John has prospered during three recessions, four tax law changes and interest rates ranging from 6-16% in his 45 years as a real estate investor. His 2016 best selling book Building Wealth One House at a Time, 2nd edition, assisted more than 100,000 real estate enthusiasts on their way to successful investÂing. John recommends buying better well-located houses rather than cheaper houses and other management-intensive properties.
Better houses are more profitable and far less trouble. He advocates paying off debt, owning properties free and clear, and renting only to long-term, high-quality tenants. John buys, sells and manages his own properties, and enjoys providing quality housing at fair prices for working families in his community. He teaches one Building Wealth One House at a Time seminar each year where students learn how to identify the best investment property in their town, how to buy it at below-market prices, and how to negotiate terms that guarantee a profit.
John also invests his time helping those who cannot afford to buy a home through conventional sources through his work with Habitat for Humanity and the Fuller Center for Housing. John has served for more than 20 years on the board of Sarasota Habitat, 7 years on Habitat’s International Board and currently serves as the past chair of the board of the Fuller Center for Housing. John, a Florida native, is a proud graduate of the University of Florida, where he earned his B.A. from the College of Business Administration in 1970. He is an accomplished boat captain (power and sail), fisherman, skier (snow and water) and an instrument-rated pilot. John loves to travel, especially with his wife Valerie and their young adult children.
In this episode:
- John’s journey into writing
- The top factor to consider when buying a property
- The importance of long-term goals in business
- Key qualities of a good mentor
- Investing strategies and experiences
Episode:
Narrator  Welcome to The Norris Group real estate podcast, a show committed to bringing you insights from thought leaders shaping the real estate industry. In each episode, we’ll dive into conversations with industry experts and local insiders, all aimed at helping you thrive in an ever-changing real estate market. continuing the legacy that Bruce Norris created, sharing valuable knowledge, and empowering you on your real estate journey. Whether you’re a seasoned pro or a newcomer, this is your go-to source for insider tips, market trends and success strategies. Here’s your host, Craig Evans.
Craig Evans  Hey, thanks for tuning in again. Here’s part two with John Schaub. So let me ask you this. You started real estate back in the 70s. When did you have the first idea that you said, hey, you know what? I want to write a book about what I’m doing.
John Schaub  In the 80s. Early 80s.
Craig Evans  Okay.
John Schaub  Jack and I started teaching, Jack Miller, who’s passed on now, but Jack and I started teaching back in the mid 70s, and one of our students, who turned out to be a really famous and had a kind of a roller coaster ride, but his name is Bob Allen. He took our class two times in a row, and he wrote a book called Nothing Down and it was a great book. And a lot of those stories he heard in that class, you know, we did a good job teaching. He got all lit up because of it. He was a new real estate investor, but he wrote the book, and then some guys picked up the book and promoted it for him. They sold lots of those books because they go around big cities, and they would tell you, you know, they would promote the book in these classes. So they sell hundreds and hundreds of books every week. And then he started teaching classes. Bob did a couple conventions in the early 80s, and I spoke at a couple of them, and did a good job. You know, he was a good, good man, and promoted the idea of real estate investing in a good way. And he just, he got, he get, did so well, so fast, that he got involved in some some deals that were, you know, too big. You know, it’s not your best interest to make a whole bunch of money in a hurry, because then, you know, you just think you’re smart. It’s like going to Vegas and winning five hands in the road. You think you’ve got a system. Well, maybe not. Maybe the next day, it’s going to take you down so and again, that’s why I like my strategy better, because if I buy a house next week and it turns out to be a lemon, well, it doesn’t affect the rest of my houses, you know. But if I sell everything I have and I go out and buy one big deal and it turns out to be a lemon, I could lose everything. And I’ve seen people lose everything, you know, after they made a whole bunch of money, you know, just because the first job I had, the guys that I worked for, I had $400 million net worth, and about five years later, they went broke. And you wonder how that could happen, but it does happen, because the things can take you down if you get in the wrong deals. So little deals are better.
Craig Evans  That’s right.
John Schaub  It just gets my personality better, and it’s better for most people, I think it’s just a safer way to make money.
Craig Evans  Well, so, when you start? So you wrote the book in the 80s. You you started in the 70s. Were you already on the circuit, teaching and doing seminars before you wrote your first book? Or where did that fall into the category? You’d been around the block a time or two.
John Schaub  Yeah, we started teaching classes 1975 and the first book I wrote was called buying Right? And, you know, just been out of print for a long, long time that was an 85 the book, Building Wealth One House at a Time is a relatively new book. I think the first edition, was published in 2016 but by then, you know, I’ve been in business for 46 years, so I knew what I was doing. And we need to update my bio, because I think I’ve been through eight recessions now. You know, recessions are very instructive. They can be painful, and what I learned during the first recession was just because you think you know what you’re doing, you’re sometimes you can be wrong. You know, if you have to make sure that, if you are wrong, that you’re going to survive. And again, that’s the secret of keeping your deals small. In the house business, you know, you can always keep them full if you just drop your rent some. There’s never been a time where all the houses in my town went at the group. We never had a ghost town. Here you have a ghost town is a problem, but a pretty rare deal I can outsmart my apartment guys, because if they lower their rents, it really hurts their values. And the houses are unique, because if I take out, say, my average house here is a half a million bucks. If I take a half a million dollar house and drop the rent from $3,000 to $2,000 a month, it really don’t affect the value. The house is still worth a half million bucks when they go to sell it. But if you take an apartment building, you cut your rents by a third. Your value drops by a third. So you can outsmart your competitors. And the trick in this business, I think, is buy a product that you can rent to somebody who wants to stay there for a while, which means it’s on an nice street. It’s in a decent neighborhood. It’s. Good school zone, you know, just close to a lot of things, and it’ll attract a tenant who will live there for a while. My average tenant stays 10 years. I just had a lady moved and been there 24 years. I’ve got somebody else to do with me over 30 years. So people will stay a very long time if you give them a decent place to live at a fair rent, and that makes you a ton of money, because you compare that to any other kind of property where you have vacancy and high maintenance. If you drop your vacancy to zero, and you drop your maintenance costs at half, you can see you have a lot more cash flow. That’s exactly the game I play.
Craig Evans  So when you’re looking at a property, what do you think the number one, what’s the number the number one point that you’re looking at when you’re looking at a property, what do you think that is?
John Schaub  Location. It’s the lot. What will this land be more valuable in 20 years than it is today? You know, there’s a neighborhood improving or going downhill. I’m in a residential business. I’m not, you know, commercial business is way too complicated for me. You gotta be on the right side of the street. Gotta be on the right side of the stop sign. You gotta have the right you know, so many things have to be just right for it to work. Houses are different. You know, I when I taught for years, I’ve had people walk up and down streets and say, look, if you’re uncomfortable on that street for any reason, don’t buy there. You know, the dogs are chasing you over here smells bad. If the wind’s blowing the wrong way, if there’s anything wrong with that street. Don’t buy there. Go someplace where you like the street. And now the house is not as important. Now, the house makes some kind of you know, you want to buy a house that people will fit into. You don’t buy a one bedroom house. So most my houses are three twos, or some two twos. They all tend to have garages, because people have stuff, right? And the more stuff they have, they load that garage up with the stuff they’re less likely to move. So, you know, again, I’m looking for a long term tenant, and you have to think like, what would a long term tenant like? You know, what do they need to be happy here? And what they really need is a street where they feel safe, decent neighbors around them, close to the things they do, close to either work or school or whatever is important to them. You know, you just use common sense and you figure that out, and then you buy the lowest maintenance house you can. You don’t buy an expensive operate house. You don’t buy a big fancy house. That’s a mistake. You buy a basic, decent house in a good neighborhood.
Craig Evans  I’m glad to hear you say that, especially about big, fancy houses. Yeah, there’s a builder, we build a few. But even in that, that’s not our bread and butter, you know, because it’s just there’s more time demand and everything like that. But from owning them, you know, I used to own a lot of homes in my portfolio, and I believe the same aspect, you know, when, when you’ve got that, that more expensive home, there’s just more things that can go wrong. The cost of maintaining that house is higher. So I’m glad to hear other people saying that same language, to especially to to new listeners and new people in the industry. That’s good to hear, so. So as you were coming up, who was the favorite speaker that you would listen to?
John Schaub  That’s a good question. You know, there was nobody talking about houses when we started, we were the only we were the first house people. We took classes as a realtor. I had a license, so I took CCIM classes, and there were some good instructors in that group, as far as recorded, you know, it’d be Zig Ziglar, or, you know, it’d be, you know, Norman, Vincent Peale. It’d be somebody who, you know, a lot older than me. And it’s kind of a lesson in life. You know, my investors, and I invest with a lot of people, because I had no money to start with. I had to find somebody else who had money, but they’re all about 30 or 20 or 30 years older than I was. And I thought about that for a while, and I said, you know, that’s, that’s what everybody should look for. You know, if you’re looking for somebody your own age, especially if you’re 22 like I was, your buddies don’t have any money, somebody who has some money, and I can write a check and so so and Plus, when you do that, you link up with people who have more life experience. You know, they may calm you down a little bit and keep you on track. But, you know, I’ve only had I’ve invested with other people in a lot of different properties, but I’ve only had about five people I’ve invested with. So they were people that we do many, many deals with. And, you know, we became very friendly, and that all happy endings. You know, all happy endings. So if you do it, right, I like partnerships. I like investing with other folks. Some people don’t, but the key is to always make money doing it, you know, if you get involved in the deal that goes bad, then you’ve got to take care of your investors. So most people don’t want to do that.
Craig Evans  You know, that’s, I don’t know if you know, I own a private equity firm as well, that all we do is invest in real estate, you know, we build and then we invest in buy and hold and that type of product. And it’s one of the things I always tell our team. I said. The number one thing we do. I get asked so many times about people that want to invest, you know, what’s your number one goal in yield creation. And you know, all the things they want to talk about the returns. And I always tell people my number one goal is to protect the equity. Always protect the equity. Because I don’t care how many times I do the deal, we’ll never hit a home run every single time. There’ll be some time where we’re going to hit a ground rule double or we’re just going to get into it. And so in that process, my philosophy has always been, if I can protect that equity, the investors that invest with me always see the value that they know I’m safe always, you know, and so again, just good to hear that, that that philosophy coming so of speakers that are out there, now, who do you Who do you enjoy listening to? Who do you think is doing a good job at passing along solid education now.
John Schaub  Well, you know, a number of my students teach and underwrite students have written books, over 100 unwritten books, you know. I’ve taught 30,000 people over the years. So there’s a lot of folks out here have done done well. And to be honest with you, the only time I see another speakers with is when I’m speaking and they show up and they speak, you know, like they’re in the class or we’re speaking together. So a couple of my buddies, one is the Pete Fortunato, who I’ve been friends with since the early 70s. He sponsored one of my first classes. I sponsored his first class, but we’ve been teaching together since the 70s, and he’s really smart, nice, nice guys on the right track. Gary Johnson, who’s another guy from he’s from Idaho, and he teaches occasionally. Most of these people don’t teach very often, though they’re not on the circuit. I mean, I don’t know anybody that’s on the circuit going out teaching every week, you know? And if they are doing that, they’re probably not full time investors. It’s hard to hard to do both. It’s possible, but it’s challenging to do both. I wouldn’t tell you that. And the most I’ve ever taught. You know, I haven’t taught more than three classes a year since 1982 a big year for me is three classes this year I taught two. So, you know, I’m done one with…
Craig Evans  Right, right.
John Schaub  One with people, one in California. But we do have an event that a bunch of my students come and speak at, and it’s called the Masters Group we meet in Vegas once a year. And you can find out about that on my website, or Gary Johnston’s website. It’s Gary Johns-t-o-n, Johnston, but you know, we have about 300 people show up. A lot of them are past students, and that they come because there’s a lot of fun. It’s a good time. Plus there’s only four or five of us. Dave Tilney is another guy shows up and speaks. These are real people who’ve made their money in real estate. Are telling about real deals they’ve made. It’s not it’s not hype, it’s not you got to do this and you get a check for $300,000 and go buy a new Ferrari, not that deal, one house at a time, and then hang in there, and you’ll have a whole bunch of money one day, if you just persist, just if you persevere, you hang in there and do it well, you can’t do it perfectly. And I will tell you that I don’t go for home runs. I don’t even go for doubles. I’m happy with the single, you know, I’m happy just to get that, get that, get the house, get it financed, and put a good tenant in there. It doesn’t have to take me a lot of money the first year, because I know if it’s the right house, and I hold on to it for 10 or 15 years, that house will make me a lot of money, and that’s my game. I’m not trying to buy a house 50,000 below the market. I’ll do it if I can, but that’s not necessary. But I like to buy a house that at least breaks even, makes some money. And if I have to put a bunch of money in it, if I pay cash for a house, of course, I get a return, but the returns in the house business are not phenomenal. What makes it work is the long term aspect of a fixed interest rate and increasing rents and increasing prices over the long term, if you buy the right properties.
Craig Evans  Well, so when it comes to real estate, what do you enjoy more? Do enjoy finding and doing the deals? Or do you enjoy now where, where you’re at in life? Do you enjoy seeing people that you have taught and mentored become successful in that process? What’s the…
John Schaub  Both. I, you know, I love making deals. There’s nothing more fun than putting a good deal together. And we generally make the best deals during recessions and where people need help, and hopefully we’re people ask me if I’m not optimistic, yeah, I’m optimistic, and we’re going to have a recession, I think we’re going to have one. We’re due. You know, right before covid hit, we’re about into a recession, and then covid hit, and all the rules were off, and the government flooded this place with money, and that’s why we have all this inflation going on, but that money is about worn out now, and especially if they don’t drop interest rates, and I don’t think they will much, I will probably have more inflation, but it’s not going to be the inflation that helps people make money. It’s just going to be the inflation that takes money away from people who are not in, you know, hard assets like real estate.
Craig Evans  I want to ask you about one thing, and it’s something that you’ve been a party to. So, you know, the I own the Norris group now, and the Rohny is an award that’s given out at the I survived real estate event that Bruce has been hosting for years. And, you know, a Rohny Award, it’s a lifetime achievement and mentorship award that honors individuals like yourself that have elevated the real estate investing profession. And you know, with the leadership and the willingness to share their knowledge, you know you received that award going back and looking through back in 2017 so as I’m working through, because we’re planning for our event this year, for I Survived Real Estate for this year, we launch that stuff next week. So as I’ve been planning through that, I’ve been thinking through and looking back at the people that had been, you know, awarded that, you know, you’ve got yourself, you’ve got Dykes Boddiford, you’ve got Jack Miller, you’ve got you’ve mentioned Pete Fortunato, and I’m thinking back and looking at Bruce Norris and all the different people that are mentors to other people. I guess the question I’m getting to on that is, what do you believe makes a good mentor?
John Schaub  No honesty, I think, you know, telling the truth, not just exaggerating, to get somebody to buy something. You know, I’ve never sold anything to my students. You know, I’m on the hustling business. We write books, rewarded classes, but we don’t sell them. They have to buy them from us at the prime, but, you know, tell them, tell them. Tell them it the way it is. You know, I’d look if I was going to look for somebody to take advice from, I look for somebody who’s been doing it for a while. Just got in the business last couple years. They haven’t seen much excitement yet. There’s going to be more excitement. They’ll be smarter 20 years from now than they are now. And so I’m looking for somebody who’s doing what I’m doing, you know, who’s a long term investor. I am not a flipper. Never have been not good at it. So there’s no reason for me to be in that business. And I’m not a builder. I’m too lazy to be a builder. I applaud you all that are building houses. That takes a lot of work, makes a lot of move, a lot of moving parts, a lot of coordination, get people to come to work and then do it right the first time and or the second time or the third time, you know. So I’ve been involved a little bit. But, you know, I try to keep, you know, my strategy is to keep things as simple as I can, you know. You know, life is pretty exciting and pretty complicated, without making it more complicated with a complicated business or business that has a lot of moving parts or a lot of employees. So I’ve always tried to operate with as few employees as possible. And right now, I’m down to none. All my employees have retired except me. But, you know, I can manage the properties we have without employees, and I do, I manage my own properties, and the event of a cell phone with an email on your cell phone has made it even easier. I don’t have people call me. I have them email me if they have a problem, if they want to rent a house, I have an email so we can communicate that way, and the communication is better that way, really, because you first of all have a written record of what people are telling you. The second of all, they’re a little more thoughtful about what they write down. People are just talking. And the problem with communication is communication. People don’t listen to what you say a lot of times, but if you write it down, they have a chance to read it so they understand it better. You know, they may not misunderstand it. So the advancements we’ve had in technology over the last 30 or 40 years that really helped my business, I think, just made it easier to manage properties. So but, you know, as few moving parts as possible, as few properties as possible, if I can make it work with one property, that probably would. But you know, the problem with one property can go bad. You know, the tenant can move out. It can be cheaper. You know, it could be somebody you didn’t think was ever going out of business, but they leave now you’ve got an empty building. So I don’t want to have just one property. I want several properties. And there’s a lot of advantages of that. Of course, when you start rearranging your portfolio into exchanging and refinancing and doing different things, you can do with multiple properties that you couldn’t do with just one. You know, if I needed some money in a hurry. I could just sell one house in a hurry, you know. And I could take a $500,000 house, even if I sold it for 300,000 bucks, you know, I could do that in a day. I just make a phone call and get that kind of money. Well, if I had a $30 million apartment building, it’d be difficult, you know, it’d be harder to sell a piece of it and get that piece in a hurry. So the liquidity part is still important to me. The ease of management is important. And just, you know, knowing where everything is and being in charge and being in control, I’m sort of a control freak, like most investors are. I feel like I’m in control of the situation as much as possible. You know, I’m certainly a realist. I know I don’t control everything. I. But I control as much as I can.
Craig Evans  You’ve written several books, if you had to write a brand new book, brand new title, what do you think the book would be about?
John Schaub  That’s a good question. It’s raining here. Now I don’t get to go out in a boat. That’s a dog on it. It’d probably be, you know, if I did write another book, it probably be about something that I don’t know anything about, so I could research it. That’d be more interesting to me at this point than trying to write another real estate book. I’ve written several, I’ve written four or five real estate books, and I think I’ve written down just about everything I need to write down about real estate, plus, I recorded 12 courses, you know, and those were full day classes. So there’s another 96 hours, if you want to listen to that, that’s a lot of material. So there’s not much more I can add, you know, to what I’ve already written. But so to answer your question, it’d be on something that interests me but has nothing to do with real estate, probably like, Why is Antarctica there?
Craig Evans  Well, I thought maybe you’re gonna say something about planes or boats.
John Schaub  Look at that. All figured out too.
Craig Evans  Okay, all right. Well, that is an absolute first for The Norris Group. We have just found out that John Schaub has had a big lightning strike at his location. Don’t worry, he’s okay. He wasn’t hit, but it has taken out all of his power, internet, everything. So So we were trying to see if we could get him back up to kind of patch in and finish the job out. But unfortunately, John is not gonna be to finish. We only had about two questions left to go through things with him, but we were super honored to have John with us today. So I want to make sure that if you guys are interested in the books that he’s got and the content that he’s got, please go to his website. JohnSchaub, S, C, H, A, U, b.com, so JohnSchaub.com, please go check him out. He is a great, great mentor in this industry. We will look forward to seeing you next time. Thank you again for being here today, and we look forward to seeing you next time. Have a great day.
Narrator  For more information on hard money loans, trust deed investing, and upcoming events with The Norris group. Check out thenorrisgroup.com. For more information on passive investing through the DBL Capital Real Estate Investment Fund, please visit dblapital.com.
Joey Romero  The Norris group originates and services loans in California and Florida under California DRE license 01219911. Florida mortgage lender license 1577 and NMLS license 1623669. For more information on hard money lending go to thenorrisgroup.com and click the hard money tab.