The Real Estate Investing Hurdle You MUST Get Over

David:
This is the BiggerPockets podcast, show 719. Your goal is to get a counter offer, not to get this offer accepted.

Philip:
Yeah.

David:
All right? If they haven’t responded right away, they didn’t love your offer, that’s okay. You want to go tell their agent, “Hey, I want you to get me a counter offer.” Okay? That tells you, you’re moving in the right direction. Okay? If they come off their million, you’re looking to see how far did they come off that million? Did they come down to 900? Did they get into 850? Are they at like 995? Right? That’s going to tell you if this is worth pursuing. If they counter you at five grand off a list, just move on.
What’s going on everyone? This is David Greene, your host of the BiggerPockets podcast. Here today with our follow-up episode from our first interview with our mentees. This is the 90-Day mentor check-in number two. If you didn’t know what was going on, we found three people that reached out to us after BP Con in San Diego who said, “I want to buy real estate and I want to be directly mentored by David and Rob.” And in today’s episode, we are following up with the advice we gave them from the first time we talked and getting an update on how it’s going in their journey. Rob, what were some of your favorite parts of today’s show?

Rob:
I think we gave some very actionable steps to our mentees. One of my favorite things about them is they did what most people don’t do, is they actually took action on goals and homework assignments that we gave them, right? We gave them all actionable things. Last episode, they did everything, and thus most of them had progress towards the end goal that they’re going for. They’re all going through something a little bit different, some actual tactical real estate struggles, all the way to getting out of your comfort zone. If you’re an introvert, how can you overcome that? And you gave some really good advice, I think. I think I actually gave decent advice as an extrovert, and I think we were able to help them out and we gave them some good actionable steps for when they check in. Again, I’m excited because I think they’re starting to turn the corner a little bit.

David:
Yeah. Something to keep in mind as you listen. A common thread in every epic story ever told is that something has to go wrong. There needs to be a challenge, an obstacle. The world at one point was a good place and something has changed and now it’s hard, and the hero has to step up and overcome that obstacle. And it almost always requires the hero finding something in themselves that they did not have.
I challenge you to find any popular story. Star Wars, The Lion King, The Matrix, all of them. They all follow this exact same trend. And in today’s episode, we are following along with our mentees in their hero’s journey as they have to overcome individual obstacles. Now, the deeper that we dive into their journey, the more of these obstacles that start to surface and the better advice we can give them on how to overcome it.
So today’s quick dip is, as you’re listening to today’s show, ask yourself, “Am I struggling with something similar to this person?” And even if you’re not, does this advice apply anywhere else in your life or in your business? You, the listener right now, are on a hero’s journey as well, and we want to tap into that and help you make some progress. I’m just waiting to see how long I’ll wait before Rob will say something.

Rob:
Oh, sorry. Was I supposed to plus that up? It’s just good. It’s not so quick if I jump in, you know what I mean? It then becomes like a… We’re quipping back and forth. It becomes a quip tip at that point. But that was so succinct, so concise. So the brevity was outstanding and I’ve ruined it.

David:
Thank you.

Rob:
And I feel bad now because I didn’t mean to take the thunder away from it.

David:
No, I appreciate that. I wanted your lightning to my thunder. Together, we are a storm that is something to be reckoned with. And if you want to know why my quick tip was faster, it’s because many of you mentioned on YouTube that they’re not so quick tips because we do listen to the YouTube comments that you give. So take a minute to listen to today’s show and give your comments that let us know what you liked, what you didn’t like, what your favorite part of the show was, and give some advice and encouragements to the mentees who show up today and share their journey with everyone. Also, while you’re there, subscribe to BiggerPockets on YouTube. You won’t regret it.
All right, let’s get into today’s show. Okay. We are going to start with Philip. Philip is a high school Spanish teacher from California, where I live, and his goal is to get into multi-family and or a glamp site for a retreat center. If you didn’t catch last episode, Philip is a very creative type, much like Rob Abasolo who looks for an angle of how to make an experience for someone that they’re going to want to keep coming back to, as opposed to a purely analytical person who just says, “I don’t know. What does Excel say?” Which is pretty fun.
So tell us, Phillip, what was the homework that we gave you last time and how did it go?

Philip:
Yeah, thank you so much, David. So my homework was to reach out to land brokers and also to your former guests that started discountlots.com and build out some more resources of agents potentially, or brokers that could help me find land. I reached out to Discount Lots. I had some great conversations with them. One of the challenges was most of the land that they had in a radius of where I live is not really that hospitable for a retreat center. It’s stuff in the desert. It’s stuff that is a great price and I love the business model, but it just doesn’t work for what we’re trying to offer our potential clients.
And then I reached out to several land brokers. And I think one of the challenges I got was they’re really just trying to sell me the land that they had, that I was able to find these brokers on LoopNet, and Crecsi and able to see some of their listings.
And at least for the most part, they really just wanted me to buy the land that they had on, that they had listed, which a lot of times there were access issues or permitting issues or zoning issues that various obvious reasons for me weren’t going to work. So those were challenging. On that end, in a positive note, I spent a lot of my own time sifting through listings and listings that had quite a bit of time on them, and I actually found a piece of land that is in a totally the area that is my target area, and it is in an appreciating area. People are moving. It’s really beautiful and we put an offer on it yesterday. We’ll see if it’s accepted or not. We definitely came in much lower than the listing price, but it’s been on the market for almost a year.
So there’s definitely some things to do there. And then the other homework that you gave me was to don’t just drop some of the shorter term projects that I’m doing with raising money for people and doing some of these more active types of investments like flipping and this kind of stuff. And I met with more potential private money lenders. I met with four potential private money lenders over the last week. Had some really great conversations and just building relationship with those kind of folks. And then also starting to deepen relationship with certain operators and decide like, okay, is this person, do our values align? Do I want to work with them? So that’s where I’m at.

Rob:
Now, when you say potential operators, what exactly do you mean by that?

Philip:
Yeah, so I met with someone that’s doing flips that we are in masterminds together. We are in a couple masterminds together. I visited six of her sites. She’s got sites throughout LA where she’s doing flips and I got to meet her general contractor. I got to see her budget, essentially where did she come in at the start? What she’d been offering her investors and sort of getting an insight into what’s her flow. And that was really actually awesome to be able to just visit her sites and just go in person, see what she’s doing.
Then there’s a team in Florida that I spent some time with virtually that I raised money for a deal for them, and I could see myself doing more stuff with them in the future, but I’m going to take it slow and see how this first one goes out.

Rob:
Now remind me, what is your flipping career thus far?

Philip:
Yeah. So right now, I have five properties in Cleveland and three of them… two of them, I did full rehabs BRRRR style, and then one of them, I got through creative finance. And then I’m in the middle of two rehabs in Cleveland, doing all long distance. Have my general contractors that I’ve developed relationship with out there, and lenders, and essentially a team that I’ve built out there. And it’s been going fine. Things are going fine there, but it’s definitely… I mean, what would I say? It’s less downside but also less upside. And it does feel like I’m doing maybe too many things to do them well. And so I’m trying to hone in on what is the thing that I can really do well and it’s feeling like raising private money is one of them.

Rob:
So for anyone at home, just to catch you up on this, I think our advice to you, Philip, was with the glamp side or with the retreat, whatever you’re building, that’s going to be a project that’s going to take 14 to 18 months, maybe even longer, to actually get up and running. So our recommendation to you was to continue getting your day-to-day projects out the door so that you can make money while you’re trying to basically launch this development. That’s kind of where we left off, right?

Philip:
Yeah, totally. I mean, that’s been in the front of my mind and I’ve, even just thinking about my timeline, I want to be able to build out the retreat center with a long-term vision, not forcing it to make me money in month three or month six or month nine, but something that is built to last. That’s really what I want to do with that, but I also need to eat in the meantime. So I’m trying to find the balance of that.

Rob:
Yeah, yeah. It’s something we all face, right? Because it seems like you’re hungry enough to be good at whatever you do and thus when you have the ability to be good at everything you do, you want to do everything because you’re like, “I can do it.” Right? So as you start to lean into this, you’re good at raising money. I think this is a great niche. I don’t think a lot of people are very good at raising money. It’s a very specific type of skill that it takes to actually pitch an investor and romance them and schmooze them, wine and dine them, and everything like that.
So have you considered jumping into some of these partnerships like you were talking about where your sole purpose is just to provide the money and maybe you get just a piece, maybe a percentage of the profit, or just a piece of equity in that particular project?

Philip:
Yeah, that’s totally what my game plan is right now, and that is what the deal that I worked out with the group that I’m working with in Tampa. And now I’m in the role of, okay, people are really trusting me and they’re trusting my judgment. And I had some of these conversations with Andrew Cushman and Matt Faircloth, but it’s just how do I make sure that I am responsible with how I vet people that I’m potentially raising money for? Which is why the guys in Tampa, they have more deals, but I want to take it slow and see how this first one goes before I do anything else for them. But yeah, I’m definitely starting to lean into that and sort of, okay, I can’t be great at everything, so what are the things that I’m going to sacrifice that they are interesting to me, but maybe I can’t be great in them, especially not in six months or a year.

Rob:
Yeah, that’s okay. Well, like I said, I think leading into the money part of it, the raising money, that’s good. That’s like an important thing. If you’re worried about vetting effectively your other partners, that’s what you’re saying, the people you’re raising money for, have you gone and actually looked at any of their properties or walked to one of their projects?

Philip:
So in the folks in Tampa or the folks in LA?

Rob:
You would be raising money for both, right?

Philip:
Yeah. Yeah. I mean hypothetically, yeah.

Rob:
Okay, so both.

Philip:
Yeah, in LA, yeah, I walked five of her properties, or I walked six of her properties, and then I saw what her purchase price is, what her rehab budget was. Like I said, I got to meet her contractor. And then it was kind of cool. I got to see one of her projects that she hasn’t bought yet, but she’s like… I got to see her sort of idea phase. We met with her agent and some other folks and saw some potentially major issues with a property that she’s thinking of taking on, but then it’s like, okay, what is her game plan for how she would mitigate those?
And yeah, that was awesome, honestly. And then for the folks in Tampa, it was going through, seeing their past projects, a lot of that. And then I interviewed several of the people that have lent money to them in the past. That was a huge part of what I did.

Rob:
Yeah, I see. I see. Well, I think you sort of mentioned it, like walking that project and seeing what they had in the pipeline added a level of legitimacy that was a positive experience for you. I mean, I think that’s what it comes down to. You can vet a bunch of different ways. You can talk to contractors that they’ve worked with before, ask those contractors like, “Hey, did they pay on time?” Talk to different sub vendors or subcontractors, talk to different realtors they’ve worked with, walk those properties, look at the final projects of something that they’ve flipped before. I think those are small steps that you can take.
I think you’re going to have a bunch of check boxes in terms of what different types of things you can do, but the more you can check off, the more you’re going to start feeling better about handing them like a $50,000 check. So it seems like you’ve sort of started to do that with the person in LA. Now you got to go and actually fly out to Florida probably and actually see one of the projects that are currently in construction or in the pipeline.

Philip:
Yeah, totally. That’s definitely my game plan is essentially how being a part of the team of one of these people that our values aligned and am I happy with the way that they’re working in this space?

Rob:
Yeah. Yeah, definitely.

David:
All right, Phillip, so you’ve been drawing out a vision and fundraising for your retreat center, but it sounds like you’re coming up against the hurdle of time scarcity. You’re trying to visit these potential sites on top of your commitments as a teacher. Like you said, you got to eat. So tell me what has been the biggest hurdle that you’re trying to overcome when it comes to having the time that you want to put into this new endeavor?

Philip:
I think for the retreat space, a huge challenge has been… I mean, we talked about last, the time deal flow. I’m still not totally satisfied with my deal flow. I did reach out to one of the groups that the masterminds that I’m a part of to get a broker recommendation for land, had a great conversation with somebody. Now, I am in the position, I do take very seriously the idea of… I don’t want to have five agents doing a bunch of work for me that they’re not compensated for. There is a part of me that’s like, I would really just rather work with one person that’s awesome, than have five people that I’m testing out, like are they okay? Are they good? Just because I do feel like a lot of the agents that are helping me out, they’ll have to go an hour or two hours potentially outside of their normal radius of where they work in order to walk some of these properties for me and to walk some of this land for me.
And yeah, I don’t want to get the reputation as somebody that has an agent do a bunch of work for them for free. I am sort of moving through that as now I have three people essentially looking for properties for me.

David:
So let’s get into your most important next step and what you can do moving forward. So briefly tell me the offer that you wrote on the property. What was it listed forward? What was your offer price?

Philip:
Yeah. So it is listed for a million. It’s been on the market for almost like a 10 months, 11 months. When I went there by myself, I found a listing by myself. And in talking with the listing agent, she was saying that the reason why it hasn’t sold is because the sellers didn’t… potential buyers didn’t have enough to put down, which I don’t think is going to be an issue for me, but… or that they were asking for the seller to carry more paper than they wanted to carry.
So our offer is listed for a million. We put two offers. One of them was 775 and 40% down with a 36-month term, and the other offer was 815 with 40% down, and it’s the same terms. And then yeah, that was our offer. There’s some due diligence things that we really need to assess with the property. The sellers really haven’t done hardly anything as far as seeing does the well function, does the septic in good condition, what’s the status of electrical hookups. There’s a lot of due diligence things that we have to check off before me personally, before I commit a bunch of investors into this project with me. But I could totally see it working.

David:
I hear you. So here’s the homework for you. Your goal is to get a counter offer, not to get this offer accepted.

Philip:
Yeah.

David:
All right. If they haven’t responded right away, they didn’t love your offer, that’s okay. You tell your agent to tell their agent… That reminds me of that Notorious BIG song, tell your friends to tell my friends that we could be friends. You want to go tell their agent, “Hey, I want you to get me a counter offer.” That tells you, you’re moving in the right direction. If they come off their million, you’re looking to see how far did they come off that million? Did they come down to 900? Did they get into 850? Are they at like 995, right? That’s going to tell you this is worth pursuing. If they counter you at five grand off a list, just move on and then check in two weeks and see if anything’s different.
If they counter you significantly lower, you can get into this negotiation going back and forth. And maybe they don’t come all the way down to your 815, maybe they go into 875, you accept it, you start your due diligence, you come back and you ask for that extra 50 to 80 grand off once you have some form of due diligence, but you want to get a counter, you don’t want to get an acceptance. All right?
The next piece of advice I want to give you has to do with working with different realtors. Have a straightforward conversation with each of them and say, “I feel bad wasting your time. What would this relationship need to look like for you to be happy about it? Are you taking hours every week to look for stuff for me? Are you just putting a search together and firing it over? Tell me what you want to see in our relationship differently.” And then I want you, Philip, to gauge that against what feels right to you and look for some congruency. You want to see if you’re clicking with them, but you can’t find that out till everybody lays their cards on the table. So that’s the other piece of advice that I’m going to give you is get everyone to lay those cards on the table. Rob, any last words from you?

Rob:
No, that’s good, man. I think getting a counter offer really is step one and find out if it’s even… You’re spinning your wheels a lot and you don’t even know if the deal is a possibility right now. Let’s find out that it’s even in the wheelhouse before you start calling inspectors, finding out about the septic report and all that kind of stuff. You don’t want to waste too much time spinning your wheels for something that may be just completely not going to happen at all.

David:
Yeah, Phillip, what you’re going to learn is when a seller makes a decision, because we typically speak to the agents. My agent said this, their agent said that. Doesn’t matter. The seller makes a decision on emotions and emotions change quick. So if they say, “No, wait.” In two weeks, their emotional state could be different. If they say, “I don’t want to do 815, but I’ll do 875,” now they’ve already moved in your direction in a couple weeks, they might be like, “You know what, 815 is not sounding so bad.” They hear one piece of bad news on CNN or Fox and all of a sudden they’re like, “Yeah, let’s just sell this thing.” So you’re trying to get some momentum built in the direction you’re going. Sound good?

Philip:
That’s awesome advice. Yeah. Thank you so much. I really appreciate the laying out how to frame some of these conversations with my agents because I really do respect their time a lot and I want to be transparent as possible. If an agent sends me something and it works, I’m going to go with them.

David:
All right.

Speaker X:
Thank you, Philip. We’ll be following up.

Philip:
Thank you so much.

Rob:
Okay. Wendy St. Clair, again, great name, great name. Just to recap, everybody here, you are a high tech marketer from Long Beach. You have nine single family rental properties, you’re ready to branch out of turnkey, and you’re also exploring career opportunities in real estate, other things that you can be doing. Does that all sound about right?

Wendy:
Yes. Very concise.

Rob:
Okay, cool. And so what was your homework from the last time that we spoke with you?

Wendy:
Well, we had three different things and I’m going to go over them really quickly. The first one was you wanted me to look at other opportunities for what I might do in the real estate world. And it really was an important thing for me to do because I kind of soul searched about what I want and what I don’t want and where I am in my life.
One of the great things that really came from it was I realized I don’t want to start from the beginning. I don’t want to build from the start. I have a lot of skills, I have a lot of experience. And so instead of going into something more corporate, I think you’d recommended loan process or that sort of thing, I really am more interested in something more entrepreneurial, not corporate, and eventually moving into more of a retirement mode. So I think I have deemphasized that. I’m going to stick with what I’m doing in high tech marketing for the time being until I work in real estate and do some projects. And as things evolve, maybe something will come around that becomes a bigger priority for me or maybe I find my way into something as I’m doing these other projects.

Rob:
Okay, great. And then did you say that, were there two other pieces of homework?

Wendy:
Yes. So the other part was really, it’s a one other project that had two parts to it and it was, what’s my next move? And so as we talked about, I have some turnkey rentals that are currently in action. And Rob, you were really integral in making me think about this differently, because I had never considered turning one of those existing properties into a mid-term rental or a short-term rental.
So I went back to the board and I looked at the two properties I have vacant right now. One is not closed yet, it’s still being built. The first one is in Baltimore. And I did an analysis of the market there and what it would cost to furnish it and looked at the area and kind of came away with, if I had to do it midterm rental, I could maybe do it, but let’s stick with the long-term rental for that one.
Right now the numbers just didn’t make that much sense. But what did make sense was in the Florida property that I am looking at closing on in March, I’m buying two of these and they’re brand new builds. They’re beautiful, three bedroom, two bath houses. And I think what I’m going to do is I’m going to try to turn one of them into a midterm rental. And I actually had a call this week with Sarah from 30 Day Rental.

Speaker X:
Nice.

Wendy:
And yeah, I talked with them about their services and their design services. They’ve got a great turnkey situation that would be very easy for me to do. It’s fairly affordable to furnish the whole house. And I mean, it’s a learning curve for me. So what’s my time versus money evaluation, how does that go?
So I think for my first one, it might be a great thing to use them for something like this. And when I ran the numbers in that area, there’s not a lot of full houses available for people to rent. And I could probably increase the rent from 1850 a month on the long-term rental to close to 2,700, maybe even 3,000 for a short-term rental. So that kind of makes sense. The only question there is there a market for it? And I’m pretty confident there is, but I got to dig a little deeper.

Rob:
Cool.

Wendy:
Yeah, I thought that was a win. And then the last one was, all right, great. So if we’re going to go down that path with that one, what’s next for Wendy as far as my next investment?
So to recap, I’ve got a W2 job. I’ve got no primary residence, so the time is right for me to use the conventional loan for once and only that I have all my other loans are DSCRs. So I would love to buy a property that I could call my own and maybe house hack it and put multiple people in it, maybe travel nurses. So the question is where do I do that? I’m looking at the Las Vegas market. In the last week. I got a realtor, I’m getting my loans approved and I’ve started looking at properties. There.

Rob:
Awesome.

Wendy:
So that’s what I’m at.

Rob:
Well, let’s get into your struggle the week here. You shared with us that your struggle of the week has been with market analysis. Can you tell us a little bit about what you’re actually getting hung up on in that department?

Wendy:
Sure. Well, I’m an Excel spreadsheet guru. I do use your online tool as well. And I use it especially for the rent analyzer situation. But I then put together my own spreadsheet and I go, “All right, how much could I rent this for, long-term, mid-term? What does this look like?” But I kind of get stuck in my own analysis paralysis. And it’s something about the fear of knowing whether or not the market really will bear this. Do people really want to live together in a house that they don’t know each other? And what, if they are, then what’s important for them? Is it a big room? Is it a lot of open space? Is it a larger place? Is it a pool? What are the parameters that I should work within in order to find the perfect property?

Rob:
So just to recap, it’s like you know that there’s sort of this safety net of long-term rentals and you’re like, that’s something you know… the devil you know, if you will. We’re having a little trouble understanding if there actually is that market for mid-term rentals and short-term rentals. Is that about right?

Wendy:
Yes, and I have a big fear about the short-term rentals that they are getting oversaturated and that there’s just so much complexity with the city thing. So really, I’m kind of interested in the midterm just because of that and it might be easier for me. But yes.

David:
I think first off, I want to commend you for doing, you’re thinking the right way. You’re asking all the right questions. Your brain is operating, I’m going to say just like mine would, but now that sounds like I’m complimenting myself, which is not what I was trying to do there. But I like the way that you’re approaching it here.
I also like your pivot to, “Hey, maybe I’m just going to house hack.” I think that that could be a good way to get into this. I don’t have a word for what you’re doing here, but you’re minimizing risk in several steps. The first is you’re moving to a house hack that minimizes risk. Then you’re thinking, “Well, I want to do medium term rental, but it might not work out.” So another way you could minimize risk would say, “I’m going to try to do a mid-term rental, but I’m going to fall back onto a long-term rental if it doesn’t work. So I’m going to underwrite a property that would break even or make a little bit of money if it was a long-term rental.” I mean, a lot of money is better, but you can’t assume that. And that way, if the city shuts me down or there isn’t the demand that I was hoping for, anything goes wrong, you just boom, throw some tenants in there and what you’ve done is buy yourself time.
It doesn’t mean you can’t do a mid-term rental or short-term rental. It means I don’t have to figure this problem out in the next month or two while I’m bleeding money. You put a long-term tenant in there, you stabilize it, you continue doing market research. Where do I have to advertise this thing? What platform would work? What hospitals are hiring? Can I get in with the HR department to let them know I have properties that are here?
And then when your tenant is going to be out of their lease, you do some research then on like, okay, do I want to convert this into a midterm rental? Now, you’ve got a couple months to buy the furniture, right? What makes real estate hard and stressful is when you compress everything into the short timeframe. But we just assume that’s the way it has to be. I got to buy the property, close in 30 days, then I got to rehab it as quick as I humanly can. Then I got to furnish it as fast as possible. Then I got to eliminate my vacancy and throw a tenant in there. And all of that is a high pressure cooker situation that leads to mistakes happening versus when you can spread this out over time, you can conduct your due diligence and you can get the verification that your subconscious is screaming at you that you need.
Because that’s a very good point, how do I know someone’s going to rent this thing out? I don’t even know where I would look. Well, if you gave yourself a year or even six months to do some research on that and you started slowly, now you figure out what works and then you start slowly converting more units into something like this, then you feel confident about demand. Now you can go balls to the wall. I’m just going to go buy as many of these properties as possible. So I’d like the shifts that you’re making. I think this is very wise. I want to commend you for how you’re looking at it. Rob, what angles are you seeing as she talks?

Rob:
Yeah, totally. So this to me, I think like you said, this is such a great lesson for a lot of people that I think that real estate is about exploration. When we get started, we’re seeing all these opportunities and we’re like, “Oh, we got to try it all.” But I think in this instance, Wendy, my question to you, and I think I know the answer to this, but currently all of your properties, they work as a long-term rental, right?

Wendy:
They do.

Rob:
Okay. That’s sort of what you based just the initial purchase on, right, that they’re going to be long-term rentals?

Wendy:
Yes, they work as long-term rentals, but that’s not… as I got deeper and deeper into it, that does not make a retirement. That is just a little gravy and maybe equity over time. But in most of these markets that the turnkeys I purchased in, they’re questionable as to whether how great their equity is going to grow over time. So it’s not like buying a place in San Diego.

Rob:
Sure. Sure. But I think the point that I’m making here, because this is a good conservative way to get into short-term rentals. If you can make… It’s harder and harder these days with interest rates, but you’ve already bought these purchases with the assumption that they will work as a long-term rental. Now I understand from a retirement standpoint that it may not be as juicy as you want it to be, but you already own the house. So it’s pretty low stakes. It’s a lot lower stakes than if you’re comping out of property that you want it to work as a short-term rental and it barely works as a short-term rental. And some people do that without confirming that it would work as a long-term rental. And those stakes are high for that person because if it doesn’t work, they will lose money. That’s not the case with you.
You might be out your furnishings, worst case scenario, but your stakes here are really low. You can furnish it, try it out as a short-term rental. If that doesn’t work, you can try it out as a mid-term rental. Either way, you tried it two different ways. It’s not like you’re going to lose the house. You can always convert it to a long-term rental.
So I think from my standpoint, I love this strategy because if you can make a deal work for a long-term rental, you can effectively make it work for any other kind of rental out there. Medium, short, medium-short, smedium, whatever you want to do. So I think that it’s honestly not as risky as you think. And probably for you, my action step for you is I think you just need to really educate yourself a lot more, as much as possible on mid-term rentals. Because as we start to learn more about the space, it becomes a lot easier.
That’s my channel. I try to make people feel comfortable about short-term rentals. So I’m going to give you one person that you can go follow right now because you already know about Sarah Weaver, she’s great. But there’s a guy, his name is Jesse Vasquez. He’s got a YouTube channel, he’s got an Instagram channel, and he’s all about mid-term rentals. He talks about how to go and actually give you a contingency plan, like how you actually go and seek out these clients. That’s what you’re scared of, is how am I going to get the people that actually do it?
So his methodology is actually contacting hospital staffing agencies and staffing agencies in general, and then insurance companies and insurance companies that will pay basically for a displaced family to stay in a home. And he kind of teaches the process of getting these contracts and all that kind of stuff. So go look at his content. And just by watching that, it’ll teach you other ways that you can obtain your own clients and leads on the mid-term rental without having to depend on some of the platforms like Airbnb, Furnished Finder, Vrbo.

Wendy:
Awesome.

Rob:
So go get some more education on it. Go follow him. Go find out ways that you can create more deal flow for clients to actually stay as a mid-term tenant, and I think you’ll start feeling a little bit better about this decision. But all in all, I’m going to say low stakes here. You already own the home. It’s going to work no matter what. Small experiment to find out, right? And if it pans out, the upside is actually sounds like it’s going to be pretty good.

Wendy:
Right. Yeah. Cool.

David:
All right, Rob, that was some great advice there as far as a new step for Wendy to take there. Wendy, I’m going to add on this. Take a property you already have, and I want you to do some research on if one of those, or even better, a unit in one of those could be converted into a medium-term rental in that market. If they’re out in the middle of a rural area and you’re renting it out to dairy farmers, maybe that’s not going to be likely. But if you could find something that is in a urban area, I want you to do some research and ask yourself, “If I were to convert this unit into a medium-term rental, what would I do? How would I do the research? What would I do?”
And if it looks promising, look at your leases and see which one’s expiring first, and see if maybe I could try it with one of these. Furnish it. I’d probably go for the least risk one possible, like the cheapest. Something that you could put secondhand furniture. You don’t have to go to, I don’t know, Crate and Barrel or one of those. I don’t know if expensive furniture. I’m not married. I’m assuming Crate and Barrel. I think my assistant said that one time is expensive.

Rob:
CB2, West Elm.

David:
See, I should have asked Rob. He knows all of this. You don’t want to go Saks 5th Avenue on this sucker, okay? You’re looking like, can I get some Goodwill furniture in there to lower my risk and get used to renting it out, seeing what demand is like, experiment with something you’ve already got before you go put a bunch of money into something else if you possibly can.
If you can’t make it work, it’s still going to be a very good exercise to do a stress test, which I think you’re very familiar with working in the corporate world. You guys are always going to be thinking, “What could go wrong? If we put our money in this, if we take this road, how could that work out?” I see the wheels are turning as we’re talking.
So when we come back and have the next talk, I’d like for you to come say, “David, I looked at converting one of my units and I realized I don’t know this, or this could work, or it’s much easier than I thought.” I want to hear the feedback you have when you consider doing it with an existing unit.

Wendy:
Okay.

David:
Also, we’re talking to Wendy, but anybody can do this with their portfolio. If they’re thinking about, “I want to become a short-term rental investor,” you don’t have to buy a short term rental. Definitely don’t have to go to Scottsdale and buy one like Rob and I did. You can just take something you’ve got, convert it to a short term rental and see if it works. And if it doesn’t, maybe you lost a little bit of money, but it’s okay. It’s a paper cut. It’s not an arterial bleed. That’s what we’re trying to avoid in real estate investing.

Rob:
Well, that, and if you already own a home, go sleep at your parents’ house or at your brother’s house or in your car-

David:
Rent your house out.

Rob:
Yeah. Exactly. Rent your house out and go somewhere else. Go camping for the weekend and find out if it works. There are a lot of ways to do an initial stress test.

David:
All right, Ms. St. Clair, thank you very much. We’ll talk to you soon.
All right. Danny is a software engineer by day and a superhero by night, I mean, he owns several multi-family properties in the Sacramento area, which in my opinion makes him a superhero because I’m a California kid, and he’s chasing a life of financial freedom for himself and his daughter, which is very superhero-esque of you, Danny. You’re also wearing flannel. That reminds me of Brandon Turner. So you’re A okay in my book. Your struggle of the week is that you mentioned in your update, you’re having a hard time pushing out of your comfort zone to make new connections. Tell us a little more about that. How’s that been going?

Danny:
Yeah. So I’m a pretty massive introvert, so reaching out to people and meeting new people is a challenge for me. I go through and I’ve reached out on BiggerPockets. I try to work my network, but definitely, I think I’d rather read a whole book than reach out to a couple people. And even though that reach out may just take a few minutes, just mentally, it’s one of those things where I’m super comfortable kind of being introverted more than extroverted.

David:
All right. I’m going to throw it to Rob in a second here, but before I do, I’m not going to give you practical advice. I’m going to give you something coming out of left field. It’s very clear to see that your introversion… I’m super introverted myself, okay? You don’t know it because when I get in the podcast, I flip this little switch behind my ear and I turn into Disneyland David. This is not it. Rob’s been around me in person. He’s like, “What happened to you?” He’s like… It’s completely different when I’m in my natural state. I’m a huge introvert. I’m analytical. I read people. I look at things deeply, and I don’t let you see what the heck is going on between my ears. And it’s very unnerving when people see me in real life. So I can relate to what you’re doing.
It is true that you have to force yourself out of your comfort zone, but rather than saying, “Just go talk to people,” that’s the practical advice everyone always gives, I’m going to encourage you to do something that is outside of your comfort zone that has nothing to do with talking to people. I want you to get comfortable being uncomfortable, but not by… I don’t know. I’m not going to take a claustrophobic and be like, “Get inside a coffin and sit there for four hours, and when you come out, you’ll be fine.” No, you won’t. You’ll come out like a vegetable. I want you to work out in a different way than you used to work it out. Okay? If you’re a weightlifter, I want you to go for a run. If you’re a runner, I want you to go lift weights. I want you to consider signing up for a beginner’s martial arts class that’s just super introductory level. I don’t want you to go into UFC gym and rolling around with some 22-year-old psychopaths, okay?
I want you to read, if you’re used to Audible and listen to Audible, if you’re used to reading. I want you to find something that’s the opposite of how you are normally doing things and start very slow. This is not throw yourself into the deep end and just figure it out. Okay? I want you to get a little bit of exposure to using a different part of your brain or perceiving a situation differently than you normally do, and I want you to do your very best to make a habit out of doing that. If it’s 15 minutes a day of reading, when you don’t normally like to read. As an introvert, you probably don’t mind reading, right?
If it’s one thing that I started forcing myself to do is when I would go to Walmart or Safeway or a fast food restaurant or anything, I would look at the name tag of the person, and I would say, “Thank you, Bob. Thank you, Jennifer.” And when you say someone’s name like that, they’d get, “What?” They catches them off guard, and it almost forces a conversation. I would force myself to be into those types of scenarios that broke me out of my typical, I’m just going to observe you and not show anything of myself. So does that sound like something that you can commit to doing before we get into your actual situation?

Danny:
Yeah, I think I can do that. Even though you said it wasn’t necessarily practical, I think you’ve given some really good tips there and kind of ways that I can do that. So yeah, I can do that. I can commit to that.

David:
Yeah, you probably don’t post on social media what you’re doing or where you’re going. Is that fair to say?

Danny:
Absolutely.

David:
Okay. Can I get you to put a post on Instagram or make an Instagram, if you don’t have one, and not just say, “This is me and my sandwich”? Do something. Put a video of you talking before you go into the gym or anything that you can think of that is not something that you would normally do, just do it in a very small dose.

Danny:
Okay. Makes sense. I’ve been thinking about the online presence, especially as I’m trying to scale and I’ve got these other properties. I have all this collection of photos before and after, and kind of some stuff documented that I really should… I feel like I should be putting out there to kind of build the brand anyway, so that might align well with it.

David:
And every situation you can in life, do something a little bit different. All right, Rob, what do you think?

Rob:
Well, Dan, I just want to point out to you that you are in good company, man. I mean, it’s like introverts, extroverts. It’s a 5050 breakdown. I don’t know what the actual breakdown is officially. I’m sure that data is recorded somewhere, but we have so many listeners in the BiggerPockets community that also struggle with this, that also struggle with getting in their comfort zones.
So maybe even consider making a post about it. Do we have a BiggerPockets Facebook group? There’s the forums, go make a post that’s like, “Hey guys, I’m naturally introverted. I have a tough time putting myself out there in real estate. Do I have any other introverts in the group? What have you done to overcome this?” I’ll try to give some advice here. It’s tough because I’m more of an extrovert, but I think probably trying to surround yourself with people that understand you is going to maybe have a bigger impact than you think.
I remember when I started my YouTube channel and it started to grow, I had nobody that I could talk to about my struggles or about anything that I was going through. I couldn’t celebrate with certain… I couldn’t talk about struggles or celebrations, really. I mean, no one really understood what I was going through. And I remember when I met other YouTubers, I went to a conference and I remember talking to other YouTubers and I was like, “Man, this thing happened.” And they’re like, “That happens to me all the time.” And I was like, “Oh my gosh.” I felt so heard and so comfortable with people that were facing what I was facing.
And it’s the same thing. I had that, and then a month after that, I went to an entrepreneurial conference. It was Cody Sanchez’s conference, and it was a room full of entrepreneurs. And I started talking to them and talking about my struggles and how it’s tough to balance life and business and being a family man and having kids, and they’re like, “Me too.” And so I felt heard. And so it actually allowed me to grow a lot more in both the entrepreneurial space and the content creation space, meeting other people that struggle with what I struggle with, and celebrate what I celebrate.
So I think it actually might be beneficial to try to meet other introverts that struggle with it, because you could probably swap some war stories on that and be like, “Yeah, I struggle with this too.” So I would try to connect with other people. That would be one. David’s advice to you about going and basically putting yourself in situations like martial arts or whatever, I like that too. I will say that I’m naturally extroverted, but I used to do improv and I hated doing improv in front of my peers. I was always really embarrassed to do that.
And so every Wednesday there was a jam we called it, where you could go and you could basically do improv on stage in front of a whole group of people that you didn’t know. And I didn’t tell my friends about it. I didn’t tell anybody about it. I would just go and show up because no one knew who I was, and that the pressure was off when I knew that no one knew who I was. And so I think this advice of going and trying something new where you’re in a group of people that don’t know who you are will probably relieve you, right? Because if you were trying to be extroverted at work, you got the pressure of your peers “judging you,” quote unquote, right? But when it’s a group of people you don’t know, stakes are a lot lower.
And that’s my advice on that, those two things. Try something new with a group of people that you don’t know. Try to basically surround yourself or connect with people that are also in your boat from a kind of getting out of your comfort zone, introversion standpoint. And I think doing those two things will be very helpful for you.
Oh, yes. I remember, one more thing. Sorry. I have a question actually, from a technicality standpoint, from an introversion thing. If I remember correctly, the way that you sort of recharge is by being alone in a group of people… alone away from people. Isn’t that how your batteries recharge? Is that right?

Danny:
Yeah, largely. It’s like I went to [inaudible 00:44:37] this year and then going out there and speaking to a lot of people and then going back to my hotel room in between breaks and kind of recharging was the way I did it. Yeah.

Rob:
So I was going to suggest that maybe don’t put yourself out of your comfort zone when your battery is drained. So always do these new things like joining martial art, whatever those things are where you’re sort of in a new group of people who don’t know who you are, make sure to do that after you’re fully charged and you’re ready to do that. Because if you go after work, when you’re just mentally drained and then you try to put yourself out of your comfort zone and meet new people, I don’t think that’s going to go well for you. I can’t imagine that it would. So make sure that anytime that you push yourself out of your comfort zone, set yourself up by success, by basically letting your batteries charge up and then go for it.

Danny:
Yeah, that’s good advice there because definitely, especially being a full-time work, I can see myself trying to push it toward the end of the day and do that stuff, but it may not work out well if I just jump right into it.

David:
Yeah, human beings, I’ve noticed, me included, I will just do the same thing that doesn’t work harder over and over and over than try a new thing. It’s very, very hard to get out of doing our normal thing, but we have the life we have right now because of the person we are right now. You’re not going to have a different life unless you become a different person. And part of the journey of real estate is actually becoming a different and better version of you. So now that we’ve shaken up your social life and given you some personal development advice, tell us, what was your homework?

Danny:
So my homework actually had a lot to do with what we just talked about, but Rob, you had assigned me finding some investors, in the Sacramento area, try to get contractor referrals, talk to agents. And you had this really cool tip around finding contractors using construction sites. And Dave, you had talked about… you connected me with Johnny, one of your agents who’s awesome, and just kind of think about Rob’s advice, and how do I apply it at other places.

David:
Yeah, we might be able to take you by one of my properties. Actually, now think about it, there’s several of them that are in construction and you could probably see that might help a little bit too. I’ll have to follow up with Johnny, or if you could tell Johnny to remind me, I’d love you for that. All right. So that was the homework that we had. Give me something that you learned from it and give me something that you feel like maybe was left to be desired.

Danny:
So what did I learn? So I went through and I did do some BiggerPockets reach outs. It was a little hard to find folks, and maybe I just wasn’t really using the search very well. Finding folks in that, that are outside of that small multi-family. It seems like, especially in the Sacramento area, that’s the bulk of the members out there. So that was a little bit of a challenge.
There were some meetups that I had been to over the pandemic virtually that I remember some names from. So I’ve reached out there and I’m going to go connect with them in person in the coming week or so. So I think that worked out well. The construction site, so when I actually did, I went out to Sacramento as part of this, kind of went through, and pulled a list of properties and kind of go visit my properties and see how things are going. And so I happened to pick a really rainy day, so I went around and kind of walked some properties. But in terms of construction sites, I wasn’t able to find anything. Maybe everybody was off that day or staying home from the rain.

David:
All right, Rob, what are you thinking?

Rob:
I just heard Pace Morby say this phrase not too long ago, which is if you haven’t called once, you haven’t called twice. And I think what that means is sometimes you got to just keep trying it because it’s like the method, theoretically a sound. We know people have had success doing this. So sometimes, yeah, you may drive around, not find a construction site. You may try to reach out to people that didn’t give you that recommendation, but doesn’t mean that you can’t try again. I mean, I think all of real estate in general is a numbers game. It’s reps, right? Yeah. Very rarely does stuff work out the first time. It does for some people like David Greene, but for me, I got to keep trying because I fail over and over and over again. But for some people like David, just naturally happens because he’s the king. He’s the gold king over there, the golden Greene.

David:
So gold, it’s green.

Rob:
So gold, it’s green.

David:
Danny, as you’re hearing this, I’m sure that has to feel discouraging and many other people listening are going to be thinking the same thing. I wanted financial freedom. I didn’t want to become a professional networker that has to call a hundred people a day. If I had to do that, it’s not worth it. I’ll just stay in the job I’m at. It’s okay to admit those are things that we think and we feel, all right?
What I want to get at here is that Pace is a human being who is wired to like talking. He is a good talker. It’s why he became a well-known person in our space. Rob is, like he said, extroverted. He enjoys talking. He enjoys meeting people. He can talk to a potted plant, but he’s constantly like, “Dude, why don’t you open up more? Why don’t you talk more? People think you’re rude? They’re intimidated by you.” It’s my personality, right? He’s easier for Rob to do some of this stuff than it would be for me, or for you, or for some other humans.

Rob:
I mean, I didn’t say that. I didn’t say that exactly.

David:
No, he wouldn’t because he’s too nice, right? He’s extroverted, but I understood what he was getting at. That’s where it was going, but he’s right. That’s what I’m trying to say. The point here is that it’s not going to feel this horrible for you forever. As your personality changes and adapts and grows, the weights get lighter. Maybe I shouldn’t say it… The weights don’t get lighter, we get stronger, and they feel lighter. It doesn’t suck forever, and that’s why I’m giving you the advice to start breaking out of your comfort zone in other ways, because this is what it’s going to take to be successful as a real estate investor in our area. And you don’t want it to just suck. You don’t want to be like, “What it takes to be successful is miserable. All I can do is eat kale every single day.”
No, there’s a point where kale doesn’t taste that bad, and you can put salad dressing on it. And then there’s like other things you can introduce into your diet so that it’s not just kale all the time, but when you’re used to donuts every day, the thought of eating healthy is miserable. It doesn’t stay that way. It gets easier. And so I just want to encourage you and everyone who’s in this position where we’re saying, “You got to call twice, not just once,” these calls don’t suck forever. At a certain point, you will adapt, I promise you. And it will even start to, in a crazy way, become fun.

Rob:
Yeah, that’s good, David.

Danny:
Got to get those reps in.

David:
Yeah, but start slow.

Rob:
Sure. Yeah. But just the analogy of, yeah, the weight doesn’t get lighter, you just get stronger. That pretty much is how it is. I mean, I’ve just recently started making cold calls again. And I think another thing for me that I’m learning is like you’re never above anything. I have teams. I have systems. I’ve got… I’m success. I’ve happy with where I’m at in life, but I’m still cold calling.
I actually met with the landlord yesterday. I walked to his apartment complex and I pitched him on a rental arbitrage deal, and that’s not something I would’ve done one or two months ago, but it’s something that I’m doing now because I want to learn that to teach people and stuff like that. So for me, I was able to say, “Okay, I was naturally a little nervous to do it because I’m like, ‘I’m going to suck at this.’ I haven’t really pitched myself in a long time, but I know that by doing it over and over and over again, it gets easier,” and it is. I already feel pretty good at it because it’s like a skill that you can learn pretty quickly if you dedicate time to it.

David:
There we go. Okay, Danny, your most important next step is going to be different than some of the other people, because I don’t think that there’s practical steps that you need to be taking as the same as with Wendy and with Philip. I think yours are going to be more, like I said, at least from my side, I want you to do something out of your comfort zone, but not wild and crazy. Okay? I don’t want you to go walk on hot coals or get in a pit full of poisonous snakes and force yourself to keep your heart rate low. I want you to consistently do small things. So if this was a weight room, don’t get in there and try to bench press 200 pounds, go to the gym and work out every muscle group one time. You’re going to be sore, so don’t blow it out, and don’t look for results right away.
You’re just looking for a habit you’re trying to build, which will lead to momentum, and that momentum that we are creating is going to be what crushes through the obstacles that are in front of you. If you try to go too big, you’re going to get discouraged and you’re going to quit the whole thing, and that’s how anybody would be. If you go to the gym on your first day and you blow it out, you’re so sore the next day, you never want to go back and you don’t, right?
So your homework from my point is I want you to come back and I would love it if you had a list of four or five things that you said, “I hated it. I didn’t want to do it. It’s not what I like to do, but I made myself do it and here’s what I learned.”

Danny:
Sounds good. I will commit to that.

Rob:
Even tinier step here, man, just really just a very easy softball that you can throw here. Just try to start a conversation with your cashier or anyone that you interact with that you typically wouldn’t, right? Go to Trader Joe’s. Everybody that works at the cash register at Trader Joe’s will chat with you about their childhood if you ask them any question. Go put yourself in a situation like that. Ask them how their day is going, what they got going on this weekend, and I promise, they’ll probably honestly pull the conversation out of you.

Danny:
I like it. Dave, you mentioned, you had a switch. I shaved my head and I still haven’t found that switch, but you thinking the reps here will make that grow out of there?

David:
It sort of makes its way to the surface over time. First, you shave, then you wait, and it rises to the surface, and then yes, the reps will absolutely reveal. Sometimes, I had to lose a little bit of head fat to reveal where that button was, but I had to get in there and talk to people to burn those calories.
I’m not exaggerating to you, Danny. I was so bad that when I was holding open houses as a new agent, I had to bring Krista with me and she would go introduce herself to the person and then say, “This is David. He’s the listing agent.” And I would shake their hand, and then I had a little bit of momentum that I could be like, “I’m David, what is your name?” And then I just hope to God the conversation went somewhere because I just couldn’t jumpstart it.
And I was a cop for eight years. I could bust into houses and scream at people or go approach a person out of nowhere. I could make conversation with someone stalling for time, waiting for backup to arrive because it was really dangerous. But something about that salesy environment, I was like, hated it, right? I just closed off and it was very, very, very difficult. So I just made tiny improvements. I brought Krista, and then after the third or fourth open house, she went with me and I shook her hand. This is embarrassing. I sound like… It’s just terrible. But this was the reality.
When I would have to call people from the open house, I wouldn’t know what to say. So I had another agent sit there and whisper in my ear, like Romeo and Juliet, “Ask them if they liked the house,” and I would, “Did you like the house?” And then they would reply and she would whisper it. They would have to wait for me to reply back.
That’s what it took for me to build the momentum. And now like Rob said, I could call somebody up and just start a conversation. And I’m actually, I teach people how to control conversations through psychological tactics because I had to learn all of that. So there’s absolutely hope. It will not suck this way forever. I don’t talk about it very often because most of the podcasts are not about me, but I absolutely relate to where you’re at. And there’s so many people that listen to this and they’re like… It’s like they’re at the gym. They want to go work out, but they’re too scared and nervous, so they’re looking in the window at the people working out like, “Someday, I wish that could be me.” And they’re doing that with real estate investing or real estate sales or networking or the meetup that they want to go to, but they’re too shy.
Just find some way to bring someone with you or just get in the gym and walk around and then leave, even if you don’t ever touch the metaphorical machine. It’s okay to start slow. The goal is build momentum, not just get a tangible result right off the bat. All right?
So thank you very much, Danny. We’re going to be following up with you soon. Stay encouraged about what you’re doing. You made some good progress. Make sure that you tell Johnny that you want to go see one of my properties and maybe I’ll meet you in person when I go out and check on how the progress is going.

Danny:
That’d be great. Thank you both.

David:
All right.

Rob:
You got it.

David:
And that was our last guest. Rob, what’d you think about today’s show?

Rob:
Really good, man. A very large spectrum of SOTWs, struggles of the week. SOTA was what I was calling them. That’s the new term that I brand it, but it’s really nice. Everybody can be going through a very similar journey, but through very different struggles. And I think it’s really nice to kind of work through all that because yeah, man, it’s just new. Real estate is so cool because it creates very unique situations that you haven’t heard about, that everyone’s got a very different story that they’re going through. So yeah, it’s really nice to catch up with everybody.

David:
And I want to give a shout-out to all of the people that were guests today that volunteered to take this very public journey in front of us and the entire BiggerPockets audience. It takes some more courage than people might think.
And it reminds me of one of my favorite poems that’s hanging in my office. It’s Teddy Roosevelt’s, the Man in the Arena. And I’m going to close out by reading that. It is not the critic who counts, not the man who points out how the strong man stumbles or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood who strives valiantly, who errs, who come short again and again because there is no effort without error and shortcoming, but who does actually strive to do the deeds, who knows great enthusiasms, the great devotions who spends himself in a worthy cause, who at the best knows in the end, the triumph of high achievement, and who at worst, if he fails, at least fails while daring greatly so that his place shall never be with those cold and timid souls who knew neither victory nor defeat.
For each of our guests today, they are the man in the arena. They are taking this public journey and out there trying to do it. And I commend them for not sitting back and just being critical of others or saying, “There is no chance.” And I am proud to be a part of this journey with them. This is David Greene for Rob, my safe space, Abasolo, signing off.