Gift Funds, Crash Indicators, and Problems

Why can’t I use gift funds on my down payment? What are the common housing market crash indicators that real estate investors should look out for? And why does David only invest with the short-term rental king, Rob Abasolo? If you’re joining us today for this episode of Seeing Greene, you’ll hear answers to all these questions and more!

David takes some time out of his day to sit down and answer arguably the most hard-hitting, specific questions we’ve had to date on an episode of Seeing Greene. These questions include how to find synergy between your career and your investing goals, how to not cross the line when working with multiple agents, the best ways to purchase real estate with no (or low) money down, and why David rarely partners up on real estate deals.

Some of these questions may hit home for you, as most of today’s guests are either rookie real estate investors or young professionals looking to get their start in investing.

Do you have a question you’d love to ask David? If so, submit your question here so David can answer it on the next episode of Seeing Greene. Hop on the BiggerPockets forums and ask other investors their take, or follow David on Instagram to see when he’s going live so you can jump on a live Q&A and get your question answered on the spot!

David Greene:
This is the BiggerPockets Podcast show 609. As far as practical advice for you on the next deal, don’t do it. Figure out a way to do it without a partnership. And if you have to have a partnership, don’t do equity splits. This is one of the reasons that in general, I don’t do equity, I pay people debt. What that means is people let me borrow money all the time and I just pay them a return that they know they’re going to get. And it doesn’t matter if the property completely falls apart, they get paid anyways. I don’t like sharing risk with people that I’m a partner with, because it ruins relationships, and it’s important to me that those relationships stay healthy.
What’s going on, everyone? My name is David Greene and I’m your host of the BiggerPockets Real Estate Podcast. If you’re not watching this on YouTube, then you don’t see the green light shining behind my head, but if you are, then you know what that means. This is another Seeing Greene episode. In today’s episode, I am going to take different questions from different podcast listeners or BiggerPockets members, and do my best to solve their problem, give them advice or help them scale their business faster, more safely, and in a better direction.
These episodes are specifically meant to teach you more about real estate by giving you my perspective. Now, I’m a real estate agent. I run a real estate team under Keller Williams. I own a loan company called The One Brokerage. I invest in short-term rentals, long-term rentals, multi-family property, commercial multi-family property, triple net property. I own note income. I flip houses. And I write books and stuff like that. So, I have a very well-rounded perspective that I like to share with everybody here. And the goal of shows like this is to take you deeper behind the curtain to see what’s really going on in real estate, rather than giving you the shallow answer that you can get anywhere else.
So, thank you very much for joining me. I really hope that you enjoy today’s episode. And if you do, please consider leaving me a comment on our YouTube page. If you’re listening to this on the podcast, that’s great. But when you get back to a safe place, if you’re watching this on a commute, please consider subscribing to our YouTube channel and leaving me a comment in the comment section, to let me know what you thought of today’s show.
For today’s quick tip, I just want to remind, registrations for BPCON are now available. This year, we’re going to be holding it in San Diego, and I want you to go, why do I want you to go? Because I want to meet you. Well, that’s not the only reason that I want you to go. I also want you to go because so many people get more involved in real estate when they develop an emotional connection to it. And in order to develop that emotional connection, you have to get involved. You have to get outside the realm of just being on the outside, watching, peeking in through the window, seeing what other people are doing. You have to get into the room and into the conversation, so you feel like you’re a part of it. BPCON is a great way to do just that.
So many stories have come from, “I went to BPCON, I met some people. I realized this wasn’t as hard as I thought. I bought my first property. I fell in love. I bought three more. Now I have more money coming in from rentals than from my job.” I cannot tell you how many times I have heard that same story, and I want you to be the next one to tell it. And if you’d like to register for BPCON this year, go to, and it will walk you through exactly how to do just that. Again, that’s
All right, today’s show is fantastic. We talk about what is the best strategy in today’s market? That’s always a good topic. We get into what to do when you’re navigating partnerships with different priorities, as well as how to get closer to real estate when you can’t go full-time, and more. Lots of really good questions. This is probably my favorite episode we’ve ever done of the Seeing Greene style, BiggerPockets Podcast. I really hope you enjoy it. And most importantly, I need you to let me know in the comments on YouTube, if you did. So, enjoy today’s show and let me know what you thought.

Nicole Heasley:
Hi, David. My name is Nicole Heasley. I have been investing for five or six years. I have four deals under my belt, and I’ve spent years listening to the BiggerPockets Podcast. And I’ve heard you and Josh and Brandon talk a lot about moving into a career that has more synergy with my investment goals. So, I got licensed and started my career as a loan officer in February. It’s going awesome. I am so glad I made this switch.
But most of the resources and conversations on BiggerPockets tend to focus on the synergy between being a realtor and an investor. I want to know more about being a lender and an investor. So, where should I look? Who should I follow? What resources are out there? And you gave us the book on being the very best realtor that one can be. I want to know who wrote the book on being the very best loan officer that someone can be, who wrote the SOLD for loan officers? And if it hasn’t been written yet, I have a suggestion for your future projects. Thank you so much for everything that you do and take care.

David Greene:
All right. Thank you very much for that, Nicole. I think this is a really cool question, because it’s something that doesn’t get brought up all the time. Let’s see how I want to tackle this. First off, the reason I wrote SOLD for BiggerPockets is there were no good books for real estate agents. There’s one called The Millionaire Real Estate Agent, which is fantastic. It’s written by Gary Keller and Jay Papasan. Jay is someone that we’ve had on the podcast several times. Gary is someone that I’m still working on, trying to get on, because he’s a fantastic real estate mind.
But that was really a high level book. It sort of is a map. It shows you the terrain. Here’s where the mountains are. Here’s where the stream is. Here’s where the quick sand is. And it shows real estate agents how to navigate through the big picture, but I wanted something like a field manual. I want you to tell me what boots I should wear. What’s poison Ivy and I shouldn’t touch it. How long can I go before I need water? There was nothing that was really written at a micro level like that. So, I wrote SOLD for real estate agents, and SKILL is going to be coming out very soon, that’s the sequel to SOLD. And then after that, SCALE.
So, part of why I write books is because there’s not a book written on that topic. When I wrote Long-Distance Investing, that was a book that needed to be written, because no one was talking about how to do that safely. Most people write books on topics that are already really popular, because they’re going to sell better. I just don’t like that, because if there’s already a bunch of books written on it, I don’t need to.
You make a very good point, there are not any books that I’m aware of that teach somebody how to be a good loan officer. It just isn’t very common, because the way that that industry tends to work is it’s broker centric. You’re a real estate agent, you hang your license with a broker, your broker becomes your mentor. You’re a loan officer, you hang your license with your broker, your broker becomes your mentor. There is nowhere to hang a license as a real estate investor, because there’s no license. And that’s why people come to podcasts like this, or they read books, or they watch videos on YouTube, or they read blog articles, because it’s set up differently. There’s nobody to show you how to do this job. So, you got to learn it yourself. And that’s why everybody makes content for real estate investors but not for some of these other jobs. Same thing goes with insurance brokers or appraisers, you don’t learn how to do that in a book, you tend to learn how to do that from finding a mentor who’s in the field, who teaches you.
Now, that being said, I would encourage anyone who wants to be a better loan officer to come work with us. That’s what we do. We’re mentoring people and helping them to be better. As far as your question of, is there a book that needs to be written? I like your little subtle hint that I need to write that book. That’s something that I am not qualified to write yet. I’m still learning that industry. Now, I think The One Brokerage is probably the fastest growing loan company in the country. We’re doing fantastic. We have way more leads than we can keep up with. We have to hire new people. So, for anyone out there who’s like, “I’m interested in a career as a loan officer.” Please come to me. Especially if you already are one and you just want a better opportunity.
That’s one of the things that BiggerPockets exists for. It’s a community. We network, we get connected to the right people that we want to be connected to. You can find handymen, you can find contractors from being in this world. So, I’m really glad, Nicole, for what you’re bringing up here and for the listeners who understand you’re a part of our community, you’re not just peeking through the window, listening to a podcast, you’re part of this. So, get involved deeper with it.
When I feel like I’ve got it down and I can explain to teach somebody how to be a loan officer, I will absolutely go to BiggerPockets and see if I can write a book. In the meantime, we’re creating a curriculum to teach people how to be loan officers. And there’s not a lot of people doing this. I know this is one of those sources of frustration for everybody who’s out there, who wants to learn how to estimate rehab costs, or you want to learn what to look for in a real estate agent. It’s very difficult for anyone to say, “This is a good agent. This is a good loan officer.” The industry just doesn’t work that way. It tends to be very sales oriented.
So, the one that you come across is the loudest one, the one with the big, loud mouth that says, “Come here.” And they’re not always the best, which is why relationships and word of mouth are how you get connected to the right people. And I’m only saying this because I don’t want to give anyone the false impression that yeah, there’s a book out there you can just go read, or there’s one question you can ask and you’ll find the best agent that way.
You almost have to know what you’re looking for. And so, that’s why on the podcast, I talk a lot about the perspective of a loan officer and a real estate agent, as well as the investor, in all kinds of different asset classes. I talk a lot about what I’m doing in my own businesses, and the reason I have those businesses is so I can learn what goes on in them, so that I can share the information with all of you.
Now, I also want to be able to train agents and loan officers to provide a very good service. So, that’s true, I want people coming to me to say, “Hey, can we use your realtors? Can we use your loan officers?” But even deeper than that, I’m trying to learn how those industries work, so I can make them better, so I can teach all of you. If you’re in an area where I don’t service, these are questions you should be asking, this is stuff you should be looking for.
Okay. As to the first part of your question, when you were discussing how you got your license to be a loan officer and it sounds like what you’re saying is you’re not really following your way into more deals, as a loan officer. That you’re in the world, like we’ve said, hey, you should get more involved and you’re there, but deals are not crossing your path. This is a great question and I want to be able to address it. Part of the reason that you’re not exploding in your investing career, even though you’re a loan officer, is the skillset to be a loan officer is different than being a real estate investor. Just like the skillset of being an agent is different than being a real estate investor.
If you’ve ever heard the phrase, “To a man with a hammer, everything is a nail.” You’ll understand what I’m getting at here. I actually think that my business as a real estate agent has stopped me from buying as many deals as I would have bought if I wasn’t a real estate broker. Now, that doesn’t mean I regret my decision. I’ve learned a ton through the business of selling homes. I’m a way better negotiator. Like the property that Rob and I just bought in Scottsdale, Arizona, we got, because I told our agent, “This is how to negotiate this deal. This is the exact timeline. I want you to say this right now. I want you to wait four days and I want you to call back. And I want you to say this script.” I only learned that because I sold houses.
But to be fair, I tend to look at opportunities and say, “How can I sell this house for someone else and get them a ton of money?” Versus, “How could I buy that house myself?” So, in some ways you got to be very careful when you get into the industry of doing loans or selling houses or being a contractor, you tend to look at every opportunity through your business’s eyes, not through your own eyes, as an investor.
The other thing that I think you should take mind of would be as a loan officer, your skillset is very technical. You are looking at memorizing guidelines for loan products, trying to learn what products might be out there. You’re trying to upload the right documents. It’s very accuracy based. That’s what I’m trying to get at. You’re a bit of a sniper. You take your time, you line everything up and you make the perfect shot. It doesn’t go quickly. Well, real estate investors are less of a sniper. They’re much more creative. It’s more about casting a wide net, getting a lot of opportunities, getting people calling you ,and then creatively looking for how to solve problems.
It’s a different way of looking at the world than when you’re a loan officer. As a loan officer, it’s very technical. You’re trying to get every single thing right. So, what you have to learn how to do is take one hat off and put the other hat on. You got to build a switch back and forth between everything needing to be perfect and having a wider vision, where you’re seeing everything that’s out in front of you and looking for opportunities. And the same is true for agents. They tend to look at everything from, “How do I make someone like me? How do I become nicer, friendlier, more exciting, more engaging, more interesting?” And they forget to look at life from the perspective of, “How do I solve a problem?” They only know one way to solve problems. They put houses on the market or they help people to buy them.
And so, agents have the same problem. This is one of the reasons I always say, “No, don’t get your license just because you think you’re going to get more deals. You won’t.” It goes the opposite. You spend a bunch of money. You build a business, you create a database, you actually get sucked out of the goal that you did have. And now you’re in a new one. Now, some people, I’m an example of this, can pull it off. So, I don’t want anyone to be discouraged and think it can’t happen. It requires a lot more focus.
Let me give you a real world example. I was asked the other day, “How do you get your spouse on board with your investing goals?” And I chuckled for a minute, because I don’t have a spouse. It’s not hard for me. I forget that there’s people that have to balance their relationship with their investing goals. Frequently, I’ll have a client who’s trying to buy a house with us and I’m having a conversation, trying to explain a complicated concept and my solution for it. And in the middle of it, their kid will start crying. Their attention gets pulled away. They’re not hearing anything I’m saying as soon as their kid needs something, right?
That person has to learn how to bounce their balance from one place to another. Or maybe I should say, bounce their focus from one place to another. It’s more difficult when you have children who are demanding things from you than when you don’t. Now, that doesn’t mean it’s impossible. And in some ways, you might actually be more inspired and more ambitious because of that child. So, it’s not bad, but it will make things more complicated.
So, in your situation, Nicole, you’re going to have to learn how to bounce in and out. Look at it like the goggles that you’re wearing. I have my loan officer goggles on, I look at everything from the perspective of, “How do I make it perfect? I can’t make a mistake. I can’t miss a detail.” You take those off, you put on your investor goggles, and you look at it from the perspective of, “What creatively can I do here? How can I reach this person? How is this property not being used well? How would I be able to borrow the money to be able to buy it? And how would I be able to rehab it? How would I find the contractor?” And then you got to take those off and put on a different set of goggles.
But I really think this is something that I’ve learned to do when people ask me, “How do you do everything?” It’s because I figured out this skill. I can take my glasses on and off, or my goggles, if you will, depending on the scenario that I’m in, and emotionally I can hit a different sort of … Just like your phone has different profiles, you’ve got silent mode, you’ve got loud mode. You’ve got all these different ways that you can have your phone act. As a human, you got to be able to learn how to do the same thing.
Also, I want to say, I love the T-shirt that you’re wearing, way to go representing BiggerPockets. Please let us know if you would ever like to make a switch and talk with us about working with us. And for everybody listening, I think Nicole’s got a great story. She couldn’t get into the investing world like she wanted, so she said, “You know what? I’m going to leave my job and I’m going to get deeper into real estate. Even if it’s not a full-time investor.” I would highly encourage many of you, as that’s the right move.
It used to be, quit your job, go full-time investing. Quit your job, go on the beach and drink cocktails all day long while you do deals from your phone. And for a handful of people that have that skillset, I do think that is a good option, but the vast majority of people, quitting your job in a market as uncertain as this, I just can’t in good conscious recommend that. I don’t think that right now is the time to take that risk. We don’t know what’s going to happen. We don’t know if the bottom’s going to drop out. We don’t know if inflation’s going to take off even more. There is so much uncertainty and we’re all sitting, waiting to see how this is going to play out. That you want as much certainty as possible in other parts of your life.
So, if you’re thinking you hate your job, you want to get more into real estate. Don’t think just quit it and go full-time investing. How do you learn a new trade? How do you learn a new skill set? How do you get involved deeper into real estate without being a full-time investor, to make more money, to put into investing? And that’s why I’m giving the advice to Nicole than I am. Once you make that jump, there’s another jump you have to take. You got to learn how to take off certain goggles and put on other ones. I really appreciate this question. I think this was awesome, Nicole. I wish I could have given you the name of a book to read. Unfortunately, there isn’t one and might not be until I write it. But in the meantime, you got to find the right mentor.
In the world of real estate sales and loan commissions, and even maybe insurance providing, title and escrow, your mentor is your broker. So, pick the right broker carefully. It’s not about the best split you can get or a title that they give you, that makes you feel special, or a business card that looks better than another one. It’s the human being that you are working underneath that’s going to determine how successful you become.
So, everyone here listening, if you’re not super happy with the current broker you have, when you go look for a new one, don’t just ask the question about what’s the commission split? Ask the question of how they are going to develop you as a professional. Mentorship is still the way that people progress through life. If you look at the people that are most successful, they always had the best mentor. Sometimes, that was their parents that they got to start off with. Other times, they just got lucky and their friends’ dad or mom brought them into the world. But no matter how you look at it, the mentor is huge, so make a big effort to find the right one. Thanks, Nicole. I’d like to hear from you again. Let me know how your career is progressing.
All right. Question number two is from Colin, “Hi, David. I’ve found myself surrounded by great real estate professionals. I, myself, am not licensed. I have one agent in my area that I worked with to buy my current house hack, which was a duplex. She has me on a few drip campaigns and I really enjoyed working with her. My mom, who is licensed in another state, referred me to this person. Since moving into the area two years ago, I’ve made friends with several other agents. I’ve got one that is a prospective business partner, so I assume she’d want to represent us if we go that route. I have another friend that I’d love to learn short-term rentals from. My question is, with all these real estate professionals in my circle, are there boundaries, faux pas, red lines, et cetera, I need to be careful of? I don’t want to alienate any of these friends and/or business relationships on the path to further building my business.”
My goodness, Colin. I love this question. Just the fact you’re asking it shows that you’re a person of character and that tells me you are much more likely to be successful. I wish you lived in California, because I’d love to be able to do business with somebody like you, who’s asking these questions. Let’s get into the macro, big view, and then we’ll zoom in on your question.
Where this is coming from is you’re understanding that it’s not really cool to have a real estate agent looking for you to buy a house and then have four other ones that are all doing the same thing. And then, basically what people like to do is set their agents up to be like, “Hey, you could be one of several, whichever one of you brings me the deal first is the one I’m going to buy from.” That always sounds good when you’re the person who’s buying the house. The problem is, at this stage, it’s not hard to find a buyer, they’re everywhere. It’s hard to find a deal for the buyer.
And by trying to date several agents in a market where you’re not as valuable as you used to be, because buyers are not as important, or I shouldn’t say important, buyers are not as easy to work with for an agent, as a seller. You probably get none of those agents giving you their best effort and you’re more likely to fail. So, I’m glad that you’re asking this question. I think one of the things you have to do is be very clear yourself, on what you want from the agent.
So, here’s what I find being an investor and a real estate agent. Oftentimes, when I’m looking, as the investor and I’m going to hire an agent, I’m going to talk to them about what they know about the area, what contacts they have and how they can help me. So, the agent that I used to buy the house in Scottsdale that I bought with Rob, owns several luxury properties in that area themselves and they run a property management company. So, we used them, not necessarily because they’re the best negotiator, because like I said, I provided some of the information of what I wanted them to do.
But once the sale was locked up, man, they had the pool company we wanted, they had a person they put in touch with to help us come up with the design that we should go with. They had contractor recommendations. They had a security company we could go to make sure people aren’t having a party. It was very, very, very helpful to have a person who owned properties themselves in that area, representing us. But I knew that was coming at the price of they’re not going to be the best when it comes to negotiating.
I used them for information for the area, but I also knew this was the agent I’m going to buy a house with. So, I didn’t feel bad about asking them information. What you don’t want to do is be the investor that talks to real estate agents and thinks that you should get free information from them without committing to working with them. This happens a lot. Now, BiggerPockets is awesome, we provide you with free information. That is why we make this podcast, to teach you everything we can about real estate. And then, I go start businesses to learn it, so I can come back here and teach you what I learned from the business. But you can’t expect that same level of service and commitment from all the different professionals you work with.
It’s not cool to talk to a CPA for three hours about tax strategy and then not use them to be your CPA, and go find another one that’s cheaper and say, “Hey, you should use this strategy that I just got from this other person.” I hope that everybody’s understanding, these are professionals that you’re not paying and it’s not good to conflate the free service you get with BiggerPockets to how the rest of the world works that isn’t in BiggerPockets. And a lot of people make this mistake and they rub agents, or loan officers, or CPAs, or insurance providers, or handymen, or property managers, or all the people that you need, the wrong way because they expect free information without commitment.
So, when it comes to your specific situation, Colin, my recommendation would be, the person who helped you buy your house hack is the agent that you use when you’re buying a primary residence. You like that person. They did a good job there. And you continue to send them referrals for other people that want to buy a primary residence. If you’re wanting to buy investment property, you use the agent who you feel more comfortable with that, and you just tell your agent, “Hey, I thought you did a great job helping me buy my house. I’m going to continue to refer other people to you who want to buy their own house. But I found another agent who specializes in investment property and I’m going to be working with them to buy the investment property I want.”
You can tell that same agent that you’re going to be buying investment property with, “When it comes to short-term rentals specifically, I have somebody else that I’m using.” Let the agent make the decision if they want to commit to finding you a deal or if they feel that you’re being pulled in three ways that they can say, “Hey, I appreciate that. I’m not going to look for properties for you. But if you find one you want to buy, feel free to come to me and I can give you my advice on it.” It’s that upfront communication that is so important.
You would want to know if your agent stopped looking for deals for you. If they just put you on a drip campaign and ignored you. Every one of us would want to know that, right? So, offer that same level of respect and courtesy back to them, “I’m not going to be buying a house from you unless it meets these criteria.” Just like you should get to decide if you want to use that agent and they shouldn’t be not telling you that they’re not working for you. The same is true, where you should be telling them, “I’m going to be using other agents for different purposes.” And then everyone, as adults, can make their decision, what level of commitment they want to put towards it. And you can have that conversation and get it all laid out ahead of time.
You do that, no one’s going to be upset with you. There’s not an agent out there who’s going to say, “I can’t believe that you were upfront and told me ahead of time you’re going to be working with another person.” What they don’t want is to be spending their nights and weekends up late, looking for properties, calling listing agents, giving up time with their kids, giving up their personal time to find you a house. And then when they do, you say, “Oh, thanks, but I’m going to have someone else represent me on this.” That’s what will upset people. Thank you for asking this question. I think this is very relevant and helpful to our community as a whole, as we try to learn how to deal with everybody else. And I appreciate you bringing this to the forefront.

Jeroe Jackson:
Hello, David. My name is Jeroe Jackson. I am a new investor just hitting my six-month mark now. And I’m currently working on some BRRRR deals as well as getting a property under contract for short-term rentals. I’m actually in two markets. I live in Florence, South Carolina, that’s my primary market and I’m relocating into Atlanta, Georgia. And so, soon that’ll be my secondary market. My question is this, it’s around getting small, multi-family properties and utilizing seller financing. There’s been a ton of information that BiggerPockets has offered around how to structure these deals and how to place offers. However, more specifically, I’d like to get your input on, if I know that the seller is motivated because they want to do a 1031 exchange, how can I still get into small, multi-family properties, that’ll cash flow immediately, especially if the properties could use some rehab work such as electrical or roof work, while putting very little money down?
I prefer not to put 20% down. My original thoughts were A, I could try to place an offer at asking and hope that the seller would be willing to do seller financing in some form of that, at full asking price. However, again, if they’re not motivated, because they want to do a all cash purchase deal, so they could do a 1031, that might not be the best case.
B, I could do a all cash offer via conventional or hard money by putting 20% down on the property and that’ll help the seller out, but it wouldn’t help me with my goals. I prefer not to put 20% down on a rental property. Or C, I’m thinking I’d do a hard money lender for 10% down and evict the tenants and do a rehab. However, that also isn’t sitting too well with me.
So again, just to reiterate, I would like to get your input on how I can get into small, multi-family deals with as little money down and knowing that sellers may be motivated because they want to do 1031 exchanges. What options should I consider that I haven’t thought of yet? Thanks. Bye.

David Greene:
All right, Jeroe. Thank you for that. Let’s look at this situation from the seller’s perspective. So, I hear what you’re saying is, what it sounds like is you’re trying to balance your needs with their needs and you want a creative solution that will come in the middle. And that is a good starting point, but if you want to get practical about how to move forward, there’s a way that you can approach how you are looking at the situation to determine the right scenario.
The first thing that you have to understand is if you want to use seller financing or you want to put less money down, you are probably going to be looking at an off-market opportunity. And the reason is, if you have to use a loan to buy the property, they aren’t going to want you to have another mortgage in second position behind theirs, which would be the seller financing.
So, you can do things that way, if you can get the seller to agree with it and if the lender agrees with it, but in many cases, if you’re trying to buy a property with the loan, it’s hard to use seller financing for the next part of it. And if you’re wanting to use seller financing for the whole thing, you’re probably looking at a seller that doesn’t have other buyers, because most sellers don’t like seller financing. Now, you could find one that wants seller financing, which is the ultimate goal.
But this is the mistake I see a lot of people make. They assume they’re going to find a seller of a house they want and convince the seller why they should do seller financing. And when it doesn’t work, they get frustrated and they come say, “How do I make this person sell me their house with seller financing?” It doesn’t work. It’s like finding a person who’s not looking for a relationship and trying to convince them why they should date you. If they don’t want to date you, they’re not going to date you. What everyone would say is, “Move on and find someone that does want to date you.” It’s like that with real estate too.
When you find off-market deals, they are more likely to be open to the idea of seller financing, because usually when there’s an off-market deal, it’s someone who doesn’t like realtors. So, they’ve got this tunnel vision where they’re like, “Commissions are bad. I don’t want commissions.” And they don’t realize that they’re not getting good representation. They often make bad decisions, just to be frank, when it comes to their own best interest. Those are the people that I’ve seen are most likely to be open to seller financing. So, if that’s something that you have to have, my recommendation would be, don’t look at properties that are on-market.
Now, when you do find a seller who says, “I’m not interested in seller financing.” Let it go. Move on to the next one. If you get one that says, “Yeah, how would that work?” And you can come to terms on the seller financing, that’s where you start having these conversations about creative options. That’s where you can start looking at using a hard money loan to buy a property or having them do seller financing for the down payment and you borrow the money from a lender. So, maybe it’s like 80% of the cost comes from the lender and then the other 20% comes from a loan of the seller made to you. Assuming that the lender’s okay with it.
Now, regarding the part of your question that has a seller that’s motivated because they’re going to do a 1031 exchange. The best thing to do is to put yourself in the position of the seller. So, if I own a property and I’m going to do a 1031 exchange, there’s some motivation for why I want to sell my property and buy another one. Now, I’ve found it really boils down to two reasons why investors sell properties. It’s pretty wild, but hear me out. The first reason that they want to sell a property is they found a better one. That’s when they would be using a 1031 exchange.
So, if somebody’s got a property and they go, “Hey, you know what? I just think I have a lot of equity in this thing. It’s not performing well. I want to be in a different neighborhood. I want to be in a better market. I’m going to sell a perfectly fine rental property to get a better one.” Now, the more common reason that people sell homes is there is a problem with it. That tenants aren’t paying the rent, the tenants are giving them a headache. It’s in a bad area. They think that they could do better in a different area. The house itself has deferred maintenance.
I mean, let’s all be honest, think about every car you’ve ever had, at what point do you think, “I want to sell this?” You either have a car you want that’s nicer, or you know your car’s starting to break down and you want to pass the problem onto somebody else. And this is something every investor needs to be aware of as a buyer. If you’re buying a property from a real estate investor, it’s important to know why they want to sell it, if they’ll tell you that. Oftentimes, there’s problems you’re not aware of, that they’re trying to pass on to you. Just like when somebody decides they want to sell their car.
Now, what would make more sense would be if you hear, “I’m selling the property because we have to move. “I’m selling the property because the owner just died and it’s gone into probate and I don’t want to own the rental property.” Something like that, that makes logical sense, that isn’t, it’s because the house has a bunch of issues or the tenant has a bunch of issues, would be a more desirable reason for me to look into that deal.
Now, in this case, if they’re going to be selling the rental property because of issues with the house, you should be aware of that. If they’re going to be selling because they want a better property, that’s usually good for you as the buyer. What you have to understand about a 1031 is that from the seller’s position, they have two concerns. The first is, “Can I sell the property?” The second is, “Can I meet the requirements of the 1031?” Assuming they can sell the property, because you’re telling them that they want to buy it, they now only have one problem to solve, “Can I meet the conditions of a 1031?”
And that can be split up into two things, “Can I identify a property within 45 days? And can I close on a property within 180 days?” So, in order for them to do that, they’re going to need to be talking to a loan officer to find out, “Can I get pre-approved?” They’re going to need to be talking to agents in different areas to try to find out, “Can I buy a house in this place?” What you find is their biggest concern is time. A quick close is usually not good in a 1031. So, we should all be careful we don’t make the assumption that every seller wants a quick close. That comes from primary residences where someone wants to get out from underneath it and buy a better house. But in a 1031, you might want to set it up where if they give you your price and they give you the terms you want, you give them an escrow period that’s longer, that they have the option of selling it under a shorter period of time.
So, if you say, “Look, I’ll give you 90 days before we close.” And then after that 90 days is when their 45 day timeline starts for identifying property. That would be great. But if they identify property early and they think they can get it, you leave the door open that you could do a faster close in that scenario, that will help them. That approach of looking at it from the seller’s perspective, makes them much more likely to work with you, because you’re relieving the pressure that they’re going to be feeling. And if you can find a way to give the seller what they want, where you’ve relieved their pressure and they feel good about the deal, they are way more likely to give you what you want, which is possible seller financing.
Hope that helps and good luck out there. All right. I got to say, we’ve had some great questions so far. This has been a very fun and I think, relevant episode for a lot of the struggles that investors are going through today. So, kudos to everybody that sent in a video or a written question. I love that. If you would like to be featured on the show, we want you here. Please check out and submit your question today.
In addition to that, I want to hear, what do you think about the show? Leave me a comment on YouTube and tell me what you think about my answers, what you think about the questions, what questions that you have that are not being addressed. And most importantly, let me know, do you like how I’m dressed? I dressed up for everybody today. I actually put on a shirt that has collars and buttons. And I’m not going to do this all the time, if you guys don’t appreciate it. So, let me know if you like T-shirt David better or collared-shirt David better. And let’s see if we can get a big debate going on in the comment section of YouTube.
Lastly, please, if you like these shows, hit the subscribe button. It’s super easy. We at BiggerPockets love it when you do that and you’ll be notified when new episodes like this come out. So, you don’t have to think to check it. YouTube will just tell you, “Here you go, hot and ready, another Seeing Greene episode of BiggerPockets.” All right, at this segment of the show, I like to read some of the comments that people have left on previous episodes, so you can see what you could be doing yourself.
The first one comes from S. Adams, “I too, stopped listening to the BiggerPockets Podcast for two-plus years until David took over. The new content is something I can relate to. I’m almost able to take something away from every episode. That was a huge change for BP. Thank you, Dave.” Well, awesome. I’m glad that you feel that way. Hopefully, there’s more people like you that also agree.
Next comes from Joe Picasso, “Your show has all the questions I didn’t think to ask.” That is a pretty cool comment. I like that. And that’s actually what the goal of this is. Most podcasts just ask the same questions, tell the same stories. It’s all the same stuff you’ve heard a bunch of times before. From my experience as a real estate agent, as a real estate investor, as a triple net investor, as a short-term rental, as a long-term rental, as multi-family, as a note holder, as someone who flips properties, and as a loan officer, I like to bring the questions people don’t know they should be asking. So, I really appreciate the advice you’re giving there.
And the last one from Tessa Higgins, “I love the format. Even if I don’t listen to the other episodes every week, I always listen to the Seeing Greene one each week.” Well, that’s nice. Thank you for that, Tessa. If you’re trying to figure out if it’s a Seeing Greene episode or a non-Seeing Greene episode, just check out the light behind me. I try to turn it green every single time we’re doing Seeing Greene. That’s not a coincidence.
And shout-out to all the people who take some time to submit these questions. I love that. And to be frank with you, those are people that are more likely to be successful in their investing, because they are getting involved in the community. I’m really on a campaign right now to take people out of, I’m just peeking in through the window and I’m looking to see what everyone’s doing, to opening the door and stepping inside to this community. Getting more involved and taking the journey that we’re all taking together. All right.
It’s scary to think about jumping off a cliff and hoping that you like where you land. And that’s what it can often feel like when you’re trying to invest in real estate by yourself. But it’s much more fun when you join a group of 10, 20, 30, two million other people, that are all walking the same path, that can help each other out on that path. So, please get yourself on the path. Go to BiggerPockets, make a profile there, consider becoming a pro member. I think that that’s a great way to get yourself involved. Subscribe to this podcast and leave me comments. Let me know what you think. All right, let’s take another video question.

Hey, David, big fan of the show. My question is regarding receiving gift funds in making real estate investments. So, I’m a young guy and I bought my first property last year with gift funds from my parents as part of the down payment. And that was as a primary residence. And now when I went to buy my second one as an investment property, the lender told me that I can’t do that, because you can’t provide gifts funds for an investment loan. So, now what we’re thinking of doing is using a hard money lender and then refinancing into traditional loan for a lower rate. You think that’s a good strategy? Any other thoughts regarding gift funds for investing in real estate? Appreciate it.

David Greene:
Thank you there, Alex. From my understanding, you were actually told the correct information from your loan officer, gift funds are allowed for a primary residence when it’s from someone like a family member, they’re not allowed for investment property. And the reason is, the lender’s looking at your debt to income ratio and they’re determining your ability to pay something back. Well, if you’re taking out a loan from someone else, which you may call a gift fund, but it isn’t always an actual gift, they expect it to be paid back, that creates concerns about your ability to pay off your mortgage, if you also have additional debt where you have to pay back the person you borrow the money from.
So, that’s where the whole gift funds things comes from. And it does apply to investment properties, where that’s not allowed. Your strategy as an alternate was basically describing the BRRR. And that’s exactly what I do think that you should do. Another thing that you could consider, instead of having your parents or your friends give you money as a gift payment for this investment property, see if they can be a partial owner. See if you could put their name on the title or create an LLC with them in it together, and use that LLC to hold title. And what they would’ve given you as gift funds can just be their contribution of the down payment. Talk to your loan officer and see if that strategy would work. That’s another pretty viable option for you.
Now, the last part of your question was, what advice do you have regarding gift funds? And I’m going to go back to the same thing I keep saying, that people might be tired of hearing, but it’s just this important, I got to keep hammering it out. This is the broccoli that no little kid wants to eat, but everybody needs to hear. This is why house hacking is such a superior strategy to everything else. It’s better than BRRRR. It’s better than long-distance investing. It’s better than everything.
Just consider that if you house hack with a 3.5% down, FHA loan, many BRRRRs leave much more than 3.5% in the deal. I’ll hear people say, “I want to BRRRR my primary residence.” And my question is, “Why? Why go through all that work, if you can just put 3.5% down and be done with?” It’s basically a pretty good BRRRR right off the bat, because you’re not having to get money back. You only had to put a little bit in down. You didn’t have to put a ton of money in. And when you house hack, you get the primary residence loan, so you can put less than 20% down. You get a better interest rate. You can use gift funds.
All the things that make real estate ownership easier to acquire, happen when you’re buying a primary residence. And if you buy the right one, when you leave, it becomes a rental property that you didn’t have to put 20% down on and you didn’t have to use the BRRR strategy for. Do you see what I’m getting at? I call this the sneaky rental tactic, because you end up buying a rental property that you just have to wait a year before you can use it for that. But in the meantime, you save a bunch of money on your mortgage.
Now, I hope you guys can understand, I wrote Long-Distance Investing. I wrote the book on BRRRR. I use both of those strategies. I still think house hacking is better than all of them. You can just only do it once a year. So, that’s why I tell people house hack one house every single year. Anything in addition to that, consider some of these other strategies like long-distance investing, BRRRR investing, some of the other stuff that we talk about. Moral of the story, house hack whenever you can.
All right. Our next question comes from Davis in Georgia, “On the mortgage side, the rising interest rates have been making predicting cash flow a little difficult. Do you see increased availability of fixed rate mortgages with longer amortization, for example, 35 to 40 years in the future? Would this be a benefit for investors to increase cash flow or do you think it would increase risk? I appreciate all your wisdom.”
All right, let’s break this down. Davis, I assume that you are talking about commercial multi-family type property. In residential properties, we’re not seeing adjustable rate mortgages very often. There’s actually products that my loan company offers and other loan companies, I believe, are starting to offer them as well, where you can get a 30-year fixed rate, but it’s still based on the income of the property, not the income of the person. So, from that situation, it’s still low-risk. It’s not going to change your cash flow, if you know what your interest rate is, it’s the same for 30 years.
My assumption is that you’re referring to when interest rates adjust on some of these commercial properties. So, you get a 3/1 ARM or a 5/1 ARM. If you’ve ever heard people talk about these ARMs, that stands for adjustable rate mortgage. And when you hear them say 5/1 or 3/1, the first number is how long, in years, the period will be where you get the same interest rate. And the second number is after it becomes adjustable, how often can it adjust? So, a 5/1 ARM would mean for the first five years, your interest rate is locked in place, and after that every one year, it can adjust to a higher rate.
Now, what I like about your question is I think you’re looking the right way when it comes to a crash. Okay? Here’s my personal opinion. I can’t state this as fact, because none of us know what the facts are, but here is how I see crashes tend to happen in real estate. They are not as related to the price of homes as people think. Home prices going up quickly or very high is more of a byproduct of what causes a crash. It’s not what causes the crash. What typically causes the crash is either the entire economy tanking, in which case real estate is not crashing, the whole economy is crashing. So, everything tends to crash when that happens.
And I don’t think it makes sense to worry about that scenario, because it doesn’t matter where you put your money. If you put it in crypto, if you put it in NFTs, if you put it in stocks, you put it in bonds, you put it in Treasury bills, whatever it was, it typically all crashes when the economy crashes. So, the specifics are, it’s usually related to debt and the cost of debt and the availability of debt.
So, here’s how I see it happening. This is what happened during the last crash and this is what I’m always looking for in my position as a real estate broker and loan broker, to see if I see another crash coming. Home prices are this hand, this is my left hand. And home affordability is my right hand. All right? They tend to move up at the same pace, and people have to be able to afford the house they’re buying. Well, if demand gets so high and supply is too low, what you see is that the price of a house gets higher and higher and higher than the average person can afford. I don’t think we’re there yet. We haven’t had that problem. All the loans that we’re giving out are still based on debt to income ratios.
Now, it’s probably wealthier people that are buying houses. I will agree, that’s a problem. It’s harder for the people that aren’t super wealthy to buy real estate. But those that are buying it, are not buying real estate they cannot afford. And that’s one reason I don’t see a crash coming anytime soon, they can still afford what they’re buying. But here’s what you’ll find, at a certain point home prices are much higher than what the average person can afford. And what that means is that banks that make these loans or the lenders that are giving out money are like, “Man, we got all this money to lend and we got no one to lend it to, so we’re not earning interest on it. And our employees aren’t making any money because they’re not getting any commissions from doing loans. There’s only a handful of people buying all the real estate. We need to increase the velocity of how often people can buy a house, so we can make more money.”
And at that point they have to be creative in solving the problem of what a house is worth on the free market and what the average person can afford. And the gap between those two things is typically what causes the problem. So, when they start coming out with loan products where they say, “Well, you can only get approved for a $600,000 house, but all the houses around here are $800,000. What if we give you an adjustable rate mortgage for the first three years at 0%, because you could afford the house at 0% interest rate, but then after three years, it’ll adjust. What if we find some way to not make you put as much money down to come up with the difference? What if we let you cross collateralize this with some other asset that you own?”
When you see tricky creative solutions in the financing department, starting to be applied to make real estate affordable, because by its very nature, it is not affordable, that to me, is the beginning of a crash. That is what I’m looking for. So, what we’re seeing right now is a lot of loans that are being made based off of an income that a property produces. That’s not crazy wild. Okay. I don’t agree with the people that say, “Oh, they’re giving out debt service loans. That’s bad.” We’ve bought commercial property like that forever. As long as I’ve been around, that’s how they determine how much you’re allowed to borrow for a commercial property. It’s, what is the property producing?
In some ways, that’s actually smarter and safer than making it based on the debt of the human being, because they could just go out there and load themselves up with debt, buying cars or stupid things. And now they can’t afford the payment. The problem would be if they made these adjustable rates or other creative solutions with financing. And they’re not, they’re still 30-year fixed rates. So, to me, you know what your payment’s going to be, you can budget around it. That’s not any riskier than a different kind of loan that’s based off your personal DTI.
But if I start seeing them say, “For the first couple years, your rate’s only whatever.” That scares me. Those are sales tactics, right? When you see a furniture store that’s like, “You pay this much for a couch,” and it’s really high, “but no payments for the first year.” Oh, I don’t like that at all. What kind of a person is that drawing? It’s usually a person that can’t afford a couch. Not always, but often. When I see car companies doing that, “Get 0% interest for the first three years, and then it’s going to jump up to 9%.” But they put that in the fine print. What that makes me think is they’re targeting people that can’t afford that car or that truck. All right?
Now, they can get away with that, because if you can’t afford your payment, maybe you sell it back to them at a big loss to yourself, but now they can go lease it to someone else. It makes sense for the car companies to do that, not for the person buying the car. Well, in real estate, lenders don’t like taking back homes. If your loan is being given to you by a company that understands real estate investing and they want to own your property, well, shoot, if you can’t make the payment, they’ll foreclose and they’ll just manage it themselves. We just don’t have that happening right now. That typically leads to foreclosures. They get put back on the market at reduced rates. And then when that starts happening at a grand scale, boom, we have a recession.
So, to sum all this up, what I’m concerned about in the future is creative financing that shouldn’t be making sense. If you start to see banks that are like, “Man, everyone we’re pre-approving is not getting pre-approved for enough to buy the house. We have to figure out a way to make up the difference.” That’s bad. You’re asking me, if I was President of the United States, rather than having loan companies create creative, tricky financing, I would be incentivizing people to build more rental properties, to build more homes, to build more supply, to balance out the supply with the demand. That’s the healthy way to approach it. It’s just not always the approach that we end up taking.

Hey, David, how are you? My name’s Anthony Zato. And my question is about multi-family strategies and partnerships. So, I am 24-years-old and I am 50/50 partners on four separate duplexes. One of my deals in particularly, I am partners with my father. He is in his late 50s and we have a lot of equity in the property and I would like to cash out, refi the property to purchase more rentals. And he would like to pay off the property to experience higher cash flow.
So, I guess my question would be, is there any way to satisfy both parties? I’m happy either way, but I just feel like making my money work more efficiently for me would benefit me, because I’m a little younger and I have some more time to experience the benefits. Thanks.

David Greene:
Hey, Anthony, thanks for asking. Life is good right now. And I love that you asked this question. To be completely honest, this is one of the reasons that I rarely ever partner with other people. It’s only happened a handful of times in my life, and even then only recently, and even then only on really big deals. And even then, only with people that I have other business interests with in other areas. And here is why, partnerships always sound like buying real estate is less scary. My friend, Daniel Del Rio, likes to make the claim, “Nobody likes to take the jump alone.” It’s always more fun if you got a person there to do it with you.
The problem is, once you’ve taken the plunge and you’re in the water, you now have to do a lot more work and keep a lot more people happy. And what you’re describing is the quintessential problem with partnerships. Somebody wants to play offense, like you, where they want to keep building and scaling. Somebody wants to play defense, like your partner, who says, “Nope, let’s pay them off and let’s have cash flow.” And there is no way to reconcile that. And this is just one of the things when you’re choosing your partner, it’s not that age is the relevant factor, but in general, people that are older want to play defense and people that are younger want to play offense. And so, you got yourself entangled up in this situation with somebody who has completely different goals than you.
So, now that you’ve taken the plunge, they’re swimming this way, you’re swimming this way. The further you get apart, the more tension starts to come in the relationship. So, as far as practical advice for you on the next deal, don’t do it. Figure out a way to do it without a partnership. And if you have to have a partnership, don’t do equity splits. This is one of the reasons that in general, I don’t do equity. I pay people debt. What that means is people let me borrow money all the time and I just pay them a return that they know they’re going to get. And it doesn’t matter if the property completely falls apart, they get paid anyways.
I don’t like sharing risk with people that I’m a partner with, because it ruins relationships, and it’s important to me that those relationships stay healthy. I also don’t like a person who isn’t me, having some input in what direction we should take the property. If they’re a genius, of course, I’d rather have them putting in some input, but most geniuses don’t need to partner with me. They would set it up to where I was getting paid debt instead of equity. In general, you don’t want two CEOs. You don’t want two team captains. There has to be a person whose vision that the group is going to follow. And unfortunately, in your case, when you have equity partners, which always sounds good, you end up with this problem of vision.
Now, how you can salvage. What I like that you said is you’re a half owner in four duplexes. Assuming they’re all relatively valued the same, what if you split up your partnership and said, “I’ll take these two and you take these two. You pay off yours. I’ll refinance mine to go buy more.” Both people get to be happy. And most importantly, you get out of this partnership that isn’t a bad partnership, it’s not like you guys are fighting, but you have different visions. And if you have different visions, you don’t want to stay long-term with those same people.
This is what human beings need to understand when they want to partner. If you go for the emotional security of having a partner, it makes it easier in the front end, it becomes much more difficult on the back end. And I know I have people listening to this that are nodding their head and saying, “Yep, that’s exactly what happens. Nobody ever thinks that was what would go down, but that is what goes down.” And for a lot of the people that do business with me, they’re confused at first as to why I don’t want to be 50/50 partners. And this is why, they will do better, they will make more money if they let me stay in the position where I’m the visionary and they’re following my vision. They will be happier. Our relationship will be better.
The minute you have the 50/50 thing, you have people’s egos getting involved. You have people saying, “Well, why can’t I get to have advice?” Even though they’re not someone who logically should be putting in their 2 cents. Or you have the problem of someone saying, “I think we have a crash coming.” And someone else say, “I think the market’s going to run up.” Does that sound familiar? That’s pretty much where we are right now. So, I’m sorry to hear about your situation. It could be worse, but I do think what you should try to do is dissolve the partnership. Each of you take two of the duplexes. Maybe you get appraisals on them and if somebody’s side has $30,000 more than the other, you figure out some way to make payments to that person until that 30,000 is paid off or something like that. Let them do what they want to do and you go do what you want to do.
Luckily, you’re able to get out of this situation, I think, because it’s a family member and because you have an even number of properties, but it might not be that easy in the future. So, you’re better off to cut it off now. Thank you for your question and let us know how that goes.
All right, everybody, that was our show. Another episode of Seeing Greene, and maybe one of the best ones that we’ve ever done. I don’t know, maybe I’m biased, but I like these difficult questions. This wasn’t the typical, “What kind of loan should I use?” Or, “What areas should I invest in?” These were some deeper, nuanced, more difficult questions that are super relevant to being successful in real estate investing. “Who should I partner with?” “How should I dissolve this partnership?” “What’s going to make the market crash?” “What do you think about the future of financing?” “I’m a new loan officer. How can I be better at my job?” That might be my favorite question ever. Someone saying, “How can I be a better human?” Whether it’s, “I want to be better at my job.” “I want to be in better relationships.” “I want to be better in fitness.” Whatever it is, I love the question of, “How can I be better?” And on the other end of that, tends to be success.
So, thank you all who submitted a question. If you’re listening to this, I want to hear from you. Please go to We would’ve come up with this earlier, we just couldn’t figure out what URL to use. Luckily, we figured that out. I’m David, so go to, and leave your question there for me to answer. And one more time, I just want to remind you, please leave me a comment on YouTube. Tell us what you think. Tell us what you’d like to hear more of. Tell us what you loved about the show and then subscribe to the channel. Thank you very much for being here. I will see you on the next one. This is David Greene for BiggerPockets, signing off.


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