Richard

Every business is bound to face challenges at some point. The way your team handles such trials reveals whether they’re prone to succumb or overcome. Your team may experience unexpected delays in the supply chain that make it harder to meet deadlines. Or internal conflict may arise due to differences in personalities or varying opinions on how to get things done.

Whatever the difficulties may be, savvy business owners know team resilience is key to overcoming setbacks and meeting expectations. Often, the difference between success and failure comes down to the tools you carry in your proverbial toolbelt. Here are four ways you can equip your team with one of the most powerful coping tools available: resilience.

1. Own Mistakes

Resilience is not just about surviving tough times and coming out a winner on the other side. It’s also about owning and learning from mistakes so you can avoid making them again. If your team members immediately blame others for their missteps, they’ll never become resilient.

Owning up to mistakes and learning from them is a critical skill that’s tied to resilience. One could argue that it’s impossible to develop resilience without experiencing failure first. People who can roll with the punches tend to view failure as an invaluable source of feedback. Though setbacks are frustrating, a resilient person can learn from them and forge a more successful path in the future.

To develop a team that can bounce back, foster a culture of admitting to mistakes. Discuss the actions that led to those errors and how they can be prevented going forward. In some cases, setbacks may be totally outside of your team’s control. That’s why it’s so important to take things on a case-by-case basis when determining whether performance improvement measures are necessary. If you deal with employees fairly, they will find it easier to take ownership of their actions and thus become more resilient.

2. Build a Team Connection

Resilience is so much easier to achieve when you know you have a team of capable people supporting you. Some of the most talented and impactful teams aren’t necessarily composed of the most brilliant people on the planet. Rather, they’re made up of individuals who trust each other and know how to cooperate effectively.

Too often, members of the same team feel like they’re pitted against each other. This may happen due to competition for similar promotions or opportunities. It may also occur when employees want to gain favor in the eyes of management. It’s important to pay attention to how your team members interact with each other. If they seem distrustful of one another, it’s time to strengthen the team connection.

Don’t worry, you don’t have to line your employees up and have them do trust falls all day. There are much more effective (and fun) ways to build resilience and camaraderie. Regular team lunch-and-learns, happy hours and awards ceremonies are great for building a sense of connection. As your employees get to know and trust one another, collaboration will come more naturally. You’ll also notice that your team is better able to handle and deal with setbacks when the members work together.

3. Encourage Resourcefulness

The Predictive 6-Factor Resilience Scale lists resourcefulness among the reasoning skills that factor into an individual’s overall degree of resilience. Other character traits associated with resilience include tenacity, collaboration and vision. While there’s (probably) no college class that teaches resourcefulness, you can help instill this trait in your team.

The first step is to build a resourcefulness infrastructure. One way to do this is to provide the resources—it’s right there in the name—that enable employees to answer their own questions. Project management systems let employees know who’s doing what and who needs a project deliverable when they’re through with it. Knowledge bases make subject matter knowledge widely available. Cloud-based file-sharing systems give employees access to required documents without needing to request them from a colleague.

Not that employees have to solve every problem on their own—you can further encourage resourcefulness by making it normal to ask for help. Resourcefulness doesn’t always mean relying on oneself for answers. Often, the most resourceful people are those who lean on the knowledge of more experienced people to overcome a pressing challenge.

The best environment for resourcefulness encourages creativity and gives employees flexibility in how they resolve issues. Give your teams clear goals and objectives, but let them determine the best ways to achieve those goals.

4. Watch for Burnout

Too often, the idea of resilience is tied to unrealistic, superhuman-like expectations. But everyone has a limit, regardless of how resilient they may be. If your employees are pushed past their limits, they’ll eventually become physically, mentally and emotionally exhausted. Burnout is a phenomenon that can cost both your employees and your business dearly.

Burnout impairs job performance and often leads to major losses for employers. These losses may come in the form of increased healthcare costs, more employee sick days and loss of productivity. Burnout can also cause employee morale to plummet. Common signs of team burnout include disengagement, decreased work quality and increased complaining. If you notice these behaviors, take note.

There are several things you can do to improve resilience and avoid team burnout. One of the most important is to keep the lines of communication open. Ask team members how things are going and if they need more support for large projects. Welcoming feedback and addressing employee concerns can go a long way toward minimizing or eliminating burnout altogether. You should also encourage employees to take vacation time so they can relax and refill their energy stores.

The more resilient your team is, the less likely they are to get overwhelmed by the challenges they’ll inevitably face. A resilient team knows how to take failures and turn them into future wins. Incorporate the strategies above into your managing approach and watch your team become stronger and more effective.

David:
This is the BiggerPockets Podcast, show 735.
The reality is, every property I’ve ever seen in my career is not up to code. Okay? Most cities in the Bay Area where I live require you to get permits, if you change the flooring, if you change the faucet, if you change your landscaping in the yard. If you actually look at what the city requires you to get permits for, it’s everything.
Even homes that are built like new home construction are not up to code with every single thing. Now, that does not mean it’s okay to not get permits. It just means it’s not a deal breaker immediately because something isn’t permitted.
What’s going on everyone? My name is David Greene, and if you don’t know, now you know. This is the best, the biggest and the baddest real estate podcast on the planet, and we are here to talk with you. In today’s episode, a Seeing Greene style show, I take questions from you, the BiggerPockets community, and I answer them for everyone to hear, and boy is it fun.
We get into some tough stuff that doesn’t get asked very often, and I had a very fun time answering some challenging questions. These included topics like, “How much of the money that I am making in savings should I be investing? Is there a formula that I should be following?” “Should I pay off the existing properties that I have right now or should I continue to expand? I’m not sure what the right road is for me.” And, “I’m buying a property, but it’s not all permitted. Should I go forward with it or should I not? How do I know what to make of this?” All that and more on today’s show.
Before we get into it, I have a quick tip for you. This is very near and dear to my heart, and I hope all of you listen closely.
Wealth building is about more than just buying property. I know you are here to learn about real estate investing and that’s what this show is. But it would be wrong not to tell you that if you want to build wealth, you also need to save money. Now, this is like telling you that you need to eat your vegetables. I understand no one likes it, but pay attention to where your money is going.
Tracking your expenses is incredibly frustrating, but incredibly fruitful. I’ve been sharing this within the communities that I run, all of the people that are following me, I’m telling everybody, we have a recession coming down the road. Every dollar you make needs to be protected. There are people that want to take it from you. Get serious about saving your money so that when the right deal comes, you’re in a position to take it down. All right, let’s get to our first question.

Matthew:
David pilf study Greene, thank you so much for taking my question. My name is Matthew Van Horn. I’m from Memphis, Tennessee. I have a small portfolio. I own three short-term rentals here in Memphis, and I have a side business managing short-term rentals for other folks. By the way, if people don’t understand the pilf study reference, they need to listen to episode 674 with Ashley Hamilton. It is informative and very, very funny, I thought.
David, my question is this, how often should I invest relative to my savings rate? I hope that makes sense. Just to throw out an example, let’s say that I’m able to accumulate $5,000 per month, whether that be from job, business, real estate income. Let’s say I can accumulate $5,000 per month that can be reinvested toward future deals. Is there any formula or some sort of rule of thumb that says how often I should invest that?
Is there kind of a rule of thumb that says you should invest once per year, so I should invest when I have that 60K after a year? Does it make sense to invest just simply as often as I can no matter how small the deals are? Am I asking a dumb question? Just hoping you can help me out with this, David, I appreciate you.

David:
All right, thank you, Matthew. I appreciate seeing you again and yes, that was a hilarious episode with Ashley Hamilton. I highly recommend everybody who likes to laugh to go listen to that one. It was very fun as well as inspiring.
All right, let’s talk about your question. I’m going to do what I normally do. I’m going to start with a broad take on it and then slowly get more narrow. My personal opinion, this is just David Greene talking right now. I’m not representing everyone at BiggerPockets or everybody in the world.
Is that it doesn’t work to frame the question the way that you did, but yet we all want to do that, okay? So people will say, “What percentage of money should I set aside for repairs or emergencies?” People will say, like you, “What percentage of my income should I be investing?” There’s this comfort that comes from clear, concise formulas. If I can put it in a spreadsheet, it makes me feel like I’m being safe and I’m doing the right thing.
The danger in this, is that life does not work according to these rules that we create. A lot of these rules, if I’m being completely frank, come from financial advisors that are selling people like you that are listening to this, on methods that come with the inherit comfort, but they’re not real, okay?
So when Suze Orman or Dave Ramsey or whoever the stock trader person that you’re listening to is talking, they have to package the information in a way that your brain can receive it and say, “That makes sense. I will do that.” They’re trying to get you to take action, which is not inherently wrong. It just becomes dangerous when you think life works in a spreadsheet because it really doesn’t. Okay? And it actually becomes constricting for your own growth when you think this way.
I had to go through the same little thing where you are, where Morpheus is holding out the red pill and the blue pill and he is like, “You could take the blue pill and you could wake up and you could go right back to how you thought before, or you could take the red pill and you could accept the truth, but it’s going to be very discomforting.” And so I can’t tell everybody when they need to take that pill or if they should. You have have to make that decision for yourself. Okay?
So I don’t want to make it sound like I’m insulting you, Matthew, because I’m not. You’re asking a great question that applies to so many people. I’m just trying to give some background that you’re not going to hear in other places. The reality of real estate is you don’t know when the thing’s going to go wrong. Okay?
I’m going through a process right now where I was kind of forced into it by someone stealing title to my properties and me having to sell and going into a 1031 and buying a whole bunch of real estate in a very short period of time, and then the perfect storm hit me. I can’t get cities to approve permits. I can’t get architects to drop plans. I can’t get contractors to finish jobs. I’ve got eight vacant multimillion dollar properties that are bleeding right now, and there is nothing I can do to get out of this mess. I did not see this coming because I didn’t realize how bad the permit process would be.
If I didn’t have wildly big reserves because I’m extra conservative, this could tank me. I’ll be fine because of the reserves, but it doesn’t feel good. It sucks in the short-term. And if I set it up where I have six months of reserves for every single property and I put it in a spreadsheet and this is the way that it works, I’d be screwed right now.
I take a different approach. When I took that red pill, which is not to be confused with political stuff, just that understanding that it’s not going to work in a spreadsheet with real estate, I realize that there are three pillars that I need to focus on and excel at, that actually work, whereas the spreadsheet approach doesn’t.
The first pillar is defense. I have a challenge every day. What percentage of my money can I save? Can I avoid buying the Ferrari? Can I avoid spending money extravagantly just because I have a lot of it? When I travel and I go to a hotel, do I upgrade to the presidential suite just because I want to look cool and I have the money to do it or do I stay disciplined and not do it? When I travel, do I make sure that my assistant is still looking for the cheapest flight, not just taking the shortest road of, “Oh, David’s got plenty of money. I’ll just book him on this flight.” That’s losing at defense and defense wins championships, so I’m always keeping my spending low.
That doesn’t mean I’m depriving myself, but I don’t spend money just to spend it. You will never see me, I hope, pouring out champagne from a bottle that’s expensive. Just so everyone knows I have so much money I can burn in. I think that’s wildly disrespectful to the finance gods when you live that way.
The next pillar is offense. Am I making as much money as I possibly can? You’re saying, you’re making five grand a month. I would much rather have you asking a different question, “David, how can I make more than five grand a month? How can I double the amount of money I’m able to make and save?” Rather than, “At what rate should I be investing the money that I am making?” It’s just a better question to ask. If we’re all keeping our pedal to the metal with offense, we’re making as much money as we can. We’re growing personally. We’re looking for ways to challenge ourselves. We’re getting out of our comfort zone.
And the third pillar is investing. How do I invest as prudently as I can? Now, this is, you’re sort of asking me a question in Spanish and I’m answering it in French. I understand this can be confusing. I’m just saying, I don’t think I can answer the question you’re asking because the world does not work that way. It works that way if it’s like, “I’m going to invest in stocks, they’re going to get me a 7% return and I can calculate that in the next 40 years of time, if I invested a 7% return, I can expect to have X amount of money.” The reason that doesn’t work is because inflation is higher than 7%, not just CPI inflation, but how much money is being printed.
Those predictable strategies that are comforting will cause you to lose. You cannot keep up with how much money is being printed doing that. The only way you win now is by excelling at the three pillars. Saving as much as you can, making as much as you can, investing the difference.
Now, when it comes to investing, I’m not going to say every month you should be spending 5,000 or investing it, or when you get to 60,000, you should spend 40,000 of it, okay? What I’m going to say is you should be looking to excel in the pillar of investing, which means finding the best deal that you can.
You might not buy a house at all for three years, and at the end of those three years, you come across two deals that you can buy for 400,000 that will have an ARV of 600,000 and will be great short-term rentals that will cash flow incredibly strong and you got to buy them both. That’s more realistic for how things work out.
You might put your attention on offense and make more money and in the process of taking on more investors and managing their houses for them, challenging yourself in that way, a couple of them are like, “We don’t want to own these anymore. Do you want to just buy them from me?” And you get great deals that you’re like, “Oh, if I wouldn’t have spent all my money on mediocre deals because I was supposed to spend it at a certain rate, I would be able to buy these amazing deals.” That’s much more my style.
I might not buy much real estate over a three or four year period and then go buy a whole bunch of them at one time when I see the market open up. I might buy a lot of one asset type and then switch and move into another one and make big moves in these moments, because I’m not asking to live life in this predictable way that you’re saying.
Now, Suze Orman could answer this question. There are absolutely financial people that could, they’re probably not real estate investors. Because real estate investors got to jump on the deal when it comes. I would much rather have you say, “I buy great deals. I’m looking for great deals. I will be ready and liquid to pounce when I see a great deal. I have all tools in my toolbox that I can use.” Like seller financing or whatever it is that you can excel at to get those great deals. But you don’t control when a great deal comes. What you can control is how much money you’re spending, how much money you’re saving, and how much money you’re making.
So I want you to come back, go to biggerpocketes.com/david, send me another video, and I want you to say, “Thank you, David. I’m a little upset you didn’t answer my question, but I’m going to forgive you. What advice do you have for me, for how I can make or save more than $5,000 a month? Here’s what my business looks like.” And we will take the question from that angle.
For everyone who’s listening, I hope this made some sense, okay? You got to look at money differently if you want to be able to accumulate it like the wealthy people do. Wealthy people don’t ask questions like that. You’re not going to see the people that are really, really good with money saying, “How much of my money am I supposed to spend out or invest out of the month?” You hear them saying, “Where are my opportunities? How do I take advantage of them, and how do I push myself to be a better version of me tomorrow than I was today?” Our next video clip comes from Branco in Raleigh, North Carolina.

Branco:
Hey, David, what’s up man, it’s Branco with eXp here in Raleigh, North Carolina? I’ll be brief. Thanks for everything you do, man. My wife and I we’re both 29 years old, make about $250,000 a year, have four homes, three house hacks, and one off-market deal.
For the sake of this question, we would just pay off the three house hacks, and that’s basically the question. Plan A, pay off. Plan B, don’t pay off. And the reason we even think about plan A paying off is because after paying off the $750,000 worth of mortgages, we would fund the great life, which is about 10 grand, 11 grand, cash flow, and that would still play around with HELOCs from those properties and still look for other deals, which is fun for me.
Plan B, would be to keep doing what we’re doing and buying a house like a year, house every year and a half, two years maybe, and I know that plan B financially makes more sense because we would have more properties obviously, but I don’t know. It’s just since it’s already funding the life, it’s just is enough, enough and I don’t know. I would still look for deals, so it’s tempting to pay it off.
We, again, I’m an agent. Maybe I’m thinking about it because market’s kind of slowing down. I don’t know. Any advice, wisdom would be greatly appreciated. Take care, man. Bye-bye.

David:
All right, Branco. This is a good question and I appreciate your transparency. This is going to be the last question. We’re going to have to break it down a little bit deeper. I can’t just give you your answer.
There are merits to both approaches, paying off your real estate, living off the cash flow, not trying to be a multi, multi, multimillionaire, just living a good life or using leverage, using the skills you have as an agent, using the knowledge you’re getting on BiggerPockets, using the skillset that will continue to increase every year to get better and better deals and build a bigger life. Okay?
I can’t tell you which is the right road for you and you know that. Here’s what I can tell you. The approach to paying off your real estate made much more sense when interest rates were really high. It also made much more sense when we weren’t printing money like we are right now. That doesn’t mean that I’m telling you the other option of continue to scale is better for you. I’m saying that the scales are tipped in the favor of the people that are growing because of all the money that we printed. Let me give an example.
I remember very clearly a certain point in my life, I was probably 28 years old. I had just bought my house in Discovery Bay, California. It was a foreclosure. I paid, I believe I paid 272 for it. I bought it at an auction, used an FHA loan to get it, and I put three and a half percent down, but I was at a point where I really wanted one of the new Corvette’s. They were like the Stingray model had come back. They were super cool.
I had probably seven rental properties, a couple in California and a couple in Arizona. I hadn’t gone out to Florida yet, and I had talked with Tim Rhode, who we’ve had on the podcast several times about my future, and he’s like, “Figure out how much money you need to retire, work to that number, stop when you get there.” So I was like, “All right, if I got five grand a month coming in for rental properties and I got five grand a month coming in for my retirement as a cop, oh my god, 10 grand.” That’s way more money than I would ever need. And if I pay off my house, I could drop my mortgage by another, it was $900 or something like that.
Here’s what’s crazy. When I was 28 years old, 10 grand was significantly more money than what it is right now. So my plan was I talked to another police officer, Shane Caduti, and he’s like, “Why do you care so much about money? You don’t need it. Buy yourself a Corvette and enjoy life.” And I actually had planned on hanging it up like, “Okay, I got my rentals. I don’t need to worry about this stuff anymore. I’m just going to buy that Corvette. I’m going to keep a little lump sum in the bank to cover me, and then I’m just going to live an easy life.” Something did not sit right with me.
It was not greed, it was not ambition. I didn’t have to prove anything. It was this little still voice that was like, “This is a huge mistake if you do this, don’t do it.” And I actually went a different route. I told somebody about my dilemma, they connected me with the Bank of North Florida. I got a line of credits to start buying rentals. I learned the BRRRR method. I sold one of my Arizona houses. I went and bought about 10 or 11 more properties in Florida with the same 80 grand that I just kept recycling through BRRRR.
I got way better at understanding construction, finding deals. I negotiated because I was doing this so often, I grew that to probably 40 properties or so in Florida, plus my other ones. I got better. I wrote a book called Long Distance Real Estate Investing. I got involved in BiggerPockets, here I am today teaching this stuff at a high level as a business owner that owns different companies and I can influence a lot of people.
Real estate did so much more for me, than just gave me five grand a month to live a life. And here’s the scary thing, when I look back at where I was, if I’d hung it up, I would still be working as a cop. I would only have five grand a month of passive income, maybe with rent bumps. It might be like 6,500 or something right now.
But living in the Bay Area, Northern California, that is not, I don’t want to make it sound like I’m elitist because I definitely love a modest lifestyle. It’s not a lot of money. You can live like that, but you can’t travel anytime you want. I wouldn’t be able to just go to Hawaii to go see Brandon. I would have to budget when I actually can travel. I would not own the condos that I own in Hawaii that I’m able to send family members to business associates to close friends I have.
One of my favorite things is when a couple that’s close to me is going through marital problems, I could just send them to my Hawaii condos and be like, “Listen, I’m taking care of everything. I’m paying for your plane. I’m paying for a babysitter. I’m paying for the condo. You’re going to go and you’re going to have a good time.” Or I can send family members that love it. My mom loves visiting those places, Hawaii is her favorite thing.
I could not do that if I didn’t have those properties and I absolutely would not have them if I had retired earlier. I’m not trying to sway you in any direction. I’m just being honest about this idea that I had, that if I just stopped growing and I stay where I am, was wrong, I would not have stayed where I was.
Inflation, things probably cost a legit three times as much as what they, at that time in my life, I could probably buy a steak at Safeway for eight bucks. That same steak is like $25 right now. It is. Everything is so much more money. That car that I was driving eventually is going to wear down. I bought that thing. It was a brand new Camry and I bought it for 22 grand. It was so cheap by today’s standards. Now, that same car might be 40, 50 grand or more for just a normal base model car.
Well, I’d be screwed when my stuff wore out and I had to go buy another one. The repair is on the house I live and the house payment is the same, but everything costs more money to me to fix up because of inflation. And I realized that the world isn’t going to stop growing just because we stop growing or we stop working. You’re always in a uphill battle. Things become more expensive with time.
So I would encourage you to strongly consider continuing to work as an agent, continuing to invest in real estate, continuing to house hack every year, continuing to make decisions that will make the version of you 10, 20, 30 years down the road happy, and not take the assumption that everything’s hunky-dory. That everything will be fine, that you’ll pay off your properties and you’ll be fine.
That money that you could get from paying off your properties could very well not be enough to live on. You might have another kid, you might get a sick family member. The market for real estate agents might change and commissions go away. You can’t make a living like that anymore, and you find yourself having to go back to work in a factory not liking your life because we cannot predict what’s going to happen.
I think it’s a big mistake when we assume the best. The world’s going to get easier, it’s going to get better. We can just stop. You don’t know what’s going to happen. What if you get sick or you end up dying and your family is left without their breadwinner? If you have a bunch of real estate they can sell, that’s some money that they can live off of. If you’re gone, it’s not the same case.
So you could tell that I’m leaning more towards. You’re a young guy, you’re ambitious, you’re working as an agent, you’re well-spoken, you have skills. Freaking use them. I would never tell someone that was really into fitness, “Go win a fitness competition and then retire and never exercise again. You don’t need to.” It’s true you don’t have to, but why would you want to get unhealthier? Once you’ve learned fitness and you’re good at exercise and you’re good at eating good, you don’t have to compete at the highest level ever, but why would you throw that away? It’s easier for you to exceed at these things than it would be for other people.
So if the genesis of your question is coming from maybe shame or guilt, like, “I shouldn’t be this ambitious. I don’t need this much.” Don’t buy into that. I had to face that same battle, and I never became a greedy a-hole. I never became the person that was buying Bugattis and McLarens with all my money. I never bought a private jet. I still live in that same house, believe it or not. I never went and bought a Big Baller property. I don’t need to. I don’t have a family right now. That property is fine. In fact, I could probably downgrade.
I could move into one of the units of the short-term rentals that I’m developing and sell that house, and I might end up doing that. I don’t need a humongous property. I didn’t assume that everything would go better. I knew it could go worse, and I am so glad. I am so glad that I built the businesses and I kept expanding that I kept moving forward because money is now becoming an issue for more and more people, and the more of it I have, the more I’ll be able to help.
So hope that helps answer your question. If there’s any further clarity I can give, please send us another video. Let me know. “Okay, David, I heard what you’re thinking. Here’s my question about what I should do. I’d love to follow up with you and thank you for being vulnerable and showing us all the question that many people in your boat are all facing.” Our next question is a video submission from JD Mims.

JD:
Hi, David. My question is about real estate agents. So I am looking for a property here for my personal residence in California in Sacramento, and I found a place that checked all of the boxes. The only issue I had was there was some work that was done to turn it into a duplex that was not permitted.
Now, I asked the agent about the permits because I haven’t actually bought property here in California, so I thought perhaps it works differently by state, and so I said, “This is my concern. The work hasn’t been permitted. I’m worried about what will happen if I try to sell it and if I put a renter once I move out.” The agent is a newer agent, so he asked his boss. His boss says, “Well, as long as the work is done in a workman-like manner, then you’re fine as long as the appraiser comes in and it passes the appraisal.” I reached out to the city and they said that, that is not true.
So my question is should this be a deal breaker or is there some type of a gray area that I’m not understanding? Because I feel like the answer that I was given was just to pacify me, because we’ve been looking for a while and the market is very difficult and they just wanted me to buy something and move on.
But my feeling is that it should be a big deal, but I don’t know if I’m making it bigger than what it really should be, because I feel like as an agent you should be looking out for me and give me correct information, but I don’t know, maybe there’s a gray area. Maybe I’m making it a bigger deal than it needs to be, so I would love your feedback on this. Thank you.

David:
All right, JD, sounds good. Let’s break down this situation because you’re not the only one who’s here. Man, there’s so many angles to tackle with this.
First off, when you’re saying, “Is this a big deal?” We have to define what big deal is. There’s many different angles to approach this. So the analogy I’m going to give is when we talk about there is free speech in America. Okay? This is something you deal with a lot when you’re in law enforcement or if you’re following what’s going on with social media.
There is free speech in America. The problem is when somebody says something offensive and then people get mad at them or they lose their job or they get kicked off of a platform or something like that, the response is always, “Well, I have free speech. You can’t do this to me.” It’s just they’re applying it in the wrong way. In the arena of other people liking you or the job you’re holding or the rules of whatever that social media platform are, you can’t just say anything. They have their own rules.
In the arena of the penal code, you do have freedoms. You can’t go to jail for saying, “I don’t like the president.” But you can lose your job, I suppose for saying something like that. Private companies are allowed to have their own set of rules whether you agree with them or not.
The protection of free speech does not apply to everything. It just applies to the government being able to punish you. You can’t get an infraction or get a citation for saying something unpopular. And when people get confused about that, then they don’t know what to make of it because they’re like, “Well, isn’t there laws to protect my free speech?” They’re like, “Yeah, but that doesn’t mean that you can do certain things in certain environments without consequences.” Okay? This applies to your permitting situation.
Is it a big deal? Well, if you call the city and say, “Does it need to be permitted?” A hundred percent of the time they’re going to say yes. They have to say yes. This would be like when I was in law enforcement, and someone walks up to me and they say, “Hey, I want a jaywalk right now. Am I allowed to do it?” I am not allowed to say, “Yeah, go ahead and jaywalk.” Because if you get hit by a car, I’m going to be responsible for that. So I can’t say, “Yes. Go jaywalk.”
On the other hand, does it mean that I chased down every single person I saw across the street without using a crosswalk? No, I probably didn’t care unless it was a super busy intersection and they were causing a big deal. That’s the best example I can give for permitting situations.
The reality is, every property I’ve ever seen in my career is not up to code. Okay? Most cities in the Bay Area where I live require you to get permits, if you change the flooring, if you change the faucet, if you change your landscaping in the yard. If you actually look at what the city requires you to get permits for, it’s everything.
Even homes that are built like new home construction are not up to code with every single thing. Now, that does not mean it’s okay to not get permits. It just means it’s not a deal breaker immediately because something isn’t permitted.
Also, I’m going to tell you, and everyone was going to tell you, always get it permitted, but that’s because people have to tell you that. It just isn’t practical that everyone’s going to do that. Now, if you’re trying to figure out, “Will this get me in trouble?” It depends on what the stuff is.
When you say work was done without permits, you didn’t give me enough specifics on what happened. If they put up some drywall or some sheetrock or something and they didn’t get a permit, they turned one living room into two bedrooms. I’ve never seen in my career, it doesn’t mean it can’t happen. I’ve just never seen, the city get involved and say, “You put up drywall without a permit, you’re in huge trouble, we’re going to put you in jail.”
But what if the property is in an area that is zoned for single-family properties and they are operating it as a duplex? The zoning situation could become a big deal. If you’re not allowed to have more than one door in that neighborhood and you’re working in it as two doors, they could shut you down. The city could go in there and say, “Hey, this isn’t going to work.”
Now, California, because you mentioned you’re in Sacramento, does have laws that prohibit municipalities from not letting you put an ADU in your property. So this is one work-around when the city tries to say, “You can’t have a second unit, you can’t make it a duplex.” Where you can come in and say, “You can’t stop me from doing it. I’m allowed to have an ADU.” The city can come back and say, “Does this unit that you are calling an ADU meet the requirements that we have spelled out as an ADU?” That’s the one of the ways I would take your question to your agent or the city.
“Hey, this property had work that was done. It’s now a duplex. Will the second unit count as an ADU?” And I’d get information on that to see if maybe you’re going to be covered there. I might also say if I buy the property and the work wasn’t permitted, what are the consequences that could cut? Maybe the city says, “We have no idea. If nobody complains, we’re not going to care.”
Maybe the city says, “Oh, we would send an inspector immediately and make you fix the work.” But I think JD, you got to do a little bit of legwork to figure out what is actually going to happen. The vibe I’m getting, is you’re wanting your agent to do this legwork for you and tell you this is a big deal, and then possibly go to the seller and get the seller to drop their price or get the permit work done, and you want everyone to be like, “Oh, we cannot let this stand.” And that’s where your frustration might be coming from.
The seller’s probably not going to care because the seller knows that nobody has work done with permits. That there’s another buyer that will buy the property and they might not care about it whatsoever. The permit thing is such a hot button topic because there is no clear line in the sand that we can navigate these situations with, which is what we want. It’s more comforting when it is clear what should be done and what shouldn’t be done.
I can’t give you a more direct answer because I don’t have any more information, but what I can say is I wouldn’t be mad at your agent for the response they’re giving you, because this is what every agent everywhere is going to say. I’ll also say it’s not immediate, it’s not permitted, so don’t buy it because almost every property, probably every property I’ve ever seen has some form of work done that was not permitted. But I don’t know the type of work.
If they took a single-family home and they put this, they literally built an extended, the square footage of it and they didn’t get any permits and you don’t know if it was done safely, that’s a huge deal. You can’t just build onto a house with, maybe the contractors didn’t do it. Maybe the homeowner built it himself.
But maybe they just took an area of the home and they walled it off from the rest of it, and even though they didn’t tell the city the work was still done up to code and still done safely, and it’s perfectly fine. I think you need to get some more specifics on the situation before you make your decision on if you should purchase the property or not, and unfortunately I didn’t get those, so I can’t give you a more direct answer. Hopefully, the advice that I have given you does help with the decision you have to make.
All right. We’re moving on to the part of the show where I get to share the comments from previous shows on YouTube, and I love this. I want to encourage you guys to please leave more comments for me to read. The funnier, the more insightful. The more clever, the better. And even if it’s something that you don’t agree with or you want more clarity on why I said what I said or you’re confused or you have a topic you want us to talk about more, tell us in the comments. We read them for every single show and we incorporate them into future shows.
Our first comment comes from John Conrady. “David, you are a boss and have been so helpful in my journey. Just want to say you explained things super clear and keep up the good work.” Thank you, John.
That’s probably the hardest part of the job. It’s not always knowing what to tell everybody. It’s, how do I say this clearly without leaving out anything that could get somebody in trouble without taking too long where I lose their attention. This is always where my stress levels come from when I’m talking is like, “Did I leave anything out or did I say too much and how do I find that perfect balance?”
Zachary Hitchcock says, “I love the podcast and it has helped changed my behavior from paycheck to paycheck to being on my path to long-term generational wealth.” Zachary, that warms my heart. Love hearing that.
He goes on to say, “Question. I’ve learned quite a bit from these podcasts as well as books about negotiation. What is the best way to go about utilizing this knowledge while having to negotiate through agents? Is it taboo to speak to a seller agent directly or is it best to focus energy to strategize with my agent?”
Yeah, that’s tough. I’m tempted sometimes to go around my agent and also, and I’m an experienced person. In general, you don’t want to do that. What you probably want to find is you want to choose an agent that is receptive to your advice. So when you say, “Hey, I want you to go say this.” You want the agent that actually listens to you and says, “Okay, I’ll go say it that way.” Or pushes back and says, “I don’t want to do it that way.” You want to get the impression the agent cares about how they’re negotiating, okay?
What most agents do, they’re not very good, is they say, “I don’t want to do that. Let’s just write them something. Let’s just put it in writing and send it over there.” But they don’t think about presenting it in the right way. It is tricky. The problem with you talking to the listing agent directly is you’re still, you want to be talking to the seller. You go talk to the seller’s agent and then your words get put through their filter as it comes to the seller and it still isn’t going to be what you want.
It’s very difficult to negotiate the way that I describe when it’s through agents. You just want to make sure you pick an agent that has some skill in this area, and when you communicate with them, the better that they’re able to sell you, it’s very likely that they’re able to sell the other agent in the same way.
These comments come from episode 717, by the way, if you guys want to go check that one out. The next one comes from Joe Chavez, “Golden Girls. Blanche Devereaux was the original house hacker and who wouldn’t want Sophia as a tenant? Picture it. Sicily, 1925 looking for a BRRRR.” This is hilarious because we talked about Golden Girls on that episode and yes, I suppose Blanche was a house hacker, having all the other girls living with her. “House hacking before and had a name goes right back to Golden Girls.” Well done, Joe. That’s hilarious.
Steve Borowski says, “Wow, hold on there, David. People were stealing titles to your property and you just glazed over it. I get that you don’t want to go into personal detail about the issue, but I would love it if you could talk a little bit about how to protect yourself from such things. In my mind, I’m thinking if it can happen to David G, it could happen to me and how do I avoid it?” Yeah. I’m trying to not become a target of that more in the future and the way that this worked out, it could not have been avoided, unfortunately.
So I’m restructuring things to make it so that this can’t happen again, but title theft is very real and it is caused a cascade of problems for me. It forced me into a 1031. I bought more properties at one time than I wanted to. The city permits have come in and they’ve screwed things up. I’ve had all kinds of issues with trying to get stuff approved.
I had people on my team that were managing my portfolio that had to quit from this. It’s been absolutely horrible and it’s put me into a place where I’m trying to claw my way out of the disaster, but that create, but that happens with real estate. That happens with life. You can’t turn yourself into a victim just because you got dealt a raw deal. And in my experience, when you continue to do the right things, God, the universe fate, however you want to look at it, will work this around for my benefit in some way.
So the reason I’m not sharing more details about that how that happened is I don’t don’t want to dangle it out there for more people to learn how they could go do the same thing. I think there’s a lot more predators out there looking to steal other people’s stuff than we’re aware of, but if you would send me a message, I do talk about it in a private group that I run. If you’re in that group, you could hear more about it there, so thank you.
All right, everybody. That is our show for today. I hope you enjoyed listening to that as much as I enjoyed making it. I also hope you’re enjoying these Seeing Greene episodes. Again, if you want to be featured on here, go to biggerpockets.com/david and submit your question. I would love to answer it and please continue to engage in the YouTube comments.
Lastly, if you are liking this and you liked it, you don’t have to pay for it. All I would ask that you would do is go to wherever you listen to your podcast, Apple Podcast, Spotify, whatever it is, and leave us a five star review and just tell people why you like the show. That helps a ton.
If you want to know more about me, you want to see what I got going on, you want to want to kind of like peek the curtain and see what is going on in Greeneland, you can follow me @davidgreene24 on all social media.
You can also check out my new website, davidgreene24.com, and then DM me or let me know what you think of the website. I had to pay a lot of money to get this thing made. It is launching very soon or probably should be out by the time this is there, so please give me some feedback on that.
And lastly, if you have some time, watch another video, listen to another podcast, educate yourself further, and if you don’t, I’ll see you on the next episode. Love ya. Appreciate you. I know you can be getting your information from anywhere, and so I appreciate that your attention, the most valuable commodity you have is on us at BiggerPockets.
Check out the BiggerPockets website with the forums if you want to learn more, and you don’t want to have to do so by listening, if you like reading, I’ll see you guys on the next show.

John Kim, real estate analyst at BMO Capital Markets, joins ‘The Exchange’ to discuss the state of the REIT market as well as companies rethinking office investments.

I recently got introduced to Alyssa Hitaka at TopTierStartups.com, a new content site rich with startup related news, tips and interviews with startup founders. I was curious what her startup founders were seeing, in terms of the best marketing strategies they are successfully using today. Alyssa was kind enough to interview ten of her founders, to get those learnings. And, we are both pleased to share those learnings with all of you, to help you with your own marketing efforts. Here is the list:

1. Katja Kaine at The Novel Company: Word of mouth and great customer service

Word of mouth is one of the most important ways a founder can get the word out about their products or services. Katja Kaine, founder of The Novel Company, has focused on slow and organic growth of her innovative writing technology, gradually building up a strong reputation among customers. Katja also emphasizes the importance of engaging with customers personally—she responds to all emails herself, which indicates to users that the company truly listens and cares, further boosting loyalty.

2. Robert Brüll at FibreCoat: LinkedIn and startup awards

LinkedIn is a must for just about any modern-day professional, and Robert Brüll, founder of high-performance materials startup FibreCoat, encourages fellow entrepreneurs to make the most of the platform to market their brands. His company also regularly participates in startup award contests, and winning awards helps his business build its reputation, secure positive feedback, and gain traction among the target demographic. When paired with FibreCoat’s powerful LinkedIn presence, these awards stretch even further and help drive more traffic at live events, which further boost the company’s reputation among consumers.

3. Vita Valka at Camperguru: Connecting with consumers in real life

These days, a lot of brands rely on digital media to promote their products and services, and Vita Valka’s Camperguru has also leveraged the algorithms at Facebook and Pinterest to evoke interest and familiarity with the target demographic. What gives the innovative camping app its edge, however, is the connections its team of ambassadors make with campers on the ground. Camperguru’s team of passionate campers tour some of Europe’s best campgrounds and, in the perfect locations with highly concentrated groups of avid campers, spread the word about the app in person.

4. Wolfgang Rückerl at Entity: High-quality content and interactivity

Content marketing is a major growth driver for a lot of businesses today, and Wolfgang Rückerl affirms its powerful role in growing his blockchain startup Entity. Focusing on valuable information, crisp graphics, and thorough explanations of the company’s more technical aspects, Robert has built up a solid community of users for his app. An important addition to his marketing strategy is engagement and interactivity on social media, with Entity regularly designing contests, games, and events for users and prospective users to participate in. Robert credits this interactive marketing approach to strengthening trust with followers and driving growth of the platform.

5. Stefanie Palomino at ROOM: Maintaining a holistic approach

There’s a lot involved in promoting your new startup, with many ways to approach marketing and many factors to consider throughout your company’s continued interaction with consumers. Stefanie Palomino, founder of innovative telecommunications application ROOM, stresses the importance of adopting a holistic approach to marketing. She encourages entrepreneurs to consider the full user journey, from their first acquaintance with your brand to their continued use of your service or product. The data you collect from existing customers—both quantitative and qualitative—can help inform your precise marketing strategy, building lasting relationships and trust with loyal users.

6. Deanna Visperas at GoVirtuals: Influential staff as a marketing strategy

The staff of a company define its aura and atmosphere, and how a company feels can have a major impact on prospective customers. Deanna Visperas, who founded virtual assistant company GoVirtuals, firmly believes that her marketing success is rooted in the influential individuals who staff her team. According to Deanna, thought leadership and employee advocacy are key to building a brand’s reputation and cultivating trust among consumers, so fostering your employees’ talents and influence is a great way to grow your business. Happy employees can lead to happy customers.

7. Mark Brouwers at Nocto: Collaboration with similar brands

The startup world is big, and while similar companies are conventionally viewed as competitors, Mark Brouwers reveals why it’s often better to see them as partners. Mark has built up his unique hospitality connector platform, Nocto, through collaboration with similar businesses who share goals and target demographics with his company. Designing win-win strategies help both companies grow, and as an added bonus, collaboration generally means you save time, money, and effort. This marketing strategy will also allow you to forge meaningful relationships with other professionals in the industry, which can open all sorts of new doors for your brand.

8. Siebe van Mensfoort at Simbeyond: Leveraging industry events

Though online marketing makes up a huge portion of modern-day companies’ promotional efforts, offline marketing can be just as powerful, if not more. Siebe van Mensfoort, founder of Simbeyond—a startup that creates software tools for the development of high-tech devices—regularly partakes in industry events to boost his brand. This marketing strategy takes him all over the world, to conference presentations and exhibitions alike, and has allowed all sorts of interested prospective customers to discover Simbeyond. As a bonus, regular participation in industry events gives Siebe a solid grasp of the latest market innovations.

9. Sam Kynman-Cole at topVIEW: Google Ads and direct calls

Sometimes, the simplest marketing approaches are also the most effective. Sam Kynman-Cole from topVIEW, a digital startup that allows businesses to create virtual 3D tours of their indoor spaces, recommends Google Ads as an effective strategy for B2B companies. However, he highlights directly reaching out to potentially interested parties as his number-one marketing approach. Phone calls are the best, Sam advises, but a personalized email is also effective for less urgent situations. He also praises LinkedIn as a great way to make direct connections with specific people, much like personalized emails.

10. Joe Menninger at Startuprad.io: SEO and media exchanges

Search engine optimization (SEO) is a major buzzword in content marketing, and for good reason—it boosts your rank in search engines, helping prospective consumers find your brand. Joe Menninger, founder of Startuprad.io, an English-language podcast covering startup news in the German-speaking world, highlights how crucial it is to create transcripts of podcast episodes. For each episode, he generates a transcript and a detailed blog post, which allows him to deliver high-quality audio content to listeners while still tapping into search engine algorithms. Joe also collaborates with other podcasts, creating a win-win scenario that boosts the followers of both shows.

So, hopefully, there are some useful “nuggets” here for you all to use in your businesses. Thanks again to Alyssa for her research and helping me create this post.

—

George Deeb is a Partner at Red Rocket Ventures and author of 101 Startup Lessons-An Entrepreneur’s Handbook.

Ashley:
This is Real Estate Rookie Episode 266.

Tony:
Most people, when they’re going into a house hack, their goal isn’t necessarily to make $500 a month in cash flow. Their goal is to subsidize their cost of living. So if you can cover the majority or sometimes all of your mortgage by renting out these additional units, then you are probably doing a pretty good job, because now you’re able to save that money you would typically be spending on your rent or your mortgage, say whatever, it’s 2,000 bucks a month, and now you can put that aside to start saving towards your next property. So for a lot of people, when they’re house hacking, not necessarily the cash flow, per say, that they’re looking for. It’s how much of my mortgage can I offset by renting out these units?

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 bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. And I want to start today’s episode by shouting out a really cool review that came in. This person loves us, a five-star review on Apple Podcasts. They go by the username TTWray, and the title of this review says, “Rookie Vitamins.” And TT goes on to say, “This podcast has given me the confidence to make moves. I was sitting on my mother’s home for about a year before committing to gutting and renovating it. But listening to Ashley and Tony every morning was like taking my morning vitamins. My real estate immune system got stronger, and I completed the renovation project, found a tenant, and now, it’s cash-flowing. I listen every morning as a part of my morning routine. I love how they break concepts down into nuggets that are actionable. No other podcast compares! Great job guys!”
That’s one of the coolest reviews I’ve read in a while.

Ashley:
Yeah, it is.

Tony:
So, TTWray, we appreciate you. And for all of our rookies that are listening, if you have left us a review, we appreciate you. If you have not yet, please take the two to three minutes out of your day to leave us an honest rating and review. More reviews we get, more folks we can help, and helping folks is what we like to do. So, Ash, what’s up? How you doing?

Ashley:
Well, you know what? I feel like I haven’t done this in a while since we recorded, but I feel like I really need to tell you guys more about my book that I just published.

Tony:
Yeah. [inaudible 00:02:20].

Ashley:
I feel like I haven’t talked at all, but here it is, right here, sitting here, the Real Estate Rookie: 90 Days to Your First Investment. There’s lots of mentions of Tony in here. But yeah, so if you guys haven’t checked it out, I would appreciate it if you look into it and see if it’s a good fit for you.

Tony:
How’s it feel, Ash, to be a published author? What’s that feeling?

Ashley:
Well, I sent my mom like 20 bucks, and she got the package in the mail and was telling me, “Oh, I’m so excited. Somebody sent me something, and then I just, ugh, just saw it was your… It was just books.” [inaudible 00:02:51]. I’m like, “Thanks a lot, Mom. Thanks.” But, yeah, so it launched on January 10th, and did a nice little dinner out to celebrate. And so now, I got to get a list together to publishing of all my friends to send copies to, and yeah. But it’s been pretty cool. Everyone should be getting their books now that did the pre-order pretty soon, and it’ll be exciting to hear what people think about it.

Tony:
Yeah, I love it. Well, I’m super happy for you. I know you put a lot of time and effort and energy into that book. And it’s so cool, because we already see what the Rookie Podcast is doing for folks. So the fact that you get to replicate that with this book, it’s so cool. So, I’m excited to see where it goes for you.

Ashley:
And Tony and I are working on a little secret something too, so you guys stay tuned for that too, because Tony may be an author soon too.

Tony:
Fingers crossed. We’ll see.

Ashley:
So, Tony, any exciting stories to tell us or any boring banter before we get into today’s episode?

Tony:
Let’s see. What’s the most boring thing I can think about that we can talk about today?

Ashley:
What did you eat this morning for…?

Tony:
You know, that’s [inaudible 00:04:05]-

Ashley:
You have the save meal every single day.

Tony:
Actually, so I’m gearing up my training for another competition. So I was initially planning to do a show at the end of April, but I think I might push it back to May probably, just to give myself a little bit more time. But I actually didn’t have breakfast this morning. I woke up, and I was doing stuff on the computer. Before I knew it, we had to jump in to start recording. So I had a protein shake for breakfast this morning. That was about it. But most days, my breakfast is 10 egg whites, two regular eggs, and then a little bit of oatmeal.

Ashley:
So, I don’t know what made me think of this, but like something that’s boring, I guess, in a sense. So, we’ve been implementing these Monday afternoon meetings. We were doing Tuesday mornings, but Tuesdays are when you and I record, and it’s just like, I have another call I do every Tuesday morning. So it was just like, too many calls in that day to actually sit down and focus on a meeting. So we moved them to Monday afternoons. And so we have an agenda built out. And so, it’s just me and my one business partner, Daryl. And, basically, we go through what each person did last week, what were our wins, what do we want to accomplish going forward, what are the things we need to prioritize, and then, what are the things we want to talk about next week? And then we just take the agenda, roll it over to each week.
And even if this is something you do with your spouse, your significant other, or your business partner, if you guys aren’t implementing this, I highly recommend it. It doesn’t take that much time. But with ours, we also have a section for travel, because we do a lot of travel together. So, last week, on our travels, we’re going to Tony’s short-term rental summit. And the one night, we’re actually going to Disney Springs for dinner, okay.
So we’re going through our agenda, everything, and one of the things was, pick the restaurant to book reservations for Disney Springs. 20 minutes later, we are in YouTube videos of the best and worst places to eat at Disney Springs. And it was just like, “How is this happening right now?” We could just fly through everything. Then we get sucked into watching YouTube videos on where we’re going to eat dinner one night. But it just goes to show that leaving those little things in, that adding things like that into your agenda that excite you or motivate you, because then it’s like, “Okay, we got to get all this work done now so that we can go and enjoy ourselves and not actually have to be like…” We want to use a lot of time for, obviously, enjoying your conference and things like that and not having to be like all these other things we got to do in the back of our mind.

Tony:
Yeah. And it’s an interesting point, because one of the things I’m really trying to focus on in this new year is less time doing and more time deciding and delegating. I feel like my time is best spent in my business at this point, not… If there is a meeting, almost no action item should be assigned to Tony. There is enough people that I work with now where I should be able to delegate that task to someone else. And really, the only thing I’m doing is deciding, I’m making a decision saying, “Okay, yes, this thing. Okay, not that thing. Yes, this thing,” and then handing it off to someone else, because there were moments where I was like, “Why am I doing this still?”
For example, we were on vacation earlier this year, or late last year, and we had a YouTube video coming out for the Real Estate Robinsons channel, and I was like, “Oh crap, we don’t have a thumbnail.” I was still doing the thumbnails. So I’m on vacation making a thumbnail. I’m like, “Why am I doing this? Why am I doing this?” And as soon as I got back, I found a graphic designer on Upwork. Now he does all of our thumbnails, and he does it way better than I ever could. Anyway, just as I’m thinking about next year, and for a lot of our rookies that are listening as well, as your business starts to scale, think about what are the things you should no longer be doing, and then delegate those off to someone else.

Ashley:
And also, making sure that it’s just the high-level decisions too, and that’s something I had heard Ryan Pineda talk about when I interviewed him in, I think it was Austin, Texas, maybe, at a conference there is he talked about how… Don’t even ask him the question. He’s high-level decisions only. There’s other decision-makers in place, and he only has to really think about those high levels that will actually make a huge impact on his business, where anything mediocre, there’s somebody else that’s making that decision too. So, he’s not overwhelmed with things, because he has everything’s set into place and his whole org chart set out as to like, “These are the things that actually need to come to me, and don’t bother me with anything else,” which I think is pretty interesting and, obviously, a great system to have set up. The hard part is actually getting yourself set up so that you are in that position.

Tony:
Yeah, and finding the right people and all those good things. So that’s always a challenge. And obviously, for our rookies, most of you are at the beginning phase of your investing journey, so don’t feel like you need to set this up on day one. But it is an important concept for you to understand so that as your business starts to scale, you know that the right decision is to start plugging people into these different roles so you can focus on the bigger picture tasks.
Like Ash, for me and you, the majority of our time should be spent in front of the microphone recording this podcast, in front of our computers writing our books, and doing other things that are super important.
All right, so today’s first question comes from Nadeem Chaudhry, and Nadeem’s question is, “Hi all. Learning more about doing property analysis and wondering, if I’m planning on a house hack on a multi-unit with an FHA loan, should you only worry if it’s cash-flowing once you hit 20% and get rid of your PMI in a high cost of living area? Otherwise, it seems as if no properties will be able to satisfy traditional rules around what a property should cash flow or make over the first year.” And just to clarify, I think when Nadeem says once you hit 20%, what she’s talking about is the loan balance in comparison to the property’s value, once you’re at 80% or less on your loan balance and your PMI goes away.
So, a couple things to break down here, Nadeem. I think the first question you have to ask yourself is what is your goal with this house hack? Most people, when they’re going into a house hack, their goal isn’t necessarily to make $500 a month in cash flow. Their goal is to subsidize their cost of living. So if you can cover the majority or sometimes all of your mortgage by renting out these additional units, then you are probably doing a pretty good job, because now you’re able to save that money you would typically be spending on your rent through your mortgage. Say whatever, it’s 2,000 bucks a month, and now you can put that aside to start saving towards your next property. So for a lot of people when they’re house hacking, it’s not necessarily the cash flow per se that they’re looking for. It’s how much of my mortgage can I offset by renting out these units? What are your thoughts on that, Ash?

Ashley:
Yeah, so, Nadeem, what you should do is remove yourself from the property and put somebody else in the unit or the room that you’re going to house hack in and see, okay, what would you be able to charge for rent on that? Does the property cash flow after you receive now that additional rent from the property? So I think using that as kind of a basis in looking at it that way, it will make you realize more as to like, okay, this is not a cash-flowing property. It’s more of like, yes, you are actually making money off of this, because you’re building equity, and you’re not having to pay any living expenses.
So, look at if for some reason, you had to move out of the property, would it still cash flow if you put somebody into your unit, or at least broke even on the property? But I love to cash flow, so if you can make it cash flow if you were to move out of the property, yes, great, but also, take into consideration if you were to go and rent a comparable unit, what would you pay and rent to live in that property too? And then kind of say, “Okay, that’s $1,500 I’m actually saving a month.” So definitely look into that. And then if you can live there and make money off of it and cash flow too, awesome, even way better, yeah, especially when you get down to that getting rid of your PMI, that definitely helps.
My sister, when she bought her house hack, she was paying, I think it was $45 a month to live there on that property, which, for her unit, probably had rented for like eight 850, $900 a month, and she was living there for $45 a month. So we consider that a huge win, even though she’s not getting any cash flow off of that property, which I think she is now, because she’s raised rent for the lower unit, and she’s maybe making $100 off of it or something, not paying anything now, but that was still a huge win to only pay $45 a month to live in that property.

Tony:
And Nadeem mentions that they’re in a high cost of living area. And I think it’s even more difficult to find deals that just create a ton of cash flow as a house hack in those kinds of areas as well. The only other thing you might want to consider, Nadeem, is, if you’ve got a multi-unit property, maybe instead of renting each unit out, can you rent out each room, right?
Say that you’ve got, I don’t know, like a triplex, and you’re going to live in one unit, and you’ve got two other units. Instead of renting out that entire unit, maybe it’s a 2/2 and another 2/2. Now you’ve got four rooms you can rent out, and what does that look like? And there’s ton of guests that have come on the podcast that have talked about the rent by the room strategy, but typically, you can maximize or increase your revenue per each unit if you rent out the rooms as opposed to renting out each unit. And we even had a guest, and I wish I could remember which guest this was, we had a guest that was doing that, but they also rented out the rooms in their own unit. Do you remember this, Ash?

Ashley:
Yeah. Yeah.

Tony:
He was sleeping on the couch in the living room just so he could rent out the other rooms in the unit. So there’s so many ways to maximize the revenue on a house hack.

Ashley:
Yeah, and you can incorporate different strategies too. So if you get a four-unit, if you’re in an area that demands it, turning one of those units into a short-term rental, then having the other two long-term rentals, or even doing one as a medium-term rental and renting it out for 30-plus days to traveling nurses or whatever, sometimes that can actually maximize your cash flow too, instead of just doing a long-term rental.

Tony:
Yeah, that’s a great part of having those multiple units, like you said, is you can throw a bunch of different strategies into each unit. So if you’re in one, say it’s a two-bed, you live in one bedroom, rent out the other bedroom, you’ve got one you’re doing as a medium-term rental, another one you’re doing as a long-term or a short-term rental, and now you’ve got income coming in a bunch of different ways. So that’s cool.

Ashley:
Yeah, Craig Curelop, who wrote the book, The House Hacking Strategy, you can find it in the BiggerPockets Bookstore, he would buy properties. He lived in Denver, Colorado, and he would rent by the room. He would have one of the rooms, rent out the other ones, and then, in the basement, he would make a basement unit, furnish it, and have the basement as the short-term rental. And that’s what he did with several of his house hacks. And then, after he had lived there for a year, he would go and purchase another one and do the same thing, and he built up his rental portfolio that way.

Tony:
I think it might’ve been Craig who said it was his first house hack where he was sleeping on the couch.

Ashley:
Yeah, you know what, that definitely sounds like something he would do [inaudible 00:15:24].

Tony:
All right. Anything else on this house, or should we roll to the next question?

Ashley:
Yeah, let’s go to the next one.

Tony:
All right. So question number two comes from Jason Lamb. Jason says, “Just curious, what issues have you all run into with unpermitted renovations? Obviously, you should always do things the right way, but I’m just trying to understand what kind of issues come up and when. For example, do buyers normally look for permits, or is it just their lenders, et cetera?” So have you ever had any issues, Ashley, with unpermitted renovations? And, if so, how did you handle those?

Ashley:
No, but we did just have on Episode 265, so this past Wednesday, you guys should go back and listen, we had Devana and Reid on, and they talked about a property they purchased that they knew had an unpermitted addition to the back of it, and they knew it was not permitted, but they didn’t need it permitted, they thought. So they went and pulled permits to do some electrical work, plumbing work, and other renovations through the property. And when they did that, the inspector came and said, “Well actually, this is not permitted,” so you have to take it down. And they had to rip off the back of the house where this addition was, and they said it was just an eyesore as to how it was set up, and they actually had to build back onto that same space, that same pad, build a new addition back onto the property. So that was definitely something they did not expect and made them go way over budget, I guess, on the property.

Tony:
I feel like it definitely varies by the city or county that you’re operating in. Some cities and counties are going to be more strict about those things. Others will be less strict. I think Devana and Reid’s situation is probably the absolute worst situation that could happen. We had a rehab that we did recently where we missed a permit in the bathroom, but we’d already completed the entire bathroom. And we were nervous they were going to come through and make us demo the entire bathroom, do it all over again. But the folks in the city were super understanding, and they said, “Hey, we’re just going to test a couple of things, that it looks good.”
But we have a separate property where we purchased this property and it already had one of those big swim-up spas, so it’s much bigger than a hot tub, but definitely not as big as a pool, like 15-feet long or something like that. And it came with the property. But when we went to go pull the permit for the short-term rental, they did the inspection and said, “Hey, a permit was never pooled to do the electrical for the spa. So now, before we can issue your permit, you guys have to go back and get this electrical thing sorted out.”
So, depending on what you’re looking to use the property for, depending on what the inspection process looks like for that city, depending on if the county or city needs to get back into that property to do an inspection for something else, there’s a lot of different variables that could happen. So I would say there are some risks that come along with buying units that include properties that are not permitted correctly.

Ashley:
And when I did my flip with James Dainard in Seattle, Washington, it was really the first time I dealt with heavy permits and an understanding of them. I mean, where I live, it’s just you go and talk to the code enforcement officer, and you get your building permit. You’re on your way. So, with him, what he actually does too is when he’s purchasing a property, he pulls the permits on the city’s website. And, for me, none of these little towns have permits online that you can actually go and look them up. You have to actually physically go there and ask for them. But he pulls the permits on the property.
But also, he’ll keep note of who the contractors were that did the work on those properties. So if he is going and doing a rehab and be like, “Okay, this was the last person to do electrical work. Maybe since they know the property, they’ll be able to do the work more efficient, and maybe even I’ll get it cheaper because they already know so much that’s going on. They don’t have to take the time to figure out the electrical of that property or things like that.
So I thought that was just a great little flip tip, as he called [inaudible 00:19:30]. When you pull the permits, look at who the actual contractor was on the property that you are using too. Or if the work is really bad at it, that’s why you’re rehabbing it, because the plumbing is all messed up, you know not to use that contractor.

Tony:
Who not to call, yeah, who not to call. Yeah, I mean, James is obviously like an encyclopedia of all things rehab and flipping, so anything he does, we should all try and emulate. Last thing I’ll say is that we actually bought a property that’s listed right now as one of our turnkey short-term rentals. And the property itself on paper was a three-bedroom, but when you walked in, the previous owner had knocked down the walls between all the bedrooms and just had one massive bedroom. I guess it was a single lady living by herself, and she’s like, “I don’t need three bedrooms. I just want one massive master suite.” So we were able to essentially just put those three bedrooms back in place, because she had knocked down the walls unpermitted, so we were able to just, without having a really repermitting thing, just put it back to the original floor plan. So there’s some nuances there for sure. All right, anything else on that one, Ashley?

Ashley:
No. Let’s go on to our next one. I feel like this is really going to hit home for you, and you’re going to have some mixed personal experience answering the question.

Tony:
Yeah. But hopefully you can give us some more insight, because we were so lost when this happens. But anyway, next question comes from Juan Alvarez, and Juan says, “One of our vacant units has frozen water lines due to the bad weather in DFW in Texas. Do you recommend I turn the supply valve off so it doesn’t flood the home if it breaks the pipe or starts to thaw the pipes out? What do you suggest I do?”
So we had our first experience with frozen pipes this past Christmas. We actually had to cancel a few reservations, because pipes weren’t working, and water was frozen, and water’s a kind of important thing to have at a short-term rental. So the pipes weren’t working. People can’t stay. And we actually posted on Instagram about the issue, and we had so many people talk about different things that they do to help prevent lines from freezing in the first place and some other remediation things they do to help solve those issues.
So, yeah, thawing the lines is one thing. And we had our crew out there kind of thawing the lines. One limitation to thawing the lines out is that they can only thaw the lines they have access to. So if the lines are frozen underground, maybe where your main water supply line is, you can’t thaw that out, because you can’t get to that line. And that was the issue we were having in our property. We could thaw the lines that were in the house and visible, but the stuff that was underground, we had no way of getting to it.
So one of the tips that we got was that when it gets cold, you should always leave a slow drip going at your property, because that little flow of water will help prevent the lines from thawing out. Another thing that was told to us is that you should almost never put your… even though it looks really nice, if you’re in a place that’s prone to freezing pipes, never put your kitchen sink in front of a window, because, for whatever reason, because there’s less insulation, those pipes tend to freeze pretty quickly as well. So there’s a lot of little things we learned around how to prevent this from happening. But Ashley, you live in Buffalo, New York, which had probably one of the worst freezes on record not too long ago. So you probably have some more insight on this end than I do.

Ashley:
Yeah, this is something I’m always very proactive about, is freezing pipes, especially if we’re rehabbing a property, or, if we have a property under contract and I know that it’s a vacant, going into the winter, I make sure, we call it, “Is the property winterized?” Okay? So you’ll see this a lot with foreclosure property.

Tony:
I just want to say, winterizing is not a thing in California. If someone said, “Did you…?” What does that even mean? In winter, we’re like, we’re in shorts and stuff. So if you’re like me, where you live in a state that isn’t prone to getting froze, listen to what Ashley’s about to say, because you’re going to save yourself a world in trouble if you do that. So, anyway.

Ashley:
Yeah. So this is common with people who have seasonal properties, so maybe you have a lake house, or you have a cabin where maybe there’s not even any heat in the property because it’s a lake house, and you’re just there in the summer, and you don’t have heat through it. Or the biggest part of it’s maybe you do have heat, but your pipes aren’t insulated. So maybe there’s just a crawl space under the house. So what people do is they winterize the house, where you actually go and drain all the water lines and you turn the water off to the property.
So if you go to a property that is owned by the bank, maybe it was foreclosed on, there’s usually a maintenance company that’s taking care of the property, and they’ll have tape over the toilet. They’ll have tape over the faucet. Like, “This property’s winterized. Don’t flush the toilet. Don’t turn on any of the valves. There’s no water to the property.” So winterizing a property is like if you’re going under contract in a cold area and the property is vacant, make sure that the seller has winterized the property and that there is no water throughing.
So, basically, why you don’t want your pipes to freeze is because, let’s go back to basic science, when water turns to ice, it expands. Think of like water in a water bottle, when it freezes. So what it does is it can cause your pipes to crack because of all of that pressure from the ice. So then, when the water melts, the ice melts back into water, it shoots out of wherever those cracks were. So that’s where the issues come in. The actual freezing causes the cracks, and then the water shoots out of it.
So me, as anal as I am, I have one rehab right now where when the deep freeze was coming, I was like, “We don’t have any water going through this. I just want to make sure. I’m pretty sure. I’m looking at it. We don’t have water to the property yet.” Everyone, “Yes, yes. It’s fine. It’s good, blah, blah, blah.” There was about three inches of the main water line coming into the property that was into the property. Somehow, someone had switched off the breaker, so the furnace shut off in the property. Well, just in those little three inches sticking out of the ground where we have a spigot on there right now, because the water lines aren’t hooked up, completely cracked the pipe. Water was shooting out all over. So, luckily, that same day, somebody was there and saw this happening. We were able to plug it up, fix it that night and take care of it. But also, the furnace got ice buildup in it, because the furnace froze. And so we actually had to have the plumber come out and dethaw the furnace and to get it going again.
So, as much as I would like to say I’m very experienced and knowledgeable about pipes freezing, it still happened to me, because I listened to my contractors, and I didn’t actually go to the property, because I would’ve seen that little pipe sticking up, and I would’ve known. But yeah. So, I think the biggest piece of… Have your property winterized if you’re not going to be living there, the rehab’s going to be going on and you want to make sure that doesn’t happen, the pipes don’t freeze. Winterize it if you’re doing the rehab, or you can actually go and make sure there’s constantly water dripping through the pipes too.

Tony:
Ash, who do you go to? So winterize the property, is that something that plumbers typically handle for you? Is there someone else? If you want to winterize, who are you calling?

Ashley:
Yeah, the plumber can definitely do that, but it’s something that you can just YouTube real quickly and do it yourself. A lot of the people that own lake houses around here, they set up a day that they go, and if it’s not seasonal where their pipes are exposed, then they’ll just usually go and do it themselves, and that’s part of their yearly routine. And in the spring, they’ll come and turn the water back on and check everything, yeah.

Tony:
Have you ever had one of your main water lines break?

Ashley:
I don’t think so. I’ve had the main sewer line get cracks in it and stuff, but never the main water line.

Tony:
I’ve never had any main major plumbing issues either. Just really quick, on the main sewer line, that actually happened to my aunt. She bought a house, and it wasn’t an investment. It was like their primary residence, and the main sewer line that connected into the city sewer cracked, and they made her replace it, even though the crack was coming from the city. And she had to dig up all of the sidewalk and do all these other crazy things, and it turned into this big ordeal. So, anyway.

Ashley:
Yeah, we had to do that in front of a duplex too, is like, get a mini-excavator there, dig it all up, and, yeah, it was a pain.

Tony:
Yeah, the only reason I bring that up is if one of those main lines that tie into any kind of public utility end up breaking, it’s super expensive to get those repaired.

Ashley:
Do the sewer scope inspection. That’s another thing I learned from James Dainard, is always do the sewer scope. Maybe if you decide to skip the home inspection when you’re buying it, but do that sewer line scope.

Tony:
Well, lots of frozen pipes. And actually, if you guys go to the BiggerPockets Instagram, my wife Sara made that Reel that I was talking about, but BiggerPockets was a collaborator. So it’s on there. And there were literally, I think at this point, over 100 comments of people dropping tips on how they prevent their lines from freezing. So maybe the producers can find that and add it in the show notes. But there’s a lot of really good information on that post.
All right, so next question here comes from Kyle Campbell. And Kyle says, “My wife and I own two duplexes. We’re ready to make an offer on a third. However, this third property is a FSBO, which means four sale by owner, and this would be a first for us. What steps do you go through when buying FSBO? We’ve read a lot and listened to thousands of podcasts, but still looking for any and all advice. Thanks.”
So Ash, I know you’ve bought FSBO. I have as well. But from your perspective, what are some of the differences that a rookie should look out for regarding FSBO?

Ashley:
Yeah, so the first thing is, you’re most likely not using an agent. Oftentimes, you still can. You could go to them and say, “I’m going to pay the agent directly, and I want to use an agent to facilitate that deal,” whether it’s to do the paperwork or to help you negotiate or anything like that. So the biggest thing for me, the difference is, you’re not going to have a real estate agent fill out the real estate contract for you. So that’s either… I use an attorney for that. But you also have to use an attorney in New York State, where I will tell my attorney what the terms are, and then she’ll plug it into her real estate contract, and then I take it to the seller.
One thing you can do is a letter of intent. If you just Google that, there’s tons of samples out there. If you’re in the Rookie Bootcamp, it’s included in there. You get a copy of it. And it just basically gives the initial terms of your offer without going through a full-blown contract and then just says like, “This contract is based on attorney approval. These terms are based on that.” So it kind of gives you some leeway. But I usually write one of those up myself without even having to talk with my attorney. Then that’s where I negotiate with the seller. And then, once we agree on terms and we have a signed letter of intent, that’s where I pass those terms off to my real estate attorney, where she draws up a contract as to what those terms are. Then I have the seller sign that.
One thing with doing dealing directly with the seller is I think you have a huge advantage with negotiating. That’s not always the case, but getting face-to-face with the seller and really figuring out why they’re selling. And also, if you’re going to be doing some kind of creative financing, like pitching to them the benefits of seller financing, things like that, it is so much easier to sell the creative financing option to the seller than having it go from you to your real estate agent to their real estate agent, then back to them, like playing telephone. So that’s why I love for sale by owner, is because you get to deal directly with the seller for negotiating.

Tony:
Yeah, that’s a fantastic breakdown, Ashley. And we’ve purchased a few directly from the owners as well. And our process, it’s fairly similar. We still do use title and escrow to facilitate the transaction. So even if you’re going FSBO, still make sure that there’s some third party in there to make sure that all of the paperwork with the county gets filed correctly. You’re still getting things like title insurance to make sure that there’s no issues with the title, and that party, escrow or title company’s there to manage all the funds to make sure people get paid out appropriately. But outside of that, it’s honestly pretty much the same process. And, to your point, Ashley, it’s honestly a little bit easier, because there’s less back and forth between you and your agent, their agent, that seller. So I think the ease of the transaction is definitely there.
But if it is your first time doing it, Kyle, I would just try and find an… I don’t know what state you’re in, but for me, I always go to my escrow company first, and I say, “Hey, I’m looking to buy this property. I’m looking to sell this property.” And then my escrow company’s the one that draws up all the documents and makes sure that everyone’s DocuSigned on everything. So the escrow company almost works as the transaction coordinator when I’m doing FSBO here in California. So, if you’re in a state that uses escrow companies in addition to title, I would just try and find a really good escrow officer, let them know that you’re a new investor and you plan to do more deals with them. But if you build that relationship, they can really help facilitate any FSBO deal that you do moving forward.
All right. Well, let’s move on to the next question here. This one comes from Daniel Budihardjo. Hopefully I said your last name right, Daniel. So Daniel’s question is, “Hello Rooks. What do you think about installing electronic keypad door locks? It sounds awesome for multi properties, as you can maintain a master code for the landlord and reset codes for your tenants. If your house has multi exterior doors, say front and back, do you install one at each door? The best seller on Amazon is only 40 bucks. It’s a great price, but not sure it has everything that we need. Thanks in advance.”
I love the idea of electronic keypads on properties, both for, I think… Obviously, we don’t really have any long-term anymore, but if I did, I would probably do that. It is just, I think, a nice feature to include, because as a tenant, having that kind of smart home functionality is a really cool way to make your property stand out from other ones. Like for example, when I bought my home, it didn’t come with any smart home technology. We had to go back, and we added our keyless entry pad, added all of our smart light switches and stuff. But I bought earlier in the phase.
Now the new home, the newer versions of my home, they’re selling with all that stuff built in. So even for new construction, it’s something that builders are starting to add, because they recognize that it is, I think, something that people want in their homes. If you’re doing a short-term rental, 1,000,000,000% you should have smart keypads. Nothing is more annoying to me as an Airbnb guest than having to fumble with physical keys and open up a lockbox, then having to go back and put the key back into the lockbox. So if you can do electric keypads for your doors, I think it’s definitely the way to go. Just, last thing, like which one you should purchase, we use the Schlage Encode, or Schlage Encode.

Ashley:
Tony, stop telling people. They’re so hard to [inaudible 00:35:14].

Tony:
That was my point. They’re so incredibly difficult to find these days, it’s almost like there’s a black market for these. But that’s the one that we like the most. There’s some other cool ones out there as well, like Remote by August Lock. They have one. Every smart company has some kind of electric keypad, so there’s a lot of good options out there.

Ashley:
Yeah, I’ve used a Yale one before. I don’t know specifically what it was, but we switched to the Encode one because of Sara’s recommendation. I really like them. But, yeah, they’re definitely difficult to get ahold of. So we use them just for our short-term rentals. The issue that I run into with long-term rentals is especially at the small multi-family. In the apartment complex, it would be fine, because there’s a general Wi-Fi in the building. But when you have your duplex… So the tenant usually gets the Wi-Fi in their name, so you would have to request access to have the lock connected to the Wi-Fi if you’re going to be changing the code or doing things like that.
So, for me, I think the advantage of doing it for long-term is like if a maintenance guy is coming in and they’re not going to be home, you can set a code so that it’s just active during the hour they’re going to be there, whatever, and they don’t have to have a key, anything like that, and maintenance can be done when the tenant’s not home.
The second thing is when they move out of the property, they’re most likely canceling their Wi-Fi. So to go ahead and change the code, you won’t be able to just do it so easily from your app, because it’s not connected to the Wi-Fi because they disconnected the Wi-Fi. So you would have to manually go onto the keypad and… There’s some way you can do it through the keypad without having to be connected to Wi-Fi. But just the convenience of having the app on your phone and being able to create new codes, change new codes, you can’t do that without the Wi-Fi enabled. So that’s where I’ve run into is it actually that big of an advantage? Because turning over an apartment, not having to install a new lock in there, that, yeah, having to send someone out that takes time to do that and just be able to remote do that would be awesome. But I haven’t figured out that piece of it yet as to how to do that.

Tony:
Yeah, you’re right. That definitely is a limitation. You can use the app even if Wi-Fi isn’t set up, but you do have to be within range of the lock. So you wouldn’t be able to do it from sitting at your house to the property. But if someone was near the door, they could still go in. And I don’t know what kind of… I don’t know if it’s Bluetooth or some other kind of local connection, but you are, so even if there is no Wi-Fi, able to set the app up and have the lock communicate.

Ashley:
And you can still change the code and everything and lock [inaudible 00:38:07], yeah.

Tony:
Still add codes and stuff like that, yeah.

Ashley:
Okay. That’s cool. Well, I mean, that’s better still than having to go in and change the lock. Okay.

Tony:
Yeah.

Ashley:
So, I’m also going to continue to hijack Daniel’s question here, because I had a situation that came up. This actually happened Friday night, 9:30 at night, get a call from the property management company that a dog is barking in the unit that we actually use as a short-term rental. So they don’t have the contact information for who is the current guest in there. So what happened was, somebody, we think it was one of the neighbors, because one of the other units ended up calling the police because of the dog barking. But we looked in the app, and it showed that the lock was actually disabled because somebody tried the wrong code too many times, and it said the lock is disabled.
So, when the tenant actually got home, or the resident, the guests of the Airbnb, when they went to put in their code, it wasn’t working. So we had to go to the property, and we somehow ended up resetting it through the app, like having the phone there and doing it through the app, and we were able to get into the unit. But have you ever had that happen before, where it’s saying that the lock is disabled and you’re not able to get into the unit, and is there a timeframe on that or…? What should I have done better next time to prevent that?

Tony:
Yeah, usually, it is like a time duration that is disabled, but I’ve never seen it where it’s just like permanently disabled, you have to go in and reset the lock. But what we do have, we still have physical keys at every short-term rentals. That way, if, for whatever reason, the keypad isn’t working, the guests can just go to the lockbox and grab a physical key from there and then use that until we’re able to troubleshoot it on our end. So that’s typically our process.

Ashley:
That’s it. That’s a great idea to have that key extra there. Okay.

Tony:
And we put that in our digital guidebook that says, “Hey, if, for whatever reason, you can’t access with the keypad…” And we have a video where we walk… “Here’s the lockbox. Here’s how you open it, grab the key, and stick it in there.” So, usually, folks are pretty good about reading directions most of the time.

Ashley:
It has a key, though, the Encode lockbox?

Tony:
It does, yeah. So it comes with a key, and then, we usually just take that key, and we put it in there. If we wanted to get really elaborate, we should probably make duplicates of that key. Because right now, there’s only one key and it’s at-

Ashley:
That one, yeah, yeah.

Tony:
Yeah. But yeah, it does come with a key.

Ashley:
Obviously, you can tell I’m not in charge of installing those in the property, so I don’t even know that.

Tony:
There was another one called August Lock… or RemoteLock by August, and that one was a little bit different, because it’s like an attachment that goes on top of your existing lock. So you would just use your original keypad, and you just add this on there, and it unlocks it for you. But that one, the battery life was kind of not the greatest, and the integrations weren’t quite there, but yeah. Anyway, the Schlage comes with a key.

Ashley:
We actually started using RemoteLock. The person that’s been kind of managing our short-term rentals, she recommended it, and we set that up as to… Which, the customer service, I have to say, has not been that great with RemoteLock. But once we got it up and going, it’s been beneficial, yeah. I actually had to use my social media power to message them and say like, “What is going on?”

Tony:
What’s up? Yeah.

Ashley:
Yeah. And the person who runs their social media responded to me right away, got somebody to email the person that was sending it up for me, and that person was great. But oh my gosh, it was a headache to actually set up that process. But now that it’s operating, everything is going good with that.
And I had one more question. For the batteries on that, do you have some kind of quarterly maintenance schedule where you’re going in and having the handyman replace the batteries? Or is it just when you get an alert the battery is low, you’re adding as a maintenance task? How are you handling that?

Tony:
Yeah, that’s a great question. It’s the latter. So whenever the alert comes through in the app that the batteries are running low, our VAs create a maintenance task, usually for the cleaner, because we just keep extra batteries at the property. And then when the cleaners… yeah, the next time, they’ll just make sure they swap the batteries out for the unit.

Ashley:
Well, thanks for letting me ask a lot of questions. [inaudible 00:42:24] that will be good.

Tony:
We got one last question. I think we can hit this one pretty quickly. This one comes from Sara Lucas. And Sara’s question is, “Aside from the owner, who in this case, has no idea, how do you find out who is the lender for a property?” So I’m going to share the one way that I know how to look this up. There are probably other ways to do this as well, but if you use a website like PropStream, PropStream usually keeps track of any mortgages that are recorded against a property, and you can see the name of the company that is holding that note. So literally, you type in any address, and it’ll show that information as well. And then similarly, you can go to your county and say, “Hey, what deed of trust or mortgage security document or promissory note do you guys have filed against a specific property?” And hopefully, somewhere in those documents, you can figure out who the lender is for that home.

Ashley:
Yeah, you should… If the city of Buffalo has it, I’m sure most cities have it, but you can actually go online to the city records for the county, and you’ll be able to just search for it. If you know that person’s name, search for their name, and you’ll be able to come up as to what the mortgage is that they have in their name.

Tony:
Cool. Well, that was an easy one.

Ashley:
Yeah, yeah. All great questions, we really appreciate it when you guys throw your questions at us, mentally stimulates us. And also, some of the times, there’s questions where we’re not sure, so we actually take the time and go and research it, and we learn some things too. And obviously, I learned a ton about locks in this episode, just from Tony. So, thank you Daniel for asking that question, because I had some burning questions I needed to figure out too. So, thank you guys. And you can leave us a voicemail at 1-888-5-ROOKIE, or you can send us a DM @wealthfromrentals or @tonyjrobinson. Thank you guys so much for joining us. I’m Ashley @wealthfromrentals, and he’s Tony @tonyjrobinson, and we will be back on Wednesday with a guest.

CNBC’s Robert Frank joins ‘Power Lunch’ to discuss the potential housing recession, Florida’s priciest property destination and one property that is the most expensive listing in the state’s history.

For businesses, TikTok is a platform with potential beyond participating in the latest dance craze or humorous trend. With over 1 billion monthly active users, TikTok is full of potential customers for your brand, and its easy-to-use video-sharing capabilities make it the perfect platform for increasing transparency with your followers and building the trust necessary to attract new consumers. But how should you get started?

Here, eight members of Young Entrepreneur Council offer a few of their recommendations. Consider implementing one or all of these creative ideas into your video marketing strategy to build a better relationship with your current customers and draw in new ones as well.

1. Share ‘Unboxing’ Videos

Brands can increase transparency with their followers and draw in new customers via video-sharing platforms through “unboxing” videos. Such videos can help showcase the quality of their products and the attention to detail that goes into their packaging and delivery. This can help build trust with existing customers and draw in potential customers to buy from them. – Andrew Munro, AffiliateWP

2. Answer Customer Questions

Video-sharing platforms like TikTok are great for “Ask Me Anything” sessions or Q&As. These help brands answer the public and address their queries about different products or processes. Not only does this help increase transparency, but it also enables brands to engage their respective target audiences, which in turn can draw promising leads or customers. – Stephanie Wells, Formidable Forms

3. Document Your Entrepreneurial Journey

The most creative way brands use video platforms like TikTok is by documenting their company’s entrepreneurial journey as if it were a reality TV program. People love following a great entrepreneurial story in real time. Through drama, intrigue and transparency, you can capture attention on video-sharing platforms and turn it into paying customers who feel personally invested in your success. – Rob Hoffman, Contact Studios

4. Highlight The Impact Of Your Mission And Work

Brands can use TikTok to share information about their values, mission and goals and to showcase the work they are doing to make a positive impact on the world. This can include content that highlights the brand’s sustainability efforts and charitable work that aligns with the brand’s values. Brands can help followers understand their motivations and build trust and credibility. – Vikas Agrawal, Infobrandz

5. Offer A Behind-The-Scenes Look

One creative method is to create behind-the-scenes content that gives a glimpse into the inner workings of the brand. This can include videos showing the production process for the brand’s products, the daily operations of the company or the people who work there. In this way, brands can help build trust and demonstrate their commitment to transparency. – Candice Georgiadis, Digital Day

6. Discuss The Good And The Bad

Yes, it’s important to share your company’s successes, but it’s also important to share your challenges and struggles. Customers can find out any detail (good and bad) of your company if they want. Showing both the positives and negatives will help your audience view your company as honest, and they’ll better connect with the authentic person behind the brand. – Shu Saito, All Filters

7. Showcase Genuine Customer Reviews

Video-sharing platforms like TikTok are great for social proof. People are generally indecisive when it comes to making purchases and rely on recommendations from others. Sharing genuine customer reviews and testimonials for different use cases ensures transparency as you help people decide whether or not your brand is a fitting solution for them. That surely helps attract more customers. – Chris Klosowski, Easy Digital Downloads

8. Help Customers Solve Their Problems

Brands can leverage platforms like TikTok and connect with a relevant audience by helping them solve their problems. Offering solutions to issues readily faced by an audience representing a particular niche enables brands to build trust and attract new customers. Plus, uploading solution-oriented how-to content increases transparency and humanizes a brand, making it relatable to the audience. – Jared Atchison, WPForms

By Nellie Akalp

If you plan to expand your business—by serving new markets, extending your portfolio of products or services, or adding staff—you have much to think about. In this article, we’ll discuss a few talking points business owners should consider as they strive to grow their companies.

5 key considerations when growing your business

1. Forming an LLC or corporation

Many small businesses start as sole proprietorships or general partnerships because those business structures offer administrative simplicity and no statutory compliance requirements. However, they do not provide protection for business owners’ personal assets or give any tax treatment flexibility.

Business growth aspirations prompt many entrepreneurs to change from a sole proprietorship or partnership to a limited liability company (LLC) or corporation.

Rightly so! Forming either of those business structures creates a separate legal entity for the company. That means the owner’s personal assets (home, vehicles, retirement investments, etc.) receive protection from the debts and legal liabilities of the business.

Also, LLCs and C Corporations that meet the IRS’s qualification criteria may choose to be taxed as S Corporations. In the case of an LLC, the S Corp election helps minimize a business owner’s self-employment tax obligations. The primary benefit of S Corporation election for a C Corp is that it avoids the double taxation of income distributed to shareholders.

2. Getting the required licenses and permits

If you’re expanding your product or service lines or extending your reach to other locales or market areas, you may need to apply for new licenses or permits. States and local government agencies’ rules and regulations vary for different types of business activity. Examples of the possible licensing requirements include the following:

• General business license
• Sales tax license
• Alcohol license
• Bakery license
• Food and beverage license
• Zoning permit
• Music license
• Health license
• Landscaping license
• Sign permit
• Entertainment license
• Professional licenses (e.g., accounting, attorney, physician, engineer)

As you can imagine, there are many more applicable to different industries and business activities. Entrepreneurs need to research the requirements for any locations where they will conduct business.

3. Hiring employees

If you can no longer do everything on your own—or you want to do more but don’t have the time or specific skillset to accomplish it—it’s time to get help. Hiring employees can take some of the administrative and operational pressures off of you. Of course, adding employees to the payroll adds some new responsibilities, which includes:

Processing payroll

Here’s a summary of what most companies need to handle payroll:

• A federal tax ID number (EIN) from the IRS
• Payroll tax registration with the state (and possibly local) tax agencies.
• Employee information and tax documents (e.g., obtaining W-4 and I-9 forms from employees, and sending W-2 forms to employees)
• Salary and wage information (e.g., wages, salaries, overtime pay, paid time off compensation, tips, bonuses, commissions)
• Health insurance documentation
• Retirement plan documentation
• Employee bank information (if direct depositing wages into employees’ bank accounts)
• Workers’ compensation insurance policy
• Payroll software or payroll services vendor

Managing payroll, particularly handling payroll taxes properly, is essential for ensuring employees get paid accurately and on time. Moreover, it’s critical for keeping a business in good standing with federal, state, and local tax agencies.

Employers must withhold certain taxes and other payments from employees’ pay and then submit those monies to the appropriate tax agencies or organizations. Also, some employment-related taxes are paid directly by employers.

Payroll withholdings from employees’ pay

• Federal income tax
• State income tax
• Local income tax
• FICA tax (Social Security and Medicare)—Half of this tax is deducted/withheld from the employee’s pay, and the employer pays the other half.
• Wage garnishments (e.g., alimony, child support, loans, bankruptcy payments)
• Benefits deductions (e.g., retirement fund contributions, employee’s portion of health and life insurance premiums, union dues)

Employment related taxes paid by employers

• FUTA tax—The Federal Unemployment Tax Act is a program that provides compensation to workers who lose their jobs through no fault of their own. FUTA tax is a cost to the employer; it is not deducted from employees’ pay.
• SUTA tax—States also have unemployment programs. Most require only employers to pay into the fund, but some states also require employees to contribute.
• Other payroll taxes—Some other taxes (such as for short-term disability and family medical leave) may exist depending on the state or municipality. Employers should contact their local tax agencies and the state revenue department to determine all their payroll tax obligations.

More articles from AllBusiness.com:

4. Outsourcing to independent contractors

Working with independent contractors and freelancers can improve your business’s efficiency and productivity by bringing in people with specialized skills and expertise to handle tasks you aren’t personally proficient in. However, it’s important to be aware that independent contractors are NOT employees. Businesses must not mistakenly treat individuals as independent contractors when they should be classified as employees.

So, what’s the difference? The IRS has classification rules for differentiating between independent contractors and employees. Some states have even more definitive parameters for distinguishing the two. Generally, independent contractors are self-employed professionals who enter into an agreement (written or verbal) with a business or individual.

• They are not on their clients’ payroll but issue invoices to request payment for their services.
• Unlike company employees, independent contractors do not receive benefits or paid time off from their clients.
• Independent contractors are mainly in control of how and when they work, whereas those things are usually dictated to employees by their employers.
• Typically, contract workers are responsible for providing the tools and equipment needed to perform their assignments.
• While the business paying an independent contractor may set the goals and deliverables for projects and assignments, the independent contractor decides how to best accomplish their assigned tasks.
• Independent contractors are responsible for reporting and remitting their taxes (including self-employment taxes) to the IRS, state, and local tax authorities.

When working with independent contractors, there are two tax-related forms businesses must pay attention to.

• They should request a Form W-9 from the independent contractor, which identifies the individual’s personal information for tax purposes (Compensation paid to independent contractors is tax-deductible for a business.)
• Businesses should issue Form 1099-NEC to any independent contractors to whom they paid more than $600 in the year.

5. Expanding your business out of state

What if you want to expand your business operations beyond your home state (where you initially formed your business)? When a business created in one state meets the definition of “conducting business” or “nexus” in another state, it must seek authorization to operate in the new state. Typically, that means completing a process called “foreign qualification.”

A business is considered a domestic entity in the state where it’s initially registered and a foreign entity in any state where it’s foreign qualified.

Definition of conducting business

What constitutes “conducting business” varies by state. Generally, states consider that a company is conducting business if it meets one or more of the following criteria:

• Has a physical presence (office, warehouse, or retail store) in the state
• Has employees working in the state
• Holds in-person meetings with clients or customers in the state
• Has reached a certain sales threshold in the state

The following activities alone usually do not qualify as doing business in a state:

• Defending or settling a lawsuit in the state
• Collecting debts in the state
• Conducting internal business activities, such as holding LLC member meetings in the state
• Having a bank account in the state
• Selling services or products through independent contractors in the state
• Engaging in isolated, non-repeated transactions completed within 180 days in the state

What does nexus mean?

Nexus implies that a business has a physical or economic connection to a state. Determining nexus can get complicated because different states have their own interpretation of what nexus is.

General characteristics of nexus

• The company has a physical presence—such as an office, warehouse, store, or employees—in the state.
• The company has reached a certain sales threshold, with or without a physical presence, in the state. Many states consider a business to have economic nexus if it has $100,000 in sales or 200 sales transactions (or both) in the state during the year.

The rules for determining nexus change often and vary from state to state. So, it’s critical for business owners to research and stay on top of nexus rules in any states where they have staff, physical locations, or sell their products and services.

Where to turn for guidance

Most state and local government websites provide business registration, licensing, and tax information. They also post contact information for the agencies that oversee business activity in their jurisdictions. For federal tax-related information and employer issues, the IRS and Department of Labor websites are excellent resources.

Business owners should also consult knowledgeable legal, accounting, and human resource experts when expanding a company. Every business’s situation is unique from others in some way, and trusted professionals can offer insight and information tailored to your specific circumstances.

About the Author

Nellie Akalp is a passionate entrepreneur, business expert, professional speaker, author, and mother of four. She is the founder and CEO of CorpNet.com, a trusted resource and service provider for business incorporation, LLC filings, and corporate compliance services in all 50 states.