Richard

By Su Guillory

The idea of showing up at the office every day is quickly going the way of the dodo, thanks to a certain pandemic that shall not be named.

The benefit? Those free-spirited folk out there now have more opportunities to work and live abroad.

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If you’ve been fantasizing about pecking away on your laptop on a tropical beach somewhere in the world, that might not be such an unattainable dream these days.

The rise of the digital nomad visa

Countries around the world, especially those that can benefit from a little extra revenue, are starting to offer what’s called a digital nomad visa. With this visa, an individual who works remotely can stay in a country temporarily. Generally, with a digital nomad visa, you can’t engage in business activities in the country you’re living in. You may be able to renew the visa if you meet certain qualifications.

Portugal is one of the most well-known countries to offer a digital nomad visa, but it’s far from the only one. Other countries in Europe that offer them include Georgia, Croatia, and Iceland. In other parts of the world, you can find digital nomad visas in Grenada, Panama, Dubai, Sri Lanka, and more.

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Sometimes the visas are actually referred to as a “digital nomad visa.” Sometimes they’re called other things but amount to the same.

The self-employed expat

This is the category I fit into. I have a remote content writing and expat coaching business, and I live in Italy. I am here on a self-employed visa.

A major difference between the digital nomad visa (which isn’t currently available in Italy, though legislation has been passed approving it) and a self-employment visa is that the latter allows expats to participate in business activities in their new country…and they have to pay taxes there.

The self-employed expat more than likely plans to stay put in her new home rather than flitting about from one digital nomad-friendly country to another every few months. Also, with the self-employed visa, you don’t have to work online, though in many countries, if you can make money from your home country, you’re better off, as it can be difficult to find a job in another country due to job availability, qualifications, and language barriers.

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More differences between the two

Another difference between a digital nomad and a self-employed expat is that a digital nomad isn’t necessarily self-employed. If your employer is willing for you to work in another country, you can be a digital nomad as an employee.

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Self-employed expats must register their businesses in their new country. This may involve getting some sort of business identity number (in Italy, it’s called a Partita IVA) so they can report revenues and file taxes in their local country as well as back home. (My advice? Find an accountant as soon as you settle in so you understand what kind of reporting and invoicing you need to do to be compliant come tax time.)

Typically, digital nomads only pay income tax back in their country of origin. Self-employed expats, however, may be required to pay in both countries. Tax laws are murky between borders, so I won’t try to go too deep here. But as an example: there is an agreement between Italy and the United States that says I will pay self-employment taxes in the U.S. as well as taxes in Italy, but my U.S. taxes will be reduced by the amount I paid in Italy (I think I got that right. I haven’t yet filed taxes!). I will continue to pay Social Security in the United States, though I did have the option to pay the equivalent here in Italy.

The ease of getting either type of visa will vary, depending on the country, how many people are applying, and whether there is a quota or not. I was told that the self-employment visa was very difficult to get in Italy because there is an annual quota for how many people they approve for it, but then I got it with no issue. Some countries that are seeing a flood of digital nomad visas may start slowing down how many applications they approve.

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Is a self-employed expat a digital nomad?

There’s a lot of hype around the term digital nomad. It’s sexy and Instagrammable. If I dive into what I consider the ethos of the term, I see a digital nomad as a twentysomething who can work anywhere, choosing to live in Bali for three months, then hop over to India, then Panama, etcetera. Obviously, that’s stereotyping, as digital nomads can be of any age, and they don’t necessarily have to country-hop.

For me, I identify as a self-employed expat. I’m in Italy for the long haul, and I’m establishing my roots here, both business-wise and personally. I’m wading through the complexities of accounting and tax reporting because I want to make a meaningful contribution to the country I have chosen to be my home for the foreseeable future.

About the Author

Su Guillory is an expat coach and business content creator. She helps women through the transformative process of moving abroad so they can live happy, more authentic lives. Su has been published on AllBusiness, Forbes, SoFi, Lantern, Nav, and more.

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RELATED: Digital Nomads Can Be a Fit for Your Company—Here’s What You Need to Consider

Housing activity often picks up in the spring, but this year, housing affordability concerns and recession fears are impacting seasonal trends. While mortgage rates dipped enough for housing transactions and building activity to surge in February, these metrics looked sluggish for March. Many homeowners and renters are staying put, waiting out a potential recession, while those looking to move are seeking more affordable areas. 

As of January, almost 30% of all work was performed out of people’s homes, a six-fold increase from before the pandemic. In busy urban areas, the share is even higher. The availability of work-from-home positions coupled with sky-high prices in the busiest metros is causing people to move further away than ever before. They’re choosing smaller communities with more affordable home prices and a lower cost of living to combat budgetary pressures while also aiming for desirable locations with booming economies that haven’t yet grown too crowded with transplants. 

The quarterly Wall Street Journal/Realtor.com Emerging Housing Markets Index, released in April, indicates the most popular cities that are drawing new homebuyers in droves. It’s based on supply and demand, affordability, median days-on-the-market, and several indicators of economic health and quality of life, such as appealing amenities and plenty of jobs that pay good salaries. None of the emerging markets identified by the index are located in the West, the region most notorious for high housing prices. Instead, they’re in smaller metros where first-time homebuyers can afford local home prices with local wages. 

For example, Lafayette, Indiana, tops the list with a median list price of about two-thirds of the national median price in March. A major manufacturing hub and college town, the city has proximity to both Indianapolis and Chicago. 18 of the 20 emerging markets had median list prices below the national median—the exceptions were Manchester, New Hampshire, which is considered one of the hottest housing markets in the country right now, and Knoxville, Tennessee, which is highly ranked in the U.S. News list of Best Places to Live. In both Manchester and Knoxville, rents are rising rapidly as well. 

The Top 20 Up-and-Coming Real Estate Markets

These are the top markets that are attracting home buyers in the spring of 2023, according to the Emerging Housing Markets Index, along with their March 2023 median listing price, population, and unemployment rate. 

The Bottom Line for Investors

For investors, this list of emerging markets is worth keeping an eye on since an influx of home buyers in an area can lead to rising home prices and rents. Furthermore, most of these cities are still more affordable than the national median home listing price, providing newbies with an opportunity to break into real estate investing while giving seasoned investors a chance to buy with more money down. 

However, the rising popularity of these markets won’t necessarily shield them from price downturns in the event of a severe recession. And, as always, it’s important to crunch the numbers on individual deals to ensure you’ll get the kind of cash flow you’re looking for. Still, this list may provide a starting point for your research, especially if you’re taking an interest in the Southern and Midwestern regions of the United States. 

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

In an economic climate characterized by staggering inflation rates, strategic business spending has become more important than ever. An inflated price tag in one area could restrict funding in another, limiting your organization’s potential to achieve advantages, discover efficiencies, and create new product or service lines.

Unfortunately, many leaders struggle to prioritize spending effectively. Why? For one, it can be difficult to put together a budget when so many departments, initiatives, and projects need support. It’s not always clear what the most important line items are. Even if you are sure, it can be challenging to articulate the reasoning behind your financial decisions.

Still, none of these challenges take away from the simple fact that you must develop a budget, sell it, and defend it. If you can’t clearly explain the rationale behind a line item, the company could miss out on growth opportunities.

How to develop, sell, and defend a budget

Budgeting is an ongoing process. It’s necessary to continuously revisit the numbers and defend each change. Fortunately, it’s entirely feasible to make smarter spending decisions. You just need to know how to do these three things:

1. Develop a budget.

To prioritize spending, you need to account for numerous factors. Because these factors multiply as your organization grows, it can become easy to lose your handle on its finances. For this reason, a single source of truth quickly becomes a necessity if you ever hope to control your company’s cash flow. The last thing you want is for the “squeaky wheel” to receive the bulk of available funding regardless of its actual needs.

Take facilities management as an example. Low-quality or badly organized data can lead to disastrous budgeting decisions. “When an organization does not know what it has, it is often due to poor data on its overall facilities portfolio, including outdated, incorrect, or missing information,” explains Michael Nichols, PMP, executive vice president of R&K Solutions. “Facilities are made up of complex systems and components, and without good data, it becomes difficult to track information in a consistent manner that can be related to cost estimation data.” When the cost of sustaining day-to-day facility operations consumes so much of your time and money, the prioritization of future capital investments can quickly fall by the wayside.

If you have the means to track and organize financial data, you can quickly pull that information together to analyze costs in relation to your goals. Once you’ve done that, it’s all a matter of working with the numbers. Trimming the fat, so to speak, can do wonders for your bottom line. It also allows you to run through a few worst-case scenarios that can help you build some much-needed slack into the budget.

2. Sell a budget.

Ultimately, you’ll need to sell your budget to stakeholders in order to get buy-in. How? Selling a budget based on economic data, for example, can be a good move. Research economic indicators such as inflation and unemployment to see how they could impact your business. Then, bring to the table your support, such as financial projections, trend analysis, and industry-standard benchmarks.

Using growth projections can also be persuasive. After all, the best budgets will support company growth objectives. Start by identifying areas that have the most potential for growth. Perhaps it’s new product lines or increases in existing customer sales. Maybe expanding into new markets makes the most sense. Once you’ve identified some growth opportunities, set realistic targets for each one and provide evidence of their potential return.

You could also use company values as another potential avenue for selling a budget. To start, review your company’s mission statement, vision, and other guiding principles. Look for ways to tie the proposal to those values. If, for example, sustainability is a core part of your business, highlight how the budget includes investments in environmentally friendly technology or initiatives to reduce waste. Use concrete examples to show how specific budgetary line items align with company values and provide long-term benefits. Vagueness is rarely compelling.

3. Defend a budget.

Much like developing and selling a budget, defending a budget will depend largely on data. What is the data telling you? More importantly, what is it telling you about the likeliest future? Descriptive analytics are important—they can help inform decisions around the budget, after all. But it’s often necessary to focus on the predictive side of analytics to defend your proposal.

“This is the stage where an organization should answer, ‘What does the data say?’ That said, it should do so with a distinctly forward-looking mindset,” writes Kevin Troyanos, head of analytics at Publicis Health. “At this stage of the process, an organization should take little interest in evaluating—and even less in justifying—past decisions. The totality of its interest should rest with how its data can inform its understanding of what is likely to happen in the future.”

Naturally, there will be some uncertainty involved, but eliminating the most unlikely scenarios can put you in a much better position when it comes to planning. It also puts you in a much better position to defend the budget if someone comes back and requests cuts to other areas. You will have already worked out the impact on business, and you can explain why such a cut could erode your market position, damage customer experience, or limit cost savings in the future.

Prioritizing business spending is an essential aspect of effective financial management. When you pay extra attention to the budget, you ensure that your business’s financial resources are being used effectively and efficiently.

David:
This is the BiggerPockets podcast show 765. We’re going to do this as low risk as possible. I want you to look for a short-term rental where people want to visit. I want you to rent the thing out as a short-term rental when you’re not using it and then when you are using it, like when you travel out there to stay at that property, which means you’re going to cash flow, you’ll probably end up with two cash flowing properties that will make more money than they both cost to own and you’ll be able to bounce back and forth between these two markets not only not having a housing expense, but actually making money from what you rent your houses out when you’re not using them. What’s going on, everyone? It’s the BiggerPockets podcast. I’m David Greene and we have a Seeing Greene episode for you. These are awesome. In today’s show, I’m going to be taking questions directly from you, our listenership, our audience, the people, and you’ll be connecting with me as I give my best efforts at answering your questions, teaching you more about real estate and helping you all to build wealth.

David:
Today’s show was a blast. Not only was it hilarious, but we also give a lot of good information. We talk about what age you should say yes to everything at and when you should start saying no, how to choose a career path, if you should continue to pour money into a home or when you should call it quits, how do you know when enough is enough, and how to short-term rental house hack and grow your portfolio. Yes, that’s right, how to short-term rental house hack. Haven’t come up with a catchy name for that, but it’s a really cool strategy and we talk about it today. All that and more in today’s Seeing Greene episode. But before we get to our first question, that’s right, you know what it is, the quick dip. Remember, if you’re having a hard time finding deals in your area, if nothing seems like they work out, it’s probably because they’re not going to work out the way you’re looking at it. There are strategies available to you that you can make real estate work and you also should remember that real estate is local.

David:
Your market may suck. Other markets may be strong or vice versa. Get in the BiggerPockets forums. Check out long distance real estate investing, which you can get at biggerpockets.com/store and ask other people questions about what markets they’re in and how those markets are working out. Don’t get discouraged because your market is tough. Look for a market where you can find what you need. All right, let’s get to our first question of the day.

Sinh:
Hi, David. My name is Sinh. I’m in California and I’m a first time investor/homebuyer and I’m stuck between the crossroads. My first option is to purchase a condo at 3% down in Covina, California and house hack a three-bedroom, four-bath condo. It’s in a desirable location and it’s very walkable and I believe it will appreciate just as well as the rest of California. My second option is to go for cash flow by going to an out-of-state market with 20% down. Why I’m stuck on this is because Covina is a great location and I love it and I love the condo, however, the 3% will still be a larger chunk of my savings and the mortgage payment will be a larger chunk, obviously, of my income than going out of state. So to me it seems riskier, especially if I can’t find anyone to house hack with. I would love your thoughts as to what you would do and any advice for choosing appreciation versus cash flow. Thanks, David.

David:
Well, thank you . All right, first off, a three-bedroom, four-bathroom condo, this might be the first time I’ve heard of one of those, so this would have to be a good location because it sounds like this property has a bathroom for every bedroom. They get their own private bathroom and a guest bathroom. That’s pretty ideal for house hacking, so I’m already liking that. That’s not like most condos that I’ve heard of and Covina is a great area. We sell houses in that location and I’m aware of it. I don’t know if you’re working with one of our agents, so I’ll have to look and see into that, but that sounds pretty good. Now, one of the struggles you were having, as you said, it’s more money to put 3% down in Covina than it would be to buy a property out of state for cash flow. I’m trying to wrap my head around how this could work. If this was a million dollar condo, 3% would be $30,000, but if you buy a $200,000 house somewhere, 20% of that is still going to be $40,000.

David:
$150,000 house out of state would still be 30 grand. You’re comparing a million dollar property to $150,000 out-of-state property for the same money down. I don’t see how buying out of state is going to keep more of your money for yourself. That’s just something I want you to think about. Maybe the purchase price of that condo has you thinking that you’re putting more money down than you are. If you’re only putting 3% down, that’s very, very low and I doubt it’s a million dollar condo. So right off the bat, you’re not saving money by buying out of state and a lot of people need to be aware of that.

David:
They see that the price of the property is cheaper out of state, and so they think, oh, that’s going to save me capital, but it doesn’t because you put 20%, 25% down versus 3% to 5% down on a house hack. You keep more capital yourself. The other one was appreciation versus cash flow. I don’t know that that’s actually the struggle you’re going to be having. I don’t think that it’s going to cash flow out of state as well as you think because if you’re buying $150,000 property or $200,000 property, you’re going to end up in a rough location. You’re going to end up with lots of tenant issues. You’re going to have vacancies. You’re going to have people that have to be evicted. You’re going to have constant repainting and re-carpeting of your units or cleaning the floors when they leave. There’s a lot of expenses associated with buying in these less desirable neighborhoods that no one calculates on their spreadsheet that don’t happen as often when you go into a nicer area.

David:
So if you’re renting out a room in an area like you’re saying here, you’re more likely to get a better tenant and it’s easier to get them out. It’s not like you’ve lost control of the entire property. They’re just renting the room from you. They’re not renting the entire home. If they try to trash the house, you’re there to see it. It doesn’t get out of hand to where you go in and you have one of those, oh, my goodness moments that I’ve had many times where you see what the tenant actually did to your property. So everything I’m hearing right now is leaning towards Covina, but not because of appreciation versus cash flow, because of cash flow versus cash flow. I think you’re going to cash flow much better with this Covina property.

David:
The last piece I want to bring in is don’t be lured and fooled by the year one cash flow illusion. It’s not true. It may look like something out of state will cash flow more, but an area like Covina is going to see rent increases that are significant. I remember maybe seven years ago, eight years ago, you could rent a room in some of the places in the Bay Area for $500, $600 a room that are now going for $1,100, $1,200, $1,300 a room. Over just a seven or eight-year period, they have doubled to tripled. That didn’t happen in these out-of-state Midwest areas. The rents back then were 900 and now they’re 950 or 975. It’s not the same. So you get much more cash flow when you buy in the right area because cash flow also appreciates, not just values. So based on what I’m hearing right now, I do think that the condo is better.

David:
Here’s a few things that I would look out for though. Does that condo have enough parking for the people you’re going to rent a room to? That’s one thing. They’re all going to get their own bathroom, so you could probably be a lot pickier about who you let in there and you can get more per unit because they’re not sharing a bathroom. That’s really, really big and helpful there. But make sure you have enough parking. I don’t think it’ll be hard to find tenants at all, especially for an area like that. That’s a really good opportunity. You might even be able to rent out a couch or a futon in the front room and get even more money. I’ve seen with high desirable areas where rent’s really high, people will be willing to do things you would be surprised to save on their rent, especially if they’re a hard worker and they’re not home a lot.

David:
Then make sure that the HOA allows for what you’re going to be doing. If it doesn’t, just look for the same opportunity not in a condo. Just look for a home in a great location and see if you can get approved for that. But , you’re in a great position. This sounds like a really good situation to be in. Based on what you’ve told me, I’m feeling pretty bullish about this condo house hack opportunity, so good luck with that. Let us know how it goes. All right, our next question comes from Vu Tran in Los Angeles, another Californian. Hey, David. I have a three bedroom, two bathroom house that my family and I are living in. We are in the process of getting our permit to convert the garage into a 400-square foot studio to rent out. Recently we visited Dallas and we think there’s a lot of opportunities for us there and we may be moving.

David:
My question is, should we rent out the main house, use the money we have for the garage as a down payment for Dallas and then take out a HELOC to convert the garage after we get the permit or should we stay in Los Angeles, wait until the garage conversion is done, then we rent both the main house and the garage out separately and use a HELOC to put a down payment for the house in Dallas? All right, Vu, good question here. The information I didn’t get that I would need is how much money is this garage conversion going to cost? Because if this is a $30,000 project, maybe $40,000, definitely move forward with getting that conversion done. You’re going to get a very good return on that money even if it’s more. If this is going to be $100,000, $120,000 conversion, the return might not be as good as if you put that money on a property in Dallas. So that’s something that I would need to give you some better advice here.

David:
I’m assuming that the garage conversion is going to be done at a good price, which means you’re probably going to get a better bang for your buck. Here’s how I would look at it. Let’s say that you pay 50 grand to convert the garage, but you can rent out the studio for $1,500 a month. That’s a 3% rule deal on that money that you’re putting into it. You’re putting in 50 grand. That’s $1,500 a month. Because there won’t be any additional mortgage on that, let’s run some quick numbers here. So $1,500 a month times 12 is $18,000 a year. You’re not taking on any additional property taxes or insurance it sounds like. So if you take just the 50 grand that you’d be putting into it and divide the 18,000 a year by that, that’s a 36% return on your money. You’ve also made the property worth more because you added 400 square feet. I’m seeing a lot of wins in that category. I don’t see you getting a 36% return investing 50 grand into something in Dallas. So I’m leaning towards you should do the conversion, get the permits.

David:
When you’re done, you should get the HELOC on the property. That should be worth more because it’s bigger, so you’re going to get a new appraisal and you’ll have that money to go towards buying something in the new market that you’re at. If I missed anything there, let me know and if I’m off on the numbers, because they definitely change if that conversion is costing $100,000, $120,000, $150,000 instead of the 50 that I budgeted for. Our next video comes from Luke O’Kane in Illinois.

Luke:
Hey there, David. First off, I want to give a big thanks to you for instilling this passion I now have for real estate. My name is Luke and I’m a 17-year old in Schaumburg, Illinois and I’m sort of at a crossroads in my life right now as I will be graduating high school in a little over a year and I’m unsure of my future. Had thoughts of going to college to pursue something in the field of engineering. Also had thoughts of just becoming an agent out of school to learn real estate as I start investing. Do you think a guaranteed decent salary of engineering, but I have college debt and less experience or the totally eat what you kill agent path with experience would help me scale quickest? Also, if I take the agent path, is it worth it to go to college in hopes I land at a more established brokerage? Lastly, I’ve had thoughts of becoming an acquisitions analyst, so between an agent and analyst, what would give me better experience for my future in hopes of owning larger multifamily? Thank you so much.

David:
Thank you, thank you, Luke. This is a good question. Because I am a real estate agent, a really real estate broker that runs a team, I can give you some insight here. First thing, I want you to start thinking like a millionaire. I’ve said this before, millionaires don’t ask, should I do A or B? Millionaires ask, how can I do A and B? So if you’re interested in engineering, I would say you should go forward with getting an engineering degree because you can make good money and that can also help you with real estate. There are literally engineers, I’m having to hire one right now in Florida, to come up with a plan to submit to the city so that I can finally get my project approved. There’s nothing that stops you if you’re doing that from also getting your real estate license and selling houses. All right, so first piece, I want to say. Second piece, the advice that I would give you on if you should become an agent is different than what I would give to someone else.

David:
So if you told me, “Hey, David, I’m a 32-year-old family man heavily involved in my church. I play basketball in a lot of different leagues. I hunt, I fish, I have tons of friends. Everybody likes me and respects me,” I would tell you, you need to go get your real estate license because you have a solid database of people that are going to bring you deals and you can be an entrepreneur. As a 17-year-old who doesn’t have any of those connections, I’m sure you are a hard worker, you are going to be fag an uphill climb getting the 32 to 35-year-olds that are going to be buying houses to trust you even when you’re 18 to represent them. Your friends are not ready to buy houses. Your peers are not ready to buy houses. I see you’ve got an Everlast punching bag in the background there. The other 18-year-olds that are going to be working out with you in the boxing gym are not ready to buy houses.

David:
It’s going to be years before you build up an actual database of people that are gainfully employed that you can represent as an agent, and then the hard work starts. It is incredibly difficult to make money as an agent. This is one of those things that everyone who’s not an agent looks at it and says, “I really want to do it,” and everyone that’s doing it says, “It’s freaking hard.” It’s not bad. It’s better than a job that you hate, especially if you like people. It’s a great career. It is nothing at all that could be considered easy. So if you want to do it, I would be like, hey, you’re 17. Do both. Go to school. Get your degree. Get your real estate license. Sell houses in between your classes. If you say, “I can’t do both,” well then you better have a family or a health condition or something that stops a young able-bodied guy like yourself from getting out there and working extra hard.

David:
When I was your age, I had several jobs at a time. I was working at restaurants every single day that I could. I was also going to school full-time, taking a lot of units. I ended up getting a degree and minoring in criminal justice while I majored in psychology, and I was still working out, going to church, doing all the things that I did. I didn’t have a family, so I could do all that stuff. This is the time in your life to take advantage of that. You’re not going to want to do it when you’re 40 years old, you have a lot of responsibilities, you have kids that are looking up to you, you have a spouse that’s going to be looking up to you, you have health that you’re going to have to be taken advantage of. It gets a lot harder, so take it all on right now.

David:
Now regarding your question about being an acquisitions analyst, if you said, “David, I’ve got an opportunity that someone’s going to hire me right now, teach me how to do this and pay me,” I’d say jump on it. That’s probably not how this is going to work. You are going to get good if you take some classes on the process of analyzing a property and your mind may even be wired to do that well, but having the opportunity to go do it, it’s going to be hard. You have to find a real estate developer or somebody big who has other people that have been doing this for a very long time that are already ahead of you. It’s not a thing you just learn and then you say, “Hey, I’m just going to go do it.” So if you’re interested in it, it’s no difference in being interested in jujitsu or fishing or painting or learning another language. Go learn it if you like it, absolutely, but you don’t, at the age of 17, have to know this is the path I’m going to take.

David:
In fact, I will tell you what people told me when I was 17 and I still didn’t want to hear it. Whatever you think you’re going to go do is not what you’re actually going to go do. You are going to try many different jobs, not like them and bounce into the new one. I love that you love real estate, so you’re probably going to bounce around within the world of real estate before you find your way. There’s nothing wrong with that, especially when you’re young. Brandon Turner and I both have the same philosophy. We believe when you are young, you should say yes to everything. You should do it all. Then as you learn what you’re good at, what you like and what your purpose is, you should start saying no to more and more things. Then as you become older, you should be saying no to almost everything and putting all your attention and energy towards the right things.

David:
So right now, say yes to everything, Luke. Get after it. See what you like. See what gives you energy. See what drains you of energy, and don’t think that the path you start on is the one you’re going to stay on. As long as you’re always moving upwards and forwards, it doesn’t matter if you’re on the same path the entire time. Love that you’re into real estate. Love that you’re listening to the podcast. Keep doing that and let me know how things go. All right, thank you everybody for submitting your video questions and your written questions. If you yourself would like to be featured on Seeing Greene, I’d love to have you. Head over to biggerpockets.com/david and submit your question there. Also, make sure that you like, comment, and subscribe on our YouTube channel so we have a lot of engagement that goes on to every single episode on YouTube in the comment section.

David:
So at this stage in the show, I’d like to read you guys what some of our previous comments were, question statements, things that people said. It could be funny, it could be insightful, something they like about the show or something that they don’t. I want to encourage you to go leave a comment and maybe I’ll feature you on a future episode of Seeing Greene. These comments all come from episode 747, so if you want to go back and listen to that one on YouTube, you’ll see what I’m talking about. Baron Artis says, “What books do you recommend to get started in multifamily investing?” I would check out The Multifamily Millionaire by Brandon Turner and Brian Murray, as well as Ken McElroy’s ABCs of Real Estate Investing. Paul Bloomfield says, “David, I love the macroeconomic stuff. Also, I love the way you explain and simplify real estate and break it down for us newbies. Thank you. We definitely appreciate it.” That’s a great example of you guys telling me what you like in the shows. Paul’s saying, “I like the macroeconomics.”

David:
Now, if you don’t know what macroeconomics means, it’s not a form of macaroni. It’s actually referring to the big picture of economic news, so how much money we’re printing, what laws are being put into place. All of that has a lot to do with how real estate investing works. There’s the art of running a sailboat, which is the art of investing, but then there’s art of catching the wind that will make your sailboat go faster. On the show, we talk about the details of real estate. We also talk about the big picture so you can put your money in the right place to help keep it the safest and keep it growing the fastest. From Mylan23, she says, “Macro resources, Barry Habib, Lyn Alden, Jim Richards, and Blockworks Macro.” Those are all places that Mylan likes to go to get her information. I’m also a fan of Barry Habib. If anybody knows him, I’d love to be put in touch with him because I like how he thinks and we agree on almost everything. So he is a good follow. I will second that.

David:
I also listen to Valuetainment to get a lot of the news that I’m getting and they get really good guests talking about things. If you guys were looking for an interesting listen, I would check out Michael Saylor on Valuetainment as well as Richard Werner talking about he’s really the father of quantitative easing, talking about how that affects inflation and what to expect in the future as well as inflation’s relationship with interest rates. Melissa Blair says, “And please don’t stop the swivel.” Here’s what’s funny. As I’m reading these, I’m actually swiveling the chair and I’m bobbing my head as I do this at the same time, having a little bit of a moment here. So as I was reading these, I was doing it and she says, “Don’t stop the swivel.” It’s like you’re watching me, Melissa. But that’s okay. I like the attention. Appreciate it. Tom Stout says, “One week he talks smack about wholesaling, but next week he suggests risking your main home’s equity.”

David:
Then Sig Fig Newton, that’s funny, replied with actual investment advice is to stay out of leverage in uncertain markets. Then Sig Fig Newton said, “Does he know that rents are dropping?” This is good. This is what I asked for. You guys are giving me the information. I don’t know where I’ve ever talked smack about wholesaling. That don’t make any sense to me at all. I’ve talked about the risks of wholesaling. I’ve talked about the fact that when someone buys from a wholesaler, they’re not getting the protection that they would. I’ve talked about how wholesaling is incredibly difficult. People tend to look at wholesaling like this is, oh, I don’t have any money. I’ll just go wholesale. It’s the hardest part of any of this. It’s the toughest way to make money of any of the real estate strategies that I’m aware of. I also don’t know where I said that you should risk your main home’s equity. I’ve given several people advice that this is a very rough environment to take out equity lines of credit to invest in, but for some people, that doesn’t make a lot of sense.

David:
If you have a great opportunity, it makes more sense to take equity out of your house to take advantage of it than to pay a higher rate to somebody else to go do it. I also don’t know if I see a huge difference between risking equity and your main home and risking equity and investment property. It’s all equity and it’s all risk. If you lose your main home and you have rental properties, you move into one of them or you move in with a family member. I don’t see a huge difference between saying, take a HELOC on investment property, but don’t take a HELOC on your primary residence. You shouldn’t be doing things if you can’t afford to make the payments in the first place. If you’re taking a HELOC and you lose something because of it, you made some really bad decisions that I think you would’ve made the same as if you didn’t take out the HELOC. You just borrowed the money from someone else and ended up in the same position there.

David:
Does he know rents are dropping? That’s market by market, Mr. Sig Fig Newton. They’re not dropping everywhere. In many places, they’re going up. I think this is an area where it would benefit you to take your eyes off of zooming in on your local market and look at the market as a whole. As you’re listening to this advice, you may hear me say something and say, “Well, that doesn’t sound anything like what I’m seeing.” It’s probably because you’re in a different location than me or you’re in a different location than the person that’s asking the question. We have someone that says, “Hey, I’m in Dallas, Texas and I want to go to LA” or vice versa, or “I’m thinking about moving from New York to Miami.” Those are very different markets with very different fundamentals that I’m making my comments on. If you’re living in Chicago, Illinois or Dayton, Ohio, you could be seeing a very different dynamic than what those people are. Doesn’t mean the information is wrong, it means you’re a little ignorant of what’s happening outside of your own market.

David:
All right, we love and we appreciate the engagement you’re giving us here. Please continue to do that. I want to hear from you what do you think about the show so far and what do you think about what I’ve said in the YouTube comments, because as you see, we do read them. We do comment on them. Mr. Tom Stout and Sig Fig Newton have now both been featured in a Seeing Greene episode, so congratulations you two. Please take a moment to give us an honest review wherever you listen to your podcast. If that’s Apple Podcast, if that’s Spotify, if that’s Stitcher, we would love it. Also, keep an out for polls in Spotify where they will ask you what you like about the content that we’ve made. All right, let’s get back and take another video question. This comes from Justin Schollard in Los Angeles.

Justin:
Hey, what’s going on, David? Justin here from Los Angeles, California. I have a question for you on how many accounts we should have for our rental properties. Historically, I’ve been told that you need to have a checking account for every property and that made sense when you have a couple of properties, but as my portfolio grows and I currently have 12 doors, it’s getting a little complicated to have a separate account for every single property. So I open up my Wells Fargo account and I have to keep scrolling to get all the way down to the bottom of my accounts. When does it get to the point to where you just roll all of your rentals into one income account, maybe one expense account or whatever. Do you continue to have a single checking account of your property, and if so, doesn’t it feel scalable if you have 200 rental properties, you have 200 checking accounts?

Justin:
Now with that being said, a few of my rental properties are more long-term and then a few of them are more short-term Airbnb. Is there some distinguishing factor with that as well? Anyways, any advice on this would be really helpful. Super confusing to try to figure it out my own and Google is not helping, so I’d love to know what you do. Thank you. Bye.

David:
Justin, this is such a great question and this is exactly what Seeing Greene is here for because no one’s talking about this. There’s plenty of places where someone will teach you how to analyze a property or teach you how to find a property or give you a form to say to a seller, but what happens when you’re having a modicum of success like you are and you have this practical problem of, am I going to have 200 checking accounts for 200 properties? This is a struggle that I have as well. I’ve just recently hired a new CPA and a new bookkeeper and they are constantly trying to get me to do things that are cleaner for them, which is a pain in my butt. It is not fun having to do this.

David:
You can have a different account for every property and this is what I’d rather see, and I know every bookkeeper out there’s going to start screaming at me if I say this the wrong way, my understanding is that you’re better off to take a bunch of those properties, put them in one entity like an LLC, and then have a banking account associated with that LLC. That’s my understanding of your best bookkeeping principles because if you’re audited by the IRS and they say, “Okay, Justin Schollard, LLC owns these 10 properties and they’re all coming out. They have their income going in the same account and their expense is going out of the same account,” they can associate easily that all of that money is associated with the same business. It doesn’t need to be associated with the property. It needs to be associated with the ownership of the actual asset and you probably don’t want to have 200 properties that are all owned individually in your name. I don’t even know if you could be able to do. That’d be very difficult to do.

David:
As you move them into different entities, you’ll have a bank account for every entity. That’s probably the easiest way to do it and there might be an argument that could be made where several of those entities are owned by one bigger entity and that one entity has its own bank account. I think the reason that my bookkeepers and CPAs are trying to protect me here is if I was sued by someone that went after one of my LLCs, they could say, “Well, that LLC uses the same bank account as the one we’re suing. Therefore, they’re really the same thing, therefore, we’re owed to the equity in both of them in case there was a lawsuit.” That’s I think the protection that you’re going after, but here’s a very real and valid risk that sounds stupid, but it’s legit. When you move properties out of one checking account and into another, you can tell the bank, “I’m shutting down this account. I’m opening this one,” but the banks will often screw up that auto transfer. This has happened to me many times.

David:
It’s happened to me where a property that I own when I had a lot of them, the note was sold to another lender who then had their own servig system, sent me letters saying, “We bought your note and I just never saw them.” So the note wasn’t paid for three or four months and I had so many properties. I wouldn’t have known that one individual payment of $550 a month wasn’t coming out of my account. And they started the process of foreclosure on me and I’d done nothing wrong. I had the auto-pay set up. This has also happened where I’ve done exactly what you’re doing. I tried to transfer something out of one checking account and set it up to come out of a different one that was set up, and then the payment doesn’t get made because the auto transfer gets screwed up between the two institutions. And guess what? It goes on my credit as a mispayment and my credit gets trashed. This can happen so easily.

David:
So be very careful when you do this and keep that in mind that before you switch it over, this is a real problem that can happen. But what a great question, man. Thank you so much for asking this and letting everybody hear about some of the silly problems that real estate investors can face. All right, our next question comes from Scott Phillips, also in California.

Scott:
Hey, what’s up David and BP community? Well, it’s almost March Madness, so I’m repping my UCLA Bruins. My question is basically getting started in real estate investing. Little background, I’m in twilight of my W2 career making good money, so not interested in necessarily changing out the career necessarily right now, but basically supplementing income. I’ve looked at HELOCs and different things like that, partnerships. I’d like to do it myself, but I don’t want to clear out savings. We have lots of equity in the house, very good credit, relatively low debt and living here in Orange County, California. It’s a little difficult to make anything cash flow here. I’m looking also at South Carolina, Charleston area that’s maybe live by coastal eventually.

Scott:
My question is what would your recommendations be for someone like me? I’m sure there’s lots like me right now to get into this game without having to empty out savings and basically, it’d be a good strategy for riding this thing out for the next five or so years and then be able to start cash flowing. Appreciate your time. Appreciate all that you offer to the community and look forward to your wisdom and insight. Thanks.

David:
Thank you, Scott. Very cool. All right, so it sounds like redug and keeping risk low is your number one priority over just making more equity. You’re in a sound financial position, so you’ve got a lot of equity. You’ve got a strong savings account. You might have mentioned a retirement account, but I could tell you’re doing well financially, so we don’t need to shake things up. We don’t have to go out there and buy huge purchases, put you in a position of risk for what you’ve worked so hard. You also mentioned that you’re interested at possibly living in South Carolina, Charleston, which is a great market. Here’s what I’d like for you to do. This is the strategy I think will work for you. We’re going to do this as low risk as possible. I want you to look for a short-term rental in a area of Charleston where people want to visit.

David:
Doesn’t have to be the best deal ever, but it does need to be in an area with a lot of demand. I want you to build relationships with property managers out there and find one that you like. I just want you to get a property, maybe using a second home loan. You can put 10% down on that so that you keep more of that savings as a side that you mentioned, and I want you to rent the thing out as a short-term rental when you’re not using it. Then when you are using it, when you travel out there to stay at that property, consider renting out your Orange County home as a short-term rental when you’re gone. Now, I’m guessing your mortgage is very low on that Orange County home if you’ve lived there for a while. You said you have a lot of equity, so you probably haven’t done a cash-out refinance, which is really good.

David:
I’m guessing you also probably have a pretty good rate, which means you’re going to cash flow when you leave it, and Orange County’s a very desirable area. You see where I’m going here? You’ll probably end up with two cash flowing properties that will make more money than they both cost to own and you’ll be able to bounce back and forth between these two markets not only not having a housing expense, but actually making money from what you rent your houses out when you’re not using them. Now, you are going to have to accept the fact that means strangers are going to be living in your house, but that’s the price that you’re going to pay to reduce your risk. This is probably the least risky thing that I could think of. Now, once this stabilizes and you get this going down pretty well, you can then make the decision, do I want to buy another property in South Carolina and maybe that’s the one you live in, and then you make a full-time short-term rental of the first one that you bought.

David:
You’re just going very slow and letting one thing stabilize before you do the next one. Maybe the second one you buy has an ADU that you rent out and you stay in the main house and so you get some additional income going that way. Maybe you decide that when you visit Orange County, you don’t need the big house that you’re living in right now and you can actually live in something smaller. So you go find another property in Southern California, we can help you do that, that has a smaller unit attached to it where you and your wife can stay when you’re in town and you can rent out the main house as an Airbnb. What you’re basically doing is slowly house hacking short-term rentals in very, very solid, consistent market so that you can bounce around from place to place living where you want and still collect income from these properties when you’re not using them.

David:
This is not a strategy that we’ve ever had available to us before the short term rental explosion. It used to be if you wanted to rent something out, you could never use it. And if you wanted to use it, you could never rent it out. But now between house hacking, short-term rentals, and acquiring multiple properties with new finang options, we can do something very cool like this where you bounce around to the best parts of the country and rent your units out when you’re not using them. It’s very similar to the strategy I’m setting myself up for. I want to have properties in Texas, in South Florida, in Tennessee, in the mountains, at the beach, in Denver, Colorado, in California, all the places that I think are cool and I’ll just bounce around from place to place depending on wherever the wind blows and when I’m not using it, I’ll rent them out as a short-term rental.

David:
So I’m setting myself up for a life like that. I think you might be able to join me on that pass, Scott. Let me know what you think about this plan. And we have a question from Jessie Prescott in Augusta, Georgia.

Jessie:
Hi, David. My name is Jessie Prescott, currently living in Augusta, Georgia. My question is, when do you know when to throw in the towel on a property you’ve spent a lot of money on? I have a four-unit property in Pittsfield, Mass. When I first bought it, it needed a lot of work, so I had to have the whole house rewired. I gutted three of the four units. I got through it and got to a point where it’s actually pretty nice now and can actually start cash flowing because I added a lot of value. My current mortgage versus the rents I’m getting actually looks pretty good. But now the porch is falling apart. I need to have an architect out and need to completely redo the porch. At what point do you say, “Enough is enough. Let’s just get rid of it and move on” versus, “Well, at this point, I might as well just keep it now that I’m cash flowing, now that I spent so much money on it. I might as well just stick with it”?

Jessie:
Or is it going to be a thing where it’s just like it’s going to be constant. It’s going to be one thing after the next and this going to be just a money sink? Thanks.

David:
Well, Jessie, we don’t know if it’s going to be one thing after the next, if it’s going to be a money sink. You have to get a home inspection to figure out what could be the case. What you’re talking about is a death spiral that people can get into with real estate that’s not talked about very often, so I hope you’re not beating yourself up because this happens to a lot of investors. I do retreats where I give personal consultations to the people that attend there where we go over their portfolio and we look at what we have. I answer questions like this on Seeing Greene. I meet with investors that come into my office that I’m going to help them buy or sell their homes in California. I’m constantly talking to people who own real estate and a trend that I see very frequently is buying in the Midwest or lower price properties can lead to this.

David:
There’s a couple of principles for why that happens. One, the electrical, the roof are being replaced, all the issues that you had to do are more or less the same, whether it’s a million dollar property that’s appreciating or it’s a $50,000 property that’s not. So your biggest expenses, the labor, the materials, the rehab work, they’re fixed. When you put all that money into a house that’s not worth very much, it’s incredibly difficult to get money out of it, especially if you’re only relying on cash flow. Now, if you had bought a property in a nicer location that had gone up in value and you made it worth more by fixing it up, say you did the same thing in Dallas, Texas, you bought a junk property and you put all this money into it and it’s worth a lot more, but it’s not cash flowing, you have the exit strategy of getting out of it and starting over and getting something with more cash flow.

David:
When you buy into these cheaper markets, you lose that exit strategy. You get stuck where you can’t get out of it. You dumped a bunch of money into it and it’s going to be 75 years before a cash flow is enough to get the cash out of it that you put into it. This is one of the reasons that I tell people, don’t look only at cash flow. You have to look at creating equity, creating value when you’re buying real estate or buying in areas where the market itself will add value, not just cash flow. Now, as far as what do you do when you’re in this situation, if it’s not a good area and that’s why you’re having these problems, sell and don’t necessarily worry about if it’s a loss as much as can you put the money into something better that’s going to make you more than the money that you’re losing.

David:
If it’s going to cash flow, that’s fine, but that only works if you have other equity set aside you can keep investing with or other money. If this is all your capital and it’s stuck in one deal, I’d be inclined to say, take the loss, sell it, get out of that bad market and get into a better one. If it’s you’ve dumped money into that deal, but you still have money that you can invest, you still have capital available to you, you can hold onto it and wait and see if it becomes more of a money pit or if it becomes profitable and you can use the other additional capital you have to keep investing and making money somewhere else. So it’s not just the individual property, it’s the architecture of your whole portfolio. Do you have a lot of cash set aside that you can use to continue investing or is all of your cash wrapped up in this one deal? How that is set up would make a difference whether you cut your losses or you can write it out.

David:
If I didn’t give you enough detail there, let me know. Go to YouTube and leave a comment when you hear this or submit another question and let me know if I missed something there and tell me what you’re thinking after hearing this. We have a question from Jason Weaver in Kansas.

Jason:
Hey, David. My name is Jason Weber from Topeka, Kansas. My question was in regards to 1031 exchanges. I haven’t done one yet. I have a duplex in Lawrence, Kansas that I’m looking to possibly 1031 exchange into a new construction. I know there’s some time limits with 1031 exchanges. Is that even an option to 1031 exchange into a new construction build? If you have some advice on the rules and regulations, ins and outs, any pitfalls or things to look out for while trying to accomplish this, I’d much appreciate getting some expert knowledge from you. Appreciate all you do for the BiggerPockets community. Thank you.

David:
All right, Jason, this is a good question. As you can clearly see if you’re watching on YouTube, you and I have a lot in common. You’re pulling me right back into one of those situations where I have to talk about 1031 exchanges even though I’m not the expert on it, but I’m going to do my best. So here’s a couple of things that I do know about 1031s that I think could help you. You got 45 days to identify the property, which is already identified if it’s a new construction home. Then you got 180 days from the point of closing on what you have to close on it. So if they can build that thing in less than the 180 days and you can close, I think you’re going to be okay. Let’s say they can’t. Well, you also have the reverse 1031 option where you put the new construction under contract and you close it in with another company’s help.

David:
I couldn’t explain exactly how it works, but it basically involves another company creating some form of a trust. They close on the property for you so you don’t own it yet. Then when you close on your 1031, the funds go into the trust and it gets transferred into your name. It’s something kind of a form of hot potato that could help you. So you could do a reverse 1031. The other thing would be to wait until the new home, like you put a deposit down on it. You wait till it’s close to being built, then you sell the property that you have right now and close on it or you take an offer from a buyer contingent on you finding a replacement property and you just give yourself the right to extend the escrow for as long as it takes.

David:
Now, buyers aren’t going to love that because their rates could be changing and they’re going to want some kind of stability, but if you find the right buyer for your home, you could just delay your closing until the construction is done. Thank you for your question. Appreciate it. I’ll see you in the gym. All right, everybody, that was our Seeing Greene for today. Thank you guys for being here with us. I hope you laughed. I hope you cried. I hope you learned. When I say cried, of course, I mean tears of joy. Love doing these shows. If you’d like to be featured on one, just head over to biggerpockets.com/david and submit your question there. Remember to like, comment, or subscribe to this video, and if you have a second, watch another BiggerPockets video. If not, I will see you next episode. You could find me online @davidgreene24, all the social media, or davidgreene24.com. Check out the website and tell me what you think.

We’ve all heard the saying at some point—do what you love and you’ll never work a day in your life. And while ostensibly true, it grossly minimizes the sheer amount of grit, hard work and determination required to turn one’s passion into a viable career. Blood, sweat and tears are an inevitable part of the entrepreneur’s journey. And to build your own business, you will have to put in a whole lot of hard work. It’s more that the work is endurable when it’s in service of something you’re passionate about. After all, if you don’t really believe in what you’re doing, it’s pretty hard to justify the effort it’ll take to succeed.

As someone who was fortunate enough to turn my passion into my career, I am often asked how others can do the same. And while I could write an entire book on the subject (and in fact have), there are a few critical steps required to take an idea and bring it to life that can be more succinctly summed up. Without a clear vision, a thorough plan and a commitment to following the path you lay out for yourself, your dream will remain just that. The truth is, there’s no secret sauce, no magic recipe—just a heck of a lot of work. I learned a lot throughout the 25 years I spent transforming my dorm-room startup into a billion-dollar international business, and while an article can’t cover it all in just a few hundred words, the abbreviated version is a pretty good place to start.

You have to dream big (and have a follow-through to match) if you want to win big.

Give yourself the time and space to really dream, no limits, no judgment. Get clear on what you’re truly passionate about (not what your peers are doing, not what your family thinks you should do, not even those unhelpful expectations of success we often put on ourselves). If you aren’t doing it for yourself, if your heart really isn’t in it, you may find yourself in a critical make-it-or-break-it moment doing more breaking than making. Genuine passion is what will help you find a little more to give even when you think you have nothing left. It’s fuel, and there will be moments throughout your journey when you’re going to need it.

Once you know what you want, jump feet-first into action, starting with creating a concrete plan. The initial plan doesn’t have to be perfect (trust me, it will change many times), but it has to be solid enough that you know your north star and the main steps required to get there. The good news though is that you don’t have to formulate the plan all on your own. There are many fantastic books on how successful people brought their ideas to life (I read every one I could get my hands on when first starting my company). Like anything worth doing, it takes work, but if you’re on the right path, it shouldn’t feel like a chore. Cultivating a hunger to absorb, learn and grow as much as you possibly can is how you keep feeding your passion so you can see it through to actualization.

Stick to your blueprint, build a solid foundation, and then keep building and improving.

Once you have a concrete plan and know where you want to go, where you need to start, and all the steps in between, it’s time to really get to work. Make sure you’re learning with each new client or project—yes, you did a good job and the client was happy, but were there any breakdowns behind the scenes that can be better streamlined for next time? See if there is anywhere you can improve and do that—over and over and over again—always looking for kinks to iron out, improvements to be made, and opportunities for growth. Never stop refining your process.

When leading a business—especially in the beginning when your determination to bring your idea to fruition is the only boss to whom you have to answer—you have to take ownership and hold yourself accountable. Meet the deadlines you set or re-evaluate why you didn’t and adjust accordingly. Always go back to your plan. Are you meeting your goals on time? If not, why? How can you adjust to get back on course? Have your goals evolved? Is there new information you need to take into account? These are the kinds of questions every entrepreneur—budding or seasoned—must continually ask themselves.

Scale wisely, but never stop looking for ways to grow and evolve.

Stagnancy is the death of business. The moment you stop growing, stop looking for ways to be better, is the moment you lose your competitive edge. The world is constantly changing and progressing; if you stand still too long, you’ll find your business left behind.

It’s important to scale your business wisely; overextending is how many businesses lose their footing, but you have to balance that with keeping apace with your industry. The trick is having achievable goals and realistic plans that are also flexible enough for pivoting and evolving as needed. Life will always throw curveballs, but if you have a solid foundation and are scaling at a sustainable pace (while continuously looking for ways to improve and streamline) you will be in a much better position to handle them.

Keep learning, growing and investing in yourself. Differentiate your brand from the competition in ways that are authentic to you and your brand, adding personal touches wherever possible (for example, have an actual person answer the phone or include handwritten thank you notes with each delivery). This is absolutely crucial when you’re first starting your business and building relationships with clients, customers and partners.

Your clients are an incredible resource, so listen to them! Learn what other services, offerings, or resources your clients need, the gaps they need filled, and the problems they need solved. Whether your business is one that will evolve into a one-stop shop that handles everything or one that perfects a single service or product, listening to your customer base is how you carve out your own space in your industry; leaning into what only you can do is what will set you apart from your competitors. Listening to what our clients needed was precisely what propelled the dorm-room startup I cofounded into a billion-dollar international juggernaut.

Take calculated risks and know your boundaries.

One of the most important aspects of bringing your dream to fruition is knowing when and where to take calculated risks. There are no guarantees in life and when founding a company, there is inevitably a lot of risk involved. So yes, of course you need to push yourself, but make sure you don’t fall over the edge in doing so. Without boundaries, it’s far too easy to get lost and lose it all.

Have firm boundaries that you won’t cross, whether they be about how you initially fund your company, the types of partners and clients you work with, the percentage of revenue that goes back into the company, your hiring processes, or your standards of quality. For instance, a big part of the vision I had for my company was not being beholden to anyone else, so we committed to being entirely self-financed (no loans, no outside investors, no gifted seed money, and virtually everything we made went right back into the company).

Your integrity is one thing you should never risk, it’s far too valuable. Bringing a dream to fruition requires working outside of your comfort zone, but that doesn’t mean sacrificing your values. So take the right kinds of big risks, while safeguarding your integrity and honoring your boundaries no matter what.

The journey is long and arduous, so celebrate your achievements along the way.

Turning your dream into reality isn’t for the faint of heart, but those moments of victory, when you are quite literally living your dream, are priceless. There is nothing quite like building something out of nothing more than an idea. Seeing everything you have worked so hard for materialize and make a difference in people’s lives—all because of your determination and grit—is incredibly gratifying. It was possible for me, and I know it’s possible for you too. Now go get dreaming and make it a reality. You deserve to live the life of your dreams. We all do.

Ashley:
This is Real Estate Rookie, episode 286.

Tony:
We run a lot of our flips through our credit cards, buy materials and stuff. All of our events are run through our credit cards. All the different things we have in our business, we run through our credit card as much as we can. For all of the real estate investors that are out there, I think a common thing that people overlook is the ability to use credit card points to help fund your vacations.

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

Tony:
And welcome to the Real Estate Rookie Podcast where every week, twice a week, we’re bringing you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. And today we got some Q&A. I love the Rookie replies because we get to deep dive the thoughts and deepest darkest fears and desires of our Rookie audience. The topics we’re going to cover today are first when you should not use a HELOC, because there are times when you should and times when you shouldn’t. We’re going to talk about how Ash and I are changing our investing analysis strategy for 2023 and what changes you should make. And we’re going to talk about why you should say no more often than you should say yes when it comes to choosing your strategy in real estate investing.

Ashley:
Tony does a big reveal on today’s episode of how he went on this glamorous $12,000 vacation for, what was it, five days?

Tony:
Five days, yep.

Ashley:
For $200. And how you can do it too. I just really wanted to use that punchline, but great real estate information today, but also as real estate investors, how you can take your business and use it personally for some of your own benefit. Tony talks about how he was able to recently do this with his wife and shares his secrets.
Our first question today is from Nicole Roy. Something I really don’t understand is what is the benefit to doing an interest only HELOC to fund another deal? It makes no sense to me to never be paying down the note and then potentially paying a mortgage on primary, plus mortgage on investment property, plus HELOC payments throwing into the gutter. I don’t get it. Am I missing something? She is saying that you have your primary residence, which you have a mortgage on, and then you’re going and getting a HELOC from your primary residence for the additional equity that’s in your property, and then using that HELOC to purchase an investment property. And now I think in her example, she’s saying that she would use the HELOC for the down payment and then it would be, she would go and get a mortgage on the investment property. Now she has the mortgage on her primary, the HELOC interest only payments, and then also she has her investment property mortgage. She is asking as to how can this make sense where you are paying these bills to purchase that investment property?

Tony:
Yeah, I mean, my thought, and I haven’t pulled the HELOC on my primary residence before, so I’m just kind of speaking from what my thoughts are on how to use this. But I’ve always looked at the HELOC as almost less expensive hard money. You wouldn’t use hard money typically for a long-term buy and hold, that’s not going to be your long-term debt. People are typically using hard money for six to 12, maybe 18 months as they purchase and renovate a property. Then the goal at the end of that time period is to refinance with cheaper long-term debt and then pay off that hard money.
When you think about using your HELOC, I would use it in that same way where you’re going out, you’re maybe buying a distressed property, and then you’re using that HELOC to either fund the down payment or the rehab, and then after whatever time period, 12, 18 months, you go back and you refinance with some long-term fixed debt. I do know some people that have purchased short-term rentals using their HELOC, and they’ll use their HELOC to fund their down payment. But then what they’ll do is because the cash flows and short-term rentals tend to be a little bit bigger, they’ll take all that cash flow from the property and then aggressively pay down their HELOC in 12-18 month period. Same concept, but I typically would only want to see someone using HELOC in a short time period. What are your thoughts on that, Ash?

Ashley:
Yeah, I agree. I guess in the case of the down payment, using your HELOC for a down payment, I think it’s more common for people to use the HELOC as their full purchase price or maybe just to fund the rehab, as in they found another way to purchase the property and then they’re just using that as the rehab. Then when they go and refinance the property, they’re paying back that HELOC, whether they used it for their mortgage or they used it for the rehab or whatever, or to purchase the property in the beginning. If you are using it as the HELOC, as your down payment and you’re going and getting a mortgage, it’s important to know what your term is going to be if you’re going to refinance. If you know that you are going to refinance the property in a year, then you want to make sure that you’ve added enough value to the property where you are able to go and refinance to pull enough money out to pay back your HELOC and that original funding you got to purchase the property.
If you are just using that HELOC money for a down payment and then you’re getting long-term fixed rate mortgage on it and you have no plans of refinancing, then you need to have a plan to pay back that line of credit and not just paying the interest only payments. Maybe you have a high income but you just haven’t saved your money, but you know that going forward, you could afford to throw $3,000 a month and you can pay off the HELOC in full, in 12 months, 18 months or whatever that is. But instead of waiting 12 or 18 months to purchase an investment property, until you’ve saved that down payment, you’re going in getting the HELOC. The biggest thing is running the numbers and make sure it makes sense having those payments. If you are repaying your HELOC, your whole cash flow, maybe some of your W2 income is even going towards paying off that line of credit.
My old co-host here, Felipe Mejia, he used to go and he used to use lines of credits as down payments on properties and he would just take all the cash flow from all of his properties and throw it at the line of credit until it was paid off, and then he would start taking the cash flow out himself again. Then when he bought another property, do the same thing, take off the line of credit, throw all his cash flow at it until it was paid off, and just keep reusing that same line of credit for down payments on properties.

Tony:
Yeah, I think we’re on the same page here, is that you really just want to use that HELOC as short term debt and not get into a situation where you’re holding onto this for forever. Before we move on to our next question, Ash, I just want to give a shout out to someone that left us a five star review on Apple Podcast. And it’s actually a kind of lengthy review, but I’ll read it because I think there’s a lot of good information here.
And this review says, “I absolutely love your content. I married into a house hack. Through the years we wandered into a few more rental properties. My husband is in the trades and knows lots of people, so fixing things is easy for him. He took on the maintenance side and placed the management stuff into my lap. I had no idea what I was doing and had a poor attitude towards the rentals. Then I found the Real Estate Rookie podcast, and for the first time in my life, I’m actually excited that we own these properties. I’m grateful for your knowledge and I see these properties as a great tool. I don’t know if we will ever scale larger than the 12 doors that we have, but for the first time, I have clarity and goals. I know what my next steps are. You guys provide the direction that I’ve never had before, and I appreciate the Real Estate Rookie podcast more than words can say, thank you so much.”
Yeah, like I said, a longer review, but what a great one. And we appreciate those kind words and for all of our Rookies that are listening, if you haven’t yet left to say rating and review on whatever platform it is you’re listening to, please do. Because the more reviews we get, the more folks we can help and the more folks we can help, the more stories we get just like this. We appreciate you guys for hanging with us.

Ashley:
Okay, so our second question today is by Natalie Ann. “How did you narrow your focus to determine your strategy? I’m all over the place with purchasing a buy and hold duplex and also intrigued by doing a flip and having short-term rentals.”

Tony:
This is a common question, Ashley, that a lot of Rookies have is like, where do I go? Where do I take my time or spend my time? And for me, it always comes down to a couple of things. I think first is understanding what your goals are as a real estate investor, and then second, really understanding where your strengths and weaknesses lie and what you enjoy doing in the role of real estate investing. If your goal is to quit your day job as fast as humanly possible, then investing in a much of turnkey long-term rentals might be a slower path to getting you there. But doing something like flipping or wholesaling or short-term rentals, that might get you there a little bit faster. I think the first thing is understanding what your goals are and trying to identify which asset class or which type of real estate investing can help get you there the fastest.
Then the second thing to look at is what are you actually good at? Yeah, maybe you love the idea of the cash that you can generate from flipping homes, but maybe you suck at property management and maybe you suck at managing people and that’s okay, right? But if that’s the case, then maybe flipping homes isn’t right for you, or maybe you hate cold calling and talking to strangers and selling people. And if that’s the case, then wholesaling properly isn’t for you. Maybe you hate the idea of talking to the general public and providing customer service, then short-term rentals aren’t for you. Every asset class has a different skillset that is required to be successful. And you have to ask yourself, do I have the skillset, the ability, and the desire to do well in that asset class? I think those are the two things I would look at, Ash.

Ashley:
Yeah, I’ve really thought about this a lot lately as to getting into your first strategy. The biggest thing is think about why you are getting in real estate investing. And a very common answer is because you want to quit your W2 job. How do you do that? That you need money, you need another income. And I think sometimes people get confused with, “I hate my job, I want to do something I love and I’m passionate about.” And yes, that’s awesome. And trust me, when the money flows in, you’ll start to love real estate. But sometimes that passion or desire, “I want to design houses, I’d love to pick out the furniture and design them for short term rentals” is the reasoning people choose certain options. Or even just like, “Wow, it looks like so many people are making way more money with short-term rentals. I’m just going to do that.”
I think look at what your resources are, what your opportunities are, and what you are going to succeed at first and build that strong foundation. When I started investing in real estate, I was working as a property manager for a buy and hold investor. I had some experience in that real estate strategy. I also had resources because I had done financing for this investor. I had acquired properties for him, all of these things. I had that knowledge base. I started building my foundation by collecting buy and hold rentals. And that was what created my cash flow. That is what started building my wealth. And I’ve gotten very good at purchasing buy and hold properties in my market. I consider myself an expert in that. I love cabins with land and taking old cabins and turning them into these cute little cozy, modern spaces. I decided to try this out.
I’ve built my strong foundation and now pivoted to doing these cabins. My first cabin I did, I went $40,000 over budget. And if I would’ve started with that, that would’ve dropped me. I would’ve probably had to sell the project like halfway done. Once you have that strong foundation, then you can pivot and start learning the things you’re actually passionate about and you have more time freedom, more money to make those mistakes as you’re learning how to do things that I had the other investor as a mentor, a resource like somebody to learn on. I wasn’t making as many mistakes because I had all these advantages at my fingertips. I think start looking at what those advantages, opportunities are for you, where you can be the most strategic and successful to build that foundation and use that to determine what your strategy should be.

Tony:
Yeah, that’s fantastic advice, Ashley. And when I started investing, I told myself, and I guess let me take a step back, right? I’m 32 right now, and throughout my early 20s, I always knew that I wanted to be an entrepreneur and hopefully one day work for myself. But what I struggled with was committing to one thing. And every couple of months really it felt like I was bouncing around from one hair brained idea to the next, and I tried this thing and that thing and this thing and that thing, and I was just searching for that, how I could strike gold. But because I never really committed to one strategy, to one tactic, I never got really good at anything. And I picked up a bunch of random skills in these different places, but I wasn’t a master of anything. When I started investing in real estate, I also told myself like, “Hey, I really want to get good at one thing inside of the world of real estate investing.”
For me, it ended up being short term rentals. And that commitment to this one thing is what really allowed me to become a master of my craft. Natalie, and for all of the other Rookies that are listening, my challenge to you is to say, “Okay, whatever path I go down,” commit to that path for at least five years. Say, “I’m going to give the next five years to really just focusing in on this one thing.” If it’s buy and hold, then you try and become the best buy and hold investor over the next five years. If it’s flipping houses, try and become the best house flipper in the next five years, and whatever asset class you choose, become a master of that craft. Then once you’ve really built out all your experience in this one asset class, it becomes so much easier to branch out from there and kind of try different strategies.

Ashley:
And with that cabin, it honestly would’ve been way more than a $40,000 over budget if I wouldn’t have had the experience and knowledge of already investing so many years and running rehabs for long-term rentals and things like that. And it was very different. And even setting it up as a short-term rental, I had only had one short-term rental prior to that, and it was in an apartment complex. I never had to really worry about half of the stuff that you do when it’s a single family home as a short term rental. “Okay, this property is out in the country, we have to get WiFi, is there even WiFi out here?” Things like that, you don’t think of when you’re just starting out doing some of these things. Natalie actually had a second part to this question was how did you get good at analyzing deals?

Tony:
I think the first thing, Ashley, and it kind of goes back to what we just said, is that it’s hard to get good at analyzing if you’re all over the place. If you’re trying to flip a house, if you’re trying to wholesale, if you’re trying to [inaudible 00:15:43], if you’re trying to turn key, if you’re trying to STR, if you want to buy an apartment complex, if you want self storage, every single type of real estate investing has a process for analyzing deals. And I think that people often struggle at getting good because they’re not focused on one thing. Just kind of tying it back to what we said initially, it’s just choose that one type of real estate investing and then really focus in on that. Then from there it’s really just repetition. The more reps you get at analyzing properties, the faster it becomes to then analyze those deals.
I tell a lot of the students that I work with is my challenge to them initially is like, “Hey, over the next 90 days I want you to analyze 100 properties,” and it sounds like a big task, but here’s what happens. Those first five or 10, it’s going to take you forever because it’s your first time kind of going into the data and trying to understand how to use the different tools to analyze and what makes sense and what doesn’t. But by the time you get to number 15, now you’re moving a little bit faster. By the time you get to 50, you’re going to know exactly what the ADR on a three bedroom is in Joshua Tree because you’ve already done it 49 times. There’s this kind of momentum that starts to build as you analyze deals. And Ash, I’m sure if I asked you, “Hey, what does a two-bed rent for in Buffalo, New York?” You probably don’t even have to really think about it and you can just kind of rattle those numbers off. I really do think it’s a matter of repetition and get good at analyzing.

Ashley:
Yeah, the only thing I would add to that too is along with the repetition is experience. As you are purchasing properties, you realize things that need to be adjusted in your numbers or things you didn’t account for before. One thing I think a lot of people miss is they don’t account for their, if you created an LLC, you don’t account for those LLC fees. You don’t account for your tax return. If you have an LLC, you are paying a separate fee to your CPA or accountant to file that tax return. Those little things can add up.
I pay like per an LLC, it’s increased over the years and I was from, started out in 200 maybe, and now it’s gone up to 350 to 400 per an LLC, which can have one to several properties inside of it. But if you’re buying your first property and you have your LLC and you’re paying $200, that could be one month’s cash flow gone and you’re not accounting for that in your numbers. Those are some of the things I think that I’ve learned over the years, investing as to, “Oh, here’s things I didn’t even think of when analyzing a deal.”

Tony:
And I guess before we get off this last question, I just want to comment on how we’re changing our approach in analyzing deals, especially in the short term rental space. And this is going to kind of vary from market to market, but I’ve been able to see data for a lot of different markets across United States, and what we’re seeing is that the first quarter in a lot of states in a lot of markets is down about 15% year over year when you compare 2023 to 2022. As we’re analyzing deals, now that we’re looking at purchasing, we have to discount whatever that revenue was in 2022 as we analyze for 2023.
We’re still purchasing properties, but the way that we’re analyzing them is we’re adding that discount to make sure we’re not overpaying for things. And I think that’s a good strategy to take. It’s better to be a little bit more conservative as we kind of get into this area of economic uncertainty. And I think the more conservativeness you have in your numbers, the more confident you can be in actually submitting those offers.

Ashley:
Okay. Our next question is for Montas Risavis. “Is there a limitation of what you can do with the cash you receive from a cash out refinance?” This is a good question because if you go to a bank and you get a mortgage, they are requiring you to use those funds to purchase a property. If you’re getting a car loan and you get those funds, they’re requiring you to use it to buy that car. As far as doing a cash out refinance, when you go and apply with the bank, they will first of all ask you if you have any current debt on the property as collateral. Maybe you own someone money, a private lender who gave you the money to purchase the property and you need to pay them back, or you did a hard money lender or you have another mortgage on the property, maybe there’s a lien on the property for something else.
Maybe you have another HELOC on the property, whatever that is, you are going to have to pay anything that is secured on the property, as the property as collateral, you’re going to have to pay that off with the proceeds from the cash out refinance. Another thing that I’ve seen where the bank will also do is maybe your debt to income is not that great when they’re pre-qualifying you and they say, “Okay, if you use some of the proceeds from this loan above and beyond your current mortgage, and you’re going to pay off this credit card, you’re going to pay off this car loan so that it eliminates that debt payment, then we’ll go ahead and approve this cash out refinance.” Anything the funds are going to be required to be used for would be agreed upon with the bank prior to that. But anything above and beyond that they want you to pay off with the proceeds that is you get a check or it’s direct deposited into your bank account and you can do whatever you want with it. There are no limitations.

Tony:
And I think the other benefit that a lot of people forget, especially new investors, is that cash you get from a cash out refinance is tax free because it’s not income, it’s debt technically that you’re taking on, so you’re not taxed on whatever those proceeds are. And that’s why you see a lot of really successful real estate investors where they make the majority of their money not even from the cash flow of their properties, but they go out and they buy these commercial properties and they buy them for a couple million, invest another couple million to fix them up, and then they’re able to refinance and pull out millions of dollars all tax free. That’s how you see a lot of the people that are really crushing this space continue to do well without increasing their tax liability.

Ashley:
The tenants are paying those payments for them.

Tony:
Totally, right? And it’s a win/win situation for you as a landlord. Ash, have you cashed out refi’d on any properties recently?

Ashley:
Yes, I did our little a-frame short term rental.

Tony:
And just, I guess if we can just talk through what that process looks like for Rookies. Are you able to tap into 100% of that equity? What’s the typical process? Just kind of walk a Rookie investor through what that looks like.

Ashley:
We did the commercial side of lending because it is in an LLC. We went with a commercial lender, which you can find those at pretty much any bank. We went to the small local lender and we used a hard money loan to purchase the property, and then we used cash to rehab the property. Once we were just about done with the property, we went to the bank and applied for the loan to refinance out of that. We had an appraisal done, we had to pay off the hard money loan first. Of that cash refinance, it was agreed upon that we would take that money to pay off the refinance on the property. As far as paying ourselves back for the cash we put in for the rehab, the bank doesn’t say like, “Oh, you have to pay yourself back. That’s a requirement.”
They don’t care about that. You can go ahead and take that money and put it into another property and never pay yourselves back, whatever you want to do with it. We did that cash out refinance, and then we closed next Friday actually on another cash out refinance where we’re doing on the residential side, not the commercial side of lending. And for that property, we did do a credit card, a 0% interest credit card for any of the materials for labor. We did disclose this to the bank and we said, “We do intend to pay off that credit card when we purchased this property.” We are actually having them just take the funds to pay off that credit card. We already paid off the hard money lender because the hard money loan was due before we would finish our cash out refinance. We will actually be getting a really big check, but it will be just to pay ourselves back for paying off our money lender.

Tony:
Then typically, Ashley, on the refinances that you’ve done, up to what LTV are they typically willing to go? The house is worth the a hundred thousand dollars. What percentage of that are they willing to give you on the refi?

Ashley:
So on both, 80%.

Tony:
That’s pretty good.

Ashley:
Yeah, I’ve seen it, the one we’re doing next Friday, that’s on the residential side, so pretty common. Then the commercial loan, a lot of times they will only offer 70 to 75% on it, but this was … I don’t know if it was because the numbers made such good sense that they were willing to go up to the 80% on it.

Tony:
And that’s again, the benefit of working with a kind of smaller, more local bank is that you get some flexibility that you’re not going to get from some of the big banks out there. Yeah, I’ve only done a couple of true [inaudible 00:25:23] where I’m doing cash out refis and those ones I had to hit about 72, and it was exactly 72 and a half percent is what I had to be at to be able to get cash back out. Every bank’s a little bit different.

Ashley:
These are actually the first loans, the first refinances I’ve ever done 80% at. Usually I only do, even if it appraises higher, I only do the 70 to 75 just to keep myself not to be over leveraged.

Tony:
Too leveraged, yeah.

Ashley:
Yeah. This is the first time I actually felt comfortable going with the 80.

Tony:
So something else you mentioned was using the 0% interest credit card to help fund some of the rehab. And I just posted on my social a couple days ago that me and Sarah took this amazing, amazing, almost week long vacation in Mexico, and I want to say the trip was probably worth about $12,000 once you add up our flights, the stay, the place that we stayed at. And we literally only spent $200 to go there because everything else was covered with our points. And I’m trying to remember how many, it was like several hundred thousand points that we had, but we run a lot of our flips through our credit cards. We buy materials and stuff as well. We host our events in person. Pretty much all of our events are run through our credit cards. We run ads for our events, just like all the different things we have in our business we run through our credit card as much as we can.
And we get to take some pretty cool vacations a couple times a year. We spent five days in Playa del Carmen at the super, super luxurious resort right there on the beachfront. We got private airport transfer and a Tesla that picked us up and dropped us back off. We got free access to all the parks. Anyway, it was a fantastic trip. For all of the real estate investors that are out there, I think a common thing that people overlook is the ability to use credit card points to help fund your vacations. Like Sarah and I, most of the time when we travel now, we don’t pay for our vacations,

Ashley:
Honestly, not even if you’re a real estate investor because a lot of the credit cards have the signup bonuses, and there are people out there that are amazing at doing this where they go and open new credit cards, close them out or whatever, and they’re just racking up all of these points because credit cards will have like if you spend $5,000 within the first three months, then we will give you a hundred thousand points to use for travel or whatever.
I actually have done this for probably four or five years now. I started out with doing the signup bonuses and now with doing my rehabs and everything, it definitely helps accumulate the points. But if I fly Southwest for the last four years, I’ve been able to take somebody with me for free. I’ve had their companion pass. It’s bittersweet because if I fly Delta, I have enough points that I’ve accumulated status there from the points from their credit card. it’s like I usually get upgraded to first class, but if somebody comes with me, they fly for free on Southwest, which doesn’t have any upgrades. It’s like, “Yes, you get to come with you, this is great, but now we’re flying [inaudible 00:28:36].”

Tony:
Make them pay for themselves.

Ashley:
Sorry, five year old, you have to scrape up money for your ticket to come with you.

Tony:
What’s been your favorite credit card? Which one do you like the most for the points?

Ashley:
I think the Chase Sapphire.

Tony:
Yeah, the same one I was going to say.

Ashley:
Especially if you’re first starting out, do that one because they have the five rule, it’s like some five rule thing where you can only have it’s five credit cards opened by Chase over four years or something. It’s something like that. Or yeah, I don’t know. But they cap you out as to how many credit cards you collect for the points and if you can open the cards in your personal name. If you have businesses, you can open them in your business names, but you can combine all those points for your personal Marriott rewards number or Delta or whatever that is.

Tony:
And not to go too far off the rails on this, but what I’ve realized too, because we have the Chase Sapphire too, and I have one in my name, Sarah has one in her name, and even though they’re personal cards, we only use them for business stuff as well. Then we have the Chase Business Ink card and you’re able to do all these cool things. But what I’ve noticed is that it’s actually the points at Chase are worth more than the miles that I get with United. I could have a hundred thousand miles and I could have a hundred thousand points and the points with Chase go further than the miles do even if I’m booking on United. Yeah, just anyway, point of this whole conversation is everyone listening, you should be leveraging debt the right way to help you fund the vacation of your dreams.

Ashley:
If you do have a history of maxing out credit cards, accumulating debt on your credit cards and not paying them monthly, this may not be the strategy for you to try right now to travel hack, but if you have been very diligent and you pay your credit card off every single month, you’ve never accumulated a balance, then you might as well take advantage of these points. The Travel Point guys, it’s like PointsGuys.com I think it is, it’s a big website. There’s a whole bunch of people, I think it’s Aunt.Kara, Aunt Kara or something like that. She talks a lot about travel hacking. Lots of different places you can try to learn about it.

Tony:
I’m glad you mentioned that because yeah, I don’t want anyone to think that me and as Ashley are just racking up six figures of credit card debt. My assistant goes in and probably pays on our credit card every other day. We very rarely carry an actual balance on our credit cards as well. You want to make sure you have the cash.

Ashley:
If I didn’t pay it off, usually it’s like a week to every two weeks. First of all, I can’t like stand having high balance, but it would probably, Daryl would be at Lowe’s, it would be like, “Sorry, it’s declined. You’ve maxed out at Lowe’s already these last two weeks.” Okay. Let’s go into our next question here. “How do you go about selecting a real estate agent who is investor friendly? What questions do you ask them?” I think the best way to go is just go online to BiggerPockets.com/agentfinder, and it’s a matchmaking service for investors and real estate agents.
These real estate agents, you can select them by market, so you at least have to know what market you want to invest in. Then you fill out a form and they will match you with an agent. Then you can call and talk to the agent, see if it’ll be even more of a good fit for you. But I think this will give you a huge advantage that you’re already talking to agents who work directly with investors, maybe even have investing experience instead of starting from scratch vetting agents.

Tony:
So just one thing to add to that, Ashley, and I think this is a question that you should ask your potential CPA, your attorney, your agents, your insurance broker. The mistake that a lot of new investors make when they’re talking to these businesses is they ask the question, “Do you work with real estate investors?” And of course their answer is going to be, “Yes, we work with real estate investors, we love working with real estate investors.”

Ashley:
“We work with everyone.” No matter what you would’ve asked them-

Tony:
Right, the answer’s going to be yes.

Ashley:
Farmers, they would have said yes.

Tony:
“We love farmers.” But I think the better question to ask is, what percentage of your current or past clientele are real estate investors? It’s a similar question, but a little bit more pointed. And now if they’re like, “Maybe like 5%.” Now, you know, okay, cool, that this person, they like working with real estate investors, but they don’t specialize in working with real estate investors. But if they say, “Hey, 60%” or 80% or, “95% of my clientele are real estate investors,” that’s how you know that you’ve got a true investor friendly agent as well.

Ashley:
You guys, thank you so much for submitting questions to us each week. If you want to submit a question, you can send a DM to Tony or I, or you can submit it in the Real Estate Rookie Facebook group. I’m Ashley, @wealthfromrentals, and he’s Tony, @tonyjrobinson on Instagram, and we’ll be back on Wednesday with a guest.

Bill Rudin, Rudin Management co-chairman and CEO, joins ‘Squawk on the Street’ to discuss the dichotomy between residential and commercial real estate, the difference in the real estate market between San Francisco and New York, and more.

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This marketing tool can make it easy to educate your audience, grow your lead list and connect with people who might find value in your product or service.

As the name implies, a coming soon page gives users a teaser of things you and your team are working on. If someone is genuinely interested in a new product or service, they can subscribe via your sign-up form so they can stay up to date.

Through my company’s work providing sales tools to e-commerce businesses, I’ve found that the mistake many marketers make is assuming they don’t need a coming soon page once their site is live. The truth is, this type of landing page can be helpful regardless of your industry or how long you’ve been in business.

Below are four situations when a coming soon page can help your business.

1. You’re launching a brand new website.

The most common instance when a coming soon page would come in handy is when you’re launching a brand new website. I’ve seen that many business leaders create a standalone landing page while they prepare the rest of their site for the public.

Use this opportunity to invite visitors to join your email list so they can receive updates along the way. You can even incentivize users further by giving early subscribers an exclusive coupon on launch day.

When developing a coming soon page in this situation, it’s important to give visitors enough information to care about your website. Avoid generalized statements, and instead focus on addressing your target audience’s goals, pain points and needs.

2. You’re expanding your product catalog.

You can also use a coming soon page to promote a new product or service.

For example, let’s say you’re the owner of an email marketing software-as-a-service solution, but, recently, you chose to dive in and tackle social media marketing. You decide you want to keep your first site email-specific, so you create a new brand and website for your social media marketing software. Instead of hoping visitors will stumble across your site, you can add a coming soon page so existing visitors will know your new product is in the works.

The key to maximizing early conversions with this strategy is to give users time to sign up and anticipate your product. A coming soon page that’s only up for a week won’t get much traction. Meanwhile, people will completely forget about your brand if you leave a coming soon page up for six months.

As a general rule of thumb, I suggest promoting your landing page for one to three months before launch.

3. You’re in the process of rebranding.

Rebranding is the process of changing details about your company, such as the logo, products or color scheme. There are plenty of reasons why a company might want to rebrand. Common causes include the following:

• Modernizing the company to meet today’s socioeconomic standards

• Separating the company from a sea of competitors

• Expanding market reach (similar to creating a new product)

• Creating distance between negative associations

Some rebrands don’t change much, such as Apple dropping the word “computers” from its name in 2007. But other rebrands are a bit more drastic. Consider Starbucks, for instance, which dropped its entire name from its logo and stuck with the iconic siren.

Regardless of the size of your company, you shouldn’t change from one brand to the next overnight. Consider creating a coming soon page to connect with users and let them know what changes are coming in the future. Keeping your audience informed will prevent them from panicking when they see a shiny new logo on your site the next time they visit.

4. You’re building interest in other marketing platforms.

Finally, coming soon pages can help you build interest around other marketing platforms. For instance, if you’re a new business owner and setting up your email list for the first time, you should create a coming soon page so users know what’s in store for them if they sign up.

You can use this strategy for growing social media channels, too. Let’s say you want to start a group on LinkedIn, but you want to build a community around the idea first. Including a landing page that explains what you hope to achieve with a community can help your message resonate with users.

Some business owners use this strategy to promote upcoming partnerships. Coming soon pages are extremely beneficial in this context because it links your company to another reputable brand, which acts as social proof.

Back To You

As you can see, there are plenty of instances when a coming soon page can assist business leaders and marketers. The most important thing to remember is these pages are designed to appeal to your audience. Whether you’re rebranding, offering a new product or starting a new website, users want to know how interacting with your brand will help them reach their goals, and a coming soon page can help.