August 2023

Logan Mohtashami, HousingWire lead analyst, joins ‘Squawk on the Street’ to discuss Mohtashami’s reaction to the morning’s pending home sales data, would-be sellers who now don’t want to move, and what it’ll take for new homes to be built in America.

The prevailing wisdom is that there is a shortage of venture capital (VC). Is this “wisdom” true? It depends on how you measure the shortage. If the “shortage” is measured based on entrepreneurs seeking capital, then yes. There is a shortage.

Entrepreneurial hopes always exceed the capital available. Entrepreneurs want growth. Growth requires skills or capital or both. Instead of skills, most entrepreneurs seek capital. Specifically, they seek early VC, which, unfortunately, is the wrong strategy:

· Early VC is scarce and has been used by only 6% of billion-dollar entrepreneurs. Entrepreneurs should be using the vast array of potential financing sources that are more readily available.

· 94% of billion-dollar entrepreneurs took off without VC by using finance-smart skills. Business schools and all the assorted venture experts should focus on this method.

Is there a shortage of capital?

As long as entrepreneurs focus on capital over skills, there will be a shortage of capital. Is there also a shortage based on the productivity of capital, i.e., based on financial returns?

#1. Only about 2% of VCs earn 95% of VC profits. 98% are average or mediocre.

20 VCs are said to earn about 95% of VC profits. Since the number of VC funds in the U.S. is estimated at about 1,000, this suggests that about 2% do very well and 98% are average or mediocre – they fail to live up to the lofty reputations of financial genius that VCs have self-promoted. Interestingly, SPAC promoter Chamath Palihapitiya notes that only about 10% of VCs make money. The rest are said to be money losers with a lot of their profits being phantom profits that their investors really do not see.

#2. VCs need homeruns if they want to succeed. VCs finance very few home runs.

Even the top VCs fail on about 80% – 90% if their ventures, according to one of the most successful VCs in the U.S. The top 2% earn high returns because they finance home runs. VCs need home runs to do well, and most VCs stink because they do not fund home runs. If there were a real shortage, wouldn’t more VCs finance home runs?

#3. VCs mainly succeed in Silicon Valley. VCs outside Silicon Valley are not as productive.

Most data shows that the Top 20 VCs are in Silicon Valley. This suggests that VC outside Silicon Valley do not do well. Silicon Valley has developed an ecosystem that churns out unicorns. The others have many experts and governments wasting money hoping to emulate this ecosystem.

#4. Entrepreneurs need to get to Aha! VCs do not know how you can get to Aha!

VCs finance after Aha, i.e., after potential is evident. Before Aha, many can point out all the flaws – but identifying potential winners is a guess – even Steve Jobs and Google were rejected by more than 10 of Silicon Valley’s finest VCs. You must get to Aha on your own – with your strategy and your skills to beat your competitors and create venture value. The problem is exacerbated by entrepreneurs who follow the VC method of focusing on the opportunity, entry strategy, and VC – rather than on the Unicorn-Entrepreneur method of finance-smart skills and bootstrapping growth strategies.

#5. Business schools focus on the VC-method, which helps about 20/100,000 ventures.

Can business schools be more productive? Most business schools teach opportunity analysis, strategy development, and VC financing. As noted above, this VC-method helps few entrepreneurs and few VCs, mainly in Silicon Valley.

#6. VC analysis seems to be deteriorating. Is too much VC creating FOMO?

VC Brian Grossman invested $96 million in Theranos and lost a lot of it. His due diligence is said to have raised a number of questions. But he still went with his instinct, due to FOMO (fear of missing out). Are these VCs sacrificing their analysis due to desperation – due to too much VC chasing hype?

#7. Are VCs sticking to the knitting?

VC has succeeded in emerging industries, such as Uber, or in high-margin ventures, such as Google. Masayoshi Son has lost $32 billion in VC. Without the circumstances of an emerging economy (China) or an emerging industry (telecom), even a great entrepreneur like Son has struggled. Is that because of too many VCs chasing too few great deals?

#8. VC returns and funding fluctuate with stock market exuberance. Is this skill or luck?

The Top 2% seem to have the talent to build unicorns at all times. The others seem to need Wall Street exuberance.

TechCrunchAs the value of startup exits craters, poor liquidity may be harming VCs’ ability to raise capital | TechCrunch

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VCs love hype because it creates profitable exits even for turkeys.

MediumHow VCs and founders are riding the SPAC wave into 2021

MY TAKE: Entrepreneurs should focus on unicorn skills to build real unicorns. But this is hard work – and most seem to prefer the hype and salaries of VC – even though very few entrepreneurs benefit from VC. It is unfortunate that business schools are following this hype and neglecting finance-smart skills.

The VergeTheranos drained $96 million from an experienced investor – plus some blood
Startupsavant.comVC Firms – Top Venture Capital Firms for Startups | TRUiC
NytimesVenture Capital Firms, Once Discreet, Learn the Promotional Game (Published 2012)
TechCrunchChamath Palihapitiya: It could take three years for the market to ‘accurately’ reprice late-stage cos | TechCrunch

Wealthfront BlogDemystifying Venture Capital Economics, Part 1 | Wealthfront

David:
This is the BiggerPockets podcast coming at you from the Spotify Studios in downtown LA with episode 812.

Jason:
I think it took about a thousand conversations before I actually got a really good lead. You can’t take the rejection personally because every single person that gets in a real estate, you get rejected. Everyone’s going to tell you no in the beginning, and it’s just a part of getting into the game. It’s the gate you need to walk through in order to become a real estate salesperson or an investor.

David:
What’s going on everyone? This is David Greene, your host of the BiggerPockets Real Estate podcast here today with my co-host and partner in Multifamily Investing, also, one of the smartest guys I know, and incredibly funny for a smart guy, we’ll say that as well. In addition to being good-looking, you’ve sort of hit the trifecta of what we want in a podcast host. So thank you, Andrew Cushman, everybody.

Andrew:
I don’t know what to say after that, man. That’s untoppable.

David:
I left you speechless. That’s how I keep more mic time. I just say everything you were going to say, like Eminem and 8 Mile, and you have nothing you can do to reply.

Andrew:
Yeah. You’re out right now. I’m doing well. Glad to be here in person. Glad to be back in California. Been traveling a lot so good to be home, especially since they dropped the charges.

David:
Oh, good to know. And also thank you for pretending like you understood that Eminem joke, which I know you’re going to ask me later, what the hell that meant.
In today’s show, you and I are interviewing Jason, who’s sitting here with us right now who has an incredible story that has gone from being a very hardworking student in school, to a hardworking broker, to a successful broker, to a badass real estate investor, which is why you’re being interviewed on the biggest, the baddest, and the best real estate podcast in the world. So glad that you’re here.
Andrew, what should our listeners keep an eye out for to help them in their own investing journey?

Andrew:
There’s a whole lot. Throughout the entire show, Jason dropped all kinds of knowledge and just inspiring things, but I would say two that really stood out to me, was one he talks about he just worked his tail off to get that first deal, got it right to the finish line, and then it seemed like the whole thing blew up on him, and it almost took him out of the game. It almost emotionally crushed him.
And what he did, part of how he got past that is he zoomed out and looked at the big picture and the skills that he had learned in the business and the pipeline that he had built, and that helped him carry through and make sure you listened through to find out how he did eventually end up saving that deal.
And then also in line with that, is he focused on learning the skills. He wasn’t focused on, “Okay, I got to get this deal.” Or, “I have to go over here.” Or, “I have to get this partner.” Or, “I don’t have the money.” His focus was, “I am going to learn these skills necessary to become an investor, to become an entrepreneur, to learn real estate, and everything else will come from that.” I think that’s a huge part of why he’s so successful at such a young age in a very difficult market.

David:
There you go. So listen all the way to the end of today’s show. If you want to hear more about how Jason has been able to build a portfolio with a very impressive worth, which we’re not going to reveal here, you got to listen all the way to the end.
Before we get into the show with Jason, today’s quick tip. Pick up the phone, not once and not twice, but a lot of times by building in the reps that you need to get the deal. Andrew, how many phone calls did you have to make before you got your first flip?

Andrew:
4,576 rejections.

David:
And Andrew will tell you all why that is like taking the stairs, not the escalator in today’s episode.

Andrew:
That’s right.

David:
All right, my brother, let’s get into it.
Jason Lee, welcome to the podcast. For everybody listening, Jason has 119 units across 17 different properties. He’s been investing for just three years. He got started in 2020. So for everybody who says all of your guests made a bunch of money in the past, well, not this one, this has happened over the last three years.
Once lost a hundred thousand dollars to a terrible contractor. And as a fun fact, he loves dogs and plans to start a nonprofit that helps dogs who need homes and veterinary care. You just got a collective, “Aww.” From a huge percentage of our audience there. Well done, Jason. Welcome to the show.

Jason:
Thanks for having me, David.

David:
Yeah, so before we get into your backstory, tell us briefly how are you adapting or pivoting your strategy in today’s market?

Jason:
Yeah. Today’s market, it’s definitely tougher than it was in 2021 and 2022. It’s definitely slowed down considerably in my world. So I think to pivot, what I’ve been doing is reinvesting a lot of money into marketing, going all in on marketing because usually when things slow down, companies tend to shrink and lower their marketing budget. But I’ve been trying to reinvest my earnings into more marketing, to try to take more market share while some people might be claiming up while the market is slow.

David:
All right. And then what about the price of the properties? Are you kind of like, “Hey, whatever it is, is fine.” Or are you really narrowing down on what you’re paying?

Jason:
So definitely been a lot pickier lately with pricing. I think, I invest in San Diego. So in San Diego things are very economically sound. There’s a lot of great fundamentals to where nothing points to a big crash.
We’re over 70,000 homes behind on being the amount of demand of people that want to live in San Diego. We have no inventory. So in that sense, we’re not scared about our exit. But then again, interest rates is a huge question mark and some other global economic factors. So just because of that, we’ve been definitely put a bigger pad in our underwriting to make sure that the numbers will pencil no matter what.

David:
So before we move on, when you do that, that obviously means more deals won’t work. Have you found that that means nothing’s working or are you still finding something even with that bigger pad?

Jason:
So with the bigger pad, you’re 100% right. More deals are not working, but we’ve been able to do four deals in the last six months. So we’re still seeing deals that work in our newer, more strict underwriting.

David:
Okay. Excited to get more into this real estate success that you’ve been having, but before we do, let’s go back a bit in time first. What was life for you like, growing up?

Jason:
Yeah. So life growing up, I was born in Seoul, Korea. I was born in a US territory. My dad was in the army and my dad actually met my mom there. She spoke no English, was just Korean, grew up there. And then my dad, when he retired from the army, decided to move us to California, a small town in the East Bay. Clayton, California. I don’t know if you know where that is.

David:
Wow. I live in Brentwood, man. I’m very close to Clayton.

Jason:
Oh, no way.

David:
We sell houses out there.

Jason:
That’s awesome.

David:
I was a deputy in the county where Clayton is.

Jason:
Oh, cool. Yeah, so that’s where I grew up. I grew up in a little, you know where Ed’s Mudville Grill is?

David:
Yeah.

Jason:
I grew up right behind there. So I lived there until I was 18 and moved there when I was seven. And my dad was a full-time security guard. My mom jumped around from business to business and then eventually her last business failed, which was kind of like a small juice shop.
And then from there she started a house cleaning business, and from that, I think that really shaped how I wanted my financial future to look and how I wanted to give back to my family, because growing up, every single conversation or every fight that my parents had, it was always about-

David:
The money.

Jason:
“How are we going to pay the mortgage next month?” Every single month. And ever since I was eight years old, that’s kind of what was ingrained into my brain. So I actually was very fearful of money and was scared to actually even do anything to make money just because I knew that money was a big trigger for my anxiety.

David:
Very similar story for me. Sounds like Andrew might’ve been the same case for you, right?

Andrew:
A little bit different. We are solid middle class. We didn’t have struggles, but we also had a tight budget to fall and pay attention to.

David:
What I noticed in my childhood is that lack of money equals pain. That’s what the cause the fighting, is they’re scared, there’s fear. Where there’s fear, there’s pain. Little kids don’t like to be around their heroes who are supposed to keep them safe, being afraid. So you probably recognize money as the monster. If you don’t have it, you’re in trouble.

Andrew:
Everyone says money can’t buy happiness, and that absolutely is true, but it can eliminate a lot of the things that cause unhappiness.

David:
Good point.

Andrew:
And stress.

David:
Yeah. So did you make an inner vow, “I will never be broke?”

Jason:
No, I did not. I think the first thing that kind of really got me motivated was when I grew up and kind of grew my empathetic side of my brain, when I went to college and moved away, that’s when I actually got closest to my parents because I saw how other people grew up. I saw how good some people had it, and I saw how much my parents struggled compared to some of these other families at San Diego State University.
So I just really just made a pact one day, middle college that I was going to somehow give back to my family. And I’ve been able to do that, fortunately, still am, but that was kind of the first pact I made. I never wanted to be just rich for myself. That’s not how it started.

David:
So you mentioned going to college. What were your expectations when you first got there?

Jason:
It’s a great question. So when I first got to college, all I cared about was rugby. Rugby was my first passion. So in high school I started playing rugby. I played football as well, but I really fell in love with rugby. But I was excited to go to San Diego State to play for the rugby team there. And then that ended up not working out because I had about seven or eight diagnosed concussions in high school.
So I told the honest truth to the trainer at San Diego State and she couldn’t clear me. So that was gone right away. So I kind of had that loss of identity when I first got to college because I didn’t know what I wanted to do. I had been an athlete my whole life. All I cared about was eating right and working out and playing sports.
And when I got there, I knew no one. I just found out I can never play rugby again. And my parents were my ear saying, “No matter what happens, you’re going to go to grad school for whether it’s being a lawyer or a doctor or an engineer, whatever it is.” So I was just a very confused kid with a lot of bad and good influences, I guess you could say.
And my expectations, I really didn’t have high hopes of college. I just thought I was going to be studying all the time and going to grad school and have a normal life. So I thought I was just be going through the system like a usual person.

David:
What was your college experience like Andrew?

Andrew:
Mine? I was living in Texas at the time, and my parents suggested, “Hey, why don’t you go to Texas A&M?” And I quickly responded and said, “I won’t be caught dead at that redneck school.” Well, a couple of years later, guess where I was going? And I went there, and I knew in high school I wanted to be an entrepreneur, but I just didn’t know how or what that looked like, I had no clue.
And so I figured, “Well, I like chemistry and I like problem solving, so I’ll go get a chemical engineering degree, that’ll give me a job that’s tolerable and I’ll always have something to do until I can figure it out.” And so I did that. I went and got a chemical engineering degree, double majored in meteorology for a while, and then also decided, “You know what? If I complete this, they’re going to send me to an outpost in the Alaskan wilderness, and I don’t want to do that either.”
So I graduated with an engineering degree and I guess it was an amazing four and a half years, but the freedom and creativity that you get to do as an entrepreneur, I would never want to go back, of just being in that environment of studying to take the test and not really to necessarily learn, and I found I was really good at that.
I could study something, remember it for two hours, write it back down, and then leave and completely forget all of it. And just looking back, that kind of feels like an empty thing to do. And I love being in this environment. Jason, you’ve absorbed so much in a few years, and that’s all self-taught, right? And self-learned, and from mentors, and that to me is much more exciting. So I had a good college experience, but today like what you’re doing, what we’re doing is just so much better.

David:
Okay. So Jason, you show up at college, prepared to be a good son, get good grades, get into grad school. What was your experience like?

Jason:
So my experience in the beginning, I was basically completely lost, like I said, didn’t know what exactly, if I wanted be a doctor, going to med school, going to grad school, whatever it is. But I chose the path of going down biology and trying to be a doctor, a physician.
So I took all the core science classes and there’s a lot of pressure on me because you have to get an A or B minimum to get to grad school, to go to med school. So I was living in the library, I was studying all the time, and there was this one class that eventually broke me and that was organic chemistry and that, if anyone’s taken that class, it’s the worst class I ever, have you taken it?

Andrew:
I have.

Jason:
You have?

Andrew:
I have organic chemistry 1 and 2.

Jason:
That was 1 and 2. Yeah. I’ll tell you why it’s terrible. So all day long, you’re drawing shapes with just different chemicals like carbon and nitrogen, whatever it is.
And I just had a thought in my head one day when I was studying for four hours straight for a test like, “Why am I learning this stuff? I’m never going to use this when I’m trying to actually help a patient.” So eventually, and it was just hard. My brain doesn’t work like that. And the way that organic chemistry works, you have to just, I don’t know, put different puzzles and stuff together. I can’t really explain it, but-

David:
Did you hate geometry?

Jason:
I hated geometry, yep. It’s kind of the harder version-

David:
It’s the chemistry version of geometry.

Jason:
Yeah, yeah, yeah.

Andrew:
It is. Yeah.

Jason:
I hated geometry.

David:
I’m guessing you liked geometry.

Andrew:
It was okay. Yeah. I mean, I was decent at it, but again, I kind of went into that stuff as something I could tolerate until discovering real estate.

David:
Did you also have a terrible teacher?

Jason:
No, my teacher wasn’t bad.

David:
Oh, that’s good.

Jason:
It was on the teacher, no?

David:
I had a horrible chemistry teacher in high school and I was like, “I just can’t do this.” I thought I was dumb. They were a terrible teacher. Then I found half the class failed. They were an intern that they stuck in there because they couldn’t find a real teacher. They was not good at teaching. And that whole time I thought I was terrible.
It was that, “Oh no, the teacher was really bad.” But sometimes that’s a blessing because this opened up doors for something else. So what was the light bulb moment after organic chemistry where you realized, “I hate this”?

Jason:
Yeah. So like you said, like Andrew said I could tolerate most of my classes, but that was the one thing I couldn’t tolerate. And that’s when I started looking around, like, “What else could be there, what other paths are there for me?” Because I never even thought about business going to college because my parents never really taught me much about business. I didn’t really know what that whole sales, real estate finance world was about. I knew absolutely nothing about it.
But every single, all of my friends in school, they were all business majors. They were all finance, marketing, entrepreneurship, every single one of them. And I just started asking questions, “What are you looking to do when you get out of college?” “I’m looking to go into real estate, be a financial advisor.” All that stuff. So I think just through networking and meeting people at San Diego State, that’s what kind of got me the light bulb running around, like, “What else could be there for me when I graduate?”

Andrew:
And is that how you discovered real estate? How did you, it sounds like they started kind of planting those seeds. Where did you go from there?

Jason:
I mean, to be honest with you, the huge moment where I eventually found real estate, I don’t know if this is PG enough for the show. It was-

Andrew:
I think they can bleep things out, right?

David:
I’m curious how on earth you’re going to turn real estate into something. PG-13, I think everybody wants to hear what you’re about to say.

Andrew:
Now we really want to know.

Jason:
Yeah, yeah. So it was finals week, my first semester of junior year for organic chemistry. And by this point I’d already been like, “I’m going to do something else. I have to do something else.” And I started investing in stocks, a little bit of finance stuff here and there, like Forex trading, bunch of BS.
And this one before finals, we go out to a concert in San Diego, and my friends and I decided to try magic mushrooms the first time. And we went to the concert, hit me like a train, and I became like a philosopher for the night. My whole world opened up. I started telling people what I was going to do with my life, “Dah, dah, dah, dah.”

Andrew:
Just like a Binance meetup.

Jason:
My left and right brain just connected. I swear. I got home. I gave my roommates a speech on how my parents are holding me back, on how science is a terrible path. I’m never going to be a doctor. And I woke up, changed my major to communication, and I went to every club on campus the next week and found real estate.

Andrew:
I think that’s one of the more unique paths to real estate I’ve ever heard.

David:
You just make it sound like psilocybin was, if everyone just took it, they’d immediately figure out what they want to do in life. There was nothing else that occurred in there. It was literally just left brain, right brain connect. You check every class or every course available, and then, a club you said, and then the real estate one just stood out, like, “That would be good”?

Jason:
Yeah. I joined the Real Estate Society. I joined the finance club, and my first event at the Real Estate Society was like a speed dating thing. So 20 professionals from San Diego met with 20 students, and we each had three minutes to meet every single professional.
And I connected really well with this guy named Brian, who was my old mentor, who hired me to be a commercial real estate agent. And he was talking numbers, talking about potential and what I’d be doing. And it just really resonated with me, my personality. I have a very type a go, go, personality. That’s what brokerage is. As you know David. So after that event, my first event at my school, I just started working in this company and that’s how I got into real estate.

Andrew:
How did you either convince him or get him, how did you go from a 3-minute meeting to working with him and his company?

Jason:
That’s a great question. Yeah, it didn’t just happen after a 3-minute meeting. So after 3-minute meeting, after the event ended, I was extremely scared to go talk to him after the meeting, but he said, “Feel free to come back and discuss more.” But I was in a corner thinking for four minutes on what I was going to say, because I knew nothing about real estate at the time. “What am I going to say to this guy when I come back?”
But I basically just came back and said, “Hey, I really enjoyed our conversation. I’d really like to work for you and see what you have going on.” And he told me it was a non-paid internship, no salary, no pay. Basically I’d give up my time for knowledge and skills. At the time, I didn’t understand that, but I said, “You know what? I really like this guy. I’m going to go for it anyway.”
So he invited me to his office and I met some of his employees, some of his agents, and I really liked the company culture there. I really liked what they were doing. There was guys that were doing very, very well at the company and the rest was history, I guess.

Andrew:
Awesome. Does he play any kind of role in your life or business today still?

Jason:
No. After I left the company, him and I haven’t really talked much. We ended on very good terms, but him and his partner, they’ve kind of taught me the whole business. But since we broke up, it was a good breakup, but we haven’t really talked to each other since.

David:
It’s a tricky thing, when it’s like you bring this person into the world and then they go and do their own thing. Sometimes if there are expectations where that’s going to happen, it’s okay, but it can hurt also, when you get an emotional connection with someone, that’s what no one talks about with partnerships. There’s an emotional component to them as well. So what time in history was this when you are moving up to be an intern?

Jason:
So, this was March of 2018. This was the second semester of my junior year. I just turned 21.

David:
Okay. And then when did you get your license?

Jason:
I got my license five months later, so in August.

David:
All right. And you’re still in college while this is going on?

Jason:
Yeah, still in college.

David:
Okay. So what are you doing there?

Andrew:
Failing organic chemistry?

Jason:
No. Yeah, no. Surprisingly I got a decent grade in that, but after that I changed to communication, like I said. So that was such a night and day shift from science. I didn’t study at all, just got through and got straight B’s. So I was focusing five hours a week on school, just going to class. And then Monday, Wednesday, Friday and Saturday, all day I would be at the office making calls.

David:
So you’re going to school, you’re studying, you’re doing your homework, and then when you have time, you’re just banging out stuff on the phone.

Jason:
Yeah. So I stacked all my classes on Tuesday and Thursdays, and then I would work four days a week.

David:
I did that too when I was in college. Same thing. Was it difficult to accept that you’re going to be making cold calls and getting rejected? How did you handle that?

Jason:
Yes. It was very tough at first. I had never ever gotten rejected like that before. I had no sales experience. So when I first came into it, I was the worst salesperson ever on the phone.
I got rejected really quick. People got me off the phone really fast. They knew how young I was just by my voice. So no one took me seriously and it took a lot of reps to eventually become good at what I was doing.

Andrew:
So that’s a really good point. So I’m in my mid-40s. I’m at the point where my once unlimited potential is starting to seem somewhat limited. You’re in your mid-20s, hopefully many decades ahead, which is a huge advantage, you’re starting early, but a lot of people in the audience, that’s one of the challenges is, “Well, hey, I’m young. I sound young. I have no experience. I barely know the language. How do I get people to take me seriously? How do I break into this?”
So could you speak a little bit more to that? So the person who’s listening who maybe just graduated college or just starting off, what did you do when you’re cold calling an owner of a 5-unit in San Diego? How did you get that person to take you seriously? And I’m sure a lot of them didn’t, right? And so that was part of what you were talking about, just pushing through.
But what would you say to the person who’s trying to do what you did in terms of having the internal strength to push through and to get people to take you seriously? Did you just own it and say, “Yep, I’m just getting started, but if you’re my first deal, you’re going to get more attention than anybody’s going to give you because your deal means everything to me.” Or was there, what tactics did you take?

Jason:
Yeah. So I think it took about a thousand conversations before I actually got a really good lead.

Andrew:
Been there.

David:
He knows his number. Ask him his number.

Jason:
What’s your number?

Andrew:
It took me 4,576 cold calls to get my first deal.

David:
Nice. That number makes it cameo in Long Distance Real Estate Investing, and if anybody wants to check that out. So you had to say a similar experience. You’re just getting rejected. Rejection sandwich every day for lunch, breakfast and dinner, with snacks.

Jason:
With snacks and dessert. Yeah, but eventually, I think the biggest thing that I want to mention is you can’t take the rejection personally because every single person that gets into real estate, you get rejected. So everyone’s going to tell you no in the beginning, and it’s just a part of getting into the game. It’s the gate you need to walk through in order to become a real estate salesperson or an investor.

David:
It’s like hell week, but it lasts for a lot longer than a week. It was dragged out for a 4-year period of life.

Jason:
Exactly, 100%.

David:
I was rejected by my own hairline. I got exposed to this earlier in life. I can relate.

Andrew:
Basically, it sounds like what you’re saying is, is just put in the reps and you’ll learn the language and you’ll be able to connect with people, and then you’re still going to get tons of rejection, but if you just hang in there eventually you’re going to make the connection and not get the rejection.

Jason:
Yeah. But there’s two more things that really helped me besides the reps. The first thing was I had a really good sales trainer. I had a really good broker that was teaching me on what to say, how to say it, teaching me how to be an expert in my market and how to analyze deals, how to understand the lingo, know what you’re talking about because if you sound like you know what you’re talking about, no matter how young you are, people are still going to take you seriously. And deal by deal, your track record gets better and better. So you can use that to your advantage, your testimonials.
But the thing that really moved the needle for me that I think is mandatory for anyone that’s young watching the show, that’s graduating out of college that wants to be in real estate is you got to have an older, wiser partner to go to meetings with you, to be on calls with you in the first year of your career no matter what.
Because if you go into real estate without a team just on your own and you’re trying to sell properties or buy properties and you have no guidance and no one by your side to go to those meetings to close sales with you or to close deals with you, you’re going to have a really hard time compared to the person like me that had that partner by my side.

Andrew:
Yeah. I mean, I would concur 100%. I had that too when I started off. It still took me 4,500 calls, but without that official mentor and my wife sitting next to me and I’d hang up and she’d be like, “Honey, that was good, but next time try this instead.” Yeah, you’re absolutely right.
Finding that person, whether it’s a paid mentor or you’re working for free or someone in your office or even a family member, is absolutely critical. It is so hard to see yourself objectively and fully enough and develop it all on your own.

Jason:
Commercial real estate brokerage is a revolving door and it’s a revolving door, not because of the lack of talent, it’s because the lack of mentorship, the lack of time people are willing to spend into these new agents, because if you just tell them to give them a script and a call and you don’t give them any guidance until they bring you a lead, which is what most commercial real estate brokers in the industry expect, a lot of your agents aren’t going to succeed.
And I’ve taken the opposite approach of my agents and give them a lot of guidance, a lot of training, being on every follow-up call to make sure that they know that I’m here and I care about them.

David:
So what came first? You’re banging the phones. Did you get your first deal or did you get a client first?

Jason:
So I got my first client from banging the phones. I didn’t buy my first property until I was three years in two brokerage.

David:
All right. So tell me about your first client. What type of a deal was it?

Jason:
I’m glad you asked. It’s a horror story. So the client was great. The client was amazing. It’s a horror story because of the circumstance. So this was six months into the business. Keep in mind I had no money in my bank account.
I had finally got a great lead and after doing my side hustles, going to school and trying to spend time into brokerage, I’d finally gotten my first really good listing appointment after six months and my senior broker crushed the meeting. We got the listing, I was on top of the world.
This was November of 2019, I want to say, no, 2018, sorry. November of 2018, four or five days after the appointment, the owner unexpectedly passes away and the owner didn’t have a trust for the property. So you know what’s coming next. It went into probate.

David:
It goes to the state, the state has to determine where it gets messy, process takes forever.

Jason:
Thank you.

Andrew:
Yeah, not fun at all.

Jason:
Not fun at all. So through a probate attorney, they told me it would take at least six months to a year to get it out of probate into the son’s hands and to be able to sell it. And when I got that news, I went home from the office that day, cried the entire way home, and I told myself I was going to quit real estate. I was done. “My family was right, my friends are right. I should not have gone into real estate. It’s way too risky. It’s a terrible business. I need to get out of this.” But something in my gut just told me to stay.
Something in my gut said, “You’ve learned so much in these last six months. You have a great team behind you. You have a lot of potential.” And for some reason I came in the office that day and just kept doing what I was doing, but I was very, very close to quitting the business forever.

David:
Those are some key linchpin moments in our lives. I can look back and remember several of them. And as you were talking, what I realized with a little bit more wisdom is it wasn’t just the experience that was so bad, it was my interpretation of the experience.
So what you were interpreting was, “I was told not to do this. I was told to take the safe route. I thought I knew better than everyone. I told them all, I know what I’m doing, get out of my way and now I’m wrong. I failed. I should have listened. Why did I trust my gut?” And that’s so dangerous because if you lose confidence in yourself, you’ll become a slave and live in the matrix for the rest of your life.
That’s why that was such a powerful moment that you didn’t quit because if you had quit, you would’ve been empowering the interpretation that you don’t have what it takes. And that would’ve become your identity and maybe the story of your life for a very long time, maybe 20 years before you give it another try. Maybe that’s why all these middle-aged guys end up getting Corvettes and it’s because they’re having to come out of that identity.

Andrew:
Finally, getting out of it. Yep.

David:
Yup. That they developed. But that didn’t happen with you. How did you respond instead?

Jason:
I showed up, put my big boy pants on and just said, “I’m going to keep doing what I’m doing.” I had a decent pipeline built, so I knew I wasn’t just like, “I had nothing going for me.” So I knew I had something going for me. And when I talked to my mentor about it and really just ran through what I was feeling, that it’s been six months I’ve made a single paycheck and I just lost any sort of chance I had of making one soon. And from that conversation and a lot of upbringing from my peers, I ended up just sticking with it.

David:
So your boys picked you up?

Jason:
My boys picked me up, the property went out of probate much faster. They did a really good job. It was actually out in two months. That ended up being my first deal. The check was a whopping $3,000. Huge check.

Andrew:
Still a check.

Jason:
Still a check.

David:
It’s funny that that’s what you were crying over, right? Like 3000 is nothing, but it’s the interpretation that was causing all the pain. It’s not the actual reality.

Andrew:
And Jason, you said something that I think it’s critical for everybody to listen to and remember and that you told yourself, a part of how you kept yourself going. You said, “Well, look, I know I’ve developed a pipeline. There’s more behind this.” And I think a lot of people underestimate the importance of that, is don’t focus on, “There’s just this one deal. I got to get this one deal.”

David:
It’s zooming in.

Andrew:
Yeah. You’re getting too far zoomed in. You were zoomed out in the big picture saying, “All right, you know what, this might fail. It’s like a gut punch, this sucks. But you know what? I’ve got more coming. I’m going to keep going and zooming out and keeping that perspective.” Is absolutely critical, especially when you’re getting started and is just build that pipeline out. So that was really good on your part.

Jason:
And I mentioned earlier, and this is when I got the best advice I ever got from my mentor is you’re learning the skills now, don’t worry about money. You’re learning the skills right now in your career to be able to become a great broker, a great agent, great investor in order to make more money in the future.
Because in commercial real estate brokerage or in any brokerage, when you’re an agent, David, your first year, it’s your toughest year, right? It’s the hardest year of your career, but your income can literally two x every single year just because of the skills you’ve learned in that first year.

David:
If you learn the skills.

Jason:
If you learn the skills.

David:
Yes, a lot of people focus on the money, not the skills. It’s like a leap of faith. You’re just constantly building skills and believing eventually that’s going to turn into money for you.

Andrew:
All right, so you told us the story of how you got your first brokerage deal. Tell us the story of your first investment deal, how you got it, what kind of deal it was, where it is, all those kinds of things or where it was.

Jason:
So like usual, day-to-day, I was calling people as a broker, as an agent, and this was three years into the business. And I finally saved up a little bit of money to go to buy my first property. And I called this owner who lived in San Jose. He just inherited a fourplex and a duplex in San Diego. And he told me that he was listing the properties with his property manager and I give him a call, gave the property manager a call, and the fourplex was extremely overpriced, but the duplex was actually extremely underpriced.
They listed it at $750,000 and it hadn’t gone to the market yet. It was a three bedroom, two bath house in the front and a little one bedroom, a studio house in the back with a two car garage in the front and a one car garage in the back. And at the time, the property was probably worth about 800, $900,000. So I knew it was a good deal and it had ADU potential because the garages can be converted into two units.
So I let the property manager represent me. He made an offer on my behalf because when the listing agent represents you, I believe at least that you have a much higher chance on getting the deal. So I let him do that and went into contract for 750. I went into contract and did my inspections, did my due diligence, and got some really tough news that the entire foundation basically had to be replaced. The electrical system was old knob and tube, which if you don’t know what old knob and tube is-

Andrew:
That’s not good. Yeah.

Jason:
Yeah. You can’t get insurance. It’s the worst kind of electrical, 1920s wiring and needing a new roof. It was ridden with termites and all the windows need to be replaced.
So when I got that news from my inspectors, my contractors, I almost backed out of the deal because this is the first deal I was going to buy. I was too scared to take on a massive renovation project. I was like, “There’s no way I can do this. I have no idea how to manage a contractor, how to run anything.” But took a risk like most investors do.

Andrew:
How did you get over that fear?

Jason:
I got over that fear of buying the first deal just because the numbers were so good. I just knew I trusted in the underwriting. I knew even if I was a 100K, 200K above budget, I still would make a lot of money on the deal.
So I think just the deal being so good itself made me feel comfortable that even if I screw everything up, make every mistake in the book, I can still come out of this a little bit positive.

Andrew:
Did you find a mentor or someone to help you manage the contracting element of it? How’d you get past that piece or did you just go for it?

Jason:
I just went for it. I never had a mentor for managing contractor. I had some clients who kind of gave me some info. I actually had a client who gave me the referral to the person that scammed me, which I’ll talk about later. But I have a lot of horror stories with contractors just because I learned the hard way.

Andrew:
And you said this thing’s in San Diego, I thought, you can’t make investments in California.

Jason:
I said that?

Andrew:
No, no, no, no, no. That’s the running narrative is can’t invest. And candidly, that’s one of the things I say is I love living in California and I love to live where I love to live, but invest where I get the best returns, and for me, that’s not in California, but to me… So you’re doing a different business model. You are making it work. And the reason I want to highlight that is because again, I think a lot of people say, “Oh, I live in San Diego. It’s too expensive. Well, I guess if I bought in San Diego 20 years ago.” Well, you live in San Diego and you just did this in the last few years.
So is there anything you think that’s different that, again, it sounds like you got it at a great price, but is there anything else that if someone is trying to invest in a market like that, that they should be pay attention to or that can say, “No, I can invest here.”

Jason:
Well, I think when most investors who are starting out think of California, first off, a lot of people like yourself probably say, California’s a bad place to invest. So they hear from all the YouTubers, people on podcasts that you want to buy in a red state. California’s a blue state.
And when people think of California, a lot of people think of the strict laws in the city of San Francisco and in the city of LA. Not all of California has extremely strict laws on displacing tenants, on doing a renovation, on executing on what you want to do. And investors do it every single day. And something that California has that no other state has is we have the best weather in the country. People still want to move here. We have a great economy. Companies are still coming here. Apple just invested millions into an office park in San Diego.
So if you’re not investing in the city of San Francisco and the city of LA, I think you’ll be just fine. And the thing that I look for when I buy properties even in California is that I make sure that no matter what, I understand that my basis is going to be significantly lower than what properties are going for right now in my location. And that’s how I’ve been able to scale pretty quickly.

Andrew:
So you’re looking at basis versus not to say you’re ignoring cashflow, but you’re looking at basis which is going to create equity, which as David you say, is really what builds your wealth, not necessarily cashflow.

David:
Yeah. Over a longer period of time.

Andrew:
Over a longer period of time. And so that’s how you’re making it work, so awesome. Thank you. Appreciate that.

David:
So, explain what that means by how you’re focusing on basis and why you feel that’s beneficial.

Jason:
Yeah. I mean I actually learned a lot about it from listening to you. So in a lot of shows you say your money’s built on gaining equity, not gaining cashflow. So you make your money on appreciation, and California arguably appreciates faster than any other estate in most cities.
So when I buy, I don’t buy for cashflow because I’m in a career that I love. You guys always talk about, you want to buy for cashflow if you’re in a career that you hate because you want to get out of the career as fast as possible, but that’s not the case for me. I love being a real estate broker, so I don’t need cashflow. So I don’t really pay attention to that as much.
I care about what am I buying it for and what can I sell it for or what can I refinance it for? What’s the appraisal value after I’m done? And the super simple rule of thumb that I use, is if I know I can sell a property for a million dollars, I want to buy it for 60 to 70% below that million dollar value. So I want to buy it for 700 grand or less. That’s my first stress test. And then I go deeper into things.

David:
So let’s break down. First we’ll talk about the area, then we’ll talk about the actual properties, little many economic lesson in supply and demand for people who are listening that have been told, California’s bad or expensive is bad because that’s the objection. “California is too expensive. I will go over here and buy something else.” But they don’t ask the question of, “Why is California expensive?” Okay, so let’s break into this. San Diego, is that a terrible place to live?

Jason:
Horrible.

David:
Do people hate it?

Jason:
They hate it so much.

David:
Absolutely. I don’t know anybody that sticks around in San Diego. They’re like, the running joke is I called the Bermuda Triangle, because all my buddies from high school that moved to San Diego to be bartenders and stuff, they never came back. I don’t know what they’re doing or where they are now, but no one does. You go to San Diego and you just get stuck there. It’s very, very difficult to live anywhere else.
It’s some of the best weather, some of the best locations of anywhere in the entire world, first off. There’s also only so much land out there. So you have a constricted supply because it’s a very small area, which is something people fail to look at when investing. Yes, you can get a cash-on-cash return if you go buy a single family house in Kansas, you’re never going to have a constricted supply in Kansas. They can just build houses ad nauseum forever. So the prices can’t go up.
One of the first things I like is a constricted supply. Austin, Texas has a constricted supply. They’ve got a river that runs through the city. There’s only so much within that river. It’s not shocking to me that you get appreciation there when everyone else talks about it, like “Appreciation is just luck. It might happen, but you can’t bank on it.”
Well, we can’t bank on cashflow either, but the odds are, if a property is newer, in a better location, has wages that are rising, in better condition, it’s going to cashflow better than a property that you have no idea. You can still put the odds in your favor. So constricted supply, you can build more, and a rising demand as more and more people want to go live in San Diego and people that go there don’t want to leave. That is a formula for appreciating assets, first off.
So you’re going to make money in equity investing in a market like that, but you might have to wait because everyone else wants to buy it. Cap rates are going to be very low in areas that everybody else wants to get into. If you look at that and say, “Oh, it’s too hard to make money here, I’ll go somewhere else.” You’re missing out on why everybody wants to be there.
The other area we have to look at is cashflow. Of course, it’s not going to cashflow super strong because cap rates are going to be low. Demand is going to be very high to get into that space. There’s going to be a lot of competition for every building because it’s desirable. But what do rents do in an area with constricted supply? It’s very difficult to find somewhere else to rent and wages keep rising because tech companies and other wealthy people keep moving there. Do they go down or up?

Jason:
Up.

David:
Right? So if you wait long enough, rents are going to be going up. The properties you buy in San Diego, 10 years ago have insane cashflow versus the stuff that everyone was saying, “It’s too expensive. You don’t get any cashflow. You have to go to Wichita, Kansas if you want to get cashflow.” Wichita, Kansas cashflow, and I’m generalizing right now, is roughly the same in 10 years as what it was when you bought it versus that San Diego property. You look like a brilliant genius.
It’s that to me, my perspective is how much gratification are you willing to delay? Does it need to make money now or can it make money later? Now, part of that’s the model. If you’re raising money as a syndicator, you’re on a timeline maybe five years before you got to pay back your LPs. You do not have the, what’s the word I’m looking?

Andrew:
Luxury?

David:
Yes, thank you. The luxury of delaying gratification for 10 years. So that property falls outside of your buy box to no fault of yourself, but if you’re buying it for yourself, you’ve got some other partners that are involved in this that don’t need to pay off really well, it can work. So are you using some of those ideas to find inefficiencies in the market to make these deals work that other people miss?

Jason:
I think one thing to note is that right now in the market, it’s much less competitive than it’s been in the past five years, six years I’ve been in the business in San Diego. So there’s a lot less buyers that are sharpening their pencil in San Diego right now.
Competition has gone down, but inventory’s still gone down. But the inefficiencies in San Diego are that everyone just looks on the market and thinks that that’s what San Diego is and there’s no better deals.

David:
Oh, I see where you’re going. You got that superpower of being able to call people on the phone.

Jason:
Yeah. And I’ve been able to find my clients some very good deals and myself by just picking up the phones, doing marketing, sending postcards, doing a lot of social media, digital marketing and bringing leads to me.
So you have to find leads in a competitive market before they get listed in order to have a chance at getting a deal that pencils, because I’m telling you right now, if you look at every property in San Diego right now, none of them are buys on the market, but there’s a lot of buys that are potentially off market right now.

David:
Buys by your metric of 70 cents on the dollar or buys period?

Jason:
I personally think buys period, I think a lot of I mean, no, I mean, everyone has different goals. So if you’re looking for a buy and hold, a very stable investment and you don’t need to get that uptick in equity right away, it’s a good investment.
So it’s a lot of old money. A lot of people are going to park cash into San Diego, but I’m not that kind of investor. I’m looking to grow the portfolio. I’m young, I don’t have that much money yet. So I’m looking to early quickly-

David:
That is a good clarification. And the reason I ask is when people hear that, “Oh, it doesn’t make sense to buy there.” And they just take it at face value, they expect prices will have to come down. Because if it’s not a buy, no one’s going to buy it. So they’re going to have to drop the price and then prices don’t drop.

Andrew:
Right. And I think another key point, and you mentioned this earlier Jason, is you have an income from something that you love to do. So you’re okay buying something that maybe doesn’t cashflow. So that helps enable you to do that.
One thing I don’t want to miss is you, I think you mentioned something about getting scammed by a contractor. Could you dive into that? Tell us about what that was, how it happened, what you learned?

Jason:
Yeah. So like I said, the contractor referral was a referral from a client of mine in the business. But after I bought that first property and a couple months went by and I actually bought four more properties in the span of three months when I bought my first one. And all five of those properties, me and my partner, they were complete full gut renovations and I was really dumb. I was young and stupid, still am young and stupid.
But I trusted this contractor to take on all of these five properties at once and no work was being done. He didn’t have a contractor’s license, he wouldn’t put anything in writing really, and I didn’t know if that was a good thing or a bad thing at the time. It’s the worst thing you can do is not put things in writing as you guys know.
So nothing was in writing, didn’t have his license. I later found out that he lived in, I mean we’re close to Mexico. He lived in Tijuana, so didn’t find that until deep into the process. So basically-

David:
Was he licensed in America?

Jason:
No.

David:
Okay. So he was using the phrase contractor, but he’s like a contractor in Mexico.

Jason:
He’s like a handyman.

David:
Yeah.

Andrew:
Yeah. Here you go.

Jason:
Yeah, he had a crew. He had a crew of people. Now they did do work. They did try to get things done but didn’t have the manpower, didn’t have the skill sets to do all the work that we required. And eventually I think he just blew up one day and just started covering up stuff.
Didn’t do the plumbing right, put drywall over it, kind of put crappy showers in. Didn’t do any of the plumbing, didn’t replace the electrical. He said he fixed the foundation, but all he did was stick a wooden post and pier under it. That’s all he did.

Andrew:
Might not pass code.

Jason:
Might not pass code. Yeah. It was actually worse than if he had just left it alone. It would’ve been better than what he did.

David:
He’s like, “Throw a two by four in there and we’ll say that it’s braced.”

Jason:
Yep. That’s what he was doing. He said everything was getting done. I didn’t know how to, at the time I didn’t know what was right and wrong. So I just kind of believed that at face value, I was just cutting him checks left and right. $25,000 check here, $40,000 check here.
And eventually if you add up the work he did versus what I paid him, I was probably at like 125, $130,000 loss on what he did before he just walked away and just ghosted me. So one day he just stopped answering his phone, stopped talking to me and just fled.

Andrew:
I bet a hundred grand goes pretty far in Tijuana.

Jason:
Probably does.

David:
That is a scary thing. You learned a lesson there. Definitely. When I wrote Long Distance Investing, one of the things I said is you can give your contractor a little bit of money up front to do the work, but then you don’t want to pay until it’s been done and you just probably didn’t have the experience to look and see that the work is being done right. You’re like, “Yeah, that looks like plumbing. I guess,” You had a person-

Andrew:
I wouldn’t know either, right?

David:
Most of us don’t. But if you had a person with a little more experience involved, kind of like you said, brokers that are helping out newer agents, they would’ve said, “Yeah, that rough and looks terrible. We’re not going to move forward with this.” Or you’d recognize you were scammed.
Luckily it didn’t stop you because you haven’t quit. That’s the story here is you just paid a hundred thousand dollars to get a very, very, very valuable education that you’ve now turned into much more money in the future, which has allowed you to help your parents out. So tell us about how you’ve been able to help your parents out with your success.

Jason:
Yeah. So that was the big why on why I got started in real estate and it’s amazing to say I’ve come full circle with it. It’s probably the biggest accomplishment in my life so far. Like I said, my mom was a struggling immigrant that came to America, had a lot of failed businesses. And the last two Christmases, I think altogether I’ve given them about over $200,000 just as like a thank you card, and also I bought them a triplex in Oceanside, North County San Diego.

David:
Awesome.

Jason:
So they cashflow a little bit off that each month too. But I’m looking to buy my mom a house here in San Diego next, coming up soon.

Andrew:
All right. So you told us about the first brokerage deal. You told us about your first investment deal. You certainly had some tough challenges in those first deals, which both cases you very much overcame.
Where are you today? My understanding is you’ve done quite a lot since then. So give us a snapshot of what your portfolio and investments and business looks like today.

Jason:
Yeah. So on the real estate portfolio side, I’ve acquired a total of 26 properties. I’ve sold off about-

Andrew:
All San Diego?

Jason:
All San Diego, yeah. When I first started it was all small, like two to 4-unit buildings, but a year or two went by and I 1031 those buildings into larger assets. So I’ve done about 26 acquisitions, sold a good amount of them to trade up into bigger assets.
Now we have 17, so we’ve never actually cashed out on a property except one. We’ve kept reinvesting the profits into larger assets. So that’s how I was able to grow pretty quickly. A lot of people ask me if I raised money to start and because I bought a lot of properties quick, but I’d actually just saved up a good chunk of change and I had the perfect partner to start with me.
So I was the deal guy, I was the front lines guy and my partner, he had a debt fund, like a private money, hard money fund. And me and him put 15% down, 50/50, got debt, renovated it quickly, and then refied out or sold it. So we just did that over and over again in 2020 and 2021 and eventually built our portfolio pretty quickly without outside capital from LPs.

Andrew:
Quick aside, how did you find that partner and how did you, for lack of a better term, convince them that you were investible?

Jason:
Yeah, so here’s why I think being a commercial real estate agent is so valuable. If you want to get into multifamily, if you specialize in selling multifamily investments to clients for a living, eventually you’re going to get pretty damn good at underwriting those assets and know your area pretty well.
And eventually you’ll develop some really good client relationships where you do deals with them over and over and over again. And when you build that trust with a client and you build a good friendship, like I did with my partner. After we built that friendship, I had four or five properties tied up in escrow that I couldn’t buy on my own.
And he actually offered me to, he asked me to partner with him. I didn’t even ask him because he knew I was a hard worker. I sent him deals every single day. I’m on the phone with him constantly, so he knew I’d get it done. So I built that relationship with my future partner just by being in the business as a broker.

Andrew:
What’s the, back to your portfolio, what’s the current value? What would you estimate is the current value in today’s adjusted market and cashflow?

Jason:
Yeah. I mean we’ve sold some stuff and prices are still steady, but right now it’s like I sent an REO to a lender. It was about 48.9 million portfolio value and we have 117 units, 119 units around town.

Andrew:
Nice. Well done. So you mentioned getting to know your market, underwriting deals as both a broker and an investor. Can you share your formula for underwriting deals?

Jason:
Yeah. I can share with anyone. It’s an easy one-page sheet. So if I’m buying a property, I want to know the current cap rate, what the cap rate can be after I’m done with it.
So I have the current rents, the pro forma rents, which is the market rents after I’m done rehabbing it. And then I have the GRM, which is a gross rent multiplier. And I like the gross rent multiplier a lot more than the cap rate just because a lot of brokers can mess with the cap rate because you can lower the expenses to make it look like the building’s actually operating-

Andrew:
David can do that.

Jason:
… better than it is. And a lot of the times when you get these offering memorandums and marketing packages from brokers, a lot of the times the expenses are estimated. So I like going off of GRM because it’s just the rents and that’s the metric that I go off of because you can’t really mess with it.
So I go off the GRM cap rate. If I can stabilize at a cap rate that’s two points above the going cap rate, I know it’s going to be a pretty good deal. And if it fits that 70% or 30% below market value stress test. So if I buy a property for a stabilized seven cap or I can get it to a seven cap and the market’s selling for a five cap or under, I know the deal is going to pencil. So I’ll make an offer at that point.

David:
All right, Jason, what advice would you give investors who are experiencing how hard it’s gotten to find a great deal right now?

Jason:
I think, I mean myself, a lot of people are struggling with this. Are you having a tough time finding deals?

Andrew:
Absolutely. We’ve only closed one large acquisition this year and we’ve underwritten probably 400.

Jason:
Got it. I’m excited. I want to hear your take too. But my take is I’m not super technologically fancy. I’m very simple and I just think for me to get more deals, just because there’s less inventory, the market’s not moving as much. You just got to put in twice as many reps as you were before.
And one of my mentors told me it was one of the best advice I ever got was in a great market, any average person can make money. But in a slow market, in a down market only the superstars can make money and the superstars emerge in markets like this. So I think that if you’re telling yourself there’s no deals, there’s deals closing every single day in every state, in every city.
So if you tell yourself that deals aren’t going to move, then that’s what the world’s going to give back to you. But if you tell yourself that the market’s still moving, I’m just going to work harder to get a deal and do what I’m doing because it works, eventually you’re going to make it happen.

Andrew:
Yeah. I was in the airport this weekend and cross country flight, got off the flight with tons of people and this is LAX coming back to California. You got off and you come to that place where you’re on the ground floor and there’s just this massive escalator up to the second floor, and for some reason the airports, each floor is 30 feet tall instead of the normal amount.
And so I’m standing there looking and I see seriously probably 120 people on the escalator and on the set of stairs right next to it, zero, not one person. And I stood there and I thought, I’m like, “Okay, that escalator represents the real estate market for the last 10 years.” If you basically had the courage to at least get on it, you probably had a fairly easy ride to the top.
Now, we’re in a market where you got to put in, you got to take the stairs, you can still get to the top, but it’s going to be a whole lot more work and a whole lot more effort and doing the kind of things that you’ve been doing and are still doing.

Jason:
It’s a really good analogy.

David:
Yeah. And you’ll be better off for it, right? Taking the stairs is healthier.

Andrew:
Absolutely.

David:
Even though you sweat a little bit.
All right, so any advice on turning leads into deals once you find a lead?

Jason:
I think one of the highest paying skill sets is being able to close a lead because you can hire people to find leads for you. You can have a marketing budget and get leads, but when you actually have to convert the leads that come through your door, that’s what separates a great business from a mediocre business.
And the thing that’s worked extremely well for converting leads in my brokerage business and in my investing business is that we always lead with credibility. So we always lead with, here’s what we’ve done, here’s our track record and we have a nice little package on our reviews, 5-star reviews work extremely well for us and our deal history works very well and we lead with that.
But then after we kind of say who we are, a huge mistake that a lot of salespeople make because in real estate we’re all in sales, is that they do a lot of the talking like me as the professional, a huge mistake that people make is you do 80% of the talking. But the University of Harvard did a study that the best salespeople actually only spoke 20 to 30% of the time and the client spoke way more. And it’s your ability to ask the right questions that actually lead you to your destination much faster than you just blabbering along.
Asking the client from a place of caring on how you can help them, what their goals are. “If we did this for you, what would your dream place be looking like?” So asking tactical questions. A question that works really well for me is when a client kind of comes to us and says, “I’ve been thinking about selling.” I always ask, “We don’t want to waste your time. What would be the perfect scenario for you if you were to sell your property? And what would you do with the money?”
Because in the real estate world, whenever you sell, no matter what, the biggest issue on why people don’t sell or do sell is, “What am I going to do when I sell? Am I going to cash out? Am I going to exchange? What am I going to do with it?” So if we can tailor the process to where their goal is matched with the actions we provide.
For example, if a client cashes out, they want that money as fast as possible. So we want to try to find a buyer listed as fast as possible and do a quick close. But if they want to do an exchange, which is a huge rebuttal, a lot of clients don’t want to sell because they’re scared of not finding a property, is that the huge thing that we do that benefits our clients is that we bill in two to four 30-day extensions after the close of escrow, after the actual close of escrow.
So if escrow is 30 days, if the buyer removes contingencies in 17 days, the seller can exercise two to four depending on what we can negotiate with the buyer, 30-day extensions to have more time to go shopping for a property.

David:
That’s smart.

Jason:
So that is just two examples of how we can cater a scenario to what our clients are looking to achieve. And that’s really helped me convert leads is coming from a place, like, “What can we do to help you?”

David:
Solving problems.

Jason:
Solving problems.

David:
That’s what we’re here to do.

Andrew:
That’s what you get paid for.

Jason:
Yeah.

David:
Awesome man. Well, we appreciate you sharing your story. I’m very glad you didn’t end up an organic chemist. We would all be worse off for it. Same for you Andrew. Glad that you’re not still a, you were a-

Andrew:
Chemical engineer.

David:
Thank you. I think word chem was in there, but I realize it wasn’t the same type. Yeah, chemical engineer, this is great.
Where can people find out more about you if they want to follow up?

Jason:
Easiest way is to find me on Instagram or YouTube. It’s just jasonjosephlee, and then I also have a free multifamily investing course if anyone’s interested in hearing about it as well.

Andrew:
And should also point out if anyone’s just trying to look up Jason Lee, this is not the Jason Lee who starred in My name is Earl back in the early 2000s.

David:
That was a great show though.

Andrew:
It was a great show.

David:
You don’t remember that, do you? Not old enough.

Andrew:
He doesn’t, he.

David:
It was funny.
All right, so reach out to Jason if you are in the Southern California area and want to buy commercial real estate and reach out to me if you’re in the Southern California area and want to buy residential real estate and reach out to Andrew Cushman, if you’re just in Southern California. Where can people find out about you?

Andrew:
Go to BiggerPockets and give me a colleague request so we can connect there and then follow me on LinkedIn and of course, just look up Vantage Point Acquisitions and there’s a handful of tabs there to connect with us that way.

David:
That’s such an Andrew thing to name your company. Vantage Point Acquisitions. Have I ever told you this?

Andrew:
No, but I have a follow-up comment. Go ahead.

David:
It’s so accurate but yet incredibly hard to spell. And you never thought about the fact that most people are not going to know how to spell acquisitions perfectly and they’re never going to find you.

Andrew:
Well, and also it shows that what shows when my early mistakes, and this is something I think most beginners make, I was too focused on. “I got to get a deal. I got to get a deal. I got to get a deal.” So I named the company, it should have been Vantage Point Capital, not acquisitions, right? But, so every time I say Vantage Point Acquisitions, I think I’m like, “Oh, it should be capital.”

David:
I made the same mistake with my social media. I called myself davidgreene24 because that was my high school basketball number and there was already a David Greene. Looking back, people are always like, “Why do you call yourself that?” I have no good answer. It was just pure laziness, because I had no idea that it was going to become this big of a thing.

Andrew:
Yeah, I just wanted to acquire deals, so there you go.

David:
So speaking of that, you can find me on social media @davidgreene24 or check out my website, davidgreene24.com. I put a chat feature on there. So people don’t realize this, but they can actually chat with me directly going to that site. I talked to some of them and then I’ll pass them off to the right team members.

Andrew:
So it’s not David GPT. It’s actually David?

David:
Yes. I am going to have some kind of a stamp of guarantee that you will never get. You may get a form of AI at some point. I can’t say it will never happen because it works into operations, it works into things. And I even think that that chat system has AI that starts the conversation, but I get a notification on my phone and I will talk.
So at some point I’m going to have a little cheesy seal that’s like, “It will always be a human that you talk to, not a bot pretending to be human.” Because-

Andrew:
I like it.

David:
… everyone’s excited about AI, saving them time and no one’s thinking about the customer. I’m not super excited for AI to take over all the conversations I wanted have with Jason and instead I’m talking to a computer that’s telling me what I want to hear. So you still talking to your own clients?

Jason:
I am.

David:
All right. You hear that. Andrew, Jason and David all talk to real people, so.

Andrew:
Yep. No chat functions here.

David:
There you go. So check out that site. Go give me a follow and check out BiggerPockets on YouTube. If you’re not listening to this on YouTube, you could be and you can see three very good-looking guys, or at least two good-looking guys and me on YouTube here for your viewing pleasure. Let us know in the comments what your favorite part of today’s show is.

Andrew:
Well, they say handsome guys are eye candy. I think that puts you and me more in the category of eye broccoli.

David:
That’s right. This get your visual vegetables here on BiggerPockets, cheese scoop. Jason, you’re like the cheese whiz to put on the broccoli man.

Andrew:
Yeah. There you go.

David:
You make us look good.

Andrew:
You make us look good.

David:
Yeah. That’s how we eat it.
This is David Greene for Andrew, my partner in Multifamily Investing, Cushman signing off.

When a member of the C-suite leaves their position, it can have a ripple effect throughout the whole company. Because they’re a key leader of your business, their departure may leave employees wondering whether they were let go or left of their own accord, whether their own jobs will be affected, whether there will be significant changes to the company culture or whether new policies and procedures will be put in place.

While change is often necessary in order for companies to grow, key changes in leadership must be handled thoughtfully to help quell these fears and answer employees’ questions. To do so, consider the following advice from the members of Young Entrepreneur Council. Here, they offer their best tips for how to ensure a smooth transition and avoid any negative impacts after a C-suite exec leaves your company.

1. Open Lines Of Communication

Keep a pulse on employee morale. Humans are creatures of habit, and we often struggle with change. When members of the C-suite leave their positions, it can create uncertainty and anxiety among employees. To avoid this, you can open lines of communication and remain empathetic to their concerns. This will help non-management employees feel heard and supported during transition time. – Bryce Welker, Crush The CPA Exam

2. Involve The Entire Team In The Transition

To avoid any negative impacts on the business, I would suggest involving the entire team in the transition process. For instance, at Rainfactory, we scheduled one-on-one meetings with the replacement hire as soon as we found the candidate. This not only helps streamline the process, but it also ensures that there is no loss of valuable information or expertise. – Kaitlyn Witman, Rainfactory

3. Avoid Creating More Change

Creating stability companywide is the best way to avoid negative impacts and ensure a smooth transition when an executive leaves their position. While long-term change is inevitable, try to avoid other drastic changes in the short term. The rest of the organization will feel more stable in their own positions if most of their day-to-day work life remains unchanged. – Ian Blair, BuildFire

4. Outline And Communicate An Action Plan

Outline and communicate an action plan to fill in the gap. This will show that you are equipped with everything you need to handle the transition, and it will boost team confidence and morale since they will know operations won’t be disturbed. Of course, you also want the exec’s departure to be on good terms, so communicate that. In doing so, you put everyone at ease with the new change. – Firas Kittaneh, Amerisleep Mattress

5. Provide Access To Support

There’s no question that when a C-suite team member leaves, this can cause stress among your employees. The best way to reduce the negative impact is to create a support web designed to help employees who are feeling a little worried and anxious. If there’s someone there to help and guide them, they are far less likely to get overwhelmed when there’s a significant change in management. – Chris Christoff, MonsterInsights

6. Onboard Someone Who Can Navigate Change

To avoid any negative impact when a member of the C-suite leaves the company, you need to seek and onboard a better replacement. The goal here shouldn’t just be to hire a professional who is best suited for the role—it should also be to hire a “people person” capable of keeping up with chaotic situations. Doing so will help you fill the skill gap and address the questions that others have been asking along the way. – Stephanie Wells, Formidable Forms

7. Prioritize Transparency

When a member of the C-suite leaves, transparency is the best policy to deal with the situation. Start by conveying the news to all key stakeholders and announce that you’ve been looking for a suitable replacement. Remember, rumors and speculations are bound to follow. The only way to control the narrative is by catering to the looming queries and concerns in a straightforward way. – Jared Atchison, WPForms

8. Facilitate A Smooth Transfer Of Knowledge

My top tip for ensuring a smooth transition would be to facilitate effective knowledge transfer. Encourage open communication and documentation of key responsibilities, processes and contacts. Facilitate collaborative handovers, where departing executives share insights and mentor successors. This knowledge transfer minimizes disruption, empowers the incoming leaders and fosters continuity within the company. – Ian Sells, JoinBrands.com

9. Step In To Help Temporarily

I’ve found that it’s helpful to step in personally and manage things for a while until a new person is in place. This helps your team because they’ll know who to turn to, and this also helps you get back in touch with the daily workings of your company. Plus, you’ll find loose ends that you can step in and fix. So, get in and support the transition personally to keep things running smoothly. – Blair Williams, MemberPress

Ashley:
This is Real Estate Rookie episode 317.

Mackenzie:
So it was definitely scary to get into investing, but then we started seeing the long-term benefit of just this multiple streams of income and residual income, and by being in real estate, I started to see, oh, my gosh, the equity, and when we had bought and sold houses before, so that opportunity for equity and appreciation in there too opened our eyes, “Okay. I feel like this is a safe route to go,” if that’s a good word to use. So that made us jump into doing that.

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

Tony:
Welcome to the Real Estate Rookie Podcast where every week, twice a week, we bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. Ashley Kehr, I’m pumped for today’s episode. This is actually someone that you recruited into the ranks of the real estate rookie world that you met at an event, and I’m super glad you did. We got Mackenzie Brogdon on the podcast, and she’s just a ball of energy and she’s got a really, really cool story as well.

Ashley:
I met her at AJ Osborne’s CRE Circle live event in Boise, Idaho, and she was just a ball of fire, had great energy, but also had a really good story. So she’s going to tell you all about that story of how she got into investing in real estate. She’ll do a great job of actually explaining why she chose not to invest out of state and give some of the reasons that turned her off from doing that. One thing to highlight with Mackenzie is that she was a new investor. She hadn’t done a deal, but she’s going to tell you how she got a partner on her very first deal that pretty much put in the majority of the capital.

Tony:
She also talks about how she started off as a real estate agent, how much volume of sales she did in a relatively short period of time, which was amazing. She goes in to talk about how she manages her rehab and what she learned between that first deal and that second deal. She’ll go on and tell you guys a really cool strategy for how she’s finding subs, managing her budgets, and keeping her projects on track for both time and money. So just overall, I think you guys are really going to get a lot out of this conversation with Mackenzie.

Ashley:
Mackenzie also breaks down what sub two is, a creative financing strategy, and also a sober living facilities, and how she actually was able to coordinate arbitrage situation, and she will go into and explain what that is.

Tony:
We go over a few real estate terms throughout this podcast, and we probably didn’t do the best job of breaking those down in the moment. So just a resource for all of our rookies that are listening, if you go to biggerpockets.com/glossary, there’s actually a glossary of terms that are all important in the world of real estate investing. So for example, we talked about EMD on the podcast today. That stands for Earnest Money Deposit. So if you weren’t familiar with that phrase, that’s what it means, but if you want the whole rundown of all the real estate key terms, again, head over to biggerpockets.com/glossary.
Now, I want to give a quick shout out to someone that left us a five-star review on Apple Podcasts. They go by the name of JeanBean16, and Jean says, “Truly the best podcast for rookies.” Her review’s a little bit longer, but it’s such a good one. I got to read the whole thing. She says, “Ashley and Tony, I love you guys. I’ve listened to over 100 BiggerPockets podcasts,” and she’s talking about the real estate show, “and recently listened to the one with the two of you on it.” So Ash and I recently co-hosted an episode on the Real Estate Podcast. She says, “I really love the information you both provided, so I immediately followed your podcast and, wow, the wealth of knowledge that has come from the two of you in just a few short days is unbelievable. Listen, you guys, if you’re truly new or relatively new to the real estate investing market, this is the podcast to dive into headfirst. Between the BP Podcast and the Rookie podcast, I feel like I have my degree in real estate investing for beginners. Keep up the good work.”
So Jean, or I’m sorry, it’s actually JenBean16, but Jen, I think you’ve said everything that is the goal of Real Estate Rookie Podcast is to help folks at that beginning phase and give them the confidence to move forward. So for all of our rookies that are listening, the reason we ask you guys to leave reviews is because it encourages that next person that’s on the fence about listening to actually dive into the whole BiggerPockets ecosystem, and when they do that, it’s a life-changing moment. So take a few minutes, leave a review on whatever podcast platform it is you’re listening to, and you can inspire that next person to become a real estate investor.

Ashley:
Mackenzie, welcome to the show. Thank you so much for joining us. Do you want to start off with telling everyone a little bit about yourself and how you got started in real estate?

Mackenzie:
Yeah. Well, first of all, thank you so much for having me. I’m so excited to be here. I am a Southern California native, born and raised in Southern California. I moved up here to Boise, Idaho in late 2017. I got licensed as a real estate agent in 2020 and started investing in 2021. I have a husband and two little kids. Both of them are toddlers under three years old, so life’s a little bit crazy, but we love it.

Ashley:
So what’s that first initial thing that got you into real estate?

Mackenzie:
I actually can’t take credit for it. In 2020, my husband was the, I guess, main income earner, main breadwinner for our family, and he goes, “Hey, Mackenzie, we should get an investment property,” and I go, “Okay. Cool. That sounds awesome. Let’s do that.” We owned our house at the time, we had some equity in it up here in Boise. So he sat down with a good friend and mentor of ours who was a real estate agent, Shelby Paget, and Shelby goes, “Hey, yeah, let’s get you in investing, and Mackenzie should just get her real estate license.” So that sparked, “Yeah, I should get my real estate license.” I have a background in network marketing, sales, graphic design, interior design. My dad was a general contractor growing up, so done all the things, it seemed to be a good fit. So I got licensed in October of 2020, and then my husband ended up quitting his job to let me thrive in real estate. So it was like a make it or break it, has to work in real estate moment for us, and thankfully it did.

Ashley:
So tell us about that first conversation about investing in real estate. What were some of the things that piqued your interest? Did you have any hesitation that maybe buying an investment property wasn’t the right thing for you?

Mackenzie:
Yeah, I think it was tough. We were looking at going the house hacking route, and at the time we had a , I think, four or five-month-old. So we said, “Wait a second, are we really going to do this right now? This is crazy.” So the fear of, “What if it doesn’t work out? What if you move your family? What if you stretch yourself too thin?” and knowing that, “Okay, maybe my husband is going to quit his job. We don’t want to stretch our finances so far and then get too overextended,” and we don’t have a fallback plan. So it was definitely scary to get into investing, but then we started seeing the long-term benefit of just this multiple streams of income and residual income, and by being in real estate, I started to see, oh, my gosh, the equity, and when we had bought and sold houses before, so that opportunity for equity and appreciation in there too opened our eyes, “Okay. I feel like this is a safe route to go,” if that’s a good word to use. So that made us jump into doing that.

Tony:
Mackenzie, I just want to pause for a second, and if you can, let’s give our listeners just an overview of where you’ve gone since October, 2020 when you got that license to where you are today. So I guess, how many transactions have you done? What does the portfolio look like today?

Mackenzie:
So I feel like real estate sales for me on the realtor side of it is different than real estate on the investing side of it. It’s completely different. I think people think, “Oh, my gosh, all real estate agents are investors,” and that’s actually very much not the case. Most agents don’t invest in real estate, which I don’t understand how that happens, but I got licensed in 2020 and it was a make it or break it moment for us. So I just put my head down and started working probably harder than anyone else, and I was grateful to Shelby for mentoring me and teaching me a lot of the ropes and I watched him as he was investing and things like that.
So as far as the sales part of it, I’ve been really blessed. I’ve done over, gosh, three million in my time here and then a little over 60 transactions. Actually, it’s probably pushing 70 now, a little over 70 transactions in my sales time. Then as far as investing goes, we started in March of 2021 when I found a opportunity on market that looks like a good flip, and I always wanted to flip. Of course, everyone’s seeing all the flipping shows, and with my background in interior design I’m like, “This just goes hand in hand.” So we ended up grabbing this flip. We brought on a partner, that partner took the main equity stake, and I said, “Hey, you’re out of town. I’m going to help manage it for you, and I’ve got a little bit of cash that I can invest in it. Will you just let me partner in this with you?”
So he said yes. So we flipped that house in April of 2021. That went well, and then within another calendar year, one full calendar year, we had flipped a second house and that one we had more of an equity stake. So those were just fix and flips, and then we started moving into long-term holds. So now we have four long-term hold rentals, and then we are under contract on another that’ll help us house hack a little bit and then working on some other creative finance deals in the background, underwriting them right now. So we’ll see how that goes.

Ashley:
So you have really propelled yourself over the last couple years, even two years. Congratulations on that. I want to go back to that first deal where you talked about you found a partner. How did you find this partner? How did you approach them? That’s one of the biggest struggles of a rookie. You’ve never done a deal, but yet you’re asking somebody to be your partner in this. So go into the details on that for us, please.

Tony:
Before you do, Mackenzie, anytime we say the word partner now, we got to plug our book. So this podcast is going to come out in the future, but today, the day that we’re recording this is actually the day that mine and Ashley’s book Real Estate Partnership launches. So if you guys head over to biggerpockets.com/partnership, you guys can pick up a copy of this book, and I think there’s still a couple bonuses that are available for folks that order during the first month that it releases. So if you want to capture some of those heads of real estate or heads of biggerpockets.com/partnership, just pick up a copy. So Mackenzie, sorry to interject there, but it’s just a mandatory now that anytime anyone says the word partnership that Ash and I plug our book.

Mackenzie:
I love it. I love it. Worth the interjection. So I was newer to real estate, but what I did is I started with finding the deal. So I found the deal, I ran the numbers, I had learned how to comp properties so I knew what this property would be worth after the repair, I knew what it would take to go into it just with my background in general contracting, had some people look into it. So I started with finding the deal and then we go, “Okay. How are we going to fund this? Who’s going to buy this?” Even though I didn’t really have real estate experience at the time, I had life experience.
So back from my home in Southern California, my husband and I were very involved in multiple circles. We were coaches in different aspects and sports and things like that. So this connection was someone who we had worked with for years. They had trusted us with their kids. So I was like, “Well, if they trust us with their kids, they’re going to trust us with their money, right?” So we just called him and we said, “Hey, Bob, I know this is crazy, but this is the deal. This is what it’s looking at. Here’s the numbers, I’ll show you. I’ll send you the comps. Here’s what I think it can do,” and because they had that trust aspect I think already with us, they trusted us in the opportunity.
So because we had already built that relationship with them, they felt comfortable to take that leap into partnering with us. So since then, they actually are one of our main partners. They partner with us on a lot of deals now and we’re very grateful for them.

Tony:
Mackenzie, you just did a phenomenal breakdown of a lot of what Ash and I talk about when it comes to finding partnerships. So I’m just going to break down what you said here for a second, so bear with me. So first, you identified what your unique skillset was, and that was finding the deal. So you leveraged your strengths, you leveraged your skills to find a really good deal. Then you said, “Okay. If I’m looking at the puzzle pieces of making this transaction happen, I’ve got the deal finding, I’ve got even the property or the project management side, but I’m missing the capital side. So okay, let me go out and find a partner to fill that void.” So you go out there and you find someone that has those resources that you’re lacking.
Now, this person had never really done real estate before, but you said the reason that they were willing to work with you was because there was that level of trust there. One of the things that Ash and I say in the book is that when you’re looking for a partner, people typically partner with people that they either know, like or that they know, like, and trust. So you need all three of those. So even though this person had never invested in real estate before, because you had that foundation of know, like, and trust, when you presented them with an opportunity, they were willing to jump at it because you guys had built that foundation.
Ash talks a lot about her first partnership where that partner invested his life savings into a deal, and it’s because him and Ashley had that know, like, and trust. So I just love that story because you really exemplify all of the critical elements of putting a partnership together.

Mackenzie:
I think a lot of people think, “Oh, I can’t get started until I have all this real estate experience.” Well, you’re never going to get started if … because it takes deals and capital and things to get that experience. So I completely agree, and I think if people open their eyes to, “Oh, maybe this person …” I hear that all the time, “I don’t know anyone with money.” I actually really doubt that’s true. So really look, and it never hurts to ask, and I always say, if you find a deal, I feel like the money and the capital will follow. You just got to start with the deal. So yeah, I agree.

Ashley:
That’s definitely great advice. Mackenzie, would you go into how did you structure this deal? Would you mind sharing the numbers of how much money each person contributed, what your role was, what their role was, and how much equity each person got?

Mackenzie:
Yeah. So probably not the prettiest on paper, meaning that there was no paper. It was a handshake agreement, which now that I’ve done more deals, I’m like, “Oh, man, that was sticky for me, that was sticky for them,” but we just trusted each other so it worked out. So essentially, we just structured it as whatever anyone was putting into the property was their equity stake in the property. So they fronted the majority of the money for the … They bought it in cash, took title to the property, and then they funded most of the renovations. I guess we funded a lot of the purchases of the supplies because we said, “Hey, we can buy in …” I think we sent in $30,000, which was like, “This is a 10% equity stake in the property.”
So then at the end of the day, we put together all the profits and losses once we sold it and just distributed things out from there. I actually, because I didn’t really have experience, I didn’t even charge. We’ve worked other deals now where I’m like, “Okay. If I’m going to property or project manage it, I’m going to take an additional portion of the equity or charge or something like that.” I didn’t even do that on this one because I just wanted them to feel like they could trust me. So I just took the portion of what I put into it, capital-wise, of the profit and the deal when we sold it.

Ashley:
Mackenzie, I did the exact same thing on my first deal. I didn’t put any dollar amount to my value. Really, I gave up a lot in that first deal, but that’s what gets you started. Being able to show that you can do that, you can be the boots on the ground, you can be the project manager, whatever that is, then that’s where you can go and bake your value in. It sounds like you also dated this partner. You went into this partnership not just, “Okay. Every flip now we’re doing with you guys and this is how it is. Whatever the money you put in, that’s your equity from now until forever,” but you did one deal and then you bring the next deal and you’re able to renegotiate with them. I think that is a tremendous point is when you’re dealing with a partner is to try to set it up that way you’re not locked into something that you end up regretting and you can change it for the next deal.

Mackenzie:
Yup, absolutely. It’s changed every deal. We’re on our third partnership deal with them, and then they’ve done a few investing deals with me that I’ve just served as their agent on it, and every deal has looked different.

Ashley:
That’s definitely cool of having that flexibility with somebody. So let’s talk about, okay, so you did your flip and then what comes next? Did you get the bug? Did you guys make a bunch of money on that one? What happened?

Mackenzie:
So that one, I’ll be honest, the margins were slim. We ended up learning a lot of what, I guess maybe not even what to do, but what we wanted to do because we learned a lot of what not to do. I’ve heard multiple guest speakers on here talk about the struggle with general contractors and, oh, man, we struggled with a general contractor. So it was in the heart of 2020 where everyone was slammed, the real estate market was going crazy, everyone was losing it. So I brought in someone who was a mutual friend and I go, “Oh, this is going to work out great. I know them,” and it didn’t work out great.
So it ended up we were overpaying for terrible work that was taking way too long and me being over here on the project management side of it too, I’m like, “Okay. Let’s push it along.” The partner’s like, “Hey, what’s going on?” because he lives out of state and I’d be there all the time, “No one’s here, no one’s here. We got to push this along. This is a terrible job. The paint’s bubbling,” all this stuff. So we ended up about a month or two before we wrapped up, I said, “This is it.” I told the contractor, I’m like, “I’ll pay you for what you’ve done. We’re going to just finish the rest of it.”
So then I just brought on subcontractors for it. So at the end of the day, it worked out. We made a little bit of money enough to put a good taste in everyone’s mouth, but I think that we realized we just learned a lot. So then there was more competence in what we’re going to do next. So actually, when we were in escrow on that property under contract to close it, it sold after two days on market. It didn’t even get through first full weekend. We wanted a contract to buy another flip. So we did another flip with them, and this time we were actually a higher equity stake, and then I also buffered in a portion of the profit for my project management in the next deal.

Tony:
So Mackenzie, you said that the margins were slim. So it sounds like you didn’t maybe make as much profit as you wanted to, but there’s something important I want to point out there. You basically got paid to educate yourself on how to flip a home for a profit.

Mackenzie:
Oh, absolutely.

Tony:
There is an incredible amount of value even if you broke even on everything that you learned throughout that first flip that you were then able to apply to that second flip to do it more confidently. So I would love to break down some of those lessons you learned in the first flip that you’re like, “Okay. We need to change this for the next one.” So what were some of those lessons learned and how did you change when you went into the second flip?

Mackenzie:
Yeah. Well, you totally touched on it. Honestly, even if we had lost money in it, which thankfully we didn’t, it probably still would’ve been a good opportunity because I was very vocal on social media with it. So I shared the whole deal, “We’re flipping this and we’re doing that,” and I shared all of the, “Oh, man, this didn’t work out, but this is working out and this is how it turned out.” It actually solidified me as a real estate investor. So it pushed my career forward in sales for investors, “Oh, Mackenzie knows how to work the real estate market.”
So that was huge. I can’t even put a value on how that pushed me forward, but then as far as lessons that we learned in it, I definitely think we learned, one, you got to be conservative on your numbers. You think it’s going to take X amount of dollars and X amount of time, just double it, just plan to double it. Then if you end up closer, everyone’s happy, it’s a great day.
Then I think on the other side too, we really did learn, “Hey, I don’t think I need to bring a general contractor in,” because at the end of the day, they’re just project managing it. They’re bringing in all their own subs, and the most times they don’t even know what’s happening. So for me to have made connections during that by reaching out and just building my book of people I want to work with, it made the next process so much smoother and quicker. There was just so much more of an ease because it’s like, “Okay. I trust my tile guy to come in and do an amazing job. I trust my painter to come in and do an awesome job.”
Then I don’t even worry about, “Oh, was that a good bid? Did I get a second one?” I just know it’s going to be great. So I just learned to grow your list of people that you know and trust and use them, and it makes it a lot easier. Then we learned too the benefit of just not using a general contractor personally.

Tony:
Mackenzie, you talked about growing your list of people, but I think for a lot of our rookies that are listening, that’s where that challenge is is that, “How the heck do I find a sub?” So is there a Facebook marketplace that you’re going to? Is there Craigslist? How are you identifying these subs? How are you vetting them? Then how are you as the, quote, unquote, “juicy for your own property”, making sure that you’re sequencing these subs at the right time so they’re not getting each other’s way because I think that’s the challenging part as well?

Mackenzie:
I think experience and referrals are the greatest place to find people. So it goes back to that like, know, and trust people. So for instance, I found my tile guy through another agent at my brokerage. She goes, “Oh, my gosh, I’ve used this tile guy for my houses before. He’s the best. You have to talk to him.” So that starts the conversation. Then I always look for how responsive are they and then how professional are they in my interactions. My tile guy showed up on time, he brought a notebook, he brought a tape measure, he measured all down. He had a professional invoice that he sent to me. I think a lot of contractors fail in that part because they’re more of just like the hands-on, they don’t understand the admin part of it, but if you really care about the process from start to finish, I feel like that gave me peace that I know he’s going to be an exceptional tile worker before he even laid a tile for me. So I think that was huge.
Then, yeah, I did share a lot and I wouldn’t just blast it on Facebook marketplace. I started with people I knew. So I started within real estate agents that I worked with, “Who are you using to paint houses? Who are you using as electricians?” Then in my personal Facebook sphere, if someone I knew had used this person, he did a great job on their plumbing, I would talk to that person. So really trusting that personal word of mouth referral helped build that book a lot. If someone I know had a great experience with them, I feel like that’s just an extra leg up that I’m going to have a great experience with them.

Ashley:
How has your process changed as far as estimating the rehab from that first deal until now? Give us those scenarios and then maybe even some tips for somebody getting started as to what they can do to learn how to estimate a rehab. You said your dad was a contractor, but beyond that, did you really know a ton about what it costs to do construction?

Mackenzie:
Honestly, I tend to wing it a little bit, which probably isn’t a great advice here, but I’ve just gotten a lot of bids. So in that first Reno project, I got three general contractors to come out and bid the job, and I would see where everything would line up. Then you just start realizing, “Okay. To paint an exterior of a house should be around maybe $7,000, $10,000.” So on my estimating, I always estimate on that slightly higher range of what I know. The houses we’re flipping are all about the same. We’re looking for that mid-range square footage, so you can ballpark, “Okay. This is about the same house, so this is probably what it’s going to cost for exterior painting.”
If you’re not sure, I think you just get multiple bids. Most contractors, especially now that they have a little more time on their hands, are great at getting you bids. So I do try to gather as many bids as I can, but to put together that budget, I’ll aim high with my estimate when you have to move quick on getting a property under contract. Then we just put in placeholder bids Let’s say $10,000 for painting, and then the paint comes in at 9,500. Cool, I have an extra buffer. So I say aim high and then get the actual bid and then adjust your spreadsheet.

Ashley:
Mackenzie, as a real estate agent, do you think that you have an advantage of getting contractors into the property because you can really schedule a time for you to go anytime you want to a property, correct, and bringing them in?

Mackenzie:
Yeah. Most of my deals have come on market or coming soon or now, I’m starting to build a network of people who are bringing me deals off market, but most of mine are coming from on market. So I think a lot of people say, “Oh, you can’t find a deal on market.” Well, that’s not true. That’s happened multiple times for me. I love the coming soon listing on the MLS. It’s like this sweet pocket of time. People don’t ask questions. I don’t know if they’re scared of being told no or what, but they don’t ask questions and I’ll ask questions. So both of my flips actually were coming soon. They weren’t even on the market, but I just called the agent. I said, “Hey, I know this is coming soon. I know I can’t see the property because we can’t get into it until it’s on market. Can I submit an offer before it’s even on market?”
They’d say, “Yeah, sure,” and then I can write contingencies in there like, “Let me get my inspection done. Let me do things like that,” so yes. Then as far as if you’re working on market deals, I do think that agents give you a little more credibility and it gives them a little more confidence too even when negotiating with their sellers of like, “Oh, she’s an agent and I’m a very high producing agent in the area. Oh, I’ve worked with her before. I’ve heard of her,” whatever. It does help give some credibility to it. So I do think it’s been helpful.

Tony:
I just want to go back to one thing you said, Mackenzie, because you mentioned spreadsheet, and this is something we’ve always struggled with with our flips is just the best way to manage all of the expenses and make sure you’re coming in on budget. So once you set up that initial budget, what are you using to track expenses to make sure you’re within range?

Mackenzie:
Google Drive all day, every day. You should see my spreadsheets. I feel like nothing makes me happier than a good spreadsheet that auto sums down at the bottom. I’m not even that good at creating them, but I can use the sum. Sometimes I was like, “Oh, this one turns green,” if you’re under, “This one turns red.” So honestly, we just do Google spreadsheets. I will say now too even moving forward, I’ve delegated a little more of that. So my husband does most of that now, which is great because he’s actually better at numbers than me, but we just use good old Google sheets for everything. Then it’s so great too because we share that with our investors. So look at it. So we’ll share that with our partners and everyone has access to it so they can see, “Hey, this bid came in,” or, “Hey, this came in lower, this came in higher,” and they could just see it all.

Tony:
So Ash and I are both spreadsheet nerds here. I’ve probably seen more pivot tables in a week than most people see in a lifetime. So are you just literally taking every single transaction like, “Hey, we just paid the painter X dollars. We just paid our drywall guy this much”? Are you taking every single transaction and just drop it into a big Excel sheet and then categorizing all of those?

Mackenzie:
So we’ll have the master budget. So let’s say painting came in at $10,000. We have set aside for it in the master budget, but at the end of the day, we only paid him 8,500. That goes in there. So then we see that $2,500 surplus. Usually it gets spent somewhere else, but it all balances out like over here we had 5,000 budget, but it took us 5,500, somewhere in there. So yeah, we have the big bid and then underneath it will be what the actual was.

Ashley:
I want to pivot to a different direction. So you did your flips and then you mentioned you have four rental units too. So can you tell us how you made that pivot from doing flips to acquiring rental properties?

Mackenzie:
So our first flip that we partnered in on was March of 2021. We caught the bug for investing, but we want to do this, and at that time, my husband had quit his job, so we couldn’t qualify conventionally because I didn’t have two years of tax returns so we don’t look good on paper, but we owned a house that had significant amount of equity in it because we bought it before everyone thought Idaho was cool. So in July, we said, “Well, we wish we could do a HELOC or something like that, but we can’t. Let’s just sell our house and take the equity out of it.”
So we put our house on the market, our primary house on the market in July and netted a very large amount of money from it. So that helped catapult us into things. So from selling that house, then we bought a new primary residence. We used those funds to partner in on that other flip. We purchased a property. We went under contract for a new build actually in Tennessee out of state.

Ashley:
What made you find that and decide on that?

Mackenzie:
It’s been a learning lesson. I actually don’t really investing out of state as I’m learning. I think maybe it’s my realtor pride. I just like that I can run my own comps. It bothers me to use another agent. I would just rather run it myself, but it was through a friend of ours who we … Actually, the agent, Shelby, who mentored me, he had a agent connection over there and it was these four houses that were being built, and $300,000 purchase price. It rents for $2,800 a month. The earnest money was a thousand dollars. Then at the end of the bill, it appraised for 350. So it was a huge win. So that’s just how we found it was I guess word of mouth connection for that one.

Tony:
I was just going to ask one followup on the Tennessee. Outside of the comping, is there anything else that I guess you’re not enjoying about the long distance piece? Is it the management itself? I guess what advice would you have for rookies to make that piece a little bit easier?

Mackenzie:
I don’t know this area of Tennessee, I’ve been to Tennessee before. My property’s in Maryville, which is about 30 minutes outside of Knoxville from my understanding. I’ve been to Knoxville, I’ve been to Nashville, but so yeah, just difficult working with another agent. I don’t know, you just see like, “I feel like this could be a little bit better,” when numbers kind of go from a high end to a low end, just a little bit of confusion. I love Zillow, but I can get the data that I can get from the MLS. So just working with another realtor, I prefer to be my own realtor.
Then we do hire a property manager for that, which is fine. He does great, but I just don’t know the market there as much as I know here. So when I have my in-state rentals, I manage them myself because I know the area. It’s easy for me to pop over. I know my contractors. I don’t know anyone there. So to be honest, it’s probably probably an issue with my own. I want to micromanage everything. So I don’t like that I have to trust other people to tell me what the rental estimate is, and yeah, I can run it, but that in neighborhood like, “I know this street, I know …” For instance, we bought this property and I look it up on Google Maps, but you don’t even realize what’s down the street from you. You’re like, “Ah, that’s a weird spot for a rental.” So just not being able to see the property, touch the property, know the area, and then you’re having to pay property managers, and if I want to sell it, I have to pay a new realtor fees and all that stuff.

Ashley:
After that property, did you only do deals in Idaho for your rentals after that?

Mackenzie:
Yeah. So now we have, let’s see, three, soon to be four in state. One of ours we bought, it was the good old end of the year scramble so we don’t have to pay some taxes. So we bought a property here in Idaho and renting out as a sober living facility, which is great. Then our next one, our last primary residence that we purchased, we flipped into a rental and moved into a new primary. So that helped us put less down. Then we just bought a property subject to that we’re renovating. That will be a long-term hold and will also be sober living. Then our current property that we’re in right now is a primary, we’re building a new primary, and so that’ll flip into probably a corporate living or executive rental.

Ashley:
We have a lot to unpack there. Let’s start with-

Mackenzie:
I know that was a lot.

Ashley:
Let’s start with, what is sober living? Explain that strategy and what you’re doing with the property to make it sober living.

Mackenzie:
So there’s a couple ways that you can go about this. The way we’re doing it, I love it because it’s very hands off. So I know someone who actually has been in the prison system, turned her life around, she’s amazing, she’s awesome, and she has a heart for people in those situations. So she actually has a direct contract and connection with the Idaho Department of Corrections. So what happens is when people get released from prison, they get released with $650 for their first month’s rent, and it goes directly to this gal for them to live in this house, and in the house, they have to abide by the rules, drug tests, do all this stuff. So they have to remain clean.
So it’s nice because I actually feel like I’m providing a place. There’s, oh, my gosh, I can’t remember the line, there’s literally people that can’t get released from prison because there’s not a sober living house for them to go to. So we’re actually trying to help her in gaining as many houses as we can for her. So how it works with her, you can do sober living on your own where you just literally market it almost like you would a rental and people can come to you, but there’s just a lot more management with it, but how it works with her is she signed a two-year lease and then essentially, it’s arbitrage or she’s subleasing it out.
So she signed a two-year lease at a fixed rate with me, and then however many people she puts in it, whatever income she brings, that’s all icing on the cake for her. So it’s really nice. It’s a set it and forget it from me, and they also property manage the house. They have a house manager that lives there. So they take care of any repairs under $500. If it’s major, we talk about it. So it’s been great so far.

Tony:
Mackenzie, did you charge a premium to them for this arbitrage deal or was it basic market rents?

Mackenzie:
No premium because it doesn’t make sense to have that many people living in the house. So the house that we have right now that she’s renting is a four-bedroom house, and I think she fits 10 to 12 people in it. So there’s certain state criteria that she has to follow, but it has to be above market value for me to justify the wear and tear on my property. So she does, for instance, that property, probably long-term rent, would rent for around 22 maybe, if I’m lucky, $2,400 a month and she signed a two-year lease at $3,200 a month.

Tony:
That’s awesome. I think that’s a big benefit as a landlord to doing rental arbitrage, which is what you said, where you lease it out to someone who instead of them living in it themselves, they turn it around and sublease it to someone else. So arbitrage is pretty big in the Airbnb space. If you’re listening to this and you’ve got a small multifamily or single family house, you want me to arbitrage it, send me a message, I’d love to connect because I think it’s a win-win situation. The landlord gets an elevated rent and the operator gets to acquire a unit at a fraction of what it would cost for them to purchase that. So it really is a win-win situation.
For our rookies that are listening, if you guys want more information on the sober living model, we interviewed Davana and Reed back on episode 265, 265, yeah. They did an entire hour breakdown of this model that Mackenzie’s talking about. So if you want to learn more about that, go there, but you also talked to, Mackenzie, aside from the sober living, you talked about subject to and creative finance. What the heck does that mean? We’ve got some other resources in the BiggerPockets ecosystem, but I’d love to hear from your experience. What does creative finance and subject to mean?

Mackenzie:
So to be honest, I’m newer to it. I guess I was doing creative financing without realizing I was doing creative financing because our property that we just bought, the sober living one that I was telling about that we bought last year, we ended up bringing in our partner as a private money lender. That’s a form of creative financing because we bought in cash, but we needed a little just to make up a little difference. So that was one aspect of it. When we purchased our property in Tennessee, still couldn’t qualify for traditional loans, so we purchased it using a DSCR loan. So there are other ways to go about it, but I really just got opened up to this world of true creative finance where we’re talking about subject to or really seller financing.
A lot more people have heard about seller financing. They have a bad taste in their mouth over it I think just because they’re not educated on it, but subject to is this powerful tool, and I really feel like it’s having its day in the sun right now. What it is essentially is we go into a contract with a seller where we agree to make their payments on their behalf. We take title to the property. The property is legally mine. I can use it for tax depreciation. I can do whatever I want with the house, but the power is that the debt actually stays in the seller’s name. It doesn’t negatively affect them, but it stays in their name so that I don’t have to go through credit checks, I don’t have to go through loan closing costs, I don’t have to go through debt to income. No one looks at my stuff. It’s actually scary. No one even looks at my stuff and I buy this house.
So it’s really the easiest way of transferring title and then agreeing to make payments to the seller. So we did that, and what sweet is now, I’m paying a mortgage that has a 2.6 rate on it, and I should be able to cashflow about a thousand dollars a month once it’s renovated and up and running.

Ashley:
That’s awesome. That’s really cool. We did interview Pace Morby on here. It was episode 280. He’s always a wealth of information. He’s also going to be one of the guest speakers on the Real Estate Bootcamp for BiggerPockets. So if anyone wants to join the bootcamps, you can go to biggerpockets.com/bootcamps and Pace will be one of the guest speakers on it. So really exciting, but that’s an awesome deal.
I want to ask, and you mentioned a couple of lessons that you had learned along the way, such as dealing with a general contractor, such as investing out of state, but what do you think was the hardest lesson that you had to learn? What was the most difficult thing through your journey as a rookie investor?

Mackenzie:
I think sometimes I’m all about you have to start to get anywhere. You’re never going to get further along if you never start. So that’s a huge piece, but also sometimes you get this adrenaline rush of like, “Let’s keep going, let’s keep doing this.” So sometimes I just think you need to be wise about the steps you’re taking before you take them. So probably our biggest moment was my husband and I went under contract to build a house, and we did the number one thing that you don’t do, which is buy the most expensive house in the neighborhood, right? Never do that. It’s terrible for values, but when it comes to a primary residence, this was going to be our house. We’re going to be in it with our family, dream home, blah, blah, blah.
However, we went into a contract on it at the peak of the market. So the market started tanking, which is okay if you’re going to ride it out. During that, just life changed a little bit for us. We want more kids, and this house wasn’t perfect for it, and just different things came up. Here nor there, at the end of the day, we ended up pivoting. We lost some money, but not as much as we could have. That’s actually going to turn into our new rental property that we bought. It worked out, but the biggest life lesson for me was the amount of sleepless nights I let it cause me.
The market is out of my control. Yeah, I can try to watch trends and follow it as quickly as I can, but sometimes the government does crazy stuff and here we are. So you can’t time it perfectly and you’re not going to win in every investment. You’re going to win some, you’re going to lose some, yes. Leverage your risks, be smart, don’t overleverage, but at the end of the day as long as you did your research before, what you’ve put out isn’t going to ruin your family if you were to lose it all. Just chill out. The peace of mind and the quality of life that you give up when you’re stressing over something you can’t even control is not worth it.
So I think when you go into investing, you just have to have a level mind about it and make sure that you keep that perspective about it, “I might lose some, but I’m going to win some and I’m usually going to come out over top.”‘ So I think that was probably my biggest struggle was I had to learn that the hard way, but I’m on the other side of it now and now I know

Tony:
You make a fantastic point, Mackenzie, about most real estate investors don’t have a perfect track record.

Mackenzie:
Absolutely.

Tony:
A lot of those failures, a lot of that adversity is what makes you a better investor in the long run. For example, last summer, we attempted to do our first syndication and it was a small hotel here in Southern California and we had to raise, I think, five million bucks was our target raise, and we ended up raising 2.9 or 2.8 or something like that. So we got a little more than halfway there and we just couldn’t raise anymore. I put up a 50K EMD. We probably spent another 50K in legal fees and inspections and all these other things, and we ended up having to pull out of the deal because we couldn’t finish the raise.
Luckily, I was able to get my 50K EMD back, but the other 50K that I spent on legal fees and all that other stuff, that was a sunk cost. So I think there are sometimes risks that you get when you go into some of these deals, but to your point, as long as it’s not a fatal amount of money, take those lumps and use those to be better on the next deal.

Mackenzie:
100%, yeah, completely agree.

Tony:
So I want to take us to our rookie exam, Mackenzie. These are the same three questions we ask every single guest, probably the three most important questions you’ll ever be asked in your life. So are you ready for question number one?

Mackenzie:
I’m so ready. Let’s go.

Tony:
All right. What’s one actionable thing rookies should do after listening to your episode?

Mackenzie:
Go do something. I don’t care what it is. Just go do something. I feel like we take so long … Pace Morby, actually, my favorite. He has a story of he talks to somebody, he goes, “Man, I’ve been working for …” I think it’s like three years, four years, “and I haven’t gotten my first deal.” What are you talking about? Go find a deal. Go do something. Yes, education is great, but you will never know anything. Here I am, I just learned about creative financing two months ago and now I got a subject to deal and it’s amazing. If I hadn’t been open to that or hadn’t acted before I knew everything, I never would’ve started.
So I feel like figure out what it is that you can go start on, whether it’s finding a deal, whether it’s finding a partner, whether it’s finding a contractor, building a contract list, do something to get you closer to your next deal today. That’s what you need to do. Do something. It never works if you don’t work. So just start working.

Ashley:
What is one tool, software or app or system, in your business that you use? You can’t say Google Drive because you already said that one. So what’s another tool that you use in your business?

Mackenzie:
Honestly, this might be a slightly unconventional answer, but Instagram. You guys, you need to be using social media. The power of sharing my journey on social media even when I didn’t have a lot of real estate sales behind me, even when I had no investing experience and I’m winging it on my first flip, use that tool. I feel like when you offer value to people, don’t even say, “Hey, I’m getting into real estate investing. I want to find a partner.” Just start adding value to people and people will come to you because they feel like what you’re giving them, what they’re getting from you is way more than what they’re going to give to you.
So I would absolutely use your social media channels, whether that’s Instagram, Facebook, Snapchat, Pinterest, whatever, the new threads, all the other things. Use your social media and just start sharing what you’re doing and share opportunities and start establishing yourself as a professional in real estate. Whatever that is, start becoming the educated voice of reason in all of your followers’ heads, and I think it will absolutely multiply your business and be your partners later in life.

Ashley:
Mackenzie, you make a great point about just sharing your knowledge and you don’t have to have any experience to share what you are learning. So if you’re listening to a podcast, what’s one thing you learned in that podcast? Post about it. You’re reading the new book you’ve just got in the mail, Real Estate Partnerships, post one thing you learned about it when you read that book. So I think that’s great advice.

Mackenzie:
I feel like everyone feels like they need to reinvent the wheel when it comes to social media and they need to know it all. I think you just need to remember that you probably know 1% more about whatever topic you’re talking about than most of your network does, especially when it comes to real estate investing. So even it’s that you just read the Real Estate Partnerships book and you got one quote and you put it on there or use ChatGPT. It’s not cheating. Use ChatGPT and share that knowledge with people. So I completely agree. You don’t have to know it all. Just share something and you probably know one more percent than everyone else.

Tony:
I think the other challenge people have is that they’re thinking about the wrong person when they’re creating content. When I post something on my Instagram, I’m not posting to educate Ashley about real estate investing. I’m not trying to impress her with my knowledge. I’m trying to give information to the person that doesn’t have that. So I think if you reframe who your audience is, it makes it a little bit easier to be transparent and vulnerable on social. All right. Last question for you here, Mackenzie. Where do you plan on being five years from now?

Mackenzie:
Ooh, that’s such a good question. It’s a good time that you asked, actually. I just reevaluated where I want to be. I’ll give you my three year, two and a half year plan, okay? So I’m 27 years old. This is fun fact. You know the whole golden birthday where you turn whatever year on your day? So I will turn 30 January 30th, 2020, oh, gosh, six, okay? So in about two and a half years, my golden birthday I’ll be 30. My goal is to increase my rental cashflow to replace my real estate sales income right now.
So buildup, it depends on the cashflow, it equates to around 20 doors, but it depends if cashflow is higher. So that’s my goal is to make enough income from my rentals every day over the top on top of expenses, so what I’m taking home after all my partnerships is enough to replace my real estate sales income. Then I do run a team here, and so my goal with that is then to be able to feed my team more deals, give them more opportunities. They love sales, they love that. So if I can give them more deals and I can focus on more of the real estate investing, it’ll free up a little bit more time for my family. My town will be my own. I can travel more, do all of that, create that financial independence life. So that’s my goal, I guess, financial independence by my 30th birthday.

Tony:
Well, Mackenzie, it’s been an absolute pleasure getting to dive into your story. I know I picked up a few things in our conversation as well, but before we wrap things up, I want to give a shout out to this week’s Rookie Rockstar. This week’s rockstar is Mimi Fenton, and Mimi says, “This is a really proud moment. We just closed on our first multifamily. I’ve been dying to get into multifamily for years, but felt so restricted by living in an expensive city and not having the capital. So I just followed the Zillow map until I hit areas with multifamily properties I could afford and then identified which of these had the best rents.” She finishes off by saying, “You can’t sit on the sidelines and plan. You have to jump in even if you don’t think you’re ready.” So Mimi, congratulations to you and can’t wait to hopefully get you on the podcast one day and you can tell us more about how you made those multifamily properties happen.

Ashley:
Mackenzie, thank you so much for taking the time to join us here today. Mackenzie and I had actually met at AJ Osborne’s conference in Boise, Idaho, and we got to talking and I just knew you would give tremendous value. So thank you so much for taking the time to come on the show. We really appreciate it.

Mackenzie:
Thank you so much for having me.

Ashley:
Yeah, you’re welcome. Can you let everyone know where they can reach out to you and find out some more information about you?

Mackenzie:
You can follow me on Instagram and TikTok. I’m also on Facebook. My name’s just Mackenzie Brogdon. I’m sure you’ll see it here in the comments. On Instagram and TikTok, it’s Mackenzie Brogdon Realtor. That’s it. Everybody will find me. I’m also on threads now, testing that out to see how that goes. So Mackenzie Brogdon Realtor anywhere you can find me and I’d love to chat and connect with you all. So thank you Ashley and Tony so much for having me. It’s an honor to share my story. I hope it can inspire even one person listening to this to go out and do something and get your first deal.

Ashley:
Okay. So you guys, give Mackenzie a follow and let her know how she has inspired you today to get your first or even your next deal.
I’m Ashley, @WealthFromRentals, and he is Tony J Robinson, @TonyJRobinson, and we will be back on Saturday with a rookie reply.

Robert Shiller, Case-Shiller Index co-founder and professor of economics at Yale University, joins ‘The Exchange’ to discuss housing supply pressures on housing inventory keeping prices high, the Case-Shiller Index’s estimates for future home prices, and the impact regulations on Airbnb and the secondary home rental market will have on supply.

As inflation continues to take its toll on the economy, many professionals are looking for ways to increase their income. While some may choose to take their talents elsewhere and seek a higher-paying job, or even add on to their workload by taking on a potentially lucrative side hustle, others are content with their current career of choice and would rather earn their bump in pay another way: a raise.

However, unlike applying for a new position at another company, the path to achieving a salary increase at your current job may not feel as clear. That’s why we asked nine members of Young Entrepreneur Council to share their best tips for how to successfully negotiate a salary increase and why doing so can help you get the increase in pay you deserve.

1. Build A Clear Case For Why You Deserve It

Asking for a salary increase because you’ve “been here a while” or because someone else got one won’t get you far, but proactively presenting hard evidence of the impact your work has had on business KPIs can be a very effective strategy. If possible, come prepared with data demonstrating how your efforts contributed to increases in sales or conversions, retention, traffic or engagement and more. If your role is not directly tied to metrics, be sure to provide positive customer or colleague feedback. Not only will this demonstrate your value to the company, but it will also make it easier on your manager to advocate for you to upper management. – Samuel Saxton, ConsumerRating.org

2. Do Your Homework On The Market

When it comes to negotiating a higher salary, do your homework! Take some time to research and gather market data on what others in your position and industry are earning. Having this solid evidence on your side allows you to confidently explain why you deserve better compensation based on industry standards and the value you bring to the table. When you’re armed with factual data, it becomes harder for your employer to brush off or underestimate your contributions. Plus, by comparing your current salary to similar roles, you can build a strong case for a salary adjustment. Taking this strategic and professional approach shows that you’ve done your due diligence, making it more likely for your negotiation to end successfully. – Jennifer A Barnes, Optima Office, Inc.

3. Focus On The Positive Outcomes You’ve Achieved

You work hard, but the bottom line is real outcomes. During any discussion about salary, show the specific and positive changes you have made, especially any during an economic downturn. If you’re able to detail and quantify the impact you have at your job in positive terms, you’re more likely to receive a positive response, even in challenging times. For example, bring specific cases of how you’ve improved workflow, increased sales, improved traffic or attracted more clients. Using data to quantify your positive outcomes helps present your case in more logical and concrete ways. If your raise request is denied, ask for a salary review after a specific time and ask what quantifiable benchmarks you need to reach to get the raise you deserve. – Shu Saito, SpiroPure

4. Put Yourself In Your Employer’s Shoes

Put yourself in your employer’s shoes! This will help you come up with solid reasons as to why you should get that raise and why your employer might be willing to give it to you. With this in mind, you can think from your employer’s perspective. What are you bringing to the table that is of great value to them? What is your unique contribution? How has your work contributed to your company’s bottom line? By focusing on how your employer benefits, you will be able to discuss points they are interested in and they need to pay attention to, making your odds of a successful negotiation greater. – Riccardo Conte, Virtus Flow

5. Focus On The Value You Bring

One tip for successfully negotiating a salary increase is to gather evidence of your value and contributions to the company. Document your achievements and quantify results whenever possible. Research market rates to provide context for your negotiation. Align your contributions with the company’s goals and emphasize the positive impact you’ve made. Prepare a compelling case that connects your achievements, market research and alignment with company objectives. Choose an appropriate time to discuss the increase and approach the conversation professionally. Presenting evidence strengthens your position, increases credibility and improves your chances of a successful negotiation. – Jared Weitz, United Capital Source Inc.

6. Align Your Skills With Your Job Description

One effective tip for negotiating a salary increase is to highlight how your skills align with the job description. By emphasizing the direct correlation between your abilities and the requirements of the role, you demonstrate your value and worth to the organization. This approach is useful because it provides tangible evidence of your capabilities, making it difficult for employers to overlook your contributions and the impact you can have on their success. By showcasing your skills alignment, you position yourself as a valuable asset deserving of a higher salary, increasing your chances of a successful negotiation. – Pratik Chaskar, Spectra

7. Think About The ‘Why’

When negotiating your salary, always focus on the “why” aspect, because that’s what follows after you’ve stated your demands. So, work on your response to the why. Why should your employer increase your salary? Is it because of the current market conditions, better salaries offered by competitors for similar roles or your past accomplishments? The reasons could be one or many. So, come up with a solid response to the “why” and it could turn the odds in your favor. – Jared Atchison, WPForms

8. Be Prepared To Answer Tough Questions

Want a better salary? You better be prepared. This could involve answering tough questions from your employer about why they should give you the raise or why you deserve a salary increase. Too many employees make the mistake of asking for a raise just for the sake of it. The ones who successfully negotiate higher rates maintain lists of talking points that establish their value. So, be ready to put everything you can offer on the table and do some research about the person you need to win over, including their limitations and their weak points. Preparation is useful because it helps you answer tough questions that may expose your weaknesses. It shows your employer that you’ve put thought and effort into what you’re asking, giving you more bargaining power. – Bryce Welker, Crush The CPA Exam

9. Let Your Achievements Do The Talking

To successfully negotiate your salary, it’s essential that you know how to showcase your skills and capabilities to let employers know your true worth. This doesn’t mean just filling up your resume but instead letting your accomplishments speak for themselves. In a nutshell, rather than worrying about hacks or shortcuts to negotiate your salary, just focus on your area of expertise, excel in it and let your achievements do all the talking. – Stephanie Wells, Formidable Forms

David:
This is the BiggerPockets Podcast show 811.

Mark:
So when everybody zigs, you zag. And so when the world does become a copy and paste, everybody’s doing SMS, everybody’s doing email, when everybody’s just relying on automation, what can you zag instead of what everybody’s zig?

David:
What’s going on everyone? It’s David Green, your host of the BiggerPockets Real Estate podcast here today with my co-host Rob Abasolo, who will actually be taking over the reigns and hosting today’s show. Or is it Rob? It might be a deep fake that we’re throwing at you. Listen to the show and let us know in the comments if you think this was real Rob or AI Rob. Today’s show is all about artificial intelligence, how it can hurt your real estate business, how it can help your real estate business, how it can make you money or lose you money, all that and more. And we’ve brought in some help. We’re joined by Mark Simpson of Boostly, who shares his thoughts on how he’s using AI to help his business and give customers a better experience. And Rob actually says a few intelligent things in today’s episode as well. Rob, you’re more than just a pretty face who’s losing a lot of weight, getting tan and putting on muscle. How are you today?

Rob:
I am doing good, David. Thank you for asking. I am doing swell. I’m going to Las Vegas tomorrow and I’m excited because I’m going to go see a Dell, the real version.

David:
Which Dell are you going to see?

Rob:
The first one, the first and only. I’m going to look at a Dell computer. I’ve been taking this purchase very serious.

David:
Is this the farmer in the Dell? What is the Dell that the farmer goes to? Do you know what that is?

Rob:
I don’t know what that is.

David:
Let us know that in comments as well. If anyone knows what the Dell is that the farmer is using. Rob in today’s show, what should people keep an eye out for that will help them in their business or maybe help them avoid potential pitfalls that could cost them money in their business?

Rob:
So I think we’re talking about a few AI tools here and a few other tools that would help you optimize your business, but giving you actual practical use cases for your business, whether it be real estate or anything else. But specifically I think that today’s message is we’re not here to replace ourselves. We’re not here to replace our employees. We’re not trying to take jobs or cut our team. We are trying to enhance ourselves to be the most efficient and optimal version of our business selves so that hopefully our business can make more money.

David:
That’s the name of the game. Before we get to the show, our quick tip is if you want to grow your business, consider getting a CRM. The idea is you need to manage your customers and your clients and the people that you want to do business with so that you can be organized and systematic in the way that you stay in touch with them. If you’ve been trying to keep it all in your head or on an Excel spreadsheet, stop. Look into getting a CRM and become a professional in the real estate space, not an amateur. All right, let’s talk some AI in real estate.

Rob:
In a not so distant future, when AI rules the land, these three investors are out to get properties with a vengeance. Machine learning has cornered the market. So how will these vigilant investors survive, David?

David:
So if you two are skeptical about AI, you are not alone. In fact, I’ll go so far as to say people are already abusing AI. I get tons of messages in my Instagram account every single day from people that are wanting to use artificial intelligence to edit my videos and charge me for it. I will reach out to people asking for something and I’m clearly talking with a chat robot that I don’t want to be talking to. That’s stalling for time. Companies are bragging about artificial intelligence, putting them on the cutting edge, but we’re talking about technology that doesn’t work very well, and it’s replacing the human element. If you think about when you go stay at a Airbnb or at even a hotel, if there’s nobody to check you in, we’ll frequently brag about how AI has gotten us out of the business, but we never think about it from the perspective of the client.
That’s the thing that I just want everyone to keep in mind. When you’re looking at a new form of technology or a business opportunity, it is very easy to look at how it’ll benefit you. But as a business owner, we build our business on the foundation of the client. Rob frequently talks about adding amenities to short-term rentals to give a better experience to the client. You’re trying to design a house so that the client would be happy with it. Well, if the client isn’t happy when they’re trying to check in and there’s no one they can talk to, they’re probably going to leave you a bad review and it’s going to cost money.
And AI is not going to smooth out an angry person like a human being could that can give empathy and share concern. And not to make this personal, but I was hanging out with Brandon Turner who was bragging about how much he loves ChatGPT, and he asked ChatGPT what type of animal I would be, and it said an owl, and I wasn’t super thrilled about that. I was looking for a lion, possibly a grizzly bear, something a little more majestic like a Griffin. I just wasn’t happy about being called an owl, and I can admit that that might have colored me a little irritated with ChatGPT.

Rob:
Well, thank you for that Black Mirror episode, David. I’d tell you to pitch it to Netflix, but a bot probably already has. Mark Simpson from Boostly, how you doing, man? After hearing DG out, is there anything that you’d like to say as a rebuttal?

Mark:
Well, hello. Thank you for having me back. It’s an absolute pleasure. But yeah, I am coming into this episode as somebody who’s a massive fan of AI and I’m excited to share a few things. But in terms of a rebuttal, I would say this is that number one, when it comes to people stopping using their brains, we are programmed as humans to only make certain amount of decisions a day. And I’ve been doing everything in my day-to-day to try and cut down on how many decisions I need to be making. And if we can have a tool that can help us with said decisions, whether it is, what are you going to order for your groceries, what are you going to watch tonight? Or if it’s something more business related in terms of organizing your to-do list, et cetera, I am all for that.
And I actually think that it’s not going to stop us as humans wanting to talk to other humans. If anything, I feel like what’s going to happen with all of this is it’s going to encourage and help us relate more to more people, meet more people, do more things and become better because of it. And I will end with this, is that the cream always rises to the top. I think this tool and AI is going to eliminate 90% of Fiverr. It’s going to eliminate 90% of Upwork, but there’s a lot of crap on Upwork. There’s a lot of people who are crap at what they do, but the cream will always rise to the top.
So what will happen is the best people in their field will rise to the top and they’ll be the ones who can command more money, they’ll get more gigs, and that’ll be the offset of this. I think that there’s nothing but positives to come from it, but I do agree with David on one thing is that we can’t just come to a world of copy and paste. We can’t just blindly go down this road. AI will get us 80% of the way there and we have to use 20% of our own intuition, creativity, brain source to get us to the full 100%. So I’m excited to dig into a few things today.

Rob:
Yeah, I mean today we’re going to talk about actual tools out there that can help you with your real estate business, and we’re going to get into things like relationship management, design, remodeling, operations. There are also a ton of tools out there that we won’t cover today. So if there’s a particular part of the deal flow you’re struggling with, whether it be deal analysis or comping in general, et cetera, we’ll list some of those tools in the show notes for you. Or you can just ask Mark Simpson what he would use because he is the AI expert here.
And then just a quick side note here, BP does not officially endorse any of these products. These are all just anecdotal things that we have used in the past that we like, and there’s a huge landscape, hundreds of different tools out there. We’re just talking about some of the ones that we’ve come across in our journeys. So let’s get into it. Let’s get into it. Let’s start with Mark, you’re first up, and basically we want to know what is your favorite AI tool that you’re using right now to optimize to make your business more efficient, run more smoothly?

Mark:
So my tool is Tavus, and I’ll have to spell it for you because my British accent. So it’s T-A-V-U-S.io. And Tavus is a marketing lead gen sales tool that everybody can go ahead and use right now. The main way that I use it in the business is I record a video right now to the camera and it takes me 10 minutes to record that video. That 10 minute video, I can then send out to 2000 people, 10,000 people in literally one minute. And the way that it works is that as I’m talking into the camera, AI is looking at my facial expressions, it’s following my mouth, it’s looking at my movements. And what I do on the other end is once I’ve finished that video, I will upload a list of contacts that I want to reach out to. And all I have to do is insert tags.
Just like when you’re sending an email to somebody, if you’re going to do a big blast for your CRM, you’ll replace first name. And for example, say I’m going to send a message to Rob and to David, I just have to do in one video that video pitch and it’ll be two minutes, three minutes, and I could talk about anything. For Boostly obviously I’m promoting what we do here at Boostly when it comes to direct bookings, but if you’ve got your real estate hat on and say you want to get in front of a load of realtors, estate agents, et cetera, you can use it for that. And so you record one video, it’ll take 10 minutes to learn you. That video is a maximum of two minutes of your time, and I can then bless that out to thousands upon thousands of people with no extra effort on my end.

Rob:
And what’s the time that it took to integrate? What was the learning curve for using this tool?

Mark:
Learning time, the main thing that I had to learn personally was how to speak into a camera and read a script because I didn’t know the any thing.

Rob:
Harder than it looks.

Mark:
Harder than it looks. It’s not a one-stop shop, but as soon as you’ve figured that out, the tool does everything for you. So as far as what I had to implement, I just had to create the script, record the video, send it off to Tavus. They did all their things and then I just had to integrate the link that they gave me into my CRM. So for example, I use ActiveCampaign for sending out emails. I use close.com to send out SMSs. I just had to take that link and put it in and it took me maybe a couple of days to get used to. So all in all, let’s just say a week to get it all turned around, but now it is all automated, so it’s all in the business.

Rob:
And what were the results from using this?

Mark:
So we pay $275 a month to use this service, so let’s just call three grand over a course of a year. And the ROI has been well over six figures in revenue coming in on the back of it from what we were doing before. Obviously the caveat is that video has to be good. You can’t just be spouting out nonsense for two minutes, it’s got to be a good video, well put together, et cetera. But we’ve been able to fine tune it, create it, and it has been generating some really good results from us personally. And I can see not just how I use it with my Boostly hat on, but I can see how a host could use it, whether it’s SDR, MTR strategy, even real estate investors, et cetera, going for some big deals, et cetera. So it’s very, very powerful tool and I encourage everybody to check it out.

Rob:
And would you say that this tool is more for a newbie, for someone that’s kind of an intermediate right in the throes of their business or the advanced I guess technologically savvy investor?

Mark:
I would say a newbie. Anybody can use this. It’s more budget. Can you put together $300 a month to use this? If you can’t stretch that far then obviously it’s not for you, try something else, you’d have to eat glass for a little while and do it manually yourself. But as soon as you’ve got that extra revenue in your business, doesn’t matter what level you feel that you are at technically or mindset wise, you can easily do this. All you have to do is have a camera. You can even have your webcam if you want, and just record a video and just talk. As long as you can talk, you can do this tool.

Rob:
All right, so do you see a use case in your business for this? It sounds like yes. But is there any reason why you would still have a human do this work? Even if let’s say you don’t want to do it anymore, you’re running the company, would it ever make sense to just hire someone to kind of run with this aspect of the support, the legion and everything like that?

Mark:
Well, for me, we’ve got 44 members of staff at Boostly and I would never put somebody on this task, particularly because I’m all for utilizing AI to free up their time. And there’s much more important tasks I personally feel like my team can be doing than doing this. Because again, if they’re going to record a video every single time somebody comes through to Boostly, they’ll be full up all day and they’ll get bored doing it. Unless they’ll come to me and say, “Mark, I don’t want to record this video for the a thousandth time, will you stop doing it?” So for me, I would never put a human onto this task. I’d much rather be doing something more proactive with their time. So I’d much rather have an AI do this tool.

Rob:
I think there’s a lot of interesting use cases here. I see it from the standpoint of let’s say a real estate meetup. If I throw a real estate meetup and I go through the trouble of creating let’s say an Eventbrite and capturing all the emails of the people that register to go to my meetup, I could in theory create a video that gets sent out to each person via text or via email that’s, “Hey Mark, it was so great meeting and connecting with you at the meetup. Don’t forget, I’m looking for a lead in this buy box for this type of investment. Please keep me in mind anytime that you’re looking to offload a deal.” Or something like that. And basically it allows me to reach, based on what you’re saying, a massive amount of people. Now from the AI standpoint, is it basically that they’re capturing my vocal sounds and tonalities?

Mark:
So in that 10 minutes that you are training the tool, you are literally reading a script that they’ve provided for me and what they’re doing in those 10 minutes is that they’re seeing how my face moves when I talk, the accent and the words how I speak.

Rob:
The diction, yeah.

Mark:
The diction, all of that, and it’s taken all of that and it’s training it all up. So when I record the actual script for the video for the woman video, just the example that you say there, when I go to say, for example, instead of me saying, “Hey Rob.” I’ll just say, “Hey, first name.” And when the video’s being put together on the script that we create, I insert the tags just like you would do on an email blast out, you’ll go, “Hey David, hey Rob.” And it makes that email look personal, but instead of it being an email, it’s literally in a video and it’s getting all of that information from the data that you put into that list. So basically you upload a list, sync it with your CRM, wherever you get the information from, however you acquire that information, you load it in and Tavus takes all of that and matches it all together and spits out a quality video.

Rob:
Okay, that’s cool. So David, you run a really large real estate team. Are you convinced, is this a tool that you would possibly encourage the team to use to create these mass videos to send out as follow-ups to all of your client base?

David:
In a situation like this, yeah. In fact, I used to do this when I would hold open houses before I was hosting the podcast, I was just an average realtor trying to make a dollar out of 15 cents, and I would go hold open houses every weekend. I’d do like three or four in a weekend, and then I would do exactly what Mark said. I would send a video of me saying, “Hey, it was so nice meeting you at the open house. This is a reminder of what we talked about. I’ll be reaching out somewhere else.” Because everyone’s used to just brushing off realtors, they’re annoying, but when you get a video, it’s so tempting. You just really want to touch that button and you want to see what might be in there. I’m curious though, Mark, how is what you’re describing, how would it play out practically different than if I just recorded a video and sent it to somebody?

Mark:
Well, if you’re going to do it on a singular level, do it on a singular level. This is to be acquired at scale, and I assume now in the levels of your careers that you’ve both had, you’ve got a lot more leads, et cetera, coming into your inbox on a day-to-day basis. So this is to be acquired at scale. If you’ve just got five videos to send, say you’ve done an open house and there’s five people, just send five videos. But this is something that you can definitely do for 100, 200, 300,000, 10,000.

David:
Yeah, I like that because if it’s not replacing something a human did, it’s not like, well, I don’t want to have to do work, so let me use AI, that’s usually where I get anti artificial intelligence. If it is enhancing something that a person would already do, that’s a different story.

Rob:
I mean, one of the things that Alex Hormozi talked about in our recent episode with them is that one of the biggest weaknesses basically in any business is the follow-up. And so really seems like this tool can come in handy for that. One quick question and then we’ll move on. Does it have any shortcomings such as like is it ever like, “Hello Mark.” And it kind of sounds computery whenever it’s trying to read things like names and then goes back to the AI generated sound or is it pretty seamless?

Mark:
It’s pretty spot on. The one time it’s had its shortcoming is when somebody signed up to get something from us and they put their name in as Seymour Butts and so the AI literally sent him a video saying, “Hey, Seymour Butts.” It went on that one.

Rob:
Yeah. So you talked about lead gen at the beginning of this. What is an aspect where you could use this for lead gen? Can you give us some actual practical use cases there?

Mark:
So in terms of actual lead gen, let’s just say for example-

Rob:
And that’s lead generation, that’s short for lead generation. That basically, right, right, sorry, I want to clarify for any listeners because not everyone may be up to speed on marketing lingo, although that one’s pretty straightforward, but this is basically the idea of creating leads for your business, right?

Mark:
Yeah, 100%. So I’ll show you how I used it for our business and then I can give an example how somebody else could use it for their business. Let’s talk like an MTR strategy. So for what we did, we were able to find a lot of property owners, hospitality hosts who were situated in an area of the United Kingdom, Manchester. What we did is we then went along and we found their websites and on their websites were able to get their email address, first name, phone number. What we then did is we basically put that into a Google Sheet, we uploaded it to Tavus. I created one of my super quick one minute videos.
It was just basically saying, “Hey Rob, hope you’re doing well, just to let you know that we are a business here that’s helping direct bookings.” Yada yada, yada. One minute, sent it out, we sent it to that list, and on the back of that, I think we found about 100 that we were able to scrape together. On the back of that, we had 10 people get back in touch with us and they then booked a call and went from there. So in terms of lead gen, instead of me just getting those bits together, blasting out a list, we’re able to use it to then made our outreach a lot more stronger.

Rob:
So that’s pretty interesting. So David, I wonder if that would work in the off market side of things. If you are sending text messages out to owners of distressed properties saying like, “Hey Mark, I see that you own 111 Main Street and I wanted to just see, are you interested in selling this property? Me and my team buy homes cash.” Or something like that. You could then effectively pull lists from, I guess, I don’t know, privy batch leads, wherever you can skip trace and effectively blast out to people. If you’re looking for an off-market deal, is that a use case that, I don’t know would make sense, David, you think?

David:
Since we started recording this podcast approximately 22 minutes ago, I’ve received three text messages like you just said, asking me if I want to sell one of my properties, which is annoying AF as the kids would say. So I don’t know if I’m a huge fan of the blast, the text to everybody thing. I see how it’s effective and some people it’s working, otherwise people wouldn’t do it, but it’s also a bit intrusive, someone’s phone is sacred in a way. Usually you give your number out to somebody and say, “Hey, you are allowed to contact me.” So I get kind of weird when you get into intruding into that world. But if you have a list of people that have already said, “Hey, I’m interested in learning from you Rob built.” Or, “I’m interested in learning from you, Mr. Boostly.” Or, “David Green 24.” I think that that’s a great idea. This makes it easier to communicate with the database of people, kind of your pool that you’ve already put together.

Rob:
No, that’s very true. I mean, I don’t really mass market in that capacity, but it does seem, I do wonder if it would be less annoying if you got a video. Instead of getting a text that’s, “Hey, David Green, I’ll buy your house cash.” If it was a video from someone then it makes them more human, but I mean either way, that method, I can totally see why it’s annoying. Maybe people can use it to create videos and send you on Instagram and ask you to edit your podcast down for TikTok.

David:
Wouldn’t it be funny if they use the AI to message me on Instagram to ask me if they can edit videos, which they will then be using AI to do, which is zero time for them. That right there, Rob, is why I have my bias towards AI. It’s all these 21 year olds messaging me that they’ll edit my short four videos, but they’re using AI to do it so they’re not working.

Rob:
Hey David, I have a couple of ideas for how to go viral. Are you open to a chat? Would you be totally against chatting?

David:
Are you open to a conversation about how we could add seven figures to your business with no work on your end at all?

Rob:
Your business every month. Yeah, oh yeah, that’s 2023 for you on Instagram. Well, before we move on, Mark, is there anything else that you’ve used in your company that may get an honorable mention here?

Mark:
We’ve used one more tool, and this is a tool that we actually created within Boostly. So as we were putting together nicksleeps.com, we, which is obviously Rob’s business, we needed to get together all of the property information and a big time suck in our business was getting the property information from say an Airbnb listing and taking it over to our world, which is the Boostly WordPress website. And what we did is one thing that ChatGPT and this AI is fantastic for is creating code, perfecting code.
And we worked with a programmer who utilized AI to put together a tool and we called it the Boostly Scraper, where we could scrape all of the information that was on your Airbnb listing, which was your pitches, availability, wording, all that cool stuff, and we could drag it in with a click of a button to our Boostly website. All in all, this saved 12 hours of time manually doing it and we could do it in a space of a couple of minutes once we’ve created the actual tool.

Rob:
Yeah, yeah, that’s good. I was surprised. I was like, “Wow, this is all my information. How did he get it so fast? Did they just copy and paste everything? That must’ve taken hours.”

Mark:
It was all done in the case of a minute. And so now we’ve rolled it out to all of our sites and this tool now is called the Boostly Scraper and it’s built into every single one that we do. So I think this tool is available for all, and the cool thing is you don’t need to be a master programmer to be able to use this tool. We’re able to create code just by asking it to do things. And it doesn’t matter whether you’re using ChatGPT or Bard, which is the Google version or Claude, which is a new one that’s coming out. They all help you get there. And this is the thing for me is that it helps you get to where you need to be. It’s like having the best intern in the world available 24/7, doesn’t sleep, doesn’t complain. And we’ve been able to take that into Boostly and with what we’re doing.

Rob:
Yeah, that’s super interesting. Well, awesome. Yeah, thank you for all your work on Nick Sleeps, man. Looks really great. Excited to launch that. Let’s move into pitch number two, which is going to be me.

David:
To be frank, Rob, your accent doesn’t sound nearly as cool or trusting as Mark’s. As a side note, as soon as Mark started talking, I’m like, “If I have to debate him, I’m going to lose.” Because his accent just sounds so trustworthy. Everything sounds smarter when it’s coming from a Brit. So rather than ask you each question, I’m going to have you pitch me on how you see AI playing a role in your business.

Rob:
Sure. So there’s a couple of areas that I think I’m starting to utilize it more and more in my business, but right now the area that I am trying to cover at a bit more of a quicker rate is design. And I’m not trying to outsource it completely, I’m just trying to use it to get ideas to generate my creativity, but I’m not completely relying on AI. But at the end of the day, with the amount of flips that we’re doing with the amount of remodels, with the amount of Airbnbs that we’re setting up, quick design is really needed so that we can start just running with our ideas.
So the tool that I’ve come across is one that I call, well, I don’t call it, so the tool that I’ve come across is called REImagine Home. I think it’s reimaginehome.ai, and there’s also another one called Remodeled AI. They both do very similar thing. And effectively what you can do with REImagine Home is you can actually upload a photo of the exterior of your home or the backyard of your home and you can give it parameters of what you’re looking to do. So if you want to re-landscape the front yard because it’s all dead sod, this is something that’s happening right now with one of my flips, I don’t really, I’m not a landscaper. This is not something I’m good at designing. I’m able to do it, but it’s just not my strength.
So I can upload this photo and basically give it parameters like I want a native landscape, I want 20% sod, I want concrete pavers, I want black gravel. And you can give it some of these guardrails and it’ll basically spit out within seconds an entire, I guess, AI generated photo of a brand new front yard superimposed on the photo that you uploaded. And it’s actually pretty cool because if you’re trying to get a quote from a landscaper, as you know when you’re talking to contractors, a lot of things can be lost when you’re trying to describe a concept without any visuals. So what I like about this is it allows me to get an idea on paper that I can then hand to a landscaper and say, “Hey, can you give me a quote on exactly what you see here.” Versus, “Can you give me a quote on exactly what you think I’m asking you to get me a quote on?”
So it cuts out a lot of the back and forth, but it also does this for interiors too. This is what I really like about it. If you want to understand what your space could possibly look like, you can upload a photo of a living room, you can upload a photo of a game room of a bedroom, and you can also put the different styles. Do you want a Bohemian chic style? Do you want a mid-century modern style? Basically click a button and it’ll completely furnish it with that style of furniture. And there’s even some design things that you can do with the actual structural components as well. So again, I’m not using it exactly to furnish my places, but it is a really good way to get really quick comps of what your property will look at so that you can start saying, “Hey, I don’t like that. Let’s swap it out for this.”

David:
And communicate clearly with someone else who’s going to be, “This is what I want it to look like, go.”

Rob:
Yeah, I can basically hand that to a designer and say, “Hey, I really like this mood board. I’m not trying to replace you with AI. Just try to bring something to the table. Can you make a better version of this?” Because ultimately it’s not like that designer can go and buy that furniture because it’s all AI generated, so they have to go and make selections based on the mood board that I give them. So honestly, the time that it took to integrate, five minutes.
And the cool thing is when you generate that image, if you don’t like it, you just hit next and it’ll generate another one and another one and another one. And it’s limitless opportunities and you just have to be good at prompting it and making your criteria more specific. Learning curve, I don’t know. I think if you mess around with it for 30 minutes, you’ll pretty much be as good as you can be at that program or that platform. And from a results standpoint, I’m just glad I don’t have to sketch really bad stick figures on paper anymore. I can just actually hand something that actually looks professionally designed.

Mark:
I think you said something really important, I think for everybody to take away from this, it’s the quality of the prompt, which is the quality of the command that you are asking said robot to do. That’s so key. The problem is that majority of people that test this technology for the first time, they put in a prompt or a question or a command that’s one sentence, which is crap, it’s nothing. It’s imagine having a worker in front of you, a member of your staff and you say, “Design me this based on this.” And they’ll look at you like, okay, and they’ll come back with a stick figure like what you’re talking about. But if you can properly give it a really cool command with plenty of detail, don’t forget to say please and thank you, because when they eventually do take over the world, they’ll come back to you.

Rob:
You want them to remember you.

Mark:
Yeah, we’ll remember you. And then the better the command, the better the prompt, the better what you get back. And that’s really, really, really crucial in everything that you are going to go away and do after watching this episode.

Rob:
For sure, man, I did a YouTube video on how I use Chat GPT to write my Airbnb listing copy, and I use it to write my copy, I use it to write my title, but it was superfast. It can spit it out in seconds, but I spent a solid hour tinkering around, say this, make it more casual, make it funnier, punch it up. It’s such a process with AI. I think that’s the big skill right now is not just using AI to replace yourself, but it’s how well can you prompt it to basically do what you would do if you had the ability to do it as fast as AI could do. Does that make sense?

David:
Yeah, it’s funny because you’re describing that if you want to use AI, you actually have to build the skill in using AI, which is what everyone is excited, oh, AI is going to do things so I don’t have to be skilled at using it, but it might be even worse. It might be, no, the people that are good at using AI are going to destroy all the people that are not good at using it.

Rob:
Pretty much. That’s kind of how I feel. Not quite as dramatic yet, but I do think effectively we’re all going to be puppet masters of AI. That’s where I think it becomes a thing in the real estate world is we’re not replacing ourselves, we are just puppeteers, if you will, of all these different AI things that make our business more efficient. That’s how I feel.

Mark:
Sounds like an Avengers movie.

David:
It does sound a lot like Ultron actually.

Mark:
Yeah, Ultron, yeah, That’s me.

David:
If James Spader did the voice of ChatGPT, people would freak out. All right, before we move on, Rob, tell me briefly who is this for?

Rob:
Well, keep in mind that people who like to design are always going to design. So we’re not trying to replace the designers, but I would say, I’m not going to say the majority, but there’s a large part of real estate investors that know nothing about design, know nothing about landscape design, know nothing about remodeling the design portion of remodeling a home. And so this tool is for them, and I think it’s whether you’re a newbie or an intermediate or advanced, it can be useful for you. But this really, for a lot of people that are scared to get into rehabbing because they don’t know how to design or there are a lot of people that are scared to get into short-term rentals because they’re like, “I don’t know how to design.” This tool is something that will help you do that so that you can at least communicate with someone that can actually execute on that side of things.
I think an advanced person, I consider myself someone on that end of the spectrum, I’m still using it because instead of me sketching a horrible drawing that I know is that good, I can give it to a contractor and have them quote exactly what they see. And I wouldn’t really say that there’s any shortcomings or surprises of the tool other than it can spit out some pretty luxury premium simulations, if you will. And so a lot of times I’ll be putting stuff in there, I’m like, “Oh, that is way too nice for the budget that I have.”

David:
I didn’t know you could say those words.

Rob:
Yeah, well, you got to be scrappy every so often. But yeah, I’d like to hear from the skeptic himself about some ideas on how to use AI for real estate. David Green, David Timothy Green, I’m just kidding. I don’t know what your nickname is or your middle name, but all right. Do you have a business area that you can cover in terms of a use case where you could see AI helping?

David:
Why was Timothy so funny? I think I was watching an episode of the Office where they called Jim Jimothy, which was so stupid but funny at the same time. That might be what’s in my head.

Rob:
Technical Timothy as one would say.

David:
Maybe that’s where my middle name comes from. All right, so the question was how do I see AI working out in operations? This is something that I think would be very useful and I’m not as disparaging of it within the context of follow-up for operations. I don’t love it in sales. I don’t love AI replacing me talking to a human and solving their problems. I don’t want to call and ask someone a question and get put on a phone tree. I don’t want to chat with a robot when I could have a human being there. I don’t mind as much if AI is doing the work that the client never actually sees, organizing schedules.
I could see logistically speaking hotels could use AI. So when somebody calls in sick, AI automatically figures out like let’s send a text message out to the employees, see who could work it, slot them in, have them check something to say, “Yes, I’m agreeing to work and now you don’t need management to do it.” I think that could be smart. So I’d like to see this take place within CRMs. These are the database managers. I believe it stands for customer relationship manager that most businesses use to organize their activity. So this would be for my real estate business, all the people that I’ve ever closed the house with, all the people that I’ve met at an open house, I collect their information, it goes into a database and then I can reach out to them. I could be reminded to talk to them. I could store information about the last time we spoke.
And when I put them into contract on a home, we have what we call auto plans. We use a CRM called Brivity and that reminds the agent or the transaction coordinator or the showing assistant or whoever it is that needs to know the task, hey, you need to do something. So I’ll create, when we take a listing, if Rob comes to me and says, “Hey David, can you help me sell this giant potato house that I bought in Idaho? It’s done really well as an Airbnb, but it’s time for me to move it on to somebody else and we’re going to sell that house for him.” I don’t want to have to tell an employee every day exactly what to do and I don’t want to trust that employee to remember what they’re supposed to do.
So I create a list of every single thing that goes into selling a house like there’s 25 steps to get the house ready for market. There’s 20 steps once we put it in the MLS, and then there’s maybe 30 steps once the house closes that we don’t forget anything by. Well, not all those steps are done by the same person. So the CRM will automatically shoot out to each person on the team, “Hey, of these 20 steps, these four are yours.” And when this person does their job and they click it done, then the next person gets a reminder that says, “Hey, you should do this.” I can see AI stepping into that world and enhancing that experience so that your employees can’t screw it up.
AI can know, well usually at this point when this thing gets done, somebody should have done this by now and they can send a reminder that says, “Hey, did you do this and forget to check the box.” Or, “Hey, just so you know, you should probably look into this because based on how all of your other escrows are going, this one looks like an outlier.” I also think that AI will be useful for telling me when I should reach out to the client because I think the client still wants the personal touch. They still want their agent talking to them, not a robot, but the robot can tell the agent, “Hey, this person bought a house four years ago. Based on what we see in his estimate, their house has probably gone up 35% in four years. You should reach out and see if they’re ready to buy a bigger house or if they want to downgrade or rates have gone down, you should reach out and talk about a refinance.”
Right now, that’s all in my head and it’s scary to be in my head because all the stuff that’s going on in there, it’d be nice if I could get that into AI’s brain and it could just tell one of us, you should contact this person for these purposes. So I am excited to see how that goes down. I’m nervous because I don’t think that’s what anyone’s thinking about when they’re playing with ChatGPT, they’re not thinking about operations, they’re thinking about sales.

Rob:
What do you think, Mark? Are there any tools that might mirror some of the stuff that he’d be looking for?

Mark:
Not yet. But there are ways that you can implement what you’re talking about from ChatGPT from OpenAI into this. And there are a lot of companies right now that are helping with operations. For example, we use GetCody, so GetCody AI. And what that is doing is that’s building a Boostly bot. So everything that you talked about there where it’s reminding our staff X, Y, and Z, we have that very low end. And what’s really important is we’re recording this in 2023, right now we’re at the first iPhone stage of this technology.
If you look at the first iPhone to iPhone what 15, whatever’s coming out next, it’s so far. We’ve leaped so far in the future of what we can do with these little devices. And we’re at iPhone one stage right now and the crazy thing for me is in less than a year, we have massively got a lot better with this technology and so much so governments are stopping ChatGPT 5 which is the next stage of this from coming out yet because they need to sort of pause and let’s go, “Okay, what are we doing with this?” But there are amazing tools that are available right now at a much lower end.

Rob:
Okay, so effectively it’s a tool, it’s a database where you put in all of your different guests, you put in all of the information about that guest last point of communication notes. And so effectively what you’re saying is a use case eventually will be merging ChatGPT or AI with that CRM to create, I don’t know, AI generated email and follow-up sequences that’s personalized to them specifically based on the notes about that person so that whenever you re-market to them, it actually feels like you’re speaking to them and not just sending out a message to 50,000 people.

Mark:
Yeah, exactly. And say a message comes in and say you get an email and say, “Hey Rob, really would like to come back and stay with you.” When that message comes into you and your team and it’s just, fantastic, who is this person? I remember when I was in our family business, we’d have people message us or send us an email and they came to stay with us five years ago and my mom and my dad and I are like, “Who is this person?” We’re trying to go and we have the standard email that goes about saying, “Hey, yeah, I hope you’re well.” Yada, yada yada.
We didn’t have a clue who they were, but with this tool and this technology, they can go, “Yeah, this is X. They stayed with you these dates, they actually came back and stayed with you a year later. They’ve got husband and wife, two kids, they came from Texas.” Wherever it may be, the information that they can give you. So then you can act and go, “Oh yeah, absolutely, fantastic to hear from you. We’d love to welcome you back.” And all of those sort of things. So it’ll help personalize your communication, your outreach, et cetera. And this can go to you, it can go to your team, it can go to sales, it can go to any department, but this is where AI will be able to help you organize and make your business run much more efficient but much more personalized. I think personalization is the key message to take from all of this.

David:
I got one last question here. I want to play devil’s advocate on one other thing. If this becomes something that becomes standard in the industry and everyone starts using this, and anytime I go stay at an Airbnb, let’s say I stay at eight of them throughout the year and all eight people are sending me all of those same text messages, how do you avoid someone just becoming saturated and blocking and saying, “I don’t want to hear from this.”

Mark:
So when everybody’s zigs you zag, and so when the world does become a copy and paste, everybody’s doing SMS, everybody’s doing email, I think it’s going to become a case in point in time where every single digital message you receive online, the person is going to think, is this a robot sending me this or it’s a human? So what are we going to do? Number one, we go back to the old school, write a letter, pick up the phone and have a conversation with somebody. Do the things at the old school marketing, that’ll be the new school. So instead of sending an SMS, you’ll hand write a letter, pop a little something in the post and send it to the person. I feel like this’ll be where we come to a point in time where it all comes swings and roundabouts. Everything comes back around and when everybody’s just relying on automation, what can you zag instead of where everybody’s zigging?

David:
Isn’t that funny? It’ll be like, remember the hipsters for a while were making it cool to use a walk man, a cassette tape recorder or something. Or they’re like, “I like to stitch my own clothes.” In a future where AI is taken over, the cool person’s going to be the one who hand writes letters because they’re one of the few people in the world that remembers how to use cursive.

Mark:
Exactly.

Rob:
People are going to be surprised whenever they answer the phone and it’s a real person. I think ultimately, if there’s one thing to take away is that AI is here to amplify your capabilities. Whether you’re a small investor, intermediate, advanced, it’s not here to replace you. It is here to be an extra set of hands to help you be more efficient. It’s here to help you create concepts and renders very quickly. It’s basically here to help you follow up and be an actual virtual assistant if you will, like a literal virtual assistant that’s all living on the internet. So there’s a lot of use cases there, but ultimately, if there’s one thing you can take away, it’s not going to replace us. It will make us better if we are willing to use it. That’s my stance. What about you David?

David:
I think it’s going to happen. I think it’s probably going to be messy as we first learn how to do it. I think people are going to rush into it thinking, oh, I don’t have to do stuff anymore. Take their hands off the wheel way too early and you’re going to have a bunch of backlash against it because it’s, “Oh, I don’t have to do this anymore.” Let AI take care of it and you’re going to have a lot of irritated people. There’s be a backlash against AI and I think eventually we’ll settle into what human beings are okay with and then it will become the norm and then we will slowly just give more and more power over because that lure of convenience is always so, so powerful and the world will move into a way where, I don’t know, we’re going a little bit too far with that, but yes, I think AI is going to happen at some point, but the wisest people will be the ones that don’t replace themselves with AI, they enhance themselves.
So the analogy that I give in scale is technology should function like Tony Stark suit of armor in the Avengers. It doesn’t replace him. He doesn’t create a suit of armor to go do the job for him. It enhances what he does. His brain still has to come up with the ideas for the lasers. He can’t shoot a laser as a human, but with the suit of armor, he can. He can take damage in a suit of armor he normally couldn’t take if he didn’t have it, he’d never be able to go compete with a Thanos or something if he was just regular Tony Stark. AI should be used in that similar way. Your creativity, your business skills, your savvy, enhanced by technology will give you an advantage over other people, but trying to replace yourself with those things will just guarantee you’re going to lose.

Rob:
Yeah, well, on that note, David, while we’re here, since we’re wrapping up, I actually went into ChatGPT and I said, can you write an analogy in the style of BiggerPockets, David Green? And it came up with something pretty good. It said, real estate investing is like gardening. You start with the seed, which is your property, you nurture it with care just like you would water and tend to your plants. Over time, it grows and flourishes and you can enjoy the fruits of your labor, whether it’s rental income or property appreciation. Just like in gardening patience and attention to detail in real estate can lead to a bountiful harvest. Boom.

David:
I don’t know if I love that, man. What do you think, Mark? On a scale of one to 10, how good was that analogy?

Mark:
I’m a solid eight on that. I think that’s pretty amazing.

Rob:
I was hoping you would give me a Brazilian juujitsu one, but I guess that’ll be for the follow-up podcast.

David:
But with gardening, I don’t know I’ve ever mentioned gardening before, but hey, not bad. It just means I got to step on my game so ChatGPT can’t be better at being me than me.

Rob:
Exactly, exactly. Well Mark, if people want to learn more about you, find you on the internet, where can people reach out, connect with you?

Mark:
Yeah, 100%. Well, you can see me in person at the upcoming BiggerPockets conference. I’m flying over to Orlando, which I’m excited to do. I’m going to be talking on about direct bookings, so come and check me out there. I’ve actually put together talking about prompts so prompts are really important. I’ve put together 100 quality prompts that you can use on ChatGPT, et cetera. If you want a copy of that, just send me an email [email protected], B-O-O-S-T-L-Y.co.uk and I’ll get that over to you. And if you want to get one of those Tavus videos that I was talking about, just head over to boostly.co uk and follow the links on there.

Rob:
You have opened the flood gates on your email, my friend. What about you, David?

David:
You can find me at davidgreene24.com to see what I got going on or all social media @davidgreene24. Thank you for asking, Rob. Where can people find out about you?

Rob:
You can find me on YouTube and Instagram at Robuilt, R-O-B-U-I-L-T.

David:
Thank you, Mark. We’ve appreciate your time here today. I know you’re British. This is a Scottish accent, but I’m sure this is someone you’re familiar with.

Mark:
It gives me flashbacks to the last episode.

David:
This is David Greene for Rob, baby V Abasolo. Rob, in a copy and paste world, you’re still the baby V that I want to copy. Have a good one, guys.

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