March 2023

If you’ve raised a dollar from anyone other than your folks, you can probably skip this article because you already know how silly it would be to ask an investor to sign a nondisclosure agreement. But, if you are a first time entrepreneur trying to raise some seed money, I am pretty sure you have a shiny NDA ready for any investor who actually bothered to respond to your cold email.

Your NDA probably got some promising initial traction when you made your siblings sign it. There’s just one little problem going forward: No one else is going to sign your NDA (true story).

First, Do You Really Need an NDA

Short answer: NO!

But I get it. you’ve spent hours painstakingly building a pitch deck and practicing your presentation. You’re ready to meet with investors and hoping to secure the funding your startup needs to take it to the next level. You’re afraid one of them might steal your idea. Ultimately, you want to be first to market with your idea.

Let’s take a look at some of the most successful companies of our time, and you’ll realize none of them was first to market:

• Larry Page and Sergey Brin didn’t invent the first search engine.
• Jeff Bezos didn’t invent the first online store.
• Elon Musk didn’t invent the first electric car.
• Steve Jobs didn’t invent the first smartphone.

The reason these entrepreneurs and companies became so successful is that they created superior products.

Here are four reasons why you don’t want to ask investors to sign an NDA:

1. It Makes You Look Like an Amateur

Asking an investor to sign an NDA before presenting your pitch deck is a surefire way to make you seem inexperienced. Investors are professionals with a reputation to uphold and have no interest in jeopardizing their name for your intellectual property. Asking for an NDA is a great nonstarter.

2. It Creates a Liability for the Investors

If an investor has invested or will one day invest in a company with a similar idea, they may be dragged to court over that NDA.

“If asked for an NDA, we will simply pass. Why? Because there’s a 1% chance we are passing on the next Google and a 100% chance we are putting our fund at litigation risk,” said Aya Peterburg, Managing Partner of S Capital who led our seed round at Hourly.io.

3. It’s About the Execution, Not the Idea

The most amazing idea is worth about a dollar (on a good day). Building a successful company from the ground up is the hard part.

These startups are often plagued by access to talent issues, go-to-market nightmares, and other growing pains that leave behind many angry customers and unmet promises.

Most investors became investors because their passion is to support the next generation of entrepreneurs. They’d rather put their money to work by investing in your business rather than stealing your idea.

4. It’s a Hassle That Creates Extra Work

Sending an NDA means that investors now have to read it, come back with edits, pay an attorney to make changes, and wait for a response from you—all before they’ve even heard what you have to say. It’s simply too much effort for an unknown opportunity.

And if they do sign the agreement, investors have to make sure to avoid contract breeches by remembering your NDA’s details as they evaluate thousands of pitches and select who to invest in.

Simply put, it’s easier for an investor to go with a deal that doesn’t require the complexity of an NDA, and that’s what most investors will do.

Is There Ever a Time to Ask for an NDA

There’s never a good time to ask for an NDA–unless of course you want to narrow your list of prospective investors to a nice zero. It’s much easier not to disclose sensitive information in early pitches than asking for an NDA.

But, while the general rule is that you shouldn’t ask for an NDA, that doesn’t mean it’s never a good idea.

An NDA might have a place if you have an ongoing dialogue with an investor, and after several rounds of discussions, the conversation extends to technical due diligence with industry experts on their behalf.

At that point, if you are going to disclose your proprietary intellectual property, asking for an NDA may appear as a legitimate request.

Find Other Ways To Protect Your Intellectual Property

Putting a unique spin on an original idea probably doesn’t warrant an NDA from investors and can make you seem naive. Since an NDA is likely out of the question, try to protect your idea with other means such as a patent.

My unsolicited advice: Forget about the NDA and start building the best product in the world. The rest will work itself out.

Artificial intelligence has been around for decades, but it seemed a lot more innocuous when it was just playing checkers. ChatGPT, an AI language processing tool developed by OpenAI, can pass the bar exam. We’ve all seen and read enough science fiction material to feel a twinge of fear that robots may be coming for our jobs. But what’s more likely to happen over the coming decade is that AI will enhance our capabilities, making our work processes more efficient and giving us back that precious free time that is often the motivation for real estate professionals to build passive income streams. 

Of course, there are valid reasons to be concerned about ethics, safety, and human independence and agency as a result of this new technology. But so far, ChatGPT is proving to be an invaluable resource for real estate professionals in multiple aspects of their business. Understand its limitations and how to use it effectively, and you could build more wealth in less time or kick back and relax a little longer than you would otherwise.

How Does Chat GPT Work?

ChatGPT uses deep learning to deliver real-time responses to questions and prompts in human-like language. It’s pre-programmed with an inconceivable amount of data and has multiple language functions. It’s one of the biggest language models that exist. 

When you type a request or question to ChatGPT, the individual words are analyzed and fed to the transformer part of the neural network, which is designed to process information much like the human brain, before ChatGPT generates a response. The tool is capable of a wide variety of language tasks, including:

• Generating text
• Completing text
• Translating text
• Summarizing content
• Answering questions
• Conversing 

When using ChatGPT, it’s crucial to be specific with your prompt or question. Tell it the length of the response you want and the tone you’re looking for if that’s important. If you don’t get the response you’re looking for, you can ask ChatGPT to change it based on specific parameters. You’ll also want to edit and fact-check the result since ChatGPT is not 100% accurate. 

Limitations of ChatGPT

ChatGPT tries to be accurate, but the results aren’t perfect. You’ll always need to review the content it delivers for accuracy. It’s not a good idea to use ChatGPT to draft legal documents for this reason, unless you have a lawyer who can confirm the document is comprehensive and accurate. Furthermore, ChatGPT is not emotionally expressive and may use phrasing that reveals it’s not human. It also tends to be pedantic and wordy. So if you don’t want to alienate your readers, you’ll need to edit it to make it more personable. 

But probably the biggest limitation for real estate professionals is that ChatGPT is trained on data that existed in 2021. It can’t discuss current events with you, but more importantly, it can’t pull market data from 2023. The real estate market fluctuates, as we’ve seen over the last several years—markets that were booming during the pandemic are now seeing price declines. Still, if you take ChatGPT’s responses with that knowledge in hand, the tool can give you a starting point for your research. 

7 Ways Real Estate Investors Can Use ChatGPT

1. Perform a market analysis

Real estate investors often spend time collecting market information from different data sources, whether that’s rental price data from Zillow or Redfin, unemployment information from the Bureau of Labor Statistics, income and housing data from the Census Bureau, or property tax information from local government websites. They compile and compare this data to make informed decisions about different housing markets. 

Given that ChatGPT is only trained on data from 2021 and earlier, using the tool will deliver less accurate and timely results than analyzing current data yourself. But you might use it as a starting point to compare markets. For example, if you give ChatGPT two cities and ask which one has a lower rent-to-price ratio, it will answer based on Zillow data from September 2021. If you ask which cities have the lowest property tax rates, it will also generate a list from then. 

But when you push ChatGPT further and ask the best city to invest in real estate, it won’t answer the question. It will deliver a list of factors to consider, which could be helpful information for some investors, but it leaves the real work of selecting an investment market for the humans of the world. 

2. Communicate with tenants

While ChatGPT is sometimes suspiciously robot-like in its phrasing, with a little editing, it’s a step above a form letter when you need to communicate with tenants or short-term guests staying in your property. If writing friendly and professional emails isn’t your strong suit, ChatGPT can take some of the pressure off. 

For example, vacation property owners can use ChatGPT to write welcome letters and draft checkout instructions. You can even use it to create guides for visitors. For example, if you tell it to “write a guide for restaurants and attractions that are popular with locals in Portland,” it will deliver compelling results rather than just spitting out the top 10 restaurants on TripAdvisor. Add in a few personal touches, and you’re good to go. 

Landlords can use ChatGPT to write communications with tenants, such as a new landlord introduction, sale of property notice, notice to vacate, notice of rent increase, late rent reminder, excessive utility usage notice, and more. You can even ask ChatGPT to draft a lease agreement, but you’ll want to check it for gaps and consider having an attorney look over it. 

3. Generate marketing ideas and content

ChatGPT can help with everything from generating a name for your business to writing social media posts and blog content—but again, it won’t do all the work for you. For example, if you ask it to write five social media posts for a property management company in a particular city, it will deliver five generic versions of the same thing. But if you ask it for ideas for social media posts for a property management company, it comes up with ten solid suggestions to inspire you. 

ChatGPT can also play a role in search engine optimization by creating and optimizing content for your website. For example, you can tell it to “write a 500-word blog post about declining occupancy rates for short-term rental properties.” You’ll need to fact-check the results and edit the copy to have an angle that serves your business, but that’s certainly faster than writing a blog post from scratch. You can also ask it to optimize the content you’ve already written for your site or rewrite something with a different tone or emphasis. 

4. Prioritize property management tasks

If you manage multiple properties, you may have had the overwhelming experience of juggling several urgent maintenance problems. Your executive functioning skills weaken in response to acute stress, so you may find it difficult to prioritize under pressure—ChatGPT doesn’t have that problem. You can feed it a list of tasks you need to complete and ask it to prioritize them for you. It will explain its reasoning behind the choices. 

5. Get resource recommendations

If you Google “best real estate CRM” or “best real estate market analysis software,” you’ll get a multitude of top 10 lists, with no consistently-ranking winner. The best resource for you often depends on your business needs, and comparing products through that lens takes time. But you can give ChatGPT a list of features you need and ask it to recommend the best, least expensive, or most popular products. 

You might even find resources you didn’t know existed by asking ChatGPT about an unfulfilled need you have. Not to toot our own horn, but if you ask ChatGPT, “Is there an online community where I can attend real estate investment workshops?” it will recommend—you guessed it—BiggerPockets. 

6. Learn about housing regulations

You can also use ChatGPT to research local laws instead of trying to sift through the information on local government websites. For example, cities across the country are cracking down on short-term rentals, so before you invest in a vacation property, you’ll need to read the short-term rental ordinance for the city or county. It’s also wise to look at how municipalities in the surrounding area are dealing with short-term rentals since there can be a domino effect. But these ordinances are often lengthy and packed with legal jargon—ChatGPT can summarize housing laws in different locations so you can easily digest the information. 

7. Write property listings and answer client questions

ChatGPT is saving real estate agents so much time. Some are already saying they couldn’t go back to work without it. Give it a few details about the home, and ChatGPT will generate a compelling listing in less than a minute. Real estate agents also use ChatGPT to answer client questions on-the-fly. It may be quicker than finding the right mortgage payment calculator or researching school districts for an address, for example. 

Bottom Line

Improving efficiency often requires embracing new technology. A spokesperson for Zillow told CNN that the real estate industry hasn’t always been quick to innovate, but ChatGPT may be changing that. While not a perfect tool, it’s likely to change the way real estate professionals work over time. And since it’s currently free, it’s worth playing around with some of the tasks we mentioned—you might be surprised how much time you can get back. 

Join the Community

Our massive community of over 2+ million members makes BiggerPockets the largest online community of real estate investors, ever. Learn about investment strategies, analyze properties, and connect with a community that will help you achieve your goals. Join FREE. What are you waiting for?

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

Without customers, your business can’t exist. At least not for long. That’s why marketers spend the bulk of their time drumming up ways to attract new leads. Growth marketers, too, create strategies to convert as many prospects as possible.

However, they aren’t satisfied with drawing leads in, getting the sale and onboarding them as customers. While these are great short-term goals, real growth happens when a company keeps those newly acquired clients happy. It’s even better when those customers buy more and refer others. Word of mouth makes a marketer’s job easier, while loyalty increases customer lifetime value.

CLV is the fuel behind a company’s growth. The more a customer purchases, the more revenue a business earns. To boost lifetime value, marketers can encourage clients to buy more often or spend more at one time. Growth marketing strategies do this by continuing to nurture long-term customer relationships. Let’s take a closer look at how these methods impact the lifetime value.

They Optimize Conversion Rates

Think back to when you were learning something new. Did you understand everything right off the bat? Probably not. If you’re like most people, it took some trial and error to get to the level of understanding you have today.

Growth marketers use a similar approach. They go in with an experimental mindset to discover how to fine-tune every stage of the customer’s journey. These stages include one of the most crucial—acquisition. You can’t retain clients if you don’t land them in the first place. But it’s not uncommon for companies to struggle with less-than-stellar conversion rates.

Leads come in because they become aware of a company’s shiny new object on the road. Yet convincing them to pick it up is challenging. Growth marketing strategies experiment with reassuring and persuading prospects it’s OK to make the next move. “One of the best ways to improve conversion rates is to test different value propositions,” notes my friend Chris Dayley from Smart CRO. “If you can find the right value proposition that resonates with a potential customer, you can usually increase conversion rates by 10% to 20%.”

Growth marketers use more tactical means to up conversions, too, tweaking call-to-action buttons on website pages, running A/B tests with email content and retargeting leads based on their behaviors. The idea is to optimize the company’s approach so fewer prospects drop out of the acquisition stage. If you can delight people at the beginning, it’ll be much easier to nurture the relationship later on.

They Build Loyalty Through Personalization

In hypercompetitive markets, what’s to stop someone from thinking the grass is greener somewhere else? Think grocery stores, cellular phone services and insurance plans. It’s difficult for consumers to distinguish these products and services over time. To them, the core offering is the same regardless of which company delivers it.

So why wouldn’t customers stray based on price or some other convenience? Growth marketing strategies attempt to tackle this behavior by making things personal. You see this with grocery chain loyalty programs that offer personalized savings. These exclusive discounts aren’t for random products but for items each shopper typically buys. Online retail giants also use personalization through subscription services and product recommendations.

Essentially, they’re building a relationship with each customer by showing they know them as individuals. Personalization also encourages repeat business by rewarding loyalty, and it can extend beyond purchases. Growth marketing strategies can include unique educational content, adding relationship value for the customer.

They Bring In Valuable Referrals

Whom are you more likely to trust? A person you’ve just met or someone who’s been by your side for years? Chances are it’s the person you’ve had countless conversations with and maybe even leaned on for support. Naturally, you’ll be more skeptical of what a stranger says.

This human tendency helps explain why 86% of consumers trust referral marketing. In fact, they’re 50 times more likely to buy products their friends and family recommend. Companies don’t have to work as hard to sway referrals since word of mouth is persuasive enough. The icing on the cake is that referrals’ lifetime value is two times higher than that of customers who convert through traditional ads.

Growth marketing strategies recognize and reinforce the power of word-of-mouth advertising. Referral programs with incentives are common, but they’re not the only worthwhile tactic. Recruiting clients for testimonial campaign videos is another. So is leveraging user-generated content, which allows brand ambassadors to express their enthusiasm for a product or service. Letting delighted customers speak for the company often has a greater impact than what it can say about itself.

Using Growth Marketing to Boost CLV

Marketers know customers with higher lifetime values add more to a company’s bottom line. But since high-value customers usually don’t start out that way, companies need to nurture every relationship to increase its worth. Growth marketing can accomplish this by discovering what’s important to each customer while rewarding them for taking the next step.

David:
This is the BiggerPockets Podcast Show 744. I’d rather see you buy a five, two and a half or a five, three and rent the rooms out individually. I’d rather see you buy a small apartment complex of seven to eight units and rent that out than just go buy a three, two, especially if new construction.
If you’re in this expensive market in Colorado, you can’t go buy a new construction home, pay market price and try to make that work as a rental. You’re going to lose money. You got to do something more creative.
You got to find a property that has square footage that can be added, square footage that can be converted to get three units out of one unit. You got to try a lot harder to make this stuff work and today’s market than before. I think you’re probably seeing that.
What’s going on everyone? This is David Greene, your host of the biggest, the baddest, the best real estate investing podcast in the world, BiggerPockets. We are here today with a Seeing Greene episode where I share my insight and knowledge on questions that you, our listeners, ask.
One of the only podcasts where you, the listener, gets involved in the show. If you’d like to be on the show or have your question answered, go to biggerpockets.com/david where you can submit your questions there.
Today’s show is awesome. We get into is New Construction: The Path for RE in 2023. How should LLCs be structured? Do you need one LLC or several, if you have more than one property? When a contractor’s bid comes into high and the deal doesn’t work, what can be done as well as a very lengthy and detailed answer from me on how to build, develop, and evolve systems in your business to help you?
Make sure you stick around all the way to the end because that’s a really good question that is asked, and I put a lot of effort in the answer and I’m excited for you to hear it. Before we get into the show, I’ve got a quick tip for all of you.
Vet your team to make sure they know a wide swath of knowledge in their industry and not just one piece of it. So often, people go to a lender at Wells Fargo or Chase Bank or an insurance person they found online and they say, “I need something for my rental property business, for my real estate investing business.”
The person goes, “Oh, this is what we do.” They’re like, “What about this? What about that?” “I don’t know. I don’t know that.” Remind of that scene in Meet the Parents where he wants a nice bottle of wine to take to his in-law’s house because he is meeting him for the first time and he says, “What’s your most expensive bottle?”
The guy says, “Mums, it’s like a $5 bottle of wine.” He goes, “Well, do you have anything more expensive?” The guy says, “Well, you could buy a lot of Mums.” That’s how you get a lot of comments from a loan officer, a insurance broker, a real estate agent, a construction person, a handyman, they’re everywhere.
They don’t study the business that they’re getting into and those are not the people you want to work with. This is why I start companies and educate my employees so that they have a wide range of knowledge for different loans, different scenarios that will work.
I don’t want to say loopholes, but different ways that we can get you financing where other lenders say, I don’t know how to do that. I’m just giving up. We don’t look for that. Ask a lot of questions of the person you’re working with. If they can’t answer them, they don’t know how the industry works, that’s not the person you want to talk to.
You could also use a BiggerPockets agent finder to find an agent in your area that is a BiggerPockets member. Use the same process with them. Don’t assume just because they’re on BiggerPockets, if they’re a good agent. They might have never sold a house or they might have only sold new construction homes and they’ve got 75 houses sold on their resume, but none of them are a resale.
You want to make sure the person you’re working with has a wide degree of knowledge. That was not a very quick, quick tip. That was actually a very long quick tip, but it was very important. I hope that you all heard it and take it seriously.
All right. Let’s get into today’s show.

Jordan:
How’s it going David Greene? My name is Jordan Ray. I’m actually a local real estate investor in the Memphis, Tennessee market. I own a real estate company that I started earlier this year with the idea, of course, to replace my income and walk away from being a truck driver, which is what I’m in right now. I’m in my truck.
I enjoy truck driving, but I also enjoy real estate and I also enjoy my family and I would like to be able to spend more time with my family and also build a generational wealth. Of course, like most people do when they get into real estate.
My few questions that I have, just two questions. First question, I want to know when you have multiple properties … I have one right now. It’s a cash cow by the way. But when I get another one, when I’m trying to figure out is if I should put it in my LLC, then I currently have the first property in or should I get another LLC?
How you go about doing that, because to me having multiple LLC seems like a lot of work as far as taxes go. Well, I like to do my own taxes. I’m really good at doing my own taxes. I’m really going to due diligence, so I prefer to stick that way until it becomes too much to handle. Right now, one property, maybe two properties, I feel like the taxes are not going to be complicated at all.
My second question would be, do you wholesale and if you wholesale or if you know who wholesales what their favorite way or your favorite way to market to get leads is? I currently have been doing a lot of cold calling and postcards and I’m actually about to start trying Facebook ads.
Because honestly, the cold calling just isn’t working. Postcards are working. I’m getting calls back. But I haven’t necessarily generated any leads yet. I’ve been on and off trying to wholesale now for about six months, haven’t closed a deal yet.
I’ve gotten quite a few of them under contract. At first I was good at getting properties under contract and then it flipped around and then got good in finding cash buyers but not getting one under contract. I’m trying to dial this down to combining it, too, and I feel like I’m getting pretty close. But I just wanted to know your opinion on that.
Yeah. I appreciate all your help if you could can answer my questions. I really look forward to seeing my video on your BiggerPockets Podcast. Thank you for your time and have a great one.

David:
All right. Jordan, thank you for your question. I can answer the second part really quick. I don’t wholesale. I don’t do that. I’m not going to say it’s immoral. But in generalized, don’t like the model. It’s skirting lines of legalities. It is rarely beneficial for the seller of the property.
Wholesalers will always tell you that they’re working on a deal. It’s win-win. Sometimes I do think that happens. But the majority of the time I think that the seller would make a lot more money if they put their house on the MLS where everybody could see the property and other investors would have access to more inventory versus when they just sell it to a buyer’s list and a guy like me gets instant access to those properties that I buy all of them and your normal investors just don’t get to see them.
I’m not really a huge fan of the wholesale model. The people who come to me that want to make money in real estate, I’d rather sell their house for them and get them as much money as I could, then just get them a quick sale and some investors going to make money.
Now, the first part of your question I can address here. Do you use an LLC per property or one LLC for all properties? This is a good question because not many people understand the complexities of the LLCs. It’s typically looked like an LLC is safer, so just own your property there. It’s complicated and it’s not always safer. Okay.
I have a lot of LLCs. I typically have several properties per LLC, but it becomes a headache to try to keep these all together. I pay 75 grand a year to CPAs to try to straighten it all out. It’s terrible. Me alone and paying someone’s full-time salary, which I guess if I think about it, I’d be better off to hire a CPA who just was my full-time employee than pay that maybe I need to look into it.
But what I’m getting at here is CPAs are hard. They’re expensive. They’re hard to manage. You have to file with them every single year. There’s a lot that goes into this. Don’t just think the LLCs are a magic pill is going to solve all of your problem for your properties.
What you want to try to do is mitigate how much equity is in any one individual LLC. You don’t want to have four properties completely paid off in cash in one, and then other LLCs where properties are leveraged at 80%. You want to split it out so each LLC has a limited amount of equity.
Because if you are sued, they’re going to go after the equity in the LLC, which is why you don’t want it all in one. Hope that helps with your question. Thank you for your service. Keep on keeping on, and I hope that you find a way to get out of the truck driving job and into a job you like more.
All right, our next question comes from Kenny McGregor in Las Vegas. I’m an active duty military. When I got to Las Vegas, I bought a small condo with a conventional loan while I built my first home with a VA loan. Now three years later, I’ve gotten my real estate license and decided to sell the condo, which I 1031 Exchange into two more rental properties and recouped my initial investment.
Next, I sold my primary. Now I’m living at my friend’s house and need to buy another place. My question is, in this market, how many properties should I go for? I can reuse my zero down VA loan, which is a great benefit, about 120,000 in the bank. But most of the deals I’m running in the local area with zero down and my current interest rates leave no cash flow.
So worth doing. Should I buy a fourth property as well or wait for the market to settle a bit more? Thanks.
Okay. This is a really good question. First off, I would say, No-brainer. Use your VA loan with zero down to get yourself into a house. Actually you could have your own home. You might spend a little bit of money. You might come out of pocket some.
But that’s okay, because owning real estate over the long term is worth. If you have to lose money for a couple years just to have a place to live, it’s still way cheaper than paying rent or owning your property. That’s a no-brainer. You need to buy a house to live it as a primary with your VA loan.
Now, the rest of the money that you have, $120,000, I don’t think you should ask the question of “How many houses should I buy?” The right question is, “What’s the best way to deploy $120,000 into real estate?”
Now, there is no rush. That’s what’s awesome about this. You don’t have to go put that money into play. For years before prices were going up, rents were going up. You had it to pull your capital because of inflation. There was a lot of pressure on us. That’s been temporarily slowed as rates have gone up.
There isn’t as much pressure on you to go invest that money. I would settle in and I would wait. But I wouldn’t wait for the market to tank. I just wait for the right deal to cross your path. If you’re telling me that current interest rates leave no cash flow, you got to look at different properties or different strategies.
Maybe you’re looking at two units, you need to look at three units. Maybe you’re looking at single family homes and you need to buy a house that has an ADU or two ADUs. There’s a way to make properties cash flow. Maybe you’re going to have to buy a property and Airbnb the main house and live in the ADU yourself.
There’s different creative ways that you can look at this. But my advice to you would be don’t just go cookie-cutter, “Oh, well, what worked before is going to work now.” When you bought that condo, it was a different market. You could get cash flow, you got appreciation. It’s a harder market now.
Combine taking your time with looking at deals creatively. When the right one comes along, jump on it, but don’t feel pressure to jump on it before that. I don’t think that anything’s going to turn around anytime soon to where you’re going to miss out if you don’t buy a house tomorrow.
All right. From Sayli in Hayward. We’re getting a lot of Hayward people coming in here. I always talk about the red chilies, a restaurant in Hayward on mission that I love. We’re getting a lot of people from there. That’s cool. If you’re in the Bay Area, if you’re in California at all, reach out to us. I’d love to talk with you. I’d love to get to know you better because these are my stomping grounds. All right. Let’s see what Sayli has to say.

Sayli:
Hi, David. Thank you for listening to my question. My name is Sayli. I’m from Hayward, California. I have been investing in Michigan for past three and a half years. My question is regarding long distance rehab project.
Last month I purchased my seventh single family rental in Michigan. It’s my second BUR project. I got bids from four different general contractors. All of them are very well-known and well-recommended on local FP groups. I have worked with two of them, two GCs on my previous projects. I have some experience with them.
This is a typical renovation project, a dated house that needs an uplift, flooring, paint, bathroom, refresh, light fixtures, HVAC, et cetera. I’ve been listening to other investors on podcasts and YouTubes. They do this rehab under 30K, 35K, but I budgeted about 45,000. The bids I got from GCs are 70K and about.
My question is how can I cut cost without compromising quality? I take pride in providing quality products to my tenants. But 70K rehab cost is too high to justify the rent. Any word of advice? Thank you for that and thank you for taking my call.

David:
All right. Sayli, this is a really good question. When you’re in a situation like this where you have to cut costs but you don’t want to cut quality, you’re going to have to give in somewhere.
Now for you that would be managing the project yourself. When you work through a general contractor, you’re paying the contractor to basically manage the project and find the subs. They’re not always doing the work themselves. You pay them a certain amount of money to do the plumbing.
They go find a plumber that does the work for less than they got paid and they keep the difference. In a sense, they’re a project manager who has the pieces that are needed. If you want to cut them out of the deal and the GCs are all giving you bids of 70,000, but you think it can be done for 45,000, you’re going to have to go find the subcontractors yourself.
You’re going to have to go find the plumbers, the painters, a handyman that can do the renovation stuff like the bathroom light fixtures, the HVAC. If you find those people yourselves, you can do this. I just want to caution you, it’s trickier than you think. This is why most people use a general contractor.
If you go out there and try to find these people yourselves, they might lie to you. They might take your money and not finish the job. This is the problem that you’re going to get stuck in. One way that I mitigate that risk is I pay them after the job is done or maybe I pay them a third of the money that they’re asking for and then I pay them the rest after I verify the work’s complete.
But again, they might tell you the work’s complete. You’re going to have to send an independent person there to make sure that HVAC worked to make sure the paint was done to make sure things are done to your liking, especially if these are out of state, that could get tricky.
Your only other option I could think of is if you could find a person who lives in a area where wages are lower and fly them into that area to do the work. Now the problem is Detroit, Michigan’s not really like Malibu here. Okay. This isn’t Beverly Hills. The people there already aren’t making a ton of money on the wages. That $70,000 quote might be just the going rate for what this work is going to be.
The only other thing I can think to say is when I get in these situations, I look for ways to cut costs in the areas that are least likely to affect the deal. You probably don’t want to cut the paint because you get a lot of bang for your buck on that.
You probably don’t want to cut the light fixtures because those are relatively cheap. But some of the other stuff that you’re talking about, maybe the flooring, maybe you leave the flooring in there. You put a cheaper flooring though what you were thinking, because that’s expensive, both the materials and in labor.
The bathroom refresh, maybe you don’t upgrade the bathroom, you just upgrade the light fixtures. Maybe you just make what you already have nicer and so you do less work to make up some of the work in the budget there. That might end up being your best option. Thank you for the video. Keep representing Hayward and let me know how it goes.
All right. At this stage of the show, I want to make sure that you guys all like, comment, and subscribe to our YouTube channel. Especially comment, I want to know, what do you think about the show so far? Do you like the Seeing Greene episodes?
We’re going to take a minute to read some comments from previous episodes that you, our listeners, have left. You can see what other people think.
From Shaka Boom 01. “David, I love your show. But words I hear too much on your show are one duplex and two duplex. Something I never hear you talk about is buying land and building. I would love to hear your thoughts on investing in land and building the ideal single family home with ADU, which I’m going to do. I know it’ll be a lot of work/learning, but I think the outcome could be great.”
Well, Shaka Boom, the reason I don’t talk about that a lot is I’ve never done it and I try to avoid things that I don’t understand. It’s incredibly complicated compared to just buying a house that already exists.
We just heard our previous question about how to manage a contractor, and we saw how that can get out of hand where the bids get too high. It gets even worse when you’re building it from the ground up. Tons of things go wrong you weren’t expecting.
You’re borrowing money from banks where they’re expecting work to be done. You’re working through permits. There’s so many moving pieces here. It could be very easy for this to take way too long and lose a lot of money.
Now, I’m not going to discourage you from doing it because if you’ve already decided you’re going to do it, I’m assuming you’ve got some training, some expertise, some background in this area that makes you think that you can do this better.
But for people that are getting started investing in real estate or have a small portfolio and want to grow it, the average listener that we have on this show, the avatar person that’s listening, this could absolutely bankrupt them financially.
I know a lot of people that tried to build spec houses and lost a lot of money, including some family members of mine. That’s why I don’t talk about it as often. But if you know what you’re doing, you can make money in real estate in every way.
All right. Our next comment comes from Rubai Khan. “Where would David Greene live if he ever left California?” Ooh, this is really good. I’ve enjoyed my time in Florida. I’ve been visiting South Florida to look at some of the projects I have going on down there. I don’t think I could live in southern California because I just cannot stand traffic and things moving slow and it’s everywhere.
I enjoyed visiting the Smoky Mountains. Oh, I know, probably be Scottsdale. I really like when I visit Scottsdale. I like the heat, especially the dry heat. Heat doesn’t bother me. I go running when it’s 100 degrees, hiking when it’s over 100 degrees all the time. I love it.
I can’t do cold. I have cold air-induced asthma that happens when I exercise. My windpipe freezes up. It’s really hard to breathe. I can’t stand it and just being cold sucks. I would definitely live somewhere where there was sun and I’d probably vacation to Hawaii a lot.
All right. Our next comment comes from Haggy 2013. “Thanks for outlining videos. They’re easy to navigate, and for that I’ll give 10 likes.” Yeah. Shout out to Nate Weintraub and our production team who help you know what topics we cover by adding in the little breaks on the YouTube timeline there. They got to sit there and do a lot of work. Thank you guys for doing that.
Our last comment comes from Unio Brainwave Music App who says, “Today is a very lonely day for some reason. To counter that, I’m saying hello to as many people that read this post. Hello. I hope you all have a better day than how it started, even if it started really well.”
Well, if you guys are also feeling lonely, it might be that you need some community in your life. At BiggerPockets, we’re here to provide that. Check out our website, biggerpockets.com where we have a forum where lots of people answer questions and ask their questions as well as meetups in your area that post on the website. Go meet some other investors and get involved in a community.
All right. We love and we appreciate all your engagement, so please continue that. Leave me some comments on today’s show to let me know what you think about how we’re doing here. Remember, if you want to be featured on the show, you can go to biggerpockets.com/david and submit your question to be put on the show.
All right. Our next question is a video from Liam Quintana.

Liam:
How’s it going? All right. My name is Liam from New Orleans. All right. I own a construction company. My question for you is I want to BUR new construction. I’m able to build houses, duplexes, single families for a lot cheaper than what they sell for on the market even though the market [inaudible 00:19:34].
But I want to build a duplex, run it out, do a cash-out refi, take the money out and build another one. This method allows me to never run out of money. If I take the liquid that I have now and just put down payments on a bunch of rentals, I would eventually lose money. What do you think about BURing new construction?

David:
All right. Well, Liam, that is how the BUR method works. The only thing that’s different is you’re talking about building instead of buying and rehabbing. This would be build, rehab, rent, refinance, repeat, which is kind of funny. It’s a little bit different there.
I’m not going to discourage you. I’m just going to say you got to understand how the building process works. If it is true that you can build a new property for significantly less than what people are willing to sell them for, this might be a new wave with real estate investing.
If sellers are just not willing to drop their price and enough new properties are built and sell for less than what the existing inventory is, that would force comps to come down and it would help the market correct. The problem is I just don’t see enough investors learning how to build and becoming proficient at doing that in the period of time that we would need to push prices to come down.
But if you’ve got some background, if you’ve got it in with a home builder, I think this could be cool. Just make sure you know what you’re getting into. Okay. There’s a time that I looked into doing the same thing. I was going to build a bunch of properties in Jacksonville, Florida that were fourplexes.
I had the land picked out. I had the builder. I had a lot of conversations. I realized, thank God before we got into the project, that the zoning would only allow us to build one door per like square mile. I was looking at buying 10 square miles of land. I could only put 10 houses, but I had planned on building 50.
I was going to do what you’re doing. I was going to build two or three, fourplexes, refinance them out once they were appraised, put that same money into the next four and just build my own subdivision of fourplexes and have my own rental community kind of like apartment complexes.
Then I found out at the last minute zoning was not going to allow me to do that. That’s what scares me. There’s a lot of little things that can pop up like that you don’t realize when you don’t build often and you can run out of money very easily.
I would definitely recommend talking with a home builder who has done this many times before that can guide you through the process before you commit to doing this new home construction.
All right. Our next question comes from Paul in Utah. Paul says, I invest in Kansas and I currently have seven doors from a triplex and a four single family homes. I am a long-term buy and hold investor and I plan to get 10 to 12 doors total.
When I was getting insurance set up on my most recent rental property, the person I was on the phone with mentioned that I’m getting to the point where it could be a better option to get a commercial insurance policy for all my properties than individual properties on each one.
I haven’t really heard this before and I was hoping to get the David Greene and BiggerPockets thoughts on this. What pros and cons should I be aware of? Any companies that I should reach out to or avoid? I called one local insurance broker and they seem pretty confused when I was asking about this.
It’s so funny you say this because I’m in the process of launching an insurance company right now. I believe we’re going to call it full guard insurance and it’s going to be providing insurance to landlords.
Now, I’ve run into a couple issues where I have had pipes break. When I was in the middle of construction, issues with short-term rentals. I bought property and it turns out the quote I was given from the insurance company ended up being way lower than what they quoted me once the property was purchased and it ticks me off, and that’s when I go start businesses.
In a couple months, I will probably have a lot more information to give you about this once I’ve dove into that business. Now, it doesn’t get talked about a lot, so I can’t give you a ton of information about this.
What I can say is that this is not a bad idea. If you can get one policy that will cover everything, I think that’s good. As far as the local insurance broker … You just called the wrong one. If you call and you ask about it and they say, “I don’t know what you’re talking about,” call someone else. Keep calling until you find a person that either knows or they say, “Oh, yeah. We don’t do that. But here’s why.” They can educate you on the process.
Guys, in general, when you’re trying to find an insurance broker, a mortgage broker, a real estate agent and construction person, whatever it is, if you ask them questions and they don’t know, that usually means it doesn’t fall within their specific wheelhouse and they just do the same things all the time and no one’s good at something that they don’t do a lot.
You don’t go ask a professional skateboarder about snowboarding because they don’t do that. They skateboard. They’re going to have to learn the hard way how to be good at snowboarding. You want to hire them to be a coach just because they can skateboard.
You need to take people the same way. If you’re reaching out to someone on my team, if you’re reaching out to someone on BiggerPockets, if you’re reaching out to someone that a friend referred you to, ask a lot of questions and make sure that they are confident and competent in the way that they answer those questions.
They should have a wide range of knowledge or at least the broker they work for should have that. It’s a huge red flag if you ask your lender about a DSCR loan, a bridge loan, a HELOC, any of these other loan products, and all that they can say to you is “We just do conventional. I don’t know.”
Get away from that person. That’s not the person that you want to be overseeing, managing, directing, guiding you in your journey. You need a person that is familiar with those products and can tell you which one works best for you, which is how I try to train my staff and what I look for in different agents that I might be working with.
Our next question comes from Kayla, Kayla Wright in Nashville. Hi David. Thank you for reading my question. I’m a freelance marketer who recently started working directly with the real estate investor who has acquired 76 doors in the Nashville area since 2020.
In exchange from my marketing services, I received a 5% payout of total profits on the flip property aspect of the business, which is a new venture on top of the multifamily rental, which is 76 doors. This has been a great opportunity for me to learn the real estate landscape, set goals for myself for my own real estate journey, and build a strong relationship with the investor.
My investor partner has also agreed to offer an extra 5%, so 10% total, of profits on flips if I find the properties myself and bring them to him. For added context, I work full-time in another job and I’m hoping this opportunity will help start my journey as an entrepreneur.
My question for you as an investor is what can I be working on aside from education that will be beneficial to my investor partner as one of the first employees? In what ways can I truly help him ramp up his flip business and stand out? I’m currently working on the website, but he is expressed interest in my helping with other investor relations and other sides of the business as well.
The podcast has helped me immensely. Thanks again. What an awesome question. I love this, Kayla. All right. I was thinking when I first started hearing this that I was going to give you some warnings about what to avoid. But I don’t know that that’s necessary.
You’re asking a really good question. What can I do to help this person with more? Guys, this is honestly how you’re going to learn about real estate investing. It’s not by finding a mentor who’s just going to teach you stuff. It’s about finding a person that you can bring value to and help them, and you learn from the experience of doing it for them.
Okay. That’s what you’re really looking for. Not how does someone teach me how to sell houses. You go find an agent that already knows how to sell houses and you do all the work for them that they don’t want to do, and you learn from doing the work. That is the best way to learn anything is from actually doing it.
Working on the website, that’s a great idea. My guess is they look at you like a marketer. They’re thinking of marketing stuff that you could do. But what if you have more skills than just marketing? Okay. Do you have bookkeeping skills? Do you have project management skills?
Can you learn what their workflow is and help them by calling the different people that are supposed to be doing stuff and making sure those people did what they were supposed to do, as well as asking those people, what do you need to help do your job better and finding ways to solve that?
Many times people like me that are managing a lot of stuff, give an order or an edict, I want you to go do X. Then X somehow falls by the wayside, and I don’t even think to go check in on that till two months later when I needed it done and I say, “Where’s X?” They’re like, “Oh, it’s halfway done.” This happens all the time. I don’t have a lot of people in my companies that take responsibility for making sure the stuff gets done.
If you could be that person, you could do anything. If you could just learn to be organized, if you could learn to do follow up, if you could create a to-do list of everything that person has, make yourself their personal assistant and then follow up to make sure everyone’s doing things and ask that person a lot of questions, you will learn a ton.
I have this model that I teach the new people where imagine water falling into a bucket. Okay. The water that falls into the bucket is the stuff that needs to be done on the job, and the bucket is the person. As that bucket fills up with water, they have tasks that they need to complete.
Their job is to get the task done, which is draining the bucket before the bucket overflows, which is they ran out of time and they fell behind on stuff. Okay. One way that we help is we put a hole in the bottom of the bucket where water drains. A person underneath them, which could be you, which is another bucket that catches all the stuff that comes down.
The benefit of that is the person who’s doing the initial work where all the water’s coming down, they’re getting all the learning. But if you can put yourself underneath them, if you can take over some of the responsibilities and do the work, you benefit from the same learning that they don’t need anymore.
Something they already know how to do comes in. They pass it down to you. You do it for them. They didn’t need to learn. They already know. But they still get the benefit of it getting done. You get the benefit of the learning and it becomes a mutually beneficial relationship.
My best advice when anyone is in your position is to quit running away from responsibility. Quit looking at real estate as a thing you can do so you don’t have to be responsible. You don’t have to grow. You don’t have to learn new skills. Welcome responsibility. Run two responsibility.
Jump in and say, “I want to do as many things as I can for this person as possible,” and only commit to the stuff that you are willing to be responsible for the outcome for. If you do a good job with little, you will be given more and this is how you’re going to learn. Great question.

Marc:
Hey David. I got a question for you. My name is Marc Irvison. I’m an agent/investor here in Northern Colorado. Moved here about a year and a half ago. Bought a new construction home. Ever since then I’ve been ringing out on VRBO three to four nights a month.
After two years of doing this, I’ll be able to offset most of the mortgage come next year during tax time. My DTI is going to improve probably about 1,000 a month, and so I’ll be looking to buy again. I started really late in 2021. That’s why the DTI isn’t going to go up as much as if I had rented it out. You know what I mean? Two years full-time. But it is what it is. I’ll get 1,000 bucks extra on my DTI next year. I’ll be looking to move again.
The next one, since my first lung was on a VA, next one I guess will be FHA. But my question is, if I’m eventually trying to get out of the rat race and get out of the W2 job, how do I make that happen in this Colorado market the way it is with average prices being a 450 to 500, unless we see some kind of real estate crash or something like that, which even then I doubt prices are going to go down here that much.
The only idea I’ve had is that to go ahead and start buying in Greeley, Colorado. The issue there is that I work at Broomfield. That’s probably about an hour commute. Do I just bite the bullet and drive an hour or two from work so I can buy duplex in Greeley for say 475, 500?
Or do I continue purchasing single family homes where you can get a new construction three, two, no basement for, say, 425 down, close to Brighton or near Firestone, something like that? Do I focus on duplexes up in Greeley or do I focus on single family home closer to Broomfield? Probably where there’s, I’d say, more demand.
Like I said, I’m eventually trying to get out of the rat race to get out of a W2 job. I’m just trying to figure that out. Like I said, this market’s way different. I come from Hamilton, Ohio where my first house was 9,000 bucks and I put 25 into it, had 30 all in. I eventually paid it all off, had my house free and clear.
Out here 30,000 bucks. That wouldn’t even get you a shed. I mean, it might get you like a 50-year-old rundown trailer, but that’s it. Nothing that’s even close to even me inhabitable. This is different out here in this market. I’m trying to adapt and do what I can.
Just help me out, man. Appreciate your service as a cop and I’ll look forward to what you have to say. All right. Thanks, man. Bye.

David:
All right. Thank you, Marc, for your question. This is some good stuff here. First off, I think you’re probably realizing the reality is getting out of the rat race is going to be harder than what it was eight to 10 years ago when prices were a lot lower, demand was a lot lower and competition was also a lot less, too.
It’s just the reality is it’s harder to get out of the rat race with real estate than it ever was before. I’ve come to look at real estate investing as a supplement to my wealth building, not as necessarily the foundation upon which I will rely on my income to come in.
I think most people, there’s a handful of people that don’t fit that avatar, but most people probably would be better off if they looked at it the same way. Then if we have another big economic crash and you got a bunch of money saved up, that’s when you can buy a lot of properties that will function to replace your income at some point.
But we don’t have control over when that happens. It seems like every time we hit a recession, we just print a bunch of money so that never comes about. That’s caused a lot of inflation, which has made the cost of living go higher, which has ironically made these assets even more expensive and harder to get.
Let’s talk about what you can do. I don’t like the thought of going to an area with less demand. I also don’t like the thought of getting a new construction three, two. Three, twos are not rental properties. In 2010, 2011, I could buy a three, two as a rental property.
If you get a screaming good deal on a property like from a super motivated seller, you can make it a rental property. But even then, if you look at the return on equity on the price, you’d have to pay to make that deal cash flow, you’d be better off to buy it, sell it, move that equity to something that’s like a six, three, two, three twos with that money as opposed to one.
Those are not meant to be rental properties. Those are meant to be houses people live in that can be made into cash flowing properties, but they’re not designed for that. I’d rather see you buy a five, two and a half or a five, three and rent the rooms out individually.
I’d rather see you buy a small apartment complex of seven to eight units and rent that out than just go buy a three, two, especially new construction. If you’re in this expensive market in Colorado, you can’t go buy a new construction home, pay market price and try to make that work as a rental. You’re going to lose money.
You got to do something more creative. You got to find a property that has square footage that can be added, square footage that can be converted to get three units out of one unit. You got to try a lot harder to make this stuff work in today’s market than before. I think you’re probably seeing that.
I’d advise you on the duplex route over the new construction. But can you get something in the middle? Can you find something in the area that you like that could have more units in it than what you’re seeing? Could you get a new construction duplex or even better a new construction fourplex?
Can you talk to the builder and say, “Could you build me a four-unit property? Is the zoning going to allow for that?” That’d be pretty cool. I bet if you get four units, you could actually probably make it work. Maybe you got to have several conversations like that with different builders or different renovators to ask like, “What could be done for the price that I’ve got to get more than one unit?’
That’s why most properties are not cash flowing. Because you’re analyzing a house with one unit and a couple bedrooms. You’re not analyzing an apartment complex or several units, which is what you need if you’re going to get cash flow.
Good luck on that, Marc. I know you’re in a tough market out there. Your last option could just be invest out of state. If you know the Ohio market, like you mentioned, maybe you go back out there and you buy some other properties and you keep putting your money there until we have a crash and you can actually find something in Colorado that works for you.
All right. On our last question comes from John McKee out of Fairfax, Virginia. David, you talk about putting systems in place to help grow your business. What does that look like and how did it evolve? Can you give me some examples of these types of systems and how they made you more efficient?
Oh, my gosh. First off, great question. Second off, concisely worded. Third, you acid it in a great way. Not only what do they look like, but how did they evolve? Because that’s the only way to answer this question is you got to talk about what your first system looked like and how it grew, because none of you are just going to go plop down a system and say, “It’s done.”
But that’s what everyone explains it. You listen to Alex Hormoze or you listen to some of the other online gurus like, “You need a system. You want a business, not a job.” You’re like, “Okay. Okay. Let’s do it.” Then they explain how it works and you think you’re just going to go wave a magic wand and you have a system. You don’t.
What you have is a first step out of 700 steps that will become a system. Ask you how it evolved is a great way to phrase this. Let’s talk. I remember being in John’s position here. I had a talk with Kyle Renke, who’s now the Chief Operating Officer of The David Greene team. Helps me put a lot of the events together that I do, the retreats that I run.
He helps run the YouTube channel. He does a lot of different things. I remember saying, I keep hearing people tell me that I need a system and I don’t freaking know what that means. I get the concept of a system, but how am I supposed to execute it? Is there software I’m supposed to buy?
Am I supposed to write it down on a notepad? Paint a picture for me of what this looks like. I was so frustrated because I knew what I needed, but I didn’t know how to get it. Kyle came back to me and he is like, “Okay. What all you need to do is open Google Drive and start open a folder about whatever you want to make and then make subfolders inside the folder with the other pieces and then use Google documents to type out the instructions.”
That little piece of information unlocked what my brain was looking for. Okay. I’m like Forrest Gump. I’m not a smart man, but I know what love is. I needed someone to just paint me a picture that I could get, like, “Okay. That’s what I needed. I can run with that.” I just went nuts.
I became a systems guy because I had that little spark that started me. Hopefully me answering this question can be that spark for a lot of you. Let me give you an example of information that I teach real estate agents and how to build systems. Because I did a very good job of systemizing the job of a real estate agent.
Then I did a very good job of systemizing the role of a loan officer. Once I had that, I could hire people for the one brokerage, for The David Greene Team, for whatever else I’m doing. They knew what role they were going to play. But before I could do that, I had to build the entire thing out.
I’m going to give you guys an example of that and then I’m going to show you a screenshot from my phone that shows you how one of the systems works when I’m combining both agents and loan officers together in one system.
All right. If I was going to take a listing, which is one of the easiest things to systemize because buyers are crazy and they’re very emotional and you got to do a lot of different things, it’s harder to systemize that. It’s like it’s herding cats. It can be done. But poof, it’s worked.
Listings are much easier. What I started was I made a list of everything I had to do in a listing. The goal of the original list is just to not forget. Your system starts off whereby eliminating errors of omission, you’re just trying to make sure you don’t forget to turn the insurance on in your rental property.
You don’t forget to have automatic withdrawals set up for the mortgage payment. All of these, the utilities turned on. It’s easy, man. I bought lots of houses and then realized, “Oh, my God. No one turned on the air conditioning. We don’t have utilities.”
The property managers showing it to a tenant the house is 105 degrees. This happens sometimes when you don’t have these systems. It’s just a checklist. Okay. Here’s all the things that have to happen when I first buy a rental. Here’s all the things that have to happen when I first list a home.
I have spreadsheets now where my employees, every time I buy a house has a column of all the stuff they got to do, they get the utilities turned on, get the auto-pay set up. Here’s a link in the spreadsheet that will go to the Google Drive folder where we will keep the insurance, where we will keep the mortgage statement, where we will keep the information if we ever need this on a later date, because you always do.
For listings, it was order assigned to put in the yard, have the photographer go take pictures, have a lockbox put on the property, get a spare key from the client, make sure the listing agreement is filled out. This stone’s obvious, but you just start by writing down all the obvious things you need to do. Okay.
I probably had a list of 15 things. When Krista was hired, my first assistant, that’s what she worked on. Now what would happen is we would realize, “Oh, we forgot to” … What’s a thing you might forget on a listing to do? You got to put it in the MLS. Maybe we would forget to get a certain form filled out that we needed to put it in the MLS.
I would look at where in this series of 15 things that step should go, and I would just go into my Google Doc. I would step 12, I would hit Enter and that makes 13, and I’d put that new thing. Every single time we made a mistake, somebody came to us and said, “This needs to get done and it wasn’t on the list.” It added to the list. It added to the list, added to the list. It went from 15 things to 50 things.
That’s how much stuff is actually being done. Some of those 50 had subpoints. Get the listing agreement signed would then turn into, give a copy of it to the broker, give a copy of it to the escrow company. All of these things would start to apply. You did have those subpoints, but you still just have a checklist on a Google Doc, under a Google folder with the property’s name, which is in a folder that says “Listings.” Okay. It’s that simple.
Now, at a certain point I realize there’s these things can be clumped into stages. I broke my list of 50 things or 75 things into 4 different stages. The first was pre-listing. Okay. This was all the stuff I needed if I was going to go to your house to sell your home. I would have a comparative market analysis run by my staff and they look at every active, pending and sold home that was on the market.
I showed them by sitting with them, here’s how you call every single person, every agent that has an active and a pending sale. You ask them, “How many offers are you getting? Where are the offers coming in? Do you think you’re priced too high?” Then I would teach them how to build rapport. There’s no agent just wants to tell you that.
Before I went to a listing, this is the work I would do. I don’t show up to sell your house and just be like, “Here’s what we should sell it for.” I’ve done some research. I know these houses are listed at 700, but they’re selling for 780, so we don’t have to list that low. We could come in at 765 or something.
Or these houses were listed at 850 and they’re just sitting there. They’re not selling. The agent says they’re about to do a price reduction at 775, so we don’t want to copy that person. I had all this information and I had notes. Their house looks like this. Your house looks like this. These are the best cops. I would have them do that.
Then we had these David Greene Team folders made and we had these pens. I don’t think I have one around. But they look kind of like this, but they were red and black with our logo and the name. Krista would put, get the folder, put the pen. We had a marketing pamphlet. We still do, called the Blueprint that explains to sellers all the steps that go into selling a house as well as buyers, all the steps that go into it.
She’d put the comparative market analysis. She’d put a copy of the listing agreement. We have a pop socket that goes on the back of a phone. One of those things that you could hold it with that was branded. We had all these goodies that we would bring and all that would go in a folder.
Then I would have an iPad that I would bring with me is that’s what I would give the presentation on. Okay. I know this is a bit of a long answer. But I’m showing you guys a level of detail that goes into the system.
Then all of the steps that were needed for me to be able to sell … to get the listing signed were in this document up to the point where there’s even a reminder for Krista to put the address in the calendar of my phone through the computer that was linked to it so that I would just get a 3:00 listing appointment.
You got to go to this address, and there’d be a reminder 30 minutes before that would say, “Put the thing in your car,” because as you guys noticed, I forget to turn the light green. I would forget to grab the folder at, get to the listing appointment. It was bad.
Then Krista knew that she needed to be on call when I was at a listing appointment. If I was there and you were like, “Well, David, I mean I know you have a team, but I really want to work with you. How do I know that I’m going to get good service?” I’d say, “Let’s try this. Let’s call Krista right now and see what happens.”
I would call, she’d be like, “Hi.” I’m like, “Hey, Krista, can you do me a favor? Pull up this house on the MLS or pull up this house on Zillow and can you tell me what the house is around her selling for?” She’ll be like, “No problem.” She’d pull it up like, “Oh, there’s three other homes that are all pending for sale and no other active homes.” I’m like, “There you go.”
Now we can see exactly. Do you want me to call one of the agents and ask them a question? They’re like, “Wow. You’ve got this dispatcher that’s just ready to jump in.” After that, I had a list of stuff that we would do after the listing presentation was signed, but before we went active.
This would be getting the picture scheduled, getting the lockbox, put on the door, getting the sign in the yard, having cleaners go to clean up the house, double checking to make sure that homes didn’t come on the market. There were competition that we didn’t know about. They would check that every single day. I’d have staff that were given tasks to do this.
You see how detail-oriented that we’re getting into this thing, making sure that the information of the home was uploaded into the MLS even though we didn’t go live. We wanted it there ready so that for one, if some reason we wanted to go live earlier, we could just click a button.
We were at the last minute taking two and a half hours to get the information ready and the client’s like, “Why is the house listed? I want it live.” Then we had stuff once it was listed, but before it was in contract that was on that list. That’d be the next step that comes up, checking in with the client every week, checking in with all the agents to get feedback of what they said.
Krista would call every single buyer’s agent that showed one of my listings and asked for feedback what they thought and what their clients thought. We would get that information to share with our clients who were letting us sell their house.
Then once it went in contract, a whole new stuff, the title company needs the contract. The lender needs the contract. We need to start a timeline of making sure that the buyer’s lenders doing their job. What would happen is properties would fall out of contract because the buyer couldn’t secure lending. I practiced extreme ownership.
Instead of saying, “Oh, well, nothing we could do.” I’d say, “You know what? We should have called their lender to make sure that everything was good.” Instead of relying on the buyer’s agent who lies. It became a part of that thing for Krista to call once a week and check with the lenders of the buyers who are buying our listings.
This is not my job. This is the other agent’s job. But I would do their job because I needed that deal to close. If they were like, “Yeah. The person’s not giving me their statements. The person’s not getting back to me. They won’t let me pull their credit.” I knew something was going on.
When the agent was like, “Oh, yeah. Everything’s fine. It’s going along pleasantly. But I know that they’re not submitting the information that they needed to their lenders. Maybe they’re looking at other houses. Maybe they’re thinking about backing out. I would go to our clients and I’d say, “I think we need to pull the plug on this buyer and put it back on the market and get another one.”
Well, what if we lose them? We’ve already lost them. They just haven’t said that. This is what no other agents are doing because they don’t have these systems. Then once the house sold, there was a whole another stuff. Making sure that the stuff got taken out of our client’s name and put it into the buyer’s name.
Making sure all the furniture got moved out of the house. Making sure that we marked it in the MLS that is now sold instead of pending. Making sure all the paperwork needed to be getting to the broker went to the right broker. Making sure we got the client a gift. Making sure we put a testimonial up on social media.
All of this stuff you cannot rely on your brain to tell you. You have to do all of it. It’s the same way when I buy a rental property. It’s the same way when I hire a person’s work in the teams. You’ve got to systemize everything. Now everything I just told you, okay, that’s not enough. That’s just the checklist.
What we then took was we took the checklist and we moved it into our CRM called Brevity, and we created auto plan. What would happen is that chunk of the list, get this stuff ready for David before he goes to the listing presentation was put in the CRM and saved as an auto plan.
Krista would check a box that would say like 123 Main Street pre-listing presentation or whatever, and it would automatically populate a series of reminders to tell her this needs to be done, this needs to be done, and then we could assign it to another employee.
If we had a listing coordinator, Krista would put the information into Brevity, check the box. The listing coordinator would get a reminder of the 12 things that had to be done to get me ready to go. Okay. Then after the stuff was signed, we would come back and she would check the next box that would say, listing pre-active, or whatever we called it.
Then all those reminders that were in the Google Doc automatically go to the right person on the team, and now they know with all that they need to do all those steps. Krista or me could look and see, are they doing their job? Are they checking things off? Is it going where it needs to go? It was beautiful.
It took all the memory out of it, which is how we got to the point that we could sell 50 homes with a handful of admin staff at a time. I had 53 houses in escrow at the peak with me and three other admin as well as just the agents, and it was running beautifully. Okay.
This is how systems need to work. Now, obviously none of that happens right away. We still refine these systems because occasionally something goes wrong that we never anticipated and we go add something to the system to say, “Okay. Now we have to add this in here, or we need to take something out.” That doesn’t happen anymore.
That’s how it involved in one area of my life, just a real estate agent. I put a lot of the stuff in the books I wrote for BiggerPockets Sold Skill and Scale, which you guys can buy at the BiggerPockets bookstore if you’re agents.
If you’re investors, this is stuff I teach to other people with the spreadsheets I have, like offers written, offers accepted, closed, closed under rehab, closed needing furniture, like all the different stages of when I’m buying properties so that Krista and I and whatever admin we have can keep up with it.
This is why I tell you guys real estate is work. It’s not like, “Oh, I bought a house and I’m done.” You still got to do a lot of stuff and these systems are what’s so powerful. Thank you John for letting me go on a 15-minute explanation of how systems are born and evolved.
I could do an entire podcast about this, maybe an entire series of podcasts because they’re so important. As you’re listening, I just want to remind you, don’t expect to get it right on the first try. Systems are evolved, just like John said, they are developed. They aren’t just something that boom, you snap your fingers and say, “Hey. Can I have your spreadsheet of all your systems?” and think you’re going to be done. It’s not like that.
All right, everybody. That was our show for today. Thank you so much for joining us on today’s Seeing Greene episode. I love doing these and I love even more that you guys are submitting your video questions as well as your written questions for me to answer.
Please remember to take a minute to leave a comment on the YouTube channel as well as like, share and subscribe and let me know what did you think about today’s show. You could follow more of me at DavidGreene24. I’m on social media everywhere as well as YouTube.
If you want to meet in person and you’re too shy to submit a video, go to davidgreene24.com/retreats where you can check out ways that you can meet with me. We can talk about real estate. I can help you in your journey. We can get to know each other and we can form that community that is so necessary for people to get lonely.
Thanks a lot guys. BiggerPockets has lots of content out there. Check out another one of our videos if you have some time. If not, I will see you next week.

By Rieva Lesonsky

“Women’s History Month is an important time to celebrate how far women entrepreneurs have come. We know they are starting businesses at historic rates. But we also need to think about how to continue to break down barriers in outcome-driven ways.”

Those words from Pam Seagle, the head of Women’s Programs at Bank of America, perfectly sum up the challenges America’s women business owners face every day. Yes, women-owned businesses positively impact the American economy. They own over 13 million businesses, employed 10.8 million workers in 2019 (closer to 12 million today), and boast $1.9 trillion in annual revenues.

But at the same time, it’s hard to celebrate. As Seagle notes, so many barriers stand in the way of achieving true success and economic parity. For instance, of total small business loan dollars, only 4% go to women.

The venture capital picture is even worse—companies with female-only founders received “just 2.1% of the total capital invested in venture-backed startups,” according to PitchBook. Hello Alice says this is truly “baffling when you consider that women-led tech startups continuously demonstrate significantly lower fail rates and generate higher returns for investors.”

And adds Sharon Miller, the president of Small Business/head of Specialty Banking and Lending at Bank of America, “While the Women’s Business Ownership Act of 1988 removed certain barriers, including ones that prevented women from accessing capital equally, there are still residual effects that make business ownership challenging for women. For example, approximately just 12% of decision-makers at VC firms are women, which contributes to a lack of understanding and connection with lenders.”

Amy Millman, the managing partner of StageNext, a relatively new venture fund that invests in women-owned businesses, agrees with Miller saying, “Women don’t speak banker.”

Ironically, I first met Millman around the time the Women’s Business Ownership Act of 1988 was enacted. At that time, according to “21st Century Barriers to Women’s Entrepreneurship: Majority Report of the U.S. Senate Committee on Small Business and Entrepreneurship,” there were 4.1 million women-owned businesses in America. The Senate Committee report attributes the subsequent success of women entrepreneurs to this “landmark legislation,” which, among other things, authorized the Small Business Administration (SBA) to establish a certified loan program for lenders, created the National Women’s Business Council, and directed the Census Bureau to collect information on women-owned businesses.

And yet, here we are 35 years later, with 29% of women business owners polled in Bank of America’s Small Business Owner’s Report (SBOR) saying they don’t believe they will ever have equal access to capital.

Women entrepreneurs’ funding challenges are underscored in a report by Hello Alice, “Standing in the Gaps: A Roadmap to Redesign the Capital Continuum for Women Tech Founders,” which surveyed almost 20,000 women tech founders. According to the report:

• 53% of women business owners say they have unmet financing needs, with loans and credit cards cited as the most common forms of financing sought
• Nearly 90% don’t have access to a business credit card
• 61% use a personal credit card to fund their businesses

Some of the primary reasons cited for the funding gap:

• Conscious and unconscious bias
• Unequal access to networks and education
• A disproportionate responsibility for caretaking and household work

Women lack access to capital

So, in addition to not speaking the same financial language as funders, the fundamental question is, why are women business owners still dealing with financial challenges? Geri Stengel, the president of Ventureneer, says that while many factors affect gender disparities in access to capital, one, in particular, is that women’s “networks tend to be smaller and [they] have fewer connections to financing sources. And, whether it is conscious or unconscious, they often face bias.”

Bank of America’s Seagle says lacking “access to capital can deter women entrepreneurs from following their dreams.” And she thinks women should explore all available financial resources, including grants and the recently expanded Access to Capital Directory from Seneca Women and Bank of America.

Elizabeth Gore, cofounder and president of Hello Alice, says, “Women entrepreneurs who have faced challenges accessing capital need to know they are not alone in this struggle. According to our [report], only 19% of those surveyed funded their businesses through small business loans. However, there are various reasons why accessing loans can be difficult, such as insufficient lending history, low credit scores, or inadequate cash flow.”

But there are alternatives to traditional business loans. Stengel points to “an array of financing options that have entered the market, including rewards-based crowdfunding, regulation crowdfunding, and online lenders. And women are funding women as angel investors, limited partners in venture capital funds, and VCs. It is critical that women entrepreneurs learn which financing options are right for their situation. If they did, they would raise money faster and at a lower cost.”

Moving forward faster is key. Millman urges women to be less patient. She says, “Women race forward till they get to the wall someone erected. And then most of them wait at the wall. But some people figure out how to get over or around the wall. The system was designed by someone [men] in their own image. If you didn’t fit that mold, you didn’t get through. So you have to be willing to disrupt it.”

Women entrepreneurs face extra challenges

Many women business owners are also challenged by their responsibilities at home and need to figure out how to simultaneously build a business and a family. If that’s you, as a working mom herself, Miller says to remember, “Not every day will be perfect or easy, but that’s when you [need to] rely on your support system. Remember you are never alone, and it is okay to struggle. Lean on people you trust—family, friends, colleagues, mentors—to lift you up when you’re facing a challenge or need support or advice.”

Gore, also a working mom, says she knows how difficult it can be to balance responsibilities at home with the dedication it takes to build a business. “But,” she says, “isn’t that what makes us the best owners? Our incredible ability to manage time! Throughout my career, I’ve found value in educational resources, mentors, and the support systems of women who can relate to these hurdles.”

Miller says it’s normal for entrepreneurs to feel discouraged at times, but encourages them to “‘own their chair,’ embrace their success, and lean into the confidence that led them to start on their entrepreneurial journey. There are common themes in raising a family and running a business, and it’s about striving toward your goals, routing yourself in passion, and pushing to see yourself and the people around you succeed. Although difficult, don’t forget why you’re taking on this challenge.”

Feeling discouraged doesn’t mean giving up. Channeling her inner Yoda, Millman adds, “You either do, or you don’t. There is no try.”

It’s time to make some noise

Part of that challenge is to work together to fundamentally change attitudes about lending to women. Is that possible? Stengel says it is, but we must “hold funders accountable by outing the lack of diversity in whom they fund.”

Gore agrees, saying that “reducing bias” is key to “improving lending opportunities for women.” And she adds, “To achieve more objective decision-making, [lending] institutions should commit to collecting data and analyzing trends that can reveal personal biases and overlooked opportunities.”

Part of changing attitudes is making some noise. Gore says it’s “critical to celebrate the stories and accomplishments of female founders and highlight their unique challenges. We should be shouting [about the underfunding of women] from the rooftops to bring attention to the problem. Raising awareness and pushing institutions to change can help eliminate these barriers.”

More articles from AllBusiness.com:

The future for women business owners

Both Miller and Gore are excited about what lies ahead for women entrepreneurs. Gore sees strength in numbers: “I see incredible opportunities for female founders, especially if founders, institutions, and investors work together.” Miller cites the recent surge of women-owned startups: “Over the past three years, the number of women entrepreneurs is growing significantly faster than men entrepreneurs, and women business owners are well positioned for growth despite the current economic environment. I believe the momentum will continue.”

To reimagine the lending environment for women business owners, we need actual tangible goals and solutions. According to Hello Alice, we need to:

• Address early and short-term funding gaps through equitable, frictionless grants
• Increase access to business financing and banking to help founders manage volatility
• Reduce bias and increase transparency in venture funding to support scale

Millman says you need to know where you are and where you’re going but be open to exploring your options along the way. “You should always have a Plan B, and a Plan C and D as well.”

Seagle believes part of the solution is access. She says women need “access to capital, access to training opportunities, and access to the market to propel their ventures to success.” To fill that demand Bank of America partnered with Seneca Women to launch a new online Marketplace for women entrepreneurs, offering access to new markets and giving consumers opportunities to shop and support these women-owned businesses.”

Women have the power

Despite the challenges, says Bridget Weston, president of SCORE, “women-owned businesses are growing at unprecedented rates [because] they’re creative, resilient, and expert multitaskers.”

The problem, Millman says, is that women business owners seeking funding are “still doing the same thing, thinking lenders know more than they do. Women keep chomping at the bit to impress them. Don’t! Instead, focus on what you’re doing. Ask yourself, ‘What did I do right that informs what I do next?’”

As Glinda the Good Witch told Dorothy, “You’ve had the power all along.” Millman agrees, saying the solution lies within us. “Change the way you think,” she urges. “If what you want doesn’t exist, how can you create it?”

As we move forward, Miller sees endless opportunities. She says, “There are numerous possibilities for women business owners. As we lift each other up, we see that we are capable of not only reaching our goals but also exceeding them.”

Resources for women entrepreneurs

There’s an array of resources available for women business owners, particularly from the companies of the women interviewed in this article:

Bank of America:

Hello Alice:

SCORE:

Ventureneer:

Also, check out the First Women’s Bank and its Resource Center.

About the Author

Rieva Lesonsky is CEO of GrowBiz Media and SmallBusinessCurrents.com and has been covering small businesses and entrepreneurship for over 30 years. Get more insights about business trends by signing up for her free Currents newsletter.

Ashley:
This is Real Estate Rookie, Episode 272. I have purchased two properties before that had back taxes on them, but I had to negotiate with the owner. Part of the closing, the agreement was I was paying their back taxes for them, or it was taken out of the sale proceeds. So my recommendation would be going and finding the owner of that property because you actually might be able to put them in a better situation than if that property is put up for sale and they get nothing from the property if it’s put up for those back taxes. My name is Ashley Kehr, and I’m here with my co-host, Tony Robinson.

Tony:
Welcome to the Real Estate Rookie podcast where every week, twice a week, we bring you the inspiration, motivation, and stories you need to hear to kick start your investing journey. I want to start off today’s episode by shouting out someone by the username of Leo Zang. Leo says, “This is a goldmine for real estate investing, tons of valuable information and suggestions for real estate investors. You will find the roadmaps to success here.” Leo, we appreciate you for leaving that honest review. If you are part of the rookie audience and you have not yet left us an honest rating and review, please do us a huge favor, take the 90 seconds it takes to log into your phone and open up the app and leave that review. The more reviews we get, the more folks who can help, and that is always our goal here at the Real Estate Rookie podcast. All right, Ashley Kehr, what’s up? How you doing?

Ashley:
Good. I just got back from a girls’ trip in Las Vegas. I went with some other real estate investors. It was a nice little weekend getaway.

Tony:
Here’s the million dollar question. Was that trip better than the trip that you had with me and Sarah to Vegas? And there’s only one right answer to this.

Ashley:
When I went with you guys, that was my first time at a pool party. When I went this weekend, it was my first time at a Vegas club. I’ve probably been to Vegas almost 20 times now, but I just never had any interest in doing any of those, except with you and Sarah, I did the pool party. Then this weekend with my friends, I did the nightclub. I hated the nightclub. I hated it.
Sarah, first of all, gave us the advice to not buy a table and said that we need to get invited to a table, so that’s what we did. We didn’t buy a table. We get in, get on the guest list, whatever. We’re in there. It’s so crowded, like awful. People are elbowing you. Not enjoyable for me. My friend Serena, got to give it to her, girl, gets a guy to invite us up to the table. So there we go. We’re in the table. We’re not crowded and packed. That was somewhat better. But I still have the music just banging and vibrating through my body. What do they… like EMD music? I don’t know where it’s just like… But, yeah, definitely, pool party, way better, for sure. You got sunshine. There’s better drinks. So Sarah ordered the good white tequila with the juices, way better.

Tony:
I know that you’re a real estate investor because you call it the genre of music, which is called EDM, you call it EMD, which is short for earnest money deposit.

Ashley:
[inaudible 00:03:11].

Tony:
That’s like the most real estate investor thing. I love that EMD music. It just gets me going.

Ashley:
I feel like this episode is really aging me, too.

Tony:
Well, look, we’ve got a slate of awesome questions for you guys today. We’re going to talk about driving for dollars and finding properties with tax liens. We’re going to talk about being a real estate agent and if you can use your real estate agent license to help you with your down payment. We’ll talk about renovations and how we estimate project costs. We give a big shout out to James Dainard. Then we talk about taxes, which are always an important topic for real estate rookies. We finish off talking about some FHA loans and some permitting for renovations as well. So lots of really good questions. Hopefully, you guys get some [inaudible 00:03:56] from this as you always hopefully do from the Real Estate Rookie Reply episodes.

Ashley:
Our first question today is from Lucas Dominique. “After driving for dollars, I’ve come across a house that on county records says that the absentee owner has delinquent taxes on the property. The property is vacant as well. My question for anyone who can help is, is this considered a tax lien? If so, would I be better to address the courthouse about my interest or the owner? I would love to get a better understanding of this scenario with someone who has acquired property through this method. Thanks in advance.”
My personal experience with this is that if the property is delinquent on taxes, the county has no right or the courthouse has no right to sell the property until it is put up for auction. In Erie County where I live, they do an annual tax auction where the properties that have back taxes that fulfill the requirements of it’s been a certain amount of time that they haven’t been paid, they will go up for auction, and that is when the county can sell those properties.
I have purchased two properties before that had back taxes on them, but I had to negotiate with the owner. Part of the closing, the agreement was I was paying their back taxes for them, or it was taken out of the sale proceeds. So if I bought the house for $50,000, there’s $20,000 in back taxes, $20,000 went to pay those back taxes and then $30,000 went to the owner. So my recommendation would be going and finding the owner of that property because you actually might be able to put them in a better situation than if that property is put up for sale and they get nothing from the property if it’s put up for those back taxes where maybe they can walk away with a little bit of money if you are going to purchase it directly from them.

Tony:
Great advice, Ashley. When we talk about sellers who are sometimes motivated to sell below market value, someone being in a situation where there’s a tax lien against the property is one of those potential situations where the seller might be willing to sell to you at a price that’s lower than what they could sell in the market because they do know that there’s this tax situation happening in the background.
Lucas, if you use a software like PropStream, or there’s tons of other software tools out there, but punching the address, you can usually find the owner and just reach out to them. Maybe you can bring up the tax lien if you want. From a lot of the folks that I know that go direct to seller, they usually don’t mention the exact reason that they’re reaching out. Even if this person’s working a tax lien list, they won’t usually call the person up and say, “Hey, Ashley. I see you got a tax lien on your property. Can I buy it from you?” They’ll just say, “Hey, Ashley. I’m calling local owners in your area, and I came across your property. Would you be interested in having a conversation?” and see if you can, like Ashley said, solve that problem for them. Yeah, I think it’s a great idea. There are people that literally do nothing but tax liens, so it’s a great way to get some off market deal flow.

Ashley:
The next question is, “If I’m a real estate agent, when I buy my own properties, would I be able to apply my commission towards the down payment?” This question is from Amber Yanhart, and it is from the Real Estate Rookie Facebook group. Tony, what’s your take on that?

Tony:
Neither Ashley nor I are agents, but I do know that there are a lot of agents who represent themselves on deals for that exact purpose of being able to either collect that commission themselves or save the commission of paying it to someone else. Yeah, you should be able to take your commission and use that towards the down payment.

Ashley:
Can you use it towards the down payment, or is it just going to decrease the purchase price? I don’t actually know the answer to that. If you go to the bank and you’re buying the property and you’re buying it, say, for $100,000 and you’re getting your commission, I guess at the closing table you are getting that check for your commission of the property, if that can be applied as a credit to your down payment or if that’s just going to be money off of what you’re getting. I would think that you could put it towards your down payment as a credit.

Tony:
Here’s the only reason why I say that. Maybe it varies from state to state. We did a deal in the past where we essentially wholesaled the property to ourselves, and we were able to get that cash from the wholesale deal at closing as well. To your point, I think it would just be a line item on the settlement statement that says commission, and then instead of it going into your pocket, it’s just applied towards your cash to close at the end.

Ashley:
Tony, can you tell us a little bit about that wholesaling to yourself? How did that happen, and what does that look like?

Tony:
Wholesaling to yourself is a great way to pay yourself twice on any deal. For example, we had a deal that we were working on where we found it off-market. Usually, if you find a property off-market and you’re buying it from a wholesaler, when you go to close, there’s all of your regular closing costs, but then there’s an additional line item on your settlement statement that says wholesale fee or transaction fee, whatever it is, to the person that you’re buying it from. At closing, those funds get distributed to the wholesaler, and then you pay your funds out afterwards.
But if you wholesale the property to yourself, what happens is you get to essentially get paid at closing a small amount. Then if you go to flip that property, then you get paid again. Essentially, we close on a property, we got a check for 5,000 bucks when we closed because we wholesaled it to ourselves. Then when we flip that property on the back end, we got another bigger check for actually completing the rehab. You do take a little bit less money on the backend because you’re giving it to yourself upfront, so your private money loan, your hard money loan’s going to account for that fee, but it is a way to get some cash in the short run if you need that for whatever reason.

Ashley:
That’s awesome to know. Thank you for sharing that with us.

Tony:
I actually learned that from Derrick Acuff, who was a previous guest on the podcast. I can’t remember which episode number he was, but if you guys look up “flipping a house” on Instagram, Derrick’s a really smart guy. They do a lot of flipping in wholesaling out in Texas.

Ashley:
Our next question is from David Sargente. “What’s the best way for someone with no renovation experience to get a working understanding of the processes, cost, and basic construction knowledge before going into it? Can any of you recommend books or YouTube channels, etc.? For books, J Scott has a phenomenal book with BiggerPockets called Estimating Rehab Costs. Obviously, it’s not going to tell you that this is what you should be paying for the price per square footage, of laying down luxury vinyl planks, or how much it will cost to have somebody come in and install that vinyl plank for you. But it gives you an idea of what you need to get costs for and how to build your estimates and what goes into actually rehabbing a property. So I highly recommend checking out that book. It’s a easy read but a great reference to go back to.
The other thing I recommend doing is kind of practicing with figuring out how much a rehab cost, so find a YouTube video about how to install a toilet. Look at all the materials you need, go to Lowe’s, homedepot.com, and actually pull up each of the items that it tells you so you’re looking at what is the cost of a toilet, what is the cost of the wax seal, all the things that go into installing a toilet, looking at what those cost. You can even go further beyond and then start to build out an Excel spreadsheet with links to all of these different materials so that when you are going in and rehabbing a project, you have the cost of materials right there to really help you build some kind of estimate.
Then you’ll want to find out what labor costs are, so you can reach out to different contractors. Call a plumber and estimate… Just ask them, “What’s your average cost to have a toilet installed? How much does it if you’re…? I’m going to ask for water lines. Maybe they can give you a general idea, like per foot how much it costs to install a water line. There are definitely a few things that are going to be really hard to estimate without having somebody come out and look at your project. But there are things you can at least get an idea.
Like to install tile, “Do you charge per square footage of tile?” Obviously, it will vary on the type of tile you’re having installed, too. So call around and get ideas of what that is. Flooring is usually a very easy one, or even painting where you can get a general number of price per square foot of how much it costs to install those things. Even going to your local hardware store, you’ll see signs all the time: “Ask us about getting your flooring installed.” Ask them, “What is your price per square foot?” and you can use that to run your numbers off of. Tony, I took on a business partner to kind of learn rehabbing, but for you, you’ve outsourced a lot of your rehabs. How did you learn how to actually come up with these estimates?

Tony:
First I’ll say, David, we interviewed James Dainard back on Episode 165. Actually, it was a two-parter, 165 and either 166 or 167. Anyway, go back and listen to that episode because James Dainard gives a world-class breakdown of how he estimates his rehab costs. A lot of it aligns with what Ashley said. But if you want two hours of deep diving how someone that’s flipped, I don’t know, probably a thousand [inaudible 00:13:46] homes-

Ashley:
That’s because I was trained by James Dainard.

Tony:
James gives a really amazing breakdown in that episode. So David, I encouraged you to go back and listen to that. There’s a couple of things that we’ve done in the past when we were kind of dipping our toes into the world of rehabbing. When we first started our business back in 2019, we were buying long distance. This was my first time ever taking on a rehab project, my first time ever just doing a real estate deal in general. I had zero basis for something like that might cost. So what I did was I went onto Zillow and I found properties that were recently sold that were renovated to the level that I wanted to renovate this prop that I had under contract. I showed those photos to a couple different contractors and I said, “Look, here’s what the current photos of this property look like. Here’s the kind of vibe that I’m going for. Can you give me a ballpark, without you even going to the property, on what you think something like that might cost?” They can give you a very rough estimate of what that might cost.
The second thing you can do is ask the contractors for photos of their previous work and ask them what the actual project cost was on that, and now that number gets even a little bit more concrete. While the individual project costs might vary depending on what you’re doing, what you’re really trying to identify is the average cost per square foot for that type of rehab. You hear a lot of flippers say this, that there’s the light cosmetic, the medium, and then the full-on gut rehab. Every single one of those has a different price per square foot that they apply to that. Gosh, it’s been a while now, but I want to say for the houses we were doing in Louisiana, they were pretty heavy rehabs. We were at 30-something bucks a square foot back in 2019. I kind of backed into that number by talking with contractors and understanding what they were charging other clients for similar work.
The last thing you can do is just pay them to go walk the job. This is something else that we leveraged when we were doing these remote rehabs in Louisiana is I found a contractor, I found a couple, and I said, “Look, I’ll pay you take an hour or two, whatever, go walk the property and give me a more detailed bid on what it might be.” Honestly, a lot of them didn’t even take the money because they were just open to getting the work. So they say, “I’ll walk the job for free.” That, today, is maybe a little bit harder because a lot of the good contractors, I think, are still kind of busy. They’re probably starting to lighten up a little bit now just because things have slowed. Trying to do that a year ago to get a contractor to go walk a job for free probably wasn’t happening because they were all booked out for years. So depending on where we’re at in the market cycle, that’s a little bit easier said than done.

Ashley:
I think that the contractors, you’ve used them before, they’re more willing to go and walk those properties for free wanting to continue business with you. Even if contractors do have the time, for them to give you a detailed scope of work takes a lot of time, and then especially if you take that scope of work and you end up hiring someone else based off of that scope of work.
The property management company that I currently use, they actually sent out an email recently saying that they are no longer providing scope of works to owners for turnovers. They have found that too many owners are taking that scope of work and going and doing the project themselves or hiring other contractors or whatever it is. They’re having owners that aren’t even responding to accept or decline the bid on doing the estimate. Now they’re also charging. They did charge to have their maintenance guy come, whatever their hourly rate is, I think it was $45, I think it just increased to $55, but they were charging their hourly rate to have that scope built out. But now they’re also charging a $250 flat fee. That’s on top of their project management fee, too, because they felt like so much time was wasted going and doing these scope of work, so they’re only going to be doing it now if you pay that fee.

Tony:
It’s solely understandable. I feel like as a business owner, I can understand why they might feel that way. That’s why I think a lot of it comes down to relationship, Ashley. If you have a relationship with this contracting crew already, there’s some trust that’s built up there. I think it’s easier for them to go out and just walk a job for you. Our crew in Joshua Tree, they’ve never charged us for a bid, but it’s because they know that we’re pretty much going to use them for every single job that we do out there. So I think the more repetitions you get, the easier it becomes, I guess.
The last thing I’d say, David, is if you can find another rehabber/flipper in your market and walk one of their jobs, that’s one of the best ways to really get hands-on, tactical, tangible data on what a rehab might cost. That’s what Sarah and I did when we started rehabbing out in Joshua Tree. We found a buddy of ours, Brian Davila, who’s a flipper here in SoCal, and we spent the day with him just walking a few of his jobs and asking a bunch of different questions around pricing. “Hey, what does it cost to do this? How are you paying for this?” That gave us the confidence to go out there and start doing it ourselves at a higher level. If you can find someone, David, that is already doing it, walking their jobs is a great way to get that insight as well.

Ashley:
Where do you find people like that? You attend in-person meetups in your markets, or you go onto the BiggerPockets forums and ask if there are any investors in the area that are doing rehabs in your market. The best is when you can actually find an investor who is also a contractor. I love that because you’ll be able to get both sides of it. You’ll get the contractor side of him, but also the investor side as to these are the ways that you can save money as an investor because you don’t need to do this, you don’t need to do that. Where residential contractors that are just doing for people’s homes are going to have a different mindset going in.
James Dainard even talked about this on his podcast episode. He’ll only work with contractors that work with investors. He doesn’t want people that do residential remodels because there is a different end game. There’s a different result of those remodels. For residentials, for the people to enjoy their home, it’s not what’s the most cost-effective way to get my maximum return on my dollar by having renters in there or by flipping the property. I think go to a meetup, go into the BiggerPockets forums, go to the Real Estate Rookie Facebook page and connect with contractors or even investors that are contractors, too, and see what kind of guidance or information they can give you. Of course, think of a way that you can also provide some assistance to them or help them out in some way, some value to them, too.
Our next question is from Bill Seth, “Sorry for the newbie question.” Bill, please don’t apologize. We love these newbie questions. That is what we are here for. This question is, “Do flippers get taxed heavily when selling since most don’t own it for more than a year?” The answer is, yes, you are taxed at ordinary income. Almost just like you had a W2 job, but when you sell the property, that tax isn’t being withheld from you like most companies do. As a W2 employee, they’ll withhold some of that and pay some of your taxes throughout the year for you. You are also self-employed. When you work a W2 job, your company is paying part of your payroll taxes and now you have to pay, I think, it’s another 6% as self-employed since you don’t have a company you work for paying that on your behalf anymore. So it does end up being more taxes that you are paying for the property and definitely a lot more taxes than you’d pay if this was a long-term buying homes and you’d be paying a lower capital gains tax.

Tony:
We had Amanda Han back on Episode 255. One of the last questions that we asked Amanda in that episode was, if you had to rank all of the different real estate investment strategies by preferred tax treatment or best tax treatments or worse tax treatment, flipping and wholesaling were at the very bottom because those are considered active income, and things like long-term rentals and short-term rentals were at the top because those are more passive income, and there’s some other things you can do along with those. Yeah, you are definitely getting the absolute worst tax treatment when you are doing things like flipping homes.
One of the suggestions that I’ve been given, and again, I’m not a CPA, I’m not an attorney, but one of the suggestions that I’ve been given is that if you plan to both flip and hold rentals, ideally to set yourself up to get the best tax treatment, you should have one entity or LLC for your rentals and then a separate entity for all of your active income. So if you’re flipping and wholesaling, you do that in one business, and then if you have your rentals, you do that in a separate business. Doing so allows you to get some slightly preferred tax treatment as opposed to doing it all under one entity. Definitely not a bad question, Bill. There’s thousands and thousands of pages of the tax code, so I think Ash and I are always happy to give some more insight on what’s worked for us and what hasn’t.

Ashley:
I feel like we’ve been talking about this a lot more recently is the tax planning and talking to a tax specialist who can help you figure out all these things. It’s something that’s very easy to outsource is somebody who is knowledgeable in taxes and bookkeeping and accounting where it’s something you don’t need to take the time to learn the ins and outs. Yes, you should have some knowledge of how the tax system works, but working and paying for a specialist is highly worth it. Tony, you’ve been working, doing tax planning. I think it was you and Tyler Madden, who was also a guest on here, who recently told me that the cost of paying for that tax planning has far outweighed what you’re going to save in taxes going forward.

Tony:
Absolutely, right? One of the biggest mistakes I made was waiting too long to get great tax strategy help. We’d already built up… we had 10 or 14 properties before I even thought about hiring a tax strategist to help me with those things and even longer before we got a really good bookkeeper on hand. So for all of the rookies that are listening, I know it can seem daunting to invest money up front to get the right bookkeeper, to get a good tax strategist, get a good person doing your tax preparation. But if your goal is to make this a full-time business and to have a relatively large portfolio, you will literally save yourself money and make more money, keep more money at the end if you invest a little bit more upfront to set your business up the right way from a tax perspective when you have one property as opposed to trying to go back and do it when you have 30. Ashley, how big was your portfolio before you hired professional tax help?

Ashley:
I’ve always had a CPA. When I worked at the accounting firm, I did my taxes on my own just because I had access to nice tax software and everything and it was pretty easy. But our farm income has always been somewhat complicated, so I always had the guidance of an experienced CPA when I worked as an accountant to help me through the farm income and how to do depreciation and things like that. Then I quit. Then after that, we have always just used a CPA to do our taxes again. As far as the tax planning, that was just recently where we ended up signing up with Amanda Han, too.

Tony:
I can’t say it enough. All of our rookies that are listening, find a good tax strategist today, day one. Even if you have zero properties, just pay for a consultation and say, “Hey look, here’s what I’m planning to do in the next year. What is your recommendation?” Then as you start to get those properties under contract, then actually put that person on retainer and make sure you chat with them on a regular basis.

Ashley:
You know what? It’s going to be cheaper probably, too, going in with one property or two properties, instead of waiting until you have 10 properties and they need to go back and look at previous years and be like, “What did you do? How can we make it better?” Where if you only have those couple properties to start with, they’ll be like, “Let’s start here,” and then you add on a little more each year. It’s just easy to add those on because they already have you in their plans.

Tony:
We always talk about real estate investing as being about, how much cash flow are you getting on a monthly basis? What’s your cash-on-cash return? How much equity are you building? But one of the other amazing benefits of investing in real estate are the tax benefits. I have a friend who still works a W2 job. He’s a six-figure income earner, but he has a small portfolio of short-term rentals. He literally pays zero in taxes from his day job because he was able to take the passive losses from his short-term rental portfolio and apply that to his W2 income. So for the three years that he’s had his properties, he’s paid zero dollars in income taxes for his W2. Outside of all the big things, cash flow is sexy and appreciation, don’t forget, the tax benefits and depreciation are some of the biggest levers you can pull as a real estate investor.

Ashley:
Our next question is from Ryan Hoffman. “With FHA, how often is it possible to roll the closing costs into the loan? I’m ready to purchase my first multi-family house hack, but I would like to be sure that I will have enough reserves remaining after paying the down payment, if, say, I were to purchase a fourplex instead of a duplex.” With this question, I honestly don’t know the answer specifically to an FHA loan. I’ve never done an FHA loan, but I helped my sister get one. We bought a house together, but she got the FHA mortgage, and I actually gifted her the proceeds for the down payment and for the closing costs.
I do know that banks, especially small local banks, will offer no closing cost mortgages where you can actually wrap the closing costs into the loan. Sometimes you’ll have to pay a little bit higher interest rate than if you went ahead and paid those closing costs. So you have to kind of weigh that out. Is it better to pay more upfront and get that lower interest rate for 30 years, or is it better to… it’s going to take you a while to save that money, but you want to get into a property now to pay a little bit higher interest rate going forward?
There’s also programs where you can get assistance to help with your closing costs. I know banks will sometimes offer to first-time buyers where if you save so much money, they’ll match it, and then you go ahead and buy a property with them. It’s like a first-time home buyer loan. It’s completely separate and different from the FHA, but there’s more strict regulations and rules around it. For example, my friend, his girlfriend did it. She has to live in that property she bought for five years, so they’re kind of stuck there for five years because she did the loan that way. So just be cautious of the different rules that come with some of these assistance programs.

Tony:
Like Ashley, I’ve never closed on an FHA loan myself. We’ve used a lot of different types of debt, but never an FHA. But just like you, Ash, there are so many down payment assistance programs out there, especially if you’re doing something where you’re house hacking. When Sarah and I bought our primary residence back in 2018, there was a program called CalHFA in California that essentially covered all of our down payment. So we had our primary, our first mortgage with loanDepot, or whoever it was that we closed with, and then we had a small second that covered our down payment. Then a year later, we were able to refinance, pay off that small second, and then we have one long-term fixed debt.
There are so many good options out there. I’d say the more you can chat with different loan officers and mortgage companies, the better idea you get of what the options are. I think, Ryan, the mistake that a lot of new investors make is that they only talk to one person. They talk to one bank. They talk to one loan officer, one mortgage officer. Whatever that person tells them, they think that that is the absolute truth and there’s nothing else outside of that. I think the more exposure you can get to different lending institutions, credit unions, banks, mortgage officers, mortgage brokers, the more flexibility you’ll have and the better options you’ll have as you look to close on this deal.
For example, we bought a lot of our homes using 10% down second home loans, and a lot of lenders didn’t even know what that was. I would have people that were messaging me on Instagram and said, “Hey, I had up my mortgage person and they don’t even know what a second home loan or a vacation home loan is.” Just know that just because these people, it’s their profession, they don’t have all of the answers to every single question that pops up. So I think exposure to more people is how you tend to get better options when it comes to loans and mortgages.

Ashley:
Just like we always stress here, tell them what you want to do. Don’t ask for some specific loan product. Tell them how much reserves you have, tell them that you want to buy a fourplex, and see what they can offer to you as options that you have because you may be surprised what a bank can come up with.
We have one more question for you guys this week. This question comes from Rebecca Tillman. She has a question about renovation permits. “Does anybody actually check these when it’s time to sell your property?” James Dainard, when he purchases a property, since this episode is all about things we’ve learned from James Dainard, is that he will always pull permits when he purchases a property. Part of it, he wants to see what actually is legal in there.
I think one of the reasons he does this… We just had a couple on our show that talked about, they were purchasing a property that they knew there was not a permit for an addition. They didn’t think it was a big deal because they didn’t need to use it as a bedroom or whatever. When they went to actually go and get a permit for other things in the property, I think it was maybe the plumbing or something, the inspector came in and told them they would not issue the permits for the other things until the addition was taken off the back because it’s not permitted. So I don’t really hear of just a residential home buyer going in and asking for permits or pulling permits on a property. Tony, have you ever sold a house or know a family friend or anybody who just went and pulled the permits on a property? I only know of investors that do that. I think that’s something that people should do in their due diligence.

Tony:
Yeah. A lot of times, especially if it’s your primary residence, you’re like, “This is my home. I’m going to do what I want with it.” You’re not as concerned about the permits or things like that. It was Devana and Reid. I can’t recall what episode number they were. They had the sober living facilities. They ended up spending a ton of money trying to get that addition permitted, and it wasn’t even part of their initial budget. So that is a big risk that I think you run into where, if the property wasn’t permitted correctly, you can end up paying for that person’s mistakes out of pocket yourself.

Ashley:
I think especially if you’re going in and rehabbing the property, check and pull permits. I hope you’re not asking that question to see if you can get away without pulling permits because you definitely want to pull permits because it can cause way worse issues down the road. I think we had a couple guests on before that have talked about running into this where maybe they thought their contractor actually pulled the permit and got it issued when they didn’t. Then the building inspector comes in. They have to rip out all the new drywall so he can actually check out the electric inside the walls, and they have to go back and put the walls together. So you never want something like that to happen. You never want to take that risk.

Tony:
That’s why when you’re analyzing these deals as rehabs, it’s important to maybe give yourself a little bit more time. If you think you can finish a job in three months, maybe underwrite the deal so that it takes you eight months. That way you have some breathing room in there to pull permits for the first time and understand what that process looks like. If your county’s anything like the counties that we rehab in, permits that used to take 30 days are taking 90 days right now. Just make sure that you’re giving yourself that flexibility to account for things like pulling permits, that you’re not up against the gun and your budget gets blown because you didn’t account for those timelines.

Ashley:
Well, thank you guys so much for joining us for this week’s Rookie Reply. I’m Ashley @wealthfromrentals, and he’s Tony @TonyJRobinson on Instagram. We will be back on Wednesday with a guest. See you guys then. (singing)

“The future isn’t human or artificial intelligence; it’s human plus artificial intelligence,” insists Anirudh Singla, co-founder and CEO of Pepper Content. The content management specialist believes that the rapid advance of generative AI will help businesses such as his, rather than replace them.

Founded six years ago, Pepper Content connects businesses in need of content with experienced and expert creators that are able to help them develop it. Working with around 150,000 creators, it has helped more than 2,500 businesses develop content, including blue-chip clients such as Amazon, Google and Adobe.

Importantly, Pepper Content identifies the leading voices in any given content segment so that clients are working with creators who have genuine expertise in what they’re writing about. The company already uses AI to support creators – its technology is based on the increasingly ubiquitous OpenAI GPT-3 – but also offers a range of tools to help marketers identify what content they need and to analyse the impact of the final output.

The next stage in the development of the fast-growing business is the roll-out of what Singla describes as the first end-to-end content marketing platform. “This is category creation,” he claims. “We believe that every company is now a content company, but if that’s the case, every company needs an efficient way to scale up their content creation.”

Pepper Content’s big idea is that just as customer relationship management (CRM) platforms have become a must-have for businesses seeking to professionalise their interactions with customers, so content management platforms will become vital to the growing number of businesses intent on driving sales and engagement through content.

Effectively, the goal is to industrialise content creation. Businesses that once employed a handful of writers to create small numbers of content are now seeking to generate thousands or hundreds of thousands of outputs, Singla explains. To operate at that scale requires new technology as well as human interaction.

To that end, Pepper Content’s platform seeks to automate and centralise much of the work around content creation. It will undertake keyword research, identify expert creators, manage the creation process, and employ data analytics tools to assess how the final piece lands. That insight can then feed back into the next content creation process. “Every piece you publish should be more intelligent than the last one,” argues Singla.

His pitch, in other words, is that the platform will manage content at every step of the way – something that generative AI can’t match. “The platform enables building an SEO content strategy, content operations, content analytics, and distribution,” Singla argues. “It solves three main objectives that most marketers struggle with when it comes to content: growing organic traffic, scaling content efficiently, and providing content return on investment.”

By building generative AI into the middle of the platform, at the point where the creator is tasked with writing the content, Pepper Content is acknowledging the disruptive power of this new technology. But Singla is convinced that the additional value the platform’s tools provide on top of that technology will be a unique selling point for the platform.

One advantage the company has is that it has been able to build the solution on the basis of feedback from its existing clients, with more than 200 CMOs and marketing leaders having provided feedback on what they would want from such a platform.

Singla is also excited about the potential to expand on the initial offer. The platform will initially generate traditional written content, but new functionality offering multi-media content is imminent – the ability to generate video, for example, should be available within months.

The company is convinced that an end-to-end content solution of this type, which incorporates generative AI rather than seeking to compete with it, will be attractive to customers – particularly to enterprises looking to scale up their content creation quickly. “The future of content marketing is all about the right technology, people, and processes.” insists Rishabh Shekhar, Pepper Content’s co-founder and COO. “This is a way for marketers to work far more efficiently.”

For their part, content creators will also hope the company’s diagnosis proves right, amid predictions that the creator economy will simply be replaced by generative AI solutions. It has to be acknowledged that the jury remains out on that one.