July 2022

David:
This is the BiggerPockets podcast show 641.

Christian:
But you never know, right? Your next relationship, your next lead, your next investment partner could come from anywhere. If you’re always thinking of maximizing the time that you’re spending through your life, it compounds just like money does, right? Everybody has their 401k that compounds on interest every year. Time is the same exact way. And if you choose very carefully where you put that first minute, before you know it, you’re getting five or 10 minutes out for every minute you spend.

David:
What’s up, everyone? This is David Greene, your host of the BiggerPockets Real Estate Podcast here with my co-host Rob Abasolo. Rob, how’s it going today?

Rob:
I’m feeling good, man. I’m feeling really good. I’m closing all my rings on my Apple Watch. And that’s honestly the only goal that’s a requirement every single day is to close my rings, get my steps in, burn some calories and hopefully get a little bit towards the who I used to be physically. It’s my big project for the next two or three months.

David:
It’s no joke.

Rob:
And then it’s over. Then I’m done. I’m just kidding. Yeah. Obviously.

David:
Trying to maintain fitness while you’re able to make money is really hard. It’s so hard because you’re like, “Oh, if I take off two hours and I go work out, I might lose 10 grand.” It’s always in your head. It’s very hard to stay disciplined with that.

Rob:
Yeah. The channel, pandemic, everything just really put a… Oh, having kids put a pause on anything physical for me for the last two years. As someone who’s always on camera, I was like, “Okay. All right. All right, buddy. It’s time. It’s time to trim you up, pal.” I give myself motivational talks in the mirror every day.

David:
Well, let’s keep at it. You can always send me those gym selfies, man. We’ll keep each other accountable.

Rob:
That’s right. You send me those every so often.

David:
Today’s show is nothing short of incredible. In today’s episode, Rob and I are interviewing my business partner, Christian Bachelder, who I built the One Brokerage with, who’s also a very prominent real estate investor. Christian has bought 15 homes over the last year through partnerships and by himself. And he shares a lot of the information that helped him to do that. So we get into Christian’s buy box, the criteria he looks for, which is very specific.
He’s also my partner in the One Brokerage. So we talk a lot about how he helps with financing of my deals, angles that we see that other people don’t know, what you should talk to your real estate broker about, how you could make your agent better. I mean, I could go on and on and on. This was a very, very, very detailed show that does run a little bit longer, but I want to make sure you listen all the way to the end because we share where you guys can get some more information to help make your realtors that you’re working with better. Rob, what were some of your favorite parts of the show?

Rob:
You know, I think it was a really nice… It was nice to hear him talk through his, I don’t know, the linear progression of why he started new companies and really evaluating his time. But we spoke a lot really about the return on time, which is really, really big. I think that’s a metric that people ignore quite often. We’re always chasing the cash on cash or the return, the ROI, right? But the actual time investment and reinvesting your time so that it starts to compound, we talk all about that and how that affects his businesses. I thought it was just a really interesting viewpoint.

David:
That is a very good point, and that will lead us to today’s quick tip, which is if you’re working with a realtor and you’re not thrilled about the service you’re getting, maybe they’re good, but they’re not great. Maybe they’re not even good, but you like them and you’re loyal to them. You don’t have to be stuck with a bad realtor, and no I’m not going to tell you to switch and go with me as your realtor, because I’m not licensed in every single state. What I am going to tell you is that there are resources out there that you can provide for them that will help them be better. BiggerPockets itself is the very best one. Tell your realtor about this podcast, get them listening to this, get them on the website. Many of them would do a much better job for you if they had access to the information that you do.
I write books to help realtors. You can find them at biggerpockets.com/store. Sold and Skill are the first two books that I wrote specifically meant to help the BiggerPockets community be better realtors and get better service from their realtors. In today’s show, Christian talks about how you can send your realtor to us and we will get them a free education to help you close more deals with them. We all get better when we share information. So if you’re not thrilled about what you’re getting, instead of getting frustrated and yelling at them, just be like, “Listen, I’m texting you a podcast, listen to this thing and then get back to me.”
All right. Today’s show is really good and a little bit long. So I want to get to it right away. Rob, is there anything you want to add before we bring in Christian?

Rob:
No, no. I don’t want to make the podcast even longer. So I’m going to amp here for a little bit and let’s get into it.

David:
Christian Bachelder, normally I would ask you to introduce yourself to our audience. However, because this is a special occasion, I’m going to take the liberty to do that myself. Let’s see how much of this I can get right.
Christian Bachelder is a UC Berkeley graduate with an engineering degree, a BJJ purple belt. He owns an Allstate Insurance Company. He is my partner in the One Brokerage, which might be the fastest growing loan company in the country. We just got back from a trip to Michigan, where we got invited out to learn from United Wholesale Mortgage because we did so much business with them. We got connections to the CEO and some other people within there that Christian works to get our clients better deals. Let’s see what else. You’re also a real estate agent that has sold houses. You own short-term rentals in various states.
We own one together in Tennessee and you’ve got several others you own as well as others that you have with partners. And we have plans on creating an actual lending company where brokers would come to us and we would be the one financing the loans for the investors. So what we would like to do is to create a situation where we go to the investors and we say, “We’re going to offer a product to real estate investors.” And then your local mortgage broker, if it’s not us, comes to us and we put a deal together that works for you as an investor.
Maybe most importantly, Christian and I shared a very important vision. So about six years ago, when I started the David Greene Team, I had a vision that I would like to have the real estate agent and the insurance company and the lender and the appraiser and the contractor and all the pieces that you will need under one roof so that you don’t have to worry about if the person that you’re working with is any good or not.
And I met Christian, and not only is the guy brilliant, as you guys are going to hear on this podcast, he’s got a brain like a computer, but he also had that exact same vision as he’s selling houses and he’s doing mortgages, and he’s doing the insurance and he was doing it at a smaller scale. And then like most people, we partnered and you ended up drinking from a fire hose. I will say you’re the only person that did not drown from that fire hose. So you impressed me, and we went into business together.
Now we are pulling back the curtain. For a long time people have heard about Christian, but didn’t really know who he was, and you guys are going to get to know him today. Christian, did I miss anything?

Christian:
Man, I think you cleared it all up. I think, well, that’ll be our show. That’s it, right?

Rob:
I think that’s it. Thanks for tuning in everybody, and we will catch on the next episode of BiggerPockets.

Christian:
There we go.

Rob:
Well, it’s just such an impressive resume. You’ve done a lot. You’ve got a lot of plans here. I guess my question just to get us started here in the podcast is, how the heck did you get here? You know, this is such a journey that you took to get to this point. What led you here?

Christian:
Yeah, it’s a question I’ve gotten a lot. I would probably argue that there’s not a whole lot of chemical engineer, mortgage brokers, real estate insurance brokers out there, but for the one other person that may be in the world, maybe we have some similarities. After graduating, as David shared, I did attend UC Berkeley. I was in a industry that had no fulfillment for me. I’m a people person. I can’t sit behind a computer, type in an algorithms and code all day.
Actually, I had a pretty early on mentor. A really good buddy of mine growing up, his dad kind of had a similar goal on a smaller scale of building this so-called one-stop shop, right? Where I always joke, my ultimate goal, if I reach where I’m trying to go, is to never write a referral check again, right?
If we could just create a network where people can go to, if you’re looking to invest, you don’t have to talk to anybody else. Right? We can find the home, finance the home, protect the home with an insurance policy, build your finances, maybe manage the property for you. That’s the idea. And then building a place where people can go just for a general advice. Right?
But to get back to the question, how I started, it was really just seeing every time that I sent a referral to a State Farm or an Allstate, there was never the level of service that I wanted for my client. Right? Similar to how David, David gives a lot of referrals out as well. And that’s his name, right? His name is attached to those people that he refers to. Now that I’m on the scale of him, you really feel that, right? If you refer to one person who gives the borrower a bad experience, it’s your name, right? They say, “This was your guy, your guy failed me.” Right?
I hold myself to a really high standard and it’s hard to hold other people accountable to the level that you hold yourself. So I’ve gotten really good at squeezing 25 hours out of a day, I guess, could be my best way to put it. You know, I sleep on average, I think Kawasaki said this the other day, too, sleep about five hours a day. It’s definitely a grind. But at the end of the day, if you can build processes and systems around you that allow you to maximize your time, you’re going to be able to succeed in building a company.

David:
So this is probably a good time to talk about just like transparently what my life is like and what Christian’s life is like now that we’re partnered together. We worry constantly that we’re going to let somebody down. We’re in this position where people look up to us. Rob, you’re now in that same boat. And they say, “Hey, David, can I talk to your CPA? Can I talk to your mortgage broker? Can I talk to your real estate agent?” They’re thinking in the back of their mind that that person is David. They get to know me. They hear me talking.
Podcasts are weird. I remember the first time I met Brandon Turner, who’s actually flying into San Francisco. I’m going to see him tonight. I’m like, “Hey, you don’t know this, but we’re already friends. I already know what coffee you order at Starbucks. I know all this about you. You don’t know me. So it’s kind of weird.” But that’s one of the cool things of a podcast is you get to know a personality. The downside is we are always worried. If a mistake happens and you trusted me, that takes it, it hits you so hard. But because of the level of volume that people are drawn to us about… That’s a terrible way of structuring that sentence. Because we have this platform and there’s so much volume of business we’re doing, our employees are going to make more mistake because they’re working with more people.
They’re going to be busier than somebody else might be, who’s in a similar situation. We’re constantly training them, pushing them, trying to get them to be better. But they’re not me. They’re not Christian. They’re not Rob. They’re not going to be quite as good, especially in the beginning. So we always are crossing our fingers and holding our breath like, “Oh, please nothing go wrong.” There’s a lot of stress that’s involved in that.
Part of how Christian and I have structured things is we’re not starting a business that we don’t do ourselves. Basically when someone comes to us to get a loan product, these are the products Christian found for me, because I’m probably the worst loan client in the world, which he can tell you about later. How do we make this work for David? Because if it’ll work for David, it will work for anybody. When you come to me to buy a house, you’re getting trained by agents that went through what I tell my buyer’s agents to do or when I’m selling my house, this is the way I do it. They got trained in the same thing.
Same for insurance and for the property management company will have at a certain point. My opinion is these are the best ways to run businesses is you did it yourself, you took what you learned and now you help service clients. The downside is when you have so many people you’re trying to help and your staff is new, there’s always going to be a little bit of hiccups. Maybe we could start off with just getting the downside out of the way. I’ve never really asked you this, Christian. What has your stress level been as you’re trying to keep up with the volume of business we’re doing and protecting my reputation while you’re doing that?

Christian:
Yeah, it’s a task. I mean, not only… When we first started, it was pretty much me, right? I was taking everything onto myself because I had such a high standard and I didn’t want to let you down. I didn’t want to let your customers down, your real estate team, all the people that we work with. And the most difficult part of the process was demanding that same level of work ethic and accountability from the people that we hired. Right? And the people that we joined on a team to tell them, “Hey, you’re going to get a level of leads and a level of customer access that you’re not going to get anywhere else.” Right? I mean, people come to us and they expect you, right? This is the similar struggles that you have with your real estate team.
It was about a 16 to 18-month grind unlike… You know, and this is somebody coming from arguably one of the most competitive majors at one of the most competitive schools. And that 12 to 18 months was like nothing I’d experienced. I mean, that I was driving all night mentally just through every recess of my brain to try to make this thing work. Right? I’m proud of what we built. It’s still a work in progress. But even today that’s a huge test to make sure that we’re holding up the name of BiggerPockets, the name of you, the name of everything that we represent in a good air.

David:
Yeah. And in a year we became one of the top mortgage brokerages in the country. Right? That’s very fast. It’d be like, imagine putting on that… I don’t know of the good analogy, but putting on 50 pounds of pure muscle in one year, it’s a strain on the body. It’s very difficult to do something like that. So we do take our job very seriously and we’re always trying to do things right. But I think, right, Rob? You had an experience with us where we funded the loan that we bought the property we bought together. One of the reasons Rob got, and I got a really good deal on that property is it sat on the market for a long time. I thought I was going to go buy four more of those properties after we closed. I don’t know if I told you, Rob, everything is more expensive and not as good as that house. That thing was a steal.

Rob:
Oh, yeah. Yeah. Scottsdale. Yeah, we got a good deal.

David:
But part of the reason is that it was sitting on five acres. Normal conventional lenders won’t fund loans when there’s that much land, because the concern would be well, are we funding the house? Are we funding the land? Because if we have to foreclose on land, we don’t know how to sell that. We can sell a property. So they put a limit on how much acreage, which most people would have no idea that that’s a requirement. I wouldn’t have had that idea if I wouldn’t have run into it. Well, having Christian on my side, he can go out there and he can find the lender that will do it. Or sometimes we can twist their arm and say, “Hey, we’re bringing you this many loans. You’re going to fund this one for us because you want to keep our business and we can help our clients in that way.”
The downside is just, it’s hard when you’re in Rob’s position, when the person you’re working with is also working with other clients and sometimes they’re not as experienced as Christian and I would be. So I’m noticing when you start these companies, there’s always positives and negatives. You kind of have to take both. But the benefit of, I think what the three of us are doing is we’re in the game, buying these properties ourselves, running into problems. Later in the show, I’ll talk about the 1031 problem that I just ran into when I was with Christian. He and I worked through that thing, but I would’ve never known that was even a problem. Now I’m able to come share it with everybody else. So this is the benefit of doing your business with a company that also does stuff themselves.
If you guys are going to partner with Rob on something, he has tiny homes, he has short term rentals. He’s very, very good at knowing what a person cares about when they go into the home. So if he’s helping you with what you’re trying to do, it’s experience. With Christian, he owns an insurance company. He knows angles other people don’t see. Same thing with mortgages. We can solve problems ways that other people can’t. Whoever you’re working with on your stuff, I’m always encouraging people. Try to do it with someone that owns homes. If your agent also owns properties in the area you’re buying, that’s the one that you want to use. And that’s how we’ve structured things. I went off on a little bit of a trail there, but Christian, do you feel like you are able to provide better service, solve problems, build a better business because you’re in the game of real estate yourself?

Christian:
Absolutely. This isn’t a pitch to just use us, right? I mean, there are mortgage brokers that invest out there in the world, but on just an average, working with a company with the morals and the foresight and the experience that we have, you’re not going to get that from a phone rep at Quicken. You’re not going to get that from a phone rep at better.com, right? I mean, you’re going to get that from somebody who practices what they preach, right? Who do it, who invest, who own properties. In my situation, I bought an insurance agency because frankly, I saw people get screwed with insurance coverages. Right? I saw people… I mean, David, after I reviewed your insurance policies, I was like, “You’re not insured correctly.”
Right? Like, “Let’s get this taken care of. Right? We got to get you insured properly.” I mean, that happens so much because the only advertisements you fee for insurance are say 15%. Right? People aren’t actually talking about what you’re getting.

David:
Or more.

Christian:
Yeah. There you go. You know? And a lizard’s the one telling you, right?

David:
Right.

Christian:
At the end of the day, if you’re working with somebody, it’s like that fiduciary relationship. If you’re working with a representative with your finances that is going to put your best interest first, you’re in a good spot. If they have the experience and the knowhow to know what your best interest is, you’re in the right spot.

David:
I’d like to point something about that, and then I’m going to… Rob, I’m going to toss it to you for an example. One thing that I’ve learned being in this business is how that person decides what’s in your best interest can be very different than how someone else does. So what I’m saying is if you’re going to a discount agent who says, I’ll sell your house for 1%, or a discount insurance company that says your premium will be this low. That is a way that they believe they’re bringing you value. “We’re the cheapest, we’re saving you the most money” until something happens. Or maybe a property management company that says, “I’ll manage your property for 3% or something” until something goes wrong. And then very quickly you’re like, “Oh wait, this was a terrible idea. I can’t get anyone on the phone.
I’m bouncing around in other countries. They’re denying me coverage. I’m going to come out of pocket $12,000 that I don’t have.” Your listing agent doesn’t sell your house for nearly as much money in there. Then they’re always frustrated later. I’ll tell you guys just a sneak peek. When we’re helping on the David Greene Team to buy houses for our clients, I purposely trigger listings that I know are bad brokerages or bad listing agents because we will out negotiate them. They’re not going to be as good. You don’t always realize that you’re losing out on something when you’re just looking for the cheapest thing. So in our world, we typically see like, we’ll get someone pre-approved for a loan. And then some other mortgage broker will say, “Oh, I can do it for less. Your interest rate will be less. Your closing cost would be like, not a lot less, just minimal amounts.” And they’ll go with that person.
The reason it was less is because their entire staff is in India on a different timetable that is not very incentivized to get your loan closed, and it takes them 60 days instead of 14 days. And you lose the entire deal because what you thought was you were getting value from a cheaper rate. I know before I got into the business with you, Christian, I had more than most people, but it was still a very limited understanding of how the mortgage industry even works. Like, why am I talking to you but the loans being done with somebody else over here? And why shouldn’t I just go to Wells Fargo? That’s where I bank. I could just get my loan there. There was all of this nuance that I never understood.
I’ve since become very skeptical when the first way someone says they bring value is they’re cheap. If that’s what you open with, right off the bat, I’m very nervous. Rob, this was a thing that you and I experienced together in Scottsdale, where you found an agent for us. And I was like, “I don’t know, man, that property management seems like… It seems kind of expensive what he’s looking for.” And you’re like, “Yeah, but the guy does this and this and this. And he knows all these things and he has…” And I’m like, “Oh wait, this, yeah, this is incredibly valuable. We’re not just getting his management. We’re getting his entire list of resources, the people that fix things when they break. We’re getting his expertise. We’re getting to know about the area.”
In that sense now, it becomes incredibly cheap. So I wanted to give each of you a minute to maybe give an example of a person you’ve used or an experience that you’ve had where you went with the more expensive option, but it either saved or made you much more money.

Rob:
Yeah. I got this one locked and loaded all the time. I mean, I always talk about on the channel quite a bit is hiring what I call your Airbnb Avengers. These are the people that are actually running your property when you’re doing self-management. So your Airbnb Avengers are going to be like your cleaners, your landscapers, your pest control, your pool maintenance, all that type of stuff. But the lifeblood of your business is always going to be your cleaning crew. And so very rarely do I negotiate with my cleaners because if they say that they want a hundred bucks and I say, “How about 90?” And they’re like, “Okay, I’ll take you on as a client.” Well, they’re going to give you 90% of their effort in my opinion. And so for me, I don’t really negotiate.
I had my cleaners for a long time. They were charging me $70 to clean my tiny house for about two years. And then I got the dreaded text about a month ago. He was like, “Hey man, we’re raising rates.” I was like, “All right, let’s talk about it. Why are you doing that? I want to understand.” He was like, “Well, it’s been two years and I’ve never asked for an adjustment. So I’d like $85 instead of 70.” I was like, Okay, that’s… You know, it’s significant, but I was like, “Okay, well, you deserve it because I have 293 reviews on this listing. I have a 4.95, which is really freaking hard with 300 reviews. And they all talk about how spotless the place is. So it’s worth it for me to pay an extra 15 bucks to keep my amazing cleaner, because then I know that it’s always going to be clean and I’ll always have great reviews. And thus I’ll always be more bookable.” So for me, I’m never really skimming out on cleaning when it comes to my short-term rental portfolio.

David:
What’s the cost of a cleaner that doesn’t show up and actually cleaner doesn’t do a good job, and your next guest walks into your property and it’s messy? What do you think that costs you when they put [inaudible 00:21:32]?

Rob:
Hundred to thousands. I mean, one bad cleaner cost us thousands of dollars one month in just refunds where they didn’t show up or they forgot, or they were really bad. We had to obviously let them go, but we had to let them go because we were like, “Look, dude, I…” We’re paying them. They’re cheap, but we’ve just refunded $900 in the last week. They’ve cost us $900. If we had just divided that over a year and just hired someone better, we would have better reviews. So it’s always one of those things that we’re learning constantly.

Christian:
Yeah. I mean, I’m just thinking as Rob’s talking here, I’m thinking their cleaning’s not worth that extra $15, that relationship you built was. Right? I mean, you’re paying $15 to keep the same people who you have two years of trust in, right? I mean, you have two years of relationship that you built with them and good work. Like you said, one bad cleaning is thousand dollar refund, $1,500 refund, depending on what your nightly rates are. I mean $15 increase, of course, nobody wants to hear it, but man, when you’re saving a relationship and trust and time out of your pocket, right? I say time out of your pocket, because it’s going to segue a little bit into this idea of your return on time. I mean, how much would you have to spend to fix a $15 error that you didn’t want to pay for?
Right? Obviously, with people like us, I’m pretty sure each of us would rather be doing a couple different things rather than trying to keep an Airbnb clean or I mean, we have a lot of different ways to spend our time and that relationship is just man, that’s… And it’s the same argument, right? Coming to a mortgage broker, coming to somebody that you trust, coming to an advisor, somebody who understands you. Okay, you’re talking about a difference of a couple thousand bucks on your closing cost or 8% or a quarter percent difference in your rate, but that other lender may not understand what you’re trying to do. Right? They may hinder your ability to continue to grow your portfolio with the product that they place you into. Right?
This is a really good example. Last time I did a video with you, David. We were talking about that loan product that came out the day that you went into escrow on your last property. If I didn’t know what you were trying to do, I wouldn’t have even told you to go get it, right? That completely changed your game plan for that property. Right? Obviously, we’re partners, but if you weren’t linked up with somebody who understood your position, that wouldn’t have even been an option. You would’ve had to completely pivot your financing strategy. I think it saved you like $300,000 on your down payment, something crazy, just because I knew what you were trying to do and I was actively thinking when I saw that product.
So a hundred percent, I mean the cheapest option… You know. We have a saying when we hire people here. Do you buy everything that you own at Walmart? Right? You could probably get the cheapest option at Walmart, but you don’t own everything from Walmart. You probably don’t want to get the things that you really care about from Walmart, right? Your finances should obviously land in that category. Right?

David:
Well, I think the average investor takes the perspective of they’re the hub and all of these ancillary companies are spokes that they need to make it happen. I need a lender. I need insurance. I need an agent. I need a property manager. That isn’t inaccurate, but that perspective creates this idea of I have to go tell them all. I have to solve my problem and tell them what I need. Right? So then I need to get a loan. What’s the cheapest rate I can get? I need to get a loan. What’s the best down payment program you have? And then they spend all their energy trying to figure out to solve their problem and then go to someone and say, can you fix it? Which isn’t bad, but it’s much better when you’re all sort of in the hub together. Like how Christian and I, we were just together for 10 days.
And while we’re there, we’re brainstorming on the most efficient way to put these things together because he knows what I’m trying to do. He’s like, “Ooh, this would be better in this situation” or “Let’s make sure we don’t make this.” Those little things he catches save us hours and hours and hours of time and money later. I guess you don’t pay money in hours, but you know what I mean? They cost money to do because we are working in it and he knows what my plan is. Those relationships are valuable. Property management companies that give me ideas. Like, we were just looking at properties in the Smoky Mountains. And when you have a good property manager that says, “Hey, here’s an idea. You could take that sleeper bed from this property you’ve got and you could move it over into this one. And if you got an extra two people sleeping here, it goes from 10 to 12. That’s probably going to be an extra $25,000 in revenue a year.”
Ideas like that that I wouldn’t have naturally thought of right away. Maybe four years later, I think of it. But in the moment, their experience is helping me a ton. It’s hard to see that when you’re just thinking like, I got to fix all my problems and what’s the cheapest option. That’s one of the reasons that we talk about being relationship based because not only do they make you money and save you time, but they let you stay focused on the things that are more productive for building a business. That’s one of the things I want to ask you, Christian, you’ve mentioned that I talk a lot about velocity of money. This concept that put your money out in the world, have it create equity, have it create cash flow, pull it back in and then send it out again.
You’re constantly sending money out in the world to add more value and then come back to you. That’s one of the ways that you build wealth, but you talk about the velocity of time. So would you mind sharing your philosophy because frankly you wouldn’t be able to do all the stuff that we do together. Run a mortgage company, run an insurance company, buy your own investment properties, train the guys. We’re working on creating a program for loan officers that want to learn how to do loans, where they can actually come to us and take a course where they will teach them. Here’s how you’d be a loan officer, similar to real estate agents. How do you put all this stuff together? What are you doing with your time to make that possible?

Christian:
Yeah, that’s a really good question. And even following up on Rob’s first question as well, this is kind of a fusion answer. We’ve hosted talks. We did one down Long Beach on that velocity time and I just couldn’t help but think when I was sitting there hearing you talk. I mean, people say time is money all the time, but really the equivalent, when somebody’s thinking of investing strategies and investing mindsets, everybody gets broken, you know just completely fed up with running analysis. You know, you get into analysis paralysis just on money, right? Like what’s your ROI? What’s the down payment requirements? Just like you’re saying, David, oh, I need the minimum down and the highest return. Right? But nobody’s thinking, man, in the time that it took you and this paralysis that you had to identify these properties, run numbers and you had to run a hundred numbers to buy one property.
You know, if you pivoted a little bit, right? And put some processes in place that allowed you to maybe buy three instead, your return would be three times as much. It’s that transition from thinking of where are my dollars going to where my time’s going? This is really the foundation of how I believe I arrived where I am now and why we continue to grow. A lot of people would look at what I’m doing and say, “There’s no way there’s enough hours in the day.” But if every hour that I spend is being compounded in the similar avenue of how David talks velocity of money, every dollar you put in investment property, whether you’re borrowing it or whether you’re long term renting it, you’re hopefully getting multiple returns on that dollar. Right? That’s how I think of time.
I’ll give a couple examples. When I first started out, the first example was I was a realtor, right? I was referring people over to a lender and I was referring people over to insurance agent. I started doing all three. So now every minute that I was spending with a client is now technically three minutes. I’m spending a minute with them as their insurance advisor, their real estate advisor and their lending advisor. Right? That was the idea. I’m maximizing every minute of time that I’m spending with the customers, and the customers felt that. They’re like, “Oh my God, I’ve never had a mortgage broker who could advise me on my insurance policy.” Right? That would lead to me getting referrals and getting people who… A real estate agent is never going to get an insurance referral, but I did. Right? Because I was maximizing the time I spent.
And even transitioning that into now with how we’re building our company, David and I, as he shared earlier, we bought a property together. So every minute that I’ve spent with David building our business relationship and our personal relationship has now evolved into a partner, a real estate investing partner relationship where I didn’t know when we first started a mortgage company that we would own property together. But every minute that we spent building this company was also building an investing relationship. Right? So my minutes have been compounded with David. And I told her, I’d give her a little bit of a shout out, but one of my… She just started as a client, Karen. Karen Skrabanik. David, you know her.

David:
Who you met because she was a client of the David Greene Team, started doing loans with us, right?

Christian:
Hundred percent. Absolutely. She came, she was a client of David’s on real estate side. We did her loan. And funny enough, I own a number of rental properties with her now. And every minute that I spent with her, I didn’t know, but I was spending it with an investment partner. Building a mindset together and analyzing properties together, and realizing that we were on the same page with a lot of our investment strategies, and eventually that led to a really good partnership forming. I can say there’s a million situations. I mean, David and Rob, you guys are co-hosts of this podcast. You guys bought a house together. You’re compounding the time that you spend with each other. Right?
So just in every avenue of life, and I know this is hyper specific to me, but the people who are listening, who are W2, when you go out on the weekends, right, you go to the beach, you go to the bar, you go out with your friends. Those could be future partners that you don’t even know yet. Right? I mean, it could be people that you buy your next property with. When you’re at your family reunion, whether you’re a salesman or you’re W2, and you’re looking to invest, your family members could be your partners, and you could be compounding that time.
Obviously, don’t make everything about work, right? You need your family time. But you never know, right? Your next relationship, your next lead, your next investment partner could come from anywhere. And if you’re always thinking of maximizing the time that you’re spending through your life, it compounds just like money does. Right? Everybody has their 401k that compounds on interest every year. Time is the same exact way. And if you choose very carefully where you put that first minute, before you know it, you’re getting five or 10 minutes out for every minute you spend.

Rob:
That’s really interesting. So I’m kind of curious, do you think of… Like, any decision you make or any business decision you make, do you ever think about the value of your time? Do you actually assign a dollar amount and thus use that to guide how you move forward or if you empower someone else, to sort of take the load off your plate or whatever?

Christian:
Yeah. A hundred percent. I mean, I wouldn’t say I’ve ever necessarily tied it to a dollar amount, although that’s really good advice. I should probably start doing that, but I just think it’s just… Like I said, there’s just so many opportunities where this could… I mean, it could be walking your dog at the park. Right? I mean, when I bought my mattress that I sleep on, I refinanced the guy who sold me my mattress. Like you never know. Right? I mean, there’s people everywhere that you can strike up a conversation with. There’s a lot of people, realtors who do it part-time and loan officers who do it part-time. They know because they’re in a sales position that every minute you don’t know where your next lead’s coming from, but if you’re really living with that, and I think that’s great advice, Rob, even tying it to a dollar amount. Like, Hey man, how much? If you had to get taken away from what you’re doing, I mean, I can even imagine with you or David.
I mean, imagine you guys couldn’t work for two weeks, how much money are you losing? Right? Imagine your phone died, you had no reception and you couldn’t leave your house. I mean, the amount of dollars that you would lose, and that’s a short period of time, that’s a week or two. Right? But the amount of impact and compounding on your time that you guys have in your networks and your spheres would be massively valuable, right? I mean, it’d be hundreds of thousand dollars probably if you guys couldn’t work for a month. Right? Not only for you, but David runs a team, right? David’s team would lose money. David’s businesses, Rob, your short-term rentals, your management companies, all that. I mean, how much would be lost there because of the way that you guys have compounded your time. I just think it’s such a valuable mindset instead of always making it about the dollar, right?

Rob:
Yeah. For sure. Well, you run that little exercise, man. I mean, I think it’s very eyeopening because that was for me, as I start to scale and really kind of run with all of the different businesses that are floating around in the ether right now, it’s tough because I have a tendency of wanting to do everything. But like you said, it’s like I’m trying to squeeze 25 hours out of a day and it’s really, really, really tough.
About six to 12 months ago, I really started calculating what my actual hourly rate, just so that I know, and effectively, it’s really eye-opening to see that because then I’d look at everything else that I do and everything else that I get cheap about and I don’t want to hire people for. I’m like, oh yeah, I’m losing thousands of dollars by just even thinking about this for two days. You know what I mean?

Christian:
Absolutely.

Rob:
It definitely helps guide me and empower me to delegate and develop teams a little bit more for sure.

Christian:
Yeah. It pushes that priority to the people that you do delegate towards. I mean, David and I have both have experiences with we hired the wrong person. Right? It took more time that we invested into them that didn’t have a reward. Right? I mean, especially if you’re teaching that mindset with people that you’re partnering with and your employees or whoever it is and the listeners’ lives that you’re using this with, if you’re also imparting that onto the people that you’re building with, now you’re compounding two people’s time. Right? And by you, whether it’s Rob, you using leverage, or David and I hiring an employee and having them do a job that we would do otherwise, if they’re also compounding their time, I mean you go four or five people deep in this mindset and you got five people doing a job of 50, right? I mean, that’s really how you build a team culture. You can build this mentality that man, time is so valuable that everybody’s now getting the maximum value from it.

David:
I think it would be valuable if we gave some practical examples of how we work this into our life. Like your example of I went to buy a mattress and I started a conversation, so I refinanced the guy’s house. I got a free mattress and I made money by going to buy something. I had the same experience where, when I bought my car, I ended up selling the guy a house, and so that paid for my car and then some. I got a free car out of it. If you have that perspective, everywhere you go, if you’re talking to people about, Hey, do you know anyone that might want to be selling a house? Do you know anyone who’s got a hoarder house or something?
Everybody remembers that weirdo in their life that has just crazy stuff in their home and their house is falling apart. When you ask those questions, they might get answered. So do you guys mind giving some… They don’t have to be actual examples. They could be hypothetical, but something that a listener who’s hearing this concept could walk away from after hearing this and say, “I’m going to start doing that.”

Christian:
Yeah. I can start. I think, everybody’s thinking of side hustles nowadays, right? It seems like everybody that we pre-approved drives for Uber or DoorDashes or whatever. It’s funny. I mean, it sounds like a joke, but everybody that we pre-approved got multiple sources of income on their tax returns. So I think of it from the analytical, like the mortgage broker side of things, right? When I see people give me their tax returns that have five or six different avenues of income, both of you guys are like this, right Rob?

Rob:
That’s me.

Christian:
Yeah. I mean, you got your courses, you got your real estate, you got businesses that you’re running, you got the podcast. Right? I mean really the easiest way for me to say that is that building multiple streams of income, maximizing the time you spend in each one. Right? I mean something like, and it doesn’t have to be driving for Uber. That’s the dumbed-down bare bones version, but it could be something as simple as that. Right? It could be something as simple as, hey, I want to… You know, if you’re good at something, right? I mean something that David and I are working on, as he alluded to, is creating this course. Right?
If you’re good at something, share it with people, right? Try to fill a niche. Try to fill your time with something that can benefit other people, and maybe you end up building a company around it. Right? I mean, I don’t think David or Rob, either of you guys probably predicted you’d be in the spots that you’re in, but because you were building a team surrounding yourself with people and maximizing your time, you guys really built something. Right? That’s the most bare bones version of it that I can think of.

Rob:
Right. You seem like you’ve gone down this… I was going to say rabbit hole, but it’s way more that. Well, it kind of is because you’re going down the intricacies of building businesses, and you’re very successful at this, and you have several businesses that are producing income for you. What was that moment… I guess in all of this sense, you have businesses and teams. What was the moment you decided to actually start investing in more real estate or more short-term rentals? Why did you do that versus continuing to pour into those businesses?

Christian:
That’s a really good question. Funny enough, I bought my first house, I think within the last 50 months. It’s been about two years and I could have purchased way sooner than that. Absolutely. I set a goal for myself where I wanted my businesses to be not self-running, but be a method of income that would be my safety net. Right? It would be, I can now invest with confidence knowing that if something did go wrong, I’ve built enough aside from real estate to withstand any windfalls that come. Right? I probably started investing a little bit late. Of course, now everybody goes back and says, I wish I bought more, but knowing that my businesses were my first pursuit, that’s where I felt like I got the biggest bang for my buck.
That allowed me to now grow at the level that I wanted. So I guess to answer your question, I didn’t start buying until I could buy at the speed and the level to which I really wanted to. Right? I hadn’t gotten there yet. Until I could, I mean, I purchased 15 homes in the last year, right? I mean, that’s more than one a month. Right? I wouldn’t have been able to do that.

Rob:
[inaudible 00:38:26].

Christian:
Yeah, I wouldn’t have been able to do that unless I built a really strong foundation that had enough cash flow coming in, had enough ability or had enough time where I had the ability to go dedicate time and resources to buying these properties because everyone’s an analysis. Everyone’s a partner that I partnered with or a property management company. I mean, you guys know the drill of property managers. You got to find boots on the ground, and everything that David writes in his long term investing book. I started only once I felt I had the confidence to do that, the way that I wanted to. I wanted to invest on my own terms. That was a little bit of when I made the switch.

David:
This is an awesome segue into how you take your compounding of time. I often talk about that same concept, but I use the word synergy. I always say, you want to get more than one benefit out of a single action, right? Like you and I were at dinner with our agent two nights ago, or maybe it was last night. It was two nights ago.

Christian:
Two nights ago.

David:
And we were talking to the agent and his brother is the property manager in the company. So while this is a dinner where we’re meeting to talk about the deals that I was looking at and get to know the agent, we’re also like, “The property manager’s right there. Let’s get his opinion on things. Let’s ask questions.” And then he tells us, yeah, these are the properties that tend to do the best. Now we work that into the conversation with the brother who does the sales and we’re like, “Hey, how would you find that property?”
And in one dinner, which we had to do anyways, because people have to eat, we built a relationship. We got to know about what properties perform better as a property manager. We got to learn how the buyer’s agent could find those. I honestly think, I see this all the time, that asking the right questions, we make them better. They walked away like, “We didn’t even think about that. These guys are really smart. They have the right ideas.” That’s synergy. That’s the velocity of your time. That’s improving the return you get on the time that you’re spending.
Now, as you just mentioned, buying properties is a time suck. I was just thinking on the way to the office to record this today. I have to fly to Tennessee to learn the area. And then even if I’m not flying to look at individual homes, I have to review the house, pull it up on a map, ask what the numbers are, run the calculation on those numbers, try to get a feel for what could be wrong with this property that I’m not seeing. That’s all before you even go in escrow. Now you’re looking at inspection reports and surveys and getting insurance quotes and having to talk to contractors about fixing things and having to order furniture and trying to figure out how you’re going to get that delivered.
One property is not just… You’re not just putting money into it. You’re putting a lot of time and energy to make this thing actually fruitful. Having a specific buy box that you know these are the numbers that I want to hit, these are the properties I’m looking for can be immensely powerful with saving you the time when you’re analyzing a ton of stuff and making sure that the work you do after going into escrow is not wasted. It’s actually going to turn into a return. Can you share us, Christian, how you came up with your numbers that have created your buy box and then what they are?

Christian:
Yeah, absolutely. So just to lay the foundation, I do invest in short-term rentals. That’s actually the entirety of my portfolio. This is specifically catered towards people obviously trying to follow suit in that regard, but I’ve developed what I call the 15%, the golden ratio, so to speak. That’s what I call it. But basically I want to see the gross revenue projections for the property. People are going to say, “Where do you get those?” Right? I wouldn’t say live and die by AirDNA. I wouldn’t say live and die by… I think Rabbu is the new one that’s out now. BiggerPockets has a short-term rental calculator. For those who aren’t using it, check out BiggerPockets. You can use a Rentalizer for free, pretty sweet.
But I wouldn’t say live and die by those. Especially once you form a partnership, whether it’s a property manager or somebody with some experience in the area, if you guys are looking in Tennessee and Florida and Virginia, this is something that I could help with. If you’re looking at other areas network, BiggerPockets is great, all the resources that they provide. But really getting some hands-on data of not just… AirDNA is a good estimate, but is there a comparable to my property that did this? Right? Did X percent this year. I like that to be 15% of my purchase price. So if a house is a million dollars, I want to see it gross 150,000 a year. Now, to be mindful, that does include my property maintenance. It’s not my net, right? A property’s not going to net 15%.
That would be a home run, go buy it right now. Right? But that’s before cleaning fees. That’s before taxes, all that. But I like to see a property that, just to add, let’s pull a specific example. One of my properties in Tennessee, I bought it for 650. It did right around a hundred thousand last year. That’s right around that 15% ratio. Right? It’s a little bit off, but it’s really close. The reason why I chose 15 is that 12 is where I actually want it to be. So I’m actually building in a 3% safety net. I’m building in a buffer, right? If I hit my 12, it’s a successful purchase in my mind.

David:
Can you define what you mean by 12?

Christian:
Yeah. If it’s a million dollars, I’m shooting for it to rent for 150,000. And just so everybody understands, that’s 15% of a million, right? If it rents for 120,000, that’s 12%. So I missed my mark by 30 grand and I’m still where I’m comfortable being.

David:
So you’re willing to accept a property that will rent for 12% of what you pay for it, but you make your target 15% in case you miss it by a little bit. Okay.

Christian:
The reason why I don’t make the goal 12 is that then I hit nine and I’m not happy with it. Right? So I always build in… And be careful guys with projections, with estimates. You know, I write 30 contracts to put one in escrow, right? I mean, our realtor out in Tennessee, David, can attest to this, right? We’ve put them through the grinder a little bit. Stick to your numbers, guys. I have another one as well. So it either has to fit that box, and if it does, it has to be in an area where I have no concern over the short-term rental regulations. It has to be an area that I can do. So no HOAs. I don’t really invest in HOAs unless it’s what are called condotels. This is similar to what I think you bought in Hawaii, David, where they’re protected short-term rentals.
So I would feel confident investing in there, but then you have your HOA fee, right? So that’s one buy box, 15% in an area where I have confidence in the future projections, or I have an alternative. If it’s potentially going to pivot away from short-term rental allowance regulations wise from the state government, it has to be able to pivot to a longterm rental and still cash flow. I’ll give an example. I purchased a 300… What was it? $350,000 single family in Virginia Beach in the state of Virginia. Lower property values, it’s something that I wasn’t shooting for the stars on them. However, I ran the numbers and my mortgage all in, I want to say it was about 1,700 bucks. The rental estimates was 2,200 that’s on a long term, 12-month lease, right? That was actually on the appraiser, so that was based on comps in the area.
Now it rents for, I think, four to 5,000 a month. We’re expecting it’ll do about 60,000 this year. So it’s hitting my numbers that I like, but it’ll transition well, because I don’t have a hundred percent confidence that the city of Virginia Beach will be short-term rental friendly for the foreseeable future. So I made that investment, knowing that my exit strategy is a really good long-term rental hold. That’s my second buy box. Those are the only two conditions where I’ll buy a property. I’ve said it to be super simple. I’ve given that to my realtors and I’ve given them a free for all write it, if it meets these numbers. And I work with two or three agents that I have some confidence in and not much more.

Rob:
Wow, that’s actually pretty simple. So a lot of people are usually like, okay, it’s got to be in this market and it’s got to have this bed, bath count, and it’s got to have this view or this amenity. Yours are strictly just on the numbers.

Christian:
Straightforward.

Rob:
Like you, as long as you can project it to be a 15% gross, I guess, 12 to 15%. And then your second criteria here that it can work for a long-term rental, then it doesn’t really matter. So your buy box is effectively national.

Christian:
It is, and that’s one thing. For instance, in Florida, insurance is high in Florida, right? They got the hurricanes. They got the wind. They got the water damage. So that’s something where if it’s in Florida, I do want to see it really hit in that 15. Right? I don’t want to get something in that 12 to 15 range, because I know that insurance is going to be a higher cost of owning. So you can pivot a little bit based on certain areas, especially if somebody kind of settles in to an area, you’ll be able to project those expenses a little bit more as opposed to Tennessee. I own a number of cabins in the Smoky Mountains. This is where David and I were last week actually. Some of them have indoor pools. Some of them have really good views, right?
Some of them are on lots that I believe will continue to appreciate as the city of Pigeon Forge, Gatlinburg, that whole area continue to be developed and improved and tourists keep staying high there. So I may be open to accepting a 13 or a 14% ROI there, not ROI, but this ratio, right? Because I know there’s a lot of other compensating factors that help that strike confidence in me as an investor. Right? I like the pool. Maybe we can use… David and I are considering using one of them as like a corporate retreat, right? So that may be a benefit where we can take our team there as a reward for high production or whatever the case is. That could be a really cool experience. So even if the properties don’t meet the perfect numbers, I set them that way because I’m setting a limit that if we underperform, I’m still okay with it.
Right? That disqualifies 90% of properties, because most of them don’t do that. But my realtors understand the ones that do meet this, we’re going to write competitive offers. We’re going to be aggressive and we’re going to get them in contract. Right? A realtor, David can speak to this, keeping it simple for a realtor, keeps the relationship healthy. Right? If I tell you that I’m going to buy this property, David, there’s no worse feeling than an investor telling you, “I will buy this property if you put it in front of me.” You put it in front of them and they say, “Oh, well, let me talk to the wife.”

David:
Yeah. “I don’t like the color.”

Christian:
“Let me think about it.” You know, that, right? I mean, it’s very clear. The realtors that we work with are… You know, and that’s once again, return on time, right? So I’m not spending time doing all these analysis.

David:
Here’s what I like about what you’re describing. It hit me when you were talking like, this is what’s different about working with us than with other people. It’s not a huge difference, but it brings clarity. What I think most people are doing is they’re saying, I want to hit this ROI. I want to be in this neighborhood. I want the ARV to be this much more than what I paid. They have all these criteria and it’s good to have criteria. Maybe they have seven criteria just like that. I want to be 10% under market value. I want blah, blah, blah. Very rarely does a property hit all seven. And so what happens is you just spin your wheels. You spend time, you don’t get anything. You never get a reward. You never get into the fun of this.
You never learn from swinging the bat. And so you just get stuck and you get discouraged. But what you’re describing is here is step one. I want it to be at 12 to 15% gross yearly revenue of what I’m buying it for. Here is step two. I would like it to be in one of these areas, because I know I can rent it out. Here’s step three. I’d like to have a backup plan. So the floor plan itself matters because I have to be able to rent this thing out if it doesn’t work as a short-term rental. I would also like for there to be some kind of upside. Now when I see, Ooh, this property is different. Like, I’m looking at one right now in an area where there’s not many more new construction. It works with the numbers, but over the next five years, it’s going to crush it with the numbers because they can’t build anything more. Okay?
What you’re saying is, “Hey, I may not hit my 15% number, but if I have something like what I just described, I will go down to 12 or maybe I would even go down to 10.” Right? Like there’s this balancing act that occurs in your head when you see the whole big picture. So you start with solid criteria and then you look at the pros and the cons and you weigh them out and the decisions become much less complicated, sort of become simple. And then you learn from it and you take that into the next thing. That is, in my head, the right way to be analyzing properties. It’s not letting a spreadsheet do all the work. There’s an element of creativity, of vision, right? A lot of the properties that we’re looking at, I looked at one, the one I just described, what I liked about it was it had six bedrooms and it had a game room.
It had plenty of places to put in sleeper beds to put enough people in the house and I can take one of the bedrooms and make it into a theater room. It’s perfectly set up for that. Okay? That is going to now add value to the property. People are more likely to book it and it’s not like it was a three bedroom house where I lost a bedroom. I can only do this because it’s six bedrooms. When the realtor is bringing me to the properties, they don’t see that. They just know, Hey, this one hits the numbers that you said. So I want to take that deal, and individually look at how I would maximize the value of the property.
And on that one, particularly because they’re not building them anymore up there, and I have the theater room thing and there’s a few other things that I can do to add value to the property, I’m going after it. Even if that one comes out at a 9% return instead of the 12 or the 15, it’s going to go up over time. What you’re getting into is ways that people can analyze deals without spending their entire day and getting discouraged.

Christian:
Yes.

David:
Can you share how you came up with these criteria that you operate by?

Christian:
Yeah. I came up with it with buying my first property with no mindset with no analysis, with no… I basically said I want a property of cash flows. Like most people get in Airbnb, I’d like to make some money. Right? Then I started seeing, oh, this one did pretty well. And I’m seeing on average, it seems like they’re doing 12 to 15%. I like that. Right? That helps me cash flow. That allows me to be profitable. That allows me to be able to restabilize it after a big expense, a roof, an AC. In one of my properties in Tennessee, I had the well pump go out. I live in California. I don’t know what a well pump is. You know, there’s no wells out here unless you’re outside of the main areas. Right? But that was an expense that I had to pivot from. Right?
But because my numbers were hitting my projections and where I am eventually ended up modeling this mindset after, it was very easy to cover. Right? I had, I guess 8,500 bucks, I think it cost to completely redo the well pump and it was in the account and we were able to make up for it in one month of rent. Right? I wish I could say I brainstormed this and was just the perfect analytical tool before my first purchase. But this was really built from my successes and my failures on doing it and seeing the ones that hit the numbers that I liked seeing.

David:
Which is why we’re always telling people, you got to take action. You can’t just wait till you have all the answers.

Rob:
Yeah. You got to kind of just figure it out as you go. For sure. I mean, pretty much my philosophies on what pencils on, what doesn’t just comes from really averaging out how things have really worked out for me in the past couple of years. So it’s the same thing, Christian. For me, it’s like, I don’t have this perfect set system that I developed in the lab or anything like that. Really it’s just an average or the median of what all my other properties perform at. Right? So for me, like you talk about your 15% gross. For me, just a 20% cash on cash. I keep it real simple, and as long as it hits that metric, then for the most part, I’m pretty happy with it. I agree, I don’t really take AirDNA to heart, not nor do I take Rabbu to heart.
It’s really just a gut check to be like, okay, this is the median aggregate that AirDNA is putting together. Now I need to go in and actually research the calendars of my competition. And so if AirDNA and Rabbu and Mash Buys or AllTheRooms, if they all kind of put out figures that get me to a 20%, then I’m like, “Okay, that’s a good starting point.” Now I need to actually go and examine my competition. I’ll go in and do what I call like a market audit where basically I’ll go and just look at everyone in that market and see overall, does this market tend to really level up on design or on amenities or on views? I really try to match up. You know, see where I match up against them or where the properties that I’m buying will match up against that demographic.
If I feel like I can outperform 90% of the market because I’m always aiming for top 10% of my market. If I feel like I can perform 90% of the market, then I already know my cash on cash will likely be more than that 20%. You know what I mean?

Christian:
Absolutely.

Rob:
It’s a new acronym here that I call LILS. Or no, LALS, little art, little science. You know, when we’re getting to it.

Christian:
Yeah, I like that.

Rob:
But yeah, I mean, it really… I wish it could be super objective because I teach this every day obviously to my students, but it really is just leaning on your experiences and the more you have and the more you can lock up and add to your portfolio, the easier it is to use that as anecdotal evidence on how you’re going to perform in the future.

Christian:
Not to beat the dead horse, but the only thing that… I mean, you don’t even think about it when you bought your first one, but you’re actually building a tool to better analyze future properties. So getting back into that velocity of time thing, the time that you spent buying those three properties is saving you exponentially more time buying the fourth one now. Right? And you didn’t even plan for that. Right? It’s like, “Oh, now I have a portfolio to create my own business.”

David:
Then you get to where they’re just bringing you a deal that you didn’t even ask for.

Christian:
Yeah, absolutely.

David:
Look at that. Right? They just bring it right to you. You don’t even have to go look for it.

Christian:
Yeah.

David:
I think, Rob, the only thing stopping private capital, hedge funds, BlackRock from buying every single property is the art component. If it was purely objective, we would all be getting pushed out of it. Right? That’s what’s beautiful about the real estate we’re buying is it takes time to look at it. And even though that can be frustrating, that’s what’s protecting you from having some computer algorithm to step in and buy every single house.

Rob:
Yeah. That’s very true. I was joking with one of my partners yesterday and I was like, it’s only a matter of time before BlackRock calls and they’re like, Hey, we were wrong. We don’t know how to do this. Can you please artfully choose our houses for us?

David:
It happened to Zillow, right? Some of those iBuyer programs that we’re just scooping them all up thinking a computer program could beat the actual investor. That’s the advantage that the BiggerPockets listener or the mom and pop investor has is they see angles like that that are not going to show up in the MLS listing. A lot of the properties Christian and I are looking at are literally in the MLS listed as a one bedroom house. So the property he owns that we stayed in is listed as a one bedroom house with 3,000 square feet. The reason is because of regulations regarding septic size and they’re only allowed to market at a certain bedrooms and the septic tank is a certain size, but he’s got a 3,000 square foot house. Right?
So how many big names are just going to skip right over there because it doesn’t show up in their search at all? Whereas when we look at this, we’re like, “Holy cow, you can sleep a lot more people in here.” So I’m always grateful that there’s errors and inaccuracy in the way that real estate works, because it gives you an opportunity to hit stuff like this. Christian, you mentioned helping me on a deal where you found creative financing that dropped my down payment from like 25% to 12%. You and I run into problems constantly. Well, really I run into the problem and I hand it to you and you have to go fix it. I’m like, “Here’s the round peg, there’s the square hole. What you going to do?” And then you get to figure out how we’re going to solve that, and you do an amazing job.

Christian:
It’s like you’re saying I have the fun job. Gotcha. Okay.

David:
Yes, that’s exactly right.

Rob:
I can confirm you guys always pull it off for sure.

Christian:
There you go. Appreciate that.

David:
That’s one of the things that I want to talk to you about are, can you share some of the creative ways that you get loans to close, maybe the advantage you have with the one brokerage and then loan programs that a person might not know about that we can help to get them to close on a deal with better terms or just close that all, that if they were just going to a retail bank and saying what’s your loan product, they would have no idea this exists.

Christian:
Yeah, really, really good question. I think what really differentiates us is the time that I put in with, I don’t want to call it the ownership, but that’s basically what it is, the ownership of the lending entities. I mean, I sit down with CEOs, David and I were just at a private broker event for UWM, who’s one of the biggest lenders in the nation. Right? We were invited and we got some FaceTime to give direct feedback into programs that they have. Right? So when you’re going to regular lenders, they’re not… You know, your loan officer at Wells Fargo probably isn’t sitting down with the head of Wells Fargo, right? I mean, we have a really unique opportunity, and this is why it’s so important also for people to respect these programs.
And if we get you a loan, we want you to analyze the property correctly because if we end up having all these default rates and all these things, it may not be a product that we can offer much longer, right? So we underwrite these things and work with the lenders to really build these products because of not only our experience, right? I want the products from me and David and Rob, and we’ve done loans for all you guys, but I want this product to then go maybe trial run and then really give it out to people and say, “Hey, this is an opportunity for you guys to buy where you couldn’t otherwise.” You know, our DSCR product is a really good example of that. There’s not a whole lot of lenders who will allow you to substitute in short-term rental income on a lot of loans.
That’s a big one, right? Especially people who are not completely new to short-term rentals, because a lot of the products want to see some experience there. But you go to a regular conventional lender and they’re not going to care what AirDNA says. They’re going to say, “There’s no way you’re going to rent.” You know, Rob, I mean that place that you guys bought in Arizona, no lender would ever buy that you’re renting it for what you guys are. Right? I mean, it’s just not reasonable with conventional mindsets. But I mean, that’s a really good one. We have some fun bridge products. That’s one where if you are able, this is a market that’s going to swing. If you are able to start getting things under market now, which hasn’t been possible the last two years, but we’re starting to see some price drops, some more competitive offers, being able to be accepted.
You know, we can lend on the appraised value as opposed to the purchase price. Right? We can say, this is the deal that we discuss on the past video for David. If you guys haven’t seen that, check that one out because we go into depth on this product. But David was able to shave off 10% of his down payment because the property over appraised by so much, right? We were able to treat that appraised value as the value of the property instead of the purchase price.

Rob:
I’m jealous, man. That’s crazy. That’s such a…

Christian:
It’s a sweet one.

Rob:
Can you do that for me, too?

Christian:
If you find a property that you’re under buying, right? I mean that’s absolutely… Obviously, that’s the unicorn property, right? That hasn’t been available for the last three years but…

Rob:
Well, I actually think the Scottsdale property, the second appraisal on that came in about $175,000 more than we paid for it. That was a nice little surprise.

David:
I found out, Rob, side note, I haven’t told you this. When I was out there looking at additional property, we bought that thing for less than what the land would cost if we just bought a lot that size.

Rob:
Whoa. Really? Yeah. Let’s double it and sell it.

David:
Yeah. Here’s something to think about. What I notice a lot of clients do, and I want to get your opinion on this, Christian, is they say, “Hey, can you get me a 12% down payment loan? Yes or no.” And if the answer’s no, then they make another phone call and they ask someone else, “Can you get me a 12% down?” Right? You don’t get that on every single deal. You work and you buy houses, and then this falls into the situation. We’re like, oh, I can maximize your deal this way. Other deals, you maximize in a different way.
So one of the things that we do since the David Greene Team and the One Brokerage works together and the One Brokerage gets to hear all of the cool strategies that we use when we’re working with the David Greene Team and vice versa is we will say instead of, “Hey, I’ll give you 900,000 for your house.” We say, “I’ll give you 875 for your house.” And they say, “Okay, deal.” And we say, “Actually, let’s make it 900 with 25,000 in closing costs.” Then we take the 25,000 in closing costs and buy your rate down. Like what, on a normal six and a 5% interest rate on a $900,000 house, can you spitball what you think that might buy the rate down to?

Christian:
Buy down to the fives. Yeah, for sure.

David:
Okay. So now you’re in the fives instead of six and a half. So that’s significantly cheaper than anybody else would’ve been able to pay, even though you paid $25,000 over, but because your rate is in the fives, that extra 25 you’re borrowing is very minimal. It doesn’t make your payment go hardly at all. Right? So now that deal works for you. Where it didn’t work for you or anyone at 6.5%, and what everyone else was doing was trying to bring the seller down on their price.
Well, we actually gave them more, but got you the house for cheaper. There’s a lot of strategies that when you’re working with the right person, they will recommend to you, what if you do this? What if you do this? It’s not always going to be the same thing. I think that’s a mistake people make as they heard about, “Oh, can you do this down payment? Or can you get this rate?” They’re the ones asking the questions rather than saying, “Here’s my goal. What do you think you could do to help me?”

Christian:
Yeah. That’s something that we pitch a lot. I mean, I think probably 50%, at least, of my properties that I bought during a really hot market were actually purchased with substantial seller credit. I mean, David, the deal that we got, we had a massive amount of seller credit, right, on the property in Tennessee. That’s a great point. This is where partnering us up with a realtor, we’re going to coach them on that. Right? So if you say, “Oh, my realtor doesn’t know how to do that.” Or “I don’t know how to do that. How do I word that?” Like, just give us their contact, right? I mean, we’re a brokerage that once again, practice is what we preach.
We know how these things go especially if you’re working on David’s team. This is something that with the market kind of we’re starting to see price drops, this is something that’s even more attainable now. Right? I mean, you can get the seller to pay for your rate, buy down. So all of you guys who are monitoring the market and oh my God rates are crazy. Have the seller buy down your rate, right? You’re getting the rate from a month and a half ago and that wouldn’t be available now if the seller didn’t credit you that money. Absolutely a tactic in a rising interest rate environment to kind of reset yourself prior to the last few rate increases.

David:
Which is why we get so excited when we see… It’s not that we’re happy rates are going up, right? Everyone’s a shock to everyone. Nobody likes it. But the effect of that is the market softens, other buyers, your competition, that everyone forgets they’re competing with other buyers. They always think they’re competing with the seller or they’re competing with their uncle that tells them not to buy a real estate. No, you are competing with all the other people that want that asset. They get hesitant and it opens up this window. That’s why I went and put eight properties under contract in a couple weeks here because I’m seeing, oh, this thing is in a great area. Great thing. It cash flows really well.
Everything works, but everybody else is afraid. They’re holding their breath and saying, “Is everything going to collapse? And I don’t want to jump in too soon.” But this softening gives us the opportunity, that’s what I’m trying to get at here, to use these techniques, to use these strategies, right? For the last six years, the only strategy has been write a higher offer.

Christian:
Yeah. Basically.

David:
That’s it. You pay more than the other buyers are paying or you don’t get the house.

Christian:
And waive your appraisal contingency.

David:
Yeah. Yeah, exactly. Now we’re keeping appraisal contingency. We’re keeping inspections. We’re keeping loan contingencies. We’re shopping around to find you better loans. We’re looking for ways to get your rate lower. Or a lot of the times we get people 15% down on investment properties instead of 20% down. There’s things like that we can bring into play. I think you have to be grateful that the market is softening because if you saw some of the tricks that we’re using to maximize what we’re doing, I think a lot of people would be really pleased.
More importantly, buyers are happy about what they’re paying to get the house. No one’s been happy for what they had to pay in the last six years. They’ve been happy afterwards, right? A year later, you’re like, “Well, this is great. I wish I’d bought more.” But at the time, no one felt good about it. This is finally a period of time where you can actually feel good about what you’re buying. I feel pretty good about the one we got, Rob. What do you think?

Rob:
Yeah. I mean, I was going to say like, we got a $75,000 seller credit on that. I think there’s obviously certain rules on how much of a seller credit you can get with a property and everything like that. We were like, “Man, 75,000 might be, we might be maxing this out. So we had to creatively shuffle things around. I think we might have bought down our rate.

David:
That’s what we did. Yeah.

Rob:
Yeah. I mean, we got that. We got full on, we got it fully furnished, which was halfway beneficial, halfway a bit of a torturous journey, getting rid of a lot of the grainy knickknacks, but it did end up… I think it’s a net positive on that one, but we negotiated pretty heavily on that one. And then we played hardball and we got it. And yeah. Then we got the appraisal back and we came in 150.

David:
Like I told you, the land is worth more than the land with a 6,000 square foot house on it. And the furniture thing you mentioned… We could do this all day because this is so fun. Let us know in the comments in YouTube, if you guys would like to hear more of these type of shows, where we talk about our deals. But you didn’t love the furniture on the Scottsdale property, which is fair because it wasn’t the best.

Rob:
Yeah.

David:
But we were also able to buy furniture relatively easy because it’s Scottsdale. They have a lot of stuff.

Rob:
Yeah. Yeah.

David:
Some of the properties that Christian and I are buying in different areas or that I’m buying in different areas, getting furniture is a pain in the butt because of supply chain issues. So being able to-

Rob:
Oh dear, especially Tennessee.

David:
A hundred percent, right? Being able to get that negotiated into the deal, not only saves you a ton of money because furniture’s very expensive, but it also saves you three or four months of waiting to get it furnished before you could book it, which could turn into five to 10 grand a month. Right? There’s a lot of ways that I’m seeing this is awesome for me. Could the market go down more? Sure. Will it go down more on some properties? Probably so. Does that mean that these are bad buys? No. Not at all.
It’s going to go back up again at some point, too. If it’s making a lot of money and I’m getting into the best areas, I think it’s a mistake to try to time a market because markets are all so different. What you’re seeing in Scottsdale in the luxury of really expensive space, that’s slowing down a little bit. What you’re seeing in Southern California, Los Angeles in the first time home buyer space has not stopped at all. It’s just as hot as it’s ever been. That’s another thing to keep in mind.
Christian, is there any last words you’d like to provide before we move on to the next segment of the show? When it comes to advice for a real estate investor who is trying to calculate like I’ve got the lender and the agent and all these strategies they talk about and I read Brandon Turner’s book on No (and Low) Money Down Real Estate. I really like what Rob’s doing. Like there’s so many things going around, where do they start? And when they walk into that position, what is it they should be looking for.?

Christian:
You’re saying with their first ever investment property?

David:
Or maybe just a newer person who wants to start buying it or maybe wants to buy more, they’ve got two or three and they’re like, these are going good. I want to scale. Give them an idea of where they should go, who they should start with and what they should be looking for.

Christian:
Yeah. I mean, I’m biased. I’d say our company, right? But aside from just who you’re talking to, the mindset is really, I believe we’re headed for a place in this country where if you don’t own property in the next three or five years, I don’t think you ever will. I think real estate is going to become such a hot asset and it’s going to be so hard to get competing with investors and corporations, everything. I really think, and this isn’t fear tactic. I’m not trying to preach that. So please don’t misrepresent, but just not be afraid to jump in. You know, I mean you can always… People are talking rates right now. America’s awesome with our finance strategy because you can refinance, right? I mean your six and a half percent rate that you have right now is not the rate that you’re going to have for 30 years.
Right? I mean, you refinance the moment the rates get low again. I mean, historically speaking, a 6% interest rate is not like this catastrophic interest rate.

David:
[inaudible 01:09:30].

Christian:
It’s a fairly healthy market rate on a mortgage. It’s not, you know. I mean, granted prices are high right now, but you pay down some equity if you, and obviously buy what you can afford. I’m not telling people to throw every last dollar they have into real estate. But if you can comfortably afford, don’t get caught up. Create a buy box. If you want to copy mine, awesome. If you want to copy Rob’s, awesome. But create something that you’re comfortable with.
If it hits these numbers, link up with an investor. If you’re buying short-term rentals, please talk to a short-term rental agent, right? Don’t go to the first time home buyer, down payment assistance person and say, I’m looking to buy an investment property. Surround yourself with investment-minded individuals, ourself as a lender, a short-term rental agent out in whatever area you’re looking at. And if you’re surrounding yourself with people who can correctly advise you, you’re going to end up in a better situation. It’s just surround yourself with that mindset.

David:
Yeah. I wasn’t saying you should just come to us, but if they do come to us or they go somewhere else, what questions should they be asking to get the ball rolling in the right direction?

Christian:
Like David was saying, don’t come and say, you got David 12% down. Let’s get it. Right? But really working with us, and we do consultation calls with every single person that reaches out to us. It’s 15 to 20 minutes of us understanding the roadmap that you’re trying to achieve toward success. I don’t know many agencies that do that like that, but that’s really how we have it built. Our first conversations should be come prepared, have us have a outline of what you’re trying to accomplish, and allow us to build the path for you. But when we build that path, you can’t be afraid to walk the path. Right? I could lay all the concrete brick in front of you that I want. If you’re not ready to take that first step, that meeting was in vain.

David:
I like that. The here’s what my goals are. Here’s what I want to do. Here’s the capital I have. Here’s my concerns. The person you’re working with should be able to paint a decently clear picture of several options, right?

Christian:
Absolutely.

David:
If their answer to you is, I don’t know what to tell you. What do you want? You want to get pre-approved? That’s not the right person, right?

Christian:
Yeah.

David:
Your agent says, so do you want a three bedroom or a four bedroom search? Not the right person. Right? You’re looking for that person that goes, “Oh, have you considered this? Or what we’re finding in this market is this is the case, and I can help you with all of these different things.” I think that’s a much better approach to take, especially if you’re trying to get into the market at a time where there’s a little bit more uncertainty.

Christian:
Absolutely. Yeah. An agent, a lender, even an insurance agent that really understands what you’re trying to accomplish is invaluable in this time right now, in this economic climate that we’re in. It’s vital to your success.

Rob:
Yeah, for sure. So you said you’re not trying to be a alarmist or anything like that. You think we should not make the thumbnail like all red and then we give you like red sort of demonized with like flames behind you and big title printed over.

Christian:
Buy right now. Yeah.

David:
Yeah. Let’s clarify that. Because I know in the comments we have something coming, he said, in three to five years, you won’t be able to buy real estate. They’re trying to get you to buy. There’s a crash coming. We’re not saying in every market in the entire country, you’ll never be able to own a home. Okay?

Christian:
Correct? That is true.

David:
I think that was a bit of an aggressive statement. But what you’re describing is there are changes happening that we see that the average person doesn’t, where institutional capital is a bit of a Godzilla. It’s coming in and smashing people and paying way more money than anyone realizes. And if some of those companies buy Airbnb, buy Vrbo, then they go buy all the properties. All of a sudden you put yours up there at Airbnb and it shows up as number 97 and the 96 above it is all the ones they own becomes very, very difficult for the mom and pop investor to compete.
I think in the hottest markets where they feel the safest, like the best areas with the best weather, the best travel, the best amenities, they will go in there and bully people out. Absolutely, I do agree with that. Real estate’s very local. So if you’re living in Virginia Beach where Christian bought his first property, I don’t think that this is going to happen there. Right? That’s not the same scenario, but I do think over time, real estate is becoming an asset class like a stock. It used to be so much labor to own real estate that the big companies didn’t do it. They just traded in easier things to own like stocks. As they are learning how to make this more automated, it is turning much more into something like a security. And when that happens, it’s a lot harder to buy it because your competition ramps up.
So just to be clear, I’ve got a lot of properties I’ve been looking at that that I’m slow playing. Okay? The one I described earlier is listed at 1.5. It’s dropped down to 1.45, and then 1.35. It’s sitting at 1.25. I’m going to write an offer at a million-fifty. Okay? I don’t expect I’m going to get that property, but it’s been on the market for a hundred days. This isn’t me going after a property that have been on the market for two days. Right? However, that million-fifty is a jab I throw and I look to see what are they going to respond with? What if they counter me at 1.125? Well, now they’ve come down pretty significant from their one. That’s more of a motivated person. Right? If it stays on the market, it’s moving in my direction. So in some scenarios, yes, take it slow. See what you can get. And then in other scenarios, depending on the property, you’re going to have to move quickly.
All right, Christian, we’re going to move on to the next segment of the show. It is the deal deep dive. In this segment of the show, we are going to dive deep into one particular deal that you have done. All right. This is the part of the show where we dive deep into one specific deal with our guests. Remember you two can do more deals with the help of BiggerPockets tools, and resources. All right, Christian, do you have a property in mind?

Christian:
I do.

David:
All right. Question number one. What kind of property is this?

Christian:
It’s a single family home in Bradenton, Florida with an additional casita, two bed, one bath, additional dwelling unit.

David:
Like an ADU or a granny unit.

Christian:
It’s an ADU. Correct.

Rob:
How did you find it?

Christian:
I found it through one of my local short-term rental agents out there who brought it up to us. It was on market. Wasn’t some special off market deal. So yeah, standard MLS.

David:
All right. How much did you pay for it?

Christian:
Original contract was for 830. We dropped it to 818 was our… Oh, I’m sorry. No, it was purchased for 830. It appraised for 818. So I actually overpaid slightly for this house.

Rob:
How did you negotiate the house?

Christian:
Negotiated, used a standard agent. It was when the market was very, very hot. I purchased it in 2021. So it wasn’t a whole lot of negotiating power there, but we didn’t negotiate, I believe four or $5,000 just for minor repairs, but it was a pretty clean cut deal.

David:
Okay. How’d you fund it?

Christian:
Funded it 15% down, DSCR loan, and actually our kind of flagship product that we use utilizing the expected rental income that it was going to produce as a short-term rental.

Rob:
What did you do with it?

Christian:
Yeah, so obviously, a little bit of foreshadowing there, but I’m using it as a short-term rental? This one is unique because it’s in Bradenton, Florida, which is a kind of a vacation destination. It’s about 45 minutes to an hour south of Tampa on the Gulf Coast of Florida. The numbers have been even higher than we expected. In six months, it did $97,000 in gross rent. We anticipated it would do about 150 to 160. So it’s on track for 180.
It’s by far and away out producing. The reason being we’re actually running it as two separate listings. You can either rent it out as a full six bedroom or the main house is a four and the casita is a two. So in the days where the main house is not rented, we just rent the back unit. It’s a shared backyard, so we have it kind of segmented where they could be two separate rentals. So really maximizing the occupancy rate on it and keeping it booked. You know, even if it’s a couple day filler, we just fill in the two bedroom casita there.

David:
What was the outcome?

Christian:
Outcome? Awesome short-term rental opportunity. If we sold it as an Airbnb right now, it’s probably already appreciated by 150,000. We got a realtor reach out to us to try to sell it. And listing price was going to be one million five. A million 50,000, I should say. So very satisfied with how that’s gone. We’re going to hold it for a short-term rental for the foreseeable future, but it’s doing very well for us. We’re very excited about it.

Rob:
What lessons did you learn from this deal?

Christian:
This was my first kind of bigger purchase. Everything prior to this time had been 700,000 and below. This was kind of my dipping my toes in the water of higher value properties. It made me realize if you have multiple units… This is the David Greene special, right? If you got multiple units, if you got heads and beds, added rental capacity, I knew it would have some benefits, but I did not forecast the level of the benefit that it would have with being able to fill up the days that were unrented instead of having it go four or five days unoccupied. Maybe you fill up three of those with 150, 200 bucks a night for the two bedroom. And it really, really made a difference for us. It’s going to do $30,000 more than we anticipated when we first reviewed it.

David:
All right. And this deal, who was the hero on your team?

Christian:
The hero on my team was for sure, my partner, I shouted out earlier. This is one that I purchased with Karen and we have a partnership where she manages for me. We self-manage, but she’s taken on the majority of it, everything from scheduling the cleaners to go in, to communicating with clients. We do have a perfect five star rating on that property on Airbnb, which we’re excited about. She got super host status and yeah, just that property has had a lot of really good reviews. It was remodeled. It did come furnished, which was a big one, and it was an active Airbnb. I forgot to add that. It was already a existing, running Airbnb, but yeah, Karen was absolutely… Couldn’t have done that one without her.

David:
All right. That’s going to wrap up our deal deep dive. We’re going to head over to the last segment of the show. It is the world famous.

Speaker 4:
Famous for…

David:
All right. First question for you, Christian. What is your favorite real estate book? I’m curious to hear you answer this because I know you don’t read.

Christian:
No, I don’t read. There you go. Showing my dirty secrets. Well, I think if I came onto a podcast hosted by my business partner and I didn’t shout out one of his books, I think the partnership would be concluded at that point. So I’m going to shout out any book written by David Greene. I do like the BRRRR one. The BRRRR method has blown up to a level that I don’t think anybody who originally thought about it intended, but yeah, BRRRR book just taught principles and concepts along… You know, that partnered with the long distance real estate investing. You know, those are morals and ideas that we teach in our company and that we do ourselves. I think the influence that those books had on the market is invaluable. I think it’s really, really awesome books.

Rob:
Good answer. Good answer. Favorite business book?

Christian:
I will say, I have read this one. Never Split the Difference, Chris Voss. I think just seeing things from the side of a hostage negotiator. If you guys haven’t read that book, absolutely recommend it. It just teaches you how to negotiate in an avenue that I didn’t think a whole lot before, but negotiating for people’s lives obviously is a different level than negotiating for real estate, but a lot of really good principles in that one.

Rob:
Great. When you’re not off buying 15 short-term rentals in a year, what are some of your hobbies?

Christian:
I love snowboarding. I had a pretty bad accident a couple years back that I actually haven’t snowboarded since, but absolutely love snowboarding. I’m one of the best five-foot-six basketball players that are out there. No, I’m kidding, but I love playing basketball. I’ve played it since I was very young and I’m a five foot six, five foot seven with shoes on white guy. So you can imagine the challenges that I had to go through, but absolutely love my basketball time.

David:
The books that Christian mentioned, if you want to buy those or any of the other BiggerPockets books, there is an entire library of stuff that will really help you get your investing career off the ground. You can find those at biggerpockets.com/store. That’s where you can buy any of the books that we have for sale.
My last question for you, what, in your opinion, sets apart successful investors from those who give up, fail or never get started?

Christian:
Gosh, I would just say action. Obviously, it’s easy to say, act and don’t have fear, but really just maximizing opportunity. Like David said earlier, when a market downturns or when things slow down, people like David and myself get really excited, right? We’re not scared of the rates. We’re not scared of the added risk of the market right now. We see this as a buying opportunity, right? We see this as an opportunity to get things that you couldn’t get last year.
So I think when the world presents you with lemons, try to get them squeezed. Make some lemonade out of them and make the best out of the unfortunate situation of our government printing 80% of the money supply, right? Let’s try to at least benefit a little bit from it.

Rob:
And lastly here, tell us where people can find out more about you.

Christian:
This is an interesting one. I do not have any social media. We have our website, the onebrokerage.com. It can be spelled out O-N-E or the number one. If you’re looking to get in contact with the team, I do have a BiggerPockets account. So if you just type in BiggerPockets, and put Christian Bachelder, you’ll see my account.

David:
How often do you check that, Christian?

Christian:
I check it actually pretty frequently. So I’m fairly active on BiggerPockets. If you guys direct message me, I will respond. But yeah, I don’t have an Instagram or a Twitter to shout out, but I prefer to keep it that way. Yeah. And if you find yourself on our website, the onebrokerage.com, navigate to the About Us tab, you’ll see my personal contact there, my email to reach out. Anything you need, advice, guidance, or to get pre-approved, I can definitely help you out.

David:
All right, Rob, what if people want to find out more about you?

Rob:
They can find me on YouTube over at Robuilt, R-O-B-U-I-L-T. And then you can also find me on Instagram at Robuilt, too and TikTok at Robuilto. Now, let me just take a moment to say that someone was smart enough to… So I captured Robuilto as a handle on TikTok because someone took Robuilt and someone then took Robuilto on Instagram, and they’re scamming people. So this is very confusing, but Robuilt on Instagram, not Robuilto, and then Robuilto on TikTok. I’m like, man, this is my life now. This is what we have to preface for everybody. So just make sure you’re not sending crypto to me or David. Okay? With that, what about you, David?

David:
I’m davidgreene24 and on YouTube I’m David Greene Real Estate. So please go, give me a follow. I still have way less followers than Brandon Turner, who’s not even on the podcast, and he lets me know every single time he sees me. And then just to hammer this point home, do not send me or any of these guys money on social media. When Christian and I were having lunch, I got a call from a cop friend of mine, who’s not the most tech savvy, a little bit older, and he got scammed. He sent a bunch of money to someone thinking he was sending it to me. It’s freaking heartbreaking.

Rob:
Oh, man.

David:
I’m doing everything I can to get the blue check mark on Instagram so that this won’t work. Instagram has denied me about 20 times that I’ve asked for it. I’m still trying to make that happen, but please tell everyone you know, they may have our pictures. They may have the… It looks just like our Instagram. It’s not us. It’s easy to copy those and create a fake account. The screen name will be a little different. They’ll put an underscore a period. They’ll add like an extra E in Greene or they maybe take one of the E’s and put three. Just something where you wouldn’t recognize it right off the bat. But please be careful because it’s the worst feeling ever when somebody that we know gets taken advantage of because they trusted us.

Rob:
Stay safe, peeps.

David:
All right, Christian, last question. If people would like to follow up with you and learn more about creative financing strategies, what it’s like to work with us as a mortgage broker, they want to know more about the short-term rentals you’re buying. They want to hear more about your buy box. They like what they heard and they want more. What do you recommend they do?

Christian:
Yeah. If you navigate to our website, the onebrokerage.com, top right, there’s an option for all our mastermind series. Feel free to enroll in them. There’s a little RSVP button. Those will be opportunities for us to share both what we’re doing personally, as well as to offer you guys some advice and guidance on potentially pursuing your next investment as well.

David:
I really like what you said about if they have a realtor who doesn’t know what we’re talking about, introduce them to you, right? Those realtors can go to these webinars. That’s free. We will teach about these loan products. Now your realtor has more information than they would’ve had. They’ve learned how to make a buy box for you. That’s really what we’re trying to do is help the whole overall experience be better because realtors aren’t really that great. Most loan officers are saying, I’m the cheapest, I’m the cheapest. They’re not understanding what investors are trying to do and we’re trying to correct that. That’s a great idea.

Christian:
Yeah. We’ll make your realtors better free of charge. We want to work with good realtors, guys.

David:
All right. Rob, anything you want to say before we get out of here?

Rob:
No, no thanks Christian, man. It’s always nice to hear from you. I can vouch for One Brokerage and everything. You guys have been really great, and give me a run for my money if you acquired 15 short-term rentals last year. So good on you. Good on you.

Christian:
Yeah. I appreciate you, guys. Yeah. Thanks for having me. Awesome. Awesome being here and yeah, hopefully we do it again soon.

David:
All right, guys. Great job. I’ll get us out of here. This is David Greene for Rob, our favorite client, Abasolo signing off.

Krishna Srinivasan of the International Monetary Fund says the two key factors it has taken into account are the country’s frequent Covid shutdowns and the worsening outlook of the real estate sector.

David:
This is The BiggerPockets Podcast show 640. What’s up everyone. This is David Greene, your host of The BiggerPockets real estate podcast, here today with my sidekick, with my co-host, with my buddy, Dave Meyer, bringing you a special episode. Look, we realize the market is shifting. And that means a lot of different things, one of which, you should be listening to as much content as you possibly can to stay abreast of changes so you can position yourself to be in the best place possible. Much like Brandon Turner, trying to catch a wave, you want to know what waves are rolling in, what they look like and how they’re different than the wave before so you can pick the right one and be in the right spot when it breaks. Also, if you have not yet got into real estate, or maybe you own one or two properties, this is a very good time to scale your portfolio. Now, of course you want to be investing from a position of financial strength. We don’t want anyone to go and buy real estate they can’t afford. But if you have been saving, waiting, this could be your moment to shine. And in today’s show, Dave is going to give a presentation of just what you can do to get your first, second or third rental property. Dave, what do you think?

Dave:
That’s a beautiful explanation of what we’re talking about because it is a really interesting time to start investing. And I understand that a lot of people are fearful about the market because there’s a lot of hype and there’s some scary headlines out there. And in no way, am I, or is David saying that you should go out there and buy just anything. But if you are someone who knows how to analyze deals and how to get good leads, this is a really, really interesting time to start looking into the market right now, because competition is going down. We’re starting to see prices look a little bit wobbly. And although I personally think prices might decline a little bit, there’s not going to be a crash, but sellers are willing to negotiate right now. I don’t know if you’re seeing that in your own real estate investing David, but … Yeah? A lot?

David:
Yeah. A lot.

Dave:
People are a little bit fearful. The sellers want to get in before they think things are going to go down. And again, that doesn’t mean every property’s going to be great and every seller’s going to be willing to negotiate, but it does mean that unlike the last two years where sellers had this just iron grip on the housing market and they dictated terms, they dictated price and it was just a complete seller’s market. Now we are starting to see some balance get restored back and buyers have a little bit of power right now.

David:
Yeah. I haven’t bought this many houses since I was doing the BRRRR strategy in Northern Florida and I was buying four to five houses a month. And I probably messed up talking about that on the podcast because then everybody else moved out to that area and it got really hard to buy them. But I’ve got 14 houses in escrow right now and they’re probably averaging right around a million dollars each. So these are not cheap properties that I’m buying. And I’ve never seen the ability to negotiate like what we can do right now. It’s actually fun to be investing in real estate again. The interest rates aren’t fun, but when interest rates were low, we were constantly complaining that you can’t get a house and they’re getting overbid and it’s a bidding war and everyone’s overpaying. And so now we finally see an adjustment to that and the complaints are well, interest rates are really high. It just goes to show there’s always going to be something that pops in that makes you think I don’t want to invest into real estate. We’re already at the top of the market or the market’s going to keep dropping. The reality is none of us know. That’s why we rely on the fundamentals. We analyze a property to make sure it’s going to cash flow. Go ahead.

Dave:
No. I was just going to say this idea that there’s going to be a perfect time is wishful thinking. Is there ever going to be a time where interest rates are super low and prices are super low and rent is really high and there’s no competition?

David:
And there’s no risk. Yeah.

Dave:
No. And there’s no risk. That’s never going to happen. And people are like, “Oh, back in 2008, it was so easy. Everything was cheap.” Well, interest rates in 2008, 2009 are about the same as what they were today, just for the record. And secondly, it was super hard to get a loan back then. Credit was super tight. So even though prices were low, credit was high. There’s always something that you’re going to have to overcome. And so I think this to me and to you represents an opportunity because no longer are there just no houses to buy. Now there are actually things you can go look at and you can interact with people. A lot of what the presentation I’m about to go into goes into is all about momentum. And it’s like, no, it doesn’t have to be the perfect deal.
It’s about getting a deal that A, improves your financial position. Not saying to go buy anything. But find something that is going to make a demonstrable difference in your financial position and use it as an opportunity to learn. So hopefully everyone listens to this. I think there’s some really good practical tips that can help you go take action right now. And as David and I were just alluding to, that’s really what it comes down to is getting ready and taking action and committing yourself to investing. And hopefully what we’re going to talk about today gives you some practical tips on how to do that.

David:
Amen. That’s some good stuff there. Now, for today’s quick tip, if you like what you hear, if you decide, “Hey, this is the right time for me to get a little bit more serious about my investing. I want to take advantage of the soft points in this market and find a great deal.”, we have some help for you. If you go pro with BiggerPockets, there’s a lot of resources you can use that will help you analyze properties, help you find what the rents are going to be, discounts to use different vendors that you’re going to need in your investing journey. We have a discount code for you because you listened to this podcast and you took action. So you will get 20% off of a pro membership, as well as some goodies. Dave, what is the discount code that they need to use?

Dave:
They can use discount code prorental. That’s P-R-O-R-E-N-T-A-L. I don’t know why I just spelled that. I think people know how to spell pro rental. But if you don’t already know how, there you go.

David:
Yeah, it doesn’t hurt right? Never hurts. So we hope you guys enjoyed this episode. If you’ve been thinking about jumping into real estate, nobody knows for sure what’s going to happen. Could the market drop more? Yes. Will the market continue to correct if interest rates continue to go up? Yeah, it very well could. But will real estate become more expensive as interest rates go up? Yep. That’s probably true too. And is it going to go back at some point when interest rates go down again? Yes, that’s probably going to happen. Real estate is a fluctuating beast, and that is why we listen to podcasts like this. That is why we follow BiggerPockets and we talk to other investors to find out what is happening in the market at the place in time when we’re looking to buy. So it’s our pleasure to bring you this information. We hope you like it. Let us know in the comments what you think.

Dave:
Hey, everyone. Welcome to this BiggerPockets webinar. How to you buy your first, second or third rental property. My name is Dave Meyer. I will be your host today. And if you don’t already know me, I’ll get into this in a little bit, but I’ve been a real estate investor for over 12 years now. I work full-time at BiggerPockets in data and analytics and I’m the host of BiggerPockets’ newest podcast called On The Market. And I’m super excited to talk to you all today because financial freedom has been a passion of mine for years and I have been fortunate enough to find it through rental property investing and I’m super excited to help each and every one of you today find that financial freedom that we all yearn for through the power of rental property investing.
Now, if you are here today, it’s probably because you want to take some positive action in your life. You want to make a change. And maybe that’s because you want some more income or perhaps you want to retire early, get out of your job, whatever it is. And maybe you’ve heard, hopefully you’ve heard by this point, that real estate is the best possible way to pursue financial freedom and to live the life that you want and that you deserve. And I believe all of that is true. I genuinely, genuinely believe that real estate is the best way to pursue financial freedom. I’ve lived it. I’ve seen tens of thousands of people do this. But not that many people actually get there. So let me ask you a question. Why is it that so many people think about getting into real estate, but don’t actually pull the trigger, start investing, get those first couple of deals and wind up pursuing the financial freedom that they want so badly? Or maybe you have one deal. Why do so many people just have one or two deals and never scale up? Actually, that’s a problem I had early in my career. I took way too long to scale up. So why does this happen?
I like to call it the three D’s. Again, the three D’s, sorry, are three things. The most common things that I hear over and over again that prevent people from pursuing their financial goals. And they’re simple. One is dollars. And I know a lot of people are probably out there thinking, “I don’t have the money to invest in real estate.” That is a common objection I hear from people. Two is deals. Everyone’s saying that these days, right? All the deals are in the past. Oh, there’s nothing good to buy anymore. Everything is overpriced. We’ll talk about that. I don’t think so. So we’ll talk about that. And then third, direction. This is all about the purpose that you take. People don’t know how to pursue the goals in a consistent focused way. They may be interested. They’ve read a little bit, or they’ve watched a podcast or a webinar or something, but they don’t know the system for pursuing financial freedom consistently day in and day out.
And this direction one, I know it’s a little bit less obvious than dollars and deals, but it is super important. Maybe the most important, because it’s all about your mindset. And it’s important to know that success in almost all cases is not a secret or an accident. It’s not just something that happens to you. It’s something that you have some control over and it’s all about your action and your mindset and your ability to consistently show up every day and follow a system that honestly I’m going to teach you today. I’m going to teach you how to do it. All you have to do is show up and take action. But it’s hard so you’re going to have to commit yourself to doing that.
I think a really good example of this and a good parallel to what it takes to be in real estate investing is actually trying to lose weight or getting in shape. Everyone wants to lose weight. Everyone wants to be in great shape. But are you going to actually follow the system and process that everyone knows works. It’s diet and exercise. Not a lot of people know this. I actually used to weigh 40 or 50 pounds more than I do now. And I didn’t know any secret. There’s nothing I did differently than what anyone else did. It’s common knowledge. All I did was show up every day because I really, really wanted it. I wanted to be healthier. And so I pursued that every single day and I got there and real estate is basically the same thing.
You just have to show up and follow the systems that hundreds of thousands of people have done before and it’s not a secret. We’re going to teach you all about it today. That’s what we’re here for. That’s what this webinar is about. We’re going to talk about getting the dollars, getting the deals and finding that direction you need to be a successful real estate investor and get that financial freedom. I’m sure you’re with me, right? Everyone wants this financial freedom. It’s amazing. It’s such an incredible powerful force in your life and I really want to help all of you get there.
Now, actually, I made this webinar a while ago and there’s actually a fourth hurdle. I just couldn’t think of a D word to come up with it. But that’s basically the economy. We all know it’s pretty wild right now. It’s very confusing. And luckily, this is my job. I talk about macroeconomics in the housing market pretty much all day. So I am going to address that later in the webinar as well, because it is confusing and a little bit scary, but it doesn’t have to be if you actually understand what’s going on. So in addition to the three normal hurdles, I’ll also put some economy stuff there.
Before we get to that, let’s just talk about why this webinar is even called the first three deals. Three’s just some arbitrary number. Why did I pick that? Well, it’s because the goal of the first few deals is not to build wealth. Yes, it’s going to hopefully improve your financial position. But three deals, let’s be honest, is not going to get you to financial freedom unless you have three grand slams. But it’s probably going to take you more than three deals. So why are we focused here on three deals? Well, the first three deals are all about building momentum. That is what we are here for. This is about building your network. About building systems and processes that will take you really anywhere that you want to go with your investing career. It’s all about building this strong foundation and moving forward consistently.
I said this earlier. I made a mistake earlier in my investing career and I reflected on it a lot. And that’s why I talk about momentum so much is because I got my first deal in 2010 and then I didn’t do another deal for four years. I was doing work and all this other stuff, but I didn’t really think about it and I didn’t build a system that enabled me to scale my business at the same time as having a career. And I was in my 20s, I was trying to have some fun. But I could have done that and I should have done that. If I had put the systems in place at that time, I would’ve had a much bigger portfolio now. I’ve caught up since, but I really want you to focus on momentum because that is really the most important thing when you’re first getting those first couple of deals.
Okay. So that’s what we’re going to talk about today. It’s about how to get to those first few deals and from there you can move on to your financial freedom goals, because you’ll have the systems and foundation that you need to really reach anything. It doesn’t change fundamentally after three deals. I just think after you’ve gotten those first three deals, you’re going to be so good at this that you can scale to pretty much any size that you want.
If you don’t know BiggerPockets, let me just take one second and explain why I’m here talking to you. BiggerPockets is a massive community and resource for real estate investors. We have podcasts. We have webinars. We have blogs. We have all sorts of things. But underlying all of that, let me just tell you what we at BiggerPockets believe. We believe that real estate investing is the greatest wealth building strategy out there. We have helped hundreds of thousands of people. There are 2.5 million people who have used BiggerPockets systems to pursue real estate wealth. But we also believe that this is not a get rich quick scheme. Listen, this is not going to make you wealthy overnight. This is, again, about a system and process that if you dedicate yourself for not that long, for a couple of years, you can find yourself anywhere you want to be.
And third, we firmly believe that anyone can do this. Whoever you are out there. Any credit, any income, any circumstances. Of course, people come from different backgrounds and have different challenges to overcome but I am confident that no matter who you are, if you are listening to this, you can make this happen if you really want it. We can help you with these systems. That’s what we’re here for today. And again, I’m not just saying this. I know it’s possible because I have seen it. I’ve worked at BiggerPockets for seven years. I’ve seen so many people become successful through real estate investing and that’s what you’re here to do today.
All right. So let me just quickly explain who I am and why I am even qualified to lead this webinar. My name’s Dave Meyer. I’ve been working at BiggerPockets for seven years. I’ve been investing for 12. First couple years when I was investing I had no idea what I was doing. I was just making it up as I went along. I had never heard of BiggerPockets. And then one day I decided I wanted to take the two things I’m passionate about, which are data and analytics and real estate, looked for a job, found one at BiggerPockets. My life has changed dramatically since then. I’ve been able to scale my real estate portfolio. I am mostly a rental property investor. I now invest passively. I have one short term rental. And I still love data analysis and do that as well. So my new podcast called On The Market goes into macroeconomics, data analysis and all basically all the trends and news and things that you need to know as an investor that’s going on in the world right now. So check that out if you haven’t already.
I wrote a book with J. Scott. If you know J, he is an incredible real estate investor and he and I wrote a book together called Real Estate by the Numbers. It’s coming out this October. All about the math and how to really just be a great deal analysis. And we’ll talk about that today, but that book is coming out. And just as a reminder, I was once a newbie too. I really didn’t know what I was doing. But once I hit that three deal mark, I really started to understand my systems, my process better. And that’s why today we’re talking about building that stack so that you can get to that financial freedom. I do live in Amsterdam. It was a lifelong dream of mine to live abroad. And luckily, through real estate, through BiggerPockets, I’ve been able to pursue that. And it’s been an absolutely wonderful experience.
If after this, you want to reach out to me, you want to connect with me, the best place to do that is on Instagram. I am @TheDataDeli. If you don’t know already, I love sandwiches. That’s why I love data deli. So I talk all about real estate, economics, and of course, sandwiches. So, okay, with that out of the way, now you understand who I am. Let’s talk about our first few deals. Because in some ways it really matters a lot about your first few deals. And in other ways they just don’t really matter at all. Because again, we are talking about momentum here. So in the ways that they do matter, it matters just that you show up and actually do them. And I’m not saying that you should just go buy anything. We’re going to talk about how to find a good deal for your first deal today.
But what matters is that you jump in the ring, you get in the arena and you start learning. Because you don’t learn by watching and you certainly can learn here in a webinar about a podcast, but the way you really learn and understand it at your core is by actually getting in there and doing that. So that’s why the first deals matter. But why they don’t really matter is because you don’t need to hit a home run. As I said before, three deals, not going to get you to financial freedom. So don’t put so much pressure on yourself. You don’t need it to be a home run. You want to hit a double. Maybe a triple. Even a single is fine. Like a house hack where you just reduce your monthly expenses. That is getting in the game. You are going to learn so much.
So that’s what I want to talk to you about today is just getting started. Because once you do, the impact is going to cascade and is going to compound and is going to grow to whatever you want it to be. So let me share this concept with you. And this is a super important concept for what we’re talking about today and why the first few deals are so important. It’s a system and a concept that we call the stack here at BiggerPockets. And the concept here is something that you need to understand. Is that you don’t build wealth by getting a single property or by any property. The way you build wealth is by building a portfolio. You need a lot of assets. Not even that many. But you need more than one asset to actually build that wealth that you’re talking about.
And listen, I know that sounds probably intimidating, right? Maybe you’re sitting here thinking, “I’m just getting started. I don’t even have one. How am I supposed to start thinking about a whole portfolio?” Well, it’s the same to buy one as it is to buy two or to buy four, or to buy five. It’s about this system and we’re going to talk about this system and we’re calling it the stack. This is basically a blueprint for you to pursue for financial freedom. So just imagine you commit yourself today to in the next six months you’re going to buy your first rental property. Let’s call it a single family home. Most people start with single families. And a single family is a great deal. It’s a great way to get started. And no matter who you are and who you’re … Whatever it is. You can do this. A single family residence is entirely possible.
If you want a house hack, you can put as little as 3.5% down or maybe you have enough to put 20 or 25% down. I promise you, by the end of this webinar, you will know that you are capable of buying a single family home in the next three to six months as long as you dedicate yourself to that. So there you did it. Congratulations. That was the hardest part. One deal is the hardest thing you ever have to do. I admit it. I know it is scary to do that first deal. Honestly, I still get a little nervous on every deal I do. That’s okay. But after that first time, everything just keeps getting easier and easier and easier. So wherever you are, whatever you’re doing, please just focus on that first one.
A couple years from now, then you buy a duplex. It’s still only one unit, right? It’s still only one purchase. So first year, you buy one single family residence. Second year, you buy a duplex. Maybe in your third year, you buy a fourplex. All of a sudden you have seven units. All you did is buy three things. One per year. And now you have seven units. Imagine if you made a couple hundred bucks per unit off that, that’s in three years. Then you go to eight. Maybe then in 16. And all of a sudden in five years you have 31 units. And listen, don’t get caught up in the details of making it exactly one, two, four, eight. This is just about exponential growth. It’s that if you learn how to do a single family, then you can easily buy a duplex, you can easily buy a fourplex.
By the time you have seven units, you can buy an eight unit. You’re going to have these systems in place that allow you to scale to any size. The way you start is with one. So stop worrying about your third deal. I’m just showing you this to show where we’re going. But you don’t need to worry about your third deal or your fifth deal right now. This is about momentum and momentum starts with your next deal. That is the thing that matters most and that’s what we’re going to talk about right now. So what is stopping you from getting to this first deal or your next deal? Maybe you have a deal already and you’re like me and you bought one and now you’re just slowing down. I don’t know. But I imagine these are roadblocks that most people face because I’ve heard it so many times.
And again, we talked about them. They’re dollars, deals and direction. But I’m first going to just talk about market conditions because I said I would. And listen, home prices are at an all time high. Rents, also at an all time high, which is good if you already own some properties. And rising interest rates have been … Interest rates have been going up for a while now and it is slowing down the housing market. So that seems a little scary. On the other side, there are other things going on. Like stock market and cryptocurrency have been getting hammered over the last couple of months and there are valid fears of a recession. I do think there’s a good chance that there is a recession in 2022 or in 2023. So that begs the question you’re sitting on this webinar and I’m telling you all these scary things, is now a good time to buy? Overwhelmingly I can say yes. I’ve already done several deals this year and literally every experienced investor I know is continuing to buy right now.
But let’s talk about why because I’m not just saying this because I’m boosting something. I genuinely believe this. Number one, it is always a good time to invest if your numbers work. If you know how to analyze a deal, it doesn’t matter what the market conditions are. If you can find an 8% cash on cash return, I will buy it in any single market. Or if you know how to find a good deal and negotiate a good price, that works in any single market. Transitionary markets, which is what we’re in right now … We saw this huge run up in prices. That’s over I think. But we are still likely going to see probably appreciation over the next couple of years. And even if you don’t, transitionary markets offers opportunity to buy below market value.
If you listen to my podcast, James Dainard and Kathy and Jamil and Henry are always talking about this because basically sellers now in this type of economy are willing to sell. They’re willing to negotiate. They’re willing to talk to you. That didn’t happen the last couple years. There was crazy competition. Even as an investor, you had to bid aggressively, you had to waive contingencies. That is changing. You’re going to have much more leverage as a buyer. That means there’s opportunity. Third, this is true of any investment, but it’s true in real estate. Time in the market is more important than timing the market. And they say this in the stocks because it’s true. The longer you own assets, the better off you’re going to be. Listen, I look at macroeconomics literally every single day for hours and I don’t try to time the market.
And I know people probably think that’s not true, but it’s 100% true. I don’t try to time the market. Instead, I try to buy good deals consistently when I have the cash available to do that. And that’s because I know what a good deal is. I know how to analyze good deals and you will too by the end of this webinar. But as I said, every experienced investor I know is buying right now and that’s because they have systems. They know what a good deal is. They’re getting good leads. They are seeing really good opportunities and they’re pouncing on that. I’ll just leave you with some words that Warren Buffet … I’m not leaving you. I’ll end this section with some words from Warren Buffet. Where he said, “Be greedy when others are fearful and fearful when others are greedy.” And I really take that to heart. That means there are opportunities when everyone else is afraid. And I’m not saying buy anything. Absolutely do not buy just anything. Buy a good deal. You’re going to teach you what a good deal is and only buy that.
Okay, so let’s get into the traditional three D’s. Number one is dollars. All right. Real estate finance honestly is really all about mindset. You can find financing if you really want to. First way to do that is the traditional loan. This is when you put 20 or 25% down and get a traditional mortgage. This is the easy thing to do. If you have a W2 job or if you are a contractor and you have two years of pay history, you can probably get a traditional loan. Or if you want to owner occupy, do a house hack, that’s a great way to get started as well and you can put as little as 3.5% down.
So you can do this a lot. You can get five or even 10 mortgages just by using traditional mortgages. We talked about the stack. You could get to seven units or you could even buy more than that just by using traditional loans. So this isn’t super complicated, but there are probably people out there who don’t have 20 or 25% to put down so there are other options out there. And the number one option I recommend if you don’t have dollars is to do a partnership. Honestly, so many people overlook the value of partnerships. They look at their own financial situation and think I don’t have the money to do that. Well, someone you know might. And if you don’t, maybe you just put sweat equity into a deal. There are so many different ways that you can structure a partnership that whatever your financial situation is, you can figure this out. And I know people are maybe skeptical so let me just tell you the story of my first deal.
So let me tell you about the story of my first deal. When I was 23 years old, I was a year out of college. I was waiting tables and I had no money at all. Really, no money to my name. But what I knew was that real estate prices had just gone down a lot. And I had done some data analysis in college and I was able to figure out that this would cash flow. I knew it would cash flow. I didn’t really honestly know how much it would cash flow. I didn’t really know how to analyze a deal. But luckily I figured it out. I went to some people I knew and was able to convince three other people to go in on it with me. And the deal we had, we needed just over 100 grand to put down on this apartment. Four units. And we each needed to bring 26K. But I didn’t have it.
So I went to one of the other partners and said, “Listen, if you put in my 26K, in addition to all the benefits you’re getting for being an owner of the property already, I will also pay you 6% interest on the 26K you loan me.” So now this partner has a lot of equity and they’re getting cash flow basically from me paying them 6% every year on that 26K. So I did all the property management and the partnership basically paid me for my property management, what you would pay normal property management. And then I used that cash to pay off the secondary loan. So this is what I mean about getting creative. No one told me to do this, but I figured it out with some people I knew. I managed to be the property manager to generate cash.
And at first, did this make me a ton of money? No. But over the years I actually bought out two of my partners. I was able to figure out how to generate more cash flow and it wound up being an excellent, excellent deal for me. But at the time it was a single. It wasn’t a home run. But it did help me learn the business. And again, I didn’t follow this up as fast as I should, but in retrospect, over the years when I was managing this property, I learned a ton and I am so glad that I got into this, even though it wasn’t the financial home run that it might have been had I just bought it on my own. But it got me into the game.
So let me just get back to that. Partnership’s an amazing way for you to find the dollar. So far we have a traditional loan. We have a partnership. And then the last thing I want to say … This isn’t really its own way of financing. It’s a little bit different. But the BRRRR strategy is an amazing way to build a portfolio. When you do a BRRRR, it’s basically like flipping a house, but you actually keep it, which is the opposite of flipping a house. But you buy a house that needs work, you renovate it, but then instead of flipping it to someone else, you do a cash refinance and you can take out a lot of the money that you put down and take it out of that property and put it into the next property.
I’m not going to get too far into that. David Greene wrote a great book about BRRRR. We actually have a couple of resources I’m going to talk about here in a second, where you can learn more about this. But it is a great way to build a whole portfolio when you don’t have a lot of cash. So if you want to learn more about that after this, check that out and we have an awesome giveaway for you. If you’re a pro member, we have a full workshop that David Greene and Brandon Turner put together for nine strategies to invest when you have no money. I mean, Brandon wrote the book, How To Invest With Low Or No Money Down so he is the ultimate resource for this. And if you are a pro member … Which we’ll talk about later. If you’re not, if you want to go pro, we’ll talk about that in a little bit. But you’ll get nine strategies on how to do this. And believe me, I did it. I had no money when I got started investing in real estate. And you can absolutely do it too. Dollars are not a hurdle that you should really be considering. And I’ll explain that more in just a little bit here.
So the secret here … Well, not that little bit. I’ll explain it right now. The secret to financing real estate … I said it was a mindset and I want to convince you not to get so hung up on dollars because no matter what, the secret to financing real estate is having a great deal. The whole reason I was able to convince those partners to go in on me, even though I had no experience, was because I had an amazing deal and I was able to analyze the numbers and show them how much money they were going to make, even with a lot of contingencies. And that is true for you. If you have good deals, people will invest in it. No investor turns down an excellent deal. It’s just not going to happen. So that is really what it’s all about.
So it’s helpful to know what financing strategies are out there. But if you can learn to identify excellent deals, that is going to help you with financing a million times over. But let’s just talk a few ways to get deals right now. The MLS. I know it’s not sexy. It’s not the cool way to do it. But so many people find deals on the MLS. Honestly, I’ve found the majority of my deals on the MLS. And according to a lot of friends of mine who are super active real estate investors, they’re getting more deals on the MLS right now than off market right now because sellers … Again, it’s a transitionary market. Sellers are motivated right now and they are willing to cash in. They are willing to negotiate and there are great ways to find these deals.
One of them is of course a real estate agent. So if you don’t have one, you want to find an investor friendly agent. You can do that for free on BiggerPockets, biggerpockets.com/agent. You can find an agent who can help you find really good deals. Now, you can do this. You can go on Zillow, but not every deal on Zillow is going to be great. So don’t get discouraged. We’re going to talk about this in a little bit. How to whittle down. If you go on Zillow, how to funnel it down to find a great deal. We’ll talk about this in a minute, but just for now know that the MLS … Don’t listen when people say the MLS doesn’t have good deals. There are good deals on the MLS. You just have to be patient and figure out how to find them.
The next one is driving for deals. This is also called driving for dollars. It is extremely common because it works. But it takes a little bit of work. You’re going to have to do a bit of legwork here to actually find these deals. Now, if you’ve never heard of driving for deals this is basically a process of identifying properties that have a likely seller, but they haven’t put it on the market. So they have … Maybe it’s someone who had an unfortunate situation with their family and they need to get out of the house or you hear a lot about hoarders who want to move, but they don’t have the energy or the money to clean up their house to put it on the market. So a lot of people just don’t wind up putting it on the market.
But if someone comes along and says, “Hey, I’m an investor. I would love to buy this deal from you.”, then that’s a great opportunity for both parties. And I love the way that James Dainard says this or Henry Washington. People who are on my podcast say it. That you’re not buying a deal when you’re driving for deals, you’re buying a situation. Some people might just need cash now and they’re afraid to put it on the market. They don’t want people coming into their house. The house needs a lot of work. Maybe it needs a new foundation and they’re not prepared to do that. These are all situations. And going back to the idea of market conditions, situations happen in any kind of economic climate. These types of deals never go away. Yes, you’re going to have to do some work, but there are great tools out there.
Deal hub … DealMachine. Sorry. Is a good one. I have no affiliation, but I’ve used it before. It’s a really good tool. And this is a very good way to find deals. If you want to find things under value, if you’re willing to do value add and do some construction and rehab work, driving for deals works all day. There’s a ton of resources. Again, we’re going to share with you guys, that you can learn more about this for free. But don’t forget about driving for deals. It is an excellent way to find deals. There’s other ways to do it. We call it driving for dollars, but you can do direct mail letters, direct cold calls. This is similar to driving for deals, but rather than actually driving around and finding a house and being like, “Oh, that one. It’s a little rundown. Maybe I’ll call those people.” You can actually just send them mail or you can cold call them by buying lists.
There’s all sorts of services that do this. You can basically go on people who are in pre foreclosure or maybe people who live out of state. It’s not owner occupied and you know that they’re a landlord renting it out. And maybe the place is a little run down and needs some work. Maybe you can take it off their hands. And guys, this is a numbers game. Not everyone’s going to respond to you. You might send out a thousand mailers, you might cold call a thousand people, and you might get a couple responses. But all it takes is one deal and it’s entirely worth it. It’s about getting that momentum. So you just need one deal. Maybe you get one deal a year doing this. It would still be worthwhile. And there are all sorts of companies that can help you do this so you don’t have to do it alone. You don’t have to figure out how to do this. There are resources to help real estate investors do this exact thing because it works.
The last is relationships. I mean, real estate is such a … It’s just a relationship game. I get called, I get talked to by people all the time, because I am friends with a lot of real estate investors. So make friends with a lot of real estate investors. Make friends with real estate agents or property managers or lenders. Because they hear about deals all the time and they can pass them along to you. And this isn’t a quick thing. This does take some time. But it’s something to think about. Maybe it won’t work for you in the next three months but if you’re trying to build that stack, if you’re trying to get couple deals in the next few years, start building those relationships now, because they’ll start bearing fruit a couple years from now.
So that’s deals. Remember, if we have pro, you can get a masterclass hosted by Brandon Turner on how to find great deals. It talks all about relationships. Like I said, driving for dollars. The MLS. Brandon talks about going on Facebook, using Craigslist, all these really creative strategies to find deals. And like I said, if you can find deals, you will find the financing. So make sure you know how to find a good deal and how to analyze a good deal, which we’ll talk about in just a minute.
The last thing here is direction. We talked about this earlier, and this is about following the purpose and being really focused on where you spend your time and your attention. I actually listened something the other day where Warren Buffet and Bill Gates were both independently asked to write down in one word why they were successful. And they both … They didn’t know they were talking to each other. They both wrote down the same word and it was focus. It’s not direction. Didn’t have a D. But it’s the same kind of idea. It’s all about pointing yourself with intention where you want to go. So how do you find direction? Well, you’ve already taken the first step. You are educating yourself, which is the most important thing. You want to start really broad at the education phase. So you’re doing it by being on this webinar. You need podcasts. You need books. We have forums, blog posts on BiggerPockets. You get most of this stuff for free. So you need education. And this doesn’t stop even when you have a first deal or second deal. I’m still learning. I am still constantly talking to investors, watching webinars, reading the forums to learn more and more and more. And you want to do that as broad as possible.
Next is focus. Like I said, it’s sort of a subset of direction. But you need to be able to focus to support your long term goal. It’s so easy to get that shiny object syndrome. Maybe you’re looking for a short term rental, but then someone tells you about wholesaling. You’re like, “Oh, I want a wholesale.” Or, “I’m going to flip.” Or, “I’m going to do note investing.” Or whatever it is. There’s so many things. But specifically at the beginning you have to focus. Otherwise, you’re going to get overwhelmed. So you need to pick an area. Pick a market. Pick where you live. Pick somewhere close by and be specific. Pick the actual block or the zip code or the neighborhood that you want to buy in because that’s going to help you focus your brain on what exactly you need to do instead of being distracted by all the things that are going on around you.
Pick your property type. Do you want single family? Do you want a short term rental? We’re talking about rentals today because I think it’s the best way to build long term wealth. I started doing short term and large multifamily later in my career so if you’re talking about first, second or third, I do think buy and hold, house hacking, great way to do it, but just pick one. Pick a condition. Do you want to buy A class properties? Do you want turnkey? Do you want to do value add? There’s so much resources about this and we’ll talk about this more, but that focus is so important because it gets you to your buy box.
And I’m going to talk about that in a little bit. But your buy box is basically what are you looking for in a deal? If you know I’m looking for a traditional rental in Denver, Colorado that has at least an 8% cash on cash return in a good neighborhood, then when you see that you are ready to buy. You’re not going to be worried. You’re not going to have analysis paralysis. You’re not going to be worried about macroeconomic conditions. You’re going to be like, “This is what I’ve been looking for and I’m ready to buy it because I know exactly what I want.” And so this focus helps you create that buy box. We’ll talk about that more in just a little bit.
And then lastly, this is about process. Guys, we’ve been talking about this, but process is what you need to get the results. So even if you’re focused, even if you know what you’re doing, if you don’t show up every day and do the work, you’re not going to get anywhere. We talked about losing weight, going to the gym. If you don’t show up to the gym, you’re still not going to lose weight even if you think about it all the time and you get educated about yourself. You actually have to show up and do the work and that is what we are hopefully helping you do today.
In this process, you might be thinking, “What is the process? What do I do? What do I show up? How do I do this?” Well, that’s what we’re going to teach you right today. It’s all about the deal funnel. Okay. Deal funnel. We have an analogy for it at BiggerPockets. We call it lapse. And that’s the process I want you guys to focus on here. To get over that direction fear. The deal funnel is all about a numbers game. We talked about the buy box. So how do you find a deal that’s in your buy box? Well, you need to start with a lot of leads. There’s a reason this slide, it looks like a funnel. It’s because at the top of the funnel, you need to start with a lot of leads. It might be hundreds of leads. It’s probably not thousands. But let’s just say it’s 100. I don’t know. I’m just going to make up a number. Then if you’re looking at 100 leads on Zillow, not everything’s going to be great. But maybe 10 of them are kind of interesting. You’re like, “Oh, maybe this could work.”
That’s when you analyze the deal. You actually underwrite it. You figure out what the cash flow is going to be, what the appreciation might be, what your important return metrics are going to be and decide if any of them are worth pursuing. And maybe only 10%, maybe one of them is actually worth pursuing and succeeding. But that’s the game, right? I keep saying that all you need to do is follow a process that thousands of people have done. This is the process. All you need to do, get a lot of leads, analyze the ones that look good, and pursue the ones that look good from there. That’s all it takes. And even if those numbers … I just made them up. I said, out of a hundred leads, you get one good deal. That’s totally worth it. I was showing you before that to get a stack, all you need to do is really buy one, maybe two deals a year for a couple of years and you’ll get to that financial freedom.
Would do you not analyze 10 deals, analyze 20 or 30 deals to get that one deal a year? I know I would because analyzing deals is not really that hard. I’m going to show you how to do it in five minutes. I’ll show you in five minutes how to actually analyze a deal in five minutes. So that’s what I want to make sure you understand here is that real estate is just a numbers game. Follow this process. Leads, analysis, pursue, success. Just do it over and over again. If you do the leads and you are able to analyze deals and you find deals that are good, you’re going to find that financing. Like I told you, you’re going to know exactly what you need to be doing. So memorize this, guys. Memorize the deal funnel. It is not complicated. It is proven. And I know each and every one of you can do this, because I’ve seen so many people do it. But just remember it is a numbers game. Do not get discouraged if you look at 10 deals and none of them work. Good. You should be looking at hundreds of deals to know that you are getting the best possible deal.
We’ve talked a little bit about how to find those leads, driving for dollars, MLS, relationships. You can watch that masterclass I just told you about. So let’s talk about the next one. Because so many of those deals, so many of the leads that you’re going to get are not good deals, you need to be able to find the right ones. This is really important and this is where it takes a little bit of skill and I’m going to talk to you about how to do it. You have to be able to analyze those leads to pick out the best ones.
That’s why people are going to invest with you, that’s why partners are going to partner with you, and that’s why you’re going to find financial freedom. Is because out of all the properties in the United States, there are 140 million of them, out of all of those, you’re going to be able to find the ones that best support your strategy and best help you reach your financial goals. Here’s what experts know. Again, I’ll say this again. I said it earlier. But it’s not about timing the market, it is about time in the market and you need to focus on what your portfolio looks like 10 years from now. So those are the important things to keep in mind when we are analyzing deals in just a second, because it is easy to get distracted by the market. I know it is a confusing time. But if you have your buy box and if you follow this process of deal analysis I’m about to show you, and you keep in mind where you want to be 10 years from now, I promise you this is going to work.
Okay. So we’re going to try this in real time together. We’re going to actually analyze a deal together. And to help me with this, I am going to use the BiggerPockets calculators. Just so you guys know, this is a pro benefit, but if you’re not a pro yet you can actually use this five times for free. So go check it out because it’s a really useful tool. I picked this deal because it’s in Alabama. I actually just did a deal in Alabama recently. In Birmingham, not in Huntsville, but I’m interested in the market and so I like this deal.
It’s a three bed, one full bath, two half bath, 1700 square feet, two car garage. Looks great. Nice curb appeal. I like the look of the house. So I don’t really know that much about it, but we are going to analyze it. I just found this on BiggerPockets. I just went to find deals, real estate listings. You can go check it out there. That’s another good place to find deals. I didn’t even mention BiggerPockets tools of the finding deals part but that’s another good place to find deals. And to do this, we are going to go analyze a deal. And while I’m pulling this up … I’ll just show you. I just go here to tools to rental property. Again, this is for pro members but you can start for free. Just hit start a new report.
I’ll just tell you guys, the reason I’m doing it on the BiggerPockets calculator is because it’s easy. And let’s just start doing this. I’m going to show you how to do it and you’ll see that in about five minutes you’ll be able to analyze a deal once you get good at this, but I’ll explain this all to you. First, let’s just start by copying and pasting our address. That sounds pretty easy. Look, you can just auto fill it. Great. I’m going to add a photo actually. Before this just did this so I didn’t have to awkwardly do it while I was doing the webinar. But what do we got here? All right. Here we got our image. You can add as many image as you want, especially if you’re going to show this to a lender or partner at one point, which I’ll show you later how to do. You might want to add some good pictures.
For the purposes of this, I’m just going to do one. And then what was our zip code here? 35810. Let’s put that in. Great. So now all we need to do is hit next. Let’s talk about our purchase. Let’s just assume for now we’re going to buy it at full price. And we might not be able to do that. That might not be a good deal. But for now, let’s just start that way, because you’re going to learn and you’re going to see that using the calculators, you can sort of iterate on the deal and if it’s not a good deal at first, you can put in different purchase prices and see what you should be offering to make that deal. So let’s just assume that we’re at 140,000, easy. Closing costs. What are closing costs? This is starting to get hard. Everything easier before Dave. It was just copying and pasting everything and now we have to think. Purchase closing costs.
Well, BiggerPockets on the calculators have these little tips. So if you don’t already know what your closing costs are, first you can do that by talking to a lender if you want to. But you’ll see that it’s just one to 2% of the purchase price of the property. If unsure, one and a half percent. So I’m just going to do one and a half percent. What is that? That’s $2,100 bucks. And let’s just say we’re going to rehab it. It did look like it needed a little work. So let’s just say we’re going to rehab it. Listen guys, I’m going to make up some numbers here. I’m not going to do a full analysis. I want to show you how easy this is. And I’m pretty good at estimating this after many years of doing this. So let’s just say that we’re going to put in 25 grand and we think that will make 40 grand in value.
So instead of the purchase price, it was worth 140. Now it’s worth 180. That’s amazing. And for that, it costs us 25 grand. Again, I don’t know exactly what it’s going to be. Obviously I’ve never been to this property. I don’t know. But I’m just going to make some ballpark estimates because I want to show you how easy this is. Again, we don’t want you to get stuck. What I want for you is to be able to get good at these deal analyses so you can do the lapse. You’re going to have all these leads and you need to be able to analyze these deals accurately and quickly so that you can identify the ones that are good.
So if you get stuck, don’t be too worried. There’s resources here. How do I get ARV? We’ve got tons of resources for you built in right there for free. That’s it. Now we know what our purchase price are. Moving on. Loan details. I’m going to say we’re putting 25% down. For me, as an investor, normally that’s what I put down is about 25%. Sometimes you can get 20% or if you’re house hacking, you can put as little as 3.5% down. And interest rates, they’re high right now. They’re actually … Let’s just say they’re about 5.7%. Points charged, none. I’m assuming that since I’m putting 25% down, my lenders aren’t going to charge points. What are points? You can learn right there.
Loan term, 30 years. I love me a 30 year fixed rate mortgage. One of the most amazing things about the American housing market is that there are 30 year fixed rate mortgages. That does not exist in many countries around the world. It’s incredible that you can lock in your interest rate for that long. So I’m going to do that. And if interest rates go down in the future, I’ll just refinance. That will be great. So again, show you what we’ve done so far. We’re flying through this because it’s easy and I’m doing this because I know it well. But I just want to show you, once you get good at this, that you could be doing this quickly. So that when I talk about this funnel where you have a hundred leads, you can run these 10 analyses in an hour, maybe an hour and a half even when you’re really thinking about it. So we’ve gone through all these, now it’s time to get to rental income. How do you find rental income? How do you figure it out? Well, there’s a couple of ways.
One, talking to property managers. That’s a great way to do it in your market or perhaps you actually rent right now in a market that you’re going to invest in and you have a good idea of what rent is going to be. But if you don’t, I’m actually going to pop over to this other tool that we have here on BiggerPockets. It’s called the rent estimator that will do exactly what we needed to do. So what was our address here? I’m going to just copy and paste this. And guys, this is a tool that I built. Honestly, it’s pretty darn accurate. And you still might want to double check with a property manager or someone in the area. Maybe you know another investor in the area is a great way to also check rent. But if you want to analyze a lot of deals, this is an excellent way for you to get information quickly. Because we want to get our rent up quickly.
So what we see here is median rent about 1215 a month. I’m liking that. And our confidence … The thing I love about this tool is that it tells you how confident it is. Sometimes it’ll say it’s low and you’re like, “All right, I got to call a property manager.” But now it’s saying confidence is high because there’s a lot of comps in the area. Look how many different properties are around here. This was a three bed, one full bath and two half baths. So I think a one and a half bed, three bath comp is pretty good. And it’s saying 1215 and I think that sounds pretty good just based off what I’m doing. So rent, we are going to scroll back down here and put 1215 in there. Oops. Now we’re going to put 1215 in there. And we’re moving on. We’re almost done guys.
We’ve already done loan assumptions. We’ve talked about price. We’ve talked about rent. Hopefully you can see this is pretty easy. Property taxes. What are our property taxes going to be? Let’s see. Let’s go back to the listing. Maybe they list what property taxes are going to be. It doesn’t but usually it’s about half a percent. So I’m actually just going to estimate. Let’s just say it’s $1,000. I don’t know. That sounds good. Insurance, I’m also going to do about 1200. That’s about average. Actually, in Alabama, I know it’s in hurricane alley. Let’s jack it up. Let’s just say 1500. I don’t really know. For these two, property taxes, that’s public record. So if you’re going through the calculator and you want to see property taxes, just go to public record. You can do that very easily. And insurance, you can just google that as well. Those are both really easy.
Now, repairs, vacancy, and CapEx. This is going to depend heavily on every property. But what I like to do is 5%, 5%, five, five. And are you going to manage it yourself? If so you can put 8%. That’s about 10%. You can say 10%. But we’ll adjust this all in a minute. I like repairs and CapEx at about 10% combined. And the only difference between these by the way, repairs and maintenance are repairing something that’s broken. Capital expenditures is something that’s really big like a roof or maybe renovating. It’s just treated differently in the tax code. But for all intents and purposes, it’s maintaining, repairing, improving your property. You always want to have some vacancy in there. And again, you can learn how to more accurately represent these. I just want to show you how easy to run the numbers are, but you’re going to want to work with those inputs.
Next. Honestly, I personally love to just bill back. Just let the tenants pay their own utilities. It works better for everyone. They just pay what they owe and I don’t have to worry about it. So I put those in. I’m not a big HOA guy. I don’t like HOAs so I stay away from those. And so I’m going to put zero in all these and we’re done. I know I did it quickly, but I want to show you how quickly it could go. I’m doing this intentionally. Because honestly I can run deals this quick. I can do it in four or five minutes. It’s not because I’m some master of this. It’s just the calculator’s super easy. And once you get enough reps in, once you analyze deals … I’ve analyzed thousands of deals in my life. And that’s why I can do it so quickly.
But if you do 100, I promise you … If you sit down today and decide … We talked about showing up every day. If you show up and analyze five deals a day for the next month, you are going to be a master at analyzing deals. You’re going to know your buy box. Because I’m going to show you how easy it is to do, but commit yourself to that. That’s what it’s about. It’s about showing up every day and this is an easy way to show up every day. All right, let’s see who we got. All right. So 93 bucks a month. So it’s positive cash flow. 12% annualized return. Pretty good. Cash on cash return, 2%. Not great. That’s not where I’d really want it to be. That’s okay. You’re going to analyze 100 deals and you might only find one. If I know my buy box, that’s why I know that this deal isn’t right for me.
Personally, I actually usually take a lower cash on cash return than a lot of investors would if there’s good value add opportunity, good appreciation opportunity. I usually like 4% or 5% minimum, but still this deal would be a little too thin for me. But something that experienced real estate investors know that a lot of people don’t understand is that deals aren’t just found. Deals are often made. And I know that sounds confusing, but it’s true. I just put in random numbers here. So what if instead of 140 grand … Remember I said, sellers are willing to negotiate right now. All I need to do is … I don’t know. Maybe they’d take 130. All right. Now it went up to 216. Remember, when I put in my rent income, that was the median. That just means it’s the middle. So there are some higher than that, there are some lower than that.
I also said that I was willing to put in 25K to upgrade that property. Maybe that turns it into $1,400 a month. All of a sudden, now it’s 5.3% cash on cash return and I’m looking good. Now it’s a good deal. Will I be able to buy it at 130 and to raise the rents to 1400? I don’t know. I’m just trying to show you that deals … This is the time to get creative and this is the time to go make a deal for yourself. This is the great opportunity in this type of market because people are willing to negotiate. Rent is really high. Sellers are getting scared and they want to sell while it’s still perceived at the top. And so you can maybe find these deals. Will this deal work? I don’t know. I’m just trying to show you how to run these deals.
Honestly, if I could find a deal like this, this wouldn’t be bad for me. An 18% annualized return. Sign me up. Sounds pretty good. All right. So that’s just something you need to know. Obviously I also just made up these expenses. Oh, one other thing I should show you. If you’re new, a great way to make something cash flow, drop these management fees down. Manage your property yourself. I did that myself. You’re not going to want to do it forever. I think after three properties, you got to stop. You can manage maybe five units yourself. But at first, if you just want to get in the game and start building that momentum, just drop that down to zero. Look, you’re at an 8.5% if you do some sweat equity yourself.
A few other things about the calculator you should know. If you scroll down, you can see all these important metrics that every investor wants to know. Which is NOI cash on cash return, expenses. Everything in here is great. And something I really like to look at because I’m not a pure cash flow guy, I really like just looking at my total annualized return. Because you can see how much money you’d be making over time. Over five years on this deal, as I have it configured right now. 20% per year, basically for five years. You know what the stock market averages? 8% or 9%. So you’re almost doubling that on this deal that I randomly just threw together. Let’s just put this back at 140. Management fees at 8%. Let’s just go back to … What was it? 1215. Still 11.6%. Still better than the stock market. So just think about that when you’re thinking about timing the market.
What I love about this calculator is that it just makes it so easy for you to analyze a deal. It took me five minutes to do it in the first place. And then I can make my deal. I don’t know if the seller will accept that. But I have the tool now to be able to decide what I am willing to offer. Now, I know that I am willing to offer 120. That is such an empowering tool because now you can find things and you can build your buy box around this entire calculator. One other thing I like here is that this sharing setting … So you can actually enable report settings and then you can download your PDF. And I think this is super important, especially if you’re going to be doing partnerships. Because if you approach me as a partner and you send me an Excel file, I don’t really want to learn the way you made your Excel file. But if you hand me a BiggerPockets calculator report where I know the math is right, and I know that this is done correctly, I am much more willing to partner with you to take you seriously, because you know what you’re doing. You’ve proven to me that you know what you’re doing.
You can use this for your spouse. A lot of times you’ve got to get your spouse on board. You can bring this to a lender, to a partner. It is such a valuable tool to be able to show how to do it. So that’s why I love the BiggerPockets calculators. I literally use it for all of my deals. I really recommend you do it. Again, you can do five free deals on BiggerPockets so go check that out. You can do a spreadsheet too. You definitely can. I’ve done that in the past. But over time, I’ve learned that just using a tool that is built specifically to do this is easier.
Okay. Let’s start to wrap things up with three simple questions here, guys. Are you committed to buying your first, second or third deal in the next 12 months? Are you? I mean, be honest. If not, that’s okay. That’s fine. I just want to you to think about this. Because if you are sitting there thinking, “Oh, I don’t know. Maybe, maybe not.”, that’s okay. But if you’re sitting there enthusiastically saying, “Yes. I want this. This is for me. I can feel the financial freedom. I know the process I need to follow and I can get started right there.” Because if you want it bad enough, you’re going to get it. I promise you. This is not rocket science. So many people can do this. So if you want it, you can have it.
Second. Are you prepared to follow a process towards success? We’ve talked about this weight loss analogy, or getting fit analogy in the past. Are you prepared to follow the process? Are you going to show up every day? Because that’s all it takes. Do you want it? Are you willing to show up? And three. Are you willing to execute your plan every single day so that you can reach your full potential? Are you willing to be consistent? Because this is a numbers game. And if you are consistent and you follow that plan, I assure you that financial freedom that we are all striving for is possible for every single one of you. I’ll leave you with this quote by Jim Rohn. He’s a great speaker. He said, “Life doesn’t get better by chance, it gets better by change.”
So decide. Are you ready to make that change? If not, that’s okay. But maybe you are ready to make that change. That little change. It’s not some big dramatic thing. It’s about showing up and following a proven process. So if you are ready to start that, good for you. I am excited for you. I’m so happy for you. I really hope this webinar has helped you get there because this moment right now could be the start of the momentum that we talked about at the beginning of this webinar. So I hope it has been for you. If you are ready to make that change, and if you want that financial freedom, then let’s talk about one of the best ways that you can do that. It’s not for everyone, but it is one of the easiest ways and it’s one of the logical next steps for you if you are ready to take action, and that is a BiggerPockets Pro account.
Listen, it is not necessary. You can succeed in real estate without it, but we have designed it for real estate investors to succeed and it makes everything a whole lot easier. So if you want to know what BiggerPockets Pro is all about, it is about finding financial freedom faster. If you could shave off three or five years so that you can get to that financial freedom sooner, how valuable is that? That is worth anything. So you can do whatever it is that you are passionate about. Like for me, that’s about travel. That is about my time with my family. I actually moved to Europe. I live in Europe. I love traveling and it’s something I’m super passionate about. And now I get to do the things that I want to do every single day.
Not because I’m retired. I still work. But it’s because I’ve been able to engineer the life that I want for myself, because I was able to get that financial freedom at a relatively young age. And maybe that’s not it for you. Maybe it’s not travel. Maybe it’s about spending more time with your kids or being around when they show up. Or maybe it’s starting a business or giving more to charity, whatever it is, what are you waiting for? Don’t you want it faster? And that’s honestly what we’ve tried to build here at BiggerPockets. So what does it do? First and foremost, it gives you unlimited access to those calculators. I don’t know how many times it has saved me from a terrible deal and help me identify a great deal. You can go try it again for free, by the way. And you should.
And so nothing is more valuable than that calculator, honestly. Being able to analyze deals is the key to running that system. Again, if you want to do it in an Excel spreadsheet, you can, but this is a really easy way for you to do it. Next. You can get the rent estimator I just showed you. So if you want to analyze deals and know what something costs in rent, you need a good data source. And we have that data source for you with the rent estimator tool. Super valuable. And this is honestly, one of the most important things is showing the community that you mean business. Being a pro member, honestly unlocks a lot of networking opportunities for you. It shows people that you’re serious, that you have skin in the game. Remember the first question I asked you today is why so many people get interested but only a few actually take action and get started?
Well, this is a way to show that you are taking action and that you’re analyzing deals and that you are trying, and that you are putting your time and your money on the line to pursue what you want. So another great thing that we have at pro, something that’s super exciting is boot camps. This is an accountability program where for 12 weeks you’ll be working with cohorts and expert real estate investors to learn and get to your first deal. We have a rookie boot camp that will get you to your first deal. You can get that for 199 bucks and only pro members can get that so that is extremely valuable. You can learn from the best. We have incredible webinars, archives of hundreds of webinars you can watch completely for free. We have landlord forms. I use these for all of my properties.
These are worth hundreds of dollars all by themselves. On any single state. They’re rewritten every single year. We have lawyers look at them. They’re excellent. So you should definitely check those out. We have partnership deals with Mashvisor, AirDNA, Foreclosure. Some of the best data providers, some of the best marketing companies in the business all give discounts to BiggerPockets pro members. But really guys, I just listed a bunch of features. All of them super important, super helpful. But really the reason to go pro is because it works. I know it sounds silly or stupid, but it just straight up works. I’ve seen it tens of thousands of time over the last seven years. Just listened to some of our members. Aaron said, “The BiggerPockets calculators are my go-to for analyzing properties. There’s no way I could analyze the volume of properties I do without being a pro member. I locked up my first 33 unit almost a year ago and now selling for almost a 70K profit that’ll go towards something larger. BiggerPockets calculators were a huge factor in making sure my numbers were right.”
That’s exactly what I’ve been talking about everyone. You have to be able to analyze. I love that he says analyze the volume of properties I do because that’s what we’re talking about. It’s a numbers game. You have to be able to run these deals a lot of times. Patrick says, “Back in June, I attended a webinar. Right after, I signed up for pro. Next couple weeks, I analyzed a bunch of deals. Eventually I found a fourplex, got it under contracts three weeks later after signing up for pro.” That’s amazing, right? He ran a bunch of deals. He was patient and found the fourplex, got under contract. That’s amazing. Super proud of Patrick.
So just for being here today, if you want to go pro … Again, not for everyone. We want people who are ready to take action to do this. If you’re not, that’s okay. But if you are ready, if you want to take action, make this change, you can do that. Just use the code pro rental and you’ll get 20% off, which is a screaming deal. That’s 20% that you can use towards other stuff. So how much is it? I’m sure you’ve seen some people on the internet who sell their training courses for 10,000 bucks. Hell, I’ve seen 25,000 bucks. So what does BiggerPockets Pro cost? Costs $390. That’s it. It’s not because it’s worth less than the other ones. It’s because what I told you at the beginning, BiggerPockets genuinely believes that everyone can pursue financial freedom through real estate and should.
And so we have priced it at the point where everyone who wants to take action and to get into real estate investing can do it. And actually with the 20% off, it actually goes down to 312. So that’s an even better deal. Use the code of pro rental. 20% off, and you will get off pro annual membership. And we actually have a couple of bonuses here. I mentioned this earlier, but if you’re stuck on one of the three D’s, which is dollars, we have a investing with no or low money down workshop hosted by Brandon Turner and David Greene. That’s a $200 value for your pro membership. So you can get that completely for free. You can also get the finding great deals. So if the other D is bothering you, finding deals, you can get the finding great deals masterclass with incredible real estate investors.
We have Elliott Smith, Nate Robbins, Lance Wakefield. That is a thousand dollar value is what we assign that as. And you’ll get that entirely for free if you sign up for pro right now using that code. And so just look at what a deal is. It’s over a thousand dollars in bonuses and you can get that all today. And if you’re already pro, good for you. Hopefully you’re enjoying it. I’m sure you are. You can get these bonuses as well. Spread the love. Go to BiggerPockets.com/proupgrade and just enter the same code and you’ll get that as well if you are already pro. You actually have to be annual to get all of these bonuses. That is just part of the deal. 20% off. We don’t want people to just take the bonuses and run. But I just want you to know you can also get your money back.
We just want people who are ready to take action to do this. So if you’re one of those people, go pro right now and we’ll give you your money back if you don’t like it. If you decide this isn’t for me or something came up or whatever it is, no questions asked, give you a 100% refund. We just want people to go check it out. Hopefully you’re excited. You’re ready to take that action to build that momentum. And this is a logical next step if you’re ready for it. So again, as Jim said, if you really want to do something, you’ll find a way. If you don’t, you’ll find an excuse. Hopefully this webinar has shown you some things that you can do today to get over the fear of the market, of not being able to find dollars or deals or direction.
We’ve taught you a process to do the lapse system, to find leads, to analyze deals, to pursue them. You can do this. Tens of thousands, hundreds of thousands of people have done this before. I’ve seen it with my own eyes and I am confident that you could do this as well. So if you’re ready to do that and you want to go pro, great. BiggerPockets.com/proupgrade. And I hope you all learned a lot from this. Again, if you want to interact with me, if you have any questions about this webinar, I am happy to answer and I’m very active on Instagram. Again, my handle is @TheDataDeli. Hopefully this has been useful to you guys. If you want to go pro, again, BiggerPockets.com/proupgrade. I hope you all had fun and I will see you all again in the future. I put out these webinars pretty regularly, and if you want to learn, I do one on multifamily, I do a couple other ones. So definitely come check those out in the future. Thanks again for watching and good luck to you all on your path to financial freedom.

David:
All right. That was our show. Dave, what are you thinking?

Dave:
Well, I hope you liked it. I would love to hear your thoughts on it. Yeah, I mean, I hope people take away, obviously the practical tips and tools, but just wanted to get back to what we were talking about at the top of the show. And there’s something that I mentioned in the presentation is that I think every single experienced investor I know is pretty excited to be buying right now and is feeling pretty good about the market right now. Do you feel the same way? And is that true? Are most of your investor friends also pretty active right now?

David:
Yeah. I would say that the people that are, I don’t want to say full-time or professional real estate investors, but I’d say the people whose identity is most closely tied to investing in real estate versus a job they have or something else they do. There’s a lot of people that kind of do this just on the side, right? They love running marathons and they buy real estate every once in a while. But the people that are hardcore about it are buying a lot of real estate right now. And I’m one of those people. So I have not been this excited or having this much fun buying real estate in years. It has been a long time, probably since 2015 or so, where I was this gung ho and excited. And most of the deals I’m buying, I was happy about it.
Usually it’s, “Well, I’ll take it, but I don’t love it.” The that’s how it’s been for the last couple years. I was still buying, I just wasn’t buying as often. And I wasn’t putting as much energy into looking at real estate because so many other people were doing it. I didn’t want to go compete with 11 other people for the same house and burn all the energy you have to spend analyzing deals and then it doesn’t work out. Well now, there’s much less competition. There’s a lot of people that have stepped out thinking that we’re going to have a crash. There’s a lot of gurus. Now I will say this. The majority of the gurus that I hear calling for a crash are not real estate people. They are stock people, they’re crypto people, they’re business owners that don’t understand the lack of supply in our market, that are just thinking about what happened in 2010 and assuming that when there’s a recession, that means that the real estate market crashes.
If you understand the fundamental of real estate, you know that’s not necessarily true. Do I think there’s going to be a correction? Yes. Do I think that if rates continue to go up, demand’s going to continue to go down, which will in many cases bring prices down? Yes, I absolutely do think that. I just buy in areas where that’s less likely to happen. I look for value add opportunities so even if that happens, I’m okay. I’m aware of the fact that even if the value of the asset goes down, whoever is buying it is probably going to have the same or a higher payment than me because they have a higher interest rate in that situation. So it’s okay. The value of the asset doesn’t really matter. The cash flow that it brings in matters and eventually it’s going to turn around. So I’ve made peace with the fact that there’s always a hurdle in every market and you need to be grateful for those hurdles because that’s what keeps all your competition out.

Dave:
Yeah, absolutely. Going back to the presentation, you are familiar obviously with the lapse system. Just think about it. If you’re getting into it right now, as David was just saying, you can always find deal flow. You can always identify leads. But right now is an easier time to identify leads than it has been at least in the last two or three years and maybe longer. And that’s just a great way to be able to get started. You’re going to be able to look at a lot more deals. You’re going to be able to analyze a lot more potential deals. And when you do offer on properties, you’re going to be facing a lot less competition. So hopefully that’s going to encourage people, whether you’re just getting into real estate or maybe you’ve been waiting to see what’s going to happen. You heard it from David, who’s one of the most prolific investors out there, that he’s excited to buy and that there’s good deals to be had.
So yeah, totally get it and agree with you that there is likely going to be a correction. I don’t know if that’s going to happen in every market. I think when I look at some of the fundamentals, I see specific markets that nothing’s really changed. They look really strong, to be honest. Some look pretty scary. I think it’s going to be really hit or miss and that’s why you have to be an expert on your local market. I actually just wrote an article about this on BiggerPockets. You can go check it out and you can actually download all the data for local markets. But I’m with you. I’m excited. I’m not at the same quantity as you are, but I’m definitely excited to be active in this type of environment.

David:
So what are some of the markets that you’ve been exploring? I know I was watching one of your videos and you talked about, “I’m a Denver investor, but now I’m looking outside of Denver.” And of course you’re the data guy so what’s going on in the data guy’s big brain?

Dave:
Totally. I do mostly invest in Denver, but ever since I moved to Europe, I mostly invest in a lot of syndications. If you’re not familiar, it’s passive style investments. And it suits me pretty well because I get to just nerd out and pick markets because that’s the nature of syndications is you get to pick your operator, you get to pick your market. And I still think parts of central Texas and north Texas are really strong. There are parts of Florida. Miami’s market is still really good. I think Tampa’s still a really strong, long term market. And I’ve actually just to invested in a syndication, one in Alabama, one in Virginia. So I think there’s good places all around right now. It really depends city to city, not just state to state. You look at certain states, I think, especially in the south where some markets are really overheated and some are really fundamentally sound. So definitely recommend you look into the Southeast in particular, but even the Midwest is starting to look good. So there’s definitely good opportunities.

David:
What is it you like about the south that you think is leading to those being good opportunities for people?

Dave:
Mostly population. You look at migration trends and you see that people are moving primarily from the Northeast and the west coast to certain areas. A lot of them in Texas, Florida, North Carolina are all big net gainers of population. And that’s just simple supply and demand. If there is more people moving there, that is more demand that’s going to push up prices. And so that’s the most fundamental thing. And then you and I have talked about this before, but I think just looking at economic growth and you can measure that in a lot of different ways. GDP. Personally, I like to look at job growth, just seeing what kind of jobs people are getting, high paying jobs, are companies moving there. That kind of stuff is really important to me.

David:
I love that you’re saying that, and we can wrap up with this. Nobody knows what’s going to happen in the future. But one mistake that a real estate investor will make, especially when they’re afraid, is … And new people are often afraid. Is when you’re afraid, certainty becomes much more valuable than when you’re confident. When you feel really good about things, you don’t need to know every detail, but when you’re scared, you’re like, “I need to know this is going to work.” So think about right before you jump out of a plane. All you’re thinking about is, “Did my parachute get packed correctly?” You’re just running through it in your head over and over and over is that. Or you’re about to jump off with a bungee cord. You’re going to be looking at every single piece of equipment. Is that thing set up the right way? Well, it’s very similar to the world that we live in.
The problem is the snapshot of what you’re looking at as far as analyzing a deal, seeing the cash flow, that is very important. You need to know this. This is a fundamental piece of being a real estate investor. But odds are it’s not going to stay five years later what it looked like right now. And that’s one of the things that the BiggerPockets calculators will help, but they’ll actually project out if we just have 3% rent growth, this is what your cash flow will look like in five years and 10 years and 15 years. Well, if you invest in the right areas, you’re going to see much more than a 3% growth. I mean, inflation right now is climbing and it was at 9.1 at the last point. And that’s not including housing I don’t think. So it’s probably higher in the real estate market than it was in the CPI. Point is, investing in the right markets.
Even if things go wrong you didn’t expect. You have the typical toilet problem, you have a bad tenant, you have something that goes wrong. You will be bailed out by increasing rents, increasing home values and increasing demand for people that want to live in or buy your asset. So pay attention to the information. BiggerPockets is putting out there, particularly through Dave, about markets that we like, places that we’re investing, why we like them, population growth, businesses moving to the area. Pair that with the basic X’s and O’s of knowing how to analyze a deal and it should do a lot to take away your fear of getting started.

Dave:
I love it. Beautiful way to end. Couldn’t agree more.

David:
All right. Thank you everybody for your attention. We know you could be getting this information from multiple sources and we really appreciate that you’re coming to us to get it. We will continue to do our best to serve you right. Please leave us a comment if you’re listening to this on YouTube and let us know what you thought about this, and if you’re listening to it as a podcast, leave us a review. Whether it’s iTunes, Spotify, Stitcher, wherever you listen, we would really appreciate that and we love you for it. This is David Greene for David, the data deli Meyer, signing off.

Fifth Wall, a venture capital firm focused on real estate technology, is tripling down on its bet that climate tech will become an integral driver in the real estate space.

It just announced commitments of half a billion dollars to close its inaugural Climate Fund, which launched with $116 million in August of last year. It is the largest private fund formed specifically to decarbonize the real estate industry, according to the firm.

Nearly 40% of global carbon dioxide emissions come from real estate, according to the United Nations Environment Programme Finance Initiative. About 70% are produced by building operations, and the rest come from the construction process. Given that most real estate already exists, the goal of net zero emissions is difficult to attain.

The fund aims to invest in software, hardware, renewable energy, energy storage, smart buildings and carbon sequestration technologies.

“What we’re looking to do is identify the major spend categories where real estate owners are going to have to deploy capital. And then our business is buying noncontrolling minority positions in those companies,” said Brendan Wallace, co-founder and managing partner of Fifth Wall. He emphasized the fund then works with those companies to accelerate their growth.

“We have some of the largest owners and operators and developers of real estate as LP’s (limited partners) in our fund, so by virtue of those relationships, we can help grow these early stage tech companies, open these distribution lanes for them, where we basically have their largest customers as our LP,” he added.

Those partners are some of the biggest names in real estate, from single-family rental developers and operators to the hospitality industry. They include American Homes 4 Rent, which builds and manages rental homes and communities in 37 U.S. housing markets.

“The investment for us is relatively small, but the access to a number of small prop-tech, as well as environmental companies all looking to improve single-family rentals is really what excites us about the opportunities. We have a lot of rooftops and a lot of consumption of energy,” said David Singelyn, CEO of American Homes 4 Rent. “From a marketing standpoint our residents are typically those, that millennial generation that really values this.”

For real estate companies, the investment return is pretty straightforward: they’re improving their own businesses.

“But financial investors and institutional investors also get that this is one of the biggest opportunities,” said Wallace. “It’s a generational investment opportunity, because, unlike 20 years ago, this is now imminent, real estate firms have to decarbonize.”

“It’s about to become a retrofitting industry,” said Wallace, who admits that his half-billion-dollar fund is just a drop in the bucket against what he says will be an $18 trillion expenditure to decarbonize commercial buildings alone, never mind homes and infrastructure.

What he calls “shocking” is that so little venture capital is being deployed in climate tech today.

“Historically, only about 6% of all venture capital dollars into climate tech has gone into tech to decarbonize real estate. So it’s kind of systemically underfunded in traditional venture capital markets,” he said.

Other limited partners include BBVA, British Land, Camden Property Trust, CBRE, Cosan, The Durst Organization, Equity Residential, Hilton, Host Hotels & Resorts, Hudson Pacific Properties, Invitation Homes, Ivanhoe Cambridge, Kimco Realty Corp., Lineage Ventures, MGM Resorts, NZ Super Fund, Osgoode Properties and UDR.

The fund has already invested in several technology companies, including Assembly OSM, Brimstone, Clarity AI, Electric Hydrogen, Icon, Sealed, Span, Turntide Technologies and Wildcat Discovery Technologies, according to Fifth Wall.