February 2024

Mindy Jensen:
Hello, hello, hello and welcome to the BiggerPockets Money podcast. My name is Mindy Jensen, and with me as always is my lovely co-host, Scott Trench.

Scott Trench:
Thanks, Mindy. Great to be here with the heart of BiggerPockets Money, Mindy Jensen. We’re here to make financial independence less scary, less just for somebody else. To introduce you to every money story, toolkit, or product. Because we truly believe that financial freedom is attainable for everyone, no matter when or where you’re starting.

Mindy Jensen:
Scott, in honor of Valentine’s Day being tomorrow, today we’re going to gush about our favorite financial tools and habits, and you’ll also hear about the ones that we loved while we were on our journey to financial independence.
We wanted to do this episode right now, near Valentine’s Day, because most people’s New Year’s resolutions have kind of fallen by the wayside. And something that we have found to be very helpful is to revisit your goals every month of the year. It gives you the opportunity to figure out what’s working, what has to change, and which tools and strategies you can start using to get back on track.

Scott Trench:
That’s right. So on today’s episode, you’re going to hear all about the financial tools and habits we’ve been loving recently, and the game-changing productivity tools we’ve discovered, as well as some of the financial tools and habits that we’re leaving behind.
Well, let’s jump into it. Mindy, what is the number one money habit that you’ve been falling in love with lately?

Mindy Jensen:
I am trying really hard to learn how to exercise my spending muscle. And this is something that has been a work in progress for about a year now, and Carl and I are really looking at ways that we can enhance our life or make things easier. And it is still a work in progress, but we are making leaps and bounds from a year ago.

Scott Trench:
Yeah, I know that’s been a big theme here. Hey, the mentality of being very frugal and really watching every dollar that goes through people’s accounts is a huge correlate to financial freedom and the ability to amass wealth.
Once you amass wealth though, what’s the point in continuing to do that, right? At certain point, once you have enough, every extra dollar beyond that should be spent for your happiness, to make the world a better place, or go on to the next generation. And I know that that’s been a challenge you struggled with, and were coached by Ramit Sethi on, and it sounds like you’re making a lot of progress there.

Mindy Jensen:
We are. We started off just kind of adding to vacations, and there’s not a ton of stuff that we need to add to our life, although you wouldn’t know that by how much we spent last year on cars. We bought two vehicles last year, including Carl’s Tesla. So I can finally get him to stop talking about when he’s going to buy a Tesla, and now I get to hear all about the Tesla.
Oh, did you know it does this? Did you know it does that? Nope. Didn’t know. Didn’t care.

Scott Trench:
I think 2024 will be the year where I might part ways with my trustee Corolla as well. It’s getting time.

Mindy Jensen:
Are you going to buy a Tesla?

Scott Trench:
We’ll see. I’m going to think about it, and think about what I want to drive there. But yeah, I think it’s time for me to flex that muscle as well, and upgrade a little bit.

Mindy Jensen:
Well, Scott, you deserve it. And more importantly, you can afford it. You have set yourself up to be in a great financial position. I hesitate to say, “Oh, you deserve it, go buy it,” when we also talk about frequently, don’t just buy something because you think you deserve it, you also have to be able to afford it. But you are easily in both places.

Scott Trench:
Maybe in 2025, we’ll flex the spending muscle of moving out of our house hack, which we’ve also been doing for most of the last 10 years.

Mindy Jensen:
I love it. Okay, so Scott, what is a money product that you have been loving lately?

Scott Trench:
I’ve been really loving Monarch. So, I used mint.com for many, many years. And with Mint being sunset, I was one of those people that transitioned over to Monarch, and I think they do a pretty good job so far. I’ve really liked it, it seems intuitive and easy to use.
I kind of like the fact, honestly, that it’s a subscription. I like the fact that, hey, there’s no … It’s just, you pay a hundred bucks and you get the product, and hopefully continuous improvements from that product, and not ads or whatever else is going on with it. So I’ve been liking it, and find it to be pretty powerful and sophisticated.
All right, what else? What’s another habit you’ve been loving lately?

Mindy Jensen:
I’m going to go into travel. We used to optimize our travel based on price, not so much location. So if you’re flying into Chicago, you have the choice of two airports. If you’re flying into New York City, you have the choice of, I don’t know, like nine airports or something, when you take into account all of the surrounding places.
But now when we travel, we know we want to go into this location. We are looking for what’s closest to where we’re going, not so much how much less it is to have to drive three hours in New York City traffic at rush hour.

Scott Trench:
Yeah, kind of related to that flexing the spending muscle it sounds like, is, hey, I’m going to optimize for convenience here, not just for cost. And I think, as always, really important to remember there’s different stages in this journey. Probably not congruent with the grind and the accumulation phase on the journey to five, but once we’re past the point of five, that’s the point of this. Is, let’s spend some of that money to optimize for life, happiness, and convenience.
And I love it, Mindy. Love that bicep getting bigger and bigger.

Mindy Jensen:
It is getting bigger and bigger. Someday they’ll be as big as yours, Scott. Maybe not. Scott, how about you?

Scott Trench:
I have switched banks a number of times over the years, and the last three I think I’ve been with Ally and really enjoying it. I think that I love the 24/7 support. It’s pretty easy. Not a sponsor of today’s show or any BiggerPockets materials as far as I’m aware, but I just like them and I feel like they do a good job.
There’s always discussion in the BiggerPockets Money Facebook group about who’s got the highest yield on savings, and I think that Ally’s is like 4.35% or something like that. And there are places where you can get up to 5.3%. So there are better rates out there, but I’ve just liked the ease of use and the relatively high rates throughout over the last couple of years, where I’ve never been way different from what you can get if you’re really maximizing for that yield. So really enjoy them and the ease of use. So, highly recommend them personally.

Mindy Jensen:
And Ally Bank has been tied to the conversation with consistently high yields over the course of, even when high yields meant like 0.1%, they were still paying among the highest.
And you cannot discount the fact that they have 24/7 customer service. Because, frankly, when you need customer service most is usually when the banks are closed.

Scott Trench:
Yeah. And if I was in some sort of business that required constant interaction with the bank, they don’t have branches, so it’s not possible for that type of purpose. But for my personal checking and savings account, it’s been phenomenal.

Mindy Jensen:
Next is a break. After we’re back, we’ll go into all the productivity habits we are implementing this year.

Scott Trench:
And we’re back. Before the break, we revealed all the financial products and habits that we’ve been loving. And now we’ll be gushing about all the productivity products that have been a game changer.

Mindy Jensen:
Anything else, Scott, that you’re just in love with? Sorry, I’ve got to use the word love all the time because it’s Valentine’s Day tomorrow.

Scott Trench:
Yeah, moving into kind of productivity tools. And I’ve said this many times in the podcast here, I am really in love with the vision and goal-setting process that my wife and I have used for the duration of our marriage, and I’ve used for a long time previous to that. But it’s a very simple process, it does not require any money to be spent. There is no product associated with it, although actually there is a product, I’ll mention it later.
But basically it’s a document, a piece of paper. And we say, we start off the conversation and say, “What are some things we’re grateful for since the last time we updated our vision?”
Like, oh, we’re grateful for the new set of words from our little baby, the funny thing our cat did, this piece of progress in our careers, this thing about our house that we like, this recent trip that we went on. And it just grounds the conversation in happiness of what you have.
Then it’s kind of like, hey, in five years from now, what do we want our lives to look like? We want to wake up and do this, we want to be vacationing here, we want our day-to-day to be like this, we want our careers to look like this, and that sets the context. Because we’re constantly iterating on it every quarter, there’s always little changes that are being made, but it keeps an alignment on exactly where you’re going. And then you can set goals on a quarterly or annual basis from there, which we do.
And then we have a Sunday little ritual, where we translate those quarterly goals into weekly things that we’re going to do to move forward. For my wife, it’s often writing the next few thousand words for a book that she’s working on. And for me it’s often a combination of BiggerPockets things. We also, of course, prioritize our family life and making sure that we’re proactive about curating great experiences.
So that is super powerful. I don’t know about you guys listening, but the week can get away from me and sometimes does, but I’m never off track for more than a week. Because I always reground it on Sunday night, and get realigned with most important things.
And also, there’s so many things related to your goals that have to do with just sending an email. Just, I got to reach out to this person and kick off this process. And this ritual, I can’t overemphasize the importance of having this ritual and just being like, oh, it’s Sunday night. I’m going to schedule these three emails for tomorrow morning and kick off these processes, and I’m good to go.
So, in love with that process. Feel like it’s so, so powerful. Highly encourage it for folks. So Mindy, how about you? What have you been loving lately from a productivity standpoint?

Mindy Jensen:
Okay, this one you have to bear with me, because it doesn’t sound like a productivity tip in the beginning. But I do not fly on a flight before 10:00 AM, and I don’t land after 7:00 PM.
And the reason is, I can’t sleep the night before a flight if I have to set an alarm. I am up well in advance of any flight that has to take off at 10:00 AM. But if I have to set an alarm, I don’t sleep the entire night, which wrecks my whole day of travel, which kind of wrecks my whole vacation.
On the same token, if I land late, I get home super late, which wrecks my whole night of sleep then, too. So I’ve got multiple days that I’m trying to catch up on my sleep, which will really destroy your productivity. The reason this is a money hack and a productivity hack is that the cheapest flights are super early or super late.
So I have decided, again in conjunction with the exercising my spending muscle, I’m not flying out early, and I’m not landing late, just to save a couple of bucks. Because it wrecks my week.

Scott Trench:
I completely agree. The loss of a day or two, or the ability to make great decisions for a day or two from red eyes, can often not be worth it. And I only fly red-eyes when there’s really no other reasonable option, or if I have a whole weekend to recover with it. But then my weekend’s shot, so I really don’t like to do that either.
But yeah, completely agree.

Mindy Jensen:
Scott, any productivity tools that you are using?

Scott Trench:
Yeah. I would say, aside from my goal-setting stuff, I’m really big into audio content consumption. So I obviously use Spotify and Apple Podcasts to listen to a lot of podcasts. I use Audible. And I’ve recently, embarrassingly because I’ve run a money podcast with you here, rediscovered the public library.
The public library here in Jefferson County, Colorado at least, has basically Audible for free through a variety of apps. You get a library card, you go in there, it’s super easy. And you can borrow almost any ebook or almost any audiobook for free from the library. So I’ve been using that a lot lately.
One specific hack I have, not hack but tip I have is, I will occasionally, if there’s an audiobook that or a subject that I feel like I really need to master quickly, or at least get a grounding in quickly, I will get a Audible book and the Kindle version. And the reason I’ll do this, and it might be 40 bucks between those two things and it sounds like a lot, but I can listen to the book at two, or two-and-a-half, or sometimes even three-times speed depending on the narrator and follow along with the Kindle.
And that allows me to, very rapidly in a matter of hours, absorb an entire book and retain it pretty well on a new subject. So that’s a little tip that I’ll use sometimes. It’s not super cost-efficient, but if you really need to master a new subject quickly, that can be powerful. And you’re able to give your a hundred-percent attention to the task.

Mindy Jensen:
Scott, do you have a random, life-changing product that you love?

Scott Trench:
There’s a self-help guru named Darren Hardy who has written a little journal called Living Your Best Year Ever. And it’s got a lot of this kind of self-help stuff, like you sign a pledge to yourself that you’re going to keep your goals for the next year, and you do all that. I’ve been doing this thing for 10 years in a row now, and I attribute a lot of my organization around the goal setting-stuff to this product.
It’s like a $40 journal and it has a weekly planner. Just, forces of function around, what are the top three goals, what are you going to do related to those goals? How are you going to handle the whirlwind, he calls it the vortex, of things that are going to come up in the week? Like, it’s tax season, got to get the taxes done. It’s not one of my top goals, but got to get it done, and then here are the habits that we want to form in this week.
Super simple structure. And I must have filled out this thing 90% of the weeks over the last 10 years straight. Not every week, but the vast majority of them. And I feel like that’s such a powerful thing there. You can get that book, Living Your Best Year Ever. Again, not a financial affiliate of BiggerPockets.
I actually email Darren Hardy once a year and tell him how much the book helps. One of these years, he’ll respond to me. If you’re listening, let me know. But that’s a good product. There are free journals that you can download. There’s stuff you can get at the supermarket that has similar products, or on Amazon. But go get one of those things, and just start the process at least weekly tracking that. It’s so powerful, and it’s not a big cost.

Mindy Jensen:
That’s awesome, Scott. And 90% of every week over the last 10 years, that’s very impressive.

Scott Trench:
I think that’s probably right. It’s probably in that ballpark. There’s definitely been a couple-month stretches here and there where I’ve skipped it or gotten away from it, but I always come back to it because it’s so powerful. Mindy, what’s your random life-changing product you love?

Mindy Jensen:
I love Google Keep. It’s a note-taking app that is on my phone, but it also saves to the cloud. And then when I get to my computer, I can see it on my computer as well. So every note that I take as I’m walking around the track at the gym, or as I’m sitting at a stoplight, ooh, I have to remember to do this. I then have it on my computer as well.
I don’t have great eyesight, so it’s difficult for me to see things on my phone, which makes it hard for me to do things on my phone. But I can talk to text and then I can see it on my computer screen, and it is absolutely fantastic ways to remind myself of all sorts of things. Spending ideas, trips, literally any random thought I have that I want to remember. And it’s free, which is my favorite cost of all.

Scott Trench:
Love it. Yeah, I need to do better a job at that. I still take all of my notes in pen and paper, and there are huge problems associated with that. Or at least all of my goal-setting notes in pen and paper. I wish I could adapt the mindset of translating that goal setting stuff that I did into something like this. I just, It’s a challenge for me to transpose it with the habit formed over all this time.

Mindy Jensen:
Well, If you know where your things are, then being able to write them down is great. But sometimes you live in a house where there are other people, and they move your things, and then they can never find them. And sometimes it’s just easier to know where your phone is. Not that I’m speaking from personal experience, everybody in the Jensen family.
Stay with us. After the break, we’ll reveal the single most important financial tool that helped us get to financial independence.
Okay Scott, now is time to talk about the kind of sad aspect of Valentine’s Day. Sometimes you have to break up. Is there any productivity tool, money product, or habit that you’re breaking up with?

Scott Trench:
Well, I broke up with Mint.

Mindy Jensen:
They broke up with you.

Scott Trench:
Yeah, they broke up with me. That’s right, it wasn’t me.

Mindy Jensen:
And everybody. It’s not you, it’s them.

Scott Trench:
Yeah, yeah, whatever it was. Yeah. So yeah, Mint’s out, Monarch’s in, as I mentioned earlier.
Another one I’m going to change over is Robinhood. I’ve found Robinhood easy to use and all those kinds of things. Nothing against Robinhood, I just feel like Schwab is a little bit more powerful. And again, I always like to say this, no financial affiliation or anything like that with Robinhood or Schwab here.
But I just think that the research analytics and the tenure of Schwab makes me feel just a little bit more secure and confident as I begin the next couple of years of investing. So I’m not liquidating my Robinhood account, I’m just not contributing more to it. I’m going to put that all in Schwab going forward. How about you?

Mindy Jensen:
Well, Scott, like Ross and Rachel, I am on a break with my customized spending tracker. Did you get that joke? Do you even know who Ross and Rachel are?

Scott Trench:
Yes, I know Friends, Mindy. Sure.

Mindy Jensen:
My customized spending tracker helped me in the beginning, 10 years ago, 12 years ago, recognize where my spending holes were. Or my spending black holes were. And now I don’t need it anymore. So I am taking a bit of a break, while still keeping an overall eye to make sure I don’t go from $60,000 a year spend to $600,000 a year. But we all know that’s not going to actually happen.
But I am not going to be able to continue to exercise my spending muscle if I’m constantly obsessing over how much money I have spent every month. And now that I am in the financial position that I do not have to constantly obsess over how much I’m spending, I’m taking a break.

Scott Trench:
Another breakup I’m going to have this year, Mindy, is multifamily syndications and funds. I am about to write, may be released by the time this episode comes out, a 5,000 word thesis on why I think multifamily is going to crash even more in 2024.
And while, yes, that is market timing, which you shouldn’t do and I shouldn’t do, I just can’t help myself. And I want to stay out of that. I’m getting my butt kicked on a syndication. Not the fault of the syndicator in my view, I knew the risks just going in. I don’t think they operated poorly, I just think it’s an interest rate issue. But I think that there’s going to be a lot more of that on the horizon in 2024 with all the supply coming online.
So learning my lesson from getting my butt kicked, watch and see how this next year goes. But I do think there’ll be opportunity on the horizon in 2025 and 2026 as that pressure continues to mount.

Mindy Jensen:
And I encourage everybody who is invested in syndications to listen to episode 456 with Jay Scott, where we talked about some of the things that can go wrong in a syndication, and some of the flags to look for, the leading indicators that could signal a potential problem with your syndication.
I also had some syndications that didn’t perform as well as they should have. And I do think that it’s a lot to do with the meteoric rise of interest rates. I don’t know that there has ever been an interest rate hike so fast and so high. Has there, in the history of American finance?

Scott Trench:
As a percentage? Probably no. If anything comes close, it’s probably that big rise in the seventies and eighties where interest rates really went up. Maybe they went up more in a condensed period of time there, but not as a percentage. But going from zero to one is a huge change, right?

Mindy Jensen:
Yes.

Scott Trench:
So going from zero to four, zero to five-and-a-half, five-and-a-quarter, is really what the federal funds rate has gone to essentially in the last two years. And that’s a big change. And one item on there, we’re starting to stray a little bit off-topic on that is, the yield curve is inverted. So the tenure is at four, and it’s usually 150 basis points above the federal funds rate.
Right now the federal funds rate’s at 5.3. So for the tenure not to not rise, the federal fund rate has to go to about 2.6%. That’s nine or 10 rate cuts from the Fed, which would be historic.

Mindy Jensen:
Yeah.

Scott Trench:
And I don’t think that’s going to happen, so I think interest rates are going to stay high the next couple of years. And I might be alone in that one, the market seems to disagree. But it’s really hard for me to envision a reality where the Fed reduces rates nine or 10 times in a hurry over the next couple of years. That’s basically admitting that they were complete idiots over the last couple of years. And while a lot of people think they are, I don’t.

Mindy Jensen:
Okay. Scott, let’s get a little off-topic, off financial topics. Are there any non-financial products that you will no longer be spending money on?

Scott Trench:
Yeah. I am a big Eagles fan, and their catastrophic collapse in the back-half of the year meant that I no longer needed my YouTube TV and NFL Sunday ticket subscription, which I have splurged on the last two years. So yeah, I’m canceling that, and I have no access to streaming television right now other than Netflix and Max. So yeah, whatever’s on regular TV I can’t watch right now.

Mindy Jensen:
Well Scott, I’m going to say that if you want to continue that streak, you can just become a Bears fan, and then you’ll always be disappointed in the second half of the season.
Didn’t your Eagles go seven and O?

Scott Trench:
The Eagles had a phenomenal start to the season, and were at one point ranked number one in the power rankings. And then just totally collapsed, back-half of the year.

Mindy Jensen:
Totally collapsed. Well, I’m sorry for their losses, Scott. And also, welcome to the club.

Scott Trench:
Well, aside from breaking up with the Bears, are there any other non-financial products that you’re not going to spend any money on?

Mindy Jensen:
In the same vein as you Scott, I just canceled a bunch of streaming services that I had signed up for to watch specific shows. And then when I was done with the show, I didn’t cancel the service. So I’m looking right at you, Paramount, for Inkmaster. And Peacock for one season of Suits. Why couldn’t that last season be on Netflix?
So anyway, I have canceled those. And I hope that this is a reminder to anybody listening that if they have unwatched streaming systems because they were just going to watch that one show, cancel it. Just put this episode on pause, and go up to your TV or your computer, and cancel that subscription right now.

Scott Trench:
Mindy, what was a tool that was indispensable to you on your journey to financial independence

Mindy Jensen:
For people who are starting their journey, I think it is so important to track your spending and track your net worth, everything in your financial tool belt. And the product that we used when we were starting out is called, it’s now called Empower Personal Wealth, but back then it was called Personal Capital.
And it was, you load up all of your accounts into this system, and you can then track all of the different sources of income, all the different sources of investments that you have. If you just have one, like a normal person, it might be easy for you to just check Fidelity every day. But if you’re crazy like we are, and have them all over the place, having a company like Personal Capital or Empower Personal Wealth will help you keep track of them when they’re in multiple locations.

Scott Trench:
And just to echo that, what these products do, Mint, Personal Capital, Monarch, there are other platforms as well, is if they’re good at it, they’ll do two things for you.
One is create what we call here at BiggerPockets a player’s scorecard, right? You can take a look at it and in five seconds tell if you’re winning, or losing, or making progress. And the other is what we call a coach’s scorecard, which has tons of additional data; your entire budget, every expense, and all these other things for you to mine and track and look at all these different trends.
And I think that these products tend to do a good job in both of those areas, of giving you that snapshot so you can just check and see if you’re winning. But also the ability to go into that more granular detail to analyze trends and where your big expenses are, and immediately find problem areas or opportunities.

Mindy Jensen:
Scott, this was super, super fun. I really enjoyed hearing about your financial tools, and I do need to start journaling. I’m going to get a copy of that Darren Hardy book. Awesome. Do you have any plans for Valentine’s Day?

Scott Trench:
Valentine’s Day, actually the 15th, we will be traveling to Cancun for a little vacation with some family. So, yeah. I haven’t been anywhere sunny in a long time, and I’m very much looking forward to that.

Mindy Jensen:
Well, that’s awesome. Scott, I hope you have a great time.

Scott Trench:
Oh, and we’re actually having a host retreat, and many of the podcast hosts from Rookie, from Real Estate, Dave Meyer from On The Market, a couple of the On The Market hosts, we’ll, actually I’ll be in town and we’ll go skiing on Valentine’s Day. So skiing and then straight to vacation. Work and play. Or is it all play? I don’t know. Yeah, it’ll be a good week.

Mindy Jensen:
Well, that sounds awesome. I’m going to go snowboarding with you guys.

Scott Trench:
All right. Yeah.

Mindy Jensen:
All right, Scott. Well, let’s go hit the slopes. That wraps up this episode of the BiggerPockets Money Podcast. He, of course, is the Scott Trench. And I am Mindy Jensen saying goodbye, Cherry Pie.

Scott Trench:
If you enjoyed today’s episode, please give us a five-star review on Spotify or Apple. And if you’re looking for even more money content, feel free to visit our YouTube channel at youtube.com/biggerpocketsmoney.

Mindy Jensen:
BiggerPockets Money was created by Mindy Jensen and Scott Trench, produced by Kaylin Bennett, editing by Exodus Media, Copywriting by Nate Weintraub. Lastly, a big thank you to the BiggerPockets team for making this show possible.

David:
This is the BiggerPockets Podcast show 892. What’s going on everyone? This is David Greene, your host of the BiggerPockets Real Estate Podcast here today with a Seeing Greene episode where we arm you with the information that you need to start building long-term wealth through real estate today. In today’s show, I’m going to be taking questions from you, the BiggerPockets community about the conundrums, the debacle, and the quintessential problems that you’re having with your portfolio and doing my best to give my advice for how you can improve your situation, better spend your money, better manage the asset that you’ve got and more.
Today, we’ve got some pretty awesome topics, including how to understand financial energy when it’s stored in your properties, seeing your properties as a piece of a portfolio, a concept that I call portfolio architecture and how to make that work for your wealth. What happens when you’re divorced and starting late, but you want real estate assets in your portfolio, as well as negotiating more favorable terms on a commercial construction project and more from you all. But most importantly, if you want to be featured on the show, head over to biggerpockets.com/david and submit your question to be featured on Seeing Greene and remember to let me know if you’re watching this on YouTube, in the comments, what you thought of today’s show.
Up first, we’ve got Justin in Virginia Beach trying to figure out what to do with his house hack condo. Let’s see what Justin needs some help with.

Justin:
Hey, David. My name’s Justin from Virginia Beach. I have a money question for you. So I have about $40,000 cash on hand. I have a house that I bought two years ago. I’ve been house hacking. I bought it for 225. It’s worth around 310, 320, so I was wondering if it would be smart if I did a HELOC and combine the cash on hand to do a BRRRR or a flip or if I should get a hard money loan and just use the cash I have on hand to do either of those two. I am a real estate agent as well, so I do have MLS access. So please let me know what you think would be best.

David:
Justin. Awesome, my man. This is some good stuff. So I see in my notes that you bought a condo two years ago and you’ve been house hacking ever since. Basically, you own the property and you only have to pay the HOA fee. So you’re paying about 280 bucks a month and all the rest of it is being covered by the income coming in from the people living in your house hack. So well done eliminating your biggest expense in life, which is housing. And it sounds like you’ve been saving that money that you used to spend on either rent or a mortgage and you got 40 grand of it put away and you’re trying to figure out what to do with it and you’re looking at BRRRR. So we’re trying to figure out how are we going to come up with the money to do it.
I do like the idea of taking a HELOC on this property as opposed to taking out an additional hard money loan, and here’s why. The rate’s going to be a lot cheaper and it’s also more flexible to pay back. So for anyone that’s not aware of how HELOCs work, they’re really cool products in the flexibility that you have. If you take out a hard money loan, there’s usually prepayment penalties and there’s more than just the interest that you’re paying on that hard money loan. So everybody knows, hey, you’re going to have a 12% rate or a 10% rate, probably closer to 13 or 14% with today’s rates, but you’re also going to have points that you pay upfront for the loan. You’re also going to have to pay closing costs, title fees, escrow fees, making sure that all the stuff is recorded properly. There’s always these little paper cuts that add up to be pretty significant expenses when you go forward with the hard money loan.
With most HELOCs, you pay for an appraisal and that’s it. You pull the money out and when you want to pay it back, you just pay it back. It’s really an easy and convenient way to move equity from one location to another location, and that’s what I love about your HELOC options. I’d rather see you take a HELOC on that property and add it with the $40,000 that you have saved up and that can become the down payment for the next property that you buy. Now, you’re going to have to get a loan for that next property. That might be a hard money loan because you’re probably going to be putting 20% down, maybe 25% down on it, maybe even 30, and you’re going to have to borrow the other 70 to 80%. So in that case, maybe a hard money loan. But what I’d love to see you do Justin, is repeat what you did with this condo.
If you move out of the condo and you rent out the room that you’re currently in, not only will you be saving that 280 bucks because now you’re getting more rent, but you’re probably going to be cash flowing a little bit. Now, you buy a live in flip. So you move into a property. Ooh, I like this idea even more the more that I talk about it. Because you don’t have to put 20 or 30% down if you’re going to do the live in flip. You can get away with 5% down on a conventional loan, which you might not even need to use the HELOC for because you got 40 grand saved up and you could take that HELOC and make that your emergency reserves in case something goes wrong and you have to pull that money out. But assuming nothing goes wrong, you’re not even going to have to spend any interest to use that money.
So you take your 40 grand, that becomes a down payment for your next property. You get yourself a fixer upper, you move into it, you put some roommates in there, and then you start fixing it up on your timeline. Maybe you hire people to come in and do the work, maybe you do some of the work yourself, but you see where I’m going here? You’re eliminating a lot of your expenses that are involved with flips or BRRRRs when you buy the property and move into it because you could do it on your time. The holding costs aren’t the same. You’re also eliminating a lot of the stress and you’re also eliminating the big down payment. These are all things that make flipping and BRRRRing tricky. You’re getting rid of them by taking the live-in flip approach.
Now, like you said, as a realtor, you have MLS access, so you could just make this a part of your morning routine. You wake up, you stretch, you scratch your cat on the head, you pour yourself some coffee, you read the news, you do your affirmations, you check biggerpockets.com and you look on the MLS to see if any fixer uppers have hit the market. You can also set a filter on there to remind you when a property has sat for 60 days or 70 days without getting taken off and going pending. Those are properties that are usually in rough shape and you can get a better deal with, and then you just wait. You’re in no rush. You got a great situation going right now, so you got the odds in your favor. It’s kind of like being a poker player sitting on a big stack of money. You only have to play the best hands. You’re not forced to play that 7-2 combination because you got to make some moves in life because you put yourself in a bad spot.
So use that to your advantage. Don’t go after anything that’s not a great deal. Don’t make any big mistakes and spend money on dumb things. Don’t get a hard money loan to buy a property if you don’t have to. Get pre-approved to get a conventional loan to buy something that can be a live-in flip and eliminate a lot of the risk that other investors have to take on when they can’t take the live-in flip approach. Thanks very much for the question. This was one that I enjoyed answering. Let us know how that goes.
All right, we got a great question coming up here about someone who’s late to the game in real estate, coming out of divorce, isn’t quite sure how the game should be played, but knows that they need to do something and they’re concerned about risks, but they also have to make some moves. We’re going to be getting into how to navigate that type of complex situation right after this quick break.
All right, welcome back. Let’s dive into our next question coming from Shelly in Jackson Hole, Wyoming. Shelly says, “I know I need to diversify my assets as none of them include real estate. I’ve never bought a house by myself, but I have owned two with my ex who got everything when I divorced him three years ago. I walked away with about 1.5 million in retirement assets. I’m interested in house flipping or short-term rentals, but I feel that a multifamily would give me a steadier return. However, I’m nervous about spending any of my retirement money since I’m 57 and slowing down. Also, I cannot touch it until I’m 59 and a half, which is two years away. My question is, since I’m older, have a health issue and I’m late to the game, what kind of market and what type of building should I focus on? Can you give me any advice on how to proceed with financing?”
All right, Shelly, this is some good stuff. Let’s talk about what you do have going for you and how we can use this to your advantage. You mentioned you have 1.5 million in retirement assets and you did mention that some of this money you can’t touch till you’re 59 and a half, which is two years away, which would lead me to believe that this is retirement income. Here’s what I’d like to see with you. The pressure’s going to be that you got to buy something, you’re going to have to find some way to get some income coming in in retirement. You’re not probably just going to be able to live on that 1.5 million assuming that you’re going to have a longer lifespan, which we’re all hoping for here.
So you’re going to have to invest it, but you want to avoid risk. And with real estate, risk comes in several ways. One would be buying in rough areas, that’s risky. Two would be buying an asset you don’t understand, that’s not having knowledge or not having experience. And a third would be the mortgage. The debt you have on the property constitute risk because it’s basically just something that slows down your ability to make a profit. So if a property generates net income through rents, vacancy can kill that, maintenance issues can kill that, problems with the property themselves can kill that, but that mortgage shows up every single month and that slows you down. What if we were able to buy you some real estate that didn’t have a mortgage? Now, you’re going to be able to get into the game. You’re going to be buying an asset that presumably is going to be going up in value over the long term, but if we can eliminate your risk by having you buy it with cash or very low money down if you had to, I’m starting to feel a lot better about this deal.
Now, I understand that you’re considering multifamily because you think it would give you a steadier return. My concern is that a lot of the income that comes from small multifamily properties like two, three and four unit stuff goes back into small multifamily properties like two, three and four unit stuff. Oftentimes, the tenants break things, the house itself wears down. You have to replace the roof, you have to replace one of the HVAC systems. Remember, when you have a fourplex, you’ve got four air conditioning units, you’ve got four kitchens, you’ve got four water heaters, you’ve got a lot more things that can go wrong, and I have one of these things and it seems like it’s always popping up in my inbox that another thing broke on that property and I forget. It’s because there’s four times as many things. And since maintenance and things breaking are one of your biggest expenses in real estate, if you go that route and you buy small multifamily, even if it’s paid off, it may feel safer, but it may not generate enough cashflow to actually support you in retirement.
That brings us into the short-term rental space, which can seem risky, but depending on the area that you buy into, there are going to be areas that have lot less risk than others. Buying into an area that is known for having vacation properties, the entire area is dependent on tourism and people visiting significantly reduce your risk of the city coming in and saying that you can’t have a short-term rental. Almost eliminates it. And it also significantly reduces how bad of vacancy issues you’re going to have because this is an area known for tourism. In other words, if you try to buy a short-term rental somewhere in Cincinnati, Ohio and you just hope that there’s enough people visiting Cincinnati to rent your unit over somebody else’s, you’re rolling the dice a little bit. But if you go into a vacation destination area like Orlando where you have Disney World or the Smoky Mountains where I have a bunch of cabins, the odds of you not having someone that’s going to rent your property at all are very, very low, and so it becomes less risky even though it’s a short-term rental.
Now what happens if we put this all together? You get into a short-term rental instead of a small multifamily because it’s going to produce enough income to make it worth your while. You buy it with cash so you don’t have a mortgage so that your risk is significantly decreased and you buy it in an area that is known for having a steady stream of tourism to reduce your amount of vacancy. Now, you might not get the deal of the century, but the goal here, setting you up for retirement is to get you base hits. We’re looking for singles, maybe doubles. We’re not looking to hit home runs and possibly strike out.
So here’s what I’d like to see you do. Pick a market that is known for having vacation rentals with very reliable and consistent income. Find an asset that is kind of boring and very steady and dependable. That’s something that I can help you with if it’s a market that I know because I know some of those neighborhoods and then have somebody manage it for you, which you should have plenty of revenue to do because you are not going to be paying that mortgage. You might even be able to buy two properties with that 1.5 million. You might even be able to buy two properties with just 1 million of it, right? You’ve got some options here. You should definitely talk to somebody who owns properties there and ask them who they’re using and how you can get set up with them.
Here’s my last piece of advice. Do not assume that all property managers are the same. I’ve had many bad experiences hiring other people to manage my properties who then delegated the work to virtual assistants or people working in their company that were not doing a good job and my revenue has crashed. I recently took over a lot of these properties myself, gave them to somebody that I hired and that one move, taking them away from professional property management and bringing them in-house has increased my top line revenue by 25% and we’re barely getting started.
The point here is don’t just pick anyone and think that they’re okay. Use someone you know who’s managing one or two properties in that area and doing a great job that can take on yours or vet the company very, very carefully and have a contract written so you can get out of it if the property’s not performing. The last thing that I want is for you to spend a lot of money buying properties in cash, handing them to property management and getting a disappointing statement every single month with some excuse that they’re always going to give you. And because you don’t have experience in real estate, you’re assuming that what they’re telling you is the truth. You’re going to end up feeling hopeless and that’s what we want to avoid.
Now, you also mentioned here any advice on how to proceed with financing. Let’s say that you want to buy two cabins in the Smoky Mountains and they’re about $700,000 each, but you don’t want to put all of your money into buying them cash. So maybe you want to take out a loan on each cabin and you want to borrow 25% of the money for the property. So in this case, you would be buying the cabin for $700,000 and putting down right around $180,000, $200,000 on each cabin. You’re still going to keep that mortgage really low, but there’ll be some kind of financing. You can use what we call a DSCR loan. That stands for Debt-Service Coverage Ratio. These are 30-year loans with fixed rates that will qualify you for the loan based on the income that the cabin is going to be generating.
Now, if you buy in an area with a lot of other properties, high tourism area, this will be easier to get the loan because there’s tons of comps for an appraiser to look at and feel comfortable that this cabin or this property is going to bring in the income that you need to pay for it. And most importantly, you are not going to have to worry about having your own debt to income looked at because they’re not going to be using your debt to income ratio. They’re going to be using what they think that the property is going to be producing.
All right, our next question is coming from Tyler Judd in Williams Lake, British Columbia.

Tyler:
Hey David, Tyler Judd here in Williams Lake. We’re a small town in Central British Columbia up on the West Coast of Canada. My wife and I have a number of small multifamily properties and a small apartment complex commercial building. We’ve got a single family home that’s an ongoing BRRRR, should be done in the next month or two, converting it into having a legalized basement suite, and I’m looking for a little bit of guidance on how we might negotiate with the lenders. My wife and I are in healthcare, so we’ve got strong personal incomes and I’m wanting to maximize that cash on cash return, kind of restocking our cash reserves as we’re continuing to look for opportunities in the market.
Details on the property. We purchased it in December for 280,000. Renovation and holding costs will be 120,000, all in for 400,000. ARV will be about 475. And so we’ve been offered from our local credit union, 80% of the acquisition and construction costs for 320,000 and that’ll be a commercial loan, 5.5% on a five-year term, amortized over 25 years, PITI is 2,650. Or through a mortgage broker, we’ve been offered a residential loan from one of our big banks up here in Canada. They’ll do 80% of the ARV at 6.25% over five-year term with 25-year amortization with the PITI at 3,150. It’ll end up being a furnished midterm rental. We’ve signed a one-year contract with a corporate tenant for 3,250 a month for that upper unit, and we’ll get about 1,750 for the basement, consistent with the other units that we have in the area, bringing our income to about $5,000 a month.
We’re confident in the property and the location for the next five or maybe 10 years. So I’m wanting to ask your advice on how to approach the lender at that credit union to possibly improve the terms on that commercial/construction loan. The credit union also has our commercial mortgage on that apartment building in a few of our small multi-families, so they’re able to see how we do financially and they like how we do business in general. So thanks in advance, David. You and the rest of the BP team have been wildly influential, so we appreciate you and thanks again.

David:
All right, thank you Tyler. I appreciate that, especially that last part about the mindset stuff, helping your business. Though I do believe that real estate builds wealth better than anything else and we love educating real estate investors around here, I’m also a businessman and I’ve found that you can create significant wealth through running businesses like me, providing services to real estate investors. So I love hearing that your business is doing better based off of some of the content that you’ve got from me and BiggerPockets. Thank you for sharing that. That made me feel good.
All right, I heard all the details there, very thorough. I see that you’re probably a doctor or in some form of medicine. Your main question was, how can you approach the credit union about improving the conditions and the terms of the loan that they’re offering you? I don’t know that my first option would be to try to get them to improve those. The first thing that I would do, Tyler, is I would look for someone else that had better ones. The easiest way to do that is from finding a mortgage broker. So there’s basically two kinds of lenders. There’s lenders who say, “Hey, I work for this company or this fund or this bank and I lend out their money, and these are the terms that we have to give you a loan.” Or you can work for someone who says, “I’m a broker. I broker your deal to a lot of different banks. Tell me what you’re looking to do and let me go to all the banks that I have a relationship with and see who’s got the best deal for you.”
I typically recommend people start with mortgage brokers going to these different lenders to shop for them so you don’t have to do all the work. If you find a mortgage broker, they can shop it for you. See if you can get better terms there than with your credit union, and then you don’t have to worry about any of this. You can just use them. For instance, at the one brokerage, we broker these types of loans all the time. We call them bridge products, and we find ways that you can borrow, just like you said, 80 to 85% of the down payment and the construction costs for the property, so you only have to put 15% down on the property and 15% down of the construction costs. You could borrow the rest of it. That might be better than the loan that your credit union’s giving you or the rates might be way better at the credit union than what anybody else can give you, but how are you going to know that if you don’t have something to compare it to?
Now, once you’ve looked around, if you’re finding that the credit union is still the best game in town, which sometimes they are, you might feel better about the terms they’re offering you. Lastly, if you don’t, I would just go in there and I would talk to loan officer and I’d say, “Hey, I’d like to use you because I have a relationship with your bank. I just think that the terms could be improved a little bit. How would you feel about lowering the interest rate or lowering the closing costs or having the points that I’m paying up front? Where do you have the most flexibility with improving these terms so that we can sign this thing today?” That’s going to let you know how interested they are in your business because this is something people don’t understand about banks and credit unions. They’re not always in this situation where they’re competing for your business. Sometimes they don’t want it.
If they haven’t had a lot of deposits or if they’ve recently loaned out a large amount of the capital that they’ve collected on deposit from all of their customers, they don’t want to make loans to people like you because they don’t have as much money to lend. In those situations, the head honchos at the bank say, “Hey, if you’re going to make loans like this, you need to jack up the rate and jack up the points because we don’t need that business.” Now sometimes they’re in the opposite position. Sometimes they’ve got a bunch of deposits that have come in and they’re paying out interest on all the people who have made those deposits and they’re under pressure to get that money lent out at a higher spread so that they can make the delta. You’re never going to know until you talk to the person at the credit union and find out what position they’re in.
Now, they’re probably not going to come forward and tell you if they’re motivated or not, but if you make a proposal to them and say, what do we have to do to get this signed today and they don’t seem interested in it, that’s a good sign that they’re not feeling the pressure. If you can tell the person you’re talking to really, really, really wants to get that loan signed, he’s probably going to give you some form of, “Let me go talk to my manager,” which is a great sign that you’ve got leverage. There’s a little negotiating tip for you, a courtesy of Seeing Greene.
One last thing to think about, Tyler, if you haven’t considered this, you may not need to take a loan from the credit union or maybe you can borrow half the money since you don’t love the terms by taking out a HELOC on one of your other properties. So you might be able to save some money by putting a HELOC on something else and using that for a portion of the construction costs instead of just going to the credit union to borrow the money from them.
If you’ve got paid off properties, you can look into cross collateralizing them, meaning, hey, put the loan on this property instead of on the one that I’m going to buy. It’s all collateral to the lender. It really shouldn’t make a difference, but oftentimes if you’re putting a loan on a property that’s already stabilized, you get a much better rate than a hard money loan where you’re going to be going into a construction process. So think about if you’re going to be borrowing money on a property that is risky, meaning you’re going to be going to improve it, they’re going to charge you for that risk and give you a higher rate. But if you put the loan on a property that is stabilized and less risky for them, meaning if they had to foreclose on it, they could sell it easier, they’re going to have less risk and therefore give you a better rate. But from your position, you just want to get the money. It probably doesn’t make a big difference whether it’s collateralized with something that’s stabilized or something that’s unstable like the fixture that you’re talking about.
All right, the green light is shining and we are on a roll. We’re actually going to skip the section where we normally read comments from the YouTube channel and the review, so sorry if that’s your favorite part. It will be in the next episode of Seeing Greene, I promise. But because we’re having such good content, I’m going to keep rolling right through. Right after this break, we’re going to be getting into a great question from Alex who bought a primary residence and did very well with it and is trying to figure out the best use of the asset. We’ll get into that right after this quick break.
All right, welcome back. Let’s take a look at this next video question from Alex in Seattle, Washington.

Alex:
Hi, David. My name is Alex from Seattle, Washington. My wife and I started as real estate investors and a part of other few properties, rental properties. We have this primary residence, which we converted into rental last year. We purchased it in 2018 and refinance it for 2.6%. Our return on equity currently is very low, about 4%, and we are trying to find a way on how to make it work better. Cash-out refinance won’t work because of higher rates and it won’t cash flow with that and at all, or even negative cashflow, and also I know we can sell it tax-free because we lived there for more than two years during previous five years. We can sell it, but it did not appreciate well, only to 765K versus 720 when we purchased it. And yeah, what do you think our best next options with this equity? Our goal is long-term investment and make sure our equity works well. Thank you.

David:
All right, thank you, Alex. In Pillars of Wealth, I talk a lot about the framework that I like to look at equity through. I see equity as energy. It’s financial energy and it’s the name for financial energy when it is stored in real estate. Now, you don’t have as much flexibility with it when you have cash in the bank that you can pull out very easily or cash under your mattress that you can pull out very easily. There’s more things that you can do with that energy. So one of the things that real estate investors should be looking at is seeing the architecture of their entire portfolio and asking themselves, where is my equity working hard and where is it being lazy? Now, in this case, it sounds like you’ve got some lazy equity, which sounds bad, but it’s actually a great problem to have because it means you can improve the performance of your finances.
Condos typically are not strong cash flowing vehicles. Now, a lot of people will hear that and say, “Wait a minute, my condo cash flows.” I know. I believe that it does. However, it’s probably not cash flowing as strong as if that same equity was in a duplex, a triplex, a fourplex, a single family home, a short-term rental, an apartment complex, a commercial building, something that is designed to generate more income. Condos are inefficient. They’ve usually got high HOA fees. The rents on them don’t go up as much as on single family houses or duplexes or triplexes. So they’re great ways to get into the game because they’re typically cheaper and they do appreciate, much like single family houses. So I look at these as sort of launching pads. If you buy a condo in the right area and you play the game the right way, you can get a lot of equity really quickly.
This happens when people buy a new development in an area like Miami, or if you bought a condo in Austin five or six years ago, you’re probably feeling really good about it, but the return on your equity, my guess is not that great. So Alex, you’re probably going to want to sell it, which is one of the ways that you get your equity out of one real estate vehicle and into a better one, and you already recognize that you get to avoid capital gains taxes because you lived in the property. So I don’t even have to tell you about that, you already know. If you’re married, which you are, you get to avoid about $500,000 in gain. If you’re single, it’s about $250,000. So you can probably sell this property, you’re going to have some realtor fees, you’re going to have some closing costs, you might have some seller credits, but you should sell the property and move it into a better vehicle.
Now, my advice would be to sell it in the spring because you typically get significantly more for your property if you get more offers and you have a lot more buyers that are shopping in the spring than in the winter, and then the question becomes, where are you going to live? Why you’re looking for something else? So you may have to move in with some friends. You may have to rent a unit from somebody else. You may have to find a medium term rental to move into, or you may have to go lease another home. I typically tell the clients that come to the David Greene team, I don’t want you to lease an entire house for a year and then have to break your lease when you go somewhere else. So look on Furnished Finder for something that you can move into for a couple of months to live in while you’re looking for your next property.
You’re also going to want to get pre-approved to know what type of loan you get, what your interest rate is going to be, or a range that you could be in and what your budget’s going to be when you buy the next house, because you’re going to need to know the expenses in order to run the numbers on your next property. Remember, running the numbers is about knowing income and expenses. You need the expenses by starting with the lender, and then you can grab the income from looking at AirDNA, from looking at Furnished Finder, or from looking at the BiggerPockets rent estimator if it’s going to be a single family house.
Once you’re armed with this information, you can start asking yourself the question of, where do I want to put the money? Maybe you save some of it and put 5% down on a house hack for you and your wife and start over with another situation like the condo where you buy into a neighborhood that’s going to appreciate and in five years you get to this whole thing again with the equity that you created. Maybe you take the rest of the cash and you buy yourself a couple short-term rentals. Maybe you buy a couple small multifamily properties. Maybe you get into the commercial space if that’s what you want to do. But the idea here is to get the equity out of the condo where it’s acting lazy and put it into the market where you’re going to do better.
Now, here’s something to think about that works in this market right now that we typically haven’t preached at BiggerPockets, but I think it’s a good strategy. Let’s say you can’t find anything that’s a screaming deal that you love, but it’s in a good neighborhood or a great neighborhood, a good location, it’s not going to cause you any headaches and you know it’s going to perform over time. It just doesn’t cashflow right now. Well, remember, it just doesn’t cashflow right now typically means it just doesn’t cashflow at 20% down right now.
You mentioned in the notes here that you don’t need the equity because you got some money saved up. So what if you sold the property and you took the equity and you just bought something all cash? Maybe you buy a short-term rental somewhere, all cash. Now, you have enough money that you can pay somebody else to manage that property, or you can learn how to manage it yourself and make some mistakes because your risk is significantly reduced when you don’t have the mortgage payment. You’re now making cashflow that nobody else can get because you don’t have a mortgage on the property, but you’ve got all the equity. Remember, equity is energy stored in the property. And later on, if you do find a good deal, you can go do a cash-out refinance on that property, pull the equity out, and put that into the next deal, which is another way of getting the energy out of the investment vehicle.
When we’re having a hard time finding cashflow, that doesn’t mean you can’t buy real estate, it just means it’s harder to buy real estate using leverage. So all you investors out there that have got this problem, a lot of equity, a lot of savings but nowhere to put it, break yourself out of the mindset of looking at everything at putting 20% down. Think about it, if you pay cash, if you put 50% down, if you put 80% down, would that asset operate making you a cashflow and making you money? And then you’ve always got the option to pull that equity out later and go put it into the deal you find that makes more sense.
All right, in today’s show, we covered quite a few topics and financial principles including what return on equity is and how to use it, understanding financial energy stored in properties and how to get it out, seeing properties as a piece of a portfolio as opposed to a standalone unit, being divorced and starting late, but wanting to get into real estate to build your wealth and negotiating more favorable terms on a commercial construction project, as well as how banks make decisions when it comes to lending out their money.
Where else are you going to get stuff like this? Seeing Greene is the only game in town that I know of, so thank you for being here. I appreciate you all. But we can’t make the show without you, literally. So if you’d like to see the show keep happening, I need your help. Go to biggerpockets.com/david and submit your questions there. If you want to reach out to me to talk more about any of the things you heard in today’s show, you can find my information in the show notes. Please do that. And if you want more BiggerPockets content, head over to the forums on the website where I promise you there is more information than you will ever be able to consume if you looked at it for probably the rest of your life.
I’m David Greene, the host of the BiggerPockets Podcast. We are BiggerPockets and you are the people that we love the most. Thank you for being here, and if you’ve got a minute, check out another episode of Seeing Greene, and if you’re an extra awesome person and you just want to show off your awesomeness, please head over to wherever you listen to your podcast at and leave us a five star review. Those help tremendously. I’ll see you on the next episode.

Ashley:
This is Real Estate Rookie, episode 366. Today, we are bringing on Amina Stevens. She’s a former teacher and turned into a full-time real estate investor and agent, and she’s going to talk to us about her market, Tampa Bay, Florida. She’s also the host of the First-Time Buyer’s Club, which is a TV show on the Oprah Winfrey Network. This is where she guides some first-time home buyers, like a lot of you guys, through every stage of the journey to build wealth and reduce the housing disparity in her own community. She makes the dream of the homeownership a reality for everyone. No, I didn’t make that up, that’s a tagline from her own show. I’m Ashley, and I am joined 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 investment journey. Now, obviously, Amina has built a very successful real estate business today, but she started off in a super safe, super secure career that a lot of people wouldn’t have had the confidence to step away from, and we want to get into how she made that leap. First, Amina, welcome to the Real Estate Rookie podcast.

Amina:
Hi. Thank you, guys, for having me. I’m super excited to talk to the rookies. We were all there, and every day there’s something to learn, so I’m excited to be here.

Tony:
Amina, if I’m not mistaken, you started off with a career that a lot of people go into spend 20, 30, sometimes 40 years retire from, you stepped away from that. What was that career? What was the motivation, the spark to leave that and get into real estate investing?

Amina:
I got into teaching because I grew up in a family of educators and I loved education and I loved learning, and it just seemed like the right thing to do, but the closer I got to getting into education, the more I started hearing people, like my mom who was a teacher, say, “Hey, you know what? You might want to think about something else.” I couldn’t figure out what else I would want to do. I got into teaching and I absolutely loved teaching, but I realized what she meant, that the system of education is different. I realized that I love teaching, but I didn’t love being a teacher. At the time, I was teaching 12th grade, I taught eighth, 10th and 12th grade, and I realized that I was helping them fill out their resumes and apply to colleges. I was helping them follow their dreams, but I wasn’t following my own.
I realized this is not quite the right fit. The final straw was when I had a lesson plan that I did for administration where many people know that teachers get evaluated and they give us grading and rankings to see how we can do better or where we’re at. When I tell you, this lesson plan was everything, it was everything and more. It had every standard. I was like, you know what? They’re going to rename the school after me after this lesson plan. I remember I went in, it was towards the end of the year and I went in to do this final evaluation and I’m just waiting to get my trophy. They gave me just one notch under exemplary, which is the highest ranking. I asked the assistant principal, I said, “Why? I feel like I’m looking at the rubric, I’m looking at my lesson, what’s going on?” She said, “Just newer teachers, they just don’t get exemplary.”
I was like, “Okay, that’s it.” I’m over here killing myself, and I have some of the highest test scores in the school and I’m doing all these things and I’m capped already. They’re telling me I’m already too good and I can’t get that recognition maybe for another five, 10 years. That was my inspiration to look into something else. The only other thing that I had liked was real estate. I didn’t even know at the time to call it real estate. To even think I was that green in the past is crazy. I was just like, yeah, I like watching those house shows. I like watching Flip or Flop, I think it was, growing up and things like that. I researched how to get into real estate, and one of the first things I came across was going to real estate school. I just joined real estate school, and that’s how it started.

Ashley:
When you were a teacher and you made that decision that you wanted to pursue real estate, at any time were you afraid that you wouldn’t have that security anymore as a teacher? In New York State, at least, teachers have a very nice pension set up for them. A lot of teachers I know, they don’t want to leave because they work for so many years and then they’re set up and they have their pension for however many years or whatever. It’s very hard for them to wrap their mind around the leaving because of those long-term benefits of being a teacher in New York State. I don’t know what it is in Florida, if it’s any different. How did you change your mindset to leave any kind of security that your job offered?

Amina:
I would say that the benefits probably are a little bit better in New York, but I also was a rookie, I would say. I’ve only been teaching for a couple of years, so I didn’t have that long history ahead of me, but I did have a sentiment that I wanted to have an impact. I was teaching at Title I schools, which are some of the most high-risk schools that need passionate and educated teachers. They were like, “You’re the teaching Beyonce.” I felt like I was having an impact. The legacy that I knew I could have in education and the legacy that was in my family was what I was leaving, this history of being in education. I realized that as I was educating my students, I really wanted them to learn from me.
I wanted them to follow their dreams. I wanted them to do what made them happy, and I felt like I was a hypocrite. I couldn’t go every day telling my students something that I wasn’t doing myself. That was gnawing at me, and I was afraid, I would say to get into entrepreneurship, which is what I learned real estate was because I still to this day, hardly know any business owners from my past life, from my upbringing. It was a completely new world to me, and I wasn’t sure what was going to be next, but I knew that I had to follow my gut instinct that there was something more.

Ashley:
Well, we are going to take a short break. Amina, when we get back, I want to hear what is that next thing, who was the person, what was the business, what was the thing that propelled you into real estate. We’ll be right back after the short break. We are back with Amina, and she has shared with us her teaching journey and now we’re starting into the transition into real estate agent and real estate investors. Amina, what was that breaking point and what were some of the things that happened during your life that propelled you into your real estate journey?

Amina:
As I mentioned, I started in education and I decided to take that leap into real estate. In between teaching and real estate, I took another job in between as an insurance adjuster. I felt like I learned some systems and processes and how to manage a high caseload of claims, which I didn’t realize later would help me with the real estate investing and the retail real estate side. I just was like, hey, if I’m going to go into entrepreneurship full-time, I don’t want something that’s as time demanding and as soul draining/aliving. It was like, it’s both sides as a teacher, as education. I got a job in the middle and I started to research what path I wanted to take in real estate. A lot of people don’t know this, but early on in that journey, I came across wholesaling on YouTube and I was like, wow, this is interesting. There’s Max Maxwell and there’s all these people that are doing amazing things.
I had a little bit of identity crisis because I was like, okay, do I want to get into real estate as a real estate agent and just have this new career and it looks good on paper, or do I want to do this real estate investing thing that maybe isn’t as popular or as common as what I was seeing people do in regards to the retail side? I was researching both things and I always researched a lot about real estate investing, but I put that on the side until I got into the real estate retail side, started doing some deals. Then I came across a friend of mine named Francisco, and he told me about the Wholesaling Land Queen, the Wholesaling Land Queen is what I’ll call her. Her name is Dherby Laraque. He was like, “You got to talk to Dherby. You got to talk to Dherby.” I said, “You’re doing well on the retail side.” I started building my business that way.
He’s like, “There’s something else that you should be looking into.” I’m like, “Do I get distracted?” A lot of times people will tell you, focus on one thing and do that well. I had been doing that for two, three years at that point, doing it well. I finally talked to Dherby and I found out that she was wholesaling land. I thought that was interesting because I was really interested in wholesaling, but I saw all the things online and on YouTube about how difficult it can be. You got to do the ARV and the X, Y, Z, then you got to do the walkthroughs and all these things. Dherby was teaching the strategy that seemingly made wholesaling a lot more accessible. That’s what set the light bulb off that maybe there’s a way that I can do both retail and wholesaling without it killing me and without it maybe taking all of my attention in one direction or another.

Tony:
Amina, let me ask, because it sounds like, and just to clarify, when you say retail, you’re talking wholesaling, traditional single-family homes, is that what you mean when you say retail?

Amina:
Well, I’m a real estate agent, my day job.

Tony:
You hadn’t even started wholesaling yet, you were just selling homes as a realtor, as an agent?

Amina:
Exactly. I was networking and I was meeting people and I came across a friend that put me onto my real estate investing mentor, I would say.

Tony:
Gotcha. If you were doing well as an agent, why even think about adding on the additional workload of wholesaling land? Obviously, it’s still in real estate, but those are two completely separate skill sets to be able to find sellers and buyers as an agent and connect those and negotiate and all those things and then doing wholesaling. That’s like a whole different beast. I guess, why even step into the world of wholesaling if you were doing well as an agent?

Amina:
As I said earlier, I like to follow my gut. Remember, at that point at which I entered real estate, I was doing all my research and very early on I found out about wholesaling. Something just told me, you need to look into that. I put that on the back burner because I felt like the more traditional real estate agent route was something that was a little bit easier for me and something that mimics a little bit of that career focus that I had from teaching to real estate, but I still had that interest in wholesaling. I was on forums and things like that, like Bigger Pockets, and I would listen to different YouTubers. I realized that I’m an entrepreneur, I don’t have to pick one lane and stay in that. I want to learn everything that there is to know about real estate and figure out how to diversify my income and have multiple streams of income, as we all say.
I felt like it was something that I was interested in, but also that I should be doing. I shouldn’t just pigeonhole myself as a residential real estate agent. I should figure out how I can get into investing myself. What was really interesting about wholesaling, and many people know this, is that it’s a lot of times, a new real estate investor’s way to build capital in order to invest in real estate. Remember, I was saying back in the day and growing up, I loved all the flipping shows and things like that. At the time, I didn’t know much about creative financing or anything like that, and I know I needed to make a decent amount of money to be able to do fix and flips or builds or anything like that. Wholesaling seemed like a really great entry point to be able to get into the real estate investing side and then later, become a real estate investor myself.

Ashley:
Amina, Tony and I hosted this rookie meetup at a conference once and someone asked the question and said, “I just don’t know what value I bring to the table as a rookie investor.” We asked that person, we said, “What job do you do now?” He goes, “I’m a project manager.” We said, “Who here would like somebody to manage all their projects?” Every hand shoots up. With being a teacher, an educator, what are some of the skills that you had developed from that career that transferred over into real estate? I

Amina:
I think one of the keys to success in any industry, but particularly in entrepreneurship, is to not allow the fact that you’re green or you’re a rookie or whatever, to make you forget who you are. You are a whole human being. You have skills, you have assets, you have aptitudes that have transferable value and skill sets in any industry. I think that I brought my education self into real estate by first of all, learning a lot of things. I didn’t realize that a lot of people just learned this and then learn that, and then they went on to this and then they need a mentor for that and a mentor for this. I’m like, what’s going on here? I’m in real estate now. Let me learn all there is to know. I think that just being a wealth of knowledge helped me figure out how to navigate complex situations or problem solve or find my value proposition in whatever kind of sector I was in.
Specifically, I’m really good at breaking down complex processes. I’m really good at talking to people and managing emotions. I think a lot of times people don’t realize that there’s a lot of psychology that goes into real estate transactions, like getting people to sign. For example, on the wholesaling side, we like to call it an agreement, not a contract. Because an agreement seems a lot more amenable, like, oh, I’m just going to sign an agreement, versus sign this contract right now. I’ve never seen you before. I don’t even know who you are. You’re some person that says that you’re going to buy my house for cash or my land for cash. I think that I was really good at just educating myself so that I could educate others and then using systems and processes to break down the process so that I can help other people.

Tony:
Let’s talk a little bit about the systems and processes, because Ash and I are both big, like operational people, and we want to systemize things as much as we can so that the management is easier, the execution is easier. As you transitioned into wholesaling land, what were some of the systems, the processes, the SOPs that you put in place to usher you through that process? Because there’s a lot that goes into it. You’ve got to market to find, the sellers, to find the motivated sellers. You’ve got to have a process for outreach once you identify those people. You’ve got to have a process for communicating. There’s the negotiation steps, there’s the disposition. There’s a lot that goes into wholesaling one transaction. Walk us through what your checklist looks like.

Amina:
When I decided to embark on the wholesaling land part of my business, I brought in my best friend who knew nothing about real estate. Because I said, I’m still a residential real estate agent and I want to make sure that we can do this business, we can scale it, but also the experience isn’t horrible because I’m doing a hundred things at once. I actually brought in a complete real estate rookie who never even thought, hey, I’m going to go ahead and get into real estate. I just was like, hey, I like their hustle. I know you’re smart. I know you can catch on and I’m going to teach you how to do this. That emphasized the importance that I had to document the processes because she knew nothing about real estate. She didn’t know anything about a CRM, anything about contracts, anything about a contract management system, anything about any of that.
To your point, I first had to document what is our process going to be? Part of that started with learning exactly what the steps are that I’m sure we’ll talk about in a little bit in regards to wholesaling land, and then putting that into an SOP, so writing down first we do this, then we do that, et cetera. Then I knew that I needed to look to technology to figure out how I can make it easier for us to do this because I didn’t want her calling me every five minutes trying to figure out what we should be doing or how to respond to the seller or how to find their contracts. I knew that we needed technology. The two or three key pieces of technology that really helped us was a CRM. That’s where we texted the sellers and called them and kept all of the information about all of the leads and the parcels that we had, as well as a contract management system.
We use Dotloop, but there’s a ton of them. There’s PantaSign, there’s DigiSign, there’s DocuSign, there’s all types of contract management systems. Then we also use a project management system. I had started using this on the retail real estate side because there’s so many different parts of my business, marketing my business and my sales and all that. When you use the project management system, it can help you keep all that in one place. The project management system that we use is called ClickUp. There are other project management systems, there’s Trello, there’s monday.com, there’s Asana. We use ClickUp because in ClickUp, I don’t want to just write down the SOPs, let’s put all the SOPs in ClickUp, and then I had them all organized by day. On Mondays, this is what we need to do. Tuesdays, Wednesdays, Thursdays, Fridays, and then we connect it. Another system that we use is Zapier, which connects all the systems and makes them talk to each other, so we connect it.
When we finally get a contract signed through our document signing platform, it automatically transfers that file and that alert that, hey, you have a new contract, into ClickUp. Then we have a board on ClickUp that says, first, you need to make sure everything on the contract is signed right. Then make sure it gets to the title company. Then make sure that the seller deposited or the buyer deposited the earnest money deposit. Then make sure that they passed the feasibility study or the inspection period. I found that I was able to through the systems, of course, it’s the whole point of them, make it easier for myself, but then also, turn my best friend into a beast. At some point, she’s pretty much, she’ll tell you this, she’s like, “I need to be on this podcast.” I was running a lot of the company, but it was true that with my connections, I was able to put together this system that now a complete real estate rookie was able to take and help us scale to six figures in a few months.

Tony:
We want to touch on what your checklist for actually buying the land looks like. You touched on a lot of these pieces already, but at least on the acquisition side. Before I do, you mentioned that you brought in your best friend. I’ve struggled with that personally in my business where I’ve tried to bring in close friends and family, but it’s just like not everyone has that desire, I guess, like that drive, that hunger to really want to put in the work to be successful in this. I tried to launch, actually a wholesaling business with my friends. We did a couple deals, we made over six figures on a few deals, but he just fizzled out. Tried to bring someone else in to help with launching my property management business, someone that I knew and worked with in the past before, fizzled out. I don’t know, did you struggle with that bringing that person in or was this someone who was just very intrinsically motivated that was able to latch on and execute well?

Amina:
You have to be honest with yourself in regards to whether or not you’re ready to bring on someone. Because sometimes you can say, hey, I want to bring on a friend, and it’s just because you want them to do all the work. If you don’t bring them on and have, for example, systems and processes in place, it will be more difficult. Now, sometimes you got to just walk before you can run, but I would say that the better prepared you can set them up for success, the more likely they are going to be successful. Imagine if you’re, any job, everybody can imagine if they haven’t even worked there, what it’s like to work at McDonald’s. I haven’t worked there, but I can imagine. It’s like, imagine you go into McDonald’s and they’re like, “Hey, start making some fries and turn out that patty.” You’re like, “What’s going on? I have no idea where the buns are. Where’s the grease?” I feel like that’s one thing, is that if you’re going to bring in friends and family, you got to have something to bring them into.
Then I would also say that you have to be honest with yourself about whether or not they are the type of person that you think will survive in this industry. I think with her, she had the natural tenacity and go-getter mindset. We definitely had our ups and downs and our struggles, but I think that she was motivated enough to say, you know what? I see this opportunity and even when it’s tough, if we can figure this out, it’s going to work out. Sometimes it doesn’t even necessarily have to be a super extremely long-term partnership. You can make some money together and then figure out, which is one of the things we did, let’s get a virtual assistant. Now the virtual assistant is running most of that and now we’re managing the virtual assistant. Or maybe, hey, we did this partnership for a year or two, now we don’t want to do it and we want to move on to something else. I think just going into it with the right expectations is very helpful.

Ashley:
Amina, you had mentioned briefly that this was a six-figure business for you. Can you go into more of how you made that happen and what timeframe was that? Was that pretty rapidly that with your systems and processes and your skills that you were able to make six figures?

Amina:
I would say the bulk of our outreach and acquisition efforts were made, let’s say in January of that particular year. I would say almost all the money, I would say we made a lot of money or a lot of contracts, a lot of dealings, a lot of relationships in that January, February timeframe, and then they were just closing after that. They started closing in January. Some of them were quick contracts and then so on and so forth. After that, we continue to do some deals, but at that scale, because really, I was like, hey, I want to get into this, I want to do some of it. I was like, we can do this. Let’s put in a lot of effort these next couple of months.
Then we started to see a lot of success. I would say a testament to having that clear vision to begin with. Then for me, I had the confidence. Once I knew, okay, you solved that problem that I felt like in wholesaling, which was a ton of time, a ton of effort. You’re doing all this outreach, you’re building your buyer list, you don’t know if they’re going to buy it, if they’re not. She simplified this process so much that I was like, okay, if we do what she says, we’re going to make money, so let me make sure we have the backend operations to support that. Once we figured that out, like I said, it was pretty easy from there.

Ashley:
That’s amazing, to be able to figure that out in a couple of months and you’re already getting contracts signed just starting in January. How did you know what your target audience was? How did you know who’s going to be your seller and how to find your buyers? How did you determine that?

Amina:
The whole idea is that you find your end buyer first. Of course, in real estate investing and in wholesaling in general, there is this idea of building your buyer’s list so that it’s easier for you to disposition properties and things like that. You can’t go to step two until you have buyers and you know their criteria, you know where they are building, you know exactly what they want, you know exactly what they’re going to pay for it. You’ve even sent them maybe some tests, you can even make it up. You sent them some test emails or some test properties to see if they’re going to buy. Once you have your three to five, let’s say, builders that you feel like are solid, that you know that if I bring you exactly what you told me you wanted, you’re going to buy it, then you increase your marketing efforts and you go supply them with what they’re looking for.
We particularly focus on infill lots or spot lots or just single lots. We have come across some deals that we’ve been trying to put together on larger parcels and subdivisions and things like that. Initially, the focus is on those single lots. Thankfully, one of my fortes, I would say, or one of my specialties in real estate on the resale side, on the real estate agent side, is new construction. I know a lot about different builders and I know the different areas where there are single lot developments or where there are subdivision developments. I remember this particular area was about an hour and a half away from Tampa, but I remember every time I went out there, because I do have a wide radius.
I just remembered that’s the type of building they do out there. I think for us, one thing that really helped us is that we were very quickly able to identify our market, which is the number one thing you want to do in this reverse wholesale or this land strategy is identify your market and your buyers. I was able to tell her, like I didn’t need to do research. I’m like, we’re going here, this is where we’re going. All the builders, let’s kill it here. You know what I mean? I would say that’s the key to our success because I have friends that have started this strategy and they spend months trying to find that area that they feel confident in to go ahead and call those builders, invest that time and do that marketing. I was certain because I already knew it.

Tony:
Amina, you hit on an incredibly important point of choosing your market and really nailing that piece because not all strategies work well in all markets, so you really want to make sure that the city aligns. I definitely want to get into how you chose your market, what data you looked at, what made you feel confident to make that decision. First, we’re going to take a quick break and hear a word from our show sponsor. All right, Amina, you just broke down an amazing process of how you’ve built your business, and right at the end, you mentioned the importance of choosing the right city. First, I guess tell us what city you were operating in and then second, what was the, I guess the data points you were looking at or just what went into your decision to say, okay, this is the city that I want to work in.

Amina:
I don’t usually give my secrets away, but I’ll give it. I feel like there’s a few people there now. One of the things is trying to find that key market and then not necessarily giving that away to everybody because you want to build those relationships and you want to have those builders. I will say that at the time, we were operating in Poinciana, Florida. It’s in an area outside of Kissimmee, which is close to Orlando, for those that don’t know Florida.

Tony:
I think that’s the beauty of investing in real estate. There’s 19,000 cities in the US, and me being in California, Southern California, there’s a bunch of cities over here that Ashley, being in Western New York, has never heard of. There’s a bunch of cities in Western New York that I’ve never heard of. Same thing going on in Florida, there’s so many places that you wouldn’t know unless you’re in that area. The city itself isn’t as important, I think what’s more important is what did you see in that city that made you say, okay, cool, this is where we want to put our flag in the ground and build our business.

Amina:
Because a part of the strategy is identifying the market, of course. What you’re looking for is what you’re looking for. You have to believe that there are people out there, there are a bunch of builders out there that build single lots or they want to buy five lots in this area or 10 lots or 20 lots or 30 lots, and you just have to find where that activity is happening. You can use different tools. You can use Zillow, you can use Zillow to see. If you can’t find the lots, you can find the new construction that looks like this archetype of a home that she’s talking about. Not to necessarily in some huge subdivision, but just a single new construction lot in a particular area. You’re researching different areas where you see a lot of that type of development.
Again, you can use tools. The free ones are Zillow. As a real estate agent, I have a few other tools that come with my MLS and things like that, so I was able to use some more tools. I think as I was saying before the break that I already knew it, I was certain because I had been out there. I go out to Orlando and I shop with buyers for new construction. It’s funny, because the area that we decided to focus on, I found out about it because it’s in between, like I said, semi-Orlando, and one of my clients that was shopping in that area was like, “I will not live in Poinciana. I don’t care what you tell me. I don’t like Poinciana.” Because it’s interesting, it’s like a little city, but it’s one way in and one way out.
It’s just like, the traffic is not the best. It’s interesting. I said, for anybody that knows that if you know, you know. She’s just like, “I will never live there.” I remember she got desperate because the market was crazy and we went there. I was able to go there with her and look at houses and I saw all these different single lot new construction homes, and I just noted that. Then after that time period, I had been there a few other times, so I just knew that there was a lot of development there. Like I said, as soon as I found out, hey, the first step is to identify the market where people are building these type of homes. I’m like, I already know. I already know, but it was solidified by us researching and making sure that we could find builders in the area that were actively still acquiring land.

Ashley:
Amina, I have a resource that I’ve used before. I don’t know if it would work for single family as much, but more for commercial development, like apartment complexes or things like that, is looking at the crane index. It’s like rlp.com, I think, and you can actually see how many cranes are in a city and if the amount of cranes have decreased or increased, which shows you how much actual development is going on in that city right now, too. That’s like a cool virtual tool that you can use to see the development of a city. What about job industries? Were there any job industries in that city that drew you to that?

Amina:
Not particularly. I mean, of course, there’s job industries that draw people to the Greater Orlando and Greater Tampa area. Education, healthcare, finance, these are major industries here that draw people from all over the country. Then what happens is because of affordability, that area is more affordable. Because of affordability, people are pushed to the outskirts of the particular city center or outskirts in the metropolitan area. That’s why you’ll see a lot of development happening in between two major cities. The industries flow over into the surrounding areas.

Tony:
When I think about that part of Florida, I mean obviously, I think about, I don’t know, Disney comes to mind and all the vacation and tourism. Are there any other big economic drivers in that area that you saw that was driving a lot of that new construction?

Amina:
I would just say we have Disney. We obviously have, I mean, come on, we got the beach, we got the weather. People always want to come. Who doesn’t want to live where it’s like 24/7 summertime and the living is easy? Sometimes we don’t think about the weather as an industry, but it really is. It promotes tourism and it promotes people that just want to come and retire here or want to relocate here if they are remote. Then also, I would just say education and healthcare are huge here. We have some of the biggest schools in the country, primary, secondary level, to the college level as well. We have the biggest colleges and universities in the country. A lot of them fall in Florida, in the Central Florida region as well.

Tony:
One thing I’m curious about, because where I live, and I’m in Southern California, outside of Los Angeles, a suburban town, there’s just not a lot of infill development. There’s big subdivisions being built all over the place, but you very rarely see a single lot that someone is developing into a home. It just doesn’t happen as often. I guess, is there a way to even know, and maybe you touched on this a little bit already, but it’s a slightly different thing to look at, but just like how do you even know if there’s enough lots in your land to buy or in your city to buy? Is there a way to look that up?

Amina:
That’s why choosing a market is very important. Some people just say, hey, I want to choose my market. As I told you, Poinciana is about an hour or so, hour and a half away. I’m not wholesaling land in Tampa, mostly. You know what I mean? Every now and then, there’s a deal that comes up. You have to find that market because we’re densely populated. You can tear down a house and build on it, but we don’t just have a ton of lots just sitting around. You have to find that market. One of the ways that you can do that, like I said, is going on Zillow, like I said, and seeing where these other, again, it doesn’t necessarily have to be a lot.
It can just be where all the other infield, single new construction homes popping up. That indicates to you that there’s land around there somewhere. Then also, you can use tools like PropStream, LandGlide, LandVision. These are all three tools that you can use to look for lots. What we usually do is first, try to identify the areas that you likely should dive a little bit deeper into where you see some of this development. Then you use tools, like I said, PropStream, LandGlide, LandVision, to really try to find the property owners.

Tony:
Amina, I love that you mentioned PropStream. Ash and I talk about PropStream a lot. I know in that tool, you can actually filter by parcel type, and land is one of those. Vacant land is one of those options. I guess, if you were to go into your city, go into your town or whatever city you’re thinking about and you see very minimal results when you filter it down to vacant land, that could be a telltale sign that maybe your city isn’t the best one. I think about Ashley, where you’re at, there’s probably, I don’t know, a bunch of land, but it’s all like 300 acres out there if you want to go out there and do it in your neighborhood. I guess, every city is going to be a little bit different.

Amina:
That’s what I was going to say, not just hyper-focusing on the land itself. I think the light bulb moment came when I realized, let me just focus on the product. I’m looking for people that build, or I’m looking for what will ultimately be a new construction home on a lot maybe that’s not in some big subdivision. We do that as well. I mean, depending on your area, that might be more what you find. Once you find that, it’s like, where there’s smoke, there’s fire. It’s like the smoke was, hey, they’re building a lot of what we see on Zillow, that there’s a bunch of those homes in this area, so that means there’s got to be some land, or we’re going to try to find the land in that area. We’re going to try to find the builders in that area. Then some of that confidence that you’ll get is when you call the builder and you ask them, for example, one of the key questions I like to ask is, how many parcels are you looking to acquire this year, or are you still buying in this area? What’s your capacity?
Because you might think, oh, my gosh, I got this. I found this builder. I’m going to find them a bunch of land. You start spending all your marketing dollars, marketing the sellers. You bring them 10 lots or two lots, and they’re like, yeah, we’re good with our quota for this year, for this quarter. Part of the strategy is finding, again, that area, finding the builders in the area, and then also, qualifying these builders. Making sure that you don’t just go to an area and spend all your money and your time and you have somebody that might buy one lot. You know what I mean? Find the builders that are like, hey, I want to buy 20 lots in this area, 30 lots. I’ll buy as many as you’ll bring me. That’s what you want to hear. Then you know, okay, if I get five, six builders that are telling me that they have a lot of capacity and then I’m in this area where I know there’s land and I see that there’s a development popping up, this is a good area to focus my efforts in.

Ashley:
Are there opportunities that you’re seeing out there right now that are being missed by other real estate investors?

Amina:
A lot of people are focusing a lot on homes, but land is a really repeatable and scalable strategy. One of the beautiful things about it is that you don’t have to worry about a lot of the things that you have to worry about when you’re focusing on houses. Because again, houses are great as well. Obviously, I’m a real estate agent, I know that. What’s cool about land is it really simplifies it and I do think it’s a great strategy for rookies. Because when we’re talking about ARV, you know what the ARV is? What the builder tells you, they tell you, these are my parameters to buy in this area. Of course, you’re going to qualify, you’re going to ask some of these questions, so these are the type of questions you’re going to ask.
How big do you need the lots to be? Do they have utilities or not, or do you require them to have utilities or not? If it has an endangered species on the lot. Will you buy it or not? If so, how does that change the price? What’s your maximum price in this area? Once you do all that qualification, you’re not really trying to underwrite the deal, you’re underwriting it to the needs of your client. Because essentially, it becomes your buyer when you realize, hey, I have somebody that told me if I can find them this, this, this and this, I will buy it. You feel so much more confident trying to put together your deals, trying to find that land when you know for a fact they’re going to buy it if I give them what they’re looking for. I honestly forgot how I got off on this tangent, but just remember that.

Ashley:
I do want to know, have you bought a lot with an endangered species on it?

Tony:
That’s right. I was literally thinking the same thing.

Amina:
We learned the hard way, right? One thing you’ll see a lot in this region is turtles or turtle nest. What will happen is that turtles are an endangered species, and you can’t just say, hey, I’m going to buy a lot, clear the land, and to hell with these turtles. You’re going to be in somebody’s jail. PETA is going to get you. You got to make sure that the lot doesn’t have this, doesn’t have any kind of endangered species like turtles, or if it does, a lot of times they cost a lot. They cost a lot of money to remove. They have to bring in a separate company to come in, remove the nest, remove the turtles one by one. It could be upwards of like $7,000 plus per turtle. You can imagine, if you think you have this deal, you’re good, you’re going to make this money, you got it. Now you have to go back to either the buyer and say, hey, it has turtles. Do you want it?
Of course, either some builders don’t deal with it at all, so you need to know who just is out if there’s this endangered species or if they do, they’re going to come down and have you lower the price dramatically. Usually, even more than what is required, just in case. Now you got to go back with your tail between your legs to the seller and try to keep the deal together. That’s definitely a pro-tip, is making sure that you’re asking those questions when you’re talking to sellers, or even preparing them. Expectation setting is a part of systems that people may not talk about, setting expectations on how the process is going to go. When I’m talking to the sellers, I’m like, hey, here’s how it’s going to go. We’re going to get the deal. We’re going to close it in this amount of time. However, we have this what we call feasibility study, which is the inspection period on land.
During this time, we’re going to make sure that the land is suitable to build. Some of the things that might come up that would make the land unsuitable or not suitable would be if it’s a wet land and we’d have to build up the land to a certain point to even build. Or if there’s an endangered species, we would have to maybe significantly come down on the price or cancel the deal altogether. Do you know if there are any endangered species on your lot? Have you ever heard about any nests on your lot? When’s the last time you’ve been to the lot? There’s certain indications as well that you can have that tell you, hey, maybe I need to go and drive that lot. Because you can do this virtually, and your market doesn’t have to be anywhere near where you are. You can be in Tokyo, wholesaling land in Orlando.
If you have some indications that there may be an issue with the lot or maybe there’s something you need to go and look at, that’s when you want to say, hey, let me drive the lot. Let me send somebody out there to drive the lot. Or what I love about a lot of builders is that they have their own land acquisition specialists or whatever, so they go drive the lot. Again, another barrier to entry is absolved there because a lot of times with wholesaling houses, you’re hoping that the inspection of the walkthrough goes well. Whereas a lot of times before you even get the landowner contracts, a lot of the builders will already have one of their representatives go and put their eyes on it. You feel very confident and like, this deal is going to go through. I’m giving them the price that they want. It’s in the area they want. They’re building a bunch of other houses over here, and somebody’s already put their eyes on it. Now, let me just make sure I don’t mess this up on the backend.

Ashley:
We had something happened at a property we purchased. It wasn’t an endangered species, it was more of a nuisance. We had beavers that had taken over three of the ponds while they would dam up the drainage flow that went under the driveway and shove all their mud and sticks in there. My business partner would be out there some days with a shovel, dig it back out or whatever. Well, it ended up overflowing, wash out our $27,000 driveway, flooded one of the cabins, and our brand-new cabinets had been in there, but luckily, they didn’t get ruined. They were over to the other side, but completely washed out the driveway. With the beavers, you can’t really do anything with them. You have to hire a certified trapper, somebody who has a trapper’s license to trap them and either take their fur, remove them from the property. It was a huge hassle and ordeal. We eventually found somebody who was a licensed trapper to come, and they do it as a hobby, but we are finally beaver free, I’ll say.

Tony:
Since it’s story time, I got to share my story. We also had an endangered species at one of our properties, but it was actually a plant. We invest near a Joshua Tree, and the Joshua Tree is an endangered species in California. We had one in our front yard, and we’ve had a few issues with this tree. The first issue was that we had a septic issue at that property, and we had to dig to get to the septic tank, but they wouldn’t let us dig because the tank was too close to the Joshua Tree.

Amina:
Oh, my God.

Tony:
Before any plumber could go in there and do work, we had to get a certified arborist. How you become a certified arborist, I don’t even know. They gave us, no, there’s not even a list of the county to say, hey, here are the people that you should, so we just had to ask around the city to say, who knows a certified arborist? They came in and did whatever they had to do to approve it. The last part of the story is that the tree eventually fell over. There was super high winds in Joshua Tree one day, and the tree literally just fell over on its own. It was out of the ground. The roots were up. It was just laying there sideways.
We couldn’t even move the tree without getting approval. This whole endangered species thing is pretty crazy, pretty real. If the real estate business ever goes belly up, I know I can go trap beavers, I could go move turtles or I could move some Joshua Trees, and I’m probably doing just fine. Amina, you shared a lot of great content on today’s call. Really appreciate that. I guess what I’m curious with is what do you feel is next for you in real estate investing now that you’ve done this a few times, you’ve built a successful business, what’s next?

Amina:
I really want to develop. I want to get into, I was thinking about the fix and flip strategy, but the more that I work with developers on both the wholesaling side and on the residential real estate side, I’m just really attracted to creating a product that an end buyer, like a retail buyer would love. I want to bring homes to the market, and I want to partner with some of the industry professionals and providers and things like that, that I’ve met along the way to make that happen. I don’t know exactly when that’s going to happen, but I’m super excited to figure out how I can get there and put a product on the market that I would love, that I would love to sell to my retail buyers.

Ashley:
Well, Amina, thank you so much for joining us today. Is there any last tips that you have for a first-time home buyer?

Amina:
I would say that my favorite quote is that if you can see it in your mind, you can hold it in your hand. I think that my entire journey started with just this thought that maybe there was something more. I didn’t look at the top of the mountain and think, you know what? I’m going to be there tomorrow. I just took it step-by-step with a simple Google search, how to get into real estate. Then I kept an open mind and I allowed it to take me in so many different directions. When I first started, I never thought that I would build a business in real estate on the residential side, that I would have 70 agents that I recruited to the brokerage that I would work for, that I would have a TV show about first-time home buyers, that me and my best friend would partner to start a wholesaling land company.
It all started with just that thought and not psyching myself out. I love the stories that you guys gave about how you navigated some of those endangered species and some of those problems, because I think a lot of times when new agents or new investors come across an issue, they think that, that’s the end of me, or Amina wouldn’t go through this, or Ashley and Tony, if I was better, if I was more like them, they wouldn’t go through this. It’s like, these things happen. You just got to charge it to the game, and if you can stay in it, then you can be successful. You just got to find your way.

Tony:
Amina, I love, love that advice. Now, one last question, and I think this might be the most important question of the show. Now, you host a TV show called First-Time Home Buyer’s Club, and I happen to know that this show is on Oprah Winfrey’s network. We’ve been trying diligently to get Oprah on this Rookie Podcast. Can you make the connection for us?

Amina:
You know what? This business is all about building relationships, and you never know when it’s going to come in handy. I’m going to put that in my pocket and when I meet her, because I haven’t yet, I might just have to slip her your names.

Tony:
Slip the name in there. There you go.

Ashley:
Your phone number, Tony.

Tony:
We need Auntie Oprah on the Rookie podcast, so get her over here.

Ashley:
Well, Amina, just to wrap up, thank you for the mini-masterclass on exactly the systems you use to build out your processes. I don’t think we’ve ever had such a great breakdown, and then sharing your experience with having a mentor and how important that can be. Then also, just learning about land deals and doing your due diligence, what you need to know when you’re considering purchasing property, whether to wholesale, to flipper, whatever to build on. Thank you so much for everything that you’ve shared with us. If you want to learn more about Amina or you want to check out her TV show, we’re going to link all of her information into the show notes. You can find them in the description below on your favorite YouTube channel, Real Estate Rookie, or on your favorite podcast platform. I’m Ashley, and he’s Tony. Thank you, guys, so much for listening, and we’ll see you on the next episode.

Rithm Capital CEO Michael Nierenberg joins ‘Squawk on the Street’ to discuss the company’s acquisition of Sculptor Capital Management, how concerned the chief executive is about the commercial real estate market, and more.

If you dream of becoming a real estate investor but work at Walmart, you could well be on your way to realizing your dream much sooner than you think. This comes with one important caveat: You’d need to manage a Walmart store to enjoy the financial benefits that could set you up with the cash needed to invest.

Walmart U.S. announced last week that it would be giving its store managers stock grants in the company. The announcement comes after Walmart also made the decision to raise managers’ salaries and introduce a new bonus structure that will allow store managers to earn up to 200% of their salary in annual bonuses. 

How Much Will Walmart Managers Earn? 

The company announced that starting from its 2024 fiscal year, which begins in February, the average store manager’s salary will go up from $117,000 to $128,000. The new salary range will be between $90,000 and $170,000, which raises the starting salary substantially from the previous $65,000 benchmark. In addition, Walmart will do a 3-for-1 stock split at the end of February—something it hasn’t done since 1999.

Where things get truly lucrative is in the new bonus structure and the latest decision to give employees in some categories company stock grants. Under the new policy, managers can earn up to $404,000 per year in total if they get the performance-based bonus on top of their salary. 

The stock grants of up to $20,000 will be issued to Walmart managers, with a vested period of three years. The total amount of the stock grant will depend on the size of the store the employee is managing. 

The full $20,000 will be given to Supercenter managers. Supercenters are the biggest Walmart stores, about 180,000 square feet in size, and require managers to oversee hundreds of employees. Managers of Neighborhood Market stores and Division 1 stores, which are smaller, will get $15,000 in stock grants. Hometown store leaders will get $10,000 in stock grants. 

The beauty of the stock grant program is that it’s essentially free stock given to an employee by the company. You don’t have to buy stock—although that is also an option at Walmart, and the company will match 15% of the employee’s purchase, up to $1,800 a year. With stock grants, the vesting period is the period the employee must remain at the company in order to be able to cash in the stock. Walmart’s managers will be given the stock in installments, one-twelfth of the total each quarter until the three-year period is up. 

So How Does This Help Budding Real Estate Investors?

The biggest stumbling block for people who want to invest in real estate is not having enough cash to invest with. Currently, BiggerPockets recommends saving $60,000 before you begin investing. 

If you were a Walmart manager, how long would it take you to get there? We know that to be able to exchange the stock grant for cash, you’d need to work at Walmart as a store manager for three years. That would get you between $10,000 and $20,000, depending on the type of store you were managing. 

The bonus money is a less reliable figure. First, 200% of your salary is the maximum bonus amount, and the bonus is performance-based. And the $400,000 total would only apply to managers earning at the top of the salary range. 

Instead, let’s take the new average Walmart manager’s salary of $128,000. Imagine that you did get the full 200% bonus for three years straight. That would give you a gross income of $1,152,000. 

But that’s before tax. On average, after tax, you can expect to take home around 75% of that amount. So, in reality, you’d get something like $864,000. How much of that you’d be able to set aside for investing will vary depending on where you live, but let’s say your living costs are close to the national average of $61,334 per year. Potentially, then, you could have a huge $680,000 to play with—and that’s before the stock grant money.

And if you didn’t get the bonus? You would only have $288,000 after tax at the end of the three years, plus the $15,000 (after tax). That’s $303,000; after subtracting your average living costs, you’d still have a very decent $119,000 to play around with. Therefore, in only three years of working as a Walmart store manager, you could have enough cash to build a real estate portfolio. 

Of course, you would likely start off on the lower end of the Walmart manager salary range, at $90,000. But once you break into that average salary territory, you could have substantial amounts of money to set aside for your investments. 

You May Be Closer to Investing Than You Think

The takeaway from this exercise is this: If you have a regular day job, you’re not necessarily locked out of the possibilities of growing your wealth through real estate investing. In fact, the vast majority of Walmart managers (75%) started out as hourly wage workers. 

And while college graduates do work at Walmart, you don’t need a degree. Sure, it may take a while to get promoted to a managerial position, but it’s not out of reach, and it doesn’t require you to go into massive amounts of college debt. 

So if you’re looking for a lucrative career that will help you generate wealth over a relatively short amount of time, working at Walmart could well be it. Or you can use the Walmart example to look for jobs at companies that similarly offer good financial incentives for staff retention, like performance-based bonuses and stock grants.

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