March 2023

David:
This is the BiggerPockets Podcast Show 739.

Andrew:
So a property manager is somebody who does the day-to-day stuff. An asset manager is big picture, set the direction. So think of like a cruise ship. If you ever been on a cruise, there’s the activities director and that’s the person that works like 18 hours a day. They’re running around always making sure the shows are on time, and dinner starts on time, and the right number of chairs on the deck, and all that little minutia that is important to making for a good cruise. The asset manager is the captain of the ship.

David:
What’s going on, everyone? This is David Greene, your host of the BiggerPockets Real Estate Podcast, the biggest, the best, the baddest real estate investing podcast on the planet here today with a treat for you. I’ve got two of my good friends and studly multi-family investors, Matt Faircloth and Andrew Kushman here to talk asset management and property management and operations at a bunch of stuff that will make you money if you get into this space and more importantly help you not lose money if you get into this space in the future.
Today is fantastic. We get into two really, really important points, forming your money-making team and then learning how to communicate with them and train them to communicate with you so that you can scale and build a profitable business, not buying an asset that makes you want to pull your hair out of your head and end up like me. We get into actual stories that these two have experienced as they’ve managed multi-family assets for years now, so that you can learn from their mistakes and avoid your own as well as find the pieces that are most likely to help take you to the next level. Look, it’s no surprise that the economy is shifting. We’re heading into a recession and it’s getting harder and harder to make real estate work now more than ever. It’s important to understand how to actually operate the asset that you’ve been being told for years you need to go buy.
Some of the things that you’re going to learn if you listen today is where to find staff that will help you what to look for, questions to ask property managers, what to look for in a property manager before you hire them, the difference between an asset manager and a property manager, and what maintenance supervisors can do that can increase the NOI of your property and actually make it more profitable. That and more on today’s show. You don’t want to miss it. Before we get into the interview, today’s quick dip is check the show notes. We’ve got a list for you, 27 questions to ask a property manager before hiring them that comes directly from Matt and Andrew’s experience doing this themselves. That is free for you. Thank you for listening. We love you. All right, let’s get into today’s show,
Andrew, Matt, welcome back to the BiggerPockets Podcast live for us, but not for the audience from Lake Tahoe at our winter retreat in GoBundance. Today we’re going to be talking multi-family, but more specifically operation of multi-family. So let’s start off with people that don’t know the difference between a property manager and an asset manager. How would you describe that, Andrew?

Andrew:
So a property manager is somebody who does the day-to-day stuff. An asset manager is big picture, set the direction. So think of like a cruise ship. If you’ve ever been on a cruise, there’s the activities director, and that’s the person that works like 18 hours a day. They’re running around, they’re making sure the shows are on time, and dinner starts on time, and the right number of chairs on the deck, and all that little minutiae that is important to making for a good cruise.
The asset manager is the captain of the ship. Yeah. He’s saying, “All right, we got a storm coming in. We’re going to shift a little. We’re going to shift a hundred miles to the right, go around the backside of the island. We need to make sure we get to this port in seven days.” He’s looking big picture, making sure that’s going to happen. That’s the difference between property management and asset management. And it’s not a perfectly clearcut delineation, especially if you’re doing smaller stuff like fourplexes and 10 units. It is more of a spectrum. And if you’re self-managing and you’re just starting out with your first fourplex, you’re doing both jobs. But as you scale and grow, the difference becomes more and more important. And as an investor looking to create wealth, you’re really going to want to focus on that asset management side. That’s where the real money is made.

David:
So do you feel most investors are the asset managers themselves or is there a size of complex where you are actually going to leverage out asset management as well as property management?

Andrew:
I’d say most investors are the asset managers themselves. For example, I was my own asset manager until about a thousand units. And then once we got into over 2000 units, I started bringing on an asset management team to help with that because it becomes a full-time job. Even if you’re not involved in the day-to-day property management, just managing… If you’ve got 10 fourplexes scattered around town, even if you have an admin person to help with collections and filing evictions and all that, still you’re going to be dealing with the lender. You need to decide, “Am I going to sell this one in one year? Am I going to sell this one in two years? If I do sell it, what am I going to do with the money?” And so there’s a certain point… I think, again, I was my own up until a thousand, and I waited way too long.
And if I finally graduated, it was like Pinocchio. My business was like Pinocchio. It finally became a real business when I added some people to help me with that stuff. I remember that we were actually, maybe here in Tahoe when we were having that conversation about what it would look like to leverage off some of the work without leveraging off the actual vision casting, which I remember was like in your head you saw it as if I hire someone, I’m giving up complete control as opposed to you’re still creating the vision, but they’re executing on the vision that you’ve now cast for them. And I got to say, folks, his career has exploded since then and I’m going to take as much credit as I can.

David:
No, yeah, you deserve some of the credit for that. You seriously do. We had a good couple good long talks and that helped. Well, I certainly benefit from it because we partnered together on [inaudible 00:05:41]. I can’t say that I’m not eating out of that same throughout.

Matt:
I just want to throw one more thing out, that you’ve certainly rubbed off on Andrew a bit because he’s now made two analogies in the first five minutes of this podcast. You’ve made zero so far. So we’ve got a cruise director analogy and we’ve also got the Pinocchio “I’m a real boy” analogy as well.

David:
Andrew’s up to an early lead.

Matt:
Got some catching up with you, David Greene. So I will glad to keep score on the analogy scoreboard here during this podcast.

David:
All right. Matt, I’m going to turn it to you now. God, in the last several years of real estate, we’ve seen so much stimulus. We’ve seen so much people that were getting into the syndication game in particular that had no experience at all. And the rising economy, it really was this perfume that covered up a lot of stink where. At the first minute we see a little bit of interest rate rising. It’s like, “Oh, my God, this what’s been going on the whole time. The lipsticks coming off the pig in a lot of these cases.” What is your perspective on how important operations are compared to just acquisitions, which is where a lot of the attention is?

Matt:
Yeah. I mean, the last 10 years has simply been get into the game. You could have bought a multi-family and literally done nothing with it. Let it run into the ground, let tenants completely not pay the rent, let things go willy-nilly, let the grass grow three feet high, and sold it for a ton more than you bought it for. I mean really anybody could have gotten to this game, and guess what, anybody did. And there are lots of folks that are for 20 grand or whatever willing to teach you how to invest in real estate or whatever. And a lot of people did pay that kind of money to get into the multi-family game. And so now it’s simply been get into the game and get a deal and crush your fingers and you can sell it in a year for a lot more than you paid for it.
That’s worked up until recently with rising rates and the sellers can’t just name their prices when they go to sell properties anymore. And so we’re going to get back down to good old fashioned real estate investing where you’re going to have to invest for cash flow and not appreciation. And, if you’re going to invest for cash flow, if you’re going to make an investment into a thing that is going to reward you for its performance, you have to have good asset management on the asset. You can’t just cross your fingers and allow the rising tide that’s risen for 10 years, right? Well, let’s all high five. That’s been great. It’s helped everybody out. But that’s not the future. Cash flow is going to be king I think for the foreseeable future. And to make that happen, you need asset management, KPIs, business plans, well-run properties, and you might not sell a year after you buy it.

David:
One thing I’ve noticed, when you understand the fundamentals of real estate, first off, the whole thing gets so much more simple than when you ask for a blueprint of, “Well, what am I supposed to do? Tell me exactly what to do.” If you understand that apartments are, like the value of them or commercial property in general is a function of two pieces. You’ve got a cap rate and you’ve got NOI. And you can’t control the cap rate and you can’t control the NOI. That’s very simple. Now there’s things you can’t control the cap rate much like you can’t control the winds, but you can look at wind patterns inside of chart your course in a direction that will favor you. But ultimately, you can’t control that versus NOI, which might to be like the guys in the bottom of the boat rowing. I’m trying to catch up on analogies. You got a lot of them…
You got two factors that determine the value of a commercial property. Then if you go within NOI, there are two factors that control that. You’ve got income and you’ve got expenses. It simplifies things. So operations is a lot about just the art of how do I minimize expenses and how do I maximize income. It’s really that simple. So on that behalf, when we know that’s the only part that you can control within multi-family real estate, and it’s so important. What’s your thoughts, Matt, on if you should self-manage or if you should leverage something that important to a third party?

Matt:
When I first got involved in real estate, I did not go straight into it. There actually are other things you can invest in besides apartment buildings. And so I started investing in single families and small multis and worked my way up through that. And there was a point where Liz and I were running 115 units with a small crew ourselves out of Trenton, New Jersey. And so we self-managed for a very long time. And it can be done. It was in essence a full-time job for me and a small team to do. But the money that we made doing it, ’cause we charged ourself a property management fee, was enough to keep our lights on and keep our family fed and live a fairly good lifestyle.
But there was a fulcrum that it was like a decision point where we were buying a 49-unit that was not in Trenton. It was a good bit away from there. It would’ve forced me to have to start up a new PM company in a new market and that’s what I wanted to do. But my wife, who normally has the better idea than I do, said, “Let’s try hiring a new PM to run this.” And we did and they did a phenomenal job. I still believe we probably would’ve done better, but they did good enough to keep the asset running. And with good asset management tactics, the property did very, very well and that enabled me to scale.
So I think in the beginning for those listening to this that don’t have 2, 3, 400 units of, they maybe have a duplex, if you have a duplex and you want to eventually do this real estate investing business full-time, managing yourself it could be a lucrative enough business to feed your family, keep your lights on for now. And it’ll also really help you develop the parameters of management because I learned the ins and outs of management in doing it myself and eventually I ended up giving it up to another party, but it taught me a ton and it also fed me very well while I did it.

David:
All right. Andrew, throwing to you. In your perspective, what are some of the pros and cons of each option?

Andrew:
Yeah, Matt mentioned some of the pros. One is if you do it, scale it well enough, it can become another income stream. So it can be a balancing factor, stabilizing factor. Another thing that’s often listed as a pro is that you have more control, and that is true, but the assumption there is that control and also that you care about your property more than anybody. So the assumption there is, “Well, if I have control and I care about it more than anybody, then I’m going to do a really good job. Well, caring doesn’t equal competence.” If my wife needs surgery for something, I’m not going to walk into the OR and be like, “Hey, Doc, you know what? I care about her more than you. Let me take this.
No, I want the best. He could hate my guts, but if he’s really good at that surgery and he’s going to do it right, I want him to do that surgery. So that’s a myth of caring equals competence and it doesn’t. But, if you have the skills to go along with it, then yeah, that’s a really good combination. On the flip side, some of the cons of property management is one of the most high headache businesses. You’re basically running a giant HR firm. All you do all day long is deal with people problems and payroll and then delinquent tenants and evictions and courts and all that. And it doesn’t pay that well. It’s a very low margin, high stress business and it can be really draining, the people that I know they do it definitely say that.
And also that’s something to keep in mind, property management is a separate business from real estate investing, so you are running two businesses if you decide to do that. How do you make a decision? We could do an hour long panel on the pros and cons and really dive in into that. It depends on what your end goals are, how many units you have. If you’ve got one fourplex, you’re going to learn some stuff from self-managing that in the beginning. So I would recommend self-managing. Where do you make the transition? That’s stuff to say. Again, it’s a spectrum. It’s like, if you’re a vegan and you’re in into crossfit, how do you decide which one to talk about first? It’s going to be different for every person and it depends on the situation.

David:
You guys are digging deep on this analogy thing, both you two. I mean really you’re very competitive. I’m really enjoying as a spectator sport, watching the analogy back and forth. All right, so on that note, Matt, when it comes to finding a property management company, if that’s something that you’re looking to do, what advice do you have for how to find a great company? Well,

Matt:
What’s interesting is you could just look it up through your friends at Google, just Google PM companies in Albuquerque, New Mexico or whatever. But likely if you’re buying a property, and let’s pick Albuquerque because it’s a fun name to say as the market that you want to invest in, you likely got to the property that you’re looking at through other leads you have, probably a realtor that you’re working with, probably maybe a mortgage broker that’s local, maybe an attorney, maybe other real estate investor friends you have through meeting them on the BiggerPockets forums. So you ask for referrals, you talk to other people that are already active or already live or present in that market. And then you look for leads.
And then you’re going to want to also find out what do they manage, right? Because if a property manager tells you that they can manage the strip center that’s down the street from your property and they can also manage the duplex you’re buying in Albuquerque and they can also manage a hundred-unit apartment building that’s down the street, that’s the wrong property management company. Those are three very different entities that manage things like that. So you want to make sure that their sweet spot, their core, their, and I’ll throw an analogy out, the Goldilocks of them, not too hot, not too cold, just right is the asset that you have. You don’t want them to be everything to everyone because property management’s not that. There is a level of expertise that they need to bring to the table for the property that you’re buying.

David:
So Andrew, when you find a company that you think could be good and you’re looking to vet them, what are some questions that you’d recommend people ask those companies?

Andrew:
We got a whole long list of questions and we can provide a document with, we got 20 something of them. We can provide a link to that in the show notes. But some of the main ones, and Matt alluded a little bit to this, is what is their background? Is it a management company that just started two years ago? And are they a little green and inexperienced or have they been around for decades? And the founders, where did they come from? Were they ex-engineers because you don’t want to trust those guys. Or for example, the management company that we hired was founded by two executives in a much bigger management company that got fed up with the corporate culture and said, “We could do better.”
They jumped out, started their own and have done a really good job. So what is the background of the founders. Matt, you touched on this, asset and class specialization. You don’t want to hire a property management company to run your 10-unit when their focus is self-storage. They’re not going to have the knowledge and they’re not going to have the efficiencies and they may not even care. Some management companies will take on assets they shouldn’t just to get the revenue, but they’re not going to do a good job with it. And also if you specialize in C-class properties, don’t hire an A-class property management company because they will run your C-class way more expensive than it’s able to support. And there’s very different ways of running those. So it’s not just self storage and multi-family, it’s also class. You also want a management company that ideally specializes in your market.
There are some good national level property management companies. My preference is regional ones. So for example, the one we use, they only do the southeast United States so their footprint matches ours. They’ve got like 26,000 units. So they’re big enough that they have efficiencies of scale but small enough that I can call the owners of the company on their cell phone if there’s a real issue and I need to get somebody. So I’m asking questions, “Well, what’s your footprint? How many units do you have?” How many units do they have in your submarket? So if a company has 10,000 units in Dallas and you’re giving them a property in Lubbock, but they’ve never managed in Lubbock, they’re not going to be good in Lubbock. Number one, they’re not going to take the time to go out there. Number two, they don’t know the market. It’s a very different market.
So those are some of the question. And then another one that is critical that I think a lot of people don’t think to ask is you is really feel them out for what ideally Mr and Mrs. Property Management Company, what kind of relationship do you like to have with the owners of the property? Because if they’re the type of property management company that wants you to go away and just read your report once a month, that’s not going to work. That to me is a huge red flag. You want a property management company that sees you as a partner so that you can work together and grow together and build a relationship. And that to me is one of the biggest keys. And like I said, there’s a whole lot more questions beyond that, but when I sit down to interview property management company, those are some of the things I’m asking multiple questions to find out about.

David:
Matt, when it comes to hiring team members, so maybe like you were talking about what Andrew did when he started to scale so that he could get some of the stuff off of his plate that he was all doing himself. What are some things you’ve learned over the years? We’re going to talk to both you guys about this. Advice for other people that have some small multi-family or they have some large multi-family. They’ve been doing everything themselves. They’re burning out, or they want to scale, they want to go more. They’re hearing us talk about, “I want to be a real boy.”

Andrew:
Can’t steal someone else’s analogy. Thank you. Yeah, disqualified analogy reference. Thank you.

David:
Sustain. Andrew just objected off to the side. Your Honor, Objection. Overused. All right. So what are the things that you think people need to look for when they’re hiring or be aware of?

Matt:
The property management and asset management are people businesses. And so people don’t work at jobs forever. And so as a property management company and as an asset manager as well, you’re going to be constantly hiring. I mean, Andrew, you can say both you and I own multi-family properties. It’s always, well this maintenance technician quit or this site manager is found another job or the leasing agent left or whatever. So there’s constantly the effort of replacing seats on the PM side. And so, there’s the conversation of, “If I’m self-managing, I maybe want to hire a new maintenance technician? So what do they bring to the table?” When I first hired, one of my first hires was a maintenance technician and it was all about, I need somebody with a truck and a lot of tools on it. They can fix a lot of different things that knows about a lot of different stuff. The jack of all trades with a truck and a lot of the tools they need for those trades in the vehicle.
So if you are self-managing, that is maybe something you want to consider. So you’re not beholden to hiring third party contractors every time you want to, like hiring a Roto-Rooter every time you want to get a plumbing. Your toilet backs up. It’d be much better to have your maintenance tech with a plumbing rooting machine that he can do it himself. It’ll be 10th of the cost of what a the plumber’s going to charge. So I think it’s about just finding the right person to fit in the role that you’ve got open. So for self-managed, could be maintenance technician or somebody that’s got bookkeeping background that could be your site manager, your office manager to collect rents, bill out rents, those kinds of things. And then I mean, Andrew, I know that that’s something that we’ve talked about before with regards to hiring asset managers. We’ve had to do it. I know you’ve done it too. For team members, for larger companies that are hiring field reps or asset managers for not property management, but next level, right?

Andrew:
And I say one of the most common mistakes that I see large and small is somebody hires somebody for property management and then expects them to do asset management. If you’ve got a leasing agent that’s running… I’ll give you an example when one of the first people that I brought on board was an admin and she started helping with some leasing and dealing with tenants and all that kind of thing. And a lot of times what happens is people bring on that person or a leasing agent or even a property manager if you’re at a hundred units or whatever that might be, and then say, “Okay, cool. This person’s got it. I’m out.” And now what you’ve done is now you’ve made that property manager an asset manager and that is not what you hired them for and it’s probably not their skill set.
So that’s something to be aware of on your side, on the investor side and it is a very tempting thing to do. But when hiring team members, what we’ve found is skills and experience are secondary. Number one is attitude and culture and fit. And when I say cultural fit, it’s not only to you and your team, but also to your properties and your residents. So Matt, you’re talking about maintenance people. That’s what everybody does, “I need a guy with a truck and he’s got the tools and he actually shows up on time. Okay, that is a plus. And he’s been a maintenance guy for 37 years and he is HVAC certified. Great. I’m going to hire him.” But if he smells like a three-day-old subway sandwich that’s been left in the car in the summer and he’s rude to the tenants, that’s going to backfire on you because that maintenance person actually has more face time with the residents than almost anybody else in many cases, right?

Matt:
I’m glad you brought that up.

Andrew:
Yeah. So you’re not just hiring for skills. Skills are important. It’s not like check it out the window and hire anybody that smiles nice, but you have to have the right attitude and demeanor. Same thing with a leasing person. I can’t tell you how many times I’ve gone to a restaurant and either the concierge or the waiter just was so friendly and amiable. I’m like, “I want to hire this person and teach them how to be a leasing agent.”
I mean, yes, you have to have the right location on your property, you have to have the right amenities, but the number one thing is the feeling, people remember feelings, how you make them feel. And so when someone walks in the door and they’re greeted by a smile, or maybe if you got a four-unit, so your leasing person is meeting them at the unit to give them a tour. If that person that you added to your team gives that prospective resident a great personal experience and they were helpful and they were smiling and all that, it doesn’t matter if they know the difference between pig tailing and aluminum wiring versus replacing using CO/ARL outlets. That’s great, but that’s not going to make the big biggest difference.
So whether you’re looking for a leasing agent, property manager, maintenance, any of these positions, again, whether you’re hiring directly or part of third party, number one thing is attitude, culture, and demeanor. You can’t teach that stuff. That is inherent. You can teach skills. And some of our greatest team members that today I just can’t imagine living without came to us with zero multi-family experience, but they had an attitude of curiosity, of learning, friendliness, and just wanting to serve people.

David:
That’s something that’s very valuable for the listeners who want to get into this space or any space in real estate really to understand, we tend to look at this stuff where, “I need a mentor, I need someone to teach me what am I supposed to do.” As if once you have the knowledge, it’ll all just fall into place. But the people we know that are successful at this, you two, neither one of you are people who just have information but your butt holes.
If you don’t know hardly anyone who’s really… Unless they’re just incredibly savvy and they can get away with being a jerk, it’s very rare that you see that, right? In general, you don’t see successful people that aren’t good with other people. And so having that ability to make someone feel good, to make people to feel comfortable trusting you, raising money I don’t think… Bren and I were talking about this, when somebody brings an operating agreement to you or a private place, a memorandum and they’re like, “Here’s the perspective deal,” not only do you not know if it’s going to work out like they said, you can’t even know if they just made up those numbers. How do we ever go back and verify. You don’t have the skill to do that otherwise you probably wouldn’t be the LP in the deal.
You are trusting the human being, the feeling that they give you and then if you’re smart the track record that they have. So learning those skills, it’s like the cap rate versus the NOI. Cap rate plays such a bigger role in the properties value going up than the NOI, but the NOI is a thing you can control. You can skills, but if you can get the people skills down, it has an astronomically larger impact on the value. Just like if you bought a property at eight cap and it compressed to a two cap. It almost doesn’t matter what happened with the NOI. It’s so much bigger. The successful people we see, especially here, get lucky right there. Well, yeah, I mean the way that the math works. That would be more valuable.

Matt:
Yeah. The bottom line’s just don’t be a jerk. People skills and being able to take care of people and address their needs and think the big picture is really one of the largest assets out there that any business owner can have.

Andrew:
All right. Matt, when it comes to a good property manager, what are some skills that they should have?

Matt:
I think that, you don’t want a property manager that is always late for your calls. You can use little cues about, well, I had sent my property manager an email and it took them four days to get back to me. And every week I have a Zoom call with them and they show up 15 minutes late. They’re always scattered. So just all bottomlines are organizational skills. A property manager is literally the best juggler out there. They’re dealing with, I got collections coming up, and I got rent’s doing in the fifth, and I got those three HVAC units stopped working, and that tenant wanted me to call him back, send me a question. So a property manager needs to be in the middle of so many different things and handling a fairly large to-do list, and the to-do list could be a lot of different things all at once.
And so they need to be a hundred percent organized and there are little tests you can use to figure out how organized somebody is or signs you see for people that are unorganized, they need to be as they’re one of the best needs for people persons and warm. The property managers that I have that are really good at what they do. The tenants view them as almost like the parent of the apartment complex. It’s like the apartment building, “This is the mom or the dad that I go to.” And they treat the tenants like they’re their children in some ways because they keep them under their wing, they look out for them, they do everything they need. When the tenant needs something, they’re right on it. And I think on top of that… like a good parent, you resolve needs.
“Oh, your HAVC’s not working, that’s fine.” Well, you also need to be able to be disciplinarian. “Well, you didn’t pay your rent this month, and so I’m not going to just allow you… You it back to me next month. You can’t be a pushover as well.” And they’ve got to have that no BS attitude when it comes to being a property manager. You must have to be like Dr. Jekyll and Mr. Hyde in some ways to be willing to go tough on a tenant and not let them walk on you, but also be likable and respectable to what the tenant is going to respect you and know that you’ve got their back and they’re going to want to stay there for a long time because they know that you’re going to take care of their stuff as it comes up.

Andrew:
Yeah. I mean, when I look at our best property managers, there’s I say eight distinct traits. One, good organization skills. Matt, like you said, they’re handling invoices and payments and checks and evictions.

Matt:
And never drawing the ball.

Andrew:
Yeah. And requests from their owners and all kinds of stuff like that. You being very responsive to resident requests, even the ones that are annoying or seem silly or petty because it doesn’t matter. To that resident, it’s important. And the ability to separate those two things. You can still be annoyed, just don’t let the residents see that. Give them the respect. Matt, you touched on this, a balance of heart and no BS, empathetic, kind, understanding, but rent is due just like the mortgage is due and the property taxes are due you. I’ve seen a lot of investors get into trouble by being too empathetic. There’s a difference between, well, there’s a difference between empathy and sympathy. Empathy is understanding the person, whether they’re Susan’s sympathy is more of like, “Oh, yeah, okay.”

Matt:
Well, you’re getting involved.

Andrew:
Yeah, it’s getting involved. That’s better. Yeah. Sympathy is getting involved, empathy is more understanding. And sympathy is like, “Well, all right. It’s okay. I understand. You can just make up the rent next month.” Guess what happens next month, “Oh, you know what, I got a flat tire.”

David:
I’m going to treat you.

Andrew:
Yeah. This why I don’t manage anymore. I’m too nice. I’m that guy. When they told me, “Well, my car got a flat tire,” I believe them. “Okay, I’ll let you pay me next month and we’ll just do an attack in our next month’s rent and whatever.” There are certain people that are cut out to be property managers that are able to approach the world with a hammer in one hand and a hug in the other. For me, always the hug guy, very, very big heart and everything like that, but I’m not one that is very good on the hammer side with tenants and everything like that. So I got walked on quite a bit as a property manager, so I don’t do it anymore.

David:
You two, you should team up because you’re the hugger and he’s the hammer.

Matt:
Yes, that works out. Right. Right.

Andrew:
And the fourth thing is they got to be able to build good rapport with other team members, whether again yours or third party. Ideally they treat the property like it’s theirs. I’ve got some managers that… It’s amazing. I swear they act like they own it more than I do. And it’s amazing the difference that that makes. And when we try to recognize and honor and reward that, it’s not just, “Oh, cool, I got this person who…” And we encourage that and give them more autonomy to do things. We have a manager that just decided, “Well, I think that side of that building would look better a different color.” She went and painted it. And the regional was like, “What are you doing?” And I was like, “No, no, no, no.” We trust her and guess what, “That looks great. Do the rest of the property.” No, again, not everyone is cut out for that autonomy, but someone who like… Well, they could still bring it up to you.

David:
Exactly. Exactly.

Andrew:
Get this thing and get permission. In this specific example, she knew we were okay with her doing that thing because she’s so good. But you’re exactly right. It’s the sense of ownership. Just noticing, “This would look even better if we painted out this.” I want to do a 90 day challenge where people who are struggling to get a promotion or make more money or have success, just say for 90 days, “Treat everything of the person you work for, if you live in a property, treat it like it’s your own.” If it’s your boss and you think, “If this was my company, what would I want to do?” And see if that doesn’t absolutely change your life.

David:
You know what, you’re right because when we have a resident that comes out and they pick up the trash around the unit, even if it’s not from theirs and you go in their unit and it’s sparkling clean, everything’s nice and organized, we are definitely more inclined to give them a little bit leeway.

Andrew:
Oh, yeah, a hundred percent. It’s like it’s magic. Make people like you and you make people trust you. Like you said, the best point there when she took it upon herself to paint it, we said, “Go ahead and paint the rest of the property.” And you immediately thought, “How do I give them more responsibility, more freedom, more autonomy, more all the things we say we want.” We all complain about the micromanaging boss, but we don’t ask the question of ourselves like, “Well, what might I be doing that needs micromanaging?” Yeah, it’s always a shift in responsibility onto someone else. That’s why I would encourage people to treat things like it’s their own, because when you’re the person who’s the king, heavy is the head who wears the crown and you’re worrying about everything, when you see the person willing to carry the burden with you, it automatically opens your heart to where you want to give more.
Dave Osborne told a story of how Matt King, who’s now the CEO of GoBundance, became his first assistant where Matt said, “Hey, your wife’s coming to visit you. I’m going to go clean up your hotel room before she gets here.” Matt could have even said something, “Not my wife. I don’t care.” But he is like, “If my girlfriend was coming, I would want her to come into a clean hotel room.” I’ll treat Dave like I would treat myself. And lo and behold, he’s now running Dave’s empire.

David:
I think the missed point there is that Matt knew that Dave’s room was going to be an absolute mess when his break.

Matt:
I know. He’s like, “Listen, I know your room’s a train wreck right now and so I’m going to go and help.” The intuition was there.

David:
I mean, Krista, she’s smart enough to say, “Hey, so this thing was added to your calendar today.” She’ll send me a text message, just to say, “Make sure you see this.” She knows me. I will not check my calendar. I look at it in the morning and I see what I have to do and I’m done. That’s part of putting yourself in other people’s shoes and taking responsibility is thinking like, “If I was that person, this is what I would need.” So I think that’s really good advice. You have about two or three more I think.

Andrew:
Yeah. Number one, we touched on this really as someone ideally that’s really engaging with residents and the rest of the team member. Also somebody, and this is when you’re starting to scale up and get a little bit bigger, somebody that can help guide the team. So you get a manager, well then you add a leasing agent, now you’ve got a maintenance supervisor, and then you add a maintenance tech or a grounds person, whatever, that property manager is someone who can have a 10-minute meeting with the maintenance person in the morning and say, “All right. Here’s our work orders. Let’s prioritize them. Go out. Take care of that.” And then she checks in at the end of the day, which one’s got done, which one didn’t, why. “Hey, leasing agent, do this.” And can coordinate and do all of that.
And then finally somebody that is good at delegating work because the property manager can fall into the same trap that we as entrepreneurs fall into. We’re going to do it all ourselves because that’s what got us here. And that’s actually something we’ve had to help some of our property managers grow through is, “No, look, you’ve got a lot of units. Let’s get you a leasing agent and delegate this.” Or you shouldn’t still be doing these invoices day after day after day. This other person should do it. And then you just verify that they did it. So ideally it’s somebody that can delegate work so that they can grow and as you scale. Hopefully they can move up and scale with you.

David:
Now, Matt, will you talk briefly about, Andrew mentioned a leasing agent should be a friendly personality. He’ll see people sometimes working in retail like, “Oh, you should be the one answering the phone when people call or meeting him with you. What are some other things that make someone a good leasing agent?

Matt:
The best leasing leasing agents I’ve seen are ones that are able to a bit of a drive and that are somewhat financially motivated. And the best thing to do with a leasing agent is offer them some sort of a bonus, even if it’s not like a typical realtor will get half a month’s rent or something like that as commissioned. At a larger property management company, it may be just something smaller than that because that leasing agent may lease eight or nine units every couple weeks. So it can add up to be something significant. So it’s got to be someone who sees that, “The more I hustle and the more I grind and help fill this property up or help keep vacant units full, the more money I’m going to make. Have that alignment and that 50 bucks, a hundred bucks, whatever, per signed lease that they get as their incentive on top of their base salary needs to mean something to them.
They have to be hungry for that. I also find that they’re typically charming. They’re good closers, right? You can’t allow a tenant that, “Oh, I’ll just come back and in a week,” or whatever it is. A good leasing agent’s got to say, “Hey, listen, I’ve got three other showings this afternoon. Don’t’ you think you want to turn into rental application? Isn’t this unit great?” And finally, they’ve got to think that what you are providing is the best thing since sliced bread, right? They’ve got to like that, “We had a pool here in this property.” Or, “There’s a grocery store down the street even. It doesn’t have to be a property with a pool. Even if they’re showing your fore family, they’re just listing amenities, know the area. “Did they’re building a new shopping mall down the street, or did you realize the gas station’s adding a Quicky Mart or a drive-through car wash or whatever?”
They got to know the area and let the perspective tenant know like, “This is a good area that I’m moving into. And this is a good unit I’m moving into.” They’ve got to know the amenities as well onsite. They’ve got to be an expert for the property and make everything they’re talking about the most exciting thing ever. So I think those are great attributes for leasing agents and also good at following up, good at closing because not everybody’s going to follow up on a… Is going to sign a lease right then, so they’ve got to do follow through and reach outs and everything. And one more thing, in the modern world, I just described a great leasing agent, but a stellar next level leasing agent is someone who’s good on social media and can do Instagram posts for your property, that can do Facebook posts for your property, that can take ownership of your Google Pin Drop of the social media assets of your property as those are the next level stellar leasing agents.

Andrew:
So speaking of social media, we were doing a weekly call with one of our property management teams and I asked her, “Where did these leases come from?” She’s like, “Oh, this one, this one, this one, these two came from TikTok.” “Whoa, whoa, whoa, whoa, whoa, what do you mean these leases came from TikTok.” “Oh, yeah, I do all these…” So turns out multiple times a day she puts these little TikTok videos out and the property has this huge following and she’s getting leases off of it. And I’m like, “Okay, can you please teach our other managers how to do this?” And some of them are like, “Okay, great. I’ll learn how to do this.” I’ve got one that’s like, “I don’t do TikTok.” I’m like, “All right, fine. I’m not going to force you to do it.” So yeah, social media skills, that was something that our whole team and business learned because that manager was doing it, again, on her own without me even saying anything. And I’m Like, “Wait, wait, wait, you can get lease off TikTok?” “Sure can.”
I’m often the person that someone in my sphere will call with the real estate question, whatever it is. So frequently I’ll get old friends or people that are actually trying to figure out what apartment they should move into. I’m a real estate guys, so they call me, like I know how to answer.

David:
Oh, yeah, that one right there.

Andrew:
[inaudible 00:40:21] an apartment in my life. But I noticed that when they’re in that point of, “Am I going to go with the whispers, the lakes, or the heights?” They’ll create this list of all the amenities they have and then compare the rents. There’s a deep analysis that most tenants are going to go into when they’re picking where they’re moving because ideally they’re going to live there for a while. They don’t want to pack up and move constantly. “This was 2000 a month and it’s in this location, but it doesn’t have a pool and it doesn’t allow pets. This one does allow pets and it’s only 2,500 a month, but blah, blah blah.”
They really put a lot of effort into looking at this and when you’re in a position like that, that you’re that engaged in where you’re going to go, I absolutely believe that a leasing agent that’s following up, that’s selling them on why they’d be happier in the heights versus the whispers or whatever, is absolutely a game changer. That is such a big thing when you’re trying to make a decision and you don’t want to make the wrong one. When you have that reassuring voice that’s making you think… Most people, as weird as this is, receive that as God must be telling me to move to this one because this person called, we always give that credit-

David:
Sign. It’s meant to be.

Andrew:
Divine intervention. They followed up just as I was trying to figure this out. Now after you show them the apartment, they’re probably going home that night to talk to their boyfriend, girlfriend, whatever, and say, “Where do you want to move?” There’s a high probability that’s what they’re doing when you divinely intervene and call at 8:30 to just be like, “Hey, did you have any questions? I’d really like to have you here. I thought we got along really good.” “Oh, my gosh, they want us. We’re welcome.” “We don’t even have a dog. Let’s go over there.” Just that one little thing can absolutely make a huge difference.

Matt:
Let me to add on to that. And the reason for that is most people don’t go the extra mile. And so when you do, it is surprising to people, right? It’s like you normally don’t get followed up with like, “Hey, how was that?” Like, “Hey, you had your oil changed here at this at this shop or whatever. How was it? Were you happy?” I don’t get that phone call. And so when you do, they’d be like, “Hey, they actually care. That’s a good place. Oh, I’m going to go there forever. And we’re lease that apartment because this person actually picked up the phone and called me.” Right?

Andrew:
Matt, you made a really good point earlier that I think highlights the difference between asset management and property management. And when you said talked about aligning your team members’ interests with the success of the property. Most property management companies, if you ask them, “What should we pay this person?” They’re like, “Well, market’s between 24 and $27 an hour, so we’ll set it at 25.” And that’s the answer you’ll typically get. A good asset manager’s going to say, “Okay, great, that’s market.” But if my property has a net operating income of a hundred thousand dollars each year, I’m hitting my targets. If it hits 120, I’m crushing it. So what if I set it up so past a certain target, the property manager gets a certain percentage of every dollar above that. Well guess what, now their income goes up with as yours goes up.
And we’ve done that with a lot of our properties and it’s worked wonders because the property manager know, “Hey, if I work at extra hard on this, it’s not going to just make some investors across the country or some dude in California more money, it’s also going to make me more money.” We have a property manager that makes more than the regionals above him because he has knocked it so far out of the park. And I am so glad to pay him literally double market because when you look at how much he’s making us, it’s almost irrelevant because he’s doing so well. So that is a good asset manager skill is to make sure… Even if it’s your admin person, find some way to align their success with yours so that you’re always growing in the same direction.

David:
So when it comes to maintenance supervisors, this is another pretty big piece because poor maintenance will make people not want to live there anymore. I think most people in general will stay where they are until something happens that disrupts their peace. So the neighbor next door is too loud. Their first thoughts is probably, “Get management to fix it. If it doesn’t get fixed, I’m moving.” Or something’s broken that won’t get fixed. Everyone has a tolerance. And then at a certain point they just get to the point they’re like, “I have to leave to fix this.” And the vacancies are very expensive, both because you’re leasing agent now you have to pay someone to go and refill it, plus the period of time no one’s occupying, it’s vacant. And then the turn, you got to repaint and redo all this stuff. So maintenance supervisors can actually help to keep your expenses lower. What’s two things that each of you guys think that you would highlight as when it comes to maintenance supervisors? What are the most important things that you can recommend?

Andrew:
I mean, I think we’re going to operate on the base assumption that whoever you’re talking about has basic maintenance skills. They know the difference between a Phillips and a flathead, which is about as far as I can get. So I don’t have any better analogies than that. Number one is eager to contribute. And what I mean by that is they are, it’s not just, “Okay, I got these five work orders. As long as I get these done today, I’m fine.” Well, maybe they’re out working on work order number two and they see that the next resident over, their door just jams. It’s gotten absorbed the moisture and it doesn’t fit anymore. So every time they see them coming out and be like, shoving their shoulder. “Oh, hold on a second.” They come over, adjust the hinges, “Oh, look.” And get it fixed for them in like five minutes.
It doesn’t need a work order. And then they’re someone that is eager to help out the manager just wherever things come up. One example I can think of is we have a maintenance supervisor that we recently hired and he comes to our calls with a notepad and has a list of things to go over and then takes notes on the things we talk about so that he can go follow up on them and get it taken care. And we never even asked him to do that. I mean he’s just that eager to contribute and be a part of it. So that’s huge. And then one other one is I would also say, and they’re tied together, is that a maintenance person who understands it’s a team effort.
Yeah. Okay. He’s got five work orders to do, but he may have a contractor that onsite that’s renovating unit that he’s got to make sure the supplies are there and that the manager, property manager is there to make sure he got the supplies order. Because typically maintenance doesn’t order their own supplies. Sometimes that’s not the case, but often it’s a team effort with, “Okay, we need this. The manager makes sure.” And just being willing to step in and help out wherever needed. And being on call is candidly probably one of the worst aspects of being a maintenance person at an apartment complex, ’cause you’re going to get call at 2:30 in the morning on Christmas that someone shoved a teddy bear down the toilet and now it’s flooding the unit.
Not that anyone’s ever going to enjoy that, but somebody that is able to say, “All right, this is part of servicing this community and things like this are going to happen.” And hopefully as a good asset manager, you’ll make that up to them on the back end. We’ve had situations like that and we will send that maintenance person like a gift card like, “Go take your wife to dinner. Our property ruins your New Year’s Eve.”

David:
Okay, we understand. Sorry about that. And thank you for answering your phone and going and taking care. That’s awesome.

Andrew:
Yep.

Matt:
To add into there, it is funny, it just seemed to be a common theme across the property management team, therefore the site manager, leasing agent, whatever is a sense of ownership. And the way a sense of ownership shows up for the maintenance technician is things like, “Well, we’re 20 work orders back this month, so that means that these 20 tenants are waiting on me to do a thing for them are now waiting and that’s not okay. And so I need to pick up the pace. I need to knock out these work orders.” Whatever. A bad maintenance tech’s going to shrug their shoulders and say, “Well, that’s all-”

David:
I get to it when I get to it.

Matt:
Yeah, I get to it when I get to it. And we’ve all seen maintenance techs that have that philosophy and there’s also the hustle maintenance technicians that are like, “Listen, that’s not acceptable. These people need me.” Then that’s a sense of ownership and they really take… Showing up to the calls of the notepad. We’ve had maintenance techs tell us like, “Listen, we were giving unit turns,” meaning when a unit vacates, the onsite maintenance were the guys that were turning the units around. They came to us and said, “Hey, we need a little bit of help. And that world on unit turns ’cause had a lot of agencies show up and they asked us for help because they knew they couldn’t maintain their work order flow and it was not going to be okay for work order balance to get way out of whack because they knew that that was something, that was like ownership.
They knew they were responsible for that. So they said, “Can we bring in a little bit of short term help to help us do some painting, to help us do the trash out?” Whatever. And we said, “Sure, absolutely.” Because we knew they cared. That’s why they asked for that. And it wasn’t ’cause they didn’t want to do the work. It’s because their obligations were going to start falling off the plate.

Andrew:
Yeah. And there’s one last thing I want to address. So anyone listening might be saying like, “That’s great guys that the three of you have all these wonderful maintenance pairs of people. I’m just trying to get someone to actually show up and do something on time.” That’s our problem too right now. I mean, Matt and David and I are at the scale where we have these team members in place, but maintenance is probably the hardest position for us to fill right now. And we have unfortunately hired people that don’t fit these characteristics we just talked about and we’ve had to let them go. So if you’re sitting there going, “Well, that’s great, all these ideal characters. I just want some character traits. I just want someone to show up.” Yeah, we’re having that problem too. It’s not just you. Hopefully if the Fed does create more unemployment, hopefully one of the side benefits is that it’ll get easier to find good people. But that’s a problem that we’re having too. So if you’re experiencing that, don’t feel bad. It’s probably not you.

David:
Everybody’s kissing frogs. We talk about the ideal person. That doesn’t mean that you get them on the first try or even the 10th try. It’s often a actual skill of figuring out how you can find the right people, which is why you treat them so good when you have them because you want them to treat your property, and they’ll probably treat it closely to the way that you treat a lot of the time. Well, thank you guys. This has been fantastic. And it’s on a topic we don’t really talk about very often because it’s just been buy as much real estate as you can, borrow other people’s money, go in there fast, loose, and reckless, just spray and prey and you’ll hit the target a couple times and you’ll make a lot of money. And that target’s getting a lot tighter and it’s getting a lot harder.

Andrew:
“It’s going to work in the future.”

David:
That’s exactly right. So before I get you guys out of here, Matt, where can people find out more about you?

Matt:
They can hear about me on our company website, derosagroup.com, D-E-R-O-S-A-group.com. Or they can follow me on Instagram at themattfaircloth.

Andrew:
Matt’s also written a book for BiggerPockets. What was that book?

Matt:
That was called Raising Private Capital. And that’s something really exciting. And I think that investor relations and the way that you raise more money for your deals and the way that you treat investors that you already have into your deals is going to be something that’s going to become even more, it’s always important, but even more important in the changing economy. So everybody should check out Raising Private Capital at biggerpockets.com/store.

David:
All right. And Kush, where can people find out more about you?

Andrew:
Just search Vantage Point Acquisitions website is vpacq.com. Also call a colleague request me on BiggerPockets so we can connect there. And if you’ve made it all the way to the end of this podcast and at either you’re someone who loves asset management or you’re like, “I really want to learn that,” three out of our last four additions to our team have come from the BiggerPockets listeners. There are some amazing people who listened to this podcast and we are looking for another one. So if you’d like to come work with us in on the asset management side of the business, please go to the website. There’ll be a tab there and a link there to apply. And I look forward to hopefully working with you.

David:
Yeah. And I can co-sign on that. Andrew is my multi-family partner. We buy properties together and the people that have come to work for us have been fantastic. And they have actually made a lot of progress with their own portfolios as well. It’s a really, really good way to learn when you’re working for someone that’s going to hold you to a high standard, teach you things to do things the right way, model for you the right way to approach it. And those habits that are developed are the stuff we talked about earlier with the attitude and the personality that you’re bringing to the job matter a lot. So please, if you’re into multi-family, consider reaching out.
All right guys, I am going to get you out of here. Thank you very much for taking time out of your Lake Tahoe [inaudible 00:53:07] to talk some multi-family with me and our listeners. And hopefully this helps a lot of people. We’ll see you next time.

Andrew:
See you then.

David:
This is David Green for Matt “The Scorekeeper” Faircloth and Andrew “The Hamburgler” Kushman stealing all my analogies signing off.

By YEC

Starting a new job can be stressful, so as a leader, it’s crucial to make sure that your new hires feel welcome and supported from the very beginning. Here, 12 Young Entrepreneur Council members share onboarding strategies that leaders can use to ensure new employees feel welcome and that they get off to a successful start.

Most people are familiar with the blend of anticipation and anxiety that comes with the first day at a new job. What’s one strategy you use to ensure a new hire feels welcome on day one?

1. Host an office get-together

We love making new hires feel welcome with an office get-together. Ditch the ice-breaker questions where you have to come up with something clever on the spot instead of just being yourself. You hired this person because you loved their work and felt good about their personality. Remind them that if they seem anxious, and let the relationships build naturally from there. —Kaitleen Shee, GROW

2. Do something active together

We have two methods that prove the most effective in breaking the ice: each new hire has the opportunity to join a fellow coworker on a bike ride, and each new hire answers our three questions, which then get posted in a visible spot in our office. The questions are: 1. What major experiences do you want to have in your life? 2. How do you want to grow? 3. How do you want to contribute to the world? —Jeff Cayley, Worldwide Cyclery

3. Offer guidance

Each new team member is onboarded with as much warmth as possible by HR, directors (individually), and their team members in their specific departments. All final interviews are with me (as president of the company), so I get to meet them even before they are officially welcomed on board. This gives me the chance to express that my door is also always open, should they need anything from me. —Magnus Simonarson, Consultwebs

4. Onboard before the first day

Get as much of the onboarding work done before day one so that your new hire can hit the ground running right away. You might say this is selfish, and it certainly will improve productivity at the margins, but it also ensures your new hire doesn’t start off on the wrong foot, confused, and maybe even overwhelmed by all the HR tasks before them while they’re on the clock. —Andrew Schrage, Money Crashers Personal Finance

More articles from AllBusiness.com:

5. Provide thorough information

I find that when people know what to expect, it helps stave off anxiety. I provide a detailed onboarding process before the employee’s first day that includes a thorough explanation of their role, expectations, and the company culture. I also make sure to schedule regular check-ins throughout the onboarding process to ensure they are comfortable, and answer any questions they may have. —Rachel Beider, PRESS Modern Massage

6. Design a comprehensive onboarding schedule

To ensure a new hire feels welcome and gets off to a successful start, we have an onboarding process that covers both practical and emotional aspects of the transition. We have an orientation schedule with a designated point of contact or mentor. We also provide access to relevant resources and connect new hires with at least one of our employees. This approach helps the new hire feel prepared and supported. —Kazi Mamun, CANSOFT

7. Pair new hires with seasoned coworkers

One strategy to ensure that new hires feel welcome and get off to a successful start is assigning them a buddy. A work buddy can help new recruits get acquainted with the company’s culture and cater to their questions in their time of need. Work buddies act as mentors for new recruits, helping them channel their energy in the right direction while making them feel at home. —Stephanie Wells, Formidable Forms

8. Use Slack to give a shout-out

When a new hire joins the company, we ensure that the entire team gives them a warm welcome in our Slack family channel. As a remote company, we don’t get to meet each other every day, but that doesn’t stop the team from welcoming our new members. We believe that them seeing all the warm messages is a great start for the new hires. It makes them feel welcomed and comfortable right from day one. —Josh Kohlbach, Wholesale Suite

About the Author

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most successful young entrepreneurs.

The housing market is stuck in a standoff. On one side, you have buyers, repeatedly beaten with high home prices, higher mortgage rates, and almost non-existent affordability. On the other, you have the sellers, who are sitting on low-interest-rate mortgages, unwilling to take a price lower than they want, waiting for rates to come back down, so the bidding wars begin all over again. This standoff has caused the housing market to come to a halt, with inventory at unbelievably low levels and no one willing to buy or sell.

But weren’t we supposed to be past this? When rates dropped earlier this year, the housing market looked like it was on a fast track to a real estate revival. But now, homebuyers, sellers, and investors don’t know where to turn. And that’s precisely why we brought on HousingWire Lead Analyst Logan Mohtashami, the one person who knows the real estate market better than the rest. Last time we had Logan on, he debunked the claim of a 2008-style housing crash repeat, and now, he’s on to forecast when the housing market could finally reach a healthy point again.

Logan knows why homeowners aren’t selling, why buyers aren’t bidding, and when mortgage rates will come back down. With some simple stats and data, Logan lays out almost exactly what would have to happen for us to enter a normal housing market and gives a rough timeline of when we can expect these changes to take place. And if you’re still on the “it’s gonna crash!” bandwagon, we’d suggest sticking around for Logan’s full explanation, as it may completely reverse what you thought was conceivable.

Click here to listen on Apple Podcasts.

Listen to the Podcast Here

Read the Transcript Here

Watch the Podcast Here

???????

In This Episode We Cover

• Mortgage rate forecasts and what has to “break” for rates to come back down
• Foreclosures, distressed sellers, and why there isn’t more inventory on the market 
• Homebuyers vs. sellers and why neither of these two will make moves until the other does
• 2008 vs. 2023 and why a Great Recession repeat is a lot less likely than you think
• What could cause affordability to rise and help homebuyers get into properties
• Rent growth declines and why rents are starting to stall even as homebuying becomes challenging
• The commercial real estate “crash” and which sector is most primed for price cuts
• And So Much More!

Links from the Show

Connect with Logan:

Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Check out our sponsor page!

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

Look around you. Not as many people are picking up the daily newspaper or sitting through long commercials on TV. However, they do have one thing in common. Regardless of the demographic, they are scrolling social media on their phones.

According to Pew Research, 70% of Americans check Facebook daily. It’s second nature for youth to use Snapchat, Instagram and TikTok multiple times a day. That’s how they communicate, read the news, raise awareness — and shop.

So it’s not surprising that brands are allocating larger chunks of their marketing dollars to social media. And within that ad spend, influencer marketing has been on a steady rise. Here are three reasons why.

1. Consumers Identify With Influencers

Millions of people watch influencers make their morning coffee or run after mess-making toddlers because they can relate. People may enjoy seeing Pinterest-perfect pictures, but they also love to get a peek of real life.

There are obvious benefits of hiring celebrities to plug your product. They’re well-known, plus there’s the aspirational glam factor. However, when a movie star says she packs cute notes in her kids’ lunchboxes daily, people don’t always buy it. Her claim doesn’t seem to align with her jet-setting lifestyle.

But when a mom influencer they’ve been following for years says the same thing, they believe her. What’s more, they’re likely to follow her lead. Companies can capitalize on this relatability to increase brand awareness without making it feel like a paid commercial.

Influencers feel more accessible. Many even reply to messages on social media. So when they recommend a set of comfy pajamas, consumers are not hesitant to click the affiliate link.

2. Influencers Can Yield Better ROI

When a Hollywood A-lister touts your eye cream in a TV or print ad, your sales may go up—but it’s hard to tell by how much. Furthermore, the bump probably won’t be immediate. Influencers, on the other hand, drive sales conversions through direct links, meaning companies can get a faster return on their investment.

Since many influencers work independently, brands also save money when there’s no agency in the equation. If the influencer’s social media reach truly reflects the numbers in their media kit, your brand can get more impressions for less cost.

Once influencers truly like your product, they can go from being short-term brand partners to long-term brand advocates. Each time they have their morning vitamins or use that hair tool, they are advertising for you. Followers often send messages asking for links and discount codes even after a collaboration has ended. That’s another reason why longer-term collaborations are becoming more popular than a single post.

Evaluating the key performance indicators of influencer marketing is easier than it is for billboards, television commercials or print ads. Each social media post yields detailed stats of what was achieved with that particular content. It’s straightforward to see how many people liked, commented, shared and saved the post. You can also see how many times a link was clicked.

3. Influencers Forge More Authentic Connections With Diverse Audiences

Since influencers have unique follower demographics, brands can use them to reach specific segments of their customer base. Consumers click links shared by their favorite influencers because they look authentic. While advertising agencies do have access to diverse models, they’re just paired with other actors on a film set.

In contrast, when an influencer from a specific ethnicity shares your product, interactions with their family members are real. Consumers have seen their kids, spouse and pets in their Instagram stories. Their devoted followers will tune into their shopping livestream or try their recommended spice blend because they are a genuine family.

Influencers can also be more creative. They churn out fresh content that is often straight from the heart. Their fans can tell it’s not heavily scripted. Influencers can also have a faster turnaround. Without an agency involved, there is less red tape. Your marketing team sends the influencer a creative brief, and they can respond directly.

Choose Your Influencer Carefully

With so many benefits, influencer marketing is not going away soon. However, there are a few words of caution. Make sure the influencer you choose aligns with your brand values. Someone might be very popular, but if they’re controversial or politically tone-deaf, they could damage your brand.

Don’t be overly impressed by the sheer number of followers an influencer has. The ideal influencer should have a loyal niche following. Some micro-influencers can produce better results because their following is very engaged. Sign a collaboration based on their organic reach. Ask for stats and insights for the last three months instead of that one lucky post that happened to go viral.

It’s definitely worth investing time to find the right influencer. They can do wonders for your brand with less money — and more natural flair.

David:
This is the BiggerPockets Podcast show 738.
Never be discouraged by a lack of results. Only get discouraged when there is a lack of progress or pattern recognition. You may take the wrong path nine times, hit a dead end, come back, but now you know the wrong nine paths. And then the next path you take will be the right one and you’ll have advantage over everybody else. Some people get lucky and they hit the right path on the first try, and then they assume this is how real estate investing works. And then they take the next nine paths for all the wrong ones and they lose a lot of money because they made those mistakes. So as long as you are recognizing patterns in what you did, like you said, this is not the right realtor, this is not the right type of property, this might not be the right market, you are making progress, okay? Don’t just measure how many deals you close as the only result that you’re measuring.
What’s going on everyone? This is David Greene, your host of the BiggerPockets Real Estate podcast. You already know this. We’re the biggest, the best, the baddest real estate podcast in the world with the two most handsome co-hosts in this space as well. This is me and Rob Abasolo bringing the heat today with our last episode with our three mentees. In today’s show, we are going over Philip, Wendy, and Danny’s Journeys. Their stories give you an update on where they are in their real estate investing journey, what’s gone well, what hasn’t gone well, and what they’re going to be doing in the future. It’s a very nice bow to put on this journey that we’ve had. Rob, are you sitting with a little tear over there?

Rob:
I am. A little proud dad tear over here because I feel like they’ve all just had really massive wins. It’s like I’m nostalgic, right? Because it does remind me of when I was getting into real estate and what it was like to have those few big wins at the beginning of your journey that really lit the fire for what would eventually become my real estate portfolio and everything. So it’s cool to see this at the beginning of their journeys and just how much progress you can make in 90 days.

David:
Yes, the wonderful bipolar cocktail that is real estate, equal parts, fascinating wonder and crippling anxiety rolled into one stiff drink. And in today’s show, we have all of that and more. You’re going to hear about deals that were put into contract and what they can do moving forward, backup plans do backup plans, things that started off and did not go well, and how we’re backing up and coming up with the new plan, and ways personal growth happened and market conditions have changed and our mentees have pivoted and adapted to them.
Before we get into the show, today’s quick tip, what is your next 90 days going to look like? Look, if you give yourself an entire year to get something done, it usually doesn’t get done. But if you break your year into 90 days and you set a hard and fast timeline regarding what you are going to do during that time, things can change. We like to use the acronym GPA, goals, planning, and action. Have you set goals? Have you come up with a plan? And have you taken action on that? Don’t waste a year. Ask what your next 90 days are going to look like.
All right, Rob, anything you’d like to get in before we get to our first mentee?

Rob:
Yeah, just stick around into the very end so we can get a nice little sendoff of our little baby birds going off into the world of real estate and so you can find out the perhaps the best domain name I have ever purchased ever. It is such a great domain name and I talk about it at the very end of the episode.

David:
I was going to say the same. That one simple hack can make people billions. All right, let’s get to it.
Philip, last time we talked, you were working on how to negotiate a timeline that works for you when you have a counter offer, as well as getting the details about all the regulations and the code rules where you’re hoping to develop land. So walk us through your update.

Philip:
Yeah. So since we talked, I got a 22 acre property under contract that’s within my zone that will work for the retreat center. We’re really stoked. And just to make it as difficult as possible, there’s all sorts of hair on the deal. There’s a bunch of manufactured homes that are unpermitted, there’s certain access issues. But we’ve spoken with a number of folks that have expertise in zoning and also due diligence. And so far, they all seem like things that we can move through and that there’s a solution for still making this… This property could still be the right one. A huge part has honestly been reaching out to and talking to a bunch of people that are way smarter than me That’s essentially where I’m at.

David:
Can you share some of the deets, as Rob would say?

Philip:
Yeah. So shout out to some of the advice you gave me a while ago. So it was listed for 1.3. And for me, the property was in really poor condition, a ton of junk. We’re budgeting for cleanup and demo potentially of some of the structures on there. And so my initial offer was at 715,000, which in the classic style I was told to take a hike. And then two weeks later I submitted another offer at 775,000 and then they came back 950,000 and we’re under contract right now for 850,000.

Rob:
Whoa.

David:
Wooh.

Rob:
Dude, first of all, congratulations. The way you said that when you were explaining this was very nonchalant. It’s kind of a big deal. You’re under contract on the property. Regardless of some of the hair that that’s in the offer right now and in the deal, I think it’s really cool, man, because I got to imagine you feel pretty good to at least lock something up. Regardless of how it turns out, at least you’re in your first accepted offer and you’re ready to rock.

Philip:
Yeah, no, I’m beyond stoked and a lot of the community that has been really supportive of this process, it’s like I’m the one that’s sort of leading the charge, but I definitely don’t feel like I’m doing it alone, which is really firing me up a lot about this project.

David:
All right. I have some actual practical questions, but before I get to those, I want to ask you a riddle. Are you ready?

Philip:
Yeah.

David:
What do you call an offer on a deal that has a lot of hair in it?

Philip:
What do you call an offer on a deal that… A hairy deal?

David:
That’s not bad. Actually, that’s a good guess. Anyone else want to guess?

Rob:
An escrow? You’re in escrow?

David:
Actually, this came from our producer Eric.

Rob:
Oh, I got it. Okay. An offur, but F-U-R.

David:
That would be good too. We were actually going with something more specific to you, Rob. It’s a coiffeur.

Rob:
A coiffeur. Also very good. I’ll take that.

David:
So this coiffeur was accepted. Congratulations on that, Philip.

Philip:
Yeah.

David:
Now, I do want to ask you, when you say hair, can you give me a couple of what it is that concerns you about this deal so maybe we can give you some advice going forward?

Philip:
Yeah, so the one that’s the most present with me right now is that I was on my phone with my agent this morning and it turns out that the tenants that are on the property, the seller has not told them that he is under contract and he’s not told them that they’re selling. So we’ve been assured that he’s going to be having that conversation in the next couple days or at the latest by March 1st. But I’m extending my timeline because now I don’t really know what the deal is going to be with the tenants moving out. And then also, there’s three manufactured homes on the property, I haven’t seen the inside of them. Our business plan works with even just demoing them out and putting completely new stuff in there. But it’s definitely of concern to me like, what’s the status of these and are they usable?

David:
All right, here’s the advice I’m going to give you moving forward. This is good for everyone to hear. Buyers make decisions on a certain path that we walk, okay? So we tend to go through a deal making a step and then evaluate a step and then evaluate. It’s kind of walking a path up a hill, right? You see something you don’t like, you either stop walking or you go back and say, “I don’t want the deal.” It’s not the same process for a seller. And you can easily make the stake when you’re a buyer of trying to look at the deal from the seller’s eyes and projecting your eyes onto theirs. Sellers, it’s more like falling down a cliff in a sense. They have a belay that stops how far the fall could go. Then that becomes a new baseline. They put a new belay in and then they might drop further. So originally they had a purchase price of what was it listed at? 950,000 was it?

Philip:
Well, it was listed at 1.3.

David:
Okay. So they had a ceiling of 1.3. Or maybe I shouldn’t say a ceiling. A floor. This is what I will accept. As time went by and they emotionally were worn down by no one buying the house, they would slowly accept, “Maybe I’ll get 1.2. Maybe I’ll be 1.1. Maybe it’ll be a million.” If you had written the offer at a million when they first put it on at 1.3, it would’ve been a hard no because their ceiling hadn’t dropped that far. But emotionally, that starts to change as time passes and it’s a terrible experience as a seller because you’re marinating in your own anxiety. It’s horrible. That’s what gets sellers to drop the price. So it got all the way down to where their ceiling hit 850,000, which they never thought they would do, but they got to a point of pain, okay? That is now the new floor. And it could go further down. I don’t want you to think that it can’t go further.
As new information is introduced, that comes with fear. So if you go to inspection reports and it’s like, “Oh, these three mobile homes are terrible. We need to do all this work to fix them up,” or I’m trying to remember what the other thing you said that concerned you. You remember what it was? The tenant’s not leaving, right?

Philip:
Yeah. Yeah.

David:
“Oh man, we might have to pay for an eviction. That’s going to cost 100 grand,” right? Whatever it is that you can give them information and say, “Well, we’re at 850,000, but it’s going to cost me 100 grand to fix this, I need a price reduction of 50 grand and another 25 grand off of closing costs or something to make up for this,” they’re now seeing that like that’s $25,000 more than what would’ve accepted at 750,000. All right? So I just want everybody listening to understand. As you go through the deal, sellers are just having these big drops, okay? It’s not like a buyer that’s sort of taking a bunch of little tiny steps moving forward. And understanding that will give you an advantage when it comes time to renegotiate.

Philip:
Yeah, I got similar advice because I was on the phone with my agent how to approach some of these issues this morning. We had a road guy going to the property that also does demo last week. He’s going to be getting me a bid tomorrow or in the next two days. It’s going to be at least probably 100 grand for the cleanup and the demo. And yeah, I decided I’m not going to say anything to the seller about concessions or anything until I have that bid in hand.

David:
There you go.

Philip:
That’s my next step.

David:
Give that first, create the fear. Now that there’s fear, maybe you take some time, make them wonder are you going to back out or are you going to stick with it? Let that anxiety do its thing, then come with your approach.

Rob:
Yeah. Yeah, and I think for everyone listening at home, this is a really good example of remembering that there are multiple finish lines to get to the end of a deal. You get your offer accepted and it sounds like you’re in a really great position here, Philip, but that’s just the first finish line. The negotiation isn’t over. The negotiation happens throughout the entire deal until you’re literally at the closing table signing. So with all that said, it sounds like you got really good advice from David here. But Philip, I’m curious for you, what homework or next steps would you assign yourself moving forward on this particular deal?

Philip:
Yeah, I think one of the things that’s made me feel so confident in how I’m moving forward honestly has been networking with other professionals. A huge benefit of being on the podcast, I’ve talked to so many incredible people. I actually have a meeting scheduled with somebody that their entire business model is that they help people with due diligence on land. We’re meeting on Monday. I have a foundation guide that’s going to see the property in the next couple days. All of these people have so much more knowledge in their area than I do. And really, I only feel confident moving forward as much as I do because they’re on my team. So yeah, just keep networking and keep getting advice from people that are smarter than me.

Rob:
Great. That’s great. And I also will say that the due diligence people that you talked about, it might be expensive, but I promise the cost of that is worth. Its weight in gold because they will help you so much. They’ll help you get through the process a lot faster than you could yourself.

Philip:
Awesome.

David:
All right. Thank you for that, Philip. Appreciate your update.
Wendy, last time we talked you had decided to house hack your Vegas property. Walk us through where we are with that.

Wendy:
Great. So I feel like I’ve gone two steps forward, one step back sometimes. And perhaps I’m not the only one that this happens to in real estate. I’m actually headed to Vegas tomorrow and I’m meeting with my realtor and I’m going to drive around town and we’re going to see a bunch of properties and we’re going to put the nail on the head as to what exactly is the criteria that we’re looking for. But what I started to realize was there’s a lot of beautiful houses in Vegas that are available for $500,000, even $450,000. But as I crunched the numbers and crunched the numbers, I really couldn’t make it work as a long-term rental, which is my backup plan. And then I saw this thing where it said, “This house is going to rent for $2,300.” Well, it was for sale for 500,000 and I thought, “Wait a minute, I’m doing this all wrong. Why would I even buy a house to begin with? Maybe I should just rent a house and then re-rent it out if I want to do it that way.”
So I’ve had to kind of pivot, if you will, a little bit to just figure out what’s really the criteria that makes a good investment for me. Living in the property, I could maybe break even, maybe make $400 or $500 a month extra, but I’m like, how much more time and effort am I spending to make that happen? And so I really just had to sit back and say, “What do I really want to do here and what’s my time worth?” And kind of figure out that model. So I’ve kind of scaled down the size of properties I’m looking for to maybe just buy an investment property there and put somebody in it and not house hack it. So I’m a little bit in a spin right now to be perfectly honest. I thought I was going down one path and I’m just midspin, unfortunately.

Rob:
Well, you may not be making the progress that you want to, but I do believe that you’re working through this the right way. You’re asking important questions. Because a lot of the times, people in your position, they’re so desperate to get in the deal that they’ll buy a bad deal. They won’t get in a good deal. And in some capacities, I think people will always figure out how to make it work. But I do think it’s a very smart thing to be cautious, right? If the numbers haven’t worked in any of the simulations or any of the modeling that you’ve put out there, then it’s probably a wise idea to reconsider it.
And then also evaluating your time and assigning a worth to that, I think that’s perfectly viable too. I still think you probably have other options. I mean, I know renting a home probably wasn’t super ideal, but that is a form of house hacking. I’ve known plenty of people that have rented a space and then they rented the other two rooms to completely subsidize their rent and then they didn’t pay rent anymore, right? Or they paid a very small amount. But at the end of the day, I think the faster you get out of renting or paying a mortgage, the more money you can save up to actually get into a property that you can probably make the numbers work on.

Wendy:
Yeah. So I think going forward, what I’m definitely looking at is still I want to use my money that I have and my W2 that I have to buy a primary residence that maybe has an ADU or something else I can Airbnb on the backside. And the question then becomes, where can I do this and have it be a good scenario? Southern California is a challenge. We all know that living here. But I did finally just reach out to somebody here to just say, “Help me gut check this. Is there any way I could buy something in Long Beach or San Pedro and Airbnb a back unit?” And we’ll see what the numbers come back on that for. But I would do that in Vegas in a heartbeat if I could find that kind of a property there, but it just doesn’t seem to exist.
On the house hacking in one house, I know people do it. I know people share houses, but it just seems even with the midterm rental folks that I talked to with Jesse Vasquez and all of them, their model really works great around a one bedroom condo or a studio apartment or a casita in the back. So if I don’t have that model, I’m just not as confident about going in gangbusters and spending a bunch of money doing it. And I feel frustrated because here we’re leading up to this podcast and everything is going so great and now as we’re like down the road, I’m like, “Wait a minute, wait a minute. Am I getting over my skis a little bit?” But I don’t know yet is the answer.

Rob:
David, you deal with this a lot, right? Because you are in the Bay Area, and so you’re always trying to help clients that are specifically looking for a property with some kind of rentable or house hackable aspect, right? How often are you finding success on the first, second or third try? Is it pretty common out there? What kind of advice do you think you could give to Wendy here? Because I know you’re sort of the pro at this.

David:
I think for Wendy, it wasn’t so much that she wasn’t going to find success on the first try. I think either your criteria changed a little bit, Wendy, or you just didn’t factor in some of the criteria in your search. So when you said I wanted as a backup plan to work up as a long-term rental, immediately almost all track housing is going to be out the window if it’s in a growing market. So you’re not going to find 1% rural stuff or something close to that in the single family residential space with one unit to rent track houses that can’t be modified in a hot market. When I say hot market, I just mean a more expensive than average market. Not the Midwest, right? You might be able to find something like that in a market that isn’t experiencing as much growth, where you could buy a property for 210,000, maybe it rents for 1,700 a month. So it could work as a long-term rental, but then you have the option to go short-term rental and actually get more profit.
Most markets where we’re seeing a lot of growth, you can’t just use that traditional long-term rental model almost at all. If you had just said, “I want to buy a long-term rental in Vegas,” I would’ve said don’t. You can only do that with small multi-family. You’re not going to be able to do it with a residential house. So I don’t know that you did something wrong other than we just probably didn’t measure this up well enough before you went into the market that you wanted it to work as a backup also. So I think for you, it’s going to be some clarity, like do I want a short-term rental? Do I want a house act? And then does it also have to be something that as a backup plan would work as a traditional rental? If so, you got to pick a different market. You’re just going to have to go to a lower price point where the price rent ratios are going to work out.
That doesn’t happen as often in our market because people don’t have that backup plan. It needs to be a long-term rental. They’re just going to live in it, right? Like backup plan is, it will be cheaper than if I had to pay rent living somewhere else. And then they sort of put the odds in their favor where they wait until they live in the house for a couple years and then as rent increases, eventually it is something that they can use a long-term rental if that’s what they want to do. Or they buy a house that has more than one unit. That’s the other shortcut, is if you can get a property with two ADUs or a property where you convert the garage and then also have an ADU now, it does work as a long-term rental because you got income coming from more than just the one space. Does that make sense?

Wendy:
Yeah. You said something really important there. Maybe it’s I’m taking insights from this realtor that I’ve chosen in Vegas and they have a very specific criteria that they will only recommend to their clients, which are in certain areas that are primarily these track homes. Maybe I should not necessarily take their advice and I should go into some of those areas where there are beautiful places that I could do so much more with than these track homes. And so maybe that’s something for me to look at while I’m out there.

David:
Track homes really do limit your creativity with real estate. And I probably should explain why. When a new home is built within a subdivision and all the neighbors are really close to each other, first off, neighbors don’t love investors. So when you got houses smashed up against each other like most track houses are you’re begging for complaints. There’s also going to be parking issues because everyone’s trying to share the same parking spaces. But more than that, they’re built with a really cool flowing floor plan that works for a family. It is very difficult to create separate units out of that one big structure. It’s what I found. It’s almost impossible because most of them are two-story houses that have a separate entrance into the second story.
Now, when you buy houses that are older, they’re on a hill, maybe they’re 1,100 square feet when they were built in the ’40s and then in the last 70, 80 years, they’ve added on several times to the house, the way they added on make it very easy to create separate units out of those homes. Track homes tend to be newer because it’s like a new way of building houses. So that’s why we’re saying you’re limited when you’re looking for that. But that is what most agents are going to be used to selling because that’s what most home buyers are wanting. So I don’t know that you made a mistake here. I think you learned something because you took action.

Wendy:
Understood.

David:
You probably wouldn’t have got to the point that you would’ve realized, “Vegas won’t work if I want to cover my bases with this backup plan” if you hadn’t have taken some steps moving forward. So you walk down the path, you hit the dead end, you’re going to go back, you’re going to find another path arm with the new knowledge. Rob, what say you?

Rob:
Yeah, I would say looking back at your 90-day journey, you’ve made a lot of progress. Just because you’re not in a deal does not mean you haven’t progressed, right? We’ve figured out what you don’t want. We’ve figured out what won’t work. We’ve examined your professional path and what you want out of that. And even though you’re not in a deal now, I just feel like you at least have the clarity on, “Okay, this stuff’s not going to work.” Now move that over to the side and continue down a path of figuring out what other markets can work for you. So I don’t want you to feel bad that you’re not in a deal, because I think you’ve gotten a lot more out of this than you probably realize.

Wendy:
I’m sure. I have gotten a lot out of it. I’ve lost a lot of sleep, but I’ve gotten a lot out of it.

Rob:
And that’s how it should be. So with all of that said, Wendy, as you sort of examine where you’re at and you’re moving forward down your path, what next steps or homework would you assign yourself to get you a little bit closer to that full clarity that you’re looking for?

Wendy:
Yeah. I really think I probably need to do a little bit more networking than I’ve been doing, which of course takes time, but I need to step outside of my Zoom zones and really just go to some more meetups and meet some people and see where people are investing and what’s moving the needle for them today. I feel like I need to increase my access to people like that.

Rob:
Yeah Yeah.

Wendy:
So that’s one thing I definitely want to do.

Rob:
I think it’s great. And that’s even something that Philip talked about too, right? He’s like, “I just need to talk to more people that are kind of higher level, a little bit more advanced.” And that has opened up some doors for him too. So I think that’s going to work great for you.

Wendy:
And I’m going to continue down the mid rental or midterm rental path. I’m going to go to that conference they have in a couple of months. I’m not throwing that baby out with the bathwater. I just got to keep crunching some numbers. I am going to be in Vegas for the next several days and I’m going to look there while I’m there and just see if there’s something I can find or an angle that works. Maybe not necessarily a property, but narrow down my criteria so I’m not just crunching numbers for four hours every night and saying no to every deal that comes past.

Rob:
Awesome. Well, I think you’re taking action. You’re going down to the Mid-Term Rental conference. You’re in Vegas right now looking at properties. You’re talking to people that can help you on this journey. So I think you’re going to get a lot of that out of that too. We’re going to be following along, and I just wanted to thank you for your time and for taking this journey with us as well.

Wendy:
Absolutely. It’s been awesome.

David:
Last piece of advice for you, Wendy, before we go on to Danny. Never be discouraged by a lack of results. Only get discouraged when there is a lack of progress or pattern recognition, okay? You never know when you’re going to hit that finish line that Rob talked about. You may take the wrong path nine times, hit a dead end, come back, but now you know the wrong nine paths, and then the next path you take will be the right one, and you’ll have an advantage over everybody else.
Some people get lucky and they hit the right path on the first try, and then they assume this is how real estate investing works. And then they take the next nine paths for all the wrong ones, and they lose a lot of money because they made those mistakes. So as long as you are recognizing patterns in what you did, like you said, “This is not the right realtor, this is not the right type of property, this might not be the right market,” you are making progress, okay?

Wendy:
Mm-hmm.

David:
Don’t just measure how many deals you close as the only result that you’re measuring.

Wendy:
All right. Good advice.

Rob:
Awesome. Okay, Danny Zabata. Zapata.

Danny:
Zapata.

Rob:
Last time we talked, you were about to make some aggressive offers on some multi-family buildings and maybe even following my strategy of making some offensive offers that might just get you a no right out the gate. Walk us through some of the updates on your end.

Danny:
Yeah. So I did wind up making some offensive offers because honestly what I’m looking out there, that’s what works for me. So I kind of approached this from what’s the price that I needed to be at in order to do this deal versus how do I get to the seller’s asking price, because I think that’s kind of a mindset that I’ve had early on. So I made two offers. One’s an eight-plex in North Oak Park. It’s been sitting for several months. It was listed for 1.9 million. I offered 1.05 million, which is a very aggressive offer. But they did respond it. It wasn’t an outre known necessarily, but they did kind of come back with their limits. So they said, “We can’t take anything under 1.7 million. The sellers looking to get into the next property, and that’s what they need. So that’s kind of where we’re at there. We’ll let it sit for a little bit longer.” It has been sitting for a while and continue that conversation.
Another property that I put an offer in was a 12-plex in Southland Park area of Sacramento. That one’s a little newer listing. Started listing in the beginning in January for 2.9 million. Offered a less offensive offer of 2.25 million, but they seem to be more offended than the previous offer. So they were just like, “Hey, we’re not even going to look at your offer. We haven’t been responding to anything under list. Basically, go away.” But I still plan to follow up on there and kind of follow the progress because that one in particular, I like the area the most out of the two. I feel like it has the most long-term potential and just have a nice stable asset. So yeah, that’s kind of where I’m at, and just continuing to follow up every couple weeks and looking for more opportunities to make offers.

David:
All right. So a couple things to highlight here. I have this analogy that I call the pickle jar that I tell a lot of our clients. You know how sometimes you’ll be trying really hard to open a pickle jar and you can’t get it, and then the next person tries, it pops right off? What do we always say when that happens?

Rob:
“Oh, I loosened it for you.”

David:
I loosened it for you. Exactly. “You’re not stronger than me.” A lot of the times I will step in and I’ll get a deal at a really good price, but I don’t know how many Danny Zapatas came before me and loosened that pickle jar. So they wanted 2 million, you wrote it at a million. They start thinking in their head, “Maybe it’s not worth 2 million. I’d be lucky if I could get 1.3.” And then I come in with 1.32 and they’re like, “Yeah, I’ll take it.” And I’m like, “Well, I’m such a great investor, I got a great deal.” But I don’t know everything that happened before I walked into that scenario, right? So the moral of the story here is you want to get the pickle from your own labors. You want to follow up with these people every so often so someone else doesn’t step in and steal your pickle, right? You’re grabbing the marks on your hand and your forearms are all swollen even wrestling with this pickle jar. You don’t want someone to come in and take it. So don’t forget to keep following up.
As the sellers are wrestling with their anxiety as rates are going up and their property isn’t selling, and doom and gloom is starting to happen more and more on the news, you never know when they’re going to hit that point where they might say, “Hey, you know what? This other opportunity passed us up. We’re going to make so much money on it. If we lose money on this one, that’s okay because I need to move the equity from this one to this one.”

Rob:
That’s going to be a good Instagram reel right there. I already know it.

David:
Protect your pickle.

Rob:
Protect your pickle. But it’s very true. I mean, I think in real estate it is all timing, right? And so you could be the one that capitalizes on the timing if you keep following up. But David’s totally right, man. You could have offended them. They’re going to get offended five more times. And if you’re not following up consistently, someone else is going to come and offend them less and that’s the offer that’s going to get accepted. So you definitely want to make sure that you’re checking in and saying like, “Hey, I know this deal didn’t work before. I know this offer didn’t work before. I’m curious, what have you been hearing? Is there a way to make this deal work? I’d love this property still and I’d love to talk about this a little bit more with you.” So I think getting in there, talking to them.
But Danny, I got to say, man, I think it feels from just the first episode, it feels like you hit your groove, man. You found it. You just seem a lot more confident kind of talking through this. So I am wanting to know when you put these offer in, what did it feel like? Was it scary? Was it a relief? Was it a relief to hear a no? How was that all for you during that process?

Danny:
Yeah, I think you called me out correctly in the last episode about having to make that first offer and kind of rip that bandaid off. It still felt really challenging to go and do it. I did hesitate a little bit, but I kind of had you sitting on my shoulder, talking in my ear, “You got to make that first offer.” So it felt liberating and just kind of really good to get that out there. I think along with utilizing David’s advice around just generally talking to more people and being more comfortable, I think putting those two things together have kind of resulted in what you see today. So yeah, I do like it. Once you make those first offer or second offer, it does feel like it’s starting to snowball and just getting more comfortable doing that.

Rob:
Yeah. So looking ahead, as you kind of walk down your path here, I know we’re at the 90 days, but what homework and what next steps would you assign yourself as you kind of go on to your next 90 days?

Danny:
Yeah. So go… 90 days flies really fast, by the way. But the homework, key is to keep making those offers and keep the momentum going. Additionally, I’m finding as I’m collecting more data over the months, there isn’t a lot ton of properties that fit this buy box, this 10 to 20 multi-family buy box. So now I’m thinking as I’m kind of churning through the existing inventory, what else do I need to do next? So I think about two things. I think are there ways to create more opportunities, things that are not necessarily listed, things that I learned from the single family and the small multifamily world where you couldn’t go bird dogging or talking to people that have properties that may not be up for sale now and just continuing having conversations with them and seeing where there’s opportunities to go and put offers in or say, “Hey, are you looking to sell? If you’re ever looking to sell, give me a call”?
And then the other part of it is being realistic and reevaluating that buy box every once in a while. So as I mentioned, there’s a limited set of properties out there today. So is that pool big enough to continue down this path or should I extend that box a little bit? In the beginning, I think the first episode, Rob, you had talked about you kind of pushed on me, “Is this really where you want to be? Have you thought about other things?” So I am not necessarily changing my buy box, but I feel like I’m open to expanding a little bit more. So instead of that one 10 to 20 unit, are there opportunities for a couple of eight-plexes? Are there different ways that I can look at it and make that similar numbers or similar goals work, just kind of approaching it from a different way.

Rob:
That’s good, man. The more you open that buy box, the more of those opportunities will start falling in you up. Things that you probably had in front of you the whole time that now you’re just like, “Ooh, that actually seems like a cooler deal than I remember.” I think that kind of stuff will start coming across your desk more. David, what about you? You got any final words here to send Danny off on his next 90 days, if you will?

David:
You know, as I’m listening to you talk about your struggle, it’s a very common one where you have set personal goals, okay? “I want this many properties by this much time with this much cash flow and I’m willing to do the work to get there.” What I realized as you were talking is oftentimes real estate does not line up with our personal goals. What the market’s doing can sometimes be working against you. So imagine that you’re in a river and there’s no current at all. You got to swim really hard to get where you want to go. Well, sometimes the current goes with you and it makes it much easier. This current of real estate flows with you. It flows fast, it flows slow. And sometimes it flows against you and you’re swimming against the current, which is kind of the case of where we are right now.
You can’t get discouraged when real estate doesn’t line up with all our personal goals. It’s not completely independent like other things would be that we have complete control over maybe our fitness. We control what we put in our mouth, we control how often we work out. You’ve got a situation with real estate where the market’s tough, not a lot of deals are working out, but there’s not much inventory either. So we’re in this stalemate where deals don’t work, but there’s not so much inventory out there the sellers have to drop their price. The current is flowing in your face and you’re having to swim against it. It is not uncommon to bust your butt swimming and become a really good swimmer and think you’re getting nowhere. And then the minute the market shifts and the currents behind you, you’re flying past everyone else, okay? So it is not a linear progression. It comes in these short spurts where you can get a ton of good deals and make a lot of money, and then sometimes longer marathons where you’re not really making as much progress and it can be discouraging.
So don’t get caught up by the people that bought a bunch of houses between 2010 and 2013 and they crushed it and you’re like, “Well, how come I can’t go do that?” It was a different market. And don’t be discouraged when you’re out there networking and analyzing deals and riding low offers and learning about real estate, but you’re not getting anything under contract. You are still getting stronger. You’re improving your ability to swim and it will turn around, but you’re not in control of when that happens. All you’re in control of is the action you take, the attitude that we bring, and the level of commitment that we have. So you kind of have to trust the process over the long term and fight those feelings of like, “Why am I even trying?” Because Rob can attest, when it turns around, it can turn around so fast.

Danny:
Absolutely. You don’t want to be in that zone where you give up too easily. And that’s kind of where I’ve also been thinking about like, “Hey, I’ve tried a couple things, should I go shift to something else?” I think there’s a balance there of trying enough or putting in your best effort and making sure that you’re staying consistent and not just giving up and jumping to the next shiny object. And I’m very aware of that.

David:
Yeah, 100%. Great attitude. All right. Well thank you for that, Danny. Let’s bring the rest of the group back in. If you guys could come back and I’m going to hand it over to Rob.

Rob:
All right. So looking back on where you were 90 days ago, would you say that your goals have changed since then? Wendy, I’d like to start with you because I know that you’ve shifted a few times on some of the strategies, but how have your goals changed since the beginning of this journey?

Wendy:
Right. So one of the goals that I’d outlined initially was around my career and moving more into something real estate oriented. I think I was able to get some clarity through guidance by you guys and just really starting to put to think through it that I’m going to stay in my career doing what I’m doing as a marketing professional because I know it, I’m good at it, people pay me well to do it. And until I’m at the point where I’m doing something in real estate that a job kind of comes to me, I’m not going to go try to be a loan processor or go try to be a syndicator. If something works in what I’m doing, whether I’m doing short-term rentals for myself and then I decide to take that on, that would be the better career path for me that I could get into it that way. But in the meantime, kind of stay on the sidelines.
But all that being said, as David said I think in week two, it’s like it’s really tough out there to just be a real estate investor. You’re going to run out of money at some point. So what’s my next move there? Considering I’ve got nine houses that are turnkey now, and those bring in some income to me, the next step was to invest some more of my own money or find partners to do something else. And so the goal that I had there was to find a house that I could live in, maybe have an ADU, maybe house hack it. I’ve honed what I want a little bit on that. This is a good time for me in my career and the timing in my life for me to buy something that allows me to do that.
And so my goals haven’t changed, but I think I’ve done a lot of work to hone what that should look like. First, I think we talked about me moving into my Colorado property next year. I could still do that, but I think now’s the time for me to buy something else and turn that into it. So those goals haven’t really changed, but I’ve honed them a lot more just through your tutelage.

Rob:
Yeah. Yeah, totally.

David:
Well, thank you for that, Wendy. Philip, how about you?

Philip:
Yeah, I think some of the feedback that you were giving Danny about just following up and not being afraid to submitting an offer that the you’re told is ridiculous or offensive, I think those were things that I had a certain self consciousness about and I just kind of was like, “All right, I’m going to trust these guys. They have more experience than me.” And it definitely worked in my favor to just put the number that works for me. And if they tell me to go away, fine, but I’m going to come back in a week.
And so yeah, my original goal was to get the retreat center under contract. That’s something that we have right now. And sort of a little different from Wendy, I’m finding so many people that want to help with the vision that I have. And honestly, I’m running out of bandwidth with the number of things that I’m doing with my career and with responsibilities that I have with my family. When this comes out, I’m getting married two weeks after this episode releases. So my bandwidth is super thin and really the most important thing is the retreat center and locking that up in a good way. And yeah, I think just focusing on that is going to really pay dividends.

David:
What would you say would be your biggest win that you’ve experienced throughout this process?

Philip:
Yeah, I mean, the way that my network has been growing has been so cool. I have talked to so many people that have a lot more experience in me, certain people that have capital and they’re interested in investing. But really just feeling confident moving forward with the land and the retreat center that is still… We haven’t closed yet, so I’m not going to check that off, I’ve completed it or something like that. But it’s going to get done. So I’m really excited about that. I feel great about it.

Rob:
Well, it gives you hope, right? I know you said that you’re not through the deal yet, but sometimes hope is a win because at the beginning of all of this, you’re going roadblock against roadblock. You don’t know things, you don’t know how to maneuver it, and it can be very discouraging. But getting something in contract is like, “Wow, things are shaping up for me. And even if it doesn’t work this time, at least I have this one win to give me hope for the next time that I go under contract.” So that’s huge, man. Thanks for sharing.

Philip:
Thank you.

Rob:
Danny, what about you? How has your thinking changed over the last 90 days and what about your actions?

Danny:
Yeah, so my thinking has changed. I think I can categorize it as moving from more of a bookworm mindset to more of a networking mindset where I’ve always been somebody to really necessarily analysis-paralysis, but dig deep and learn a as much as I could about things. I felt like in the beginning that kind of limited me to taking action. So just being able to shift from that, constantly sharpen your ax and taking that big swing to finding a balance where, “Okay, I think the ax is sharp enough. Now I need to move on to the next thing. I need to build up this network. I need to talk to more people. I need to go take some action and put those offers in.” I think that mindset is the biggest shift for me.
I guess for my actions, similar to Phillip, these 90 days when you’re adding these kind of goals on top of your daily life and all the things that you have going on, it’s really forced me to prioritize what’s important and figure out ways instead of being crushed under the pressure, figure out ways to make sure I can get these done. How do I get these things done? From our last podcast, making the most of my in-between time, figuring out what are the highest and best value things I can do with my time and what needs to get done, but I don’t necessarily have to do them. So I’ve engaged virtual assistant and leveraging my partners more have really given me the opportunity to open up and spend more time on what I think is the most important things.

David:
Success is a function of who we become, not just what we do, right? Now, we often say taking action is required to have success, but that’s because taking action improves who you are. And then as who you are improves, success finds you. That’s one of my favorite things I’ve found about your journey here, Danny, is you’ve embraced the fact that parts of you need to improve or parts of you need to change and become more flexible. You have embraced networking. You’re writing offensive offers that you never would’ve wanted to do. You’re putting yourself in these uncomfortable situations knowing that that’s going to help. And it’s not only going to help you with real estate investing, it’s not only going to help you with growing your wealth. Your overall life, your relationships, your friendships, lots of other things benefit when we do step out of that comfort zone and find improvement. So I just want to commend you on taking that step.
Really you, Philip and Wendy, all of you who have come on here and admitted, “I made mistakes, I did things wrong. I looked into something I never thought I would do. I took this action and I didn’t get the result that I was wanting,” but you are closer to becoming the person that as is going to get it. I know for you, Philip, congratulations on your upcoming wedding. This is going to make you a better husband. It’s going to make you a better partner. Hopefully, that’s going to rub off on your partner and they’re going to want to sort of jump in line with it and do things that are outside of their comfort zone, get more focused. Like Danny was just saying, focus on where time can be better spent. All of us become better versions of ourselves when we commit to this process. So I’m proud of all you guys.

Danny:
Thank you very much. This has been a lifelong dream mark. I can’t say a lifelong. I can’t literally say lifelong, but kind of when I started this journey, being on BiggerPockets was one of those goals that I thought was several years away. So thank you very much.

Rob:
Awesome, man. Well, thank you guys. We really do appreciate all the vulnerability and just checking in with us and staying to it and actually coming back with homework and the assignments that you completed. You get out what you put into this kind of thing, right? I’ve seen so much of what y’all have put into this, so I’m excited to see and keep up with y’all over the next 90 days and see how things change. If people want to learn more about you, if they want to get in touch, if they want to find you online, where can people get in touch and follow along with your journey? Danny, I’ll start with you.

Danny:
So Instagram, I just started Investor on Fire Instagram account and posting a few things there. I’m learning. As I’m going through this process, I want to start uploading more reels and kind of putting more of that out there.

Rob:
Awesome, man. Investor on Fire on Instagram. Wendy, what about you?

Wendy:
I’m wendysc_invests on Instagram. You can also find me on LinkedIn at Wendy St. Clair. A lot of people have found me there. I’m not as active on Instagram as so many other people are in the world of real estate, but I’m going to try to get a little bit better at it. wendysc_invests.

Rob:
Okay, awesome. And Philip, what about you, man?

Philip:
Yeah. So on Instagram and LinkedIn, I’m the_educated_investor. I have a podcast called The Educated Investor where I interview incredible people in the real estate and entrepreneurs and find out how they did it. And I have a website, educatedinvest.com where I have all my podcasts and all the good stuff.

Rob:
Okay, awesome man. Educated_. Give us the Instagram handle one more time.

Philip:
[inaudible 00:44:57] too complicated. The_Educated_investor with underscores in between them.

Rob:
Okay, cool.

Philip:
You can see a picture of my shining face.

Rob:
Great. And then David, what about you man? Where can people learn more about you?

David:
You can go to the_agent_BiggerPockets_flipper_buyandhold_mediumtermrental_bald_wealth builder. Just kidding. No, you can just go to my website. It’s just been remade, davidgreene24.com. You can see all the stuff I got going on. And then if you want to follow me on YouTube or any of the social media stuff, I’m @davidgreene24. It’s kind of the opposite of Philip. At least his handle makes sense, you know what it is. You see mine, you’re like, “What is DavidGreene24? Is this a diner that he owns? Does he think he’s Kobe Bryant? Is he saying that he works 24 hours a day?” It’s very confusing and frankly, I don’t blame people for being confused. Rob, how about you?

Rob:
You can find me over at www.If this was a good episode and it inspired you to take action, please consider leaving us a five star review on the Apple Podcasts platform or wherever else you download your podcasts.com. I know it’s really long, but everything else was taken. So yeah, if this inspired you to take action and get started or optimize or scale your real estate journey, leave us a five star review and thank our awesome guest mentees here in the review.

David:
Absolutely. Thanks again to all of you for doing this. And thank you listeners for following along on the journey. We hope you’ve been inspired, that you’ve learned something. And please reach out to all of our guests and just tell them thank you for being transparent and vulnerable and signing up for this. It’s not always easy or fun to be in the spotlight, but they are willing to do it because we care about all of you and trying to give you best experience and the best show possible that we can. This is David Greene for Rob www.abasolo signing off.

CNBC’s Diana Olick on why the housing market is in deep trouble. With CNBC’s Sara Eisen and the Fast Money traders, Tim Seymour, Courtney Garcia, Jeff Mills and Steve Grasso

Ashley:
This is Real Estate Rookie episode 268.

Tony:
I think a lot of rookies maybe make the wrong assumption that they need a license to be real estate investors, when the majority of real estate investors that I know don’t have their license, and instead, we hire someone who is an expert in that specific thing and we leverage their expertise, because my agent in Joshua Tree, him and his team, I absolutely love them because they have the process of buying and selling real estate down to a science. Like, if I forget to schedule my inspection, his transaction coordinator is saying, “Hey, I’m going to schedule your inspection for you.”

Ashley:
My name is Ashley Kehr and I’m here with my co-host Tony Robinson.

Tony:
And 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 kickstart your investing journey. As always, I want to start today’s episode by shouting out someone by the username of KSP75. KSP left us a five star review on Apple Podcast. It says, “I own a multifamily home and my family lives in part of the house, so I have some exposure to tenants, leases, et cetera. Real Estate Rookie is fantastic to listen to as it gives information, guidance, and confidence to move to the next level of real estate investing. I plan to devour every episode, take notes, read, research, and be 100% ready with absolute certainty to pounce on my next deal when the conditions are right.” So KSP, we appreciate, you and I love that you’re going to have the information, guidance, and confidence soon to take that next deal down.

Ashley:
So Tony, what is new with you?

Tony:
I got a different color shirt on today, so I’m rocking the maroon. I guess. It’s almost black, but not quite.

Ashley:
I had to turn up the brightness of my phone because I still thought it was black until the producer said something and I turned the brightness, I’m like, “Oh yeah, it is a different shade.”

Tony:
I think I might try a different color for 2023, so we’ll see. But no, on a serious note, we’re actually, I think I’m going to be flying out to West Virginia this weekend. We just got an LOI signed on a deal we’ve been looking at out there. It’s really cool piece of land that we’re looking at. It’s about six acres, and it’s near a new national park out in West Virginia, and the property itself has a main house, a guest house, five RV pads, and then it also has the permitting to add a bunch of glamping sites as well. So the idea is that we’re going to buy that property, add the glamp sites, renovate the primary house, and then probably buy a few Airstream campers as well to kind of make it a little destination out there. So we’re excited for it.

Ashley:
That’s awesome. That’s really exciting.

Tony:
Yeah.

Ashley:
Have you been to West Virginia before?

Tony:
Never in my life. This will be the first time.

Ashley:
When I was younger, I used to go to the IBO World Championships for archery there. Me and my dad and my brother would call [inaudible 00:02:51].

Tony:
You were in the world championships for archery?

Ashley:
For like one league, the IBO League, but yeah.

Tony:
Why am I just now hearing about this? Have you ever told me that you were in the world championships for archery?

Ashley:
I don’t know. I mean, I feel like it’s not that big of a deal. I don’t know. But yeah, I used to do 3D target archery shooting when I was younger.

Tony:
I mean, how many people can say that they’ve been in the world championships for anything?

Ashley:
But anyways, it was at Snowshoe Mountain each year in West Virginia and I just loved going there. It’s like a little ski village on top of the mountain, and it was super cool. The whole archery tournament would be walking up and down the hills to do the 3D shoot and stuff, so it was really cool.

Tony:
Yeah, I’ve never been, so I think we’re going to take off this weekend and it’ll be kind of a quick turnaround trip, but we’re super excited. This will be our first time doing anything with glamping. Wasn’t even really in the game plan, but the property kind of presented itself. Actually, this person reached out to me on Instagram, and I’m not the best at checking my DMs, but every once in a while I’ll go through and kind of try and clear them out, and someone had sent me a deal, was like, “Hey, yeah, I’m looking to offer at this.” So if you guys have some other good deals that kind of fit that criteria, please continue to send them to me because this wouldn’t have happened without that guy.

Ashley:
I’m also going away this weekend, but unfortunately it’s not for a deal. It is for a real estate girls weekend in Las Vegas. So some women real estate investors have become my closest friends. So we are having a girls weekend in Las Vegas. We do a lot of trips together, but it’s usually our whole group of friends, but this time it’s just going to be a couple of the girls, and yeah, we’re about to take down the Las Vegas strip.

Tony:
As long as you don’t have more fun with them than you had with me and Sarah last summer, I think it’s totally fine.

Ashley:
Well, you know what? I think you’re safe because the pools are closed this time of year, so there’ll be no pool party.

Tony:
No pool parties.

Ashley:
But I’ve also, I’ve been to Las Vegas, I don’t know, probably 12 times, but I’ve never been to a Las Vegas nightclub. That’ll probably be my first time this weekend.

Tony:
Well, as long as it ranks your second most fun Vegas trip, and I think we’re square. We’re good.

Ashley:
So today on the Rookie Reply, we actually have some great questions that our producer pulled from the Real Estate Rookie Facebook group. So we’re going to be talking about cleaning for turnover. So after a tenant moves out, how you should charge for it, what’s common, different ways that you kind of charge for the cleaning. Also, a little bit of seller financing, if the seller does offer that to you, how does that work along with getting bank financing in the same place, and then we talk about getting a survey done on a property. Tony and I have very different experiences with that, so if you guys want to weigh in as to what is common in your area, we’d love for you guys to hop in onto the YouTube comments and comment below as to whether you typically do or don’t get a survey when purchasing a property and why.
Okay, so today’s first question comes from Jason Dorsey. “When purchasing a property, what’s the purpose of getting a survey? The realtor is asking if I’m going to get one.” Okay, so a survey, a survey is of the land. So where the boundary lines are, you’re going to find out where, how large the parcel is, so how many acres and where those lines actually go. So what is your property that you’re actually buying and what is the neighboring property. Tony, is it common for people to get surveys done where you live to purchase the property?

Tony:
At least not the properties that I’m buying. I don’t think a realtor or anyone or even my lenders have ever asked me to get a survey, but also our parcels are pretty small. I think the lot lines are pretty well-defined typically. So maybe that’s why it’s not as much of a concern for the markets that I’m in.

Ashley:
Yeah, I don’t think I’ve ever closed on a property without having a survey which is interesting.

Tony:
Isn’t that so crazy?

Ashley:
Yeah. For here, it’s very common to have the survey done, and usually, typically, the seller pays to have the survey done where a surveyor comes out, marks the property, maybe stakes the corners of the lot for you, and then draws out basically the survey map. They’ll put usually where the house is located on the property, the property lines where a street is. Sometimes though a person maybe already had a survey done maybe previously when they purchased the house, or I bought a little A-frame cabin last year and there was an old survey from like the ’90s, and I accepted that survey and just had the seller sign an affidavit of no change stating that they were saying that there was no changes to the parcel line. Usually it’s only recommended that you go back and accept a survey that’s maybe only a couple years old, just to have that sense of security that there weren’t any changes to the parcel and to your survey lines.
I did have a property that when the survey was done, there was a dispute with the neighbors that it wasn’t actually done correctly, and we didn’t close and our closing was pushed off until that actual dispute was done and the lines were actually defined as to where the parcel actually went. This is where you can also find out if there’s easements on the property too. Around where I live, it’s very common for an easement to the gas company where they have a gas line. Actually, on my primary residence, we have a gas well, and there is a road that goes back to the gas well on the property that the National Fuel is the gas company that they can go and have access to at any time. And then they pay, we get free gas to our house which is great. Yeah, unlimited consumption, which you don’t even hear that these days. So just there’s different things like that you can also find out from having the survey done on the property.
So if it’s recommended from your real estate agent, ask if that’s something the seller is going to provide. If not, you can always pay for the cost of the survey to be done, and depending on the size of the parcel, I mean, typically I see for a couple acres, not a ton of buildings or anything on it, it could range from 400 to maybe $1,000 at the highest.

Tony:
Interesting. Yeah, I’ve literally never heard of that. I’m looking through closing docs as you’re talking for some of our old properties to see if maybe it was in there and I just didn’t even notice it, but I don’t see anything about a survey in any of the documents that I have. The closest thing that I have, it even shows the lot lines, is from the title report and the very last page just has like a bird’s eye view of all the different parcels on that street, and it just kind of outlines which parcel is ours. But no, that’s so interesting. I’ve literally never done that before.

Ashley:
Yeah, I’m actually shocked too about that one. We had the episode where we talked about wells and how you guys don’t typically have wells where you were first purchasing, but yeah, for a survey, to have that done. Yeah, I would recommend getting a survey done or seeing if they have one already done. It just, it makes things a lot easier too if you’re getting bank financing. I’ve recently had banks ask for a copy of the survey too which I previously hadn’t had that done, but I just did a commercial loan where they asked for a copy of the survey.

Tony:
Yeah, and now it makes me wonder if I’m maybe opening myself up to issues down the road by not doing that survey when we are purchasing the property, especially if it’s only a few hundred bucks. It’s just to make sure that there are no issues with the property lines or what if the neighbors fence is like 10 feet further than what it’s supposed to be. You can see some of that stuff, like my realtor, they use LandGlide, the app or something. So if we’re at the property, they’ll like, “Hey, here’s where the line is,” and stuff like that, but it’s probably something we should take a little bit more seriously now that I’m hearing about this.

Ashley:
Yeah, we use LandGlide too and onX Hunt. We did a little experiment actually a couple weeks ago where this 30 acres I had bought, we walked the property line. It was right after hunting season had ended, and it was amazing how close some of the tree stands were that were for the neighbors that were… They were facing towards their property, but there was some instances where it’s like, “Eh, that actually might be on our property,” their tree stand. But the onX Hunt we did notice, and the LandGlide, was a little bit off from where the actual stakes were in the corners of the property too. It wasn’t super accurate.

Tony:
Spot on.

Ashley:
Yeah.

Tony:
Cool. Well, should we should move to question two?

Ashley:
Yeah, let’s go to the next one. “Can you share pros and cons in getting your real estate license just to help yourself in real estate investment deals?” This question comes from Teresa Molter from the Real Estate Rookie Facebook group. If you guys aren’t in the Real Estate Facebook group yet, make sure you are joined. It is worth signing up for Facebook just to get into this group, and you get to connect with a lot of like-minded investors and also ask questions that we may play onto the show. So Tony, neither one of us have our real estate license, but Sara is getting her license, correct?

Tony:
Sara is working on getting hers. Even as she’s gone through this whole process, she’s almost at the finish line now, and we’re still debating does she even need to go through the final step of taking the test. There’s a few things that we’re looking at, right? First is it’s a pretty lengthy process in California to get your license. You have to take three courses, there’s some additional certifications you have to get, and you finally have to take this exam which is a pretty lengthy exam as well, and obviously there’s some costs associated with all of this as well. But it’s not like in 30 to 45 days you can have your license. It’s like a six-month ordeal at minimum, maybe even longer depending on how fast it takes for you to go through all the coursework.
So I think the first question that anyone should ask themselves, but Teresa for you specifically, is how much time and money and energy will it take for you to get your license. And then the second thing is what is your goal in doing this. You said that maybe it’s just to help yourself in your own real estate deals. Are you looking just that you have MLS access? Do you want to maybe save on commissions that you would pay to a buyer’s agent when you’re buying something or a seller’s agent if you’re selling something? What is your motivation for doing that? And then what is the volume that you think that you’ll actually use it? If you’re buying one deal a year, does it really make sense to go through the hoops of obtaining and maintaining that license on an annual basis or however frequently it is in your state?
I think a lot of rookies maybe make the wrong assumption that they need a license to be real estate investors, when the majority of real estate investors that I know don’t have their license, and instead we hire someone who is an expert in that specific thing and we leverage their expertise, because my agent in Joshua Tree, him and his team, I absolutely love them because they have the process of buying and selling real estate down to a science. If I forget to schedule my inspection, his transaction coordinator is saying, “Hey, I’m going to schedule your inspection for you,” or, “Hey Tony, just a reminder, your due diligence period ends in seven days. If you want to get your request out, let’s make sure we do that today.” So I do think, Teresa, that if your goal is just to save money, maybe not do it, but if you really want to be an agent, then I will probably go for it.

Ashley:
I started my real estate license like three times. I think I paid like $99 for the online course. This was, I don’t know, five years ago or whatever. You have to rebuy the course after a year or whatever. But it got to the same point as to why do I need it, and really the only reason I was going to get it was so that I could take myself to showings, so I didn’t have to schedule showings with somebody else, with an agent, and I could just go to the properties. Then I got to the point where most of my properties were off market deals. That was the only benefit really to me. Of course, saving the money on the commission, but I think it is worth paying the money to have somebody else do the paperwork, draw up the contract, talk to the other agent, deal with the things that come up.
Especially, I think it’s a huge advantage having an agent when you have tenants in the property and you’re trying to sell. Scheduling showings with tenants in properties can be a nightmare of just coordinating with them, getting them to grant access. I’ve gone to so many showings of properties where I’m supposed to get in a unit and we get there and it’s like, “Nope, sorry. The tenant said no or they were supposed to be here, they’re not. We don’t have keys,” things like that. I actually sold two properties within the last year that had tenants in place and literally I just, I went with a real estate agent who worked with my property management company, said, “This is what I want to sell it for. Here’s my property,” and he got all the tenant’s information from the property management company, he coordinated every showing with them directly. That right there was worth the commission in itself of having to do that.
I agree with Tony on this. If you want to actually run a business as a real estate agent and buy and sell houses for other people, then yes, it could be worth it because remember, there’s those continuing education costs. To keep your license going, it’s going to cost you money, it’s going to cost you time to take those continuing education classes too.

Tony:
Yeah, I totally agree, Ash. I think it comes down to the ultimate motivation. Just like you said, I would rather pay someone to handle all of the administrative work than me do that myself. But again, I get it. We’re kind of in different spaces in our real estate journey, so maybe it makes more sense for us to do that. But my personal thought, Teresa, is that if you don’t plan to make this an actual income source for you, I might focus more of my time on building my real estate business first and then looking at the agency stuff or the agent work later.

Ashley:
Okay. Onto our next question by Rick Watts. “Has anyone ever purchased a home with occupants in it? Anything I need to consider in trying to get them out? They were there with the permission of the previous owner, but there’s no lease agreement of any sort and they don’t seem willing to leave. I’ll probably talk with an attorney regarding my legal obligations. I’ll soul search a little for the ethical obligations as well. Just didn’t know if anyone has experienced this before.”

Tony:
Ash, can I start with a question to you first, right? I never buy properties with tenants. Even our flips that we purchase, a lot of times they are long-term rentals beforehand, but it’s always a requirement on my end is the buyer to make sure that the tenants have vacated. There’s actually a flip that we’ve had under contract for almost two months now because the seller is working to get those tenants out. So my baseline is just I’m not going to buy it if there’s a tenant in there because I don’t want the headache of having to try and evict. From you, from your perspective, if you have a property that you’re looking at purchasing and you already know that the tenants don’t want to leave, would you still move forward with buying that?

Ashley:
Yeah, and I think something with this question that Rick maybe didn’t know the do enough due diligence I think maybe as this property was under contract, because I think there’s some ways that he could have handled this before getting it under contract. Trust me, there’s so many things I wish I would’ve known on the first couple properties I did too.
I’ve boughten quite a few properties that have tenants in place, but what I do is I do an estoppel agreement where I compare what the landlord is saying to what the tenant is saying. The tenant or the landlord will either say, “Here’s the terms of the lease, here’s the lease agreement.” Or, if it’s in Rick’s situation, there’s no lease agreement, it’s will they just give me $400 cash per month and they’re month to month and this is their name, this is their phone number, this is all I have. Then I’ll contact the tenant, with the owner’s permission of course, and have them fill out an estoppel agreement which basically gives me more information about them but confirms what the landlord said. Are they saying their rent is also $400 a month? Are they saying that they’re actually in a five-year lease agreement where the landlord’s saying, “No, well you can get them out as soon as you close on the property”?
So there are steps that you can take. You can also use this as a negotiation too. I recently sold a property and the person purchasing it wanted the tenants removed from the property before buying. What we did was we gave notice for them to vacate. They were month to month, we gave the proper notice, they said, “No, we’re not leaving.” So we started the eviction process and we actually still closed on the property, but we held money back in escrow to pay for attorney fees if they had to continue with the eviction. We set a dollar amount, I think it was maybe like $1,200 or whatever to cover attorney costs if they had to continue with the eviction if the tenant didn’t leave. And so, when the tenant left on their own without having to proceed with the eviction, I was refunded that $1,200. And then if they would’ve had to go through with the full eviction, the buyer would’ve gotten to keep that $1,200 to help cover the cost.
There is some way that you can kind of address this issue before closing on the property is stating in your contract that the property to be vacant. In this exact situation here with Rick is you’re going to have to start the eviction process to get these people out of the units. Things to be concerned about is that there is no lease agreement to the property and you want to be careful that you go to court and all of a sudden a lease agreement appears. So getting some kind of documentation maybe from the previous owner stating that they were living there at this X amount, there wasn’t a lease agreement or they were month to month, something along those lines can definitely help your case.
But as far as doing your soul-searching for ethical obligations, you are well entitled to the right of that property, and just do the legal process of going through with the eviction. And then, Tony, you may know more about this as far as squatter rights. I mean, are they even paying any rent here or are they just living in the property? Because that can be a whole nother issue in itself where you would have to again go through the eviction process, but excuse me, in California I believe there’s very lenient squatter rights. Is that correct?

Tony:
I don’t own any long-term rentals in California. I never have. But I do know that, and don’t quote me on this because I could be a little off, but I’m pretty sure that even if someone just finds an open house and they stay there long enough with no permission from anyone, they can technically have rights as a tenant. It definitely is going to vary state from state, Rick. So chat with an attorney in your state to get that right information, but my preference has always been I just don’t buy property that have tenants in there if I don’t plan to keep those tenants.

Ashley:
Yeah, and I did a house flip with James Dainard in Seattle, Washington and there’s pretty favorable squatter rights there too. I always joked with him, well, if this deal goes south, I’m just going to move into the property and I can at least live there for probably a year or two for free to get my return back.

Tony:
Before you get evicted.

Ashley:
Okay, so let’s go on to our next question. This question is from Rob Young and also comes from the Real Estate Rookie Facebook group. “What are the risk associated with seller financing the down payment? I’m the buyer. The seller doesn’t own the home free and clear. I can get the mortgage but don’t have the money for the down payment. Seller is willing to extend terms. He would have to satisfy his mortgage when he sells. Any advice?” Okay, let’s kind of map this out maybe first. Okay, so Rob is going to get a mortgage to purchase this property. Okay, let’s just use, for easy math, let’s say he’s buying it for a $100,000. He’s getting a mortgage for 80%, so $80,000 and he needs $20,000. The seller is saying, “I will loan you the $20,000 for the down payment. You have to pay me X amount over five years,” or whatever that is.
So the thing with this though is that the bank is going to want to see where that money came from, especially if you’re doing it residential where you have to show that you earned that income or you had that money saved or that money came from you, or it was a gift from a family member. Seeing that you got the money from the seller may not qualify as proof of funds for the property. That’s the first discussion I would have is going to the loan officer, the lender that you’re using and ask about the situation.
If you’re doing commercial financing, I know that this happens quite commonly where the seller will do seller financing for the down payment. You disclose it to the bank, the bank runs the numbers and says, “Okay, this rental property can afford to pay its monthly expenses including these two mortgage payments, one to the bank for the $80,000 and the other to the seller for the $20,000. Approved. Go ahead. Let’s move forward.” But that’s my concern with this. Is this going to be residential financing or is this going to be commercial financing? So that’s kind of like the first step I would look at for this kind of situation.

Tony:
And I think, Rob, just to give you some clarity on kind of how the money flows between buyer, bank, seller, bank, because there’s a few steps in there, right? So going back to your example, Ashley, of say that Rob is buying this house for $100,000, he’s getting a mortgage for $80,000, and he has a down payment of 20, and let’s say that this seller maybe owes $35,000 on the house. Using round numbers, if they’re selling it for 100, they’re going to pay off their $35,000 mortgage, they’ll be left with $65,000 afterwards, right?
But Rob, the money just doesn’t flow from you directly to the seller. Usually there’s a third party in between. In California, we use title and escrow companies, and the way that it works is when the bank sends their check in for $80,000, they’re going to send that into title and escrow. Escrow’s then going to go to the seller and say, “Hey Mr. Seller, this money is for the property that you’re selling to Rob. We see that you still owe $35,000 to Bank of America for this property. So before we issue you any funds, we’re first going to pay off your $35,000 debt that’s due to Bank of America and you will get the balance which is 65,000.” So, Rob, you don’t necessarily have to worry about the seller paying off that initial mortgage because as long as you go through title and escrow, they’re going to make sure that any debt or any kind of liens, anything against that property are paid off before that money actually goes to the seller.

Ashley:
Yeah, so that’s a great point is you want to make sure that the money you’re paying, so that $80,000 in our example, would cover what is owed on the mortgage or that the seller does have the money. But like Tony said, that’s something that title will make sure happens at closing and you’re not all of a sudden going to own this property but there be another lien still left on the property from the previous owner.

Tony:
Ash, based on what you said, I do agree. I think it is common that you’ll see sometimes the seller will carry back some portion of the down payment, and honestly, I think there are some smaller banks, if Rob’s working with maybe a local credit union or something that might be comfortable with the seller having a second lien against the property as well. Rob, that’s typically where banks kind of feel weird, where they don’t want anyone in second lien position. They want you to have some kind of skin in the game and not another lender. But if you’re working with maybe a smaller credit union or local bank, maybe they are comfortable giving you 80k for the first and then having the seller give you 20k for the second. So I think it depends on what bank you’re working with.

Ashley:
Especially if you’re buying the property below market value. If you can show the bank comps and say, “Look, I’m buying this house for 100,000, but any other house that’s like this around me is selling for at least 150,000. I’m already buying it $50,000 below market,” or whatever that is, that definitely would help your case too.
Okay, so our next question here is from Eric Donno. “Cleaning and move-in fees, how do you work with fees? For my long-term rentals, I have been charging a move-in fee to cover a professional cleaning prior to move-in. My thinking was it’s better to do this than to take out the cleaning fee from their deposit on move-in. How do you deal with cleaning? Do you just eat the cost, take it out of the deposit upon move-in , don’t clean at all?” Okay, so this is more of a long-term question, but Tony, maybe after we go through the long-term rental situation, you can even cover it on the short-term rental side too.
For a long-term rental, you can charge a move-in cleaning fee. I don’t typically see this often. Really, I honestly don’t know if I’ve ever seen anyone do this. I mean, you can charge a fee, unless your state doesn’t allow you to do that. What I do is I do a cleaning checklist. When somebody moves into the apartment, they walk through with me and we do almost like an inspection of the property where they can say, “You know what? There’s this dent in the trim here. I don’t want to be charged for that. There is a stain in this corner of the carpet,” whatever these things are. They can go through and mark, or they’re going to go through and just say, “yep, everything is in great condition, great condition, great condition.” Maybe there’s a little wear and tear on one of the cabinets, they can mark that down. Document everything with photos, you as a landlord sign or the property manager, and then the tenant also signs, date it, and this is the date they receive their keys, they’re going into the unit. Okay? Everything’s fine and good.
Then when it is time to move out, they are given a cleaning checklist. I actually provide this upfront when they do move in. So hey, just so you know when you move out, this is everything that needs to be cleaned. I actually got this list from my sister. When she graduated college, she had to move away for a teaching job for a couple of years, and the apartment that she was in, I went to move her out when she was done and they gave her this cleaning checklist and it itemized everything as to if this wasn’t done, what you would be charged. So if you didn’t clean out the fridge, that was $10 or whatever it was. I mean, this was actually a pretty nitpicky list and where it’s wiping down the blinds, everything like that.
I remember my sister just freaking out that it wasn’t going to be clean enough. I mean, she literally did not even touch this place the whole year she lived in it or whatever it was. It was spotless. I remember the manager coming to do her move out inspection and he just glanced around, he’s like, “Okay, it looks great.” She’s like, “That’s it?” And he’s like, “Yeah, yeah, you took really good care of this place. Thank you.” And she had two days before spent just cleaning every little speck of corner even though there wasn’t even any dirt or dust in it. So implementing some kind of checklist where your tenants know ahead of time, this is the expectation for when you move out so there’s no surprise, and they’ve already signed that inspection sheet saying you both agree that it’s in good condition. There was nothing wrong with the unit when they moved in.
And then I always refresh, when they give their notice they’re moving out, give them that inspection sheet. That’s where you can write down this is the cost per an item. If the carpets need to be cleaned because there’re stains, they need to be professionally cleaned or something like that, that is $100 charge, whatever it is. Or, you can do a flat rate cleaning fee. If you don’t clean the unit, have this checklist of things cleaned, we’re going to charge you $250 because that’s what it costs us to have somebody come in and do that. And then when the tenants move out, they have their belongings. You come in and you do the walkthrough with the tenant stating, “Okay, this wasn’t cleaned here, this wasn’t there.”
In New York State in June of 2019, they actually changed the law where you actually have to offer the tenant to do the move out inspection prior to them actually moving out. When they give notice, I think it’s two weeks before their actual move out date, you have to offer them the chance to have an inspection there, it’s kind like a pre-inspection, so that they have the opportunity to correct anything. Say there’s a hole in the wall or something. This gives them the opportunity to patch and paint it, which if you guys follow me on Instagram, you can see that’s not always the best thing is to have your tenants do repairs on their own. That’s the way that I’ve done it and I typically see it is that there’s no fee charged and that can be taken out of their security deposit until after they have moved out.

Tony:
Yeah, that is a great breakdown, Ashley. The most experience I had with that was that property management company that I worked at after college, and their process was almost exactly what you just said where some period of time before the guests actually, or the guest, before the tenant was actually supposed to move out, they would do an initial walkthrough, and then the day that the tenant was returning the keys, they would do the final walkthroughs to make sure that everything was corrected. Whatever wasn’t corrected, they were billed, obviously taken out of their security deposit, and if it went over, then they would be issued an invoice, but they were billed for every item that was still outstanding. That was their process. But yeah, I don’t think I’ve ever met anyone that charges their tenants a move-in, like a cleaning fee when they move in to the property, but I guess Eric, if it’s working for you and people are still looking to say at your place and maybe it works, but like Ash said, there are a lot of other options there.

Ashley:
Okay, so that is it for today’s Rookie Reply. I hope you guys took away a ton of value from this. If there are questions that you want answered, please send Tony or I a DM on Instagram. You can leave a question in the Real Estate Rookie Facebook group where you’ll probably get a ton of responses before we’re actually even able to air the episode with our response on it. Thank you guys so much for joining us. I’m Ashley at wealthfromrentals and he’s Tony at tonyjrobinson, and we’ll be back on Wednesday with a guest.