How to know when housing bottom is in

New homes at the Cielo at Sand Creek by Century Communities housing development in Antioch, California, U.S., on Thursday, March 31, 2022.

David Paul Morris | Bloomberg | Getty Images

Chicago realtor Jeremy Fisher headed to Florida after Christmas counting on five mostly-relaxed weeks, after a slow second half of 2022 left him with a bunch of unsold listings exiting the year.

Instead, the Compass broker ended up flying back to the Windy City three times during his low season, as seven homes went into contract and his husband ended up driving their baby home from Florida alone. The great real estate bust, it seems, has found something like a floor.

“For somebody, it’s always the right time to buy a house,” Fisher said. “People for the most part have come to terms with interest rates.”

After only a few months in the tank, is the U.S. housing market close enough to a bottom that it’s time for those on the sidelines to at least start thinking about buying as spring shopping season nears?

Signs are accumulating that the big price bust — and mortgage-rate relief — that buyers wanted isn’t materializing, at least not soon.

Goldman Sachs trimmed its estimate of peak-to-trough declines in nationwide home prices to 6 percent from 10 percent in late January. Online housing marketplace Zillow now expects prices to rise slightly in 2023. Existing home sales, which were running at a 6.5 million annual pace in early 2021, have begun to stabilize around 4 million, with the National Association of Realtors forecasting 4.8 million for the year. Meanwhile, mortgage rates, which dipped under a 6 percent national average on Feb. 2 after more than doubling since mid-2021 to almost 7.4 percent, have jumped back to 6.75 percent, driven by a scorching January jobs report.

No bust, but a standoff between buyers and sellers

Instead of a price bust a la the one after the mid-2000s housing bubble, what’s developing is a standoff, says Logan Mohtashami, lead analyst for HousingWire in Irvine, Calif. On the one hand are buyers who would like homes to be as affordable as in 2019. But a big share of them either have to move or can afford to despite higher prices and rates. On the other are sellers, under no pressure to move since they have cheap mortgages and plenty of equity for now. So far, sellers are hanging tough in most cities. Even small increases in demand can keep prices firm, or move them higher, because inventory is so tight, Mohtashami said.

The recipe for 2023’s housing market is shaping up as prices that are roughly stable nationally, but with ongoing drops in some regional markets, interest rates that decline but not hugely, and buyers’ incomes that rise. Experts think they will combine to make affordability improve, maybe to near-normal historical levels, but still fall well short of where home buyers stood when mortgage rates were 3 percent or even lower.

“Households have two incomes, and you have to earn about $100,000 to buy a house,” Mohtashami said. “There are lots of dual-income couples that can do that. It gives you more buying power than people know about.”

No return of 2008, or 3% mortgage rate

The biggest reason why housing prices aren’t plunging like they did after 2008? Because the market isn’t being flooded with homes that drive down prices, as happened then.

Capital-rich banks aren’t under pressure as they were then, with foreclosure rates less than a tenth of those from the housing bust. Neither are households, with debt payment burdens near historic lows and few homeowners owing more on their mortgage than the house is worth. Serious delinquency rates, which skyrocketed after 2006 and led to 6 million foreclosures, have fallen by nearly half in the last year, to less than 0.7% of mortgages, according to Fannie Mae. Unemployment is the lowest in 54 years, letting homeowners either trade up or hang on to their current homes easily – and if they are among the 85 percent of owners whose mortgages carry interest rates below 5 percent, many will stay put rather than buy a more expensive house with a costlier loan.

All that means the supply of homes for sale is likely to stay tight, which limits price declines.

We're still at half the housing inventory of 2016 through 2019, says Redfin's Glenn Kelman

Affordability is bad now, after rate hikes and Covid-driven price increases, but it has been worse. And we’ve all been spoiled by recent history: After the financial crisis, housing affordability nationally literally doubled as interest rates collapsed and prices fell, reaching all-time highs. It had retained most of those gains up until the Covid price surge, even as home values recovered.

“Rates will be dropping in the second quarter, but we don’t see a drastic drop that should make people wait,” said Nadia Evangelou, director of real estate research at the NAR. She predicted that 30-year mortgages will decline to around 5.75 percent. “Buyers realize 3 percent rates are not coming back.”

Housing affordability is stretched

The NAR’s closely-watched affordability index, which considers prices, rates and buyers’ incomes, is much lower than in 2019, but is still in line with the late 1980s and early 1990s. At current levels, the Housing Affordability Index says the median buyer can afford the median U.S. home — but barely. In 2020, the median buyer could afford the median home with a 70 percent cushion, which was the product of 3% loans, Covid-driven income support and the residual impact of big home price drops between 2006 and 2011. Since 1980, the average is that median home buyers have about 20% more income than they need for the median home, Evangelou said.

So why is anyone buying homes that are suddenly less affordable?

For Maggie Neuder, a client of Fisher’s in Chicago, the answer boiled down to wanting a new place and being able to afford one. Having seen 6 percent interest rates when she bought her first place in 2007, she’s not daunted by today’s rates, she said. The 41-year old finance executive bought a bigger home than she needed during Covid to ride out quarantines, and now wants a smaller place in the city’s Lincoln Park neighborhood, so she executed a flip.

To calm her buyer’s interest rate fears, she is giving a closing credit big enough to buy down the mortgage rate on the buyer’s loan for the first two years, by two percentage points in year one and one percentage point in year two – a move many builders are also using to sell new homes. To make back the money, she extracted a similar concession from the seller of the home she expects to buy in April.

“People look at refinancing like it’s a bad thing,” she said, figuring she can likely lower her payment within a couple of years. “I don’t think we’re going back to the sub-threes, but somewhere in the fours. Even if rates don’t fall below 6, I’m in a comfortable place with my mortgage.”

Mortgage rates move higher, along with homebuilder sentiment

Fisher says his recent buyers fall into three camps. At either end are first-time buyers who have never had a 3 percent loan, and older buyers who are paying cash. Neither is much bothered by rates around 6 percent, he said. In the middle are move-up buyers who initially worried about rates more. But they are making work-arounds like Neuder’s to get what they want, Fisher said. These buyers likely drove the increase in applications for new mortgages that happened as rates fell earlier this winter.

“People have wrapped their heads around where interest rates are, and they have adapted,” Fisher said.

Indeed, combining the wage gains of the last few years with the deflation that has begun to show in market-based housing data in the last six months, and the most flagrant cases of distorted regional markets have begun to correct already. Another boost comes from solid rates of new household formation, said Daryl Fairweather, chief economist at Redfin.

Where home prices are now

The average house price is down 6 percent since the June peak, according to the S&P Case-Shiller index of prices in 20 major metro areas, and 3.5% in the index for the whole country.

Recently-hot markets have taken bigger hits, as expected. In San Francisco, the Case-Shiller index is down 12 percent, in Phoenix 8 percent. In Sacramento, home prices have given back almost half of their Covid-era gains, said Ryan Lundquist, a local appraiser who blogs about the market in California’s capital. In metro Tampa, where prices rose 69 percent during Covid, according to Case-Shiller, prices are down only 3 percent.

Add in wage growth — wages rose about 5 percent last year, according to data from Zillow — and the effective price of housing has come down sharply in some places, while remaining well above pre-Covid levels, Zillow chief economist Skylar Olsen said.

“Even with values down a bit since August, if you bought the average house in February 2020 you have annual gains of 11 percent,” Olsen said.

Wage growth is one reason why even in some recently-hot markets, buyers are still out there, said St. Petersburg, Fla. broker Jeffrey Clarke. Indeed, he recently talked one client with a home in another city out of selling their place in St. Petersburg, convincing them that the crash they feared was not coming.

By the NAR’s numbers, affordability is now poor in metro Tampa, with the median buyer only earning 80 percent of what’s needed to buy the median home. But Tampa is close enough to equilibrium that Clarke doesn’t see anything coming like 2008-2011, when the average Tampa house lost half of its value.

“With nothing falling yet, no one is freaking out,” he said.

The math on mortgage rates and wage growth

The big flaw in the thesis that only minor price drops are coming is that so many large regional markets like Tampa remain out of line with local incomes, and many of them were in much better balance as recently as two years ago. Another is that San Francisco, Phoenix and Las Vegas all saw more than a 1% price drop in January alone, according to Zillow, making forecasts for relatively-stable prices look shakier.

Much of Florida and Texas, and markets like Asheville N.C. and Denver, had relatively-affordable housing until 2020 but median homes are now 20 percent to 30 percent too expensive for median local incomes, according to NAR data released in October. In much of California, NAR affordability indexes are at 50 or below, indicating homes cost twice as much as local incomes can support. But much of California has always been less affordable.

Nationally, to get back to the average affordability since 1980, meaning median houses are about 20 percent cheaper than the median family can afford, mortgage rates would have to come down to about 4.6 percent, while wages would need to rise 4% and prices stay stable, the NAR’s Evangelou said. Wage growth has recently cooled a little, but remains above 4% — in the recent nonfarm payrolls report, wages were up 4.4% from a year ago, though a bit below the December gain of 4.6%.

Mortgage rates remain volatile, and the market hopes that began 2023 — that the Fed would be cutting its benchmark interest rates before year-end — have recently dimmed as the labor market and consumer remain too strong to provide confidence that the current rates hikes are doing enough to slow inflation. After falling for five weeks, the average contract interest rate for 30-year fixed-rate mortgages increased to 6.39% from 6.18% last week, and was as high as 6.8% on Friday. The rate was 4.05% one year ago.

How fast could affordability get better? On a $300,000 loan, a drop in fixed rates to 4.5 percent from today’s 6.75 percent, with no change in prices, would change the monthly payment by about $425 on a 30-year loan, about a 23 percent drop. Going to 6 percent cuts a payment by about $150, or 8 percent. A 5 percent income gain this year for the median buyer would add about another $400 a month.

“If rates come down to 5 percent, it gets radically better very fast,” Olsen said.

In a place like Tampa where prices grew rapidly during Covid, the affordability fix will probably blend near-stagnant prices for a year or two, pay raises and lower interest rates, Clarke said. But hotter markets like Tampa may need more price cuts to get affordability all the way back to historical averages, Evangelou said.

The market’s standstill is likely to last for months, at least, because its main underpinnings aren’t going anywhere. Sellers will continue to have the advantage of being equity-rich and sitting on a low interest rate from 2021 or before, Mohtashami says. Some buyers will remain priced out of the market, or able to afford less house than they want. And some will use work-arounds like mortgage buydowns or parental support to buy houses until affordability recovers. Sellers of new homes will do buydowns and have been using incentives since last summer to limit cuts to list prices.

“It has become kind of the norm,” Neuder said.

In some markets, affordability is likely to remain a problem for long enough that policy solutions will be needed, Olsen said. She mentioned solutions like building more dense housing, or letting more homeowners add additional dwelling units such as basement or attic apartments to let families share costs.

In most places, the likely outcome is affordability that falls somewhere between today’s market, where many prospective buyers are stretched and demand is light, and the buyer’s delight that prevailed for close to a decade. The path to that is rising wages, declining inflation that lets interest rates fall, and home prices that give back a still-to-be-determined chunk of the 2021-22 gains – a share that so far is small in most places.

“I want it to be flat the next two years,” said Clarke, the Florida broker. “You can’t rise 20 percent a year for a decade. You end up with a $5 million dollar two-bedroom, two-bath.”

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How To Choose The Channels Of Customer Service To Invest In

Blog / Richard

We live in an era defined by personalization and instant gratification. This has made customer service more important than ever. Each interaction with a customer, both before and after the point of sale, doesn’t just decide if they have a positive experience.

It can also influence their reviews and word-of-mouth marketing for a brand — and that stuff really does matter. 90% of customers base their brand loyalty on the quality of the customer service that they experience. If they have a good time, they come back. If they’re offended or unsatisfied, they let everyone know about it.

Modern customer service is necessary. It’s also complicated. Here are a few ways to build an … [+] effective customer service network for your business.

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Of course, customer service isn’t what it used to be. It’s gone from a bank of telephones connecting one human to the next to a smorgasbord of communication channels connecting customers to chatbots, automated responses, and, every once in a while, a human.

If you’re uncertain which customer service channels to invest in, here are a few suggestions to keep up with the expectations of consumers a quarter into the 21st century.

Set Up a Chatbot

We’ve all become used to IVR (Interactive Voice Response) systems. Automated menus and pre-recorded responses can help resolve some issues. But often, customer service requires a more nuanced approach.

Chatbots use AI and machine learning to interact with customers in a more complex customer service environment. They can predict questions based on circumstances. They can also adjust recommendations and answers after receiving input from a customer.

Rideshare giant Lyft has made a splash for its use of AI chatbots in its in-app help option. Third-party developers have even taken things further by building chatbots that allow drivers to connect directly to regular riders through channels like Messenger. This allows them to create consistent, high-quality service at customizable rates.

Provide Expert Lifelines

In a world that is quickly becoming dominated by automated responses and lifeless interactions, it’s important to consider where the human touch is still needed. Chatbots and pre-recorded messages are only an initial step. In many cases, more complicated support is needed.

When that happens, businesses need to have customer support channels established that give customers access to expert assistance.

For example, HVACDirect.com, an online marketplace for HVAC systems, has a chatbox that appears the moment a visitor arrives on their site. Unlike the chatbots previously mentioned, this chatbox connects users to humans. And not just humans — expert technicians. The same can be said about their established phone and email options. Using experts for a customer support team means a company can answer detailed questions in an informed manner that can calm customer fears, boost buying confidence, and ultimately increase brand loyalty.

Utilize Social Media

Social media is often seen as a fluid and contemporary arm of the marketing department. It focuses on building customer communities and working with influencers.

What many overlook, though, is its power as both a direct and indirect customer service channel.

On the one hand, businesses can use messaging and group forums to field direct questions and concerns from clientele. On the other hand, McKinsey points out that social media can also be a way to follow up on poor customer experiences when the customer vents on a social platform.

A timely, sensitive response can salvage a situation and even serve as a public message that a brand cares about its customers — even the unhappy ones.

Building the Right Customer Service Support Network

Customer service is no longer a single lifeline between businesses and their customers. It’s a complex and nuanced network of channels, each of which serves a different purpose.

Chatbots field initial inquiries. Social channels allow for clean-up and the salvaging of negative experiences. Elite support from human experts provides that professional touch that many customers miss.

When brought together, they can create a synergistic level of support that can address any and every customer need, even in the ever-evolving modern business landscape.

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How to SCALE Your Real Estate Portfolio in 2023

Blog / Richard

You want to build a real estate portfolio, but you might not even own a single rental property yet! So how do you go from onlooker to investor and finally become financially free through real estate investing? Start with the end in mind! So many rookie real estate investors envision a dream life with cash-flowing rentals and little to no stress, only to realize the landlord life is a LOT different than social media makes it seem. To grow a passive real estate portfolio, you need to do something different. David Greene, host of the BiggerPockets Real Estate Podcast, knows exactly what that is.

David went from cop to top-producing real estate agent, investor, broker, and host of the world’s most recognized real estate investing podcast. He knows what it feels like to have a big portfolio and all the pain points that come with it. For the rookie investors, David wants to make sure you don’t make the same mistakes he did. Scaling your portfolio incorrectly could force you into yet another job, NOT the financial independence you’re looking for.

In his new book, SCALE: A Successful Agent’s Guide to Leveling Up Their Real Estate Business, David outlines EXACTLY what you must do to build a business, NOT a landlord nightmare. In this episode, he’ll give you everything you need to know about picking the right area and property, why appreciation often beats cash flow, knowing “the number” to offer, and how you can outsource your work to live the life you love!

Ashley:
This is Real Estate Rookie episode 262.

David:
There’s two parts to a system. I talk about this in Scale. Everybody understands the first part, which is you need to create a checklist of things that need to get done or a library of videos that show somebody how to do it. That is the first step in creating a system. The error becomes when we think that’s all a system is, because the second part of a system is having a human being that is skilled and capable at doing those things. We have all had a position where we hired someone to do something and it was super clear what they needed to do and they still screwed it up.

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

Tony:
And welcome to the Real Estate Rookie Podcast, where every week, twice a week, we’ll bring you the inspiration, motivation, and stories you need to hear. Today, I want to shout out someone by the username of Maryelle PC who left a five-star review on Apple Podcasts that says, “Speaking honestly, I discovered this podcast after first listening to the OG Bigger Pockets Podcast. I ran out of content and wanted more. This podcast, the Ricky Show, is now my favorite podcast. It’s so relatable to someone who is still early in their real estate investing journey and provides so much useful and concrete advice. Tony and Ashley are phenomenal hosts and I would highly recommend this podcast to anyone looking to further their real estate investing career.”
Maryelle, we appreciate you. That it’s such a great and nice and positive review. If you’re in the Rookie audience and you haven’t yet left us a review, take the two minutes, leave that review. We would appreciate it.
Ashley Kehr, we have a heck of an episode for everyone today, right? Some really cool things we’re going to be getting into.

Ashley:
Yeah, and I wish our guests would’ve been on today when you read that review for the intro that we’re recording here.

Tony:
Yeah, that’s true.

Ashley:
Today, we have David Greene on, and it is amazing how fast he can analyze a deal if you guys don’t know that about him. He wrote a book called Scale and he’s going to talk about scaling your business, and we’re going to focus mostly on how you can quickly analyze a deal to grow your business and things you should be implementing into your systems. It’s definitely a book for any business type, I would say. It’s not even just real estate agent specific or even investor specific, so really looking forward to that. But we actually get to see David in Denver in a couple of weeks.

Tony:
Yeah. We’re doing a little host get together for all the Bigger Pockets podcasts. That’ll be fun. But Ash, me and you just got to hang out in Orlando for a few days as well, so I appreciate you coming out to the summit.

Ashley:
Yeah. We just did Tony’s short-term rental summit. It’s my second one I’ve gone to, and both have been awesome and such a great learning experience. You know where I took the most notes down? It was Tony’s wife, Sarah, when she did her presentation, afterwards, the Q&A, just the amazing questions people were asking and she was answering were just these little things that you just don’t even think of that were just like aha moments to me. Like if you allow pets, have super strict expectations like no pets on the furniture. If there is dog hair found, you will be charged X amount. Also, provide a dog bed. Such an easy, cheap, inexpensive thing to do. I was just on my little no pet on my phone adding all these things in.

Tony:
Yeah, it was super fun. We’re always super excited to to get, we had almost 400 people at that event come down to Orlando with us. We’re going to Austin in the spring, so it’ll be fun to take this thing on the road and meet some more people and talk more short-term rentals. But me and Sarah both appreciate you coming out and being our biggest fan for a couple of days.

Ashley:
Well, that’s really nice of you to say, even though I brought the bad weather with me as usual. It wasn’t super bright and hot and sunny the whole time.

Tony:
Yeah, but at least flights didn’t get canceled. We didn’t get stuck. Luggage wasn’t lost.

Ashley:
Yeah. Yeah, yeah.
David Greene, welcome back to the show. I mean, is this your second, third, maybe even fourth time on the Real Estate Rookie Podcast?

David:
It might be the fourth time. You guys are such a good host that I have such a good time. I’m constantly bothering our production team saying, “Can I come on the Rookie show please?” It’s a blast.

Ashley:
Yeah. I mean, we’ve been paid lots of money to continuously have you back on the show. It’s been working out great for all of us.

Tony:
It’s a win-win situation. But I think you hold the record, David, for most Ricky appearances right now. So dude, kudos to you, man.

David:
Well, that just goes to show that we never stop being rookies, right? No matter how many properties you buy, there’s always something to learn. There’s always things that go wrong. There’s always ways you can improve.

Tony:
Dude, so hold on. I know we have a totally different topic to talk about today, but I love what you just said, because it’s like people look at me and they’re like, “Oh my gosh, I want to be like Tony.” And then I look at you and Brandon and I’m like, “Oh man, I want to be like you guys.” And you guys are looking at I don’t know who else, Ken McElroy, and you guys want to be like him, and Ken’s looking at someone else saying, “I want to be like them.” Even for the people that are listening to this podcast, just know that all the folks you look up to are looking up to someone else that they’re trying to emulate. I love that concept, man. Thank you for sharing that.

David:
That’s a really good point. I heard there was some NBA players that were having fans trash talk them, like, “You’re not as good as LeBron James, you suck.” One of them made a really good point. They said, “I am closer to LeBron James than you are to me.” Okay? That’s a very good point, right? Do you ever want a good video YouTube, the Brian Scalabrine challenge.

Tony:
I saw that.

David:
It’s awesome, right? He’s this scrub by NBA standards that everybody makes fun of and he picked the best players he could possibly find that thought they could beat him and wiped the floor with all of them. It just goes to show how good those guys are in the NBA. The people listening to this to own a house or two, or their house hacking, they’re looking at you guys and they’re like, “Oh, I wish I could be them.” You’re so much closer to Ashley, Tony, and me than you are to the people that don’t even understand that real estate matters, that finances matter, that you should be saving your money and you should have a budget and you should have a plan. You’re so much closer to where we are than the average American that’s just naively walking through life hoping that they win the lottery. Don’t be discouraged by where you’re at right now. If you’re just listening to this, you’re already better off than most people.

Ashley:
And you’re an expert or experienced in that one thing that you’re doing or maybe a couple things that you’re doing. But David, if we said to you let’s set up a glamping site in Buffalo, New York, would you be an expert in that?

David:
Absolutely not. No. See?

Ashley:
Yeah, exactly. Even looking up to somebody who you think is this awesome, amazing expert experience investor, there’s things that you may know and you may know better than them than somebody else, because maybe you just have that one little camping, glamping, campground and you’re way ahead of the three of us sitting here because we don’t have anything like that. Think about that too, you guys, when you’re comparing yourself to others that you may know more than you think that too.

David:
Oh yeah. Before the show, the three of us were having a conversation about the industry in general that we’re all a part of where we are sharing real estate education. The trend right now is to find a person who has a better plan than everyone else and copy their blueprint. There’s tons of people selling courses and this is like, “Be like this person, be like this person.” They all have their own little branding and that’s how they make money. The problem with that method is you might not have Tony’s skillset or Ashley’s skillset or name your favorite influencer’s skillset. You might not have their resources. You might not have their personality to where they run a wholesaling business and they have a gift of gab and they can talk anyone. They could sell ice to an Eskimo and they’re very good at that. Or you might not be intensely analytical at an incredible multifamily investor like someone else.
We see the stories of X amount of money over X amount of units that we think, “I want to have what they have.” I think you’re way better off to say, “I want to be who they are.” Who’s the person that I can identify with that my skillset, my personality, my goals, my principles aligns with them and then maybe make that be the main place where you get your food from. It’s so hard to know who’s the right person to follow because there’s so many ways to make money in this, but you’re not going to be equally successful at all of them. You could be great at glamping, but you could be terrible at flipping or different ways. And if you pick up a method that is not in line with your strengths and what feels light to you, you’ll hate every day of real estate investing just like you hated every day of the W2 job that you tried to get out of it. There actually is a little more thought that needs to go into making sure you pick the right path.

Ashley:
David, that’s a great point and it kind of leads us into our discussion as to why you’re on here because you wrote a book sharing your experience with others. Can you tell us a little bit about that book and your reasoning why you think people should learn from it?

David:
Yeah, thank you. When I left my W2 job, which was being a police officer, I jumped into being a real estate agent, which is a wildly different environment. The things that make you good at a cop do not make you good at selling houses. I had to learn completely different. It would be like someone who was a long distance marathon runner wanting to go work out with Tony and they want to be a bodybuilder. If you’re good at one, you’re not going to necessarily be good at the other. It was a very challenging journey for me that ended up leaving me a more well-rounded person. I do think that was the divine plan that I was supposed to take. But it was motivated by recognizing agents just weren’t good. I kept as an investor finding agents, working with them, and realizing I know more about real estate than they do. This is really frustrating. I’m listening to more podcasts, I’m reading more books, I’m having more conversations. I’m paying more attention to how this world works than my agent does who’s supposed to be my guide.
When I started to work as a real estate agent, I just had a different approach than what everyone else did and I had this fire to learn how to be good at being an agent. So I signed up for every piece of Keller Williams training I could. I talked to all the top producers that were in GoBundance, all the ones in my office. If they were good at selling houses, I wanted to analyze them, dissect them, and figure out why they were good at it, and then slowly I started applying that to me. Now, in that process, I realized I don’t have the personality and the makeup we were just describing to be great at selling homes.
I don’t like having conversations all day long. I’m way more introverted. I’m way more analytical. I like to figure out what makes it work, but I don’t like the execution. I don’t like having to talk to you for two hours and make you feel good about the process. Whereas the top producers, that was the pattern I saw. They loved humans, they loved talking to people, they loved making someone’s day. They were high eye on the disc profile and mine was very low. So instead of focusing on just becoming the best agent, I sort of shifted and focused on training agents to be the best agents and growing a team, which was way more down my line. It felt way more like investing. The principles were very similar. You work very hard to get an investment property, you add value to it, over time it starts performing better.
You eliminate problems that could go wrong. I never talked to a tenant. I don’t want to have to be the person to talk to a tenant. That’s a property manager. That’s the first thing I wanted to leverage. Well, that started to work with real estate as I created systems to help agents figure out what they should do and how to do it, provided them with tools, provided them with training, provided them with knowledge, they were much better at talking to the clients and walking them through the process, and so I built a real estate team. At the end of that journey I looked back and I said, “Okay, how do I share all this information that I’ve figured out over the last six or seven years with every other agent that’s out there in the Bigger Pockets ecosystem?” Because they need that help too. The people that were teaching how to buy homes, they need better agents.
I worked out a book deal with Bigger Pockets where I wrote three books in the top producer series. The first is called Sold, and that just focuses on the first steps for an agent: what you do to just make money at all, how you just sell a house, the basics that your broker should be teaching you and they’re probably not. Then the second book in the series was called Skill. That was about becoming a top producer, the best agent in your market, the one everybody wants to work with, the one makes a very good living and makes a lot of money so that they can then reinvest that into hopefully real estate.
This third book that’s coming out is called Scale. This book is about taking, once you are a top producer and you’re making a lot of money, you want to turn your job into a business so you’re free to do other things or you can scale it at a really big degree. This book is full of principles that any business person can use to move from, “I have a job,” to, “I run a business.” It works for being a real estate agent. It works for being a short-term rental operator that doesn’t want to be the one doing all the work. It works if you own a pool company and you’re cleaning the pools and you want to get to where you’re scaling this business to where you’re getting pool contracts all across the city. The principles are the same.

Tony:
David, I love the distinction between having a job and running a business, and obviously so much of our audience are people who are at the beginning of their journey. When do you think, at what point in their real estate investing life cycle should someone think about the fact that they’re actually building a business? Let me give you some context. I think so often people make decisions when they’re starting off their investing career with the idea of, “Oh, I’m a real estate investor and I have one or two houses,” and not, “I’m a real estate entrepreneur who owns a business.” What’s your advice to folks who are just getting started about having that mindset of they’re actually running a business from day one?

David:
That is such a great, great point, because they are, but you don’t realize it. I think let me start with what I think screws people up. Most of us don’t make decisions where we sit down and we really think about what we want our life to look like and then we start building that out. That would be the ideal way to do it. But I’ll be the first one to say, when I first joined GoBundance and they were like, “Well, what are your goals?” It’s like, “To not be where I am right now.” “What does that mean?” “I want to get more than three hours of sleep a night.” “How are you going to get there?” “I don’t know, but that’s what I want.” Right? We don’t really understand how to get out of the place we’re at, but that is a better path. If you know what you want your life to look like, you can start buying the right property, setting it up the right way, taking the steps that you need to get where you want to go.
Just like you, Tony, you’re doing body building. You know what the body looks like that’s going to win the competition. You don’t just go in the gym and grab stuff and work out and hope that you look better. There is a purpose to what you’re doing, how you’re doing it, and the way you’re going about it. And then you make little pivots along the way. If this body part isn’t coming along or this one’s coming along too much and you have to balance that out, you tweak it, right? That’s the right way to go about being good at something. But what most of us do is we say, “I’m in pain. I don’t like my job, I don’t like my commute, I don’t like being broke. I don’t like something about my life. That would be better than where I am now, so let me just go do that.”
Then we go do it and it is better. But then that situation has its own pains. We say, “okay, I don’t like this. What can I do differently?” We end up schizophrenically bouncing around from thing to thing to thing. We call it the shiny object syndrome. We call it building too many bridges. We have all these different ways we describe what’s happening. But it’s basically just human beings moving from pain point to pain point in their life hoping that they where they end up. It’s being addicted to hopium. You’re just hoping if this goes better, that I’ll finally be happy. And it rarely is. What you’re talking about is coming up with a plan to own a business that you choose what role you will play in that business. If you want to do sales, if you want to do operations, if you want to do legal stuff, if you want to just talk about it, if you want to market it, whatever it is, you get to have that option.
When you are an investor, you do own a business. Having a house affords you the opportunity to be the property manager, the construction person. You can be your own agent. You can do all the work yourself or you can leverage that out to different people in the team. What I want to highlight is the human beings that think that they want to get six houses, you probably don’t want six houses. What you want is to get out of where you are right now. Then you can own six houses and decide you don’t like that either and you want to get out of that. Understanding the principles that are in this book Scale will put you in a position that when you decide I don’t like where I’m at, it’s very easy to remove yourself and put somebody else in that place and focus on the thing you do like, not scrap the whole project that you were working on and start a new one from scratch.

Tony:
Yeah. David, so many good nuggets in what you just shared. You talk about the hopium, I’ve never heard it phrased that way before, but I love that saying. Dude, it reminds me so much of me when I was in my early twenties. You know guys know Blue Host is kind of like GoDaddy, the domain hosting website. If you logged into my GoDaddy account between the age of 19 and 27, there’s like 40 different domains there that I purchased because every couple of months I had this next crazy business idea. I found myself not finding success and the reason was I wasn’t really focused on one thing. And when I started in real estate investing, I really told myself not only do I want to be a real estate investor, but I want to be a real estate investor that focuses on just this one asset class.
When I really made that decision to get world-class in this one thing, that’s when the success started to really follow. So if there’s advice for our rookie listeners, it is that even at the beginning of your journey, the more clarity you can have around the thing you once get good at, the easier it then becomes to get really good at that thing. The other thing you said was just about having those goals up front. I think if we can take the time to think five, 10 years down the road and say, “What do I want my business to look like?” It helps us make better decisions today that support those goals. But if you’re just going with the flow, you can end up in any kind of situation because you don’t have that clarity around what it is you’re working towards.

David:
Yeah, that’s exactly right. I only starting the interview off by pointing this out because it’s sort of like the vegetables nobody wants to eat. There’s someone else’s voice that’s going to say, “If you just take my course, if you just use my program, all your problems will be solved.” People throw themselves into it, they spend their money, they invest into it, and then in the middle of it, at some point they realize, “Oh, this is not any different than the situation I was in. What’s the next thing?”
There isn’t a next thing. The principles of scaling a business are the same across any enterprise that you want to take. If you could focus on that, you get good at those, you pursue excellence in what you’re doing, what you said, Tony, is exactly what will happen. You will pick your thing, you’ll become excellent at it, you’ll play the role in that business that works for your personality, and then you’ll have doors open all over if you want to go bring a new thing into it or start a second or just double or triple or quadruple down on that thing and blow it up to have a whole bunch of them.
Whatever it is that you want to do in life can happen when you build a business, not just chase the job.

Ashley:
David, I think it’s pretty obvious from our conversation so far is that this book, even though it’s somewhat tailored to real estate agents, that it is business in general. This book will help anybody who is trying to grow and scale any business. The first question I have that comes up when growing and scaling, especially as a real estate agent or even as an investor is, okay, I’ve been buying in Buffalo, New York, now I’m going to take my business model and I want to grow and scale to another market. Can you talk about some of the things that you need to be aware of, you need to research, and kind of do that education before actually building out a business in a whole new other market?

David:
Yeah, That’s a great point. The typical newbie will say, “What’s the hot market? Where should I invest. Buffalo? Okay, I’ll go to Buffalo.” They invest in Buffalo because other people are, and maybe they got it right and that market grows, and they make money, and now they go bragged all their friends at their net worth increased, right? It’s that same vibe you got from NFT or crypto investors. They became millionaires overnight and all of a sudden they’re an expert and then they lose it just as fast. It’s better to know why Buffalo worked. What were the fundamentals that happened that caused Buffalo to do so well and what steps did you take that worked and what made them work? As opposed to monkey see monkey do, I just copy what I saw someone else doing.
When you’re wanting move to a new market, you want to have a good understanding of just basically macroeconomics. What is the country doing? Is our money supply going up or down? Is real estate desirable? Is it not desirable? Is there an area where tenants are moving to in greater droves than others or businesses are moving to where wages are going up? And how does supply and demand work? This sounds really boring. But almost every question I get about what can I expect the market to do, if you understand supply and demand, it becomes very easy to anticipate. Okay, so when this hypothetical Buffalo did well, odds are there was a constriction in supply and an increase in demand that led to some form of result of rents going up and values going up, and that’s why it went well.

Ashley:
David, where can somebody find this information, so get these statistics, find this data?

David:
The easy answers are the US Bureau of Labor and Statistics that tracks where people move to. Okay? I believe you could also see where wages are increasing in those areas. But to be transparent, I don’t usually use that. I look at the people who like to read that stuff, the nerds that are tracking that, that then they publish those findings. Bigger Pockets, like Dave Meyer, right? When we do State of the Market, we’re talking about what we see happening with the data that are showing where people move to. If you were following COVID, you saw a lot of people left California and a lot of people left New York during that time. It was all over the news. You didn’t have to have a specific place to go look. It was pretty clear. Californians moved to Idaho, Nevada, Arizona, kind of the states that are close to us, Oregon. And then New Yorkers moved to Florida. A lot of Wall Street moved into South Florida. It’s not a coincidence that real estate values in South Florida exploded at the same time that money was leaving New York and going into Florida.
If you understand the principles of real estate, you can see, well, at a certain point South Florida would be too expensive for people to move to and what are they going to do? They’re going to say, “Well, what’s close to South Florida that’s cheaper?” That’s going to be the emerging market where the people are moving into. These principles, they’re not rocket science. You don’t have to outsmart everyone else. You just have to have a commitment to understanding what drives real estate values and rents increasing.
Once you understand the basics of analyzing a property, knowing if it cash flows, that’s kind of the first step everyone gets. The next step is understanding, well, what would make cash flow go up? What would make values go up? How do I find an area that is more likely to be desirable in the future than what it is right now? And just listening to the news, just watching bankrate.com, you can see about where interest rates are tending to be going. It doesn’t have to be something that people are religiously studying all the time. Just paying attention in general and understanding these principles will give you a huge edge when you’re trying to pick your market and then decide which properties to buy in that market.

Ashley:
Yeah, for any rookie listeners right now that haven’t checked out any of this data, even just pick a random city and go to the places that David recommended, and just get familiar with these websites. I was listening to On the Market podcast today with Dave Meyer, who David recommended to check out. He released this report on Bigger Pockets. If you go to biggerpockets.com/report, he just put together a 2023 almost market outlook. It’s giving you data on different cities. What he is forecasting, you’ll kind of see within the next year. I think it’s free to pro members, it might be free to everyone, but you can go to biggerpockets.com/report. He’s put it out before and there is tremendous value, so I highly recommend you guys check that out and the other websites, too, that David mentioned and just get familiar with those things.
David, what about becoming efficient with growing and scaling? Now that you’re going to different markets, how are you making sure that you’re doing this the best way that you can and you’re not just wasting your time and building from scratch again?

David:
The mistake most new investors make is they make up for knowledge and skill with sheer volume. They’ll say, “All right, I’m going to analyze a hundred deals and I’m going to find the one deal, the needle in the haystack, that works.” They go on Zillow and they just start randomly looking at houses that are pretty and analyzing them, and then they get discouraged. “Nothing works. Man, I can’t find anything that cash flows. It’s not going to give me my number that I’ve been told to get, that 10% return.” Whereas if you showed me that same Zillow profile, I wouldn’t even bother analyzing, and I could tell you right away, that is not going to work. Single family homes that are in that good of condition at that price point are nothing close to the 1% rule. You don’t even need to bother analyzing it.
Now, I think the key is if you take it the next step further and you say, “What would have to change in order for it to cash flow?” Well, the rents are 2,500 a month. The property’s 500,000. It’s about a half a percent. You’d almost have to have two units in the same house for the same price. Well, if you had one unit that rented for 2,500 and one unit that rented for 2100, you’re now close enough to the 1% rule that it could work. So if you can find in that same area for around 500,000, a property with two units that are close to the rent amounts that I just said, it is now worthy of digging into and analyzing. Okay? That one tiny bit of information could literally save someone five to six hours of time bouncing around, analyzing every single single family home, hoping that they find one that just miraculously cash flows.
Rather than the person who understands, “I need to bump the rent up. No one’s paying more than 2,500 to live in this city, so I need to get two units or I need to get three units.” And then you start looking at the property and saying, “Well, could I convert the garage? I only want to look at properties that have ADUs. Do they have basements that are already converted that I could add a bathroom to and then rent out?” Just a little bit of elbow grease. Can you just use a little bit of creativity to find something that would work in that market? Because you understand what makes properties cash flow. That alone makes those investors way more efficient when they’re deciding which properties they should be pursuing and looking into versus the one who doesn’t know why the number at the end, the cash on cash return, ended up good or bad.

Tony:
David, I want to get your opinion because the market has shifted. Right? What we saw the last couple of years, it was very much a seller’s market where multiple offers, over asking, no contingencies, and what we’re seeing now is more a return to normalcy where it’s kind of a buyer’s market, right? Buyers have a little bit more leverage right now. I’ve shared this on the podcast before, but there’s a property that we just got under contract and actually pulled it up while you were chatting. Seven months ago, that property was listed for $500,000. They subtly dropped the price over the next couple of months. When I initially put in my offer, it was about four months ago, they had listed it at 410. I offered 312 on that house. They rejected my offer flat out. They came back a few months later after a 50K price drop and said, “Hey, we dropped the price 50 K, do you want it now?”
I said, “No, my price is 312.” They came back later, “Will you take 325?” “No, my price is 512. They said, “Will you take 315?” I said, “No, my price is 312.” We’re under contract now at 312. There’s obviously, I think like you said, an importance of knowing what kind of properties you should be looking for, but for our rookies that are listening, do you think that they should maybe ignore the purchase or the asking price right now and really just focus on, okay, what do I need to offer for this deal to make sense?

David:
That’s the first half, yes. You’ve got to know the number of the deal makes sense for you. The error that people make once they have their number is they try to force the seller to accept that 12 is what they should sell for. You’ll see them asking questions like, “How do I get the seller to agree to create a finance? How do I get the seller to agree to sell for this price? They have to understand their house isn’t worth that.” That’s an exercise in futility. Half the half of the game is knowing what number to offer. The other half is knowing how to identify which sellers are likely to take your number. Right? Just you telling me this story, the fact that they kept coming back to you tells me you created a form of impression. You built some kind of relationship with that listing agent that they knew that you would close and you were very interested.
You did not shotgun an offer. Yes or no, they said no and just forgot about it. You planted some seeds that let them know I really want this house but it has to be at this price, please come back to me when you’re ready. That follow up is what businesses do. That is a principle that we talk about in Skill. You don’t just go to a real estate client and say, “Hey, can I be your agent?” “I don’t want to buy a house right now.” “Well, then you’re dead to me. Go pound sand.” Right? You have to keep a relationship alive with that person so that they come back when they’re ready to buy a house. It would be the same for anything. The guy who walked in my office yesterday wanting to sell me high speed internet for my office or something, he’s not going to get the sale the first try, but if I see that person over and over and over and he happens to catch me at a time when my internet just crashed and I’m pissed off, I will probably say, “Yes, I’ll take your internet.” That’s a business principle.
The people that get that, when they get into real estate investing, they miraculously get these great deals at 12. The problem is someone hears that and they go, “Well, I don’t know. Tony just gets better deals than me. When I wrote an offer at 312 on a $500,000 house, they said no. It doesn’t work.” Right? It’s the approach of understanding. I literally have a spreadsheet when I’m looking at properties and we write an offer. The fact that I wrote an offer on a house is the first column on my spreadsheet, offers written. I use that to follow up every two weeks if I really like that property. Has it sold yet? Are your sellers thinking different? Because you never know what’s going to happen. A lot of the times the sellers say no. Then they start looking at houses themselves on Zillow and they fall in love with one, but they’ve got to sell their house to go buy that one. And when you come back after one of them just fell in love with a new house, now that offer that you sent might be more appealing than when they first received it.
I’ll follow up constantly. There’s a house I had in contract a couple months ago. I had to back out because it needed $75,000 of work on the deck. The house still hasn’t sold yet. Every couple weeks I tell my agent, “Check in and see how the sellers changed their mind yet.” That’s a business principle that works in any business. I’d love to see investors getting more into understanding that. And then the next column on my spreadsheet is properties and escrow, and then close, and then with a rehab. I’ve got this whole process of how we track the properties that I’m buying. But the first step is following up on that deal that you really want and kind of monitoring it over time.

Ashley:
David, talking about your spreadsheets here, Tony and I both use monday.com to track similar things, but would you go a little more in depth with your process so that a rookie can maybe get faster at analyzing deals? What are some things they should be implementing in their business to become more experienced at that deal analysis so that they are going through their buy box or their criteria and not wasting so much time on, okay, here’s one MLS listing. I’m plugging it into this calculator. I’m going through the full analysis for each property. What are some kind of tips you can do to speed up that process?

David:
That is a great question. I’m so glad to hear you say this, because this is what people need to hear. When you’re learning how to analyze a deal, yeah, you got to go analyze a hundred deals, but once you know how to do it, there’s no value in just repeating this process and trying to push this square peg into a round hole. When you are pretty good at understanding what are the numbers, the inputs that go into determining if it’s going to cash flow or not, now you want to move into phase two, which is, well, what makes some properties work and other properties not work. Okay? In my analysis, the first thing I’m looking at is the area. I have in my head, there’s 10 ways that we make money through real estate, and a couple of them would be buying equity. That’s just buying the property at less the market value. Tony’s property’s going to appraise for more than 312. He’s already made money going into the deal right away. There’s also forcing equity. That would be fixing up a property, improving it cosmetically, adding square footage, something like that.
What we tend to think about is only is just cash flow. That’s one out of the tent that we drill down on and we’re just looking to see which one of these things have cash flow. But even then there’s forced cash flow. Can I come in and add a unit to that property that will make it cash flow better? There’s natural cash flow, which is just what happens because of inflation going up, but then there’s market appreciation cash flow. What if you bought in a market like South Florida before it exploded? You could expect your cash flows to rise disproportionately to the market as a whole.
I’m trying to identify the areas where I’m putting the odds in my favor. I don’t know it’s going to appreciate. I don’t know it’s going to go up. But statistically speaking, if I identified South Florida or Seattle a couple years ago, or Austin, Texas five years ago as an area that tech was going to be moving into and bringing big jobs and there was a restricted amount of properties that could be built because the area was already built out, so that supply and demand were going to be way off with way more demand than supply, it’s reasonable to think that I’m going to get higher returns in that area than somewhere else. The area itself is the first thing that I look for.I’m wanting to know, is this a desirable place people want to live? What’s the weather like? What’s the economic environment like? What’s the political environment like? What’s the tax structure of that actual city or that state like?
And then does it have restricted supply? I don’t know that Topeka, Kansas is ever going to be the hottest market, because Kansas is so big and they can just build some more homes. All you Kansas listeners out there, we love you. If prices of Kansas go up, they’ll just build a million more houses, and there’s plenty of room to do it, right? When you look at the market that are doing really well over the last eight years: San Francisco, Seattle, Portland, Austin, they’re all tiny little hubs where everyone moved to and they were already developed, but there wasn’t anywhere to build. That’s not rocket science, but for some reason it goes over investors’ head because there’s nowhere in the calculator to point out that type of stuff.
The area’s the very first thing I’m looking for. I’m looking for restricted supply, low crime, and signs of development. Are companies moving there and are they bringing higher wages? Because even if you want to pay a higher rent, you have to be able to afford it. You have to be able to make more money to be able to pay that higher rent. The second thing that I look at after area is revenue, which is where most people start. Is it close to the 1% rule? It does not have to be the 1% rule. Especially as interest rates were lower, the 1% rule, you could get farther and farther off of it. Maybe if interest rates are at 15%, you’ve got to hold tight to the 1% rule, but they’re still pretty low considering. It doesn’t have to be exactly there. I’m not even going to bother analyzing properties that are way off.
If someone’s looking at single family homes in Austin, Texas that cost 800 grand and they rent for 3,200, don’t bother. Just don’t even analyze it unless you see an angle and you have the capital to convert extra units out of that property or you’re analyzing it for a flip because there’s a lot of equity there. I like to look at three years down the road rather than year one, sometimes five years down the road. This is another piece of advice that is very unpopular. People don’t like to hear it, but I’m being honest about how I look at real estate. Very few deals right now look incredibly promising. The second you buy them. I’m sure you guys can both agree. Most of what you analyze is not giving you that 12 to 15% cash on cash return that we could get five years ago, or 10 years ago you could get 20 to 25% cash on cash return.
There is so much competition for real estate right now, and there’s so few competing asset classes where people can put their money that it’s all going into real estate. If you’re just wanting an incredible cash flow the second you buy the home, nothing’s going to work. What I’m doing is I’m looking at three years down the road, four years down the road, five years down the road. With rent increases, with increasing demand, with the property finally being stabilized, will this be a good investment or will this still suck?
Because a lot of the people I hear about that get stuck into bad deals bought them from turnkey companies, or they went and bought something in Indiana for $40,000 that looked amazing, and five years down the road they’ve lost money because the minute that one thing goes wrong, all their cash flow is right out the door, or they get one bad tenant and it’s disappeared. Okay? There’s no input on a spreadsheet for those types of things when we’re monitoring for cash flow. I’m thinking five years down the road, what’s development going to be like? You don’t know, but you also don’t know if year one cash flow is going to work. It’s this fallacy that the calculator telling you that you’ll get a certain return is what is actually going to work out. I always take that longer term approach and try to put the odds in my favor with understanding that there’s no guarantee there.

Ashley:
David, along those lines with looking at the three-year outlook, is there anything specific right now that someone should pivot or implement in their business that you’re seeing compared to the last two years with the market conditions changing? Is there anything just top of head that you would give advice to rookie? Maybe you were in a real estate investor’s course and learned this over the past two years, or you watched other investors do this, and now that the market has changed, don’t do that anymore or do this instead? Did you just have any little tidbits like that?

David:
Well for one, the government was printing so much money over the last five years. Almost anything you bought was going to grow in value. But the problem was us investors would take credit for that. Okay? Someone would go buy a property in some just random area and then it appreciated by 20% and they were like, “I’m so smart. I’m a genius.” No, you’re not like you. In fact, the way I look at it is properties did not appreciate by 20%, the dollar was devalued by 20%. You just took that credit on your books. That’s a big thing I think a lot of people haven’t realized is we didn’t do as great investing in real estate as we thought, money was devalued. And that’s why I’m not surprised that eggs are expensive or the gas is expensive or the cars are expensive. Everything is becoming more expensive because of inflation.
The best move investors made was we put our money in something that retained its value. It didn’t actually grow in value, and that’s humbling when you can accept that, but it also creates a sense of urgency that you need to put your money into something that will hold its value because naturally the value of money is eroding along with inflation. As we have increased interest rates, we have kind of slowed down prices going up, but I don’t think that that means we’ve stopped it. The minute rates come back down, we’re going to see another poof in value. Part of the strategy right now is balancing, “I can’t buy a property I can’t afford hoping it goes up.” That’s speculation. We don’t do that. It has to be something you can afford. But you do need to maybe temper your expectations that it’s not going to perform great until four to five years of inflation occurs and the rents that you can expect are higher.
Or if you’re buying a property right now, like I just had to refinance one of my BRRRR projects that I had a bridge loan into a 10.75% interest rate. That sucks. This is a $2.2 million loan. I did not like that whatsoever. Okay? But when rates go down, if it drops from I had to pay 10, maybe someone else might have to pay seven or eight. If it goes back down to four or five, what’s going to happen to the value of that property? It appraised at 2.9. When the rates go down a lot, it’s probably appraising at 3.7. If I can refinance from that high rate into something less, my $17,000 mortgage probably goes down to 11 or 12,000, and all of a sudden there’s a lot of cash flow.
I can only buy properties I can afford. I don’t love that that’s the situation I found myself in, but I will be fine if I take the longer term approach. I don’t think investors were thinking that way in the last five to six years. It was like, “We’re printing money. We’re drowning the country in stimulus. All hands on deck. You’ve got to put your money somewhere right now to ride this increasing tide that’s going up.” Now you’ve got to be a little bit more careful and you have to think, “Am I buying in an area that will maintain its desirability over the next three to five years, because then I’m going to look like a genius.”

Ashley:
I think a big takeaway that rookies should look at right there with what you just said, David, is don’t have such high expectations. You’re watching people on social media. Like, “Wow, I got that 20% in appreciation from doing this rehab on this property. I made that so valuable.” Decrease those expectations a little bit and don’t get stuck. Still take action. Having a return or cash flowing sum on a property, it’s still going to be great. Don’t get focused on having that perfect deal, the one that’s completely maximizing every single dollar you’re putting into that investment, because you just want to make that first deal. That’s going to give you the momentum to propel you. So don’t get caught up in what other people are doing or what they did the past two years, or you did a BRRRR and you’re not pulling all your money out. Maybe you’re leaving a couple thousand dollars into the property. That’s not the end of the world at all. That’s still amazing. You just got this property for $2,000 and people are paying you to live there. You get mortgage pay down and you’re building equity into it. Try not to get focused on what was happening in the past two years and restabilize yourself and stay in your own lane and stay focused on what’s happening now.

David:
That is such a good point. I hear that one a lot. “Oh, I didn’t get all my money out of the BRRRR they failed.” It’s like, well, you would’ve put 25% down plus your rehab. You’d have been left with 35 to 40% of your money in the deal if you bought it traditionally. Instead, you left 10% of your money in there and you think that you did something wrong. That that’s absolutely still a win. I think to your point, if we compare ourselves to the influencer on TikTok that showing their huge wins that you may or may not be able to confirm that they actually did that, we feel bad. If we compare ourselves to the person that did nothing, you should feel really good. That’s just an overall lesson. If we’re all comparing ourselves to Tony, we’re going to think I’m not doing good enough in the gym. Right? Or we’re comparing ourselves to Ashley, we’re like, “I’m just not funny enough.” But if we compare ourselves to what we were yesterday, all that matters is am I stronger and am I funnier than where I was.

Tony:
David, I want to talk a little bit more about the systems and processes that real estate investors should be building when they’re thinking about the business that they have. As an example, I just had to hire a new assistant in my business. When I was onboarding my previous assistant, I did a really good job of recording videos on Loom for the different tasks that I wanted that first assistant to do. So like, “Hey, pay this credit card bill here. Here’s a Loom video. Pay this invoice. Here’s a video. Pay this team member. Here’s a video. Do this other little random task. Here’s a video.” Every time I did this task for that first EA, it was easy for me to train her when I had to replace her. Now it’s even easier because every time I ask this new EA to do something, I just send her a video with the link as well. If you think about that process of building the systems within that little example, how can we apply that to someone who’s building a real estate business? What are some of the things they should start doing today so that way they can start systematizing their real estate business?

David:
That is another principle that applies whether it’s investing in real estate, running a business as an agent, running any kind of business. It’s easier to just take whatever has to get done and just go do it, but that puts you on the hamster wheel that you never get off. There’s two parts to a system. I talk about this in Scale. Everybody understands the first part, which is you need to create a checklist of things that need to get done or a library of videos that show somebody how to do it. That is the first step in creating a system. The error becomes when we think that’s all a system is, because the second part of a system is having a human being that is skilled and capable at doing those things. We have all had a position where we hired someone to do something and it was super clear what they needed to do and they still screwed it up.
And then what happens is you go, “You know what? People don’t work. There’s no way to do this. I just need to go and do it myself.” Because when it’s our business, we will always figure out some way to do the things that need to be done. That’s not the end of the world, because at least when you have a checklist yourself, you’re less likely to make mistakes. You’re less likely to forget to do stuff. You’re going to be more efficient in getting it done. What I talk about in Scale is the process of leveraging out what you’re doing needs to be viewed with the same approach that you took when you were learning to do it yourself. I talk about the three dimensions of success.
The first is just a plain one dimension, it moves left to right. That’s what I call learn. We start off knowing nothing and we slowly move down this spectrum towards a hundred. And the closer we get to a hundred, the more money we make, the less time it takes, the more skill we have, the better success you achieve. This is you who knows how to run a short-term rental. You are much closer to 100 because you’ve done this for a while. You’re good at analyzing them. You’re good at anticipating problems. You’re good at maximizing revenue. You’re good at mitigating guest complaints. You’re good at getting good reviews. You’ve learned how to be good at this job, so make good money. The problem is, at a certain point, you reach the end. You cannot get any better. You’re managing 15 of them and you’re like, “16 would break me. I can’t do another thing.” At that point, you have a choice. You could be happy with your 15 and just work hard and make good money forever, or you could start over on a new spectrum, a new dimension, that I call leverage.
And again, you’re going to start at zero and now you’re moving in another direction. It’s your second dimension. Now you’re going up. You’ve got to get to a hundred at the ability to leverage, the skill of leverage. It’s different than learning. Where people mess this up is they think, “I’ve already learned how to do this. I should start at a hundred on leverage.” And you don’t. There’s a completely different skillset that involves identifying talent, training talent, holding talent accountable. All the things that go into being good at leverage, you suck at, and you’re going to start all the way over at the beginning as you fail and fail and fail. And if no one tells you that’s what’s coming, you’ll give it one or two tries. You’ll say, “This isn’t for me.” You’ll quit. You go back to the learn where you’re comfortable and you’ll just work your butt off and never tell anyone that you hate your life because you make good money but you have no time to spend it or enjoy it because you’re working all the time.

Tony:
David, dude, so many good examples. It’s funny, I actually had a call earlier today with my ops manager for our short-term rental cleaning company. One of the new roles that we instituted in that company was someone who’s a property inspector. Their whole job is to go to these short-term rentals after the cleaners are done and inspect how good of a job the cleaners did. And my ops manager was saying, “Hey Tony, when the inspector finds an issue, I just want her to clean it on the spot. That way we can get it handled quickly and the guests can check in with no issues.” I said, “That it’s absolutely not what we’re going to do.” Because if that property inspector cleans it on the spot, now we’re taking away accountability from the cleaners of doing that job correctly themselves.
What I want is that if the inspector finds an issue, they notify the cleaner who then drives back to the property for a second time that day to solve the actual problem. Right? The reason I share that is because so often we feel that it’s easier to just solve these problems in ourself as we’re building our business, but what we’re doing is handicapping the people that should be developing the skills to solve those problems for us. So if we can do a better job of pushing that accountability towards the people who we’ve hired or partnered with to do that, it eventually allows us to take a step back and let the business grow on its own.

David:
What you just described is part of the skill of leverage. You probably didn’t learn that automatically. You had to go through a couple situations being very frustrated that the cleaners are like, “Oh cool, I don’t have to do anything.” What you realized was if I want to be good at leverage, I have to create pain for the person who made the mistake, otherwise they will just keep making it. No one tells you that, that’s a part of something you have to get good at. I had to learn that lesson with my businesses too, where I had this tendency to want to jump in and help the agent who makes a mistake and save their bacon and try to keep the deal alive. We all have a thing where, “It’s easier if I just fix it.” And then the problem continually happens for the rest of your life. There has to be a point where the person that you’ve leveraged to feels pain, is forced to take responsibility, and solves their own problem so you don’t solve it.
There’s a lot of things like that that are going to pop up during leverage. You’re going to have to figure out the right cleaners. You’re going to have to get good at reading people. Is this a cleaner that’s going to show up every day or is this a cleaner that’s like, “I’m behind on my bills. I really need a job. I’m going to tell Tony everything he wants to hear and I’m going to work hard for two months and then I’m going to get caught up and I’m going to stop being motivated and I’m just going to slip back into doing a bad job again.” You have to learn how to anticipate these things, and at a certain point you will get leverage down, and you can now go from having 12 single family short-term rentals into 40. You’ve got a huge portfolio.
But there’s another dimension if you want to go past that, and the third dimension is leadership. That’s a whole new skillset. You have to learn a whole new way of approaching things and you have to start over at zero. In Scale, I talk about these facts because everybody wants financial freedom and they know real estate’s going to help them get there, so then they do it. Then they realize they’re a slave to managing real estate and they need the leverage, so they want to get out of it. So then they get out of that and then they realize, well, I’m still a slave in a sense to all these people that depend on me for how to do the job. Until you get to leadership, you’re not ever actually really in control of your life. You haven’t turned it into a business, you’ve just turned it into a job.

Tony:
Man, David, so many good things, brother, and I feel like we could go on this point for days and days. But I think the really quick one on the leadership and the leverage piece is that every single person that wants to build a big portfolio should be thinking about those principles from day one, because the more you can integrate that into your business when it’s small, the easier it is to have success when your business gets big.
I also just want to recap, Dave, some of the other things you’ve mentioned. When we talk about market selection and really the deal analysis piece and things you called out were in order to quickly analyze, talk about the area that you’re focused on and knowing what markets you should be moving into. You talked about the revenue potential and quickly being able to exclude certain properties because you know that they’re not going to check that box because you’ve already analyzed a few deals in that market. Looking for markets that are maybe appreciating and not just focusing on that one metric which is cash flow. Ultimately, I think the biggest thing is that even if you have this framework, people still have to take action on a consistent basis to find the benefit of knowing those things. That’s where a lot of rookies get stuck.
David, I guess one last question for you. If someone reads through the books, if someone listens to the podcast, how can they consistently take action? What advice do you have for someone to actually do the things they need to do to see this all the way through?

David:
Well, start off with knowing what actions would need to be taken. Who would I need to be or what would I need to know to actually be good at this? Just sticking with your weightlifting analogy, you don’t just … Part of the job is working really hard, but you don’t want to just show up at the gym and work really hard with no plan. Can you identify what makes muscles grow? What foods need to be eaten? Right? How hard is too hard or is there a too hard? Can you get clear on what even makes this successful? When you have that, you just focus on what the next step is. So many investors, this is just my personal opinion, are looking at the guy that’s got 700-unit apartment complexes and saying, “I want to be them.” They’re trying to copy this blueprint or this system that is not realistic for them to achieve.
They’re not going to go become a syndicator and raise a bunch of money and buy 100-unit apartment complex and learn that way. They would be so much better to just house hack, just put three and a half percent down on a property, and get used to the fundamentals, get used to seeing what goes wrong, get used to figure out which part of real estate you like. And then at the end of a year, rent out whatever part of the house you were living in, the bedroom, the unit, whatever, and house hack again. Just do that every year for the next three, four, maybe five years. You’ll get this sense that real estate just starts to become kind of predictable. Right?
You buy a house, you’re like, “Okay, I’m going to go sign. This is what I’m going to check for in the documents. I need to make sure that this gets done. This is the part the contractor always misses.” When you are anticipating what’s going to go wrong right before it does, you’re getting to the point that you’re ready to take the next step. And after you’ve just house hacked, you’ve just put 5% down on a house, you didn’t risk all your money on one deal several times in a row. You’ve built up some equity, you’re in a position to take a HELOC out of that property, you have a very good understanding of the fundamentals of real estate. Then say like, “Okay, I think I could buy a 12 unit apartment complex.” Or if you’re really confident, maybe buy a 20 or 25. And then just give yourself a year to figure out how that works. Then leverage off parts of it, get a property manager to take it over, get a different company to focus on the leases, and then kind of take the next step of what you’re getting into.
It’s really there’s two ways to err. You could go way too big and try to do too much and get yourself caught up and do nothing. Or you can say, “I’m not ready at all. I’m just going to sit here and do nothing.” Just take very small steps all the time. I’ve been getting back into the gym recently myself. It was discouraging because I expected myself to lift what I did two years ago when I was going all the time, and it was nothing close to that. There’s this little voice that’s like, “Just don’t do it. There’s no point.” Right? The key wasn’t like to monitor how much I was lifting. It was just to make sure, did I go to the gym? Did I work out to failure? Who cares if that my old warmup is now my max. It doesn’t matter. It just matters did I do it.
And then in time it slowly starts coming back and coming back, and now about three months later, I’m literally increasing the weight every single time I go and I’m feeling good. It’s that reminder to myself, because we’re all a rookie. You just have to do it over and over and over and make sure you’re doing it, and then the doors open up. It wasn’t like, “How do I know what I’m ready to lift more weight.” You can tell. You could go heavier and it’s not going to fall on your face, and so you do that. You’ll know after a couple of house acts it’s time to go bigger. And once you’ve gone bigger, you’ll know this is getting boring. I’m ready to take the next step.

Ashley:
Well, David, next time we have you on, you’ll have to do some kind of lift competition with Tony now that you’re back working out.

David:
Yeah. That’s what Bigger Pockets needs, the bigger pump competition.

Ashley:
We’ll do some kind of charity event where people could donate dollars as to who they thinks going to win. Yeah. Well, David, thank you so much for joining us on the Real Estate Rookie Podcast. Can you let everyone know where they can find your new book?

David:
Yeah, they can. If you go to bigger pockets.com/scale, or scalebook, but scale’s less words, so type that one. You can get the book there and you can find out more about me on social media at davidgreene24.

Ashley:
Okay. And if you guys go to the bigger pockets.com/scalebook and use the discount code scale262, you can get 10% off.

David:
That’s right. I believe we’re also putting together another marketing plan where if they buy all three books, they can get a free month membership into the mastermind that I’m running, which the books are nothing close to what the mastermind would cost, so it’s a super good deal. And if you don’t know, if you’re not an agent, just buy them and give them to the real estate agents that you have. They will appreciate it. It’s a hard job and they’re not getting nearly enough guidance that they need.

Ashley:
Or if you already have the two other books, it’s probably still worth it to buy the three and give one to somebody.

David:
Yeah, that’s pretty true.

Ashley:
And just to get into the mastermind for free, that’s a really cool value. Okay, so make you guys check that out at the Bigger Pockets bookstore.
I’m Ashley at Wealth Firm Rentals, and he’s Tony at Tony J. Robinson, and we will be back with another guest.

Speaker 4:
(Singing).

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We’re still at half the housing inventory of 2016 through 2019, says Redfin’s Glenn Kelman

Blog / Richard

Redfin CEO Glenn Kelman joins Brian Sullivan and the ‘CNBC Special: Taking Stock’ to discuss housing data and what’s really going on in the market right now.

05:00

Thu, Feb 16 20236:36 PM EST

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Trying To Define Your Business’s Niche? 10 Questions To Ask Yourself

Blog / Richard

Defining what makes your business unique is one of the most important tasks you can do to help answer the question of why customers should buy from you. Without a differentiating factor separating you and your competition, you ultimately give customers no reason to choose your business over another—which isn’t a helpful strategy when looking to grow your company.

But if you’re new to business or haven’t considered your brand’s niche before, how do you go about determining it? The members of Young Entrepreneur Council can help. Below, they offer up 10 questions you can ask yourself that will help you define what is unique and different about your brand and explain why these are such effective questions to ask.

Members pictured from left to right.

Photos courtesy of the individual members.

1. What is the job that needs to be done here?

Asking this question prompts me to think holistically about the users and what their needs might be. Focusing on this question helps you assess whether you have a creative and better way to solve their problems and how you solve it differently from others. – Paul-Miki Akpablie, Akos Technologies Inc.

2. What sets my product or service apart from the competition?

One question you can ask yourself when trying to find your niche and define what is unique and different about your brand is, “What sets my product or service apart from my competition?” It is important to ask this question because it helps you identify your unique selling points and differentiators. These are the aspects of your brand that make it stand out from others in the market and are crucial in attracting and retaining customers. In addition, it can also help to differentiate you from your competitors and appeal to customers who are looking for something specific. Asking this question allows you to tailor your marketing message and strategy to the specific needs and wants of your target audience, which can ultimately lead to better results. – Kazi Mamun, CANSOFT

3. What is the bigger picture?

Strangely, “What is the bigger picture?” is the important question to ask when trying to find a niche and your unique selling point. While it’s incredibly important to know what is unique about your business, it is dangerous to get too bogged down and pigeonholed into one particular area. Once your business reaches a certain point where expansion is necessary, you might find yourself with only limited options for growth. Sussing out trends before others, looking at market potential and then tying that in with the problems your business is trying to solve will lead to a better understanding of what your brand should stand for. – Robin Saluoks, eAgronom

4. How does our brand improve customers’ lives?

When trying to find your niche and create a differentiated offer that your customers will care about, start with the basics. Ask yourself: How does our brand improve our customers’ lives? Try to get out of the mindset of focusing on your product being better than someone else’s product, or zooming in on specific features. There will always be someone who does it differently. Instead, focus on what impact you want to make and for whom. Think about what improvement you can make to how they work or live—that’s where your true value lies. – Daria Gonzalez, Wunderdogs

5. What would people miss about working with me?

Business owners are often terrible at understanding and expressing their own uniqueness. My favorite way to dive deep is to ask, “If I stopped offering my services or products tomorrow, what would people miss the most about working with me?” Typically, the answer to that important question is the ultimate differentiator. – Rachel Beider, PRESS Modern Massage

6. What emotional need or desire do we fulfill for our customers?

Ask, “What is the underlying emotional need or desire that our product or service fulfills for our customers, and how can we uniquely tap into and amplify that feeling?” By understanding the emotional drivers behind customer behavior, we can create a differentiated brand that resonates with real customers. Identify a unique way that your product fulfills emotional needs, and it will stand out in the market. Understanding underlying emotional needs helps create effective marketing campaigns, identify new product opportunities and develop new business models. This question is key to creating a brand that truly connects with its target audience and drives growth and success. – Miles Jennings, Recruiter.com

7. Why are customers referring?

Given that our growth has been driven so strongly by word-of-mouth referrals over the past decade plus, I always ask: Why are customers referring? What is it, specifically, that makes them want to tell their friends? I think this question really gets to the heart of what resonates beyond the transactional level with our customers and offers insight into what we should be doing more. – Lindsay Tanne, LogicPrep

8. If we shut down, how would our customers solve their problems?

One technique to help you identify what makes your business unique is to look at alternatives versus competitors. A question to ask yourself is, “If my company and my competitors shut down, how would my customers solve their problems in the absence of our products or services?” This causes an entrepreneur to look at their business differently, through the lens of an alternative-solution seeker. For example, if your company was a recipe subscription app that helped organize recipes, customers would resort to traditional notecards to organize recipes even though you don’t consider notecards a competitor. When you look at alternative solutions, you can identify unique problems that your product solves and can position it in a way that makes your company stand out. – Nick Chasinov, Teknicks

9. What is my perfect customer profile?

I find that starting with thinking about the ideal customer for my brand is the surest way to identify the unique product quality that will drive sales. So, I consider who would buy the product idea I have in mind; who they are in terms of demographics (location, age, gender) and psychographics (lifestyle, interests, values); and the behaviors of the best buyers. Then I try to define their needs or problems that I can solve. From this, I can narrow down why they would want to buy my product instead of products from other providers in the market. The current marketplace is highly competitive. Most businesses are not inventing but creatively innovating existing products to make them more efficient. So, identifying the unique selling point in a way is how you micro-niche. – Tonika Bruce, Lead Nicely, Inc.

10. What is it about our company that would turn me into a customer?

When trying to find out what makes your brand unique, one question you should ask yourself is, “What is it about our company that would turn me into a customer?” To understand how other people see your business, you have to look at things through the eyes of a shopper, not a business owner. Switching your mindset and thinking about things as a consumer can help you identify the strengths and weaknesses of your brand identity. As a result, you can build on what you’re doing well and find opportunities to improve. – John Turner, SeedProd LLC

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The Hidden Housing Costs Almost Every New Investor Overlooks

Blog / Richard

Your real estate investment’s returns could be ruined by a few hidden costs that you don’t know about. For the rookie real estate investor, it seems like every investment has the same type of expenses; mortgage, taxes, insurance, repairs, and property management. And while these surface-level expenses are almost always present in a real estate deal, NUMEROUS extra expenses could sink your ship if you don’t include them in your deal analysis. So, stick around, or you might get burnt on your next real estate deal!

To walk us through the different types of deals and the expenses that come with them, we’ve got Henry Washington, James Dainard, and Kathy Fettke on the show. Henry, a buy and hold investor, knows that the “cash flow” new investors are calculating is far from reality. He highlights the exact expenses it takes to run a rental property portfolio and why those counting on self-management could be making a MASSIVE mistake. Next, James talks about the often over-glamorized world of flipping houses and the massive haircut investors take when they don’t account for closing, construction, and tricky lending fees.

Finally, for our passive investor, Kathy goes into the world of real estate syndications, defining the numerous fees many “mailbox money” investors overlook. In fact, investors in these passive deals often don’t know when (or how) they’re getting paid. You DO NOT want to make this mistake! Stick around to hear it all, so you don’t make these beginner blunders next time you get a deal done!

Dave:
Hello, everyone. Welcome to On the Market. I’m your host, Dave Meyer, joined by three panelists today. We have Kathy Fettke. How are you, Kathy?

Kathy:
I’m good. I’m alive. That’s helpful.

Dave:
Are you referring to your heliskiing experience?

Kathy:
I am. My anniversary gift from my husband to take me up on the peak of some random mountain for our 25th anniversary. I survived it, even though the pilot didn’t want to go and the guide told us it was the most dangerous day they’d ever seen. And then the helicopter sunk into the powder and he said, “I don’t want to spend the night out here.” And I said, “I don’t either. This is not the anniversary gift I had in mind.” Anyway, we made it back.

Dave:
What’s up everyone? Welcome to On The Market. I’m your host, Dave Meyer, joined today by Mr. James Dainard, Kathy Fettke, and Henry Washington. How is everyone?

Henry:
Fantastic.

Kathy:
Good to see you guys again.

James:
I’m good. I’m back in warm California, so I’m, I’m happy.

Dave:
Are you still snowed in, Henry?

Henry:
There’s still snow on the ground, but luckily the roads are navigatable. Is that a word?

Dave:
Close enough.

Henry:
Nava-

Dave:
Navigable?

Henry:
Navigable.

Dave:
There we go.

Kathy:
Well, we had an earthquake.

Dave:
What?

Kathy:
Kind of exciting. I wasn’t there.

Dave:
In California? I didn’t even see that.

Kathy:
Right off of Malibu, about a few miles in, but I wasn’t there, so hopefully the house is still there. We’ll see. But if the earthquake didn’t take it, it might be the Santa Ana winds we had all week, so.

Dave:
Oh boy.

Kathy:
Glamorous California.

Dave:
I mean, it does… I know you’re saying it’s not, but it does seem pretty glamorous. I’m pretty into it.

Kathy:
In the summer.

Dave:
The weather at least seems really nice. I’ve been staring at, it’s like 4:00, 5:00, it’s pitch black out here, so that sounds pretty nice. All right, well today we’re going to get into a topic that we haven’t touched on this before, but a lot of the show, we want to help people understand current market conditions, and honestly, a lot of that is how you underwrite your deals, and how you make estimates into some of the costs. Sometimes we talk about rent, and income, but today we’re going to really focus on the cost side of your deals, and we’re going to talk about hidden costs.
So, what are some of the traps that investors miss when they’re underwriting their deals, or don’t know how to calculate? And I don’t know about you guys, but this is probably one of the more common questions I get. It’s like, I get the math, how to underwrite a rental property, but how do I figure out the assumptions for a rehab, or how do I figure out the assumption for holding costs for a flip? Those types of questions, I think, really trip up the investors, and they change a lot based on market conditions. So, that is what we’re going to talk about today, but first we’re going to take a quick break.
All right, so let’s get into it today, and we’re actually going to break this down into different strategies. So, as usual, James is going to represent the fix and flipping crew for us. Henry’s going to take the buy and hold position, and Kathy is going to look at syndications. James, let’s start with you, and just talk about fix and flip. Just generally speaking, at the highest level, what are the big categories of expenses that you think investors really need to know about when they’re underwriting their deals, and which ones do you think are the hardest to understand, and to underwrite correctly?

James:
Yeah, fix and flip is one of those businesses, because it’s a high return deal, there’s a lot of fees that can be associated with it. It’s also a high risk transaction, as well, because you are buying… There’s so many little things that can come up.
But the four main costs that I usually am watching when I’m buying any kind of fix and flip deal, or a short term investment, where we’ve got to close really quick, is closing costs and assignment fees. What’s your total acquisition? The lending, because a lot of times you got to take down these properties with construction lenders, which have a lot of fees that can be associated with that loan, as far as doc prepping, what kind of interest are you being… How they’re structuring their interest payments, and then construction, what are you missing outside the general scope of work?
And then lastly, it’s always seller concessions, because those things can be big effects at the bottom line in the ROI, when you’ve got to contribute to closing costs. So those are the four big things, and as an investor, you really got to dig into each one to make sure that you’re not getting feed to death, because those fees can really, really jeopardize your return.

Dave:
All right, great. I know nothing about any of this, so let’s get into that. You said the first thing here is closing costs, and assignment fees. So, what are some of the big costs associated with just acquisition there?

James:
Well, one of the biggest fees, hidden costs that I see happen all the time is in wholesaling. And because a lot of times when a wholesaler… When you’re buying an assignment deal, or you’re buying any deal, you have your own closing costs, which are typically going to be your title, and your escrow fees. And if you’re an investor, a lot of times you can negotiate a better rate, because you’re doing numerous transactions. So that’s the first fee I’m always going after is how do I reduce my transaction fees, escrow, title, I work with one title company, they give me a way better rate, they reduce my cost when I’m doing the same transaction.
The other thing I have to watch out for is when you’re buying an off market wholesale deal, you are buying the terms that the wholesaler structured with the seller as a negotiation. And part of that negotiation, sometimes, even when we’re wholesaling or working with a seller, a seller just sometimes wants to know what their net number is. Like, “I’m walking away with $10,000 or $20,000,” or whatever it is.
That usually means that the contract’s structured with the buyer paying all the seller’s closing costs. And so, there’s a huge fee that can creep in at the end. I’ve been see… Especially the last two years, it wasn’t as big of a deal until these last two years, is you would go to buy a deal from a wholesaler and they say, “Hey, it’s $200,000.” “Perfect, wholesaler. I’ll take that deal.”
I’m calculating, as a buyer, that I got my standard escrow, and title piece. But then, when they’re saying 200,000, or they’re saying, “Hey, I locked this property up for 180, I want to make 20 as my assignment fee, you’re buying it for 200.” But then if they structure that you’re paying the buyer’s closing costs, that can get rolled into the deal, and that can be anywhere between three, four, $5,000 that can get added onto the property.
And if that’s not specified in that assignment agreement, you could get stuck paying those costs, because if you’re signing an assignment and saying, “Hey, I’m just assuming this guy’s contract,” it’s up to the investor to verify what’s inside that contract. And so you can get stuck with those fees if you’re not watching that.
So, how I like to always structure my off market deals is instead of a purchase price, I do total investor acquisition. So, that means when I’m buying it from the wholesaler, I’m going, “Hey, I’m buying this for 200,000,” but that uncovers all the costs in there, and then that way if there is additional costs, that comes out of the assignment, not my pocket.

Dave:
So you’re saying that there is a chance, using your example where it’s, the house is at 180, the wholesaler wants 20 grand for an assignment fee. You’re saying that there are scenarios where you as the investor could buy it for 200, and then you would have additional costs on top of that, that could be unexpected?

James:
Yeah, because when you’re buying a wholesale deal, you’re not actually buying a property. You are, on the next transaction, you’re buying the rights to the contract on that property. And so however that contract’s structured, if it’s not clarified on if that’s being deducted from the fee, yes, you are going to be responsible for any buyer’s closing costs, because you’re now assuming that contract, right?

Dave:
Okay, that makes sense. Okay, that’s a very good tip. Yeah, I never would’ve thought about that. And so, is that something that wholesalers… What you were suggesting, the total acquisition fee, using that as the number for your negotiation, it sounds like, is that something wholesalers are familiar with, in your experience, and they’re comfortable reconsidering the way they structure their deals, or their presentations to you, around your preferred metric?

James:
Yeah, a lot of times I’ll have a little bit of issues when I’m working with maybe a newer wholesaler, just because they just also didn’t think about it either. So if they call me and say, “Hey, this price is 200 grand,” the price is really 205 if I’m paying all the closing costs. And so, I just have to educate people a little bit, like, “Oh, next time will you let me know it’s 200, and I’m paying all sellers close… So I can calculate it correctly.”
The clarification question I always ask is, “Is there any other cost outside of it?” And then, “Is this my total acquisition fee?” And if I do that, it can kind of narrow the price down, if they say yes, and then the contract states later, they’re responsible to cover the difference at that point.

Dave:
Okay, cool. Thank you, that’s super helpful. So, the second thing you said where there’s some hidden costs that you might want to make sure you’re calculating, is with lending and hard money. There are some well-known fees and costs associated with getting a loan, but what particularly about flipping, and hard money do you think people need to keep an eye out for?

James:
Especially nowadays, so the lending hard money space has changed. It has the been one of the biggest industries that’s changed over the last 24 to 36 months. Hard money, when I was buying as a new investor, was just like it… I mean, it was really hard money. We would go to a lender and say, “Hey, we got this property. They want us to put a certain amount down.” They’d verify the loan to value, and I could have my cash in 24 to 48 hours. And it was a very simple process at that point.
And then, you kind of knew what your fees were, which typically with a lender, when you’re using a construction or hard money loan, which most of the times you need to do with a fix and flip, you got to add value to these properties. They’re going to be higher rate and points. So the first things you always want to look for is what’s the points on the loan? And what points are, is it’s the origination fee, with the balance of that property, which is going to be the purchase price, and the construction component.
The next thing you want to know is, what is the interest rate? Which is going to be, typically with hard money right now, it’s going to be 10 to 12%. And based on that rate, you want to make sure that… There’s a couple things that you want to watch out on the interest, and the rate. The thing that I’m always looking out for, is if I’m doing a construction loan, are they charging me interest on the full balance of the loan, or only the drawn amount?
That can really make a big difference on a long project, because some lenders do finance, because they say, “Hey, I’m reserving you the cash, and so, if we’re reserving the cash, we’re charging you for the interest.” Now some lenders don’t do that.
And so, those are really important things to do, because again, it can be thousands of dollars on your interest when you’re reading your loan sheet. In addition, too, you want to know if there’s any kind of prepayment penalties, right? Because like what I was saying earlier was when we had hard money, it was like cash guys giving us money. Now there’s banks in the space, and banks come with different types of terms.
They’re used to prepays, they want to keep their money out on the street, because if you are a short term investor, and you’re getting a 12 month hard money loan, and you’re selling that deal in eight months, and there’s a prepay, that’s going to affect your deal, and return down. So, sometimes there can be a one to two point prepay.
Other times there can be motivation, where, like we have a hard money company called interest funding. We actually incentivize our borrowers to pay us off quickly, because we like to get in and out of loans. It’s safer for us. And so, you want to be also asking what the benefits are. And then the biggest thing you got to check out for in your lending is just those hidden little doc fees, because they just rack up.

Dave:
But can you negotiate out of those? It’s like, they always keep it at a level where it’s annoying, but it’s not worth actually arguing about. Do you actually go after your lenders for those things?

James:
I will, because there’s also the cat and mouse game all these lenders play, and it’s like, “Oh, I only charge one point, and I’m this rate.” But then you look at their doc schedules and their fees, and it’s almost the same as a two point lender that may have a lot more reduced fees. So, you do have to look through them all, because when you’re paying $350 to $500 per fee, and there’s four to five of them in that deal, that can turn into two to three points.

Dave:
Yeah.

James:
And if you’re doing that on 10 deals, that’s going to add up dramatically over a year. And so, just always be watching. There’s always the construction doc fee, the underwriting fee, then there’s a construction draw fee that could be like $500 per draw that you have. Then there could be a… What’d I get? I got one recently, I’m like, they charged me a $100 to generate a payoff. I was like, “You got to be kidding, I’m paying you off, and you’re going to charge me $100?”

Dave:
Money collection fee.

James:
Yeah, money collection. Yeah, I’m paying… Yeah, they’re trying to make it sure I’m not paying them off.

Dave:
You’re paying them to take your money.

James:
Exactly. That one I felt really good about. But all these fees add up, and you really got to watch for them. And a lot of investors will… That’s their first thing, is, “What’s your rate and points?” And they get fixated on this, but you want to look at the whole big picture. What is the total cost of all of these? How they’re structuring their interest payments, what kind of doc and prep fees, and then really compare apples to apples at that point.

Kathy:
Sounds like it would be a good idea to be a lender, then.

James:
Being a lender is one of the best businesses there are.

Kathy:
Clearly.

James:
Being a hard money lender, it is the best business to operate. I will say that. Because you don’t have to do all the hard work. The investors are doing the hard work. You just got to make sure you verify the asset, and you’re good.

Kathy:
And just charge a bunch of fees.

James:
Reasonable fees. If it’s [inaudible 00:13:07] .

Dave:
Okay. James, so far we’ve talked about closing and costs, and lending, construction. I feel like this is obviously a big one. There’s probably so many things to it, but what’s your top tip here, for helping people avoid any hidden fees, or costs with construction on a flip?

James:
The biggest one that I always say is, is the bid fixed, or is it time immaterial, or just an estimate? Those are going to be the big variances on those hidden fees, because I have had clients, and it’s happened to me too, where you get submitted a bid, and you have to read that fine print. Are these allowances that are being listed on your estimate, or is it fixed? And if there’s verbiage about there being an allowance, or it’s an estimate only, that contractor can raise their price at any time, at least in Washington state. So, that’s the big one with construction, to make sure you’re narrowing that scope, that it can’t be increased just because costs go up.

Dave:
What structure do you prefer, James, for your contractors? Is it fixing the bid?

James:
Oh, we fixed bid everything. I want to know price per square foot, or fixed bid, and if they can’t do that, it makes me a little uncomfortable.

Dave:
Okay, cool. And then last thing you said was seller concessions. Very popular topic these days. So, what are you doing to make sure you’re accounting for seller concessions right now?

James:
As the market cools down, you want to look at what demographic you’re selling to. If it’s a first time home buyer right now, we might pack in an additional 2% to 3% in closing costs, because that buyer might be asking for that on every deal. In 2008, ’09, and ’10, there was limited financing, limited buyer pools, and it was a lot of motivation for first time home buyers. And so, it was almost always on those deals we were going to have to pay 2% to 3% in closing costs.
And so you want to make sure you know who you’re selling to, or what product you’re selling. Like if you’re a new construction builder, and the rates are high, you might be buying down the rates. So these are all… If you’re paying three points on a $300,000 flip that you’re selling later, that’s $9,000, which can be anywhere… A lot of times, 25% to 50% of our profit on the smaller deal.
And so, watch out for those closing costs. So, how we kind of protect ourselves on that, when we’re running our analysis and our underwriting, we’re calling every broker, and then we’re reading through the MLS to see if there was concessions costs given when they sold it. Because if the comparables are all saying they had to support those closing costs, we have to factor in our pro forma.

Dave:
You have a good rule of thumb, James, for how much people should set aside when they’re underwriting a deal right now, for seller concessions?

James:
What I’ve been doing, because roughly is, we have 6% broker fees, and then we usually have about 2.5% in closing costs, to 3%. So, I add an additional 1% minimum to each deal. So typically when I’m selling a property, I knock 10% right off the top. If I’m selling it for a million bucks, I’m going off a net of 900, because that’s going to be all my closing costs right off the bat, plus a little bit of wiggle room. So, that’s how I underwrite things really quickly in my brain.

Dave:
All right. Well, there are some good tips for underwriting right now, in the fix and flip space. Henry, let’s move on to you, and talk about buy and hold. So, what do you see as the big buckets of expenses that need to be accounted for, and what are some of the major areas that you find investors underestimating, or miscalculating, when they do their underwriting?

Henry:
Yeah, man, so buy and hold. I think most people understand the high level buckets. So we’re talking about maintenance. Everybody knows stuff breaks. So, you need to be budgeting for maintenance out of your properties. Everybody understands that there is going to be property management of some sort, so there’s a budget for that. There’s capital expenses, there’s vacancies, and then everybody else knows there’s your debt service, and your principal, your interest, and your insurance.
So, those are the main buckets that people are typically aware of. But what I found is that people like to skimp on some of these. They’re like, “Ah, it won’t happen too often. I’ll just leave that out of my underwriting. Vacancies are really low here. Stuff rents so fast, so we’re not going to budget for vacancy.” Or, “I’m going self manage, so we’re not going to budget for property management.” So, I think people leave a lot of that stuff out.
But even within some of these expenses, there are hidden costs in the hidden expenses. So when you think about vacancy, everybody understands vacancy. Yeah, people will move out, and then when they move out, I have to re-rent it, and so I need to budget for that time that somebody is not living in my property.
But when you really break down vacancy, there’s a lot in there that people don’t account for. Yes, vacancy means when somebody moves out, you need to pay the mortgage. But what people don’t think about is, what about vacancy when tenants don’t pay rent, right? Because maybe a tenant doesn’t move out, but they’re just not paying you rent for whatever reason, and you’re going through this series of back and forth with a tenant. You’re still having to cover the mortgage for that timeframe, and they still live there.
So, I think vacancy is much deeper than just, “Somebody’s moving out, and I’m re-renting it.” Also, what about eviction costs, right? You’re a landlord, at some point you’re going to do an eviction, or two, or three, or four. It depends on how good you are at tenant selection. But no one budgets for evictions on the front side, and I think evictions are part of vacancy.

Dave:
And expensive.

Henry:
And expensive, and it’s going to vary from state to state. So you should do your due diligence, know what an eviction costs you, and budget part of that into your monthly expenses for your property. You also have utility costs during vacancies. So, if your property is empty, and you’re having to renovate it, right? Well, you’re not only covering the mortgage, but you’re covering the utilities, and those utility expenses aren’t things that people think about as part of what you pay for as a landlord. They say, “Oh, well, my tenants are going to pay for the utilities.” Yeah, they will when they live there. But what happens when you’re doing a 60-day renovation on a property? That utility expense goes back to you. So, you’re carrying utilities.
And so, it’s not just tenants moving, it’s much more than that, because you’ve got tenants moving, you’ve got renovations, and a lot of times people who are going to do this buy and hold method, or especially the BRRRR method, they’re not considering all of these holding costs on the front side. You’re buying a property that needs a renovation. So, all of these expenses start hitting you from day one, before you’re ever making any money. And so you want to underwrite that into what you’re offering for a property, and be able to budget for it on the front side.

Dave:
So, how do you do that practically, Henry? Because a lot… If you use the Bigger Pockets calculators, or a spreadsheet, usually there’s a line item for vacancy, and it’s usually a percentage of rent is what most people do. Is that what you do, or do you recommend adding sort of another lineup? Do you jack up the vacancy number?

Henry:
I don’t think that it matters, as long as you add it in there. So, if you just want to increase your vacancy percentage, right? So some people, as a rule of thumb, just use the vacancy percentage of a market, so you can find your market, and understand, “Hey, in Northwest Arkansas, we have 5% vacancy, so I’ll budget 5%.”
Well, 5% typically probably isn’t even one month’s rent. And so, I prefer to do it more on, how long do you envision a property to be vacant when you have to turn it over, and then add a little padding for these other things that we talked about. So, in my opinion, it needs to be at least one month’s rent, plus these additional things. And so, just use your best judgment, based on what these things cost, and add a little bit to that. Or you can have separate line items if you’re super detail-oriented.
Another thing to think about is a lot of people do not budget for property management. They say, “Well, I’m going to self-manage.” And I know that sounds great, and I think most people should self-manage where it makes sense, but you have to understand what your goals are as a real estate investor.
If your goal is to buy one property a year for five years, and then at the end of your journey you’re going to have five properties, okay, self-managing might be something that’s reasonable for you. But if you’re planning to scale this business, if you want to get to your financial freedom by generating enough cash flow from your rental properties, it’s probably going to mean you’re going to do more than five properties. And yes, right now managing your properties seems like a good thing to do, because you want to learn, because it saves you the money. But at some point, you are not going to want to do that if you’re growing, and scaling, and you want to be able to still cash flow your properties when that happens.
And so, if you’re not underwriting your deals with 10% property management in there, I think that you’re hurting yourself, because if you’re buying something that doesn’t work, if you add that 10%, well you’re buying a really slim deal, and then you’re going to lose your cash flow, if and when you decide you don’t want to do that. Also, you don’t know what life brings, right? You don’t know what opportunities are around the corner for you. Maybe you get a different job, maybe you have to move. There’s all these things that could unexpectedly require you to hire property management, and you haven’t prepared to do that, and I think that’s a big one that people miss that’s easily added to your underwriting.

Dave:
I think that’s such a good point. I mean, this is an oversimplification, but in a lot of ways, the only way to really lose money in rental property investing, is forced selling, like if you have to sell at a bad time. The housing market generally goes up. So, if you can hold on through bad times, you’re going to do well.
And I think property management is one of those sort of traps where you can get sucked into forced selling. Like you said, if your life changes, if something happens, and it doesn’t pencil out with you not managing, you could sell what might be a great deal, because you just… Like long term, because it just doesn’t work with your lifestyle anymore, or you can’t find a property manager to do it effectively. So, I think that’s a really good risk management strategy, is to make sure, even if you’re self-managing and intend to do it forever, to continue to underwrite with those. Very good tip. Any other ones, you think?

Henry:
Yeah, one final one to think about, that I think a lot of investors don’t think about it, because they don’t really consider it at an expense, but it kind of turns into one. So, a lot of landlords don’t… they’re not diligent about rent raises. I buy properties all the time from landlords, and their market rents are so low, and you’re essentially leaving money on the table by not keeping up with market rents.
I’m not saying you need to be at the market number every single time, but if you’re not increasing your rents with what the rent rates are in your area, essentially you’re charging yourself an expense every month, because you’re leaving money on the table from the rents that you could be getting, especially if you rented it to another tenant.
Now, I’m not saying be irresponsible, and raise rents on people without considering who your tenants are, what situations are out there, but you need to have some sort of systematic process in place to ensure that you’re keeping your rents up with the market, and with inflation. Because if you’re not doing that, then you’re paying an inflation expense, and you’re paying a rent expense by not charging those things.

Dave:
Opportunity costs are costs. I mean, if you are losing out on an opportunity, that costs you something, that is an inefficiency in your business that you need to take advantage of. So yeah, I mean, that’s hard to underwrite for though, right? You’re just like, you can’t be like, “Oh, I’m going to be bad at running my business, so I need to add this [inaudible 00:25:18].”

Henry:
And a lack of business acumen.

Dave:
I guess if you’re just really self-aware you could do that, but I’m not that self aware. You learn those ones the hard way.

James:
And that’s why we hire ho property management, right? If you don’t have the heart to raise rent on people, factor for the property management expense, let them do it. So, just put one of those in there. Either rent raises, or property management cost.

Kathy:
Absolutely. Couldn’t agree more.

Dave:
All right, well, any other last thoughts? I think we’ve covered now buy and hold, and fix and flip. Kathy, I have you going last because I know you have to go to the airport, so if our listeners just hear Kathy run out the door, it’s because she has to make a flight, but she’s here with us for now. So, let’s ask her about syndications, and what the big costs… I assume we’re, we’re going to do this as a LP, as someone who invests, a limited partner in a syndication. What are some of the, as a passive investor, some of the costs that we should be thinking about?

Kathy:
Yeah, and just to explain to some people who maybe don’t know what a syndication is, somebody, an investor finds a deal, and needs more money, doesn’t want to go to the bank, so they bring in passive investors, other investors who don’t want to do the work, just want to invest. So, the person who found the deal is generally called the sponsor, and they’re the GP the general partner, and then the investor is the LP, the limited partner.
So, I can really speak to both sides, because I’ve been on both sides, and there’s hidden fees on both sides, because it’s a partnership, and it’s flexible, meaning if the deal goes really well, then everybody generally makes money. If it doesn’t, that’s when people get upset, right? Because there’s not enough money to trickle down to everybody.
So, as an investor, it’s really important, first and foremost, to look at the fees, because the sponsor may say, “Hey, we’re going to split this 50/50.” Now, the investor generally gets like 80% of the profit, but it’s 70, 80% depending on the deal, and the sponsor gets 20 or 30%. But I’ve seen people flip it. I mean, there’s all kinds of ways these are structured.
But let’s say it’s 80% of the profit, and you’re like, “Whoa, this is great. I’m going to get 80% of the profit and do none of the work.” Well, what if within the documents, there’s all kinds of fees that you didn’t account for, and those fees eat up all the profit during the process of the deal, such that there’s no profit left, and you get nothing? So, this is really important to understand.
On the flip side, if you’re the sponsor, if you’re the syndicator, and you don’t charge any fees, which I’ve done, when I first started syndicating 12 years ago, I didn’t want to charge fees to the investors. I just wanted it to be fair, and even, and I’ll just do the work, and we’ll just split it all at the end. But I also gave an enormously high preferred return.
So, that’s the next thing, is the preferred return is who gets paid first, who gets preference? And it’ll outline that in the documents. Some documents don’t have any preferred return, everybody just gets their money pro rata. It’s better for the investor to have preference, to get paid first, before anybody else. That’s a preferred return. So, in the beginning, I was giving my investors a 15% preferred return per year.

Dave:
Whoa, I want to go back in time and invest in this.

Kathy:
Man.

Dave:
Because no fees, 15% pref, that sounds great.

Kathy:
It was crazy. But this was 2010. I mean, we were getting stuff for 10 cents on the dollar. There was so much in it that everybody made money, except if things go longer. So if you project you’re going to get through this deal in two years, but it goes three, or four, due to things that are really maybe out of your control completely, well, the investors are still getting that pref, they’re getting paid first. They’re getting that 15% before I get anything.
So, in some of those deals, I didn’t charge any fees, I gave an enormous preferred return, and by the end, I didn’t get anything. So I did all the work, didn’t get the profit, but the investors did great. So in a syndication, it needs to be equal. Everybody needs to make money.

Dave:
Absolutely. Yeah. I think that this concept of the capital stack, basically the order of which people are getting paid, is really important. And that’s not just for syndications too. Sometimes this happens in partnerships on smaller deals, as well. If someone… You really need to model out in your underwriting, the order of which people get paid.

Kathy:
Yes.

Dave:
Because if there’s a lot of money, it might look like a huge pot of money, but if someone gets a guaranteed 10% return before you get a dollar, maybe that big pot of money doesn’t go so far, and it’s really worthwhile to even draw this out, and just visually understand who’s getting paid what, before you get into any sort of partnership, including a syndication.

Kathy:
And syndications are regulated by the Securities Exchange Commission, the SEC, so you are supposed to have all of that explained in the operating agreement. It’s usually in an LLC, and a private placement memorandum, where all of that is spelled out. But most people don’t read them. They’re boring, they’re legal. But if you’re investing in a syndication, just spend the money to have an attorney review it for you, or just make sure you really understand it.
And Dave, what you said about understanding that waterfall is the most important thing. Who’s getting the profit when that profit hits? And who’s getting fees? Now, I’ve learned since that a syndicator should be charging fees, because you’re doing the work, and there might not be profit. It’s an investment, there’s no guarantee. There could be another pandemic. Right?
So in the case of, and I’ve talked about it before, but our Park City deal, we got shut down for two years because of COVID, but we’re still paying that 15% preferred return when we’re not making any money, and can’t do any work, and you can’t change the documents. Right? This is just… It didn’t say, “Oh, if there’s a pandemic, we’re not paying this.”
So, you’ve really got to understand the fees being charged, and if that’s going to take all the profit, and as a syndicator, or the investor in it, is it equal? Is it fair? So, typically, you would see a one to 2% just sort of asset management fee. We’re just kind of watching this. If it’s development, it’s going to be a higher fee, because there’s more to it, there’s more work, so the fees might be higher.
There’s generally going to be a fee for the person who does the financing, because they’re doing all that it takes to get the financing, and sometimes they’re taking a recourse loan. So, it’s okay, expect that, but not an exorbitant fee. So again, maybe one to 2%.
There might be an acquisition fee. Now, this is where the people get paid to just find the property, and go through the process of acquiring it. There’s still broker fees on top of that, and there might be a disposition fee, the time it takes to sell the property, even though a broker’s really doing that. So, these are all fees. Some syndications will have them, some won’t.
It’s got to be good for everybody, and there has to be enough cushion that those fees can get paid, and there’s still profit in the end. So with every syndication, make sure they have a very detailed pro forma showing you where all the money’s going. Because if it’s vague, and this is what I’ve learned over the years, if anything’s vague, then the syndicator, the sponsor, can say, “Well, the documents allow this, because it didn’t not allow it.” And so everything needs to be spelled out.
And then another big… I noticed this was with a single family fund that wanted us to wanted partner with us, and they were kind of Wall Street guys. And as we looked at their pro forma, and their documents, they were charging $500,000 per person in salaries.

Dave:
Whoa.

Kathy:
In salaries. And this is a fee that came on top of anybody, any of the investors getting their money. We’re like, “I mean, maybe you guys do that on Wall Street, but we don’t do that on Main Street. That’s not how it works.” So really look for that. Who’s getting paid? And what happens if they said this project’s going to be done in two years, but it goes for five years, do they still get that salary? So again, there’s a lot to look at. A lot of people just don’t pay attention, and they just believe the marketing materials, and don’t read actually the fine print. So, if you don’t want to read it, have somebody else who understands it, read it for you.

Dave:
Read your contracts.

Kathy:
Yes.

Dave:
God, yes. I mean that’s basically, maybe that’s just the theme of this episode. It’s just hidden fees. It’s like read your contracts, and you’ll eliminate probably half the fees that you encounter as an investor, or just a human, in life.

Kathy:
And then there’s another thing that people really don’t understand with syndications. We’ve noticed this all the over the years, is they don’t know their status… I don’t know how to say this. They don’t know their status, their position as the investor. So they don’t know where they fall in that waterfall.
They don’t know if they’re an equity investor, so they don’t even know what that means. They don’t know if there’s somebody ahead of them that has priority to them. Or they think maybe they’re a lender, they’re investing and they got a 6% preferred return, and they think that’s a loan. They think that that’s guaranteed. It’s not. It only comes out of profit, the preferred return, generally, unless you’re coming in as a lender.
If you’re a lender, you know what? We talked about it earlier. The loan gets paid first. Always. The lender is in the best position, almost always, and there’s usually a first and a second. Obviously the first lender has the first priority, and if there’s no profit, you still got to pay it. You still… The sponsor, the investor takes the loss, the lender doesn’t.
So, if you are investing as a lender, it’s definitely the highest priority. If you’re investing as an equity investor, you’re at the bottom. You get paid after everybody else gets paid. And if there’s huge profit, you can make a tremendous amount of money. If there’s no profit, you get nothing. If there’s losses, you lose your money.

Dave:
It’s very good advice. Well, thank you all for all this. It’s been super helpful. There are, actually, if you want to learn any more about the nuts and bolts of operating of these different types of businesses, there are actually great Bigger Pockets books for any of these.
Jay Scott did a really good house… He has two flipping books, one on estimating rehab costs, one and just being a flipper. Brandon wrote a great book about managing rental properties, and Brian Burke has a great book on investing in syndications. So, if you want to learn a little bit more about underwriting deals in a written format, you can check those out on biggerpockets.com/store.
With that, we have one question from the Bigger Pockets forums that I want to ask you guys. It is about the general economy, and then we’ll let Kathy make her flight. Emily Hazard went on the Bigger Pockets web forums and said there, “Morgan Stanley sees something called the 4-4-4 happening in 2023.” Have any of you heard of this?

James:
No, I have not.

Dave:
Me neither. I hadn’t either. So, it’s called, “Morgan Stanley sees an environment in the future with 4% federal funds rate, which is a little bit below where it is now, 4% inflation, which is definitely below where it is now, and 4% unemployment, which is a bit higher. Do you think this is accurate? What are your thoughts?” All right. Anyone want to take a first swing at this?
So just as a recap, it’s Morgan Stanley forecasting that we might see a year in 2023 where the federal funds rate is 4%, inflation is 4%, and unemployment is 4%. That would be inflation and Feds coming… The Fed fund rate coming down a little bit, inflation coming down a pretty good amount, and for unemployment going up just a little bit. So, what do you guys think?

James:
It sounds balanced, and nice.

Kathy:
I think it’s hopeful.

Dave:
Yeah.

James:
I personally don’t see that happening. I actually think the federal fund rate will be around 4%. I think, hopefully inflation gets to 4%, maybe by the end of the year, it might, probably a long shot. But the one thing is this unemployment numbers are just not moving.

Dave:
Yeah, it’s wild.

James:
The labor market is getting no ease on that, and that’s where I’m like, “At some point, something’s going to happen there,” but it right now, it does not seem to be breaking.

Kathy:
Yeah, I mean that’s wishful thinking, and it would be wonderful. I guess the question is when? I mean, are they thinking it would be this year? Because the Fed has made it really clear going to keep raising rates, and shooting for 5% Fed fund rate, and yeah, they’re really shooting to kill jobs, and they haven’t done a great job at that yet, which I guess, depending on if you would like a job, or not, it’s good news for the person with a job that they haven’t killed the jobs the way that they wanted to. So, I highly doubt that. I think the Fed fund rate’s going to be higher, and inflation probably higher too, at this point, unless there’s a little tweaking with the data, which is possible.

Dave:
Really? I think inflation’s going down. I think, we’re already at 6.1%, if we stayed at the run rate we’re at for the last six months, we will be at like 2.5% by June. So as long as inflation doesn’t go up, we will be well under 4%, just from a mathematical perspective. It could go back up. I have no idea, but just based on the trajectory right now, I think it’s going down.
But I totally agree on the Fed funds rate. I think they’ve basically said there’s no way they’re cutting rates in 2023, and it’s already above 4%. So, that seems like a long shot. Unemployment is just the big question, right? It’s weird. You would think that it would be higher, but it does seem like there’s kind of this bifurcation of the labor market, and there’s this big… All this public discussion about layoffs, but those are just happening in the tech sector.
If you look at more traditionally blue collar jobs, the labor market is incredibly strong there. And I read something today in the Wall Street Journal that said that 78% of job openings right now are at “small businesses.” So still, we hear about Amazon and Microsoft laying off businesses, but that’s not… Or, laying off people, but that’s what’s driving the labor market. It’s all these small businesses. And so, it’ll be interesting. Personally, I think that’s sort of the X factor for the economy this year is what happens with unemployment.

James:
And we are seeing, for like our job, because we’re the small business in Seattle, all the tech guys just steal everybody. And the last 24 months we’re really frustrating. You’d be like, “I need an accountant, and I can’t get an… This is crazy.”

Dave:
You can’t pay 750 grand for an accountant, James?

James:
Oh, yeah. It’s like, it’d be an entry level marketing person, they’d be like, “I’m going to get paid a $100,000 at Amazon.” I’m like, “Well, I can’t do that. It’s just, that doesn’t work.” But it is easing up a little bit. There is some, like construction companies are starting to lay off some people. There is, some of that blue collar is lightening up, but at least you can get applications now.

Henry:
Typically the layoffs that I’m seeing are in industries that had to staff up during the pandemic, or staff up during what happened as a result of the pandemic. So, the mortgage industry is doing some layoffs, but obviously, that’s affected by the rates being what they are, and mortgage applications not being what they were. And then in tech, and then a lot of different customer service industries, where they had to staff up to handle the load of calls coming in from people who were just sitting at home.

Dave:
Totally. Yeah. So, it’ll be interesting, but I hope they’re right. That sounds like a great place to wind up. If we wound up with 4% unemployment, that would not represent a significant break in the labor market. It would be mean inflation still too high, but back in the stratosphere at least. And then, federal funds rate a little bit low below where they were? I mean, that would be wonderful. So let’s all hope that we’re right, but it does seem like there are some headwinds that might prevent this forecast from coming true.
All right. Well, Henry, James, Kathy, thank you so much for being here. For everyone listening, if you appreciate this show, appreciate the insights from the three panelists, please give us a five star review. We really do appreciate it. It really does help us. You can do that on Apple, or Spotify, so please go do that. Give us a five star review. We’d really appreciate it. Thank you all for listening. We’ll see you next time for On The Market.
On The Market is created by me, Dave Meyer and Kailyn Bennett, produced by Kailyn Bennett, editing by Joel Esparza, and Onyx Media, researched by Pooja Jindal, and a big thanks to the entire Bigger Pockets team. The content on the show On The Market are opinions only. All listeners should independently verify data points, opinions, and investment strategies.

Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Check out our sponsor page!

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

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The Peebles Corp's Don Peebles explains how rising mortgage rates affect the housing market

Blog / Richard

Don Peebles, founder of the Peebles Corporation, joins ‘Power Lunch’ to discuss the health of the housing market.

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5 Companies Connecting Consumers To Custom Healthcare

Blog / Richard

Today, consumers can enjoy personalized experiences in almost every area of their lives. In fact, the move toward hyper-customization has extended into the healthcare field. And five companies are taking individualization to the next level with their innovative solutions.

As McKinsey research points out, it makes sense to treat consumers as unique people with equally unique needs and wants. When 71% of consumers say they like to receive tailored interactions, companies need to listen. However, until now, healthcare and medicine have lagged behind in the personalization department.

Personalization is heating up the healthcare field. These five tech-forward companies are all having … [+] disruptive influences in customized medicine.

getty

It’s not hard to understand why healthcare has been slow to adopt individualization. The healthcare machine is large and looming, as well as complex. These factors have stunted its progress toward taking an evolutionary leap. Nevertheless, the 2020s have ushered in an environment where the disruption of traditional healthcare has become inevitable.

As the years go on, more healthtech startups are likely to leverage the desire for custom healthcare products and services. For the moment, though, several have taken center stage. These five organizations are helping push personalized medicine toward a net worth of $3+ billion by 2025.

1. OK Capsule: Solving Supplement Confusion

People have been taking supplements for years. Since the pandemic, supplement usage has ramped up. A recent Harris Poll showed 76% of Americans rely on supplements. The only problem? They’re playing a hit-or-miss game. Though there’s no dearth of supplements available, the supplement offerings are aimed at broad audiences.

As naturopathic doctor Dr. Andrew Brandeis explains, this problem became the impetus for him to launch OK Capsule. OK Capsule creates and ships individualized daily supplement packets on behalf of supplement brands, directly to their buyers. “Consumers will be loyal to a brand they feel sees them as an individual,” says Brandeis. “Brands must be able to offer these consumers a supplement program that is safe, simple to understand, and designed specifically to meet their nutritional needs, which is why we provide the technology for them to do so.”

Different things work for different people. With OK Capsule’s tech powering personalized supplement brands, consumers can be sure that they’re taking the right high-quality supplements for them. This confidence not only encourages compliance but allows them to get the maximum benefits from supplemental nutrients.

2. Nurx: Eliminating Medication Access Friction Points

It can be a hassle for people to access reproductive care or manage health problems like urinary tract infections and acne. Plus, the care they get at an urgent clinic or even their family physician often feels like a one-size-fits-most experience.

Nurx, part of Thirty Madison, was created to provide custom healthcare unique to each patient’s needs — easing roadblocks to birth control access and offering medication for non-emergency conditions including genital herpes and migraines. The Nurx process to get medications is faster and more convenient, especially for individuals who want personalized service. Consumers can make prescription requests digitally. These requests are reviewed by licensed clinicians and then, if medically appropriate, fulfilled by mail or at a preferred pharmacy.

Ultimately, Nurx enables anyone to take control of their health in a very individualized way. As an added personalized benefit, Nurx also offers a high degree of privacy.

3. Flow: Revolutionizing Custom Depression Treatments

The World Health Organization estimates that 3.8% of adults and minors deal with depression. But depression doesn’t follow a standard playbook. As a result, every person must find the right balance of tools, techniques, and healthcare solutions to minimize depressive episodes.

One of those tools is called Flow. The basic Flow product setup requires a headset and access to the app through the Internet. The headset delivers transcranial Direct Current Stimulation (tDCS) into the scalp. The app allows the consumer to monitor what’s happening during the 30-minute tDCS sessions. Additionally, it helps pinpoint specific, personalized behaviors and habits most likely to help the user manage depression.

In clinical studies, Flow has been shown to produce safe and measurable results. In one study, the results showed favorable effectiveness for those who tried tDCS consistently. Among Flow subscribers with depression who used the product for six weeks, 83% reported positive outcomes.

4. Oura: Merging Fashion With Healthtech

It’s safe to say that fashion is all about showcasing individual style. So what could be more apt than a product merging haute couture with healthtech? That’s just what some biowearable companies are doing, most notably high-profile Oura.

What makes Oura a standout in the emerging biowearables category is its extraordinary appeal. The Oura ring itself has all the technical capabilities to connect to any device through Bluetooth. Once connected, the Oura sends individualized data based on 20+ biometric signals to the app. The data is then transformed into usable information, like sleep activity and fitness tracking.

Oura proves that biowearables can be runway beautiful as well as functional. Even Gucci has jumped on board, offering a special Gucci-Oura jewelry line. It’s personalization times two—and made for consumers who like to marry the practical with the aesthetically pleasing.

5. Marodyne: Giving Bone Loss the Boot

Osteoporosis is a devastating disease that can hinder people’s ability to live life on their terms. However, it’s always been challenging for the average consumer to stay on top of their bone health. The Marodyne LiV is attempting to make the process more intuitive and simple.

Marodyne LiV looks somewhat like a larger version of a bathroom scale. When stepped on, it gently vibrates to send stimulation through the body. With regular use, these stimulations help encourage new bone development. Simultaneously, they give the muscles a mini workout, further improving the user’s balance and overall health.

The Marodyne is a pricier tech tool but is tailored for users concerned about bone mass. Chief Scientific Officer and leader of Marodyne Dr. Clinton Rubin notes that the science behind Marodyne LiV is sound. Says Rubin, “Low-intensity Vibration promotes the building of lean muscle mass and the conditioning of muscle reflexes.”

Personalization doesn’t have to stop at Netflix recommendations. With today’s access to countless pools of data, consumers can enjoy the reality of individualized healthcare.

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Making K+ Per MONTH with Just 9 Rental Properties

Making $80K+ Per MONTH with Just 9 Rental Properties

Blog / Richard

You don’t need a hundred rental properties to make a million dollars a year. You can do it with less than ten properties. Sounds insane, right? If so, tune in to hear Jesse Vasquez’s story as he breaks down exactly how he built a seven-figure income stream with fewer rental properties than most medium-sized landlords. He even gives an example of how just two of his rental properties are cash-flowing enough to replace a six-figure salary. So what is he doing differently from the rest?

After escaping the “golden handcuffs” of a six-figure healthcare sales job, Jesse knew he couldn’t ever return to the corporate work environment again. He loved the paycheck but was paralyzed by the work and needed an escape that could help him build wealth without sucking his soul. After sparking up a conversation with a traveling nurse, he realized there was an unfilled niche in the medium-term rental space, one that traveling professionals would pay handsomely for.

From working in healthcare, Jesse has been able to pinpoint exactly what makes a high-cash flow medium-term rental, which amenities can dramatically increase your rent price, and how to make six figures in cash flow with just a few properties. This deep dive will give you EVERYTHING you need to know before you buy a medium-term rental, how to achieve a near-zero vacancy rate, and the most lucrative way to find tenants that will net you five times higher rent than a regular long-term tenant.

David:
This is the BiggerPockets Podcast, show 728.

Jesse:
And the cool thing about the agencies is you can actually get these agencies, they can be the lessees on these properties. So in San Francisco or Central Valley, who you worry about, holy crap, there’s squatters. I don’t worry about that too much, but a lot of people do. These agencies are actually the lessees. And these are multimillion-dollar agencies, there’s no way they’re ever going to screw you over. And that’s one of the things that I love about this space too, is that they’re taking responsibility for the clients that are there. They’re taking ownership for that. And any damages, the agency’s actually paying for it.

David:
What’s going on everyone? This is David Greene, your host of the BiggerPockets Real Estate Podcast, the biggest, the best, the baddest real estate podcast in the world. Here today with my good friend and talented co-host, Rob Abasolo. Now, we have one of the best episodes we’ve ever done for you today. And I’m not exaggerating, it’s that good. You’re going to listen to it more than once. It’s going to inspire you. You’re going to go follow the listener, and you’re going to think, “Gosh, darn it, that’s why I listen to this podcast.” When you get that feeling, please do me a favor and leave us a review on Apple Podcast, Spotify, Stitcher, wherever you listen to this. Because we really need those, and you’re going to love it.
I’m going to make this a very short intro here, because we went long. We were supposed to record for a certain time, but it was such good content, that we just kept going and going and going. And I don’t think that you are going to be upset about it when you hear it. Today’s quick tip before we get to the guest is, look for creative ways to exercise your leads. Our guest today tells you about different ways of finding guests for different asset classes of properties that you probably never thought of. But he is making more than 10 times some of his competition, by looking for ways to do it. Make sure you listen to today’s episode all the way to the end, because you are not going to want to miss this. It is subtle, yet brilliant. Rob, anything you want to say before we get started?

Rob:
I have a feeling that if you listen to this all the way through, you will probably listen to it again. This is one of those episodes that I think people will reference for many years to come. I’m so excited. I’m so excited. This is one of my favorite, legitimately that we’ve ever done.

David:
Yeah, I end up asking our guest today, if he wants to coach me on the topic of today’s show. And so hopefully he does, and we come back, and you guys can follow along with the journey of me trying to implement Jesse’s methods. So without any further ado, we are going to jump right into our interview with Jesse Vasquez.

Rob:
Jesse, welcome to the show. To give our listeners some background, you run a full-time mid-term rental or medium-term rental business rather, that caters to healthcare workers. You’ve hacked this market segment, and are here to give all of your secrets to our BiggerPockets audience. Your business includes 27 properties in Texas, Oakland, and in the Central Valley. And you’re a self-described go-giver. Did I miss anything?

Jesse:
No, man, that sounds pretty damn perfect.

Rob:
Oh, and also you’re a fellow YouTuber, right?

Jesse:
I am, man. Yeah, so I’ve been able to build a beautiful business, you guys, from both mid-term rentals and short-term rentals, and co-hosting other people’s mid-term rentals. And specifically in the Central Valley, in the Bay Area, David, wherever you’re at, San Francisco, Oakland, Berkeley, all those beautiful places in the bay. And even though the prices are high there, we still are able to get a pretty solid amount of income in a high market, which is difficult to do in a lot of places. That’s pretty much it, man. I worked in healthcare for 18 years.

Rob:
What’d you do in healthcare, specifically?

Jesse:
Yeah, I was actually a business development manager, so it’s a fancy way of saying sales. I was a sales rep for a hospital for companies. My job was to get permission for these doctors to have privileges at a hospital. And also for patients that were discharging, my job was to connect and schmooze with these case managers, to get them to use me to send folks home. If they needed… So David, imagine if you fell, God forbid that happens. You broke your hip. And Rob, you are the case manager. My job was to be buddies with you, so that you would send me David as a referral, and then I would get paid on that end. So yeah, it was a really cool business. It paid me really well. I was making over 200 grand a year. I had golden handcuffs at that time in my life, and I finally decided, “You know what? I’m not doing this anymore.” Plus, I was driving the Bay Area from the Central Valley. And for those of you who know, it’s like literally… Dave, you probably know Modesto.

David:
Oh yeah, I’m from Manteca, which is like 20 minutes away from Modesto.

Jesse:
Holy smokes. Yeah, we’re neighbors. So literally driving from Manteca, Modesto to the Bay Area, literally daily is, I’m not kidding you guys, is like a three and a half to sometimes even four-hour drive depending on what day you decide to go, what accidents and whatnot. So for me, it was just burning me out. That drive was killing me. And I just decided one day I went into work, I’m like, “I’m just done. I’m going to just go full in on investing in real estate and mid-term rentals.”

David:
This is fascinating. Also, so are you from Modesto? Is that where you grew up?

Jesse:
Yep. Yeah. And actually speaking of Modesto, there’s a couple of people that I know that know you, that actually started working with you back in the day, or working on deals. You probably knew who I’m talking about.

David:
That’s funny. We’ll have to catch up on that. But you can still catch me in Modesto at the Vintage Faire Mall, once every two years when I have to go shopping for new clothes. That’s the best deals around. So this is interesting because as people are going to see later on in the interview, these sales skills that you developed in this business development role, have come in incredibly crucial for you when it comes to running a medium-term rental business. And so this stuff is going to, it’s going to come full circle. That’s really good. Before we hear about your freaking empire that you’ve been building, tell me about your first real estate experience as a kid.

Jesse:
Yeah, this is a beautiful story. Well, it depends on what kind of beautiful you’re talking about here. All right, you guys have all seen National Lampoon’s Christmas Vacation, right? I’m assuming?

David:
Yes.

Jesse:
All right. So you know that Woody, that station wagon? So I need you guys to picture this. Me being a nine-year-old kid in the back seat of this wool, there’s literally wool upholstery in the car. My mom and dad were in the front seat. I grew up in a very Catholic household. Rob, you might know about this. Hispanics usually grow up Catholic, maybe in… I don’t know. So anyway, my parents were in the front seat. I was in the back bouncing around, because those cars do not have any shocks at all, by the way, and in this Woody. And my parents were arguing as we were on our way to the courthouse. They were arguing because they had tenants that were living in the property that didn’t want to move. They were literally not moving.
My parents, again, being super Catholic, were always very forgiving of people like, “Oh, they can’t pay this month. We’ll pay next month.” And literally as a kid, that was my first experience in the backseat, never hearing my parents argue of this 19… it was like a 1983 Woody, the same one in National Lampoon’s, for those of you who are picturing this. That’s my first introduction to real estate. And I remember thinking, “Holy crap, I don’t ever want to be in real estate.” Because here I am as a nine-year-old boy sitting in the back of a courthouse, my parents, and this lady that was renting from them.
And do you know the crazy thing, David and Rob? The judge looked at her and said, “This is not the first time this lady’s been in here.” And I remember her name specifically, I’m not going to use it on this show. But he said, “This is what she does.” So it’s literally she would go and stay at people’s places, take advantage of them, not pay the rent for months, and then eventually go into court. And then that’s what it was. So it was literally just repeating the cycle. So for me, that was my very first introduction to real estate in the backseat of a 1983 Woody, that’s what I’m going to call that. It probably doesn’t sound very good. Backseat Woody. Whoa, what’s going on here, guys?

Rob:
I’ve really restrained myself several times.

David:
So you got exposed to the very worst of the industry from tenants that are professionals at taking advantage of landlords. And you said, “When I grow up, I want to put myself in a position to let that happen to me?”

Jesse:
I grew up and I said, “I am not going to allow that to happen to me,” yeah, yep. Which is where the contracting stuff came in, and the Airbnb stuff came in. And my dad was always like, “Real estate’s great.” And this is not the first time my parents were going through that, you guys. Keep in mind, literally over probably the next… I was nine at that time. Over the next five, six years, we probably ended up in court again, probably three or four more times. Finally, my parents started selling off some real estate, and I just thought to myself, “Do I really want to end up like this?”
Yeah, obviously that’s not the route I wanted to go. And I was always told real estate’s such a good thing. Keep in mind, my parents were immigrants that came here in the ’70s, and built this pretty good real estate business. And then I watched it kind of deplete over that span of seven, eight, nine years, just because of them being generous in a lot of ways. And also not very business oriented. They were more on the emotional side of it than the actual business side of it. And I think a lot of people, especially immigrants sometimes can have that mindset. You know what I mean?

Rob:
For sure, man. So question, did your parents ever have any wins throughout the year? Were there ever any moments where you remember watching them actually have success in real estate, or was it always sort of a downward spiral, if you will?

Jesse:
No, it had peaks and valleys. So it was like, I’d watch them do really well, buy multi-unit properties, two doors, three doors. And then all of a sudden end up in court again. It was like the same thing. My mom was the business mind, and my dad was the emotional mind. So it was, those two things together were always kind of clashing with each other. And I think for me, real estate probably wasn’t the best avenue for them, because they were just way too forgiving. So I came in, and when I decided to do this, I’m like, “You know what? I need to get paid first. I’d watched this too many times.” I never heard my parents fight ever. My parents were not the fighting type. But the first time I was able to hear that was over real estate. Which David, you’re absolutely right, man. That was the ugliest thing that you could potentially see in real estate on the landlord/tenant side. That was it. That was my introduction.

David:
So that clearly had an impact on the way you decided to structure your real estate business. Before we hear about that, I just want to commend you. Props for not saying, “Oh, there’s a bad thing with real estate. I’m just going to throw the baby out with the bath water. Just screw it. There was a bad experience.” So many people take that approach. Instead, you were smart enough to say, “Well, how do I eliminate the problem and maintain all the benefits?” So you figured out a way to structure things to where the tenants had less ability to professionally screw you over. So let’s hear, how did you first come up with the idea to invest in real estate the way you do now?

Jesse:
Yep, yeah, so this is going to take me back to what I did at my W2 job. I was working on the floors of the hospital. And in California, you guys know how everybody says dude, and bro, and man, David? Rob, you’re in Texas, you don’t know. I guess you’re here from California.

David:
They say y’all in Texas.

Rob:
Y’all.

Jesse:
Y’all. So there was this really sweet lady, her name was Barbara. And I was working at the hospital, and there was a little… We were on the floor. And she was saying things like, “Oh, don’t you know? And such a doll.” And I’m just like, “Holy crap, where’s this accent? I love this. Where are you from?” And she’s like, “Fargo.” And I was like, “Cool. I watched the show. I get it now.” Or I watched the movie, this was a while back, and 2015 by the way. And I was like, “What are you doing here?” And Barb was like, “I’m a travel nurse.” And I was like, “Oh, that’s cool. Where are you staying?” And you guys are not going to believe where she was staying. And Dave, you might know this because you are from Modesto. She was staying at Motel 6 on 9th Street, Downtown Modesto.

David:
Why?

Jesse:
And for those of you who can’t see David’s face right now, he’s making a pretty cool face. And because literally, it’s not a place where a travel medical professional, especially a nurse is going to feel comfortable. And I asked her, this is my follow-up question, “How much are you paying for that place?” She was paying $3,000 a month for Motel 6. That’s what the rent was for her to pay. And at that time, this is 2015, I could buy a property for under 300 grand, my payment would be 15, 1,600 bucks. And they’re paying 3K, so my brain was like, boom, “I need to do this right now. How do I figure out how to do this?” She started to talk to me about contracts, which I already knew about. And everything in healthcare, you guys, whether you’re a doctor, nurse, clinician, physical therapist, everything goes around contracts.
Housing is not any different. Everything in healthcare is based around contracts. So I walked down to the HR department, knocked on the door and said, “Hey, I’ve noticed all these clinicians that are travelers here. How do I actually become a housing solutions provider for these folks?” Because they’re all staying at this crappy place.” And the hospital, Doctors Medical Center, by the way, David, was like, “Oh, we’re actually looking for housing. How do you want to accommodate housing? What property do you have?” And at that point, I was just like, “Tractor beams, real estate.” I didn’t even own my own house yet. And I went and bought an investment property. So that’s kind of how it started.

David:
My cousin is a nurse at Doctors Hospital in Modesto. We have a lot in common here, Jesse.

Jesse:
I know.

David:
That’s funny.

Jesse:
What’s going on here?

David:
I mean, we’re kind of glossing over it, but that’s brilliant. That you recognize the problem, that you saw a solution. And that you just said, “I can buy a house for 15 or $1,600 a month.” The nurse is going to be happy to pay three grand to have a house and not have to live in Downtown Modesto. That area’s gotten even worse, if you’ve been there lately. It’s kind of over overrun with transients at this point. So they’re not going to even feel safe leaving the hotel to get to their car, is what I’m getting at. And they’re probably doing this at nurses’ hours. So graveyard shifts, swing shift, they’re coming in and out in the dark. It’s terrible.
And they don’t have their own space. When you’re staying in hotels of ill repute, the type of noises you’re going to have to hear, and the screaming and the yelling, and just the overall chaos. And nurses need a place where they can find some peace and respite from the insanity that they’re dealing with. So you see all these things, and it just clicks like, “Oh, this is what I’m going to do.” Do you think that your parents’ background in real estate had something to do with your confidence level to say, “Okay, I can jump in and meet this need in a business way?”

Jesse:
Yeah, definitely, man. I think somehow subconsciously, that burned into my brain. I need to get paid. I need to make sure I get paid up front. And then also, my dad would always tell me, “Real estate is where most people make their millions. You want to build…” “It’s basically like a long-term bank account,” is what he told me. Verbatim, that’s exactly what he said. He’s like, “You buy a property, you rent it. It’s just like having a large bank account that’s going to eventually pay you in dividends over years.” It’s not like that you get to make money right away. In real estate, it’s not like that, right? It’s a long game. So he essentially burned that into me as a child. “Buy real estate, buy real estate, but don’t end up like me, in court every six months.” And he knew he consciously, he was in that specific space.
So yeah, 100%. My brain was like, “How do I do this? How do I grow, but how do I get paid?” So that was my introduction to… And that was just the nursing side. For nurses, the pay. At the other side is the contracting. I’m sure you guys are going to dive into that a little bit, but it’s so different. And by the way, David and Rob, you guys, I noticed this because my job was to go to all these hospitals. So like Manteca, David, you mentioned that. I was in Kaiser, I was in Memorial Medical Center, Emanuel in Turlock. Every single one of these hospital floors, guess what was there? A bunch of Fargo accents, “Don’t you know?” And stuff like that.
And so I realized, holy crap, the Central Valley has such a need for clinicians. And actually at that time, I had a friend that was going to Stan State University, another friend that was going to JC. And there’s only 30 graduates a year for these nurses in our specific market. And there’s over 400,000 people between Turlock and Lodi. Actually more than that. And what I noticed is, then I started calling around to these colleges, 30 graduates, and only a quarter of those students would actually stay in the Central Valley. So we’ve always been understaffed for the healthcare industry.
In fact, California, Illinois, Texas, North Carolina, and Florida are the most… they’re five underserved states for travel medical professionals. And they’re not going to be to pre-pandemic levels until 2030. So if you guys are in one of those states, you have a long roadway to build the legitimate business, that is housing clinicians. Because there’s not going to be enough clinicians until 2030, is what the National Registry of Travel Medical Professionals is predicting.

Rob:
And you’ve just ruined those tips for us by saying that on the podcast. No, I’m just kidding.

David:
Yeah. Thanks, Jesse.

Rob:
So Jesse, bring us back a little bit. Because you stated that you were making really good money at your previous job or at the job that you were working, the W2, multiple six figures. And it is golden handcuffs, right? You’re making money, very comfortable. You’re probably past that threshold where, yeah, it’s like you’re very comfortable, and you can probably buy whatever you want within reason, and travel, and do all that kind of stuff. And so the difficult thing with making that amount of money is that when you start going into real estate, you have to try to replace all that money that you’re making at your W2 with real estate, which at that level, takes a long time. So tell us about that shift and that transition from going to W2 all-in on real estate. What was that like? Why did you decide to even go all-in on real estate, when you were crushing it so much at your job?

Jesse:
Yeah, I had success and self-fulfillment. I was not happy with the job, but I was happy getting the paycheck. And at the end of the day, 200 grand for those of you in the Central Valley or people that realized, 200 grand is a lot of money in the Central Valley. It’s not very much in the Bay Area. But if you’re in the Central Valley, you’re like the top 5% in these areas. So for me, I was like, “Holy crap, I’m crushing it. I’m doing so well.” But at the end of the day, I was not happy. And I think my timeframe, and I think a lot of real estate investors always go like, “Oh, the time, freedom,” whatever, yada, yada, yada. But that’s not actually the case. When you dive into stuff, full force, it takes years to build that.
But for me, man, I just didn’t want to do that grind anymore. I was just done. And one day I literally went into work, and I’m just like, “I’m not doing this anymore.” I gave my resignation letter. They let me go that same day. And literally that was July 17th at 3:43 PM, I was in San Francisco. I know the exact time, date, everything. I know what I was wearing. I remember vividly, you guys, vividly. And from that point on, my family was like… Dave and Rob, they were like, “You are insane. Why would you ever do that?”
Remember my daughter, who was 17 at the time, 16. Called my mom, and she’s like, “My dad just quit his job. We’re going to be homeless.” Literally, my daughter called and told my mom this. Because in Hispanic families, you tell the moms, the grandmas everything, and then they’re going to get on me, and I’m going to be like, “Oh God, why did I do this?” So that’s what happened. Literally, everybody in my family was like, “You’re so dumb, why are you doing this?” And now, they’re just like, “You were right on. We were supporting you the whole time. We knew you could do it.” So it’s tough, man.

Rob:
Yeah. And so you go into this, you decide to transition into it. Obviously, the timing of going into real estate is always, you just never really know until you make that decision, and you march into the office. Tell us a little bit more about how your family took that. Was it something that… Because you said now they accept it, was it fast? Or did you really have to convince your parents? Because I’m sure they had some biases with their relationship with real estate. So how much did you have to pitch them on this idea? And how long did it take really before they were like, “Oh, okay, I think you got a good handle on this.”

Jesse:
So Hispanic families are very like, you go and do a job, you work your butt off, then you move up to manager. And then you move up to this, you climb that corporate ladder. So my parents were 100% like, “That’s what you need to do. What are you doing?” So it was not an easy transition. I think that the first few months, it was kind of, I had money saved by the way, you guys. I had six months of cash reserves, and probably even a little bit more than that. So that if it didn’t work, I can always go get a job somewhere else. I’ve been in this space for so many years, that I can literally go get a job. Even today, I can go get a job right now if I wanted to.
So for me, in my brain was like, “If I don’t do this right, if I don’t try this, then I’m not going to have any success. And I’m going to present this later on in life.” Granted, I did give up a 200K a year job. But I mean right after I did that, everything just took off. I started teaching people what I was doing, and that was successful. And then my portfolio was growing. Which by the way, for those of you who decide to leave your job, make sure that you start your actual corporation two years ahead of time. That’s where I screwed up, that I didn’t actually start my corporation until 2020, and I left in 2021. You have to have two years of experience through the IRS. They want to see those two years on paper. So that made things a little bit difficult to go buy property, but I did the SCR loans. But you know that you can’t conventionally get a loan that way.
So I did things kind of on a whim. I should have thought it out a little bit more, but I’m so glad I did it, you guys. My life is completely changed. I’m working way more than I ever have, but I’m also making way more than I ever even dreamed about making. And it’s just been such a beautiful ride. And not only that, but inspiring other people that are in these spaces like Modesto and the Central Valley, and places all over the US are not big. You don’t have to be in these big urban markets to do extremely well. You can be in the very underserved small market, and have a pretty good amount of doors. And build an actual legitimate business based off of relationships. And I think that’s where a lot of people can really drive home this specific model.

David:
So you mentioned that you’re making more money than you ever have before. Can you give us a quick rundown of what your business stands look like today, how many units you’re managing, and the revenue they’re providing?

Jesse:
Yes. Right now, I have nine properties that I own. I just did my books, and we did about $987,000, and that’s gross in just nine properties. And then I manage for other people, and we’re doing over a million, that’s short term and mid-term off of 11 other properties. So between the combination of these two, we’re doing 2.1 million. And then my coaching business is like, that thing’s going crazy right now. And so just the combination of all those things. And just keep in mind, you guys, when I talk about these numbers, those are gross numbers. The revenue, if you own properties, it’s usually 40, 50, 60% is what I get to keep, what I actually get to keep. But with mid-term rentals, there’s not as much turnover. For medium-term rentals, there’s not as much turnover, there’s not as much products that you need to use in these properties. So we have less kind of… And Rob, I’ve heard you mention this before. I feel there’s less wear and tear with having actual medium-term rentals in my specific place. So yeah, it’s been fantastic this last couple of years with just the growth.

Rob:
For sure. The wear and tear aspect of medium-term rentals. When I first started doing it, I was doing it incorrectly, because I was really only cleaning after that guest checked out. So if a guest was there for three months and we cleaned it, it was a disaster. But now what I’ve done is, I send cleaners in every month now to do a checkup, and to fix anything that I might like to… Basically, point anything out that might need to be fixed. For example, my cleaner just went over to one of my mid-term rentals last week. And there was a mailbox that’s attached to my house that was just on the ground. And she was like, “Hey, this is broken.” And I was like, “All right, I wish the tenants would’ve told me that.” So sent my handyman. So it’s a good way to help avoid some of that wear and tear. Do you have anything like that that you do for your mid-term rentals, or do you just let them play out their entire lease?

Jesse:
Yeah, man, there’s a lot of things we do for the mid-term rentals. So going back to the contract, connecting with agencies, and maybe we can drop in this in a second. But we have car rentals. So a nurse can literally hop on a plane, end up in San Francisco or Oakland, get an hour Uber into Modesto. As they check in, they have a car in the garage waiting for them. We had a grocery delivery service to clinicians or resident doctors that are there, we’ll actually go deliver groceries that they want. Kind of a shipped in Instacart before that, we were doing that. We’re still doing that now. So literally all they would do is work, and we were supplying literally everything they needed from point A to point B. And I think this is where you start building relationships with the recruiters of these agencies.
Their jobs are to place people in these specific jobs, and if I’m able to be a person that solves problems for them, then they’re going to use me every time. And that’s kind of what happened with me with a company called AMN Healthcare. I was able to see the needs, and then I solved the problems. And then I became that go-to guy for this specific market. So everything just kind of snowballed, like I was mentioning before, being able to grow so fast. And it’s doing things different. Most people are not intuitive in that way. They’re not going to go out of their way to build something that way. And for me, it’s like, how do I make these jobs easier for the recruiters?

Rob:
That’s really cool. So you’re a very turnkey solution basically. You’re not just housing, you are also transportation, and effectively food. And I think obviously there’s a lot of value there. It’s really, really smart. A lot of hosts and a lot of people in this space tend to really just stop at what they consider to be their “job.” But this really does seem to provide a solution. So if you wouldn’t mind, can you walk us through a little bit how you structure your business?

Jesse:
Yep, yeah. So I’ll kind of break things down for you. So again, going back to the needs. The needs of these clinicians are… So for you guys that don’t know, or anybody listening to this right now. If you just go on expedia.com, and you just type in the cheapest car you could potentially get, which is like a Geo Prizm. Do they still make Geo Prizms? I don’t know if they do or not.

Rob:
I don’t think so.

Jesse:
They don’t make Geo Prizms. But anyway, the smallest compact car is literally going to be like $1,800 a month. I had at that time, a 2012 Civic that I would rent for a $1,000 a month. So my payment was literally 180 bucks, you guys. So I was renting that car, renting that property. And then we’d also do the grocery delivery. So my cleaning crew, because I had short-term rental after that as well. So we already had these cleaning crews that were doing stuff. So we just applied them to pick up the cars, drop off cars, go in and do maintenance in the properties. Clean them weekly, monthly, pick up grocery services. If they wanted specific kind of oat milk. I know that we were talking about milk earlier, you guys. So they would literally go get all these things that these clinicians and doctors are very specific on what they eat, what they… so it’s very specific.
So we would go out and do all these things, so that these folks would literally go back to the recruiters and say, “Holy smokes, Jesse literally takes care of everything.” So once those recruiters find out about that stuff, that’s where I’m actually building market share with these actual companies. And I’m actually building a business that I don’t need to rely on Airbnb. I don’t need to rely on Furnished Finder. I don’t need to rely on all these people. I am creating my own business. And if I eventually want to sell my properties, guess what I get to sell? Not only my tangible real estate, but also my contracts, my actually legitimate business.
So I think that a lot of people think about real estate, and they’re just like, “Oh cool, this is just like a tangible house or a property.” But there’s other things that you can actually build that make it a business. And that’s being one of them. And again, David and Rob, if I didn’t have the 18 years of healthcare experience in that sales background, I would’ve never been that intuitive to think that way. I think a lot of people have jobs now, whether you work at AT&T, or you’re a drug rep for a pharmaceutical company, everything goes back around customer service, essentially everything. The easier you’re able to make somebody’s job, the better you’re going to be able to do in the outcome.

Rob:
So can I just ask a little bit more on the logistical side of this? Because I know a lot of people, they have to be wondering. So you talk about the Instacart thing, you talk about the transportation. The actual logistics of that. Is the client or the travel nurse, are they actually renting that vehicle from you? Is it a different business than the actual business of the home itself? Are you renting it via Turo? How does that look? And then I’ll get to the Instacart question here in a second too.

Jesse:
All right, cool. Yeah, we ended up actually getting an umbrella policy that covered both the property and the cars. We have two separate businesses. So I have my AirVenture, which is the hosting company, and then we have another company that actually handles all the vehicles, so we weren’t intertwining the two things. And then we had an umbrella policy that covered literally both businesses, and both businesses were under that policy. So that was the difficult thing is getting people from other states to get coverage in California. And for those who don’t know, if you drive a car in California… If I got in your car right now, Rob, and you’re in California, I’m literally covered to drive your vehicle. That’s how California state law is.
So we ended up getting an attorney, paying thousands of dollars to get this coverage so that I’m protected, and whoever rents the car is protected as well. And then we had them buy their own supplemental insurance, which was a short-term insurance for that specific car. So we were covered on three different angles. And for anybody thinking about doing that now, you can literally do that with Turo, which is Airbnb for cars. That’s literally what it is. So you can essentially do the exact same thing that I’m doing, and not to pay the thousands of dollars, but just pay Turo, what is it? 20 or 30% of the daily revenue or the revenue of that vehicle that it’s rented out.

Rob:
I think it’s anywhere from 10 to 30% depending on how much coverage you’re looking for. Okay, so on the Instacart side, this is just really interesting. I’ve really never heard of this angle. Is that something that, do you provide some kind of form or some kind of survey that’s like, what are the kind of foods you like, and then I’m the one that’s going to physically order it for you? Or do you just give them I don’t know, a promo code that gets the money off of their first delivery? How do you set that up?

Jesse:
Yeah, we use Typeform, I don’t know if you guys ever heard of a company called Typeform. So you could basically essentially put any type of questionnaire that you want, and we would formulate all the things that they like, what they don’t like, from Typeform. So whether it’s dairy, meats, a specific kind of meat, they would be able to put all that stuff. And I think it was 14 questions that were asked around food. So they would literally put what was in there. My cleaning crew would then go out, pick up that stuff, drop it off, and we would charge a $45 delivery fee specifically for that, which is including time.
So essentially, we weren’t necessarily making very much off of that, but what we were doing is creating that business mindshare with the recruiters, the agencies. Because these recruiters and these nurses, they’re very well-connected, especially the first time they’re coming in. So they’re going and just telling them like, “Hey, this company’s taking care of everything. We want to use this guy, we want to use this company. Or the next nurses that are coming behind me, you should refer them here too.” So even if there’s a company that doesn’t do contracts, where these actual agencies are paying me a specific amount, they’re at least giving the referral to these nurses. And that’s exactly what I was going for at that time.

Rob:
All right. So you’re talking about the contract aspect of this. Walk us through getting a contract. Because obviously you worked at a hospital, and you walked into the HR like we talked about. But the everyday person can’t just… I mean, not without being escorted out by a security. But they can’t just walk in the hospital, and go into the HR department. So how can the everyday person go about snagging a contract like this?

Jesse:
An everyday person can go into the hospital and knock on the HR department, first off, you can definitely do that.

Rob:
Okay.

Jesse:
But the smarter way would be to just call the hospital, ask for the HR department, and just say, “Hey, can you tell me what agencies you’re working with that are on the healthcare side? Is there any specific companies you’re connected to?” And secondary, “Is there a recruiter that’s attached to you guys, that you guys need for housing?” I’m just giving you an example. I own, I’m going to say five properties in the specific market. I want to be a solutions’ provider specifically for them.” Nine out of 10 times, we’ll have a HR department that will say, “Yeah, we use one company, AMN Healthcare or Trustaff, whatever those are. And our recruiter is Barbara.” I’m going to use Barbara again. Cool. That gives me some really good information. Now guess what I could do? I can literally call that company.
I can talk to Barbara and say, “Hey, I got referred to you from DMC. They’re telling me that you guys are connected. I actually have properties here. Is there a way that you and I can connect and actually create a contract for these clinicians to come?” And if they don’t answer you that way, guess what I can do secondary? We’re talking about business, right? I can now go on LinkedIn, and I can connect directly with that company, connect to Barbara with her last name on LinkedIn. And there’s my backdoor into getting this specific contract.
Again, everything’s about building relationships. And you got to think about it just like if you’re dating, everything’s very slow. It takes time, it takes energy, it takes consistency. But once you do that, and you’re able to build an actual contract with these agencies, you can get paid every time. You get paid up front, sometimes three months at a time. So first, last and deposit. And you can really actually build a legitimate business. And these agencies will go to you every single time, and you don’t have to rely on Airbnb. Again, we talk about Furnished Finder, we’ll dive in on a bit. But you can just actual build a legitimate business this way, by just literally building relationships, which is not an easy thing to do, but it’s possible.

Rob:
So I’ve heard you mention LinkedIn a few times on your channel, and I know that this is something that you do with connecting and everything like that. Do you ever advise anybody that’s wanting to go the LinkedIn route to get a LinkedIn premium subscription? Where they get the, I think it’s called an InMail, that allows you to just send a message to somebody without them accepting your connection invite? It’s been a while since I’ve been on LinkedIn obviously, but I think that’s about right.

Jesse:
Yeah, when I first started, I didn’t use that. You can send a message directly. So if I wanted to add David on here, I would be able to write, I think it’s like 500 characters. So I’d be able to say, “Hey David, my name’s Jesse. I own seven properties in Modesto. I just want to let you know that I talked to Barb over at DMC,” whatever, yada, yada. And that’s the other thing too. I’m creating instant credibility by that name, they already know that person, they work with them in the hospital. And they’re nine out of 10 times likely to actually read my email, because I’m name-dropping somebody that they connect with on a regular basis. That’s a warm lead, folks, you absolutely want to have those. If you have a cold email or a cold draft email, it’s harder to get across to those people.
So for me, that was how I built my business is just kind of talking to these clinicians. And we can all do it now on Furnished Finder, there’s something called the unmatched leads. And this is going to be a good tip for everybody listening right now. Take note of this. If you get on Furnished Finder, there is leads that come in, and there’s unmatched leads. All you have to literally do is pick up the phone and dial every single one of those nurses, and let them know what you’re doing. Ask for their recruiter and what agency they work with. And that’s literally how you could build your business for free. You don’t have to pay anything to do this. You can literally do it for free. So that’s another way that folks can get into this space by going after these agencies is by going on Furnished Finder.

Rob:
I need some clarity. When you say agency, like you said, “Call the HR department at the hospital, and you say, Hey, what agencies are you working with?” Can you just clarify what kind of agency are you talking about? Like a staffing agency?

Jesse:
Yeah, so every hospital does not have enough clinicians to meet the demand of patients. We talked about this a minute ago. Central Valley doesn’t have enough clinicians to meet the demand for patients. In the Central Valley, David, you might know this, there’s a lot of high acuity patients. Which means a lot of folks here are sick, compared to the Bay Area, it’s worse than the Valley. There’s just not enough nurses to meet the demand, so these hospitals have to outsource to be able to bring more clinicians in, and they have to outsource with agencies. And those hospitals typically have contracts with, say, AMN Healthcare, which is national or huge. Trustaff, which is another big giant company. Aya Healthcare is another big giant company. They’re national.
So they’ll have one recruiter or two recruiters that literally the hospitals will deal with. So if the hospital gives you that information, then you can now reach out as a third-party person and say, “Hey, I just got your information from the HR person at the hospital, here’s her name. How do I connect with you? How do I build an actual business? Or how do I actually build clientele with you guys? What is it that you need, or how can I assist?” And I think that’s where asking the right kind of questions, and making sure that you’re a go-to person for them. If you have multiple properties in the market, that’s better. I usually tell people, “Go deep, not wide,” which means you want to have a lot of properties in one little market, as opposed to being spread out so far. Agencies like to deal with people that have more properties in one specific space.

Rob:
Yes. So are you basically saying they want to know, “Hey Jesse, when I call you, I need you to have something available?” And so if you keep saying, “Oh, all my places are completely filled up,” they’re less likely to call you because it’s sort of a crapshoot with you, right?

Jesse:
Yep. Yeah. So most agencies will look at you, if you have five or more properties, you become on their preferred provider list. You’ll actually become like a preferred vendor. And that’s what you want to be. You want to be a preferred vendor. Not only on the healthcare side, we didn’t even dive into the insurance side of stuff. But that is what’s going to solidify you as being an actual true player in that market. If you have a one-off property here and there, you’re going to get bookings, I’m not going to say you’re not. But if you have that portfolio of five or more, there’s tremendous more upside of being that number one person that they go to on a regular basis.
And I’m seeing this more and more, where these agencies are now leaning towards, if you don’t have five or more properties, don’t contact us. That’s literally what they’re saying. So anybody’s looking to invest, you got to have multiple doors, and build an actual portfolio. Well, think big from the very beginning. Cool, I’m going to have my first door now, but in two or three years, or one year, I’m going to have five. And you build in that specific market.

David:
I want to ask you about how you choose the market, because I think you made a very good point, is in that, this is not a thing that you can casually step into, which at one point, it was. And so a lot of people hear the success stories from someone that says, “I bought a property in X city, and it does great.” And then they go, “Oh, if I buy a property in X city, mine will do great too.” And then you find out the competition is more fierce. They have a headstart on you. If you can’t get in with, like you’re saying, a minimum of five properties in some markets, it’s not everyone. But in some, it might not make sense. Probably the areas where there’s the most competition, where you’re making the most money.
That’s a very smart and helpful point, I suppose I would say, for the listeners who are like, “Oh, I was about to go buy one in Topeka, Kansas, maybe I shouldn’t. I need to look into it deeper.” What about the specific property? I don’t want to go too far down this, I just want to ask before I forget. Are you always renting to one nurse? Is it always a one-bedroom property that’s best? Or are there times where having two or three bedrooms in the same property is actually beneficial?

Jesse:
David, that’s an awesome question. So for me, I stick with two bedrooms and above. Any savvy investor, any intuitive investor is always going to have an exit strategy. And for me, that would be mid-term first, short-term secondary, long-term being last. That gives me more exit strategies. The more beds that I have, the more opportunities that I’m going to have. Most of my clinicians are coming in groups. They don’t come by themselves. There is a lot of clinicians that come by themselves. But I’ve been seeing over the last five years, millennials travel in groups. They’ll go to the Bay Area, work for three months, and then head to Ibiza for a month. And literally that’s the culture of this healthcare industry. It’s been changing over the last… I’ve been doing this since 2015, I’ve watched it change.
So for me, if I’m able to put more people in a property, that’s going to give me more opportunity to get paid more. And not only that, but I can house… I’m nicheing things down even more. Because most people will, exactly what you said, David, will get a one bedroom or a studio. But again, going back to what we were talking about a second ago, you got to diversify your portfolio, whether that’s a one bedroom, three bedroom to be able to serve multiple different people and clientele. But for me, it’s always been serving more people than just your typical one-off nurse.

David:
So getting a two bedroom or a three-bedroom property isn’t overkill, because sometimes they travel in groups. Which actually makes sense. If you got to move into a new area that you don’t know anything about, you don’t have any friends, you’re going to feel more comfortable doing that with other nurses you can relate to.

Jesse:
A 100%. And they’re already booking together. So when I talk to recruiters, I’ll say, “Hey, who do you have that’s coming in a group? Who do you have that’s coming with their wife or their children?” Especially during COVID, we saw this a lot. And you want to be able to house those people. And if you only have a one bedroom, you can’t, you’re not going to be able to get that extra income. And agencies want to group people together, that’s kind of why they connect. And a lot of times, doctors will actually travel with their families. So we got to contract with UCSF. And I’ll give you as an example. It’s a doctor that came from Europe, him and his family. He’s got two kids, a dog, a wife, and they’re staying in a property in San Francisco. And that’s what they do, they’ll pay. And they’re paying 14 grand a month for a property in San Francisco. They’re not paying, the agency is actually paying.
And the cool thing about the agencies is you can actually get these agencies, they can be the lessees on these properties. So in San Francisco or Central Valley, who you worry about, holy crap, there’s squatters. I don’t worry about that too much, but a lot of people do. These agencies are actually the lessees. And these are multimillion-dollar agencies, there’s no way they’re ever going to screw you over. And that’s one of the things that I love about this space, too, is that they’re taking responsibility for the clients that are there. They’re taking ownership for that. Any damages, the agency’s actually paying for it.

David:
That is so smart. So smart. Because you’re not going to have a hospital that wants to take you to court and potentially be sued, as much as you might have a individual that would be willing to roll the dice. It’s very similar to the advice I tell people who buy in college towns, and they rent out to the students. I say, “Don’t put the student’s name on the list, put their parents’ name on the list. You’re definitely reducing your risk by taking that approach.” So we’ve talked about the way you get the contracts, the type of properties to look for, the level of commitment that you recommend before someone gets into certain markets. Let’s talk about the actual market that you target, and why you target it? So what can you tell me about that?

Jesse:
Yeah, so this is perfect. This is the bread and butter of this conversation, you guys. So anybody looking to get into a market, here’s what I suggest you do. There’s hospital levels. Each hospital has a Level 1 and Level 2 hospital. These are like what you typically see on ER, Grey’s Anatomy. You guys have all seen that, I’m assuming, right? It’s this high acuity, lot of… Rob watches that all the time. So you’ll have these high acuity doctors that are there, brain surgeons, literally there’s on-call people. And I usually say, “Look for a hospital that has 300 or more beds. And that is not including labor and delivery beds.” These hospitals are going to have way more turnover. So if you look in the Bay Area alone, there’s probably, I’m not kidding you, probably like 15 Level 1 hospitals. These are massive. So they have a lot of people coming in and out.
So Level 1 and Level 2 hospitals are very similar. Level 3, Level 4, and Level 5 hospitals. Those types of hospitals are more rural, and they also have a lot of clinicians that sometimes come into these markets. So you’re going to want to look at what the level is. It’s going to give you a better insight on how many beds they have. It’s going to tell you a little bit more about how many clinicians are actually traveling there. Like UCSF, Dameron Hospital in Stockton, these big hospitals have a lot of people that come in and out on a regular basis. They need to have more clinicians to meet the demand of patients. In California, we have to have two nurses to one ICU patient. So you have these ratios that come into play, too, which means that bigger hospitals have more clinicians that are going there.
So look at that first. Call the hospital if you can’t get that information. It’s all public knowledge, you can look it up. But just call and say, “What level of hospital do you have?” One of the other things that I do, too, you guys, is I’ll actually go on indeed.com. And if you guys are all listening to this right now, you can do the same exact thing too. Go to indeed.com, type in Hayward, California, and whatever, travel RN, travel registered nurse. And you’ll literally see probably, I’m not kidding you, 30 or 40 different companies that are hiring for those specific people. That’s going to give you a mindset that, okay, cool, here’s a demand in my market. This is actually legit. This is today, right now, information.
Then I can go on Furnished Finder, and I can see what the demand is on that side. So furnishedfinder.com/stats will actually show you how many clinicians or how many people are actually looking for property in that market. So you have these two different angles. You have the factual data from Furnished Finder, right? And then you have the Indeed or Monster jobs, which is actually people hiring for travel nurses right now. And you can pick up the phone, and that’s another way to get contracts right there, is literally just by doing a simple, free Indeed search.

Rob:
I mean, it seems like you’ve got basically all these different I don’t know, places that you’ve kind of found on your own organically. Are there any other creative ways for getting some of these contracts or clients into your business?

Jesse:
There’s so many creative ways, man. Yeah, I can dive into a lot of them, the healthcare is one of them. So you guys know what Dave & Buster’s is, I’m assuming, right? You guys know what that is?

Rob:
Yes.

Jesse:
So they were building a Dave & Buster’s in Modesto a while back, about two years ago. I saw a construction truck. I literally went there and took a picture of it, called the company and said, “Hey, where are your guys staying that are working here?” And they were staying at Holiday Inn Express. There was five rooms that they were paying for. It was a $1,000 a day to have these five dudes working at this place. They were all engineers, by the way. So I just called that agency and said, “Hey, I can rent you guys a property for $7,500. They can house all your people there.” They’re literally going to be saving thousands of dollars. So there’s different ways of doing things. You guys have all heard of Extended Stay hotels?

David:
Mm-hmm. Of course.

Jesse:
Okay, cool. So if you literally just drive by there at 7:00 PM at night, and you take pictures of all the work trucks. Extended Stay hotels have literally massive contracts. They’re like the number one contracted agency with construction companies, stuff like that. All you got to do is literally pick up the phone, take pictures at 7:00 at night. That’s when the dudes are back, or people are back at the place. And you just call those companies in the morning and say, “Hey, I noticed your work truck out there. I have properties here. Can you tell me how many rooms you guys are renting? Did you guys contract with other people? We have a safe, comfortable house that can house all your people that are working right now. I can save you money. What are you spending right now?” You just start finding out information about these companies.
And again, this is the intuitive side of things. If you think outside the box, you’re going to be able to build a business. And I think a lot of times, people don’t necessarily think that way. And these are creative ideas and ways that people can literally start building a six-figure business relatively pretty quick, by literally just taking the time to call somebody and ask questions.

Rob:
That’s good, man. I love it. I love it. All right, so I don’t want to go down too much a rabbit hole on this, but you did say something that really sparked… I mean, we could do a whole nother episode on this, I’m sure. But you did mention, even outside of the medical industry, you talked about the insurance industry. Can you give us a little brief rundown of what you meant by that, what that means, and that entire side of the MTR business?

Jesse:
Yeah. So medium-term rentals in the insurance companies, so folks that are displaced from fires, floods, or any kind of catastrophic event. And just by the way, you guys, every 88 seconds in the US, somebody loses their property due to a fire, flood, or something like that. There’s a lot of these claims. So there’s companies like ALE Solutions, DAN Housing, these are two large scale agencies. And what they do is, if somebody loses a property, they have to relocate them right away. And a lot of times, just like we talked about with these construction workers a while ago, families are literally renting two or three rooms, and they’re paying thousands of dollars to… these companies are paying thousands of dollars. Families want to be comfortable, they want to be in a place that they know, that they feel like sharing. Two different rooms doesn’t work necessarily all the time.
So for me, this is something that’s been really growing for me too, you guys. I’m actually renting properties right now in the Central Valley and in the Bay Area from four to 5X what the long-term rental rate is, and I’m not kidding, this is legit. Because these agencies are actually paying, it could be 10% of the property value that they lost per month. So if somebody has a million-dollar house, they’re paying 10% of that per month on housing for them. That’s over 10 grand a month that they’re specifically paying for these properties. So that’s a huge play. It’s been something for me that’s been able to grow tremendously. With just two properties, I can cash flow 10K a month off just two insurance claims.
And all these things that we’re talking about a second ago, building relationships, connecting with these folks. There’s somebody called a relocation specialist, and you guys can all go on LinkedIn right now, and you guys can all look up these people. Relocation specialists are basically the bird-dogs for these families to find another property. So if you connect with them, you build rapport with them, they’re going to send you these clients relatively… not necessarily easy, but it’s about building rapport, building relationships with them. So for me, man, that’s been a game changer, going from the healthcare side and being able to serve multiple different clients.
You don’t want to put all your eggs in one basket, right? You want to have multiple different avenues or avatars to go after. And I think for me, the insurance side and the healthcare side, those two together, they work beautifully. And you can make a substantial amount of income from those.

Rob:
Can you clarify really fast? You said 10%. Does that mean if on a million-dollar house, roughly they’ll give you a $100,000 a year for a housing allowance?

Jesse:
Yeah, every housing allowance is going to be different. But yeah, so that’s how you can look at it, a year. If the family lost a million-dollar property, they’re going to be able to give you a $100,000 for that year. So that’s what we’re kind of looking at right now is… And when you talk to these folks, they’ll tell you. I had ALE Solutions tell me, “We pay 10% of the value of the property per month.” So again, if it’s a million dollar, they’ll split it up in 12 months, and give you that amount. So for me in the Central Valley, I have properties that are 1,500 to 2K a month, and we’re renting it for 8,000. I’m cash-flowing literally 5K a month from one property.
And people are doing this all over the US in a lot of different places. David, here in the Bay Area, same thing. Most properties are over one million, one, 2 million. So these companies are paying 14K, like I mentioned, in San Francisco. 9K in Oakland. Berkeley, we have 11K. So you can get substantial income, even in markets that are urban, that are more expensive. And that’s through building relationships.

Rob:
Jesse, on working with these insurance, I guess relocation specialists. Are there any tips that you might have for building rapport with them? Is that the same level of… I mean, do you do the same type of stuff for the insurance relocation specialist, as you would do with the medical HR department and agencies?

Jesse:
Yep. So what I typically do is, I’ll get on a call with them and I’ll say, “Hey, do you guys have five minutes, that I can have a conversation with you and your entire staff?” And they will say yes or no, or whatever. So I want to get on a Zoom call with them. So what I’ll do is I’ll… Actually, we have this beautiful thing in this world called DoorDash, you guys have heard of that? So I’ll actually find out what office they’re working in. I will find out every single person that’s working in that office, what their name is, what their favorite Starbucks drink is, how hot they like their Starbucks drink. And I’ll literally order Instacart or DoorDash food to them, get on a five-minute presentation, talk about my properties. I will literally have everybody’s email, favorite Starbucks drink, and that’s how I’ll build my business.
It’s almost like you’re meeting somebody in-person, but you’re talking to them over the phone. So for me, that’s, again, going in thinking intuitively, you guys, is not a lot of people think like that. Me coming from my background of being in healthcare and this is what I did for a living, it’s the same kind of concept. You want to build relationships. You want to be cute but not forgettable, right? You want to be somebody that they’re not going to forget about. And I promise you now, most people listening to this, those relocation specialists aren’t getting Starbucks drinks. People aren’t buying them Dunkin’ Donuts, we’re thinking different. We’re building a business and a brand. And I think that at the end of the day, you have to think about those things. And just get five minutes. That’s all you need is five minutes with somebody to talk about what you’re doing, and how you can help them.

David:
I want to highlight something I think you’re doing so much better than other people that have not had as much success. It comes down to the mindset and the approach you’re taking. Because you’re approaching this as a business, not a replacement for work. So many people get into real estate investing because they don’t like their job, and they’re like, “All right, I just want to get a couple of houses, and never have to work again. Once I’ve bought the properties, I’m done.” And that may have worked at one point in history when there was less competition, but there are so many people looking for yield, as rates have been kept very low. There’s not a lot of opportunity. Everyone’s hearing all the YouTube videos and Instagram Reels of, “I don’t want to work anymore. I do this thing.” It’s not a secret. It’s out there. Now you got to be better than other people.
And what you’re describing are fundamental techniques that worked in your sales role at the previous jobs you had. You are applying them to your real estate business, and you are having more success than other people that are doing the same. Rather than saying, “I don’t want to have to email someone, I don’t want to learn their Starbucks drink. I just want to buy a house so I don’t have to.” That subtle approach, taking a skill you had in one area, applying it to real estate, has probably made you 10 times more successful than the other people that could own the same properties you do, that could listen to a podcast like this.
You’re describing it so clearly, and it really is simple. It’s not a complicated strategy, but it isn’t easy. It doesn’t just fall into your lap, right? You got to do a little bit of work, learn their Starbucks drink, learn what Instacart is, learn what DoorDash is, learn how to use Zoom. Have a clear delivery when you go to this half-hour meeting that you explain what properties you have. You probably have a slideshow that’s prepared, or something that they can see pictures of what they look like, so they can feel comfortable here.
In my opinion, the future of real estate investing looks more like what you’re describing, than what it’s looked like looking back over the last 20 years, which was buy it, set it, forget it. Now is going to require an active role if you want to stay on top. And we should be very grateful for that by the way, because if this wasn’t the case, Blackstone would buy every single property and push us all out of it, and we wouldn’t be able to have a business anymore. It’s these detailed nuances that allow us to compete with the big dogs. And that is why podcasts like this are so important, because you can learn these sorts of techniques that worked in other parts of business, that will also work in real estate.
Okay, Jesse, you’ve mentioned Instacart, you’ve mentioned offering rental cars, everything you could do to make this convenient. I also, I keep highlighting everything you say. That’s good. It’s brilliant. You’re talking about customer service. You’re not saying, “I want to buy a property so I don’t have to cater to people.” You’re saying, “I’m going to buy a property, and cater to people through that property,” which gives you an edge. What other amenities can people be thinking about, that will improve their odds of being successful? Is design super important? Are there little details or things that can be left in a house that will improve the actual experience a person’s having, so that they go to their HR department and say, I loved it, I want to stay with them again? What are you doing?

Jesse:
Yep, yeah. So there’s two things I want to highlight here, David. As more regulations come into place from the short-term side, you’re going to see more investors looking at the mid-term rental space. Right now in the US, only 3% of the entire US is regulated by short-term mental regulations in municipalities, 3%. I was just reading a study, it’s expected to actually triple this year. So you’re going to see more people that have these beautiful, sexy, Rob, like you, Airbnbs that are going to get regulated, then what are you going to do next? Oh, I’m going to mid-term it. So you’re going to start seeing a lot of these properties come into this space that are beautiful, sexy, that have all these cool things in there. But at the end of the day, you want to be very thoughtful and insightful on design.
Most places on Furnished Finder, and everybody listening to this right now. If you go on Furnished Finder, it looks like most properties on there look like it was a hand-me-down, somebody lost their family member and they decided to put that property, grandma’s house on Furnished Finder. Literally, that’s what they look like. So right now it’s a competitive edge where you can have a pretty decent looking property. It’s not a crazy Airbnb, that extreme experience, but you still have a place that is done up well, and you’re probably going to do well. So you want to make sure you design it with intuition as far as what kind of clients you’re going to go after. If you’re going to have nurses, you want to have blackout curtains. David, you brought this up a minute ago. Nurses work from 7:00 PM to 7:00 AM, they work the graveyard shift. Guess what they’re doing during the day? They’re sleeping. So you want to have blackout curtains.
Box fans are really important. I’ve had so many requests for box fans, we have those in all of our properties now. Noise machines. Just stuff that’s simple that people… If you’re in an urban market, there’s a lot of car noise, things like that. A lot of these clinicians come from the Midwest or different parts where they’re used to sleeping in this absolute quiet stillness. And without box fans or those kinds of little simple things, it’s going to be important for them to have. And plus that’s another added little touch to those specific properties. So those are just small little things that I would say, really think about the design, and think about the little amenities that are going to help them sleep at night or during the day.

David:
As a former police officer, who also had to sleep during the day for much of my career. I can say with a resounding yes to everything you just mentioned, the box fans are huge. It’s hotter during the day, so it needs to be cooler. And they may not want to run the AC or may not be able to get the room cool enough to be able to sleep, and it drowns out all the noise. And I still have blackout curtains in my room because it was so hard to sleep when the sun was up. So these are things that set you apart from the competition, that can only happen at the micro level. That’s what’s so important if I think about the information you’re giving, and the strategy you have. Is it’s micromanaged, which puts the power in the hands of the investor, as opposed of the huge freaking corporation that can go buy 3,000 properties in every major city, and just try to push us out so that we can’t make a living like this.

Jesse:
Yeah. Well, David, there’s actually REITs like Greystar. All these big companies are actually in the medium-term rental space. I don’t know if you knew that or not. Over the last six months, they’re actually allocating a certain amount of properties. And all saw this with the Airbnb, right? They’re allowing mid-term, medium-term rentals in their property, so they’re actually doing the same exact thing as that I’m talking about here, just not on that super intuitive level. So we’re going to see more and more of this happening. And eventually, one day, my goal is to have such a big, big portfolio that smart institutional money comes in and buys my property, and they buy my book of business. That’s something to think about. That’s my exit strategy, for me thinking later on, is I have…
I was talking to a friend… I’ll talk about this real quick. This guy owns 200 doors in the Midwest. I’m literally making just as much as he is with 200 doors with literally 10 properties, literally 10 properties. So if you do things the right way and you’re really intuitive about it, you can make a pretty substantial amount of money. It does take more work though. Dave, you mentioned it perfectly. It takes more work, and most investors are not willing to put in that work.

Rob:
All right, Jesse, I have so many more questions, but we are getting towards the end here. But I’m sure that one of the more common things you hear are the squatters, the squatters, Jesse. I see those comments all the time, on mid-term rental and medium-term rental comments on YouTube videos and on threads. Do you make your tenants, whether they’re through Furnished Finders or through Airbnb, do they all still have to sign leases?

Jesse:
Yep. Yeah, they absolutely have to sign leases. And we have addendums that say that they’re there for a specific amount of time. That they’re not considered long-term tenants, even though they are there for over 30 days. But again, go back to what I talked about earlier, you guys, most of these contracts that I get, these agencies are the lessees. So I don’t have to necessarily worry too much about. And these folks are professional too, by the way. You’re not going to have a nurse that’s going to squat at your property. You’re not going to have guys that are working for Dave & Buster’s, these engineers. They’re not going to just be like, “Oh, we’re not going to pay.”
So I think you got to screen people just like you do with long-term, see, exact same kind of concept. I think people just take this to way an extreme in a what-if scenario. And most of the time, this doesn’t happen on a regular basis. And it can. Yes, it can, but you got to protect yourself in a way that if you can get these agencies to be the lessees, awesome. But you just got to do regular screening that you typically do with every other tenant that you have.

David:
I would bet it’s less likely to happen with a medium-term rental than even a traditional rental.

Jesse:
Right.

David:
Right. Because that’s someone who has something to lose. They don’t want to screw this thing up with the hospital. They don’t want to get the hospital in hot water by refusing to leave. They don’t want to lose their contract to go work there again. These traveling nurses, if that’s who you’re renting to, can make really good money. Especially in Northern California. I would guess that Northern California wages are probably higher than anywhere in the country, outside of maybe specific niche markets like Manhattan or something like that. So whenever you’re renting to someone who has something to lose, the odds of being taken advantage of like that, significantly decrease.

Jesse:
A 100%.

Rob:
It’s funny. It’s just, when people make content about long-term rentals, no one is ever commenting a thousand times, “But what about the squatters?” I mean, it’s a problem. It’s something that could happen in literally every real estate asset class that exists, not just mid-term rentals. But I just feel like that’s always the biggest fear.

David:
It’s the new, what do you do when the toilet overflows?

Jesse:
Yeah, I agree. Yes, I’ve heard more people with Airbnbs that have had these issues than mid-term rental operators. I mean, I’m not worried about it, I’m just not.

Rob:
Okay, so long-term rentals are, what do you do if the toilet overflows. Mid-term rentals are, but what about the squatters? And then Airbnb is, but what about an LLC? Do I need an LLC? Those are the three main questions I hear in all of real estate.

David:
Toilets, LLCs, and squatters have cost people more money than anything else that I know of, in my career. Those concerns about toilets, yeah. There always is going to be a challenge, but you have to learn to enjoy the challenge. Because if it wasn’t for the challenge, you wouldn’t have the opportunity. If it was super easy and nothing went wrong, people with more money than you, would’ve already stepped in and taken all the opportunity, and there’d be nothing left. It’s these little tiny paper cuts that are annoying that stop people from being able to do it at scale. And so as the mom and pop investors, the people that are listening to our podcast, that are all trying to find financial freedom through real estate, are looking for opportunities.
You actually should be attracted to and drawn to the obstacles to success that you may find, because that means you are going to have an opportunity. Where if it becomes too easy to do it, you will be pushed out. And we’ve seen this over and over and over through so many different industries. I actually feel better about something like this, Jesse, and the method you’re describing. Because it sounds safer, and it’s a more defensively sound option. Compare that to buying a 400-unit apartment complex that some massive corporation can buy, and hire one property management company to take care of it, and do nothing. That’s going to be much harder for the small person to be able to get into that space than this one.

Jesse:
Totally. A 100% agree. And you’re going to start seeing more of this stuff happen. Right now, I think about medium-term rentals as Airbnb in 2007. There’s no property management software out for it. There’s no PriceLabs. These companies aren’t necessarily making anything for it. So imagine being able to know where Airbnb is now. This is where we’re at in this space. I feel like Airbnb is in the fifth inning, right? It’s been around for a while. They’re pushing experiences now, unique properties. And going back to baseball terms, I feel like the medium-term rental space, the umpires are barely walking the field. They’re just chalking the field, grounds crew is out. That’s how early we are in the game. And the sooner that you get in, the better you build your foundations. The likelihood of you being able to succeed in the space is tremendous. And I think there’s just so much opportunity for people. And they might not necessarily see it like that, but I do. I’m all about skating to where the puck is going, and I see that, the bend is there. So that’s just my two cents.

David:
Fantastic, man. I’m glad that we had you here to share this information before anybody else heard it. This has been really good. We’re going to move on to the next segment of our show. It is the Famous Four. At this segment of the show, Rob and I will take turns asking you the same four questions we ask every guest, every episode. Question number one will come from me, and that is, what is your favorite real estate book?

Jesse:
My favorite real estate book is called Loopholes of Real Estate. That was the first book I ever read in real estate, and it was basically like tax stuff. It was how to find your first property. It was part of the Rich Dad Poor Dad series. You guys probably never heard of it. It’s not really that huge of a book. But that was, for me, my introduction to actually investing in real estate. And I kind of go back to it every now and then. So it’s called Loopholes of Real Estate.

Rob:
Awesome. And number two, what’s your favorite business book?

Jesse:
Favorite business book is The E Myth. So The E Myth, I’m sure you guys have heard of it. It is about removing yourself from your business. And that’s where I’m at in my life is, only doing the things that I’m uniquely qualified to do, and everything else is going to be delegated to people that can handle it. And that’s going to allow me more time for me to actually focus on the actual business. Because again, going back to what we talked about before, you guys. This type of business that I’m in, it’s very mindful that you have to be very intuitive with who you’re going after, what you’re going to do. So that book was extremely helpful for me to realize that I need to remove myself from a lot of the day-to-day operational stuff. And I think a lot of times, investors want to be involved in all this stuff all the time, and you can’t. In order to grow an actual legitimate business, you can’t be the guy that’s doing everything all the time, everywhere all at once. It’s impossible.

Rob:
Great book, would love to read it someday. Number three, hobbies. What do you do whenever you’re not out there crushing the mid-term rental game?

Jesse:
I play guitar. I love playing guitar, drums, bass guitar. Baseball. I’m a big baseball fan. I still play baseball even at 40 years young. I still skateboard, you guys. I can still kickflip. I have younger kids, I still go out and skateboard with them, so I stay young and hip, and still like a cool dad. So those are my hobbies.

David:
It’s always funny when we ask the hobby question of anyone that has kids. It’s like the biggest struggle ever to try to find anything to say, because I think when you have kids, they are your hobby. You’re like, “I do real estate. That’s my hobby. I freaking have kids, what do you expect out of me here?” All right. My last question for ya. What sets apart successful investors from those who give up, fail, or never get started?

Jesse:
Yep. I think grit, and having a mindset that is going to keep you going is extremely important. I think a lot of times, most of us will run into an obstacle. And you just talked about it earlier, David. Those finger cuts, those simple things that people are just like, “Oh, I’m not going to do this anymore.” It’s about being consistent. The more consistent you are, the more reps that you have, the more opportunities that you have. And I think that being able to build a business takes time. It takes energy, and it takes consistency. So if you have all those traits, that’s what’s going to make you successful. That’s what’s going to keep you going. That’s what’s going to keep you. From your first YouTube video to your thousandth video, it just takes reps. It takes consistency. And I think that, for me, is what is the most important. Because we’re all going to fail. No matter what we do, we’re all going to fail. And you have to learn from those mistakes. And you still stay consistent, and diligent, and build. I think that’s what needs to happen to be successful.

Rob:
Amazing. Well, Jesse, tell us where people can find out more about you on the interwebs, Instagram, YouTube, all that kind of stuff?

Jesse:
Yep. Yeah, you can find me on Instagram @therealjessevasquez. I have a website, therealjessevasquez.com. And YouTube, you can type in Jesse Vasquez on there as well. And one little quick thing, if you guys don’t mind me saying this. There’s a Mid-Term Rental Summit coming up. I’ve actually linked up with Furnished Finder. It’s going to be April 30th to May 1st, in San Diego at the Mission Bay Resort. So head over to MTR Summit or the midtermrentalsummit.com to pick up your ticket. I’m extremely excited about Furnished Finder jumping on with me, and we’re hosting this first ever mid-term rental event.

Rob:
Very cool. Everybody, go follow Jesse. Jesse, you are one of those people, that you’re frustratingly smart and very good at this. And I learned so much from you. And I’m always like, “I wish I could be that smart.” Your content is really great, very knowledgeable. So thanks so much for coming to share. David, where can people come and find you if they want to get in touch, connect to you, all that kind of stuff?

David:
Yeah, please do. You can find me on Instagram or everywhere on social media @davidgreene24. There’s E at the end of Greene. And now you can find me on YouTube there as well. So youtube.com/@davidgreene24 will take you to my YouTube channel. And there’s real estate agent advice, there’s loan officer stuff, there’s investor stuff, there’s walkthroughs of my properties. There’s all kinds of cool content as I’m trying to become more like Rob and less like me. Rob, how about you?

Rob:
You can find me over on YouTube @Robuilt, and Instagram @Robuilt. And lastly, if you like this episode, if this episode got you fired up about MTRs, which I know it did. And if it was useful, and you want to get into the medium-term rental game. Then consider leaving us a five-star review on the Apple Podcast app or wherever you listen to your podcast. The five stars really help us get served up to new audiences, so we can teach other people how to get into the medium-term rental game, and the real estate game all around. So that’s it. Please leave us a five-star review, it would mean the world to us.

David:
All right, and that is our show for today. Jesse, thank you so much for being here, man, this is one of the better interviews I think that we’ve ever done. Tons of good information. You’re a very good communicator. I hope everybody goes and follows you. And I’ll be reaching out to you myself, because I am a budding medium-term investor myself. I’ve got three properties being rehabbed that should be coming online. So I’m going to get your information and make sure we stay in touch. And maybe we can have you back on, and we can kind of share what’s been going on with my properties, and how you coached me, what I did. That could be a cool experience that we could have. This is David Greene for Rob the short-term specialist Abasolo, signing off.

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Watch CNBC’s full interview with Smead Capital Management CIO Bill Smead

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Bill Smead of Smead Capital Management joins ‘The Exchange’ to discuss the economy and the homebuilder trade. He’s been bullish on the homebuilders for nearly a decade.

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