Erick Peterson: Growing A Team & Passive Income To Fund Rental Properties
LISTEN TO FULL EPISODE ON:
Erick Peterson started in real estate as a solo agent in 2006. He launched a team with Keller Williams and currently serves as Tean Owner and Realtor for that team - Peterson and Co. Together they have closed over 100 units the past 2 years. In addition, Erick owns a pair of duplexes in Wright County, MN as an investor. He also spends his time giving back to others in the industry as a coach and trainer. Erick is an avid hunter, fisherman, and outdoorsman. Erick lives near the family farm where he grew up in Rural Wright County. He has a wife and is a father to three beautiful children.
In this episode, hosted by Mike Swenson, we discussed :
- How Erick got started in real estate and began running his team
- He loves being able to control your own destiny and work towards being financially free
- Having a balance in work and family while raising 3 daughters
- Personal growth is key for business growth
- His process for setting business goals
- His passive income goal of $10,000 – $15,000 a month
- Focusing on the income paths that best align with your skills
- Focusing on your top 20% and leverage the rest to grow your business. Be willing to let go of the rest to others on your team
- Without other people, our success doesn't mean a lot
- His income streams as an agent, team owner, investor, profit share from his brokerage, coaching, and other businesses
- Benefits of investing: cash flow, depreciation, appreciation, and principal reduction
- Getting started as an investor: define your criteria & area and researching rents
- Define your investor buy box to be able to say yes to the right opportunity
- Discipline yourself in the short term to have financial freedom in the long term
- Your environment will define your success as a business owner
- Surrounding yourself with the right people
- Big thinkers ask big questions
Timestamps: If You Want To Jump Ahead To Your Favorite Part
0:00 - Intro and Overview on Erick and his background
5:35 – Where is the potential end milestone for Erick
8:58 – What are the different things that Erick is working on
11:38 – Why and how to focus on top-line 20% and how to leverage the rest
19:47 – Benefits of Rental Properties
23:04 – How to get into investment properties
30:21 – Freedom takes sacrifice
34:00 - How having a team has added to Erick's income
35:11 – How your our environment defines your success
41:11 – What's next for Erick and what he wants to accomplish
Links Based On This Episode:
Erick Real Estate Team: https://www.soldinmn.com/
A favorite book of Erick's - The Millionaire Next Door
A favorite podcast of Erick's - BiggerPockets
Great tool for Landlords: Cozy: https://cozy.co/
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Full transcript here:
Mike Swenson
All right, well, today we're here with REL freedom. And we've got a wonderful guest here to help us out. We've got Erick Peterson. And Erick's gonna share a little bit about his journey. And you know, the whole point of these interviews is to be able to give a real life example of a real life person working their way towards financial freedom and what that looks like. So for those of you watching, just to be able to have a path to see, here's what one person is doing.
Mike Swenson
If you ever want to reach out to Erick with questions, or reach out to me, I can put you guys in touch, but we want people to see here's real people doing it. And here's how they're doing it. So hopefully, that can inspire you, and help you on your journey. So, Erick, if you want to just give a little bit of a background about you and what you're up to.
Erick Peterson
Yeah. So thanks for the intro, Mike. My name is Erick Peterson. I am the CO not the CO owner and the owner of the Peterson and co real estate Team at Keller Williams here in sego and Buffalo, Minnesota, and been an agent since 2006. I like to tell people I got into real estate right as the pianos being pushed off the top of the building. And it's really been, it's been a fun opportunity for me to really grind and understand and, you know, really get to know our industry from a time that was very, very troubled, and we get to learn a lot about it.
Erick Peterson
So you know, more than that I am the father of three amazing daughters. I also have a wife, Jackie, at home and a couple of pets as well. So I'm an avid outdoorsman loves to hunt and fish. And you know more than anything, just really love the opportunity that we have in front of us, as you know, real estate professionals and controlling our own destiny to help get to a point where I can be financially free. And that's really what it's all about. Right.
Mike Swenson
And to you know, like, I like what you said, you know that part of it is, is getting to the end point, but part of it too, is doing it with your life intact, right? Because we know there's so many people out there, you know, real estate, there's a lot of opportunity. And people may get to their destination, what happens is they have a trail of collateral damage along the way where it's ruined relationships ruined whatever it might be. And so what we want to focus is on doing that in a healthy way. And so, still being able to be Erick the businessmen and also being able to be Erick, the dad and Erick the husband, most importantly first, and your life sustainable through this journey.
Erick Peterson
And Mike, you've seen that as many times as I have where somebody focuses, you know, solely on their business, and, and leaves, as you said, the collateral damage of their family in the background. Whereas, you know, you're who you are as a person and who you are, as a business owner will run together hand in hand, right who you are, as a business owner will never outrun who you are as a person. So it's important to keep all of that intact and, and maintain your health and your relationships and, you know, maintain your mindset around being as good of a person as you can be, and your business will flourish and follow, you know, in in the wake of that.
Mike Swenson
Yeah, and we know that this is a long term journey, you're not going to be financially free, within a year or two, for some people that can happen, you know, you might, you might be able to hit the right amount of luck. And yet it is a long journey. So you need to be able to do it in a sustainable way.
Erick Peterson
So well. And I think that's important as we, as we talk about, you know, some of the things that we're going to talk about today, it's really important to know that, that that vision of what financial freedom looks like, is going to be different to anybody. It's not like a switch that you walk into a room and flip on and then it's financial freedom, right, it's a it's a journey that ebbs and flows and has hardships and has, you know, triumphs and has wins and losses and, and everything along the way. And in all the emotions that go with it.
Erick Peterson
But at the end of the day, what we're really talking about is maintaining a vision of of something bigger than yourself, that can help you and your family and all those people that you care about, you know, in a way that maybe just having a nine to five job couldn't right, or may not afford you. So I'm excited to talk about all the ways and that that I've been able to, you know, in small increments begin my journey towards financial freedom, obviously, right, we're not there yet. And I don't think anybody you know, well, not a lot of people that I know are there and I think if you probably ask people there's they don't really even know what their looks like.
Erick Peterson
But what we can start to do together through this conversation. And, you know, through conversations with you know other people or other people within our environment. is really starting to, you know, wrap our arms around the possibilities and wrap our arms around what opportunities exist? And maybe What didn't I think about before that I should be thinking about now to help make the accrual of financial freedom? A little bit easier on ourselves.
Mike Swenson
Yep. Great. So, so digging in a little bit, then, you know, if we want to start with the end in mind, like you said, not, not everybody necessarily has a number, or an arrival point. But for you, let's talk about the end a little bit. What is it that you're working towards? What is that look like? any detail you want to give of, of the journey? Where's, where's that least the the potential and milestone for you?
Erick Peterson
Yeah, you know, I, what I found is that when I give myself a hard number, that doesn't allow a lot of flexibility along the way, when I have one thing that I'm focused on, while it may be a good milestone, and a good, you know, target to aim at, I found that I don't allow myself a lot of leeway, and a lot of opportunities to grow and other areas that might help in my journey, but not necessarily directly on that road. So for me, you know, I have an end goal of, of basically, in a passive income of 10 to $15,000 a month.
Erick Peterson
And the reason that I give that is because I'm not sure, at that point, right, I'm thinking somewhere 5055, I always told myself, I'd be at that point at 50, I'm not sure what we'll get to be being paid off by some of the other passive sources. And I'm going to be okay, somewhere in there, you know, I don't have this goal of, I got to make a million dollars a year, and it's all got to be passive, and I don't have to lift a finger, you know, there's a lot of give and take, and there's a lot of, you know, things that that you need to look at, in your overall position, that may still be allowing you to be financially free, and yet having other assets sources that might be seen without any other debt as passive income.
Erick Peterson
But if they're, if they're paying off other debt that might allow you to have that grow a little bit more exponentially. I'm allowing myself a little bit of latitude in that. So but that's essentially where we're at where it ends up.
Mike Swenson
Yeah. Yeah. And it's not like, you know, it's going to be the the arrival point of I've hit that number. Now, I'm off the grid and completely shut out from this. I never make any adjustments. You know, I think, I think that's the thing too, like, we don't know, you know, there's things within our control and things outside of our control, you know, the stock market, investments, different things like that can come up, it can change things, but you know, there's a period where at least you can take your eye, take your eye off the ball in some regards in the day to day sense, right?
Mike Swenson
Like you're not having to show up and pour an important important every day, it's now you're just maintained, right? You're just kind of watching everything, making sure it's performing the way that you want to perform. If you need to adjust, if you need to tweak, you can do that, but at least you're not necessarily have to be having to fill up the cup every day.
Erick Peterson
And that's me. And that's an income to me, you know, obviously, you know, things can be very different. If you, I mean, if you make 50 grand a year in passive income, but it's serving debt that you have, that's not a point of financial freedom, right. So it's important that, you know, when one side of the skill goes up, the other goes down, and we don't just kind of keep accruing, accruing and maintain, you know, trying to maintain that lifestyle as well.
Mike Swenson
Yeah, yeah, a lot of moving pieces. So absolutely fantastic. So why don't you just take a little bit of time then, and walk us through. And what I really love about Eric's journey is he's got a few different things that he's added to the backpack along the way. And over time, they've grown a little bit and, and you know, for some people, it might be putting your eggs in one basket, it might be putting your eggs in mostly in one or two baskets, it might be you've got a few different eggs in a few different baskets.
Mike Swenson
And the nice thing is, as they start to grow over time, you really start to notice, you know, if this has grown a little bit, this has grown a little bit, and this has grown a little bit and all sudden you wake up and you look like oh, wow, things have grown a lot. I've built a lot of wealth along the way without really realizing it. Because you have a few different streams or a few different ponds that you're fishing. So why don't you just kind of walk through each of those with us?
Erick Peterson
Yeah, so you know, like one of the one of the things that I see, you know, people really do and they do it very often is they find themselves being really good in one area, and then trying to tackle a completely different area that they think is going to be very lucrative, right? We see it in in our industry with people that maybe have a really good sphere of business, but Now they want to go get really good at tackling expired listings, let's just say are for sale by owners? Well, the same thing can be true across multiple industries.
Erick Peterson
But you know, where I found the most benefit is saying, Okay, if I'm good at this, if I'm good at, you know, a, whatever A is, how do I make a BA plus? Plus? Plus? Plus? Right? How do I take a, and, you know, make it as big and bad as I possibly can, and squeeze the most amount of juice out of what I'm already doing, you know, very well. So for me, that came in the form of layering opportunities within real estate already. Now, for me, I found that I had a natural affinity towards real estate, and we only have a certain amount of time in our day, and everyone has that same 24 hours.
Erick Peterson
So we looked at it said, Alright, well, how do we go from being a single sales person, you know, which I was, for at least the first two thirds of my real estate career and start to compound? Something that we're already doing? Right? And how do we take that and and do it to the next power? Right. So what we found is that we have a real estate business already, which is great from that we have opportunities to buy rental properties, let's just say we have opportunities to grow into teams. And what I found is that as my real estate business grew, I needed more leverage in my life, so that I could focus on the things that ultimately made me more money.
Erick Peterson
And so when we talk about growth, it's not just we take on more, and we take on more, and we take on more, and we take on more, what we're really talking about is focusing on that top line 20%, right, and continuing to let go of more, because what you'll find is that as you obtain more responsibilities, and I'm realizing that I'm far more about a hand talker than you are Mike, but as we as we take on more of those responsibilities, we have a responsibility to let go of just as much or even more to experience true leverage in our business.
Erick Peterson
So in terms of, you know, building a real estate team, we had we had our sales, right, so what did we need to do? We have a saying at Keller Williams, success through others, right? Well, I kind of turn that as a success with others, because without other people, our success doesn't really mean a lot, right. And my success should not be in spite of someone else, or using them as a catalyst, we should take our you know, as we've talked about, one plus one, and not just be two would be three, four, or five, because now we're harnessing each other's power.
Mike Swenson
And the other thing too, just to quick jump in on that concept is, you know, we talked about you know, there's there is a period where as you're pursuing, like a sustainable model towards financial freedom, part of it is, you know, giving up the things that you're not good at or be you don't necessarily like doing so part of, you know, we happen to live in an industry where somebody technically can do it all. And yet, for some people, they realize they don't want to do it all. And they're not the best at doing it all.
Mike Swenson
So part of it is by you focusing on sales, or let's just say, you know, whatever part of the business it is, it frees up an opportunity for somebody who really loves the stuff that you don't like doing, and they're not going to ever want to do the stuff that you love doing. And so that's where the power of leverage comes in is, you're more happier doing half of it, let's just say we split it a half, you're happy over here doing this half, they're happy over here doing that half, and you're both going to get better along the way at it. So so that's the power of leverage helping you to achieve your goals.
Erick Peterson
And that's part of that's really part of defining what makes you the most amount of money and what what really amplifies your skill set, and letting go of the rest. Right. So if we know, we know that a doctor, you know, who makes $500,000 a year is not going to be the guy who picks up the phone, when you call is not going to be the guy that you know, takes your blood pressure when you come in, we know that they're there to see as many patients as possible in in a kind of a critical five to 10 minute window, right? For most of us, you know, in our age group, we go see the doctor, you know, once a year, maybe maybe twice if we have to. And we're there in and out in five minutes, because that's what the doctors 20% is right?
Erick Peterson
That's what that experience and that training has got them the opportunity to take their 20% and let go of everything else. The same thing exists across our industry and many other industries. It's just that you know, the thing that I find about a lot of other industries is that they don't Define and adjust quickly. Right? How many times have we waited on contractors or you know somebody to come work on our house who they don't have a receptionist, they have a cell phone and their their voicemails always full. I'm thinking how many, you know, jobs could that person have lined up for the next month with somebody who just does strictly amazing communication and billing.
Erick Peterson
And now the contractor can go do what they what they do plumbers, plumbers, electricians wirehouses, right. It's no different. It's just it's just defining and, and strategically moving along. So getting back to kind of the the buckets or the layers that we've experienced. So we've got our real estate sales team of which I'm a part of, right, we have the team ownership, right. We've also gotten into a few rental properties, I don't have a billion of them, I just have a couple duplexes. But we've seen some some good net growth and some some income off of there. We've also been able to participate in profit share.
Erick Peterson
In the past, I've been up maps coach, right, which is a sister company to Keller Williams, I don't do that anymore. And then I've also had the opportunity to, to burn in on a couple other businesses that are related to real estate, but in the category so you can see immediately, you know, they say the average person needs seven sources of income. Well, immediately out of the gates, I've got 12345 or six. Right. And I have been at one point, I think I had 10 in the same layers. But what we did is we got rid of the bottom third, because they weren't producing the highest return on investment. Yeah, so now we can focus more heavily on our real estate business and our real estate sales. And, and, and really put the pedal down on kind of that top 20% helps us grow even faster.
Mike Swenson
Yeah, and I think to what, what what's really nice being in real estate is because there's so many opportunities, like you said, You're not, it's not like you're, you know, starting some side business where you're like, you know, drop shipping, Amazon items for people that they buy, you know, it's like everything's within the sweet spot. So for you, when you're out there doing your daily job of being a real estate agent, and somebody wants to list their house with you. There's a potential for a rental there, right, so you get a chance to look through that lens.
Mike Swenson
And in other industries, it's called insider trading, which is illegal and you can't do that, here, you get a chance to, you know, you have all this expert information, being a real estate, local market professional, and you can decide, does this fit where I want my future to be. And so you just happen to have accumulated a few investment properties along the way. And you can make that intentional, where you're actively searching them out. Or it could be passively where you just let your team know, like, Hey, this is kind of the sweet spot I'm looking for.
Mike Swenson
If you've got anything that fits that let me know. But it's not you having to close off everything you're doing over here to then move over here. And and you'd mentioned to you know, some of the other real estate businesses that you're an investor in, it's not like that takes all your daily time, where it's like, I can't, I can't do my day job. Because I've got to do this, that's all everything flows vertically, where you can still be in all these different buckets without having to massively adjust your time or your focus.
Erick Peterson
Well, it's it's, it's leverage, right? It may not be the you know, that something that I spend a lot of time on, like, even let's use my rental properties, for instance, I don't hire an outside manager, right. I do everything with the use of technology, I use cozy CO and they they pay online, they can submit repair requests online, I can take new applications and screen people online. And it's very user friendly, and, and very easy to do. And it gives me the opportunity to be not only objective and who I hire, or who I leased to write, but gets us to not be in front of them all the time not be the Nagy landlords that automatically sends them, you know, rent is due today, you know, click here to pay, and we'll link right to their bank account.
Erick Peterson
Well, that's a piece of technology leverage that is free to me, but frees me up of you know, I would say, you know, five hours a month, maybe, and just in bookkeeping and all that. And then, you know, like we talked about the layers, each of those boxes can have their own layer. So going back to the rental properties, again, you know, we have, you know, cash flow that comes in every month. We've got depreciation that we can experience on our taxes.
Erick Peterson
We've got appreciation, you know, increasing value in a rising market, and then we've got principal reduction that happened. Every month along the way, so there's, you know, little drop downs in in multiple buckets that don't always have to be this huge, you know, 100 200 $500,000 investment here, but it's making that making those little investments work for you and grow over time into something that's big.
Mike Swenson
Yeah, I remember doing the math on that, because we have a rental property. And, and I remember when we had refinanced our mortgage, when rates were really good. And I was looking at the principal reduction on that mortgage. And so it was something were tangibly in my head, I remember it was, you know, at the time, you know, 350 bucks a month or something like that. And I remember thinking, like, that's exciting, because I know, every month that passes, that you continue to have somebody in that property, it's $350, that, you know, you could, you could decide, if I didn't have a rental property, my paycheck comes in, I take 350, and I go put it in a separate account that eventually I'm going to use to acquire some sort of asset, or here, it just kind of happens as a natural byproduct.
Mike Swenson
And so it's kind of like, you're paying yourself a little bit over time. And when you've got all those different areas within a rental property, it's a little bit here a little bit here a little bit here. And that really adds up when you're holding it for one to 510 years. You know, and then, you know, we refinance from a 30 year mortgage down to a 20 year mortgage, well, now we just lop 10 years off of the debt, eventually, that's going to get paid off, and our cash flow was pretty close to break even. And yet to go from a 30 year to a 20 year was a big difference, because now that that principal reduction is kicking off at a much faster rate.
Erick Peterson
Absolutely. Now, you know, I'm not suggesting that, you know, we, we look for layers, and in whatever we're going to do, and just stay in that one column, obviously, you know, the one downside to me being, you know, heavily invested across multiple buckets in the real estate realm is, if we experienced another, you know, downshift in the market, right, what happens there? Well, I also realized that it's all a long term game for me, so I'm not playing the buy low, sell high. You know, I don't have that mentality. But I do still, you know, I have life insurance, I contributed towards a Roth or a Sep, I have, you know, an HSA and Ira that I can potentially use to purchase other rental properties.
Erick Peterson
So, you know, do yourself a favor and in looking at having some strategic avenues within your plan that are maybe a little bit more secure, and a little bit more long term in diversifying, but, you know, really don't focus solely on you know, what is putting 200 bucks a month into a Roth going to do for me long term, right? We need to think outside the box and, and how we can layer to have multiple, multiple sources of income, based upon what we're doing currently.
Mike Swenson
Yeah, so digging in a little bit more to the rentals, then, because I know that seems to be the one where people don't really necessarily know where to start, right? Like, I'm not like, hey, somebody happened to just give me, you know, 50 grand to put as a down payment on something. So what am I going to do for it? How do you turn that that little bit into something big, like an investment property, not only for you personally, but maybe for people that you know, that are doing investments?
Mike Swenson
How does that typically start for them in terms of identifying a property? Or maybe it's first identifying financially, what you need to do to be able to execute on the right property when you find it?
Erick Peterson
Yep. Yeah. So for those of you who do not currently listen to the bigger pockets, podcast, that is a great resource for somebody to looking at, looking at starting with their own rental properties, because there's so many different avenues that you could go even within purchasing rental properties, right or or interviewed, you buy and flip? Do you use the burst strategy? Right? Do you buy and hold? Do you, you know, go multifamily versus single family? So I think there's a few things that you really need to do to start number one, is, you need to define your criteria. Okay, and define what we call your buy box.
Erick Peterson
Because how many times have you heard Mike, somebody say, I'd love a rental property, but they don't really know what that means. Is it a, is it a $2 million apartment complex? Or is it your grandma's house that she's moving out of that hasn't been updated since 1958? Right? There's a big gap between those things. So defining what you want, in the areas that you want, and starting to research what they can rent for. So you know, personally, I like small multifamily properties, I don't really want to have to hire a property manager unless I were to buy something that was, you know, bigger and necessitated that.
Erick Peterson
So I wanted to be able to use the small technologies, you know, to have leverage in my business, but not necessarily, you know, remove large chunks of that cash flow, like a lot of property managers tend to do. Now, if I can tell you this, if I worked a normal nine to five job or you know, a professional career in another industry, but happen to have rental properties, there's no shame in getting a property manager, I would absolutely do that myself, right. But being in the industry, I already have such an insight knowledge on it, that I just wanted to be able to do that. Because now I can create a relationship with my tenants and potentially even turn them into clients to help my real estate business, right and see that cycle.
Mike Swenson
Many vendors that you're working with, you know, in terms of handyman, you know, AC stuff, you know, any of that type of stuff that comes up along the way, those are the same people, you're going to refer to your real estate clients with your rental properties as well. So your your same relationship can be can be used in multiple avenues as well, you don't have to make a new friend of somebody that, you know, that does a great job at putting in new carpets, because you already know somebody from your real estate business. And now they can do it on your unit instead of somebody else's unit. So you still have those same relationships, that's leverage in a different way too.
Erick Peterson
100%. Couldn't agree more. So define your define your buy box, because once you clearly know what you're seeking, you don't have to make the decision to purchase it. You've already told yourself that the opportunity will be purchased when it arises, right? Because I see so many people go in and they, they go in and they see an opportunity and they him and they haul and they try not to analyze this. And then they try to analyze that. And they they overcomplicate it to a point where they miss a great opportunity, because they didn't clearly define the criteria that would make them buy it.
Erick Peterson
Because then it either becomes you buy it or you don't not. Is this a good deal? Is this an okay? Deal? Is it a great deal, or don't buy it? Right? It just removes the complication. Number two, figure out what you can afford. If you cannot afford to make that monthly payment on your own, for at least a few months out of the year, you need to seriously, you know, think about just going into a different asset class temporarily until you you know, have enough reserves or you know, have enough of a downpayment where, you know, you're, you're going into it in a solid enough cash position where you are comfortable. So if you can line up your financing, and your criteria, when the opportunity arises, you got to go for it. Because now you know that you can make a sound decision in in making that happen.
Mike Swenson
Yeah. And to I mean, there's, there's lenders that you already have relationships with that, you know, if if you're looking to have somebody help with a mortgage or whatever, versus just paying in cash, like you've got those same relationships with people that you can talk to, and those lenders also have certain buy boxes, too, in terms of what do they like to go after in terms of investment property? So networking with lenders is a great way to to find out, how much do I need to save, you know, to be able to buy that first rental property?
Erick Peterson
And I mean, and I get it, you know, I help people do it all the time. And even understanding it personally. I know that the the more clearly you can define what you're looking for, the easier it'll be to make that decision because, you know, I see people Hammond Han, and I didn't even you know, like, I missed out on a few opportunities in the first couple years that I was looking, and then the right opportunity hit the market. And I bought it. And what that actually led to was, I was outside thrown out some mousetraps, right, or just some some of those exterior boxes. And I saw the neighbor working on his. And I asked him, I said, Would you ever consider selling it? And he said,
Erick Peterson
Absolutely not. This is my retirement plan. And I said Good for you. If you ever consider selling, call me first. I sent him a little card. I took his information just sent him a text saying thank you. And I knew what I was doing. He maybe didn't but I knew that with him working on that property. Every time he pounded a nail or every time he cleaned, cleaned those gutters he was thinking, What a pain in the butt. Right? So so I knew that if there was ever a choice or an option for him to throw up his hands and say, take it over, that I was going to be the guy to call and what happened is a week later he called me and said I think you should come make me an offer.
Mike Swenson
So you went from not interested, this is my retirement to one week later, you're not?
Erick Peterson
Yep. And that was it. And I and I had, I knew what the rents could be, and we're going to be, I knew that they had, you know, tenants in there of my four units, I've only turned over one tenant in three years. And that was the first month that I own the first property. And the second unit, I actually was fortunate enough to have another source of passive income, be my complete downpayment, right.
Erick Peterson
So now, we take one asset class, right, a passive income profit share in this case, and we apply it towards another asset class of real property. Now, I know that, you know, my my profit share earnings are now whatever comes in every month from Keller Williams, plus, essentially, the rental property income from that asset class that that profit share was able to purchase for me.
Mike Swenson
Yep, Siri, able to just stack and build on top.
Erick Peterson
And that's it. And I don't, to be honest, if you're looking for some for a quick income, this probably isn't the right podcast or webinars to be listening to. Right. Because Personally, I'm diligent enough, where I don't take a single dime out of any of my passive income earnings. I let them roll and grow and, and compound within each other. Now, is it hard?
Erick Peterson
Absolutely, it's hard, are there some days where I, I would love to just take, you know, cash flow from the lab from one of the rental properties for the last six months, and buy myself something nice, absolutely. But if I intend to get where I'm going, I cannot afford to make small bad decisions to make to end up being a big bad decision in the future.
Mike Swenson
And that's what we talk about, you know, freedom, freedom taking sacrifice, you're going to have to give something up in the short term, your lifestyle could grow more significantly than it has, if you just cashed out all that stuff, or even half of that, you know, like I made an extra 1000 bucks a month, I'm going to spend an extra 500 bucks a month. But when you have that discipline to hold the line, that's where that that long term, wealth is going to really grow and grow and grow, because you made the decision to hold the line on your lifestyle.
Erick Peterson
Well, it's, you know, I mentioned the beginning data of three girls, I mean, I'm sure you can see the artwork, and some of the pictures here in the back of footprints. Like, give yourself that reminder. You know, tell yourself every day, what you're doing it for review your goals, you know, have conversations with your wife about what are your significant other about what it'll mean, when you can achieve them. Because if you don't know what you're fighting for, you're gonna have a heck of a hard time fighting forward and being disciplined enough in the short term to see the benefit in the long term.
Erick Peterson
And for those of you looking for a book, if you haven't read the Millionaire Next Door, please do. It just talks about, you know, some of the sacrifice and how a lot of the millionaires in this country are first generation millionaires. 80 80% of all millionaires in America are first generation. And I think a lot of people have a hard time digesting that. Because they see the Kardashians on TV. And they see, you know, these silver spoon babies just growing up with whatever they want. When in reality, most people got there on their own volition. And they did it by disciplining themselves in the short term to have financial freedom in the long term.
Mike Swenson
Yeah. And for you, if you're watching this or listening to this, and your parents weren't millionaires, so then it has to be 100% for you to become a millionaire. Right? So you got to go get it yourself. Yeah. So talk for a second a little bit just to touch on you know, your your real estate sales business and your team talked about how that's grown over time and how that's added to your your income each month?
Erick Peterson
Well, I think, yeah, there's there's two sides to that, right. So you know, as a solo agent, I would probably sell between 30 and 40 houses every year and it was a good income, but had all the stress. When I went on vacation, I was still picking up my phone and answering that. I did the you know the the high dollar work and I also did the $15 an hour work. And having a team allowed me to take away a lot of the administrative stuff which I wasn't very good at. I'm not a you know.my i's and cross my T's type of guy just naturally. But it allowed me to take my skill set and my knowledge base which I had developed over the first two thirds and help Grow other people around me, right?
Erick Peterson
I view my my opportunity as a leader, right in, like we talked about success through and success with others before, my opportunity as a leader is in raising up other leaders around me because your environment more than anything else will define your success as a business owner, right. So it's important to continue to surround yourself with big thinkers and help pour into those around you. Because the more you can lift up those around you, the higher you have to rise to continue to lead them.
Erick Peterson
So I viewed my opportunity and continuing to rise myself by raising up people around me and we went from, you know, doing a 30 or 40 units to doing you know, 60 7080 100, and what we should pass over 100 units this year, which means there's a lot of people making a lot of good money on my teams. And I earn a small percentage of each of those sales as well, provided we're profitable at the end of the month, which, you know, we, we really have been, we've had some good months. And it doesn't mean that anybody suffers, it just means that we all get better together.
Mike Swenson
Yeah and the key is, for you, even if let's say, your income stayed the same, moving from individual state sales to having a team, your income, may let's, if it did stay the same, it would be you have some time back, you have some you're pouring yourself into the right activities. So you've got to happier Erick, because you're not doing the things you don't like doing. So even if there was no net dollar gain, there is some reward to you and your lifestyle by doing that.
Mike Swenson
And then the nice thing is, is if you continue to push down on that gas pedal, now your income will grow more than you had when you were on your own. And you also get all those additional benefits. And you've got a team of people pulling in the same direction as you so as you grow, over time, those people can still be a part of your world, and they can grow too and their world can get bigger, just through being in a strong relationship with you.
Erick Peterson
Completely agree, Mike, and very well said, you know, I'm, like, we talked about your environment, defining your success. The other thing that you know, you need to think about is, who are you surrounding yourself with, that will intrinsically help you grow and intrinsically be, you know, help you get better if you have a goal of, you know, making $50,000 a year passively by the time you retire, in addition to your retirement accounts, or whatever, or even if it's just 50 passively, right?
Erick Peterson
If you have a goal of, you know, 10 million net worth, by the time you retire, find people who already embody what you seek, and find a way to surround yourself with them, take them out for coffee, ask them questions, be in relationships with these people. Because we see it all the time, whether it's on the news, or you know, people we went to high school with or you know, you name it, right members of our family, even we you surround yourself with will either bring you up or bring you down. And they say that you're the average of the top five people you surround yourself with, right?
Erick Peterson
So if those people are making 20 grand a year, or if they're making 200 grand a year, you have the ability to choose that no one will get you to your financial freedom, right much quicker.
Mike Swenson
Yeah and they're gonna, they're helping you along the way because they're in that same boat. So they're probably thinking about the same things that you're thinking about. You know, there's probably other friends that you have that are doing investments or colleagues that you know, through work that are doing investments that you can talk to them. So you're also sharpening each other along the way and helping each other get to the same goal, whether your goal is 10 million, somebody else's goal is 20 million, that's irrelevant.
Mike Swenson
It's the fact that you're, you're pulling in the same direction. And you're helping and encouraging each other along the way, and challenging how you think, how you act, how you respond to things, it's really going to make you a better person through being in relationship with that.
Erick Peterson
And that's the other thing is big thinkers ask big questions. And if somebody can question why you're doing something and help you understand that it might not be the best route for you to take, and help you identify some additional routes or some additional sources of information to grasp onto to help propel you. You know, that's, that's worth its weight in gold, the same thing we you know, as with reading, right, like, we we hear a lot of people say when you read you stand on the shoulders of those who had before you, so it just elevates you to the next level.
Mike Swenson
Yeah, I was listening to or watching a video of an agent and she was a newer agent a couple years in the business recently, and, and she said, You know, one of the best pieces of advice I got when I was first starting out is find a top producer. And don't ask them what they do. Ask them how they think. Because that's so different. You know, everybody's got a different flavor. of how they do real estate.
Mike Swenson
But if you ask them how they think that really makes a big difference, because you're, you're, you're teaching yourself how to solve that puzzle to get where you want to go versus just, they did this, I do this, you know, and it may not lead the same results, but it's teaching them how to critically think, how to problem solve and how to improve.
Erick Peterson
Yep. And I know, Mike, you know, some of the relationships that you and I have maintained over time. You know, whether it's been in, you know, coaches, or even just, you know, small group settings, you know, we've had the opportunity to gather to be a part of some pretty dang good discussions, pretty high level thinkers. And I know, for me, that's really, you know, been kind of a catalyst of stretching, you know, your mindset and stretching, you know, who you who you know, and think you can become.
Erick Peterson
And that's part of it, I think a lot of us have, you know, limiting beliefs I sure as heck did, especially at the beginning, on what we could accomplish, when big thinkers will flip that question and ask what you can't accomplish.
Mike Swenson
So then, looking at where you're at today, Erick, and thinking about the future? What's next for your what's kind of on that to do list? Or what you want to accomplish here between now and and ultimately having that financial freedom? Where would you like to see yourself go?
Erick Peterson
Well, I think there's, there's really two areas of improvements. Number one, in order for me to, you know, get to that level of income, I'll likely need to be at at least 10 rental properties. So my intent is to you know, acquire, at least I'm at four doors now, however you want to some people classify doors, some people classify, you know, units, some people classify entities all together, I need to be at at least probably 10, to 15 doors, or, like 10 properties.
Erick Peterson
So for me, it's really going to be hunting down the best deals small multifamily, I would say anywhere from, you know, two to 12 units, I'd love to find something that's maybe a little bit bigger and help leverage that. Right.
Mike Swenson
In what area you looking in, in case anybody's watching this and happens to have that need for you.
Erick Peterson
Yeah, Wright county, specifically. You know, where I'm comfortable with Wright County, Minnesota. So the other thing is going to be, you know, helping, helping my real estate team grow, and helping them become better moms and dads, and husbands and wives and better sales people. All over. So I think, you know, as I analyze my income, currently, those are the two areas that have the biggest opportunities for growth, and we're, I find myself strong suited.
Erick Peterson
So for me, it's really about, you know, kind of continuing to grow those, and then taking the net income and putting it back into some of the debt that exists on the rental properties. Because then we can take those that cash flow, and just, you know, put it towards the next one, or do you know, like the, the Debt Snowball, with that Dave Ramsey talks about on properties specifically. So it's gonna be kind of a combination of growth and debt reduction to, to widen the gap, so to speak.
Mike Swenson
Right? Okay. Anything else that you can think of, that you want to share that would be relevant for anybody watching or listening to this to for success?
Erick Peterson
You know, Mike, I really take a look at your environment. I think the one thing that I can advise anybody on is, you know, have a an afternoon where you just look around at who you're surrounding yourself with the information that's coming at you, whether it's positive or negative. And ask yourself if you are growing today, and ask yourself what it would look like 20 years from now, or 10 years from now or whenever you do intend to achieve financial freedom. Ask if you can get there by doing what you're doing today. And if the answer's no, you know that you need to change your environment. Mike, I loved where I worked.
Erick Peterson
Before I came to Keller Williams, I loved it, I still I still talk to, you know, the the owner of that brokerage on a weekly basis or bi weekly, right, amazing guy. But I knew that I wasn't growing into who I knew I could be in wanting to be. So I changed my environment. And my success followed. I never thought, you know, if you'd asked me this question, you know, eight years ago or six years ago, you know, I never thought I would retire in real estate. I honestly didn't.
Erick Peterson
And now I'm wondering how quickly I can. So it's a change in mindset that was a result in changing the environment and being surrounded by big thinkers and big questions. And then ultimately, you know, the opportunity to, to ask myself what is possible. So, analyze your environment, define what you want, and don't let anything get in the way.
Mike Swenson
Cool. All right. And then also, as part of being a part of this, we want to give you a chance to give any plugs so we know if you're in Wright County, and you have potential rental properties to reach out to you, but what else would you like to plug while you're here?
Erick Peterson
Yeah, so we've got a sales team that operates out of the Buffalo Minnesota and not Siegel Minnesota market center here. We've got some great agents and some great systems to help buyers and sellers achieve, you know what they want when it comes to real estate transactions. The other thing is, if you are looking at getting into real estate, you know, we've been very fortunate, fortunate enough to help a lot of people discover and join Keller Williams so if you have questions or have thought about being a real estate agent, feel free to give me a call.
Erick Peterson
We'd love to introduce you to our team leader and show you the you know the values that Keller Williams and bodies and what Keller Williams has to offer you the salesperson to help your career skyrocket.
Mike Swenson
Awesome and we'll make sure we put your contact information up there so people can reach out to you and get whatever they need.
Erick Peterson
Awesome. Thanks for the opportunity to do Mike
