ITF 8 | Cross Collateralization


Today’s guest is Marcus Long, an England-based Naval Officer who stumbled upon real estate investing and now wants to provide financial education as a way to give back. With his financial skills and his love for mathematics, there’s no doubt that he would succeed in real estate investing.

From house hacking his first property for $300 to owning 14 properties, Marcus has truly come a long way. Here’s a fun fact: He is also now one of the managing partners in Long Brothers, LLC Rental Properties!

Join us in today’s episode as we tackle his different strategies for acquiring deals. He’ll share all about cross-collateralization, equity strategy, $0 down payment, and utilizing the cash flow from other properties! Listen until the end of it as there are so many gold nuggets you don’t want to miss! Enjoy!

Listen to the podcast here


Achieving Successful Investments Through Different Strategies With Naval Officer Marcus Long

I’m here with my buddy, Nick Monge. How are you doing?

I’m doing great. How about you?

I’m doing good. How is your real estate stuff coming along?

It’s good. I got our own property under contract, which is great. My license finally came in, so that’s good. It’s going to start getting to work there. We’ve got our projects moving in Alabama and they’re going pretty well. I can’t complain. Everything is going well. How about you?

Things are moving along. I got another contract on a property in North Carolina that we’re look to BRRRR. I got another house hack under contract here in Denver that hopefully will work out nicely. It’s a single-family house but I can make it a triplex, which is a bit unique. Jacksonville, which has been the bane of my existence for the last few years, might close and if it does, I will be the happiest person in the world. Agent stuff is going good. A lot of people are house hacking here in Denver, which is great. We’ve got a great guest on the show and his name is Marcus Long.

Welcome to the show, Marcus. It’s great to have you. How are you doing?

I’m doing awesome. Thanks for having me. I’m excited to be here.

We’re excited to have you. Word on the street is that you are in a rural village in England.

That’s correct.

What’s the name of the place you’re in?

It’s in Shipton Oliffe. You have to google that one. It is a small village outside of Cheltenham.

I was wondering, I’m from New England, so a lot of times the cities and towns’ names are taken from England. I’m from Leicester, Massachusetts which there’s a big city there called Leicester, England. A lot of the cities there are the same, so I was wondering if there would be any correlation, but I’ve never heard of whatever name you just said anywhere in New England.

As you travel around England, there’s Shipton in about 43 different other words, so it shows up all over the place.

Marcus, how did you get into financial independence? How did you start learning about it? What action steps did you first take to start getting there?

I don’t know if I have a definitive moment where I learned about financial independence, but I’ve always had a finance and investment mindset. I was in a partnership with my dad and stuff like that when I was thirteen years old. I always had this entrepreneurial type spirit. I’ve always enjoyed math and finance, and my degree is in Finance. It always revolved around that. Over time, like many others, I started reading Rich Dad Poor Dad. As you move on, some of the others like Paula Pant and others are talking about financial independence. I’ve always had this ambition to get there even before I probably understood and knew what it was.

Improve your community by building relationships with the bank and people around you. Click To Tweet

Rich Dad Poor Dad is common.

We’ll get into some of the deals and stuff later but in reality, I started doing some investing and had already bought my first property and stuff before I read Rich Dad Poor Dad. I didn’t necessarily take immediate action right after it. It was some books like that that I did more concrete stuff.

In finance, you probably dabbled in the stock market in college and all that kind of stuff. You saw how it could be passive income and then you said, “Real estate is even better,” and then you went that route.

I was enlisted right out of high school, so I started investing in TSP and IRA-type stuff immediately. A few years later when I went to commissioning program and went back to college is when I bought my first property. As I read the books like Rich Dad Poor Dad, it made more sense to me, the tangible assets and how you could control the assets for pennies on the dollar. That’s where I started to shift towards the real estate focus.

Before you even started learning, what did your first deal look like? It’s probably brave. How did you get the courage to do your first deal without much education or even being super intentional with what you’re doing with it?

As I talk about this, you hear that it wasn’t intentional from an investing perspective necessarily. I still own that property now, but it’s not the best cashflowing. I just knew from math and investing background that owning a property is the American dream type of thing or whatever. When I was going back to a commissioning program and had the opportunity, I decided to purchase this 3-bed, 2-bath condo in Columbia, Missouri.

When I did it, it was better for me to buy the property and live in it than renting something else. That’s where it got kicked off. It wasn’t really like an investment deal from a rent. I didn’t run any rental property analysis. I didn’t think about what would it cashflow if I was going to move out later on as a rental. I didn’t do any of that calculation ahead of time.

That first deal was prior to Rich Dad Poor Dad, right?

That’s right. I bought that first property in 2004, but at the time, I can’t remember exactly when I read Rich Dad Poor Dad but it wasn’t until after the fact.

That’s exactly what happened to me. I was in the same situation where it made more sense to purchase a property than to rent because the rent was more, and that’s how I was forced into it.

Back at that time in 2004, I was E-5 or something, and the BH was probably $600 a month or whatever it was.

I’m a civilian and those are military terms. I was expecting anything with an acronym in military because you guys only speak in acronyms.

E-5 was an enlisting rank, and the BH was my housing allowance. When I moved back to Missouri to go to college for this commissioning program, my housing allowance was $600 a month, which is not much compared to a lot of Navy Bases on the Coast. I bought new construction, 3-bed, 2-bath condo for $86,000. My principal, interest, tax and insurance at the time were $520 or $530 a month or something. It made sense to me.

This was on the Coast?

No, this was in Missouri. I was saying that the housing allowance is much less than here in San Diego or stuff like that on the Coast. It made sense to me to buy a property to live in for the time being. I hadn’t intended to when I first bought it, but after I moved in, I ended up house hacking one of the rooms before I knew what house hacking was. I rented the room out to a friend of mine from high school for $300 a month. I didn’t buy it as an investment in that sense, but things fell into place like that. My mortgage and stuff in taxes were $530 a month. I started to rent a room out for $300. I was still getting my housing allowance, and then things started clicking in my head.

You bought this place. How did you feel going into that first property? It made sense that you were nervous. It’s almost like ignorance is bliss. You don’t know what you’d be scared of.

I probably wasn’t nearly as nervous as a lot of people are going to the first property, but I won’t say there wasn’t any. I was 22 years old at the time. I remember I was in transition, and I’d come home for a couple of weeks. I remember my dad going down to look at the properties. My realtor was my childhood friend’s mom who had happened to live there. I trusted her a lot. She was practically another mother to me.

ITF 8 | Cross Collateralization
Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!

There was a lot of security from that perspective. I remember some nerves. I went to lunch with my dad before buying it. After I was under contract, I went back out to Rhode Island for some training for a couple of months. I had them send me all of the closing documents ahead of time. Being the nerd that I am, I read through stacks of closing documents before my first property. I didn’t have a whole lot else to do.

You might be the first person ever to read through closing documents.

I haven’t done that again since. I figured once was enough, but I read through a lot of it.

Do you read through the terms of acceptance when you sign up for things on a website or something like that too?

No. You would think so, but one time going through that process was enough. I just accepted it. Debt is there for a reason.

You’ve got that 3-bed, 2-bath condo. Your mortgage payment was around $500 a month. That includes HOA too, right?

It doesn’t. That’s one downside of this. Initially, the PITI was about $530. When I initially bought it, it was 6.2% interest, which right now sounds high. I don’t remember back in 2004 how that was or if it was because I was a 22-year-old. I later refinanced it to $3,800. It’s lower than $500 and stuff now. There’s an HOA fee and land lease, which I’m not a huge fan of but it was brand new. Those two things together are under a couple of hundred dollars a month.

The total monthly payment is about $700 or so. When you were living there, how much did you get in rent from your buddy?


You’re living there $400 and you figured that $300 is probably a lot of the interest. The $400 is a lot of the principal. You’re paying down your loan and your buddy is paying for the cost of money. Now that you’re a real estate pro, how much is that rent for?

The rent is about $850 for the whole place and right now, between the mortgage payment, the HOA, property management, and all that kind of stuff, the total cost is around $750. By no means, it’s cashflowing. It cashflows $100 a month, which isn’t something that I would go for today. There are reasons that I still own it. I use the equity after paying on it for quite a while. I use the equity to cross collateralize on other properties.

In twelve years, it’s been vacant for probably less than 45 days. I’m not a big fan of HOA, so it cuts into your stuff. At some point in time when I remove those cross-collateralizations and stuff, I’ll probably end up 1031 out of it or something. It’s not an anti-cash cow by any means. There are reasons that I held on to it and use the equity to get into some other properties.

It sounds like the cross-collateralization is probably the big thing. Can you explain to everybody what cross-collateralization is and how you use that property to do it?

People talk about HELOC and things like that to get equity that they have in a property to take that out and use it to purchase another one. Cross-collateralization is using the equity I have in that condo and using it as a down payment on another property without refinancing or HELOC or taking any money out. The bank that I’m working with on the next property takes a second lien on that condo. I have 2 or 3 properties tied to that condo but it’s all the same bank. The same bank has the 2nd, 3rd, and 4th lien.

Who got the first, the one you’ve got the primary mortgage off of?

That’s right.

Liens and stuff can get confusing if you’re new. Do you want to explain what a lien is and what that all means?

For example, the bank I have mortgaged for the condo if I defaulted on it, they have the first lien. They have the first rights to get paid if the condo had to be sold, or foreclose on the 2nd, 3rd, 4th lien or whatever. The bank that has the second lien, if there’s money left over after if I defaulted, and there’s money left over after the first lien is paid, then the bank with the second lien would get paid, and so on so forth.

And that particular property was a retail place. And, you know, we're, we're trying to kind of gentrify and improve the community and things like that. And so I think some of the relationships with the bank relationships with the community and stuff… Click To Tweet

Is there any risk to doing that?

As far as cross-collateralization, absolutely, specifically as you get into higher properties and stuff. If you defaulted on one property, there can be a domino effect to the properties that it’s connected to. The properties that I have connected to, there’s still a risk. The Midwest properties, I’m pretty comfortable in paying all of them. If you started doing larger multifamily and things like that, it can be probably even a higher risk but there’s certainly some risk there.

If you use house 1 to get house 2, if you stop paying on house two, the bank can come after house one. That’s gives the banks a little bit more comfort and lends you money.

One way to get out of that is if you cross-collateralize initially, the property that you get into is a value-add or something, and you can put some value into that and then refinance it, then you can pull the two apart or something. A lot of people do that as well. There’s not that potential for a domino effect.

You BRRRR it with cross-collateral. You’ve got this first deal. It’s not cashflowing you a whole bunch but then again you bought this because you’re 22 and wanted to not pay rent. You weren’t looking at it as a high ROI. There wasn’t much intention behind it. How did you use that property to get number two and get to that 2nd and 3rd? How many properties do you have?

Altogether, fourteen properties. About three of those are personal. Eleven of them are in partnership with some brothers. I’ve done some private lending and limited partner on some mobile home park syndications. The fourteen that are personal and with my brothers are mostly single-family. There’s a couple of commercial retail in there and then I have about a 36-acre farm and stuff as well.

It sounds like you might be the type that gets bored with the same thing over and over, so you decided you want to do mobile home investing and farm syndication.

I don’t know if I’ve been bored. Some of the early fourteen, all of the buy and hold stuff was what I had done up until the end of 2020. The private lending, the limited partner, and the mobile home stuff, I started doing some more passive stuff since I came to England. It’s been the period that I have been in where it made sense for me.

I’ll go back to your question about how I use that first property. After I read books, I was in about five years of deploying quite a bit with the military, so it wasn’t like I jumped right into another deal after that. There were some big gaps of swimming at the forefront of my mind. After that, I moved out in 2008 out of that condo, and for the next ten years, I only bought two more properties. I bought another single-family house and then the farm.

It wasn’t like I jumped right in there and we’re rolling them over. I did use the condo to get into those other properties at that time by cross-collateralizing. About 2016, my brothers and I got together and partnered. We’re all geographically separated, but that’s when we started acquiring quite a few over the next couple of years.

How did the partnership work? We began to do that. You’ve got to get your feet wet with that single-family stuff. You got interested and you probably got a bunch of your brothers interested, which I suspect is your fellow military folks.

One of my brothers is in the military. I have two biological brothers, and then two brothers-in-law. There are five of us. In the military, we call each other ‘brothers’ quite a bit. In my case, it’s legitimately my biological brothers and then brothers-in-law.

You all got together and were like, “This is cool.” What does that structure look like? How did you make that work?

Myself and then my oldest brother, who’s also in the military, talked about Rich Dad Poor Dad and expressed interest in real estate together. We reached out and wanted to invite our third brother in to see if he was interested in working together. We did that and shortly thereafter, one of our brothers-in-law said, “I had a couple of investment properties. I’d be interested in joining you.”

We invited the fifth one as well because he’s local to where most of our properties are. It’s my two older brothers and then two younger brothers-in-law, so there are five of us. We’re geographically separated. I’m in England right now and one is in Georgia, one is in Kansas, one is in the St. Louis area, and then one in our hometown, which is Rural Northeast Missouri. That’s where the ones we have in a partnership and most of them are in around our hometown or within an hour there.

Your brother at home is the boots in the ground for you. How does that work? Is it a debt structure? Is equity structured? Did you guys split it five ways?

The way it is set up is it’s an even split of 20% each. We all agreed to contribute an equal amount of capital and/or labor in the case of my brother-in-law that’s at home boots on the ground. We have agreed upon contributions to do that for the time being. We’re not taking any money out for now. Everything is going back into the business. At some point in time, we may decide to change and alter that but initially, it’s an even split.

ITF 8 | Cross Collateralization
Cross Collateralization: Cross collateralization is about using the equity in one property and using it as a down payment on another property without refinancing or taking any money out of the bank.


You’ve got five people. How much money was invested in that syndication?

It wasn’t like everybody put in money upfront necessarily an equal amount. What we said was that over a certain number of years, everyone would contribute a certain amount of capital. It wasn’t like we all put in a solid dollar amount on day one. We had minimum monthly requirements, and then we would get to a certain point by year 5, 7 or whatever.

What property was that?

We have about eleven properties.

Single-family homes?

It is a single-family, with a couple of retails. It’s been mixed, to be honest with you. Our first property was fairly inexpensive in a rural area, but we went to a local community bank and convinced them to buy it with no money down. The first property we bought with zero down. We probably only have to put money down on maybe two of the properties.

You went to the bank, they put you with no percent down, and then you’ve been able to generate cashflow from each property, put it back in the business, and that buys your next house and build your empire that way.

We’ve done a couple of unique things. We had the one where we didn’t put any money down. I did help us to get boosted a little bit. I’ve used some of the equity I’ve had in the farm and stuff to cross-collateralize into the LLC. It’s mixing the two a little bit and that’s trying to get us kicked off. We bought another property from within extended family for about 75% of the market value that gave us some good equity to get going. It’s been a mix of cross-collateralization, working with a community bank to not put any money down on a couple of properties, and using some cashflow from others.

What does that conversation look like when you go into a community bank? A bank you’ve probably never heard of before like JamesCo or something. How did that conversation go?

We grew up in that area. It’s a small rural community. Going back to the young days when we were in 4-H, we used to get loans from them for livestock and stuff. We built those relationships. They know the family and things like that. There are decade-long relationships within the family or even within the community as well. Don’t get me wrong, we’re not going in there and getting no way down loans anytime we want, but there were a couple of pretty inexpensive properties in which we were able to do that to get started. Part of it was we went in there as a group and said, “This is what we’re trying to do,” and that particular property was a retail place. We’re trying to gentrify and improve the community and things like that. Some of the relationships with the bank, relationships with the community helped that conversation.

I like what you did. I always say everyone is dealt with a set of cards. You have your advantages and disadvantages. A lot of people might say, “I live in a rural area.” It’s a disadvantage because people don’t want to live there. It’s not going to appreciate. There’s a yin and the yang to everything. Wherever there’s a disadvantage, there’s an advantage. You guys exploited that like crazy because you built this relationship with a bank over the course of your life.

There are a lot of pros and cons to investing in that area. We certainly don’t see the appreciation that you might see in some places. We don’t invest for appreciation. If you get it, it’s a byproduct. The rents certainly are not near as high. Despite the low population, you would be surprised the demand there is for rentals. There are always people looking for rentals that are having trouble finding a place. I don’t think demand is that big of an issue if you have good properties.

The relationship we have with community banks sometimes is people talk about the struggles they’re having with banks or getting financing and stuff, and sometimes it’s hard for me to imagine because we’ve dealt with these community banks, we’ve had good relationships, and done such good stuff there. There are certainly some pros and cons that worked out well for us.

You used that first one to leverage up to get the whole bunch of others. You said you had eleven properties in this portfolio between the five of you now. How much would you say the whole portfolio was worth? How much is a cashflow?

I didn’t do all that math.

Rough numbers are fine.

It’s probably eleven doors, so to speak, and it’s probably somewhere in the ballpark of $4,000 a month or so. That’s not cashflow. I have to go back and probably do that math a little bit.

You don’t need to work in real estate alone. Surround yourself with people who have already done this, allowing your investments to escalate. Click To Tweet

It’s okay. You’re getting a couple of hundred bucks a month from that. You’ve got your couple rentals. How much passive income would you say you have?

I don’t include anything in that LLC or partnership as passive income for me, for the sole reason that we’re not paying out right now and everything’s going back into it. I’m not going to include that until we start taking distributions. I don’t want to plan for that and we don’t do distributions until a later point in time. From my other personal real estate investments, I’m probably somewhere in the ballpark of $2,500 a month passive from my personal stuff.

What number would you want? What point are you good with investing in real estate, you don’t need to do anymore, and you can just chill? A lot of people say $10,000.

My number is about $10,000 for now. What I plan to get to by the time I transition from the military in about 3 to 4 years is about $10,000 a month from real estate. At that point in time, you’ll reassess and that’s filling the gap between my pension and what I make today with a little bit of a buffer. When you talk about the number of years I’ve been investing, the passive income right now is $2,500-ish a month.

You’ve got a long way to go. That $1,800 of that or so has been in the past months. It escalated on that part. Later on down the road, we’ll start taking distributions from the LLC to increase that as well. For my transition out of the military, I’m planning for about $10,000 a month from real estate. At that point in time, I don’t think I’ll stop real estate. I’ll use it. A lot of my why is to give back, so it will allow me to increase the way I’m able to do that in a lot of ways.

$2,100 a month is still a decent amount. Now that you’re more focused on it and you’re leaving the military in a couple of years, that will grow. You stumbled into this. For the first ten years, you were Humpty Dumpty like, “I’ll buy a house here or there.” Now that it’s more intentional and you focus on it, it will go faster. It’s about time to get into the last part of the show, which is The Final Four. Do you have anything else you want to share?

I could probably sit here and talk forever. We talked about the different variety of things that have been done. We could probably go on forever and ever. The biggest thing for me is to surround yourself with other people that push you. I joined the War Room Mastermind. After all these years of investing, I started hitting some meetups. I joined that mastermind. It’s surrounding yourself with those other people. You don’t have to do this alone. Other people have already done the stuff and that’s what’s escalated the investing. A lot of times in the military, people will be like, “Have you done the math?” Staying three extra years and getting promoted to the next rank? Yes, I have done the math and I intend to make more than that in a shorter period. I don’t want people to feel like they’re locked into one solution.

Take everything with a grain of salt. See what people are doing around you and copy them. In real estate at least, every strategy has already been done, so you don’t need to innovate. Pick up rental properties, make sure they cashflow, you hit financial independence, and then you could take larger risks elsewhere.

You find out when you start networking and spending time around these people that everyone is not necessarily trying to compete with each other. Many of them have an abundance mindset and teach each other, learn, share, refer each other, and stuff like that. There are plenty for all of us.

If you don’t have an abundance mindset in this community, you will not fit in at all. Everyone has got that abundance mindset. I had a question about one of my clients, a realtor out here that helps house hackers in Denver, about a scenario of Denver that I have never had anybody purchase the house hack in yet. It’s up north in this town called Erie. I asked three of my biggest competitors who also help house hacking but we’re all friends as well, and they’ll get back to you within a couple of hours.

I’m like, “That’s a pretty cool thing.” I would do the same for them. They asked me questions. That’s the whole idea. You’ll end up making and be happier when it’s an abundance mindset rather than, “He stole this from me.” We’ll get into The Final Four. The first question is what book are you reading right now?

I’m about halfway through Man’s Search for Meaning by Viktor Frankl. I don’t know if you’ve ever read it or heard of it. He’s reflecting on his thoughts and experiences during his time in a Nazi concentration camp, and talks about the realization that those that had someone or something to live for had a better chance of survival.

That sounds like a good book. I’ve been looking for a new genre within the self-help region to explore. That might be a good one.

That’s tied to your why a little bit. It’s a little different perspective on it. I was doing the same thing. I was doing a lot of self-help and it’s a little bit different.

It’s a different flavor. It’s a little bit redundant, the self-help stuff. The second question is what is the best piece of advice you’ve ever received?

It is probably the realization of this whole not doing the stuff yourself and the abundance aspect. That’s not anything verbatim. I just heard that and brushed it off. Whenever I started getting around people, the whole Tribe of Millionaire concept if you’ve read that, it’s amazing the difference in my life both in investing and other aspects like physical fitness, family and stuff like that. You’re surrounding yourself with like-minded individuals.

Surround yourself with people that you want to be like and are better than you, and you’ll naturally progress up to their level. The third question is what is your why?

ITF 8 | Cross Collateralization
Cross Collateralization: Despite the low population, you would be really surprised by the demand for rentals. There are always people looking for rentals that are having trouble finding a place.


My goal is to create the freedom for my wife and I to design the life that we want to live on our terms. For me, I love to give back, that might be me volunteering. I love to write a check to a cause that I care about. I want to get to the point where when I wake up in the morning, whatever I do that day, even if I’m doing real estate and it’s the profits from that, or if I go volunteer somewhere, I want to be able to get back on my terms.

My family and I don’t have to worry about it. We’re taken care of. While some have a certain amount of profit given to a certain charity and stuff, I don’t have a specific one at this point. I like to support my community, support a variety of causes. Maybe at some point in time, that narrows down. That’s my real why. It’s when I get to that point where I don’t need to work for the paycheck and to give back in any way that I can.

Final question, what is the funniest joke you know off the top of your head?

I’m usually more of an off-the-cuff joking based on things that are being said. Do you know how to make holy water?


You boil the hell out of it. That’s probably a Scott Trench dad joke or something.

ITF 8 | Cross Collateralization
Man’s Search for Meaning

I’m sure if Scott Trench ever read this, he would appreciate it.

I didn’t copy it from him.

You probably heard on the Money Show. Thanks for coming to the show. Hopefully, I get to meet you in person at some point, not in your rural village of England, but if you come back to the States.

Are you going to be at BPCON?

If it happens, I will be at BPCON. I have a high inclination that it’s not going to happen because everything seems to be getting canceled. BPCON in the future, did you get your ticket?

I haven’t. I might be open to coming back for a couple of different conferences, but we’ll see what happens.

Hopefully, when the conference has happened in 2021, we’ll be able to chat. Thanks for coming to the show.

Thanks for having me.

Catch you next time.


Important Links


About Marcus Long

ITF 8 | Cross CollateralizationI am a husband, father of two spirited children, a real estate investor, and a Naval Officer. I grew up on a small Missouri farm where I was active in our family business from my early teenage years.

My formal education is in business finance (we’ve certainly failed to deliver formal education on personal finance and that’s probably why I feel called to help provide that here!). And for almost two decades, I have been blessed to lead and serve alongside some of our nation’s most diverse teams.


Leave a Reply

Your email address will not be published. Required fields are marked *