Richard

Andy Walden, vice president of enterprise research at Black Knight, and CNBC’s Diana Olick join ‘The Exchange’ to discuss why home prices may be on the verge of cooling off, the state of the housing market, and more.

By Solomon Thimothy, who is on a mission to help as many entrepreneurs as possible start and scale their businesses. | President of OneIMS.

In my experience, building a high-performing sales team is not that difficult, but too many leaders are making the same mistakes and skipping the foundational principles. Here are three steps that can help you increase the efficiency of your sales department and generate higher results in the long run.

1. Empower Your Team

If you put pressure on the sales department to produce results but don’t empower them, they’ll end up using “snake oil” tactics to push for the sale and never get to building trust and rapport with customers. Do this for long enough and people will not want to deal with your company anymore.

Instead, take the other route. Think about sales as the heart of any organization. What can you do to support the heart? You can eat healthy, do aerobics every day, quit smoking and manage stress better. And what would that mean for a business? Doing lead generation, running ads to give our salespeople more leads than they possibly need and setting up automation to make their life more efficient. You can also add on an operations team to qualify the leads, score them and prioritize them.

Also, remember that salespeople come in different forms. Some are super technical but not so good at closing, while others are not technical but amazing on the phone. As a leader, you have to help them overcome these barriers and close gaps. Those who are highly technical may need to be taught how to ask better questions, while those who are less tech-savvy need to learn automation.

2. Assess Their Skills

Different people have different skills and sales is definitely a skill. However, not everybody is cut out for it. Your job as a leader is to match the skills to the job.

Some people just don’t have what it takes, and there’s a way to figure it out by putting them through a personality test. First, conduct the DiSC assessment. Once you have the results, you’ll be able to more clearly see which members of your team are suitable for sales and which ones would be more effective in other roles, such as customer service. If they are great at hosting a demo but afraid to ask for a sale, they shouldn’t be in sales. Your ideal salespeople need to be confident in your solution and assertive enough to lead a conversation.

Good salespeople also should not be prospecting. If you have a top-level salesperson on your team, hire a prospector to support them. I’d personally just have them do calls. They’re going to make way more money by making five calls a day than spending five hours trying to get one meeting (and running it, too). I recommend finding two appointment setters to feed their calendar. You’ll still make more money after paying the two appointment setters than you would otherwise if you had one person do it on their own. And your star salesperson is less likely to burn out because appointment setting can be exhausting—especially if you don’t enjoy it.

3. Train Your Team

The best way to turn a good sales team into a great one is by training them. Over the years, I’ve spent a lot of time and energy not only learning about sales but also training our people. And I really want to emphasize that sales is a skill. Your B players can definitely become A+ players if you help them fill the gaps that they have right now. But you also need to be serious about it if you want to see the results. You can’t recommend a book or send them to a one-time conference and then expect that they will become significantly better at their job. The only way to do it is through constant training. I recommend finding a professional sales trainer and putting your team on an ongoing, well-structured weekly program with role-playing exercises that give participants a chance to practice overcoming objections.

Implement these three tips to start seeing your team grow in their knowledge and skills. I think you’ll find your team will become more efficient and you’ll be more likely to meet your revenue targets.

Dave:
Welcome to On the Market. I’m your host, Dave Meyer, joined by the birthday boy, James Dainard, turning 40 years old today, in podcasting anyway. Thank you for joining us on your birthday.

James:
You know what? I wouldn’t rather be anywhere else.

Dave:
I think you’re lying, but I appreciate you saying that anyway. But how are you feeling? How does it feel to be 40?

James:
You know what? I’m actually feeling pretty sore, and I don’t think it’s the 40, it’s just because I had a little, I need to workout and just get after it this week. And I’ve definitely overdone it.

Dave:
I mean, you have more energy than most people I’ve ever met, so I don’t think 40 is slowing you down at all.

James:
No, not going to let it do a thing. Just keep growing.

Dave:
Well, James, we have an awesome show today. We brought in a couple of realtors. We have Ryan Blackstone from Northwest Arkansas, friend and partner of Henry’s, and Anson Young, one of the original BiggerPockets authors, and someone I’ve known for a long time, coming to talk about what they’re learning being an agent in two pretty different markets. As an agent yourself, what did you learn from this conversation or what do you think listeners should be on the lookout for?

James:
I think the biggest thing is to not just look at each market as one, but really just look at what is working in each market. Look at price points. The rates have spooked people, they’re kind of locking up and they think they need to look elsewhere. But the common message was, no, just break it down by price points and see where the opportunities are. And transactions can keep going on in any type of market.

Dave:
Awesome. Great. Couldn’t agree more. So we’re going to take a quick break of course, but then we’ll be back with Anson, Ryan and, of course, myself and James. Today for our realtor panel, we are of course joined by James Dainard, our resident realtor on the show. James, what’s going on, man?

James:
Oh, just enjoying the big day, number 4-0.

Dave:
Yeah, happy birthday. I was thinking about making these other guys sing to you, but I think that would be too embarrassing. But we’ll just tell you happy birthday.

James:
Only if it’s the Red Robin version, that’s the only one I want.

Dave:
I don’t know the Red Robin version.

James:
You don’t know the Red Robin birthday song?

Dave:
No. I know you were a Red Robin employee of the year. Can you sing it?

James:
Why don’t we save that for BP Con?

Dave:
All right, afterwards. Well, we also have other great real estate agents with us. BiggerPockets OG, Anson Young. Anson, what’s up, man?

Anson:
Hey, Dave. How’s it going, man?

Dave:
Good. Good to have you on the show. So Anson, for those people who don’t know you, can you just tell us a little bit about yourself?

Anson:
Of course. I’ve been investing and had my license since 2006-ish. And I mainly do residential single family real estate here in Denver, Colorado. I was briefly licensed in Arizona when we were doing some REO, so I have experience on the agent side with REO, short sales, just regular retail real estate. And then also do a lot of house hackers lately, seems to be a big market segment. But I’m also a BiggerPockets author, a book called Finding and Funding Great Deals. And yeah, enjoying life out here in Denver.

Dave:
And we also have Ryan Blackstone. Ryan, is this your second time on the show, third time?

Ryan:
Second time, yeah.

Dave:
All right. Well, welcome back. For those who didn’t listen to your first episode, can you just introduce yourself please?

Ryan:
Yeah, thanks for having me on. Ryan Blackstone, we’re in Northwest Arkansas. And we do residential, small multi, storage units and large multifamily. So, have fun on that.

Dave:
Nice, that’s great. Anson, let’s start with you, curious just a little bit about the Denver market. This is selfish because I still own property there. What’s happening in Denver?

Anson:
Yeah, man. Denver is nice because it acts like the coasts. And so when trouble comes around, we typically can weather the storm a lot better than the Sun Belt and the Southeast and areas like that, Rust Belt for sure. So yeah, looking at all the stats and everything, it’s still a seller’s market. It’s not strong, strong, but it’s still sellers market. Prices are still up year over year from this time last year. We only have six weeks of inventory, and inventory basically cures all problems, it feels like. As long as you have low inventory, it feels like things chug along no matter what. And yeah, we had a little bit of a dip in the beginning of the year, probably due to interest rates and other things. But yeah, this summer has been chugging along. And our days on market’s lower, and our prices are up even though we still have some price reductions and stuff. But overall, it still feels pretty normal and pretty the same stuff we’ve seen for the last three years. Inventory’s low, things are still selling and yeah, overall good.

James:
Anson, Denver’s market, I think it is funny, I’ve been tracking the market because it’s very similar to Seattle’s. We’ve been seeing the same kind of trend where it kind of came down, it bounced back up. Are you seeing the seesaw market, though, that we’re seeing, like every two weeks it goes up and then it comes back down? It’s like this constant up and down. And not big swings, but more just transactions wise. Are you seeing that in your guys’ local market right now?

Anson:
I don’t know about every two weeks. I think that’d be kind of hard to track. But I think it definitely does this weird thing. Obviously we’re seasonal, I’m sure Seattle is seasonal as well. Winter time’s a little slower than summer and all that. I think overall it’s been pretty strong. But there are fluctuations for sure where it feels like there’s less listings in the last couple of weeks, and then it’ll pop and then it’ll go back down. So yeah, for sure.

Dave:
What about you, Ryan? And just so everyone knows, Ryan and Henry Washington, who you all know, work together. But from what we hear from Henry, everything’s always perfect in Northwest Arkansas, and it’s just a magical place where real estate works all the time. Is that what you see as well?

Ryan:
Yeah, I think it’s the same thing that Henry’s been saying. So you guys need to invest here. But for real, I think for us it’s the same as what Anson was saying. It feels like we were climbing this mountain. And then when we got to the peak, which was like third quarter, fourth quarter, we kind of just have been on this plateau. It’s not going up. I mean, it’s going up slightly, it’s not going down. We’re just plateaued in some regard. The big change from 2022 to 2023 is seasonality came back. So typically, Q4, Q1 operates 20% less than Q2 and Q3. And so we have seen that, but that’s just signs of a normal, healthy market.

Dave:
And are all asset classes, all price ranges following the same pattern?

Ryan:
That’s a good question. No, that is not true. Small multifamily is just going nuts. I would say small multifamily is way harder than just normal single family residential. And that’s partly because, with the higher interest rates, a bigger buyer pool now is people who are wanting to house hack, where they buy a duplex, live in one side and rent out the other side. So now, small multifamily just runs and operates on retail market prices instead of any kind of cashflow price, from what we are seeing.
The other interesting thing for us is our rent rates are still double digits, like 18% increase in rents. And what I’ve heard or learned is we are so deregulated on our rent rates that, honestly, we don’t increase our rents because we don’t have to. If I needed to, to sell a property, I can double my rent rate and there’s no problem. Whereas, I heard in other big metropolitan areas where it’s highly regulated, you kind of have to keep rent increases, otherwise you miss out. And then office space I would say may be struggling, we’re not really filling that. But warehouse space, storage space is skyrocketing still. So that’s what we’re feeling.

James:
So Henry’s not painting a picture, Dave. It really is just a magical real estate bubble. Ryan, on these small multi-families, that actually kind of caught me a little bit by surprise, because I know the multifamily market has slowed down because our investor rates are terrible, it’s hard to cashflow deals. And you mentioned that now, and those investors were acquiring all these properties for two, three years, you couldn’t really get them as a house hack, owner occupied. And I know Anson also mentioned the same thing with the house hacking. Are you guys seeing that more in your local market where the affordability as people are just going to a new strategy to buy, they’re essentially paying for the rate increase and, by renting out, subsidizing their mortgage and then going towards the multifamily. Is that majority of the transactions going on, and where people are really focused on to get their monthly cost down?

Ryan:
What I’m seeing as far as buyers in the market, period, is you need to either have cash or cash equivalent. And if you’re needing to be in specific locations, you are looking to house hack and you’re totally cool with that, right? Or it’s like, how can I live in this or sustain in this property for the next five or 10 years? They don’t think they’re going to rotate out in a quick timeframe. And so the way to get your payments down, because the interest rates are high, is to offset with rentals.
Now, like Anson was saying, the biggest problem is still supply. We have 10 to 12 new households move in to Northwest Arkansas each day, and we aren’t even coming close to building that much. And in fact, builder permits have dropped even more. So again, yes, it’s harder for buyers and maybe the amount of buyer pool has dropped, but so has the seller pool and listings and new builds. And with multifamily, there’s not much multifamily being built. So I’m not seeing a ton of multifamily transactions. I’d probably see more if there was more supply. There’s just not enough supply out there. And the only big multifamily that is being built is a hundred plus apartment complexes.

Dave:
So Anson, everything’s perfect in Denver too, right?

Anson:
Oh yeah, for sure.

Dave:
Everything cash flows. You just throw a dart at a dartboard?

Anson:
That’s how I invest. I need that astrologer’s phone number. No. So kind of like Ryan was saying, I would say the majority of our transactions are just basic mom and pop, need to move before school starts, just pretty typical transactions. The house hacking pool are people who either want to get into investing but they want to stay local. So this is kind of the only way that they can do it in Denver. They’re not going to buy a duplex over in Edgewater or something and then spend $600,000 to do that and not really cashflow. They’re looking at that value play of house hacking their own property.
So yeah, I would say the majority of our transactions are pretty normal, conventional loans, all of that. And so there’s different market segments doing different things. But when your median house prices are like $600,000 or $700,000 and that’s kind of just your average price these days, people still need to move. Kind of like Ryan said, we have a lot of influx of new people, something like 50,000 a year coming to Denver, and we don’t have anywhere near that many units being built or inventory. I think we have like 5,000 that get listed every month and then 4,997 of them sell. So it’s like, we’re super low inventory and it causes a bunch of crunches in a bunch of different areas.

Dave:
Are you seeing any sort of, Anson, concessions anymore? I feel like last year we were seeing a lot of concessions. Is that still happening?

Anson:
It is a little bit. We’re not in that seller holds all the cards. They hold most of the cards, but not all of them. So they know that they have to budge a little bit here and there. There are, I think, your kind of below median house price homes in a good school district, the seller holds all the cards. It is going to list, it’s going to be gone in four days, there’s going to be multiple offers. There’s no reason to give any concessions.
In the condo market, and then also in that normal median house price, for some reason, is the one that’s a little bit slower right now. In those two markets, there’s going to be a little bit more concessions given than just that all day long below median house price houses that just fly off the shelf. So not a ton, and definitely not as many as the winter time, but they’re still definitely happening. I just had a listing where we had to give up 5,000 on concessions on a condo, but that’s pretty normal because condos aren’t selling nearly as quick, and way less showings and all of that. So just depends.

Ryan:
Yeah. What we see in our market for concessions is it is coming back. But what’s very interesting to me is right now if you took the city and you made it a bull’s eye, there was a lot of new build new construction on the ancillary markets, the outside rim. And the new builders are offering 10% in concessions. So they’re trying to pay closing costs, pay down points, offer upgrades because what happened is when everyone could work remote, they’re like, okay, it doesn’t matter where I live, I’ll go more outside of town. I love the country, heehaw. And then what happened was those prices went up, but now it’s unaffordable because now, you need to come back into work. So the amount you have to pay for gas and living far away has changed. Now, new build in the city is still going crazy and there’s no concessions there.

James:
You guys made a couple really good points. And as investors, we’re always tracking markets and cities and going, “This market’s doing really well.” But as you’re investing in today’s market with that high cost of capital, with a little bit riskier market that’s going on right now, you have to micro cut them down. And that’s what we’re having to do in Seattle too, is the upper echelon, the luxury pricing has compressed about 10%, and they’re still having to offer concessions because it is just expensive, and the amount of people that can afford those higher end markets. I know, Anson, we have very similar median home pricing. The luxury new constructions are like 3 million to 5 million in our market, that’s not trading at all.
But then your core, right around median home price homes, if they’re in a nice neighborhood, that are cleaned up nice, people are buying those and they’re selling for over list. The two asset classes that we’re seeing the most amount of deflation in, and concessions, are either the super high-end luxury or the massive fixers. Those are getting discounted dramatically too. But the rest of the market’s kind of just chugging along. People are going, Hey, we need the housing. They don’t have a choice at this point. They need the home. They want to get into a property. They have to make it pencil.
And I know in our local market, builders are the ones offering the concessions, not the flippers. The flippers are still moving their deals. The new construction guys are still getting lined up with buying their rates down, they’re getting preferred lenders and that’s helping move product. But that’s where we’re seeing this jolt back and forth on the uber expensive. The inventory’s above, if you’re double the median home price, it is sitting big time. But otherwise everything else is kind of moving forward.

Ryan:
Yeah, I would agree with that wholeheartedly. Flippers, they’re not giving concessions. And I think the big thing is, what everyone’s saying is, if it’s fresh and clean and doesn’t need repairs, the buyer’s taking it. The thing that makes it hard for that buyer is like, oh crap, it’s expensive and I have to worry about these things breaking or these things fixing as soon as I get in.
And honestly, the number one buyers that we’re really seeing is either cash or cash equivalent buyers, meaning that they already bought that first time home and then they’re upgrading up. So our average sell price is like 425 right now. If you’re at 425 or just a little bit higher, that buyer has a little bit more discretionary income so they can make it happen. But then we’re also seeing cash coming in from family members like grandparents to help the person buy the first home, or their 401K, they’re cashing out the 401K to then buy a house as well. So it’s keeping the prices up. I don’t really see that they’re putting like 25%, 35% down, but more getting to that 20%, let’s get rid of PMI, let’s get rid of FHA, VA loans and do conventional still.

Dave:
So this great is conversation about the market in general. I want to switch gears a little bit about what investors should do in your relative types of markets. So Anson, if I were a new investor moving to Denver, what would you recommend as a strategy?

Anson:
Yeah, in these high cost of living markets, you have somewhat limited options. You can’t do the crazy cashflow plays in the Midwest or anything like that. The things that I’m seeing and the things that I would do, house hack if you can. I think it’s still a great strategy here. There’s still a lot of upside and a lot of opportunities there, whether it’s like an up, down house where the basement’s split off or you split it off yourself, side-by-side duplex, there’s room by room. ADUs, we’ve opened up a lot of ADU zoning here in Denver. So accessory dwelling unit, you could build a carriage house or a garage with a two bedroom apartment over it. Those are all value add plays that make sense.
And if you’re not into house hacking and sharing your space, there are ways to maximize your cashflow here, which midterm rentals, short-term rentals and room by room rentals always underwrite your deal with long-term cashflow as your last resort. But we do have a lot of opportunities in certain areas for short-term. There’s restrictions of course in Denver, Aurora, Boulder, kind of the big areas. But there are little pockets where you can still buy for short-term rentals, and there’s no regulations. So I would keep an eye out for that.
Midterm. We have a lot of hospital complexes, really strong healthcare center for job centers here. That’s a great way to maximize your cashflow. And since it is not very affordable to live here, a lot of young professionals are opting for a room by room type arrangement where they can be in a five bedroom house, rent one of the bedrooms, and the common areas are furnished and they are saving half as much on their rent. You can go get a one bedroom for 2,000 a month, or you can rent a room in a nice house for 1,200 a month. Most of those young professionals would take that other option. And so those rentals are doing really well.
There’s even management companies that are springing up around just room by room management companies. And so there’s ways to do that that I think make a lot of sense when you can maximize your cash flow, because you can’t change your interest rate. And if you’re good at finding deals, you can do that. But if you’re just kind of a normal investor and you take what you can get from wholesale market or on the market, then working on maximizing your cashflow would be the way to go. So that’s what I would do.

Dave:
Yeah. Those are great ideas. Rent with the room, I’m always curious about this. Do you have any concept of how much more cashflow it could generate?

Anson:
So on a five bedroom, six bedroom house just north of Denver, in kind of like Westminster area, there’s some really good areas there where this makes sense. It’s close to Boulder, close to Denver, just down the road from the airport on the highway. So an area like that, a five bedroom single family, if you just rent it long-term, probably rents for 3,000, 3,200, somewhere around there. That’s probably the max that you’re going to get. Whereas room by room, obviously if it’s decent, the common areas are nice, it’s been upgraded somehow in some way, you can easily get 1,200 per bedroom. And so you’re talking 1,200 times five versus the 3,200 a month. So there’s almost, it’s not quite 2X, but there’s a significant boost in that income that makes it worthwhile for sure.

Dave:
Wow. That is very significant.

James:
I have found the same, that renting by the room will get you a lot more money for your property, but it also brings you a lot more problems, at least I’ve dealt with. I remember last year I got a call. I had brought a property up for rent for 3,500 bucks. And this group of five approached me and said, “Hey, we’ll pay you by the room. Can we do this?” And I was like, “As long as it’s on one master lease, I’m not doing individual leases.” And I was a little worried about it, but the cashflow was so much better. And then sure enough, 90 days later I get messages from all these tenants, like, “The fifth tenant is walking around naked all the time.” And I’m like, “This is not my problem. You guys redid one master lease. If you want to remove them, that’s fine.” But it is a great way to get into the market. And it comes down to, as an investor, sometimes you’ve got to deal with some grief to get into the game.

Dave:
Oh, totally. Yeah.

James:
When we were flipping in 2008, it wasn’t easy to get in, but we had to do what we had to do. And so it comes with the problems, but sometimes it comes with what the scenario is.

Ryan:
So is the suggestion to buy in Denver, house hack it and be okay with that naked man for a year and then we’ll be golden? That’s awesome.

James:
Yes, yes. That’s the strategy.

Dave:
No, but I agree with that general sentiment, James, it is so true that it’s not 2010. You can’t just buy anything and make it easy. That doesn’t mean there’s no options, but you’re going to have to do a little bit of work, whether it’s doing a reno, a value add, that’s work, in the same way that’s additional headache, in the same way that rent by the room is an additional headache. But we talk about this all the time, real estate is not really a passive business except in some extreme circumstances like syndications. But really, it’s just entrepreneurship, and you just got to pick the business that you want to run. And this is an option to build a higher cash flowing business, but it is more operationally complex.

James:
And treat it as a bridge. When you’re looking at a property, if you have to rent it by the room, that’s going to give you high income or cash flow it, but then see how long you’re going to have to do that. If you do think rates are going to fall over the next 12 to 24 months, you can plug that new rate in. That’s what we’ve been doing, is plugging the 6% rate in two years. And then we’re going, okay, cashflow is good here. So it’s almost just bridging you through. And the good thing is right now you can get some good discounts on property where you can get the equity, you can get the cashflow to cover, and then once rates fall, you can go back to a traditional rental and get rid of the headache. And so don’t always worry about the now. It’s that short-term pain, long-term gain. You just kind of got to grind it through at this point.

Dave:
All right. Ryan, what about you in Northwest Arkansas? What would you recommend for investors if they were new to the area and they wanted to get into the market? Best possible options for them?

Ryan:
So I always say the number one winner is always, if you’re going to be proactive in finding your own off-market deals, that’s surefire number one. House hacking is great as well. And I would just make a preface, I have a good buddy, Conrad Eberhard, shout out to him, he’s a lender. He was just telling me that buyers, there’s so much fear in the market right now, and so that’s reflecting in the interest rate. And then if interest rates go down to 5.5%, it’s like a trigger rate. And so what will end up happening is everything will go gangbusters again and prices will start soaring. And so if that is happening, then anything buying right now is still good, even though it’s hard. I would still say it’s good to buy.
My big thing is, as long as you can make the payments and then you don’t have to sell, then you’re never losing in real estate. So yeah, I would say off market. I would say house hacking. And then midterm is great. We still have not much regulation on any short-term rentals. And then flipping or building still is great. But when you’re not whole-tailing, you’re flipping it. You’re making it amazing.

Dave:
Nice. Have margins changed at all over the last couple of years?

Ryan:
Yeah. I mean, Henry has to do work to make 75,000 now per flip.

Dave:
Poor guy.

Ryan:
I know. I can’t just list it and be like, “Hey, that critter comes with the house. They got a lease on it.”

Dave:
That’s why we’re giving him the day off. He’s at the spa just relaxing.

James:
But that’s a good point. If you want to put in the work, the margins are there. It’s like, go after the ones that you have to put in work, and the margins have doubled, at least what we’ve seen across the West Coast. But Ryan said, you got to put in the work. This is a full on business, you’re not going to get lucky with the rates anymore.

Ryan:
It’s interesting. Typically, I would say our smaller market, which I still think we’re a big market, but whatever. You guys are like a crystal ball, which is great for me. So whenever I see the bigger markets take a dip or go up or whatever, I’m like, okay, that’s what I get to look forward to in six months. Yay. But it’s weird. It’s kind of still the same, right? That’s what I’m hearing, right?

James:
Yeah. I think so. At least that’s what we’re seeing on a national level in most of these big markets.

Dave:
So Ryan, I don’t know, are you an investor yourself as well?

Ryan:
Yes.

Dave:
Do you have any recent deals you can tell us about?

Ryan:
I’m honestly putting too much money into our office renovation, and that’s still going and struggle busting. But we just bought some storage unit facilities down in the capital of Arkansas, Little Rock. So that’s been good. And then flipping a deal here or there. So my main focus has been growing my team on the sales side of things and taking care of that office.

Dave:
Yeah. How long have you been doing the office, just out of curiosity?

Ryan:
Oh my goodness.

Dave:
You don’t want to say?

Ryan:
April of last year, I think I bought it, and just keep dumping money into it. So we did sell two storage unit facilities in Kansas City and got some money there to put into the office.

Dave:
Nice. Well, when James and I move to Northwest Arkansas, we’ll lease some space from you.

Ryan:
There you go. Yeah, it’s a coworking space. Henry’s there, I’m there, other investors.

Dave:
Well, the whole On the Market team, it’ll be great.

James:
Henry always puts a bow on that market. I’m really interested in going to visit it.

Dave:
Yeah, it’d be fun.

Ryan:
I’ll take you around. The only thing, James, is you have to fly to your boat. Sorry, man.

Dave:
What about you, Anson? What deals are you up to these days?

Anson:
Yeah, so for the past year and a half, two years, I’ve been focused mainly out of state. The grass is somewhat greener in some respects. I think competition really kind of drove me a little bit outside of Denver to go into the Midwest. And so our deals, what they look like now is BRRRR deals in Ohio and Nebraska. And then also we’ll wholesale or we’ll flip deals that just don’t meet our criteria, mainly wholesale them just to recoup some marketing money and go back at it. But that’s been my main focus, is cashflow. And so, finally getting on the smart bus and going that route.

Dave:
Well, yeah. Is it just a balance? Do you still own properties in Denver?

Anson:
I haven’t been much of a buy and hold investor here. I’ve been mainly just wholesaling and flipping in Denver my whole career.

Dave:
Okay. Yeah.

Anson:
So I don’t really have much here. Everything is out of state these days.

Dave:
But yeah, I guess you’re still kind of achieving that balance. You get your hits of income in Denver from flipping or wholesaling with your agent business?

Anson:
Agent stuff. Yep, exactly.

Dave:
And then getting the passive stuff externally. Yeah, makes sense.

Anson:
Exactly. Yeah.

James:
Yeah. Anson, have you switched the markets in the Midwest? So as you’re starting buying in other markets or you keep your rentals, with the rates changing, have you switched all that up and forecast in? Buying rentals in different states, I’m more of a backyard investor, but it’s always been interesting, but it’s hard, right? You got to renovate them, you got to target the right market. Are you buying in different markets now than you were 18 months ago because of just rates and the cashflow positions?

Anson:
No. Because once you’ve kind of built up teams and marketing and everything else and kind of pushed that snowball downhill, there would have to be something more catastrophic than just a couple of points in a rate increase to have to shift that hard, to take a huge right turn into a different market. So we’re still in the same exact markets that we were, we’re investing in the people on the ground and the market itself and still making it work through trying to buy as low as possible, trying to maximize the cashflow on the other end. And like you said, James, if the interest rate comes down to six in two years, then we’re golden for that. And in the meantime, we can still pencil deals now. And so we’re just focused on that. And so we haven’t had to shift too hard. We’ve probably pulled back in expanding into a couple of markets. But in hindsight, we probably should have just gone full bore into one or two other markets as well.

James:
Arkansas.

Dave:
Arkansas.

Anson:
I don’t know. Between James and Dave, it’s too much competition there.

James:
Nah.

Dave:
No. We’re going to all do it together.

James:
Yeah, and I love that because what Anson just said is he built good systems over the last three to five years in different markets. And no matter what’s going on, you’re still buying the same type of deal flow. You’re just kind of adjusting your mindset behind that. I know in Seattle we’ve had to do the same thing. It’s like, we don’t really care what’s going on, we’re just buying. We’re going to be always be buying. And you just have to tweak your systems. And if you have that set up correctly, you just have to more tweak it rather than rebuild. And for us, we’ve been buying a lot of value add and getting a lot bigger deals done because that’s just what’s available right now. And as long as you have those good systems, you can make your pivots. And every market still has an opportunity. It doesn’t need to be an affordable market. It can be an expensive market, they all have opportunities. You just got to switch on how you’re looking at them right now.

Dave:
That’s a good way to wrap it up, James. I think you just put a bow on this entire episode. So let’s get out of here. Anson, for people who want to learn more about you, obviously they have your book. You can find it in the BiggerPockets bookstore, which is biggerpockets.com/store. Where else can people interact with you, get to know more about you?

Anson:
If you want to connect with me on BiggerPockets, just search my name there, I’ll pop up. On Instagram, @younganson. And that’s me.

Dave:
All right. And Ryan, what about you?

Ryan:
Yeah, same. BiggerPockets, you can find me there, just type in my name. Or YouTube, we got a channel called Blackstone and Co. We’re starting to throw stuff on there. And then Instagram, I’m not on as much, but @ryan.blackstone12.

Dave:
All right, great. James, what about you?

James:
Probably the easiest place is Instagram @jdainflips or check me out on Jamesdainard.com.

Dave:
All right. And I am always on BiggerPockets, or you can find me on Instagram where I’m @thedatadeli. Anson and Ryan, thank you both so much for being here. Really appreciate it. Hopefully we will have you back on sometime. Tell us how your markets are shifting in a couple of months from now.

Ryan:
Sounds perfect.

Anson:
Love it. Thank you.

Dave:
On the Market is created by me, Dave Meyer and Kailyn Bennett, produced by Kailyn Bennett, editing by Joel Esparza and Onyx Media, Research by Puja Gendal, copywriting by Nate Weintraub. And a very special thanks to the entire BiggerPockets team. The content on the show On the Market are opinions only. All listeners should independently verify data points, opinions, and investment strategies.

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

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

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

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

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

Is there a shortage of capital?

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

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

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

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

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

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

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

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

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

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

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

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

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

#7. Are VCs sticking to the knitting?

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

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

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

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

.

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

MediumHow VCs and founders are riding the SPAC wave into 2021

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

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

Wealthfront BlogDemystifying Venture Capital Economics, Part 1 | Wealthfront

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

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

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

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

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

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

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

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

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

Andrew:
4,576 rejections.

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

Andrew:
That’s right.

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

Jason:
Thanks for having me, David.

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

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

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

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

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

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

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

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

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

Jason:
Oh, no way.

David:
We sell houses out there.

Jason:
That’s awesome.

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

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

David:
Yeah.

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

David:
The money.

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

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

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

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

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

David:
Good point.

Andrew:
And stress.

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

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

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

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

David:
What was your college experience like Andrew?

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

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

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

Andrew:
I have.

Jason:
You have?

Andrew:
I have organic chemistry 1 and 2.

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

David:
Did you hate geometry?

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

David:
It’s the chemistry version of geometry.

Jason:
Yeah, yeah, yeah.

Andrew:
It is. Yeah.

Jason:
I hated geometry.

David:
I’m guessing you liked geometry.

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

David:
Did you also have a terrible teacher?

Jason:
No, my teacher wasn’t bad.

David:
Oh, that’s good.

Jason:
It was on the teacher, no?

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

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

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

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

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

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

Andrew:
Now we really want to know.

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

Andrew:
Just like a Binance meetup.

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

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

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

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

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

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

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

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

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

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

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

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

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

Jason:
Yeah, still in college.

David:
Okay. So what are you doing there?

Andrew:
Failing organic chemistry?

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

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

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

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

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

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

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

Andrew:
Been there.

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

Jason:
What’s your number?

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

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

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

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

Jason:
Exactly, 100%.

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

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

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

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

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

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

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

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

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

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

Jason:
Thank you.

Andrew:
Yeah, not fun at all.

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

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

Andrew:
Finally, getting out of it. Yep.

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

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

David:
So your boys picked you up?

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

Andrew:
Still a check.

Jason:
Still a check.

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

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

David:
It’s zooming in.

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

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

David:
If you learn the skills.

Jason:
If you learn the skills.

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

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

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

Andrew:
That’s not good. Yeah.

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

Andrew:
How did you get over that fear?

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

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

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

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

Jason:
I said that?

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

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

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

David:
Yeah. Over a longer period of time.

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

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

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

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

Jason:
Horrible.

David:
Do people hate it?

Jason:
They hate it so much.

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

Jason:
Up.

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

Andrew:
Luxury?

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

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

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

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

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

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

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

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

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

David:
Was he licensed in America?

Jason:
No.

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

Jason:
He’s like a handyman.

David:
Yeah.

Andrew:
Yeah. Here you go.

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

Andrew:
Might not pass code.

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

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

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

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

Jason:
Probably does.

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

Andrew:
I wouldn’t know either, right?

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

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

David:
Awesome.

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

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

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

Andrew:
All San Diego?

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

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

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

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

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

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

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

Andrew:
David can do that.

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

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

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

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

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

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

Jason:
It’s a really good analogy.

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

Andrew:
Absolutely.

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

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

David:
That’s smart.

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

David:
Solving problems.

Jason:
Solving problems.

David:
That’s what we’re here to do.

Andrew:
That’s what you get paid for.

Jason:
Yeah.

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

Andrew:
Chemical engineer.

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

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

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

David:
That was a great show though.

Andrew:
It was a great show.

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

Andrew:
He doesn’t, he.

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

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

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

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

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

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

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

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

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

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

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

Andrew:
I like it.

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

Jason:
I am.

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

Andrew:
Yep. No chat functions here.

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

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

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

Andrew:
Yeah. There you go.

David:
You make us look good.

Andrew:
You make us look good.

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

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

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

1. Open Lines Of Communication

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

2. Involve The Entire Team In The Transition

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

3. Avoid Creating More Change

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

4. Outline And Communicate An Action Plan

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

5. Provide Access To Support

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

6. Onboard Someone Who Can Navigate Change

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

7. Prioritize Transparency

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

8. Facilitate A Smooth Transfer Of Knowledge

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

9. Step In To Help Temporarily

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

Ashley:
This is Real Estate Rookie episode 317.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mackenzie:
Oh, absolutely.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mackenzie:
I know that was a lot.

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

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

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

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

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

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

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

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

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

Mackenzie:
Absolutely.

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

Mackenzie:
100%, yeah, completely agree.

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

Mackenzie:
I’m so ready. Let’s go.

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

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

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

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

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

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

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

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

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

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

Mackenzie:
Thank you so much for having me.

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

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

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

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