let a professional do something. The amount of time it takes me to do something that an expert can do in a quarter of the time you end up making up for it in the time frame. Anyway, I, by the way, bought my very first. Probably six or eight leases were all from a Spark Rental package that I bought before I knew all you guys.


Brian: Oh well, I’m certainly glad to hear that. I’m gratified to hear it.


Kevin Christensen: Yeah, it’s just a funny coincidence, but it’s. Don’t be afraid to pay for stuff. Don’t be scared. Get three estimates. Take the average take. You know, take the one in the middle. Take the one that gives you the best gut feeling and know for a certainty and a fact that you are going to get ripped off at some point in this business. It’s the nature of the business. Contractors, lawyers. Somebody is going to take you for some money, whether you’re happy about it or not, you just got to look at it like gambling, right? It’s an investment. Once that money is on the table, you have to mentally let go of it. It’s gone. And if you get it back, great. If you don’t, you move on with your life. But you cannot get emotional and get overly emotionally invested in numbers and money. And I’ve seen some, some horrible breaks that people have had in this business already. And I’ve had I lost 10 grand on a house that ended up not coming through. And the lady laughed in my face that took the ten grand from me because we didn’t have anything in writing, and she knew I would have no leg in court to get it back.


Brian: Yeah, I mean, I’ve lost quite a bit of money in real estate too over the years. But you know, if you look at it as the cost of tuition, write like it’s the cost of education. And you know, if you keep going, you are going to earn a lot more money than you lose over the years. And it does. It does take a certain amount of investment of both time and money to get to the point where you can consistently earn high returns on real estate.


Kevin Christensen: Yeah.


Brian: Yeah, exactly. It’s not rocket science. Anyone can figure it out. Anyone can be successful in real estate investing, but it does take some time. It does take a little bit of money invested to get there to learn the skills and knowledge that you need to know and in forming those partnerships with the people that you need. You know, whether it be realtors, property managers, investing partners, contractors, you know, appraisers and home inspectors, you know, you just like we talked about earlier, it’s a team sport and you’re going to have a few missteps


Kevin Christensen:  if you come across team members and I’ll say I’ll use team members because it’s broad, whether it’s an attorney, a title company, a contractor, if you come across people that are ethically aligned with you and deliver their product good, even if their price might be a little bit higher than somebody else. You have to treat those people like gold and hold on to them because there are so many more slimy ones than good ones. I find that it’s really, really important to hang on to the people that treat you well and do the job and deliver the product that you pay for without any drama. There’s a little bit of there’s a little bit of. I don’t know, I guess, the advantages to having stress free transactions versus ones, I mean, I’ve had some that are just a nightmare. The paperwork is a nightmare for everything. And then I have guys that just handle everything, and I show up at the closing table and everything’s perfect. And I love that and I’m willing to pay a little bit more for that because I can focus on everything else I’m doing and move forward.


Brian: I couldn’t agree more. Work with good people you can trust, and you can sleep at night. It’s that simple. Well, Kevin, thank you again for your time today, we really appreciate you coming on. If people want to connect with you, where can they connect with you?


Kevin Christensen: I’m on Facebook. Kevin T. Christenson. My email is [email protected] Just like my last name. I’m a pretty open book. I’ve had people telling me I need to write a course forever now, and I’m just too lazy to do that. But I help tons of people for free all the time. I’ll answer any questions. If you message me on Facebook, I’m usually pretty good about answering those and. You know, I just try to see as many people make it forward and be successful as I can with no gain for me, I just my gain is helping other people get to the point where I live a pretty comfortable life and I hope everybody can get to that.


Brian: Well, we certainly hope so, too. And that’s, you know, that’s why we do interviews like this so that people like you can share your story and hope other people get their first couple of deals going because it’s those first few that are the hardest. So. Kevin, thank you again for joining us today. We really appreciate it, and we will certainly be in touch with you.


Kevin Christensen: My pleasure. Thank you for having me.

Brian: All right. Bye now.

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