- PNC is proud to support "Business Forward" where local leaders discuss the challenges and opportunities in how we do business in Central Illinois.

(light music) (light happy music) - Welcome to "Business Forward."

I'm your host, Matt George.

Joining me tonight, Brad Stegall.

Brad is the real estate investor guru right now and one of the founders of the Iron Men Prayer Lunch.

Welcome.

- Thanks for having me.

- I threw that out because I think, I didn't picture you like this, and then you're doing this over here.

You've got your hands in a lot of different things, but we're gonna get to that in a second.

Let's talk about you and your family and your wife, and you just have a great family.

And where are you originally from?

- I'm from a small town over by Galesburg, Abingdon, Illinois.

- [Matt] Okay.

- I say small, it's true, it's small.

My graduating class was 52 people.

- [Matt] Ooh, it is small.

- Can you imagine?

- No.

I think I had 52 in my PE class at Danville High School.

- Most people I talk to, their graduating class is the size of my entire high school, so.

- [Matt] Oh that's hilarious.

- Yeah, I grew up on a farm up until the age of 13, and then we moved into the big city of Abingdon.

I think it's maybe 2,400's the population now.

And so we lived in town for my, you know, middle school and high school years.

- And what brought you to Peoria?

- My dad.

So my parents got divorced when I was younger, and my dad ended up meeting somebody in Peoria and he was living here at the time.

And so when I got outta high school, as I was deciding where I wanted to go, what my next step was gonna be.

And I planned to move to Peoria, get some work experience, and then I was gonna go to St. Louis or Chicago, can't stick around here too long.

And I just, I fell in love with Peoria and have never left.

- That's awesome.

So your wife Ashley, is she from here?

- She's from Morton.

- Okay.

- Yeah.

- Great.

And so let's talk about how you got into the real estate business.

Because you didn't start there, right?

Or did you?

- I started there at the age of 24.

- [Matt] Okay.

- And so, when I was young, I read a book called "Rich Dad Poor Dad" by Robert Kiyosaki.

- [Matt] I love that book.

- Yeah, and I'm a very simple man.

If I read something that makes sense, I typically, I'm just gonna go do it.

And in the book it talked about instead of buying a house, which the controversy with Robert was, he talked about your house being a liability and everybody else calls it an asset, and that's because it takes money out of your pocket rather than putting money in.

And so he said, instead of buying a home, buy a duplex live, in one side and rent out the other.

And so my first property at the age 24 is a duplex.

- And did you rent out the other side?

- I rented out the other side and I even had a roommate living with me.

So I was living in a brand new construction, super nice duplex out by Northwoods Community Church.

And I was making money by living there.

- So did you always have that, I mean, you said you grew up on a farm.

Did you always have that kind of entrepreneurial mindset or by just reading a book?

- No, I was always wired that way.

I still, there are two stories I remember from my childhood is my parents, we'd go to a gas station and fill our car up with gas and we could either get a piece of candy or I would wanna buy baseball cards because they might be worth something someday.

And then I also went through a phase where I was buying candy at the gas stations.

My parents would buy it, but then I wouldn't eat it.

I'd take it back to school the next day and sell it at recess and mark it up two, three times.

And then I'd take that money and go buy more candy and go back to school and sell it some more until the school system shut me down.

And they said I couldn't run my business there.

- That is funny.

So when you talk about leaving your day job, so I'm assuming you had some properties and you put those over to the side and those were generating some income, but then you had your day, you left your day job a couple years ago.

What did you do?

- I was a media salesperson, so I started off selling radio advertising, and then I transitioned over to television.

I worked at WEK selling commercials to different business owners.

And it was a great career.

Made good money, which allowed me the opportunity to invest in real estate.

And it also, being an outside salesperson, I had the freedom to be out and about.

And so I could run the business while I was in my car.

I could do what I needed to do while I was out.

And as long as I was producing, everybody was happy.

- I could picture you, I can just picture this, you getting your money from the day job, so to speak, and you're funneling it back into this job and you just keep feeding it.

- Yeah.

- Keep feeding it, right?

- Feed the beast.

- [Matt] Feed the beast.

That is awesome.

- When I think about my real estate investing career is the late gratification at its finest, because all throughout the time I was taken the abundance that I made in my job, pouring it into more real estate.

And then as you're building this other business on the side, I never took money out of it.

And so, whereas other people had take those profits and go buy cool, fun stuff, we just kept letting it grow and grow and it just started to snowball and get bigger and bigger.

- That's pretty smart.

So, you know, people talk about all the time about what are the right investments?

You know, do I put it into stocks?

And everybody's, "Well, you need a diverse portfolio."

But then there's people that, and I'm not saying I don't care about your other stuff, I wanna talk about on the real estate side, like what's the theory from someone who knows the business of investing into real estate and maybe mainly just real estate?

- The biggest thing with real estate is you can use leverage.

- [Matt] Okay.

- I can't go out and use 80% leverage to buy stocks, but I can put 20% down on a piece of property and I own the whole thing.

And so then I'm cash flowing off of the entire piece of real estate, even though I've paid for 20% of it.

In addition to that, if that house goes up or that apartment building goes up due to appreciation, whether it's just natural appreciation or forced appreciation, I get 100% of the benefit, but I only put 20% of the money in.

That's what makes real estate so powerful.

- That's a good way of putting it.

So when someone says you're earning passive income, just for our viewers, what's passive income?

- We like to call passive income mailbox money.

- [Matt] Okay.

- That's money that's gonna come in every single month.

It's come into your mailbox whether you show up to work or not.

And so if you own assets, you know, in my case, it's real estate.

You think about Monopoly, whether it's the houses on the board or the hotels, every single time somebody lands on that hotel or that house, you get money in your bank.

And so passive income is money that comes passively.

You don't have to actively work for it to get it.

- And then, so as you get those dollars, do you as a real estate investor, take those dollars and pay down the other 80%?

- [Brad] Yeah.

- And that's the goal is the passive income takes down and all you're doing is building up more equity in the property, until you hopefully it gets to zero, now you've got this huge asset.

- So typically with a real estate investment, you're getting double-digit rates of return just with the cash on cash return.

So the money that you put in to do the down payment, the repairs, whatever that might be, compared to the money that's going into your pocket every single year, it's usually double-digit rates of return.

And as most people would agree, that's similar to what the stock market can do.

But then there's the backend side of real estate, in addition to that double-digit rate of return on the cash flow, you also have the debt pay down.

So the amount of equity that you gain every single year due to the mortgage payments.

Then you get the benefits of depreciation on your tax return.

- Well, that was my next question.

So talk about that.

So you do get, just like you would your own house, you get the depreciation.

If you had 20 properties, you get 20 different tax benefits.

- Right.

And it just, again- - [Both] It just keeps snowballing.

- And then they write tax laws that make, it's illegal to take advantage of these tax laws where you can accelerate depreciation.

And so then you can fast forward that depreciation to take advantage of it now to offset other potential big gains that you've had from other moves you made in your business.

- I think that the reason why I'm going to this kind of on an elementary step-by-step stage is because one of the problems we have right now in the United States is credit card debt, and we're not investing back into our families and ourselves.

So whether it's stocks or even putting it in a bank or credit union or whatever it may be, real estate, there's so many advantages to doing that.

And what we're seeing is we're just seeing an uptick, you know?

And it's because I gave a speech a couple years ago and it was financial literacy related on credit card debt.

talking about these kids that are getting into debt.

And I'm sitting here going, wait a minute, you are 20 years old, if you opened an IRA or if you did this and saved 150 bucks a month for the so-and-so, you can still do that with real estate too.

- Yeah.

And it's the lack of discipline that's causing people to make these bad decisions when it comes to their finances.

- How do you, I like that.

So it is the lack of discipline, but how do you stay disciplined?

- You stay focused on the long term.

You know, start with the end in mind.

I forget, somebody said that.

- Start with the end in mind.

I like it.

So, wow, okay.

So you're building up this little baby empire over here.

Because that's your goal and it doesn't matter what, it could just be one house- - And it was gonna be my 401k.

That's the way I looked, in the beginning, the whole reason I did the duplex and then I moved into the second duplex, and moved into the third duplex so that I could just do 5% down because I lived in them.

The reason I did that was just to supplement my 401k when I retired.

I never had the vision of being a full-time real estate investor.

And my business partner didn't have that vision either.

We both were full-time salespeople that were buying real estate on the side.

And it just grew to the point where it just made sense for us to focus on that full time.

- So let's get personal for a minute.

So a couple years ago, you're sitting here going, well, I'm doing this and I've got a career and I can do still do that.

There's a lot of openings too, if you didn't do it with where you're at.

And then was it a tough decision to say, I'm done, I'm going and just doing all of this and focusing on that?

'Cause I'm guessing now things are thriving even more because you're paying attention to it 24/7.

- So the reality is financially it wasn't a tough decision because I waited longer than I should have to do it.

- [Matt] Yeah, you made a mistake.

- Right.

If I would've done it sooner?

- Yeah, right.

- Yeah.

And so the financial side wasn't that tough.

What I did though, leading up to it is there are some different things you can do in real estate.

Flipping houses is one of them.

Wholesaling's another thing that you can do where you just buy a house, you don't really fix it up at all, and you sell it off to somebody.

So I wanted to prove to myself that I could generate income quickly if I needed to for my family.

So I did some of those things and it worked, and I'm like, it's time.

Like I'm made for more than what I've been doing.

It's time to go.

And so that's when my wife and I made the decision to pull the plug.

- And that was a family decision, right?

- Yeah, yeah.

- Yeah.

And I think I'm kind of in the same boat right now too.

You sit there as a family and you say, okay, what's the next chapter of not my life?

Because a lot of people see you or see your wife 'cause she does great in what she does.

But they'll see an individual and they'll go, "Well, what's he thinking?"

Or "What's he doing?"

But I actually kind of have a plan.

You just don't know it.

- We talked about this.

We talk about things with our wives.

- That's right.

So when people's, let's talk about some things that, like I hear about all the time that I think scare people away could be, is there a lot of management of these properties?

Like how do you handle the management piece of it?

- So you can do it yourself, which is the way that if you're good at managing them yourself, that's the way you're gonna make the most money.

But you can also work it into your performance that you're gonna have a third-party property manager.

So if that's not something you excel at, if you know the managing all the details and staying on top of stuff doesn't come naturally to you, you should probably figure out how you could have a third-party property manager in there.

And that way you don't have to worry about those types of details.

- So if you have an apartment complex, something goes out.

- Yeah.

- Toilet's broken.

- [Brad] They don't call you, they call somebody else.

- Yeah.

- Yeah.

- That seems like a no-brainer.

- So we just bought a building from a guy.

He's a successful businessman in Peoria, and he sold his company and took all the profits to buy an apartment building.

He never managed it a day of his life.

And over the period of time that he owned it, he paid it down to where he owns it free and clear.

He's sitting on a huge asset and it took care of him for that entire time after he sold his company.

And he didn't have to worry about the toilets breaking in the middle of the night or any of those issues.

That's what the property manager is doing for him.

- And then I think on the flip side, if there's somebody, I'm the least handy guy in the world, I can't even change a light bulb.

So if there's somebody on the flip side who's a contractor by trade or whatever, they can sit there and make maybe 10% more or 15% more, or whatever the number is at the end of the day.

- Or you might want to consider partnering with somebody like that.

If you've got the business-minded guy and you've got the handy guy and they both have the same interests, then that could be a good partnership to move forward.

- When people say that real estate's not liquid, is that a true statement?

I don't feel like that's a true statement.

- Well, it's only as liquid as you want it to be.

- [Matt] Okay.

- Any piece of real estate would sell at any moment in time for a certain price, right?

- [Matt] That's a good way of put it.

- Yeah.

So right now we're not selling anything because everything that we own, we feel is more valuable than what somebody would be willing to pay us for it.

And that's because of interest rates.

But someday the interest rates won't be in the same situation.

And during the past three years when interest rates were so low and there was so much money out in the marketplace, yeah, we were selling this stuff because there were people willing to pay us more than what we thought it was worth.

And so we sold.

- So like when you buy these properties, you have to, you still have to manage the I'm guessing the liability insurance you have to pay for and all that and everything.

So does a third party do that or do you just handle everything or do you split it up?

- We do it all.

So we brought our property management in last year, my business partner and I did.

And that was just, we're control freaks, just to put it out there.

And we think that we can do things as good as or better than anybody else.

So that's why we brought it in-house to be able to have those controls.

And so if you have a third-party property manager, I think you would be involved in the discussion of which insurance company and which insurance policy you're gonna go with.

But then they would pay the premium for you and take care of those types, if there's a claim, the property manager would be heavily involved.

- Is the goal kind of like Monopoly?

I mean, not for everybody, I'm saying is your goal to just keep building the properties and own the most property?

- I think, so I think- - [Matt] Or the most good property, I guess?

- Yeah, good property, trading up to better properties, trading your houses for apartment complexes.

I struggle to say to just control the most because I think- - That's not a good way of putting it.

I agree with you.

- [Brad] There's a level of contentment that comes in there.

- And humbleness.

- Yeah.

- Yeah.

I mean there's, I get it.

- But if somebody, if a nice property in Peoria is for sale and it's something that makes sense to us, and we're probably gonna try to buy it.

- [Matt] Okay.

- Yeah.

- So now you've got a project that I was looking at and I went, "You've gotta be kidding me.

This is really cool."

And it's in a different country.

- Yeah.

- It's in Belize.

- Huh-uh.

- Where in the heck does that even come from?

Like, how does that cross your plate?

- Do you ever, have you had any moments in your life where you heard about something and you thought "Eh, I'm not gonna do that.

That just doesn't, like I could never do something like that."

- [Matt] Yeah.

- And so there was a, Belize is one of those things for me.

I was listening to a podcast I have for many, many years by The Real Estate Guys.

And they talked about investing in Belize all the time and all the benefits of investing down there, English speaking country, like all these benefits of the taxes and no real estate tax and everything.

And I listened to the podcast and I did zero with it.

My friend Isaac Bennett, who lives right here in Peoria, decided to go down there.

And so he went to some seminars down in Belize, and I think a year or two after he is down there for the first time, did his first project, and then he did his second project, and then he did his third project.

And the fourth project is what we're working with him on right now.

And so what's beautiful about this is Isaac had the boldness to go down to Belize to learn about this emerging beautiful market and did something, whereas I chose to do nothing.

So it's funny when you look back on things you have been exposed to and whether you took action or not.

We're talking about Belize right now as if we were buying property or developing property on Sanibel Island down in Florida before it was what it is today.

And because that's what it feels like and that's what it looks like.

And we feel like we're properly timed.

- That is unbelievable.

- [Brad] Yeah.

- And so tell me about it.

What's the project?

- So the project's inside of Mahogany Bay, and that's a development that's been put together.

It started off with Hilton coming down to Belize.

It was the first large resort hotel that came into Belize and that's where they settled.

Mahogany Bay's made up of a bunch of strips of land surrounded by water.

So if you think about the manmade islands in Dubai, you've probably seen those, that's exactly what it looks like.

And so there are two phases to Mahogany Bay.

And what we did is we purchased three lots on the first street of the second phase.

And so we're currently in the fundraising process right now.

And once we get all the funding secured, then we're gonna hopefully break ground in January and we're gonna build two five bedroom houses that are gonna be very high-end, short-term luxury rentals, and then in the middle will be a three bedroom house that can be keyed off to two separate units.

- Do you need a consultant?

- You wanna go down there and overlook, just watch over the property for us?

- I can watch over it for a couple weeks and work down there.

- [Brad] Yeah.

- That is great.

Well, good for you.

So my favorite thing about this show is just learning.

I learn from so many people and that's what's fun about it.

But you do something else that I like and I find interesting, and from an outside point of view, I looked at it, at first, I'm like, you know what, you're putting together a lot of good men in town that are in need of helping each other, almost, I don't know if that's the best way of putting it, but that's how I originally looked at it.

But it's called the Iron Men Prayer Lunch.

- [Brad] Yeah.

- Where did this come up?

What is it and where did it come about?

- So where it came about is a good question because it all started for my real estate business.

- [Matt] Okay.

- March of 2021, we started Midwest REI, which is a real estate investor meetup.

And we started bringing speakers in and just inviting all the real estate investors in Peoria to come to these meetups.

And the very first one that we threw together, we thought we'd get maybe 25 people and 80 guys showed up.

We're like, "Holy cow, I guess there's a need for this."

And so we continued to do these once a month with different speakers coming in.

And it was great to watch all the people coming and just learning about real estate investing and going and doing.

And I go to church all the time.

I was saved back when I was 14 years old.

And I started to be challenged by a small group that I was a part of.

And the challenge was like, what more are you gonna do for the kingdom?

Like, where else are you gonna be able to use your spiritual gifts to impact the kingdom of God?

And I just kept going back to the fact hospitality's a thing for me.

I know how to bring people together.

I love it.

To connect people is just like- - You're a pro at it.

- Yeah, it's energy.

It's good energy.

- Yeah.

- Giving back was a thing that just comes naturally to me.

And the administrative part of doing events like this, it's not heavy, it's a light thing.

And so as I was looking at how I could impact the kingdom of God, I just kept hearing, "You're doing these events, you're bringing people together and you're teaching 'em how to do real estate.

Why aren't you doing this for me?

Why aren't you bringing men together and bring them together to learn about me, to learn about how to be better fathers, how to be better businessmen, stronger men."

- Well, there you go.

Better fathers and stronger businessmen.

I think that's so important.

I mean, I was asked, I'm asked all the time, but I remember I was speaking once and someone said to me, they said, "What do you think's wrong with today's society?"

And I said, "We need more dads."

- [Brad] Nobody would disagree with that.

- Nobody would disagree with it, but they did when I said it, they didn't disagree with it, but it was probably a little controversial when I said it about 10 years ago.

- [Brad] Yeah.

- And, but I've never wavered from that.

Like, I saw things and that's what I love about this, because I talk to a lot of people that have gone and attended this luncheon, and you've got some, part of it's the speakers too.

I mean, you you're not asking Matt George to speak, you've got Roger Powell in there.

I mean, you've got some, you've got people in there.

- The rev.

- The rev.

- Yeah.

- I mean, fighting lion eye, right?

But he's impactful.

- [Brad] Yeah.

- And he can come in here and he can make change and he can have you walk outta there like you're floating.

- [Brad] Yeah.

- And feel good about going in and making change for your community, making change for your family and making change for your business.

- He talked about being built different.

- [Matt] It's built different.

- That's what his whole thing was like, how can we as men be built different?

And that came back to being vulnerable, he was super vulnerable in front of that group.

And that's the amazing thing about the Iron Men Prayer Lunch is guys are coming there with a heart of vulnerability, just wanting to open up and wanting to grow.

It's incredible.

- That is incredible.

So you've had some great speakers.

Now think about this though.

You did it, your business still somewhat benefits, even though that's maybe not even the goal now, because do you sometimes even feel conflicted or do you sit here and go, "Wait a minute, I've got now another business, so to speak, even though it's not a," do you think that way or not?

- [Brad] Not at all.

- Not at all.

Okay, I was just wondering because you've get a lot of people attending this.

- And I think the reason I don't think about it that way is because I just, my whole life I've loved knowing and getting to know other men and people.

And so it doesn't seem like a selfish thing to me to try to get to know others better.

- I don't think it's selfish, but I think from an outside point of view, I will tell you this, you're becoming an influencer.

- [Brad] Okay.

- And that's a good, I'm saying it from a good thing.

Because you're bringing business people together for a cause.

And it may not be for everybody.

That's totally fine.

- [Brad] Sure.

- But you're bringing, and typically, I'll tell you this too, you know this, to sit here and go from 20 to 80 to whatever, it's hard.

- Yeah, it is.

- So that's impressive.

- It's been beautiful because I've met other men that share the same desires I do.

And now I've been working with other guys that I didn't really have relationship with that share the same desire to bring guys together for the kingdom of God.

And it's just, my mind is blown every single day with what is going on with my faith journey.

- I bet, I bet.

Very, very cool stuff.

I love the fatherhood piece, but I like how you bring in the business piece, because a lot of it is too, as men, we go home at night, sometimes to family, sometimes not.

But I'm going home to my family and I have to sit here and tell them about my day.

When I was working tough days and seeing things that I didn't want my kids to know about, you had to sit there and keep that inside and just to be able to be with a group and to be able to sit there and be vulnerable, I love the word, and talk.

And when you're vulnerable, you know this, you don't have to pour everything out, but you can pour enough out to kind of show your heart and soul.

Brad Stegall, you do great things for our community.

Thank you for coming on this show.

This is another episode of "Business Forward" and I'm Matt George.

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