Richard

Dewardic McNeal, Longview Global managing director, joins ‘The Exchange’ to discuss China’s real estate market and the problems its seeing now.

David:
This is The BiggerPockets Podcast, show 669. Get yourself around other people that are committed to their goals. And it doesn’t have to be real estate. Get yourself around other people that are committed to staying in the gym. Get yourself around other people that are committed to eating healthier foods. Get yourself around other people that are committed to having better marriages or being better parents or managing their wealth better. The first thing that you can do is when you start telling other people good job for what you did, it will silence the need you have inside yourself to hear it. I don’t know why it works like this, but it’s almost the equivalent of if you’re really hungry but you give someone else food, your hunger can go away. What’s going on everyone? This is David Greene, you are host of the BiggerPockets Real Estate podcast here today with a Seeing Greene episode.
If you’re new to BiggerPockets, you’re going to love it. This is a place where the best real estate investors in the world come to learn how to invest in real estate and build big wealth. And if this is your first time hearing a Seeing Greene episode, you’re in for a treat. In these shows we take questions directly from our community. Areas that they’re stuck in, advice that they need, hurdles they’re having a hard time overcoming or they’ve got a bunch of different options they don’t know which is the best one to take and I do my best to give them advice from my perspective as the person who’s Seeing Greene. In today’s show we’ve got some really good stuff. We get into a very good conversation about the timeline you should give a property manager to turn a property around, as well as what you should look for if you’re going to switch to a new property manager.
We talk about what the IRS considers a real estate professional and how you can take advantage of all the tax benefits that come from that designation. And we get into if real estate syndications are as beneficial as they may seem. All that and more in today’s show. But before we get to our first question, today’s quick tip is, this episode is dropping right when BP Con 2022 is starting. So what are you doing to get out there and make connections or foster the relationships that will take your business to the next level? Do you have a game plan to go demonstrate value to a potential mentor and get someone personally invested in your success? Have you evaluated what skills and talents you’re bringing to the table? Spend some time today to make your next event, conference, or coffee meeting that much more impactful so that you can supercharge the speed that you get through your learning curve and get into making big money and having big success soon. All right, let’s get to our first question.

Collin:
Hey David, thanks so much for taking the time to review my question. My question has to do with the BRRRR strategy. Given how hard it could be these days to lock down a contractor, given how far out in advance contractors tend to be booked, how do you balance the process of sourcing the right property to BRRRR with the process of ensuring that a reliable contractor will be available to perform the rehab process shortly after the property is closed on? The last thing you want to do is have to soak expenses to hold the property while you wait weeks or even months for the contractor to start the job. Thanks so much again for taking the time to respond to my question. Really appreciate all the great content you’re putting out there.

David:
All right. Thank you Collin. Some pretty good questions that you’re asking there. Let’s start with where we are in today’s market. With the interest rate hike we’ve had, we’ve seen a decrease in demand. And not every market’s the same, but in many markets across the country we’re actually seeing a slowdown. So I’m having an easier time finding contractors right now than I have had in recent past because there’s not as many transactions happening. So a contractor’s talents are in less of a state of demand, which means it’s easier to find contractors to do deals. That’s one thing to keep in mind. There’s also contractors out there that are busy and then there’s others that are actually looking for work. So I would say double down on the amount of people that you ask for referrals from different contractors that can do work. Then you’ve got the fact there’s different kinds of contractors.
There’s some contractors that just communicate with you, look really fancy and professional, spend a bunch of money on SEO so that you find their company when you’re googling them, and they sub out all the work to completely different companies. So they might go to a plumbing company and say, “I’ve got a job. What are you going to charge?” And the plumber says, “20 grand.” And the contractor tacks plumbing as 30 grand onto the bid and they make a $10,000 spread because they found the plumber. You’ve got other contractors, and these are the types that I tend to prefer, that have a plumber on in their company or a person that can do plumbing work that comes and does it. And so you’re not paying as much as if they contracted to a completely different company. There’s also the fact that in today’s market when houses are not flying out the shelves in every single market across the country like they have been, that you can get a longer escrow period.
If you put the house in contract and the contractor says, “Well I can’t start for another three weeks.”, you can go back to that seller and say, “Hey, can we close three weeks later? Can we delay escrow? Can I maybe close in a week and a half later?” And you only have to soak the cost of a week and a half instead of the full three weeks. So you’ve got something there. And then another thing that I’ll do … Because I have a couple BRRRRs going on right now and I got a property in contract today as we’re making this episode and that’s going to be a BRRRR. Now, part of that property can be rented out as is and another part of the property needs to be renovated. So in that case, I’m going to rent out the property as is as soon as I close as a short term rental. And when the contractor can start the work, that’s when I’ll shut down renting it out while he takes about 30 days to complete the renovations and I get it back on the market.
So not every property has this problem where you can’t do anything with it until it can be renovated. Now if you’re doing kitchen, bathroom remodeling in a single unit property, yeah, you’re going to be soaking those costs. So what I would do is I would look at building that into your offer. So if you know it’s going to be another three weeks before you can get to the job and you are going to spend $3,000 a month on mortgage, maybe see if you can get the house for $9,000 less or get $9,000 credited back to you from the seller to cover those expenses. Look for some creative ways that you can get the seller to pay for some of those expenses that you’re going to have if they won’t delay the escrow. But in any regard, I’m finding that right now is an easier time to BRRRR than what I’ve seen in the last eight years.
All right, our next question comes from Jake in Pennsylvania. The good old PA. “Are real estate syndications as beneficial as they seem? Would you recommend them for a beginner investor or should I focus more on multi-family rentals to start out?” Okay, let’s dig into this. I don’t know that a syndication will ever be as beneficial as it seems because how it seems is usually going to be the syndicator paying for some kind of sponsored ad on social media or selling you at some kind of a conference to say, invest in my fund, invest in my syndication, because they want your money. So I’ve never looked at it as if they’re as beneficial as they seem. I’ve looked at them as are they as beneficial as buying a house for myself?
And I have invested in syndications, primarily with my partner Andrew Cushman. He and I buy apartment buildings together and we’ve structured some like that. But I also spend more of my money on residential properties that I own myself, not in syndication. So sometimes I’ll invest in a syndication because I’m having a hard time getting a loan. Sometimes I’ll invest in a syndication because there’s not that many good deals out there. Sometimes I’ll invest in a syndication because I’m really busy and I don’t have time to manage a BRRRR, a rehab, getting a property up and off the ground and running so I’ll just give my money into a syndication and get it back in a couple years. I’ve done that a few times. There’s different reasons why I might want to. In general, I would say most people are probably going to be better off investing it themselves.
And here’s why. When you start off buying your own properties, you’re not only getting the return on your money but you’re gaining knowledge. You will learn so much more buying a deal and making mistakes and getting better than you will handing your money to a syndicator who’s going to go buy a deal, make mistakes and get better off of your money. I’d rather see you, Jake, house hacking. If you don’t have a property at all, house hack. I’ve said it before, I will say it again. Everyone listening should be house hacking one house every year. Every single year for at least the next 10 years you should be getting a primary residence, and probably longer because you can often get primary residences after you have 10 properties. If that’s all you did in your whole career, you would be very wealthy at the end of your career if you just bought a house, a year, house hacking, putting 5% down or three and a half percent down sometimes.
Now anything you buy in addition to that, you should weigh, is it better to buy the rental and put 20% down or is it better to put that money into a syndication? If you’re going to focus on multi-family rentals, you’re probably talking small multi-family. That’s going to be two to four units. Just make sure you’re doing that in an area that is not crime ridden, not full of problems from problematic tenants and is an area where you’re seeing population growth. One of the benefits of a syndication if this syndicator is good is they’re more likely to have done their homework on the area that they’re investing in because they have a lot of money going into it. So if the person’s good, they avoid buying into bad areas, which you as a new investor can easily wander into.
And if you look at most problems in real estate, it comes from someone that bought in the wrong area. So it all depends on your goals, how you’re going to vet the performance, if you’re trying to maximize your capital, how much time you have to put into it. There’s active and there’s passive and there’s a scale in between and you have to ask yourself how much you’re willing to do. You also have to be an accredited investor in most syndications, which you may not be. In which case it becomes a very easy answer. You should be buying your own properties. But if you’re looking at a small multi-family and you can buy it on your own and man, house hack is just staring you in the face. Just buy a triplex or a fourplex every single year. Don’t make this complicated. Get the best one that you can. Live in one unit, rent out the rest, then buy another one next year and rent out the one that you were living in right now and you’ll end up accumulating rental properties for five to 10% down instead of 20 to 25% down and your capital will go much further.

Paul:
Hi David. My name is Paul Charbonneau and I live in the Dallas Fort Worth area and I invest in Pittsburgh, Pennsylvania. My partner and I started this about two and a half years ago and over that time we have purchased 20 single family houses and we used private equity to purchase those and right now we’re working on our first refinance. And if we refinance 10 of them, or half of them, that will pay off the note and we will own the other 10 scott free. So, so far, so good. Everything seems to be working according to plan. But my question to you comes from a tax perspective. I work full-time W2 job and right now I could only take the tax loss for the passive income. It cannot offset any of my W2 income the way I’m reading it. And the only way to get past that hurdle is to become a real estate professional.
And I was looking up what that entails. And you can correct me if I’m wrong, but I think it says more than 50% of the personal services you perform in all businesses during the year must be performed in a real estate business you materially participate in. So that would tell me that maybe if I worked at a title company, I’m in real estate, but that’s not anything that I have a personal stake in. So I think that doesn’t qualify, but I would like clarification on that. And then the other thing says that you have to spend at least 750 hours in the calendar year in real estate services or businesses and I think I qualify on that aspect. I could easily do real estate all day. So the question that I have is can I reduce my hours at my W2 job? And let’s say I go part-time to a thousand hours a year. At that point, if I work 1,001 hours on real estate, do I qualify as a real estate professional under the IRS guidelines? And then the second part of that question is going to be, how do they look at the number of hours that you worked? Does scouring Zillow count? Talking to my property management group? I assume that works. What about talking to my realtor? All of those conversation emails. What constitutes as working 750 hours? Look forward to hearing your answer. Thank you.

David:
Hey there Paul. Thank you for this. First off, you’re asking the right questions. I love that you’re saying how do I do this, not am I doing this or can I do this or I can’t do this. You’re asking the right question. You’re also asking it in the right forum. Thank you very much for posting this on Seeing Greene. If you guys would like to also ask a question, just go to biggerpodcast.com/david and you can ask a question just like Paul. Now Paul, I do need to preface this by saying this is not legal advice. I am not a CPA and so I don’t know exactly what the law is. Now, I can understand the law as you read it and that is my understanding of what you said. Very similar to a 1031. I know most of the main stipulations, rules and regulations. Where you get tripped up with legal matters is in case law.
Now, in many cases in the law, if you guys have never heard of the phrase case law before, you have a hard and fast rule such as you have to perform 750 hours a year doing real estate related activities or you have to spend more than 50% of your time on something that you would be materially affected by. Something along those lines. However, sometimes there’s ambiguity in what would be materially affected or what would be considered real estate related activities. That’s where case law comes into effect. Now, case law is when judges look at a specific case and set a precedent saying, hey, in this case we found that this work did not constitute real estate related activity or this case it did. So your question about Zillow is a great question. Would that count? We would have to ask a CPA who knows the case law on that specific situation.
Has there been a person that claimed to the IRS, I’m a real estate professional because I looked at Zillow for houses as part of the acquisition part of my business, and if so, how did the court rule in that specific case? That then determines precedent or what we call case law. Now, coming from law enforcement, I had to study this laboriously. I was constantly learning case law when it came to use of force, evidence, rules when it came to the fourth amendment, which is really big in law enforcement. Search and seizure. If we find evidence of a crime on someone, there’s certain times where it’s admissible in court, there’s other times where it’s not admissible in court and you had to learn the case law to know how to make your case stick. That’s the same in the situation that you’re in here. So I’m going to tell you that you should run this by a CPA before anything that I tell you is something that you go put into practice.
What I can tell you is what I would do if I was in your situation. Part of why I am an entrepreneur now instead of just working the W2 job is because everything that I do is real estate related. I have a real estate sales team. The David Greene Team. I have a real estate loan company, The One Brokerage. I do real estate investing myself. I’m now raising money and helping invest it for other people. That’s Greene Capital. I write books about real estate. I make podcasts about real estate. I make YouTube videos about real estate. I write books about real estate. All of this stuff is real estate related so that it’s not hard for me to qualify as a full-time real estate professional so I save in taxes in a big, big way. You could do the same thing. The question is, is your W2 job holding you back?
And this is the case for so many people, Paul. I think you’re this prototypical, awesome example of a BiggerPockets member. You love real estate, you bleed real estate, you eat and breathe it, you can’t get enough of it. You listen to all the podcasts, you love to talk about it at barbecues. You’re the guy that all your friends come up to you because you have all the real estate answers and they’re fascinated by it. But yet you still have a foot or maybe a foot and a half in the corporate W2 world that stops you from being the full-time professional. I don’t think working at a title company would qualify because that’s still your W2 job. However, what if you started a title company, hired one even part-time person to work in that title company, started talking to realtors or other investors and saying, “Hey, when you buy a house, let me do your title work. This is the offer I can give you. This is the service I can give you. This is the price that I can give you that’s better than other people. Bring me your business.”
Even if that business isn’t making you money hand over fist, what if the hours that you put into running it start to qualify you as a full-time real estate professional? Now again, I don’t know the case law on this so I cannot come out and tell you this is all you got to do. Just go do this. I’m not a full-time professional. I’m not a CPA. I would have to run this by my CPA to ask, but these are the kind of questions that I ask. If I’m acquiring properties, if I’m refinancing properties, if I’m doing X or Y in business, would that qualify? When they tell me this would or this wouldn’t, now I know what direction to put most of my time in and the question becomes how do I make that profitable.
What most people do is they say, what’s profitable? How do I go do that? Well, you often paint yourself into a corner where now you’re not a full-time real estate professional. I don’t think you need to jump completely out of your W2 job, but I do think you can start a side business or a couple and start moving in that direction. And as those companies become more profitable, you can start to take more weight off of the W2 foot and put it onto the foot that’s in the 1099 world until eventually you can jump in all the way. Thank you for asking such a great question. I’m glad that our listeners got to hear a little bit about how that works. If you’re listening to this and you love real estate and you don’t love your W2 job, you’ve got more options than just completely quit your job and go full-time into investing or be stuck in a job you hate forever and never get out of it.
There’s a whole spectrum of stuff that you can do and I’m a really good example of someone who lives inside that spectrum. I’ve got tons of different revenue streams where I make money through real estate because there’s so many different ways that you can do it and I’d like to see more of you doing the same thing. So if you’re not happy with your W2 job, but you also wouldn’t be happy being a complete risk filled full-time investor, find a job that is somewhere in the middle like an escrow officer, a title officer, a loan officer, a loan processor, a real estate agent, a buyer’s agent, a showing assistant, a real estate administrative assistant, a contractor, a handyman, a CPA, a bookkeeper. I could go on, but there’s a lot of different people that work within this industry that serve it where you could start to dip your toe and get involved so you could be closer to real estate but not completely dependent on rental income to pay your bills. Paul, let me know if there’s anything I didn’t answer in your question. Please submit a follow up question if that’s the case. And also I would encourage you to post this on the forums on BiggerPockets so other people can weigh in.
All right. Thank you everyone for your questions so far. We would not be able to do this show without you. And in fact, my love and appreciation for you and those that have submitted their questions to biggerpockets.com/david has reminded me that I needed to turn the light green of everything I do with BiggerPockets. By far, I have the hardest time remembering to change the light from green to blue. So if you’re watching this on YouTube, no, it did not just skip to another video. I just remembered to turn the light on. But hopefully this different ambiance captures your attention and keeps you interested as my monotone, baritone, calming voice may be putting you to sleep so you can get more out of this real estate cornucopia of information that we’ve put together for you.
All right, in this segment of this show I like to read some of the comments that we’ve gotten off of our YouTube channel on previous episodes. A lot of these are funny or nice or sometimes they’re even mean and that’s fun to share too. So as you listen to these, please leave a comment for me on YouTube. Let me know what you liked, what you didn’t like, some insightful information that you got out of this or just something clever and humorous that I can read on the next show because it’s always better when we can spice the information up with a little bit of flavor and funny.
First comes from R. “I will unsubscribe if you ever get rid of the Seeing Greene episodes. These are the best ever.” I love that I get to read comments about me that are always positive. And I’m sure as you guys are listening to this, you’re thinking that. Does David just pick the nicest stuff about himself? Well, you’ll never know unless you go to YouTube and read the comments for yourself and leave one for me. R, I don’t know who you are, but I do know that that was a very nice thing to say. So I will try to make sure that you never unsubscribe and we will continue to make Seeing Greene episodes and hopefully make you a lot of money.
The next comes from Pewmeister, whose name alone has already got me chuckling a little bit. “Awesome episode as usual, David. Also, I ordered your book. I’m currently in law enforcement. I’ve gotten into investing. I’ve developed such a passion for real estate. I’m starting the courses to get my realtor license this week. Thanks for all the value that you have brought to the BiggerPockets community.” There’s something about people getting out of law enforcement and into real estate right now. I’m definitely seeing a trend. I might have been the first person to take the Oregon Trail and now everyone’s following me. I’m not sure what it is about these two professions that end up going hand in hand. My buddy Daniel Delrill told me there was some movie and I think Harrison Ford played a homicide detective that was also a realtor on the side. So he’d be on his phone putting deals together when he was at the crime scene. And there was definitely more than one moment where I was doing something very, very similar. And so if anyone knows the name of that movie, please go into the comments on YouTube and post it so that we can get a feel for what it is about Harrison Ford’s character that is drawing so many BiggerPockets members into taking a similar path.
The negative comment comes from Uli Mooli. We are on a role with the names today. “This was great. Any idea for you for new content would be to review other people’s advice to see what you agree and would improve.” Ooh, Uli Mooli. I got to say I like this. You start having me review other people’s advice and I get to critique it and maybe disagree with it and maybe offer a alternative opinion and you might start seeing a little bit of beef popping up in the real estate community. I’m okay with that. I think that’d be fun if we brought some people in and we had me give commentary and what I thought about their advice. I made reaction videos to people. Like Patrick Bet-David is a guy I respect a lot, but he made a video on how you can’t really trust your realtor because usually your realtor is working with the other realtor more than they’re working for you.
And I made a reaction video that described that happens less than 1% of the time that we even know the realtor that we’re dealing with on the other side. That happens at the ultra high end luxury community where a handful of realtors will sell 20 million houses and they all know each other. But to the general person, the realtor you’re working with probably sells three houses a year and they’re working with someone that sells six houses a year. They never cross paths. But I like it. That’s what I’m getting at. I like this idea. So if you would like, Uli Mooli, you can help us by going to biggerPockets.com/david, giving advice that you’ve received about a question you have and asking me what I think about it. Maybe we can start the trend there.
And our last comment comes from Gerald Smith. “I wish I knew of you years ago. I’m 75. Great advice.” Well dang. Thank you Gerald. I really appreciate that. It’s not every day that you hear a 75 year old tell you that you’re giving good advice so I will take that to heart and you made my day. Thank you for that. We love it and we appreciate your engagement so please keep it up. Like, comment and subscribe on YouTube. And also if you’re listening on your podcast app, whichever one it is, take some time to give us a rating and an honest review. We want to get better and stay relevant, so drop us a line. All right, let’s get to another video question.

Hieu Bui:
Hey David, this is Hieu Bui. I’m from Augusta, Georgia and I just want to say I really enjoy your format here. I’m always looking forward to a Seeing Greene episode. So kudos on that. Very good job. So about me, I am a full-time real estate investor now and I currently own about 20 to 30 doors here in Georgia. And because I’m a full-time real estate investor, I don’t have a high taxable income on paper due to write off and depreciation. So for all of my residential properties, one to four unit, I always used a DSCR lender to finance all of my properties. So that’s my wheelhouse. But recently I purchased a seven unit apartment and I know that my lender will not refinance it. I bought it with private money lender. But the DSCR lender would not refinance it because it is not residential. It would be commercial since it’s more than five units.
So my question for you is how do I go about refinance this property with a commercial loan or some other option when I don’t have a high taxable income? What would my option be in that case? And this property would cash flow really nice because, just some rough numbers, the total income will be 5,500 bucks per month and we currently only owe about $400,000 on it for the private money lender and we also bought it at a very good discount. I think we’re going to be at about 65 to 70% ARV after we fix it up. So the worst can happen, we can always sell it if we cannot refinance it. But I’m curious to see what is your experience with refinance a multi-family, which you don’t have any taxable income. So I appreciate it. Thank you. Have a good day.

David:
Well first off Hieu, I’m sorry to hear you got stuck there. If you were using my team, we would’ve told you not to buy a commercial property to try to use a residential DSCR loan. Maybe next time you can talk with your lender before you close on the property. Even if you’re going to refinance it, I’d give that advice to everyone. Don’t buy the property or do the thing and then run to the professional and say, “Help. I screwed up. What do I do?” Go to them before you close. When you’ve got a contractor who’s going to do the work, run it by the agent and say, “What would the ARV be when we’re finished with this?” Or when the property’s in escrow, ask the person, you’re going to refinance it, “What would you need to know about me?” That’s what I do. I don’t ever walk into it and just hope that the person at the end of the day is going to be able to bail me out.
I want to tell them about what I’m doing. And oftentimes they’ll say, “Well it’s not going to work this way but it would work that way,” and I have time to make the adjustment while it’s an escrow. So that’s a little quick tip for everyone out there. Now, there is some good news here. What I hear you saying is you bought a commercial property that cash flows very strong by commercial terms, that has a very solid loan to value ratio. I don’t see why you can’t just get a commercial loan on this commercial property. I might be missing something because you’re saying that your DTI isn’t that solid, your debt’s income ratio, but it usually doesn’t need to be on a commercial loan. They’re probably not even going to look at that. Much like we don’t look at them on DSCR loans. So I’m just not sure why you wouldn’t be able to refinance this into a commercial loan and maybe even pull out more of the equity than you put in like a commercial BRRRR. Those work too.
I’m racking my brain trying to think about why you wouldn’t be able to do that because I’m wondering … Maybe you just didn’t think about it because you don’t get the 30 year fixed rate. That could be the case. You’re probably going to be looking at a 5/1 ARM, a 7/1 ARM, maybe a 10/1 ARM. That’s just how commercial properties work. Double side note, this is why DSCR loans are so amazing and why we do so many of them. Because you don’t get the adjustable terms with the commercial underwriting. You get the residential 30 year fixed rate terms with the commercial underwriting. So it’s really the best of both worlds and this is why I’m buying so many properties right now specifically with this product because I don’t know how long it’s going to last. At a certain point, lenders will pull this off the market.
The only thing I can think about is you don’t like that adjustable rate. But if you’re going to sell the house now, why not refinance it into an adjustable rate mortgage with a fixed rate for five, seven or 10 years and sell it at the end of that period of time. Unless you think that prices are going to go down over the next 10 years. That’s kind of hard for me to see a scenario like that happening with the inflation rate that we have right now. Man, this would be a great one for us to have you back on with a coaching call so I could dive deeper. But yeah, I would just say find a commercial lender and refinance it that way. You could reach out to us. We’re happy to do it for you. Or you could talk to loan officer that you have already and see if he has a connection with a commercial lender. Just finance it that way and move on to the next property. Thanks Hieu.
All right, our next question comes from John Nunguster. John is from Thousand Oaks and has a rental property here in California. Thousand Oaks is in Southern California if you guys didn’t know that. Has one home and is looking to BRRRR in East Texas. There’s so many Californians that are all looking to invest out of state. It’s almost ironic that I wrote a book called Long Distance Real Estate Investing as a Californian who at one point had to do the same thing. “David, I feel like we are kindred spirits. I’m currently employed as a deputy sheriff. I’m also a blue belt in jujitsu.”
All right, let me just stop you right there, John. I’m a … Not only am a white belt man, I’m a clear belt. I haven’t gone to class in over three months. I’ve been traveling, buying properties and super busy with a 1031. So let me not give this fake impression that I’m a jujitsu master. But thank you because I am interested in it. I just haven’t put enough time into it to say I’m good yet. “I’m currently trying to build a portfolio to replace my current W2 income and I’m really feeling a calling towards building a team of law enforcement officers as private money lenders to buy real estate and become financially free. Do you have any tips on this?” Okay, I’m going to answer the first part of your question then get to the second. You need to look up Brian Burke. Brian Burke was a staple on the BiggerPockets platform when I first started getting into it almost 10 years ago now, and he was a law enforcement officer, I believe in the Santa Rosa area. I don’t remember which police department. It doesn’t really matter.
But he left to become a full-time syndicator. I believe he runs Praxis Capital and he’s a very good investor and more importantly a good guy. Brian’s a person I look up to as a mentor. He’s someone that I go to and say, “Hey, tell me what you think about this,” or, “What do you think I should do different?” I really, really respect Brian and I’ve never heard a bad thing said about him by anybody on the platform. So if you guys are hearing Brian’s name for the first time, give him a call and say that David Greene said he’s an awesome dude and you want to follow him and also search for blogs he’s written or any books that he’s written on the BP platform. He’s a great template of how you can do it.
All right, getting to the rest of your question. “Maybe you get this all the time, but I feel like you would be an amazing guy to grab a beer with and rack your brain for an hour or so.” All right, I do get that all the time. Let me just address this right now. For one, I don’t drink. I never have. It’s not like I’m an alcoholic or I have a conviction against it. I just don’t think it’s a very good idea and I have enough vices in my life like food for one, which is a struggle for many of us all the time. But I don’t need to add more vices by getting into drinking. So for all the people that have offered me a drink or said to go grab a beer, just know I was not rejecting you. I was just rejecting that offer because I don’t drink. And thank you for that. As far as racking my brain, this is the best place to do it. That’s why we do these Seeing Greene episodes so that everybody can rack my brain all at one time.
And this now begs the question, what the heck does rack someone’s brain mean? You hear this a lot. It doesn’t make any logical sense. Does anyone know where this phrase rack your brain comes from? Now I’m worried more about that than I am the question. Let’s get back on the topic here. “I have been an avid follower of BiggerPockets for several months now and even read your book on out-of-state investing.” How funny, I mentioned that earlier. “I’m currently reading Brandon’s book on creative financing and I’d like to know if you have any tips for me. And my question is, do you ever meet with the people one-on-one to chat about real estate and mentor a newbie?” Great question here. This is actually something I get asked all the time, probably several times a day. Maybe more. I’ll get a DM or an email or someone saying, “Hey, will you be my mentor?”
So let’s take a minute to break this apart. First off, BiggerPockets itself functions as the best mentor you could ever have. I’m sure you already know that because you know a lot about me. You know that I like jujitsu, you know that I’m a former law enforcement. So clearly you’re already listening to BiggerPockets and anyone hearing this advice, you’re in the same boat. Otherwise you’re going to be hearing it. Just keep in mind that BiggerPockets was formed to be that mentor you never had. To give you a place to go ask questions like the forums. We write books so that you could go read them so that you wouldn’t have to talk to another human being because all their information is put into their book. This podcast was meant to feel like you’re part of a conversation between a real estate investor and another real estate investor, and you get to be the fly on the wall and listen to what they say.
Seeing Greene particularly is something where you can come in to ask questions just like this. So this is already a form of mentorship. Now, there’s another form of mentorship that goes deeper that’s really more like an apprenticeship. An apprenticeship is a situation where someone experienced and knowledgeable in a skill passes down their knowledge and their skills to someone else to develop that person so that they can then go make money. Now, in my opinion, an apprenticeship is the best way under God’s green earth, no pun intended for Seeing Greene, to learn anything. That’s what jujitsu is. You get this instructor who knows a lot that walks you through the techniques and tells you to move your foot here, move your hips this way, grab here instead of there, grab with this part of your hand and not that. There’s all these details that they have learned over years and years and years of doing it. That’s how martial arts are passed down.
It’s done through the apprenticeship model. Now, the apprenticeship model made sense when the person teaching the apprentice was going to get something out of it because the apprentice was then going to work for them. Now, you may have already understood this, John, but I think a lot of people don’t, and that’s why I’m getting into this at a deeper level. In today’s world, you’re not going to learn the martial art from the black belt so that you can then go teach in the school. Most people are not interested in working for the person that they’re teaching. So instead of compensating them with their labor in the future, they compensate them with money right now. This is why I pay 150 bucks a month to belong to the jujitsu gym. This is why people may pay for courses where someone’s going to teach them, hey, here is how you do what I do in the real estate space.
Now, BiggerPockets is this amazing paradise of awesomeness because very few things here cost money. This is why we do it. We’re giving free information because we have such a big reach that the company can still afford to keep the lights on just by the sheer volume of people that are there, the ads that they sell, stuff like that. But if you’re approaching someone and wanting to be a mentor that you don’t know, it’s very rare that someone’s going to say, “Yeah, I was hoping that I could take some time away from managing all the stuff I already have going on to teach a different person that I don’t know.” And so the odds of you getting a mentor from that approach probably aren’t that great. What I would recommend, what I do, what the successful people I know do is they are more clever than that.
So for instance, I’m going to be in Scottsdale hosting retreats where I’m teaching the people how to invest in real estate. That’s a great way to get to know me better. If you go to BP Con and you see me sitting down somewhere and you come sit down and hang out in the conversation, that’s a great way to get to know me better. If you have a friend of a friend and you end up … There’s a couple guys that literally joined my jujitsu gym just because they were like, “If I’m rolling with the guy, I have to be able to ask him questions.” That literally happens is they will come to me and try to talk about real estate in class. Now, I’m not saying I want a bunch of stalkers. That actually can become problematic. I’m giving you examples of how you can use your creative abilities to build a relationship with someone rather than just emailing them and saying, “Will you be my mentor?” And probably not getting a response.
Another way that I’ve seen that people can do really well is they will go make friends with the people that are in my company that I rely on. All right. So guys like Kyle Renke who’s my chief operating officer or Christian Bachelder who runs the One Brokerage with me. Krista Keller, my assistant. These people contact me every day and play a very big role in my life. If you make yourself valuable to them and one of them is like, “Dude, this person’s been super helpful. They sent us this thing, they gave us this connection, they provided us with this resource that I wouldn’t have been able to get this thing done without them.” You make my friends like you, you’re going to make me like you. So if you really, really want a mentor, you need to think about how you can get in their world.
When we interviewed Alex Hormozi, he said he spent … I don’t remember what it was. It was more than $100,000 to talk to Grant Cardone on the phone for an hour. And he did that several times. Now, he didn’t just get the information that Grant Cardone gave him. Alex got a relationship with Grant Cardone that turned into a friendship. I’ve seen people do this with other people like Ed Mylet where they will pay a lot of money to get coaching from that person, but in the process of coaching, they develop a relationship which turns into the mentorship that isn’t the apprenticeship model. So just this word mentor is … It’s used very ambiguously and I’m trying to become more specific. You’ve got an apprenticeship and then you’ve got a relationship and each of them have different paths to get there.
So if that’s what you’re looking for from me or from someone else that’s in this space, you’re going to have to think how do you set yourself apart from other people? I appreciate the offer to get me a beer, but that beer would cost me so much money if I had to take time away from the other stuff that’s going on, it wouldn’t make a ton of sense. Now you show up at BP Con, you donate money to a charity that I really like, you become friends with someone that I know, you end up at an event that I’m at and something comes up. Now you’re in a position where you can start to develop that relationship that I know so many people here are looking for. This is how I got ahead is I joined GoBundance and I met a lot of the people you guys have heard on the podcast.
I met David Osborne and Tim Rhode and Pat Hiban. I met Andrew Cushman, I met Hal Elrod who wrote The Miracle Morning and wrote the endorsement for Long Distance Real Estate Investing, which we mentioned here. And a whole lot more people that I haven’t mentioned. But I didn’t go up to them and say, can you teach me everything? I joined the group they were in, I sat next to them, I went and rode snowmobiles with them and went wakeboarding with them and jet skiing with them and listened to their problems and tried to help them through it and we developed a relationship through that bonding process. So hope that that helps. I see that you’re in Thousand Oaks, so I have a team in Southern California. If you would reach out to them, that would be a great way to get the ball rolling with getting deeper into my world. Thanks for the question.
All right, for those of you who have also been dying to know, our producer for the show, Eric, has done the heavy lifting and has found the meaning to rack your brain, which I am now going to share with you. The meaning is to think very hard to find an answer. If you rack your brain, you strain mentally to recall or to understand something. The rack was a medieval torture device where the victim was tied to the rack by his arms and legs, which were then practically torn from their bodies. It’s not surprising therefore, that rack soon became a verb meaning to cause pain. The word was used whenever something or someone was under particular stress and a huge variety of things were said to be racked. The first recorded use of this being specifically applied to brains is in William Beveridge’s sermon circa 1680. They rack their brains, they hazard their lives for it. Where else are you going to get this much real estate information, this much direct advice on finding a mentor and this much historical knowledge on the meaning of phrases like rack your brain than BiggerPockets? That alone should get us a like and a subscribe from you on YouTube and your favorite podcast app.
All right, our next question comes from Nathan Nye. Like Bill Nye the Science Guy. “Hi, this is Nathan from Michigan. Not an investor yet, but hoping to change that soon after listening to the podcast for around six months. Can’t say enough how much I appreciate BP. Truly life changing. Anyways, very curious how you all at BiggerPockets navigate the topic of validation. Many people, including myself at times, thrive on someone else telling them good job. But whenever I find myself locked in this mindset, the tie to someone else’s opinion feels unhealthy and almost takes control of my process. That said, I find it hard to tell myself you did it even with tasks or projects in my daily work. How do you tell yourself I’m doing very well, I’m proud of this, even if others are leagues ahead? How does this one conversation play out when millions are watching like on the podcast or even when you just know you know about an event happening? Would love to hear how you think about this topic. Thank you, Nathan.”
Wow. We are going deep here. This is a great question and I’m not even quite sure how I’m going to answer this. I should start off by saying you’re not the only person that feels this and I appreciate you having the courage to say it. Most of our listeners, me included, will struggle with wanting validation. In fact, I was just thinking about this the other day because there’s a trait in people that will irritate me and it’s usually some form of pride.
When people think that they’re better than other people, when they act like they’re better than me … In general, when anyone acts prideful it gets under my skin and almost every prideful person is insecure. So what I was thinking is when I see pride, what I typically want to do is try to humble that person. But the process of trying to humble somebody usually will hit on their insecurity and make their pain even worse. And this is the problem with insecurity, which shows up in pride, but it also shows up in the need for validation. Now, we’re all created and designed to need this. When we’re little kids, we need our parents to say good job. It’s like a wiring that we have inside us. At least this is how I look at it. That is made by either intelligent design or evolutionary biology, however, you tend to look at it, to keep you alive.
If your parent doesn’t tell you good job, you don’t know what to do and you won’t do the right things and then you’ll end up dying. In the same way that when your parent says you have to look both ways before you cross the street and if you don’t do it, they yell at you or they spank you. They’re telling you you did not do a good job. And because that is painful to lose their approval, you’re more likely to remember to look both ways before you cross the street and not be dead. The same thing if you eat your vegetables and they tell you very good job. They are training you to do a healthy thing that is hard and against your willpower. Sorry, against your nature, I should say. Against your will, not your willpower. That will serve you well in life so that they can keep you alive.
So this need for validation is tied to your desire to stay alive, and that’s why it’s so powerful. You can’t just get away, get around it. The key is you’ve got to put yourself around the right people so that they’re giving you the right feedback and not leading you down the wrong path, as well as to put yourself in a position where you’re not completely dependent on it because now we’re not little kids and so now this can become a pain. Sometimes when someone tells me good job for something, I’ll spend more time doing it when it’s not in alignment with my goals. Other time I will be making progress with my goals, but I’m not hearing good job. So this is difficult. Here’s a few things I can tell you right off the bat that will help you. Get yourself around other people that are committed to their goals, and it doesn’t have to be real estate.
Get yourself around other people that are committed to staying in the gym. Get yourself around other people that are committed to eating healthier foods. Get yourself around other people that are committed to having better marriages or being better parents or managing their wealth better. The first thing that you can do is when you start telling other people good job for what you did, it will silence the need you have inside yourself to hear it. I don’t know why it works like this, but it’s almost the equivalent of if you’re really hungry but you give someone else food, your hunger can go away and that will help. The other thing is they’re more likely to feed you if they’re being fed. This is just a philosophy I have in life. Don’t go around trying to find someone to be your friend. Go around looking for someone to be a friend to.
Don’t go around saying, “Why won’t anyone love me? Where do I find someone to love me? How do I make someone love me?” Go around and say, “How can I find someone to love? How do I meet other people’s needs?” Because the people that meet everyone else’s needs, the people that are a friend to others, the people that love others by the law of reciprocity will have that turn back to them. To me, that’s what faith is. It’s knowing if you do the right thing that your needs will be met rather than manipulating a situation to try to get your needs met by doing the wrong thing. It’s trusting that if you do the right thing, that things are going to work out for you and then having eyes to see where it did. So when it comes to being locked in this mindset that you talk about, the tie to someone else’s opinion that feels unhealthy and almost takes control of my process, one really helpful way you can get yourself out of that is to go look at what other people are needing, what other people are craving.
How many talented people do you know that are working a job they hate because they don’t have the confidence to get out of it? How many really awesome people do you know that are stuck in an unhealthy relationship that won’t leave it because there’s not anyone telling them that they can do better? How many people do you know that are not happy with their weight, but they’re just too insecure or shy to go running that you can say, “Hey, why don’t I start walking with you every morning? Then let’s start running together. Then let’s go to the gym together.” How many people do you know that are suffering from the same thing that you are suffering from right now, Nathan, that you can be that person to that you’re looking for for someone to be to you? Now, I don’t know exactly how that’s going to work out for you. I just know that it will.
If you focus on putting other people’s needs first and validating them in the way that they need, people will turn around and do it back to you and the universe or God or whatever you believe, intends to smile on that and push blessings your way. I know this was not the tactical advice that you were probably looking for, but I really hope that you would start taking some actions out of faith here and then either DM or email me and let me know if you’ve seen a positive impact from this advice. All right, we have time for one more question.

Seth:
Hey, David. Seth Stevens with Silverback Investments in Cape Girardeau, Missouri. We own a 12 unit apartment building for about a year at this point. It’s third party managed. We’ve been able to raise rents, but overall, the building doesn’t really seem to be doing a lot better than when we first purchased it. So my questions are how long should you give a property manager to turn a property around and what are some determining factors in deciding to switch property management companies? Thanks for taking questions.

David:
Steven, love it. This is a great question. All right, let’s dive into this. First question. I don’t think the right way to approach it is how much time should I give them to turn it around? I like to take almost every problem I have like what you have and turn it into the flow chart. Is it yes or no, if this, then that, right? So the first question I would ask at the very top is, is this something that can be turned around? If the answer is no, switching property management companies isn’t going to help you. If the answer is yes, now you ask the question, how long should I give them to turn it around as well as what progress am I seeing that they’re making? And then when it comes to the progress, now I’d ask the question of like, well, why are they not making progress? I’d work my way down that flow chart.
If it’s a 12 unit property and it’s not in a great area, it might not be the property manager’s fault. Okay. Now just think about your Phil Jackson. You’re the best coach that the NBA has ever seen. I don’t know who the best coach is. That’s debatable. Let’s just say you’re a very good coach and you’re given the worst players in the league to play with. All of your knowledge, all of your skills with people, all of your handling of personalities, all of your brilliant play calling is worthless if the guy on the floor can’t dribble the ball without turning it over or your players can’t shoot and they can’t score. What I’ve found is that the people that perform at the highest levels have to be surrounded by talent. It does not matter how good you are at anything if you’re not surrounded by talent.
Now, your property manager in this case, let’s call the talent, that might be your actual asset. How nice the units look, what kind of area it’s in. Are there other people that are moving into the area? Companies that are driving up wages and making so people can pay higher rents? Or is there a ton of competition and no one really wants to live in this apartment complex? It might not be the coach’s fault the team isn’t winning. Now, if you’re doing everything right and it’s an amazing unit and everybody wants to live there and you’re getting tons of applications and they’re just mismanaging it, yeah, you need to get another company and need to do it right now. There’s no more time to give them to turn it around. My guess is you’re probably not thinking about if you were in their situation, could you do anything different?
So before you assume it’s the property management company, always start with yourself. What kind of an asset did we give him? What could we be expecting him to do? There’s certain problems that I think anyone just with pure effort and having a good intention can fix. For instance, if they’re having plumbers come out to fix trivial issues and charging you $1,000 when they could be calling a handyman to pay 100, they’re being lazy. Get rid of them. If it’s the expenses are just completely out of control, that’s usually something that the property management has some control over. They’re being lazy. Get rid of them. If everyone that’s applying to live there is willing to pay 895 and you want to bump the rents up to 1200 and no one’s willing to pay it, there’s not much you can do. If tenants are constantly breaking their leases and it’s not just one or two, it’s all the time, well, that may be that they’re choosing the wrong tenants, but it also may be they don’t have much tenants to choose from.
Most of the time, if they have a lot of high qualified tenants, they’re going to pick the ones that are less likely to break the lease. So you’d have to ask some questions. I’d be asking when we have a vacancy, how many people apply for it? I would be saying, how much competition do we have from other units in the area and they should know that. If they don’t even know what their competition is, that’s not a good sign. You might want to move on from them. And then the last piece of advice I’d give you is before you go find another company … Because I feel like you’re moving that direction anyways. You’re just looking for some reason not to at this point. Is ask the company what they would do different than what you’re getting right now.
Okay. So let’s say that you had a house for sale and it wasn’t selling. You had a listing that was the very same scenario you’ve got. You’ve got an apartment complex, it’s not renting for enough. If you came to me as your real estate agent and said, “David, my house isn’t selling. What would you do to sell it?” I would tell you. I would be straightforward. And there’s a very good chance that it wouldn’t be the house’s fault, it’d be your fault. A lot of people list their house too high. They save on not wanting to spend for marketing. They let the house smell bad. They don’t want to have to move their stuff out of it so they’ve got outdated furniture or they’ve got moving boxes, they’ve got stuff that stops the house from showing well, they’re not wanting to actually keep the grass cut or keep it in good condition.
And if you came to me and said, “David, why is my house not selling and what would you do different?” I’d tell you what you don’t want to hear. I’d give you the truth. And I would also say, “I’m not going to drop my commission to make this work for you. You’re going to have to put the work into getting your house sold because my job is to get it sold and this is what it’s going to take.” I want a property management company that would say the same thing to me. “Okay, here’s the problem. You haven’t spent the money on the units that you need to. You’re not marketing it in the right places. The units are not in very good shape. The lighting is really poor and the tenants are going to feel scared coming here at night.” They should have objective information readily available to tell you of what they would do different. If they go, “Well, I don’t know. Let’s just get in here and see what we got. We’ll figure it out.” That’s not the person to hire.
You want them to have a plan going in where they can write out to you specifically, this is what we need to do different. These are the 10 steps we’re going to take if you hire us. If they didn’t have a plan in place, I wouldn’t switch to that company. Thank you for the question there though. I’m really sorry this is what you’re going through. I love it as you struggle with this, once you figure out what it was you needed to change, if you would go in the forums, quote the number to this show and tell people, hey, this was my problem and here’s what I figured out how to solve it.
All right, Thank you again everyone for taking the time to send us questions. This is a wrap to this episode of the Seeing Greene Podcast. As always, if you like these shows, please go to YouTube and leave us a comment letting us know what you like about it, why you like it, and what you want to see more of as well as leave us a review to let us know that you love the show. If you’d like to submit a question, please go to biggerpockets.com/david where you can do so there. And lastly, if you’ve got some more time, please consider checking out another BiggerPockets podcast. We’ve got more Seeing Greene, we’ve got more traditional real estate podcasts. We’ve got a whole library of information on BiggerPockets YouTube channel. We’ve got the State of the Market Podcast, The Rookie Podcast, The Money Show, the Business Show, the Investor Podcast, and probably more that I’m not remembering because there’s so many out there. So check out all of the BiggerPockets podcasts and find the one that resonates with you the most. Thank you very much for your attention and the time that we spent together. I will catch you on another.

Ashley:
This is Real Estate Rookie, episode 222.
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 bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey.
I want to start off today’s episode by shouting out some folks from the Rookie audience. We got another five star review. This one says, “I’m a small time real estate investor with one property, and I want to get to three to five. This podcast is amazing because they focus on the basics.”
So if you haven’t yet, leave us an honest rating and review on whatever podcast platform it is you’re listening to. The more reviews we get, the more folks we reach. The more folks we reach, the more folks we can help. And that is our ultimate goal.
So, with that out the way, Ashley Kehr, what’s up? What’s new? Tell me how things are.

Ashley:
Well, to be honest, today I’m going to use the Rookie Reply as my own confessional. I’ve had something just weigh me down on my shoulders and I just need to get it off my chest, and hopefully it will help some other people and everyone will realize that I am not perfect and bad things can happen. This bothered me so much, and I feel like I just need to get it out there in case it happens to someone else, that you know you’re not alone in this.
So at one point in time in the past year, I hired somebody to do my payables for the business.

Tony:
A bookkeeper.

Ashley:
Not even a bookkeeper, just paying the bills. So not even entering in any of the data, so just paying the bills. They would go and get my mail from the PO box. They would open the mail, they would scan in the mail, and I’d be able to look at it from there. And then they would write the check. They would bring the checks to my house that they wrote, have me look at them, compare them to the bill, sign them, and then they would make the envelope and mail them out.
So, first, I know you guys are all thinking that, “Well, why don’t you set all your things up on autodraft and automatic withdrawal?” Well, when you invest in small rural towns, sometimes there’s no online system. The only form of payment is walking into the place or mailing a check, unfortunately.
So there was things that would come in … or if a contractor, vendor, or something, something that’s an occasional occurrence, or the property tax bills, even the water bills. For in the small towns, the electric bills, they have their own utility company, and they only will mail out a bill and accept a check payment.
Anyways. So I got a letter in the mail about a month ago, and it said that my property taxes were not paid on one of my properties. In bold print across the top, foreclosure, property tax foreclosure, across … I seriously had a heart attack. At this moment I can’t even recall exactly what it said because all I did was panic inside. And it said: past due, nonpayment. These were due, I mean, like six months ago, that this happened.
And at the same exact date that I got that letter, I got an email from my bank that I have the loan with, saying, “Hey Ashley, just wondering what’s going on? This third-party company we check, to make sure things are paid on a property, said that the property taxes were not paid. What’s going on?”
Immediately, I felt embarrassment. I got sick to my stomach. I felt anger. What happened? So this person just did not do what they were supposed to do. So we went through the scanned documents, things like that. There was property taxes that were scanned in. Never paid. There was some that were never scanned in. Did she not get them? Things like that.
So I had to go through a lot of my accounts and just make sure everything was paid. Go through every property and pull up … And it ended up there was two properties that the property taxes were not paid for. Actually, no, I’m sorry, there was three. So one of them, what happened was that the property taxes were actually added to my next round of property taxes, and they were re-levied, they call it. So it was actually included into that bill. So they ended up being paid.
So what I did, was I went online to pay the property tax bill. And it says that they’re no longer accepting online payments. So I go into the town clerk in the small town and I go to pay the property tax bill. She’s like, “Oh no, I can only accept payments until June 30th.” And I was like, “Okay. How should I pay this?” And she goes, “Well, I don’t know. I’ve never been in this situation.” My embarrassment just overloaded even more. I’m like, “Oh my God.”

Tony:
“I’ve never had any bum landlords be this late on their property taxes.”

Ashley:
I know. And I was just like, “Okay. Yeah. I’m sorry, I’m not sure what to do. I was just asking for some guidance.” And she’s like, “Well, I guess I could Google it for you.” And this clerk is the one that you would write your check out to, to pay your property taxes. I just assumed they would know …

Tony:
Know what to do.

Ashley:
… what to do if someone’s paying late. So my embarrassment was awful. I had to work up the nerve to even go into it. I tried to make Darrell do it, but it would’ve had to wait another day until he was available because I didn’t want to walk in there. So it just got 10 times worse.
But what you ended up having to do was … she’s like, “You’ll have to go downtown Buffalo and you’ll have to pay it to the county now,” or whatever. So I got back in the car, I did my own Googling, and they actually accepted the payment online. So I didn’t even have to go into the clerk’s office, I could have paid it online. It was taken care of.
And then I learned that it’s actually two years of back taxes that you need before they will actually come and take your house and put it up for auction. But that was just a horrible, horrible feeling for me, is having that happen. So my biggest things that I learned, is that if you hire and outsource someone to do something … and I learned this with my property management company too … is that that doesn’t mean that you can forget about it. You need to still stay on top of things.
So that was my biggest takeaway from that. And if a bill is not paid, like your property taxes, it’s not the end of the world. But maybe I need to implement some kind of system, where I have a VA that’s going in and: check, check, check. Okay. All these property taxes are paid. Because if I don’t get a bill for something I don’t know to pay it. I can’t remember all of the property tax bills that should be coming in for my properties.
So if there’s anybody else out there who hired somebody that missed a payment, or maybe just forgot or something and missed a bill, I’m right there with you and felt the embarrassment.

Tony:
Yeah. Well, first, thank you for sharing, Ashley. I appreciate you sharing this super embarrassing story. I’m embarrassed for the both of us. I’m embarrassed that we’re even associated with one another now because I don’t want people to think that I don’t pay my property tax bills.
But, I guess, a couple questions. So, for me, I never have to worry about paying my property tax bills because my property taxes are impounded with my insurance payments for literally every single property. Is that not the case for your properties in New York?

Ashley:
So you have them in escrow?

Tony:
Yeah, all my payments are escrowed. Yeah.

Ashley:
Okay. So yeah, I have a lot of commercial lending on my properties, where they usually don’t require you to escrow your property taxes. So the nice thing about that is my monthly payment is low. Yes, I have to save up to make a payment, but a lot of my commercial loans, they don’t offer it or they don’t require it.

Tony:
Have you called to ask them if they would be able to do that on your behalf?

Ashley:
No, because I don’t know if I would actually want to. I mean, maybe now would be a good example. But I like that I’m just paying my insurance bill once. Because I have had it happen … this has actually happened twice now with a hard money lender … where I paid, at closing, for my insurance upfront, and they took the check and they were going to pay the insurance themselves, just for that one year, with the hard money lender.
I got notices stating that they have no record of the insurance, blah, blah, blah. So I’ve had a lot of issues with that recently. But I’m sure if they wanted to … I do have one commercial loan that has it in escrow, but that’s it.

Tony:
Yeah. For me, like you, there’s too many things going on, I think, for me to be able to keep track of that. So, for me, being able to escrow all that stuff has been super helpful.

Ashley:
Maybe that’s something I need to reevaluate going forward, is make sure that they are all escrowed. Yeah.

Tony:
Yeah. So my second question: did they send any notices before then about the nonpayment, and was this person who was in charge of that just not catching that? How do you think it went that far without it being brought to your attention?

Ashley:
So, actually, they would’ve received the bill a month before I let them go. So there was other things that were happening. So I had let them go, and then somebody else took over. And no, there was no bill received. This was the first notice that we got in the mail. And the bank had found out the same information at the same exact time. Which I thought was weird too.
But also, the next round of taxes for that property is coming up due now. So maybe they sent a notice before they re-levy it onto the next set of taxes for that property? So it’s like the school taxes are all coming up now. But yeah, I don’t know. But we thought that was really strange too, was that this was the first notice of it. And coming up too, is the big county auction for properties that they’ve taken for properties tax.

Tony:
So you’re like, “Oh no.”

Ashley:
I was like, “Oh my god, it’s going to be on the list. My LLC.” Oh my God, I was just sweating. People are probably Google satelliting the property, like, “Oh yeah, we want to bid on this one when it comes up to auction.”

Tony:
But luckily you avoided that.

Ashley:
Yeah. Yeah. Yeah.

Tony:
Crisis averted.
So I know you mentioned trust would verify, which I think is a big thing. And for folks, even if you just have one property, if you’re not doing everything yourself, I think there does have to be some kind of checks and balances in place to make sure that the things you’ve delegated to other people are actually getting done.
Just a quick backstory. So, for me, in my old W2 job, I was in a manager level position, so a lot of my information came secondhand from folks who were on my team. And obviously I had to trust them, that they were giving me the right stuff. But a lot of times I would just go back and I would just randomly pick different things that I would double-check, like if they were sending me data on how their shift perform for the last day, I would look at the email they sent me, but then I would just go into the system myself and pull some of that data to see if it all lined up.
So those little spot checks sometimes, I think, help catch some of those issues. And typically, what I’ve found, is that if you have someone that’s a low performing employee, if you find one mistake there’s probably some other mistakes in there as well. So it might be a telltale sign that there’s some other things you might want to dig into.

Ashley:
Yeah. And there’s probably things that are still going to come up from this too, I’m thinking.

Tony:
Yeah.

Ashley:
So we’ll see. But I had to get that off my chest. I had to do a real estate confessional of mistake.

Tony:
Yeah. And like you said, I think it’s helpful for the rookies to hear as well, because they hear our voice, they hear our stories every week. I know there’s this maybe misconception that things just always go right for us.

Ashley:
Yeah.

Tony:
But I shared my story about the Shreveport house that I lost money on. And things like this happen. As you’re building your business, things don’t always go right. So it’s not necessarily about maybe not letting those bad things happen, because sometimes it’s out of your control, but it’s about: how do you respond and how do you take those lessons and put them into your business so you can continue to get better?

Ashley:
And I think those are the people you want to have in your network too, who are open and honest about those things. While I was waiting for my kids to get off the bus today, I was on the phone with my friend Layka, who’s an investor in Seattle, and I was just telling her how some things were going wrong. We just found out this morning we have to put a new well on a property. And just every day there’s new costs, and it’s just like you’re moving money from the good properties to support the bad properties.

Tony:
Totally.

Ashley:
You never seem to have money because you’re always buying stuff.

Tony:
Buying stuff.

Ashley:
She’s like, “Yeah, you really get to enjoy real estate when you actually stop buying things and you just live off your rental income because you’re not putting it towards more properties.”
But she just rattled off all these things that are going wrong with her properties and then things that are going right with some. And it’s like, those are the investors you want to put yourself around, to share the good and the bad.

Tony:
I just want to share one thing that’s gone wrong in our business. So one of our cabins in Tennessee, summer is usually one of the busiest times of the year. Last summer we absolutely crushed it. And our second biggest cabin, there was a small leak, a little pinhole leak, that no one noticed. But we only started to notice because the floor was a little uneven and a floorboard started to pop up.
So our handyman went, he popped up the floorboard, and saw that it had just been leaking for who knows how long. So we had to cut out a big … I don’t know, like eight by eight square. And he replaced the subfloor and then put new flooring down. So this was two weeks ago.
We get a message from our cleaner on the same exact property, a few days ago, that they walk into that same lower level where we just replaced the floor and it’s soaked again. But this time it’s because the bathroom was clogged, the toilet in the bathroom down there was clogged, and literally re-damaged that whole section of floor that we just replaced.
So we had to block the calendar two weeks ago because of that first issue; we have to refund guests. And we have to do it again this week because of the second issue. So things that are totally out of our control. But like you said, it’s all-

Ashley:
And does that hurt getting super host, when you have to cancel people too?

Tony:
Yes, it definitely does. But if you have a cool guest and you just explain to them what happened, it’s like, “Hey, here’s what happened. You can stay if you want to. But just know this little section’s going to be unusable.” And if they cancel on their own, then you’re fine. But if they go to Airbnb and said I canceled on them, then automatically we would lose super host status.

Ashley:
Okay. I think that little tip is worth anyone listening to that episode because that’s great advice. Because my first thing was, wow, you had to cancel all these people. But no, you tell them what’s happening, and then you say, “I’ll give you a full refund if you choose to cancel,” so it’s on them. Ah, that’s a great idea.

Tony:
Yeah.

Ashley:
I mean, hopefully I don’t have any major …

Tony:
Yeah. Fingers crossed you never got to use that one.

Ashley:
Yeah. Yeah. Okay. Well, thank you guys so much for listening to my real estate confessional this week. We will be back on Wednesday with another Rookie Reply.
I am Ashley at WealthFromRentals, and he’s Tony at Tony J. Robinson. Don’t forget to check out our YouTube channel, Real Estate Rookie. And we’ll see you guys next time.

This article is presented by Arrived. Read our editorial guidelines for more information.

While real estate ownership has been one of the most consistent ways to build wealth in America, it has been notoriously difficult to access because of three main barriers: expertise, time, and money. 

First, investors will need the expertise to know what markets to invest in and which properties to buy at what price. Once an investor has the expertise, they need time to manage properties, tenants, and taxes. Last, investors need money to make a down payment, which can cost thousands, if not hundreds of thousands of dollars. 

Thankfully, fractional real estate investing has considerably lowered the barrier of entry by removing the above factors. In this article, we’ll cover what fractional real estate investing is and why you should consider adding it to your portfolio. 

What is Fractional Real Estate Investing?

Fractional real estate is an investment structure that allows you to buy a portion of a home or commercial property instead of the entire property. Think of it as a crowdfunding model: a group of real estate investors purchase shares of an apartment building, industrial complex, or a vacation rental, and split the costs and profits.

Fractional ownership is not a new investment strategy. You can now buy fractional pieces of many different asset classes, including stocks, classic cars, or million-dollar paintings. This fractional ownership model not only reduces the barriers for anybody to own these asset classes but also allows people to start small, diversify quickly, and see returns sooner. The same is true for fractional real estate investing. 

Until recently, buying commercial real estate, luxury vacation homes, or single-family dwellings in sought-after neighborhoods was only available to those with deep pockets. But companies like Arrived have created fractional ownership platforms, allowing individuals to reap the benefits of these long-term investments without the need to have the time, expertise, and money that have traditionally been required.

Top 5 Benefits of Fractional Real Estate Investing

Low barriers to entry

With fractional ownership, you don’t need large down payments or loans to enter the real estate market. You can purchase a share of the property for a small amount and add more as your available funds increase or diversify into multiple properties. 

Further, with a management company handling the property’s purchase and financing, you can confidently rely on their expertise and get started without the need for extensive research and learning. 

No operational headaches

Real estate investing isn’t always passive, especially when scouting for the right property or renting out single-family homes that require upkeep and repair. The rental income from a fractional real estate investment is genuinely passive because it requires no time or energy from you. It provides a reliable source of monthly passive income and capital appreciation without the need for you to manage and maintain the properties you own. 

Saves time

One of the best things about fractional real estate investing is that it allows you to earn rental income and potential appreciation with no significant time investment. 

That’s right! No more landlord responsibilities and headaches. The management company takes care of all the administrative tasks from selecting, purchasing, and renovating the home, to the day-to-day responsibilities like finding tenants, dealing with repairs, and managing expenses. 

Diversification

With fractional real estate investing, you don’t have to be a professional investor to gain exposure to the asset class. If you only have a set amount of capital to devote to real estate, you can break up those funds across multiple properties and geographies instead of having to sink it all into a single property. Furthermore, it allows you to invest across geographic locations and property types, amongst other factors, enabling a level of experimentation and risk management that is not possible with single-owner investments.

Distance is no longer a limiting factor

In the past, investors were mostly limited to properties in the markets close to where they lived. Otherwise, managing a property and dealing with its operational issues from a long distance would be a huge pain. 

Platforms like Arrived take on all responsibility for the operational tasks and have a local team available. This means that the investor can now pick investment properties in the market that yield the most favorable returns. 

Just think, you could own a piece of a single-family home in a desirable suburb with the best schools while also owning a piece of a vacation rental in one of the most popular tourist destinations!

Drawbacks of Fractional Real Estate Investing

While there are numerous advantages to the fractional investing model, we must also consider the drawbacks. First and foremost, since you are one of many investors in a property, you do not have control over the decision-making process.

Whether it’s something small like choosing the paint color for the walls or something big like selling the home. Second, you forfeit the ability to make tax-advantaged moves like a 1031 exchange. Third, while platforms provide access to fractional ownership across the nation, they must be compensated accordingly through fees. 

Is the Fractional Ownership Model Right For You?

The fractional ownership model provides access to new investors seeking exposure to the real estate market, as well as seasoned veterans looking to diversify their holdings across the nation. The decision as to whether or not the fractional ownership model is suitable for you depends on your particular situation, and you should not feel a sense of urgency since the asset class is known for its steady growth over the long term.

This article is presented by Arrived

Fractional real estate investing platforms allow anyone to invest in real estate easily, whether they are investing $100 or $100,000. Here at Arrived, we are proud to be a pioneer in this category, enabling anyone to buy shares of income-producing properties, including long-term and vacation rentals. Arrived will take care of all operations: finding tenants, dealing with maintenance requests, and everything in between so that investors can sit back and collect net rental income and their share of the home’s appreciation.

We have specifically designed our investment platform not only to make investing super simple but also focused on delivering maximum benefits to our investors. If you’re interested in learning more about our platform, check us out at ArrivedHomes.com

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

Dave:
Hello, everyone, and welcome to On The Market. I am your host, Dave Meyer. And today, we are going to talk about big news in the investing world. Basically, what happened at the Federal Reserve meeting last week. If you haven’t heard yet, they raised rates, but of course, that was pretty widely expected and was not the big news. But what did happen on top of that headline news was really important and gives us probably the clearest picture yet that we have seen over the last couple of months of where the Fed is intending to go.
I’m not sure if everyone listening to this knows this, but on top of just raising the federal funds rate, which they did, 75 basis points, they also have a press conference, which is really closely followed by investors and nerds like me. And they also release something called the Summary of Economic Projections, where the Fed actually tells you where they think the economy is going and what they’re intending to do about it. And not a lot of people look at that, which I think they should because the Federal Reserve, as we talk about on the show all the time, the Federal Reserve sets the rules for the entire investing world, not just real estate investing, but the stock market and bonds as well. And if the Federal Reserve is telling you what they think is going to happen and what they intend to do about it, you should probably pay attention.
But I know not everyone wants to read through that. So I did, and I will tell you what’s in there and give you some of my opinion and some other analysis about what this Fed announcement means for real estate investors because they have been raising rates for the last couple of months. But, to me, this meeting was probably the most impactful for the future of the housing market, let’s say the next six, 12, 18 months, than any of the other meetings. And I’ll tell you why about that in a minute, but that’s why we’re going to do this show today. That’s why we’re going to go deep into this topic. So you’re definitely going to want to stick around for this. But first, we are going to take a real quick break.
All right, let’s just start with the obvious here, which is about interest rates. Basically, the Fed raised the federal funds rate, which, again, I just want to make this clear that the federal funds rate and what they are raising is not mortgage rates. It’s not really even a interest rate that impacts any consumer directly. It’s actually a short term interest rates that banks use to lend to one another. And this is wonky, but it basically sets like the baseline interest rate. And then, every other interest rate, like the yields on bonds, or what you pay for a mortgage, or a car loan, or credit cards are all in some way based on this federal funds rate. It’s basically the lowest interest rate. And everything else from there goes up based on risk, and reward, and all sorts of things like that.
So what happened was the Fed raised this federal funds rate 75 basis points. And if you don’t want to know what a basis point is, it’s just a weird way of saying 0.01%. So when I say 75 basis points, that basically means 0.75%. So it went from 2.5 to 3.25, that’s 70… Excuse me, sorry. It went from… Yeah, did I say that right? It went from 2.5 to 3.25. That’s 75 basis points. And so, that’s where it is now. And the federal funds rate is actually a range. So now it sits between three and 3.25%.
Now, that, again, was kind of obvious. People actually thought there might be 100 basis point hike after the most recent inflation report because that was so much higher than people were expecting. But the Fed decided to pursue a more predictable course, I would say, and just did the 75 basis point hike. That’s what people were expecting. They typically want to do something that’s not super out of line with the market’s expectation, and that’s what they did. Not a lot of news there.
But in addition to this immediate hike, we now know that rates… And this is the important part. We now know that rates will likely climb higher in the coming months, and actually, into next year, into 2023. And you might be wondering, how do I know this? How do I know what’s going to happen with rates? Well, the Fed just tells us this. It’s not rocket science. I’m not looking into a crystal ball. And like I said at the top of the show, they release something called the summary of economic projections. And after every meeting, they do this. And it tells you they put out expectations for inflation and economic growth. But what we’re looking at today is really what their expectations are for monetary policy. Basically, where are they going to set the federal funds rate.
And to me, the most important part of this entire summary of economic projections, at least for what we’re talking about today, is known as the dot plot. And the dot plot is basically a poll for every Fed official who’s at these meetings, and it asks each individual person where they think interest rates should be over the next couple of years. So they have a vote and they say, “Where do you think interest rates are going to be in 2022, 2023, 2024, 2025?” And they put it all on a dot plot. But the dot plot is a little bit confusing. I think for our purposes here today, it’s actually just easier to look at the median expectation. So, instead of looking at each individual expectation of each Fed official, let’s just take the average of what Fed officials think is coming over the next couple of years. And basically, what that shows is that the people who make this decision, that the Fed officials are the people who decide where the federal funds rates go, and they expect it to go up to 4.4% by the end of 2022.
Now, remember, we just experienced our third 75 basis point hike in a row. And it’s saying that we are still going to go about 125 more basis points by the end of the year. So that could be another 75 point hike and then a 50 point hike. There’s two more meetings this year. So that’s probably what will happen. I think that’s the most likely scenario. So going up significantly more by the end of 2022. And then the Fed thinks it’s going even higher in 2023. The median there is 4.6%, so not much higher. It sounds like the Fed is thinking that what they’re going to do is raise rates aggressively through the end of the year, and then a little bit more in 2023, but not much more.
If you’re wondering around the out years, 2024 and 2025, they do have it coming down to somewhere around 4% in 2024, and then dropping all the way down to below 3% in 2025.
Now, no one knows what’s going to happen, right? If you watch the press conference with Jerome Powell, he basically said he doesn’t know what’s going to happen. So I don’t put a lot of stock in what’s going on in 2024 and 2025. There’s just too many variables. That’s basically the Fed saying they want to get back eventually to what they would call a neutral interest rate. When interest rates are super low like they’ve been for most of the last 10 years, that’s known as easy money. We are now entering a territory where it’s tight money, where it’s hard to borrow. But the Fed has this vague concept of neutral where it’s just like the right amount so there’s not inflation, but there’s economic growth. And that’s what they think the 2.75, 3% rate is. And so, that’s where they want to get to eventually. But I think we should take very seriously what is happening and what they’re saying they’re going to do for the rest of this year and into next year.
So I don’t know what’s going to happen. No one does. But the only data that we have is that the Fed says they’re going to raise rates for the rest of this year and a little bit next year. And I’m going to take their word for it personally. I think that’s going to happen. And higher rates have really big implications for the housing market. But I just want to say it is important to note that when I am saying in this episode, high rates, I’m actually really just speaking relatively. And what I mean is they’re high in a relative context. They are high compared to everything that we have seen since the Great Recession. Since the Great Recession for the vast majority of the last 12 years, the federal funds rate has been at zero, right? It’s been at zero.
So, yes, what if we have a Fed funds rate now at 3.25 like we do, that is low compared to where we were for most of the last century. But what matters here is that it’s a shock to the system. It is still low in a historical context. But if you go from zero to three really quickly like we have, this can be pretty shocking to the economy. And I do think we’re going to see some shocks through the economy. So that’s what happened with the federal funds rate.
The second thing I want to talk about is about mortgage rates because that’s what really is going to impact the housing market directly. And as I said, the federal funds rate is not the mortgage rate. And I just want to explain what that means. So the Fed funds rate, like I said, impacts things like bonds. And most particularly what we want to think about here is the yield on the 10-year treasury bond. This is basically a bond that the US government puts out and they pay an interest rate on it. And yields, when the Fed funds rate goes up, yields on these bonds tend to rise for a lot of reasons I’m not going to get into today, but just know that that happens.
And the reason I’m mentioning this is because mortgage rates are super closely tied to yields for the 10-year treasury. And so, we are seeing yields go up all year and that’s why mortgage rates are going up. So just know that, that they’re mostly tied to bonds. And what you want to look at, if you are trying to predict where mortgage rates are going to go, is that bonds are what matters here, not really the Fed fund rates.
So, my analysis of what’s going on and based on this analysis is that mortgage rates are probably going to go up over the next couple months. I wouldn’t be surprised, let’s say, if we see mortgage rates enter the low sevens over the next couple of months, but I’m not expecting rates to just keep going up linearly. We’ve seen this really aggressive rise in mortgage rates, but I think that is going to slow down even despite this news that the Fed is going to raise rates into 2023. There are actually some analysts who thinks mortgage rates, even with this news, are going to go down next year. And let me explain why.
First and foremost, mortgage lenders, they are forward looking. It’s not like they’re sitting around being like, “Oh, the Fed is probably going to keep raising rates all of 2022, but I’m going to keep my mortgage rates that are dependent on bond yields, and everything else. I’m going to keep them low and wait to see what the Fed does.” No, that is absolutely not what they would do. That is too risky. It’s just bad business. And so, what they do is they base their mortgage rates based on where they think interest rates for bond yield, and the federal fund rates are going to be several years down the load. They want to be able to make money even when the Fed raises rates into the future.
And so, they have been pricing these Fed raises into mortgage rates all year. That’s why mortgage rates went up starting in June. They didn’t wait for the two 75 basis points hikes since we’ve had since June. They went up past six or near six back in June. And now, starting a couple months ago, in August, we were starting to see rates go up again. And that’s because people were anticipating what happened in this fed meeting. So it’s not like all of a sudden the Fed announces that they’re raising rates and mortgage brokers are like, “Oh, damn. We got to catch up. We got to raise rates.” They’ve already done this. They already did it. And so, now they’re, of course, going to adjust a little bit. Yields and bonds are going to adjust based on what the Fed said, but they have already been thinking about this and the adjustments are going to be smaller. And in these times of uncertainty, mortgage brokers are going to err on the side of caution and make rates go higher to cover their basis. They want to make sure that they have good rates even if the Fed keeps raising rates even higher and higher.
The second reason that I think that mortgage rates are not going to just keep skyrocketing is based on what I said before about the 10-year treasury. They are very, very closely correlated. For any other stats nurse out there, the correlation is near one. It is 0.98 from my analysis. So that just means, if you’re wondering what that means, is when one goes up, the other goes up, when one goes down, the other goes down. They’re very tied. They move in lockstep.
But, usually, in normal times, for the last 70 years or so, the spread between yields and mortgage rates, so the yield on a 10-year treasury and the mortgage rate is about 170 basis points or 1.7%. So mortgage rates are always higher than the bond yield. And the reason the spread exists is based on a bank’s business. If you are a bank and you have millions or billions of dollars to lend, you have to decide how to lend it to people. You can lend it to me as a home buyer or you can also lend it to the US government in the form of a bond. After all, that is what a bond is. You’re basically lending the US government money and they are going to pay you back with interest.
And so, if the bank is saying, “Hey, yields on the 20-year treasury are going up, so I can earn nearly 4% on a trend year treasury.” And the government bond is considered by pretty much everyone the safest investment in the entire world. The US government always pays them. They’ve never defaulted. They always pay. And so, it’s considered the safest investment. So if you go to a bank and you’re like, “Hey, you can earn 4% with virtually no risk,” the bank is like, “Yeah, that’s pretty good.” So then when I go and ask for a mortgage and I’m like, “Hey, can I get a mortgage?” They’re not going to lend to me at 4% because I’m not as credit worthy as the US government. So they’re going to charge a premium to me because even though I pay my mortgage every single month, I as an individual homeowner is, unfortunately, a bit less credit worthy than the US government. And so, they charge a premium. And that premium is usually 1.7%. So if a bond yield is about 4%, mortgage rate is about 1.7%.
But I did some analysis, and what’s going on right now is that the spread is actually higher than it is normally. It’s at 232 basis points, so about 2.3%. It’s normally at 1.7%. And that is because there’s all this uncertainty. We don’t know what’s going on with the Fed. We don’t know what’s going on with inflation. Are we in a recession? What’s going to happen? So, mortgage lenders, like I said, are bringing extra causes and they’re increasing the spread between mortgages and bond yields. And that’s probably going to stick around for a little while. But if the Fed holds their line and does what they say they’re going to do and inflation does start to come down, I think people will start to feel a little bit more comfortable. And the spread between bond yields and mortgages might start to come down.
Of course, bond yields could keep going up a lot more, but again, bond yields have largely priced in these Fed decisions. So those two things make me feel that, although I do expect rates to go up, they’re not going to go up like crazy because we could have some reversion to the mean with the spread between bonds and mortgages. And a lot of this has already been priced in for months.
That is why Mark Zandi… You may have heard of him. He works for Moody’s Analytics. He’s one of the most prominent economists in the world. And he expects, even after this week’s news, he expects the average rate for a 30-year fixed rate mortgage to be 5.5% in 2023. He actually thinks it’s going to come down. So that might happen. I don’t really know. I’m not an expert in bond yields. I’m not an expert in mortgage prices, but I do think these two things do suggest that, although they probably will go up, again, I wouldn’t be surprised if we get into the sevens, that we are probably not going to see this linear mortgage rate growth like we’ve seen over the first three quarters of this year continue throughout this year and into 2023.
Okay. So far we’ve talked about interest rates, mortgage rates. Now, let’s talk about the Feds focus because this, to me, was really telling what happened in the press conference afterwards. And nerds like me, economic reporters, finance people, all love the press conference because Jerome Powell, he gets up there, he reads some carefully prepared statement, and it’s all like a game. The Fed has an enormous responsibility in the world. They dictate so much of financial markets and economies, and they’re very careful about what they say. People count how many times he says recession. Or back when they were saying calling inflation transitory, they would count how many times he said transitory to try and understand what’s going to happen next. So people make this huge game out of it. It’s kind of ridiculous.
But the reason I think this it’s important to note right now is because the press conference yesterday, or two days ago… And again, this will come out a week from now, so you’ll hear this a week after, but I’m recording this two days after this news came out. Jerome Powell, he was pretty darn clear about what he is expecting, clearer than he usually is. And I think he said some things that were really noteworthy that tell us the Fed’s intention and where they’re going to go.
So, during the press conference, a Washington Post reporter, named Rachel Siegel, pointed out to Powell that the Fed’s own summary of economic projections… Remember, that’s that data that they just give out when they meet. They are predicting now that unemployment over the next two years is going to rise to 4.4%. And that is a rate at which typically brings about a recession. Remember, we are not technically in a recession. By many people’s definition of a recession, we are, but the National Bureau of Economic Research has not officially declared us in a recession yet. But this reporter was pointing out to Jerome Powell that the Fed is basically predicting a recession.
Here’s what the chairman said back. And I’m going to paraphrase briefly here, but he said, “We have always understood that restoring price stability,” which as an aside just means reducing inflation. So he says, “We have always understood that restoring price stability while achieving a relatively modest increase in unemployment and a soft landing would be very challenging. And we don’t know, no one knows whether this process will lead to a recession, or if so, how significant that recession would be.”
And I know that’s a lot of mumbo jumbo, but basically, what the Fed chairman, the guy in charge of the economy just said is, “We think that controlling inflation is going to bring about at least modest increases in unemployment and no one knows if it’s going to bring about a recession or how bad the recession would be.” He’s basically saying we need to bring down inflation and we don’t care if unemployment goes up a bit, and we don’t care if it goes into a recession because inflation is such a problem that we have to pursue this.
Now, today, I don’t want to get into a debate whether inflation or recession is more important. Everyone has their own opinion about that. I’m just want to tell you what he’s saying and my interpretation of that. So that’s basically what he’s saying is like, “We’re going for it. We’re sending it. We’re going to keep raising rates. Recession be damned. Rising unemployment be damned.” But I do think it is important to note that he was basically saying if unemployment starts to get really bad, that’s when they would back off. But 4.4%, which is a pretty good increase from where we are today, they are comfortable with that. So, no one knows, but that’s basically what they said.
As it relates to housing and the need for the housing market to cool off, Jerome Powell stated, and I quote, “What we need is supply and demand to get better aligned so that housing prices will go up at a reasonable level, at a reasonable pace, and that people can afford houses again. And I think we probably, in the housing market, have to go through a correction to get back to that price.” Okay. What does that mean? It means Gerald Powell is planning on a housing correction. And personally, I think that’s what they want. A big part of inflation has been shelter inflation, both in terms of rents and housing prices. And I think Powell and the Fed know that to get inflation under control, they need housing to go down. So he’s basically saying, “Yeah, I know. Housing market is probably going to cool and probably going to go negative at some point on a national basis, and we’re cool with that.” Basically, all told, the Fed is saying, “Yes, we are willing to risk a recession. Yes, we are willing to risk job losses. And yes, we are willing to see housing market correction in order to bring down inflation.”
If you just read the transcript and I recommend you do, we can put a link to it here, he wants this. This is how you bring down inflation, is you get prices to come down and you get people to stop spending money. So he wants a recession. He wants job losses. He wants a cooler housing market because that would bring inflation under control. Of course, the Fed could change their mind, but this press conference, he said, in very clear terms, that they’re going to hold the line inflation. They’re going to keep rates high there probably, even going to raise rates, even if this is going to cause all the things that I just said.
So that’s my interpretation of Jerome Powell’s speech, is he was not pulling any punches. He is not messing around. He is telling us all in very clear terms what to expect. And, to me, that is high rates, housing market cooling significantly, probably going negative in a lot of markets, not every market, but in a lot of markets. We’re probably going to see unemployment go up. And we are probably going to see a recession officially, even though we’re not officially in one yet.
All in all, everything we’ve talked about today, basically, why I wanted to make this show and why I think this is so significant is because over the course of this year, over the course of 2022, many investors have been hoping for a Fed “pivot.” And basically, a lot of investors had this theory that the Fed would raise rates up to a point where it would slow things down. The housing market would cool like it has been. Companies would probably be hiring less and things would start to cool off. But they wouldn’t risk a deep recession, or a lot of job losses, or huge crash in the housing market, and they would keep it around two and a half, 3% sort of that neutral Fed funds rate that I was talking about.
But, to me, this press conference just completely kills that theory about a pivot. The Fed is extremely careful. And they are very deliberate about what they say. And if they were keeping their options open for a pivot, they wouldn’t have said the stuff that Jerome Powell said yesterday. The data it shares, everything they said right now is that they’re going to stay aggressive in the fight against deflation even if it causes economic pain elsewhere in the economy. And that is what we should expect.
The most notable implication of all this is for housing prices. And we all know by now that as rates have risen over the last couple of months, demand in the housing market is starting to drop off, and prices, that is putting downward pressure on prices. We’ve talked about that a lot in the shows. Most recently, we are seeing a lot of West coast markets start to decline. Most haven’t yet, as of this recording, this is the end of September, have not yet declined year-over-year, but a few, San Francisco and San Jose, have. And that’s where we are.
That’s said, I think, over the course of this year, the housing market has actually held up surprisingly well to downward pressure. We’ve seen rates double. Yeah, we’re seeing prices come off their June highs and their down month-over-month, but year-over-year, almost every major market is up. And that is what I thought. The [inaudible 00:25:39] market is resilient. There are a lot of reasons, fundamental reasons why the housing market is resilient, even in the face of the rising rates that we’ve seen so far.
But now, knowing that a mortgage rates are going to stay high for the foreseeable future is going to be a much bigger test than what we’ve seen so far. Because, if there was a pivot and rates peaked and people could get adjusted to that and maybe come down a little bit, then the housing market, I think it was probably going to hold up pretty well and you could maybe have a decent year in 2023. But now, I mean if you were going to have a year and a half of mortgage rates above five and a half, maybe up to 7%, to me, that is going to put a lot more housing markets at risk for declines. And so, I think everyone needs to keep that in mind. 2023, right now, at least on a national level, is looking like a flat year at best, and is more likely a down year, even on a national level, is what I’m starting to think, by next summer. I don’t think it’s going to come in the next couple months, but I don’t know, I really don’t. These are just my musings that I’m sharing with you right now.
And the reason I say this is just because affordability in the housing market it’s just too low. We did a whole episode if you haven’t listened to that about affordability, but it’s at 40 year lows. That means it’s harder right now for the average American to buy the average priced home than it has been since the ’80s. And that’s not sustainable in my mind. And there’s basically two ways that we could improve affordability. One is rates start to come down because that makes homes more affordable. But we just got told that rates aren’t coming down. And so, the only other way for homes to become more affordable, other than massive wage growth, which we are not going to see, is that housing prices start to come down and make homes more affordable. And so, that’s why I think there’s going to be this sustained downward pressure on the housing market.
And I want to be clear that even given all of this news, I still do not think we are heading for a crash. And I define that as a declines at a national level of more than 20%. I don’t think that is going to happen. The credit quality is still good. Inventory is actually starting to level off. People who know more about this than I do, professional forecasters, think that, really, the downside, the biggest downside is somewhere around 10%, as in on a national level. We don’t know if that’s what’s going to happen, but it is worth noting that that’s what a lot of experts and people who forecast this stuff think.
The second implication other than housing prices is rent growth. And I think, if we do see a recession, if we see job loss, those things, combined with inflation are probably going to lessen demand for apartments. You see in these types of adverse economic conditions, people move in with their friends and their family, and that’s known as like household drop declining. The total number of households people occupy a housing unit could go down, and that lessens demand.
It’s worth noting that rent is pretty stable. It doesn’t really fall that much even during a recession, but I think rank growth is really going to start to come down. It already has in August. It was at 11% year-over-year, which is still really insane, but way lower than it’s been over the last couple of years. So I think that trend is going to continue.
And then, the third thing is that we could see increase foreclosures and evictions, but we’re still a good way off from that, right? If there’s a recession, we don’t know if it’s going to be a bad one. We don’t know what is entailed in that. And right now, the data shows that homeowners are paying their mortgages, renters are paying their rent. And so, I’m not immediately concerned about that, but it’s obviously something we’ll keep an eye on over the course of the next year to make sure that if we see something that changes, I will certainly let you know.
So, that’s what I got for you today. I just want to say that I personally am still investing. I do think that there are opportunities that are going to come over the next couple of months. We’re going to be working on some more shows about how to invest in 2023, different strategies that are going to work, different strategies to avoid, opportunities that might present themselves. So definitely stay tuned for that. We’re going to have a lot more 2023 planning content on this podcast over the next couple of months, but that’s what I have for you today. Hopefully, you guys understand this.
If you’re interested in this, I do recommend at least watch the press conference with Jerome Powell and see what he was talking about. You can look at the summary of economic projections and look at some of the data that the Fed is sharing with you. These are things that you should know if you’re an investor, if you’re risking large amounts of your money and the Fed is this active and they have so much control over what happens. If you were me, I would learn as much as I can.
Thank you all so much for listening. I really appreciate it. If you want to give me any feedback about this show, have any thoughts, you can do that on Instagram where I’m at, thedatadeli. If not, appreciate you all being here. I’ll see you next time.
On The Market is Created by me, Dave Meyer and Kalin Bennett. Produced by Kalin Bennett, editing by Joel Esparza and Onyx Media. Copywriting by Nate Weintraub. And a very special 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.

David:
This is the BiggerPockets podcast, show 668.

Zasha:
I feel like educating people on what exactly it is we do as real estate investors is very important. We’re not out there buying deals for really low price points and then reselling it for really high without doing any work in between. A lot of times people don’t know we buy homes that are incomplete distress. They might have abandoned cars in the front, people might be in some financial situation that they can’t get out of, and we are providing different solution.

David:
What is going on everyone? This is David Greene, your host of the BiggerPockets Real Estate podcast. Here today with my co-host Rob Abasolo. If I sound a little different, you’re not crazy. Today I’m recording from Scottsdale, so I don’t have my normal audio and video equipment. I’m here in the casita of the house that Rob and I built because I freaking love this place and love being in the area. We’re recording the podcast. I’m in Scottsdale. Rob’s at his normal place, but we’re going to have to keep this intro short because somebody has to go to Austin, Texas with his wife because they’re lazy and don’t want to work.

Rob:
That’s true. Listen, listen, we have two children. They’re one in two and a half and we have never vacated. I think that’s how you can, we’ve never vacationed away from them ever. This is going to be our first. We’re going to leave tonight, leave Thursday, we’re going to be back on Friday. We’re scared. We have faith in my parents to pull this off, but to be honest, I’ve been sweating bullets thinking about it, but it’s going to be okay because I’m going to try to relax, which is something I never do.

David:
Today we have an awesome episode for you. We bring in Zasha Smith who is investwithzasha on Instagram. Sort of has a little connection to Brian and Turner out there in Maui. She’s a Maui investor and you want to make sure you listen all the way to the end, because we tell a very funny story of how Zasha took a deal right out of Brandon’s grasp. Recently I’ve become addicted to these horrible short videos on Instagram, which might also be on TikTok of crazy animals in Africa doing insane things. You’ll see like a lion come steal food away from a hyena or a crocodile, take food out of another crocodile’s mouth. And that was what reminded me of with this deal that Zasha talks about, is that Brandon thought that he had it and then boom, at the last minute she got it and she tells us exactly how so you can do it too.
Zasha is passionate about giving back while building wealth, and I love it because she doesn’t have it’s me or you. I have to get ahead or I can help you get ahead. She’s getting ahead while helping others and she does it in several ways. She does it by providing affordable housing to her local community. She does it by providing mentorship and knowledge through the partnerships she’s in and the masterminds that she attends. And she often approaches how to put a deal together in a way that works for everybody with a lot of integrity. If you’re somebody with a strong conscious that wants to find financial freedom, but you worry that doing that is going to make you a bad person, today is a fantastic show for how you can put that to ease and see a path that you can take that helps other people while helping yourself. Rob, what were your favorite parts of today’s show?

Rob:
Well, typically I would add in how the community aspect was great and how she’s questioned it on the content. But my wife did just text me and she said, don’t dilly-dally, you have to pack. I’m just going to say everything that you said was actually my favorite part. It was really nice to honestly legitimately hear the human side of real estate. I think that’s something that is very important for people to learn. Again, we’re all chasing cash flow. We all want that, but she really tells a story about how it’s like human first, right? Be personal with people and treat them like people. And if you do that, you can have really great success in this field.

David:
I want to get a t-shirt made that says chase excellence, not cash flow. The cash flow will follow.

Rob:
How about don’t dilly-dally, chase excellence. We’ll workshop it.

David:
I was actually going to make a reference to your use of dilly-dally, because it’s equally parts impressive and embarrassing that you were able to work that into show. Rob the 28 year old guy going on 77 every time we record. Before we bring in Zasha, today’s quick tip is, consider making real estate your job. There’s so many ways that you can make money in real estate other than just owning it and getting cash flow. You can flip houses, you can work for somebody else. Zasha has an acquisition manager that works for her, who is the hero in the deal that she took from Brandon. You can be a real estate agent, a loan officer, a title officer, a construction person, a bookkeeper. There are so many ways that you can make a living through real estate and the reason that I’m advising you to do it is you want the life that rob lives.
You want to be able to get in a car with your wife and take off to Austin and go to other places and not be thinking the whole time, oh my gosh, I’m using all my PTO. This trip is costing so much money, we can’t stop and get corn nuts on the way because we’re spending all of our money in gas. What you want to be thinking is, I’m going to take a trip and on this trip I’m going to make more money in real estate than I spent to go on it, so I get paid to take a trip. Real estate offers that flexibility.

Rob:
I don’t want brag, okay? I’ve tried to be as humble as I can here, but we are actually taking a bus to Austin, Texas. It’s Vonlane and apparently it’s nice, I don’t know.

David:
I gave you too much credit by saying this.

Rob:
Well you said we’re getting in the car and going. We’re actually taking a bus that apparently serves food and drink. I don’t know, I’ve never heard of it before, but should be fun.

David:
Just want to remind you, ask yourself the question, how can you make an impact as you build your wealth? It makes the journey a lot more fun as well as satisfying in the end. All right, enough of listening to me yak. Let’s bring in Zasha. And Zasha Smith, welcome to the BiggerPockets podcast. This has been a long time coming, so glad to have you today.

Zasha:
Aloha, everybody.

Rob:
Aloha.

David:
For those of you who don’t know, you can follow Zasha on Instagram at, is it investwithzasha? Is that the handle?

Zasha:
Yeah.

David:
Zasha and I have been aware of each other through online things. I think we met briefly in Maui one time and now we get to have her on the show. Zasha, can you tell us how you got started in real estate?

Zasha:
Well, I feel like I’m just the average person who was working there, W2. I had been working as a civil engineer for 10 years and I was working 60 to 70 hour weeks, going in on Saturdays. I seen my boss going in on Sundays and thought to myself, this is going to be my life. I’m now going to be working seven days a week on a 40 hour a week salary. I wanted a change. And so I basically started Googling something silly like, how to get rich and quit your job or what is the top way to build wealth? I found out that majority of the people that had been coming up had some sort of stake in real estate.
And so from there I stumbled upon BiggerPockets, started listening to the podcast, going on the website, connecting with other investors, started attending meetups and really gained that confidence to know that I could buy a rental property, because I live in Maui, Hawaii where the medium home price is over a million dollars. I never thought of owning anything else but my own home. And so that opened up my mind to see that there were other ways to buy these properties. I didn’t just have to qualify using my job or using my income, there are other ways to leverage debt. And so from there I just started buying properties.

Rob:
Okay, that’s awesome. Can you tell us a little bit about what your portfolio looks like today and then just a little bit of that trajectory over time as well?

Zasha:
Right now I have 10 rentals. I have nine long term and one short term, all here on Maui. It averages about $10,000 a month. It’s not $1,000 each property. My short term rental brings in about 3,500 to 4,000 a month, which basically makes up my nine other long term rentals net cash flow, which that ranges between 500 to 1,000 depending on the type of loan that I have on those rentals. And then I also do a lot of fixed and flip. So right now I have six projects going on. One is here on Maui, there’s one on another island, and then the rest are between Arizona, Georgia, Florida. I’ve been partnering as a way to scale the flipping business and have that active income versus trying to do everything myself. In the beginning I think I was a typical investor who was very hands on.
I was working my W2. I bought my first flip, which is a condo here in Maui and I was just using logic at that point. I found it on the MLS, it was listed at 300. I think I was using Zillow at that point. Contacted a realtor who was also an investor and said, hey, what are things selling for in this area? And he said, well, there’s a comp that just sold for 450. So I thought to myself, well, it can’t be that much of a difference between what it takes to fix it up and actually make money. And so that’s my indirect way of getting into real estate without overthinking it. Because I think a lot of first time investors get into that analysis paralysis. But for me it was just thinking logically and then taking action and using the resources that I already had in my circle and basically using the MLS which is available to everyone if you have access to the internet as far as Zillow, Redfin, and those other public sites.
And then from there I bought my first rental. I inherited a tenant, but initially I think it was cash flowing net 300. I bought that also off the MLS, used a conventional loan, and went through the process of trying to find them another place, trying to raise the rent, did it on my own, self managed. I found it to be very rewarding in the end because I was willing to work with them until they were able to qualify for affordable housing and buy a house of their own, versus just kicking them out from the start, giving them the 45 day notice. Even though I now cash flow between eight to $900 a month, it was more so helping these people get to the next step as well.

Rob:
That’s amazing. Can you remind us just for reference, when was that very first deal? How long ago was that?

Zasha:
It was in 2019.

Rob:
Oh wow. So really you’ve built a great portfolio in a few years here. And that very first deal that you were talking about, that was a flip, is that the one that you sold and then you went into a long term rental?

Zasha:
Yes.

Rob:
Awesome. I think this is the question, right? Everyone always says, how do I get started? When you’re getting into your flip, obviously as someone that, you were saying you were going based on the logic and you’re like, all right, it shouldn’t cost that much more to fix it and then make a profit here. Was this all self-funded, getting started? How did you actually get into that very first deal?

Zasha:
That was also used, and this is not advice for anybody getting started, using a conventional loan. I had no idea that you couldn’t use it to flip properties. I qualified-

Rob:
Okay, got it.

Zasha:
… using a conventional loan and then used my own funds for the rehab. It was about 30 grand. That was manageable for us. I was the typical person going to Lowe’s on my lunch break, meeting contractors after work, paying them cash, just doing all the things they tell you not to do. If you’re getting started, definitely look into hard money or private money or something else, because after that point moving forward, when we sold the condo, my lender was like, hey, you said this is going to be a rental? And I was like, yeah, that was the initial plan. However, we pivoted into selling it short term and after that he didn’t give me any more loans.

David:
Well, that’s okay, we’re here for you if that’s what you need. I guess because people don’t realize this, but if you buy a house with a loan or you refinance a house, sorry, if you sell a house that was bought within six months of getting the loan, the lender has to pay back all of the money that they made, but they don’t get compensated for all the time that they put into it. So that’s why people can get a little salty if you end up selling a house or refinancing within the six month timeframe. Little quick tip for everybody out there who may wonder, why did my lender ghost me and get so mad? I don’t understand, I made the right move. They don’t ever want to tell you that, but that’s should what it is.
I am fascinated by an element of your story, Zasha, where you hear everyone talk about wanting to do what you’re doing. There’s people that listen to podcasts, there’s people that see this online, they follow the people taking the action, but they don’t actually get out there and do it. What was it about your personal story that gave you the drive to take action where other people think about it and talk about it but they don’t be about it?

Zasha:
Definitely I think growing up in low income housing and just having that perseverance throughout my life to look for something better, look for a way to give back or help people that were in my position helps to drive me to get to that next level. And so even while I was working my W2, I always thought about what it would be like to have more. I’m getting into this engineering job to be able to live in an expensive market, but is that the only reason why I’m working? Is it to build wealth for my family but have no time with them? I was trying to find that balance or that median in order to be able to basically live a life of perseverance and make an impact at the end of the day. And whether that be to my family or my community, I was trying to find that way to pivot into that from the engineering job.

Rob:
Well first of all, I guess I want some clarity here. Are you still working your W2 job? Are you still in the field of engineering?

Zasha:
After I bought my first flip and my first rental in 2019, at the end I ended up joining a mentorship and then quit right away in January of 2020, right before the pandemic. I don’t know if it was universal timing that said, hey, I’m going to give you the hardest year to try to get into investing and you’re going to run with it or you’re going to fail. It was definitely a challenge getting started. In 2020 I had bought my first multifamily and my whole goal was to wholetail it. I ended up having to pivot because the person who was going to buy it, he shut down his office. He was going to buy it, he was a doctor and going to use it for his nursing staff.
And so during the pandemic shut down and I was forced to keep it. However, that’s one of my best deals yet. I’m cash flowing probably about almost $4,000, and it’s a fourplex. Majority of the people who live there have Section 8 HUD or some sort of rental assistance. It’s a very fulfilling property to have as well. And every time I go past it, I just am happy that I learned to have different exit strategies. So quick tip for everyone, if you’re getting started or if you’re looking at a deal, always look for multiple exit strategies that you could use just in case one doesn’t work out.

Rob:
You mentioned it’s a fulfilling property. Why is that?

Zasha:
I feel like it’s come full circle. Because I came from low income housing, I’m now able to help these people who have low income or maybe fell on hard times and are accepting assistance, because it does take a little extra paperwork working with government offices. And on my part, sometimes I have to wait till the fifth or the 10th of the month to get paid. You have to be willing to wait a little bit longer and put in a little bit extra work to work with these affordable rental assistance programs.

Rob:
Is this something that you, because obviously it relates back to your upbringing and everything on that kind of stuff. Is this Section 8 component of real estate, is this your way of giving back? Is that a big driver for you? Is it something that’s very familiar to you and you want to help others in the way that you were helped when you were growing up? Tell us a little bit about that, because I think it’s really important. I think it sounds like there is purpose behind your story and I’d love to hear that, because I think a lot of us will lose sight of why we’re even doing this in the first place.

Zasha:
When I was growing up in the low income housing, it just taught me very much to be humble, but also to strive for a better life. I know things happen to people in their lives, whether it be death, whether it be some sort of health condition that falls upon them or they get fired from their job and now they don’t have any income. I understand how it can happen to people. And people always are asking me, what do you do to prevent yourself from, I’ve heard all this bad things about Section 8 that they’ll trash your house? I say, they’re like any other renter, you have to vet them. So run your background checks with them, check their credit score, talk to their current employers and previous employers and same for their landlords. If you vet your tenants correctly, then everything should fall in place.
Of course it’s not a hundred proof, but at the same time give them a chance like everyone else and vet them but also stick to your standards. One thing that I do differently with my tenants on Section 8, is I let them know, hey, I understand where you’re coming from. This is my property. If anything happens to it, it directly affects my family. I am hoping that we’ve built enough rapport with each other that you understand where I’m coming from. I’m going to be a great landlord to you if you be a great tenant to me. We’re working together on this. So it’s more so of us working together that will help them sustain a place to live.
Because a lot of people here don’t accept Section 8 and it’s for that exact reason, is they’re worried about drugs, they’re worried about nonpayment, they’re worried about them trashing the home and everything like that. But I don’t look at that first, I look at that after I vet a few of them.

David:
A lot of us came from backgrounds where we didn’t have everything we wanted and the drive to get ahead often comes from pain in our past and everyone has some form of pain they can tap into. It’s not like it’s unique just to you. But then I’ve noticed that while your past can be the fuel that can help you overcome the obstacles to get the future you want, like what you’re describing, there’s also traits that sometimes we develop in our past that do not help us when we’re getting to the next level. I feel like a lot of successful people have to navigate the waters of, what do I hang onto from my past? What do I have to let go of to think differently? Can you explain a little bit about what your specific journey was like with how you reconciled those two things?

Zasha:
I definitely am still working through a lot of things I think I went through during my childhood and then also during my young adult years. But I think I still struggle with that as far as using that as my drive. But now where do I go now that I’ve kind of made it to a level where I don’t have to worry? I’ve reached my financial independence number, I don’t really have to build a bigger portfolio. How do I keep myself driven to wake up every morning and definitely move forward with my journey? It’s definitely something that I’ve always struggled with. However, I feel like I just think about the amount of people that I can help and that has helped push me forward as far as being the driver for me now. So every person that I get to help on their journey, help them even start to think differently.
Because a lot of this I found is your mindset. I never really thought about it until last year. I went through Steve Rosenberg’s mastermind, and he was really heavy on mindset. I didn’t know how much that affected me. I thought I could just do one deal at a time, but he taught me to open up my mind and be like, hey, why don’t you shoot for these bigger goals? I’m like, oh well, I want to know that I can achieve things. And so he really got me to think bigger. I think a lot of people are stuck in that. They’re just looking right directly in front of them instead of ahead. And so I think that helps drive me, is helping other people to see the bigger picture.

Rob:
I love that. It’s a really honest answer and I’m honestly really glad that you said you’re still working through it, because I’m honestly in a similar place. My parents are immigrants from Mexico and they are a lot of what drives me and that is a big part of my story, and people are like, Well why do you still keep working? You don’t need to work. Haven’t you figured it out? You seem like you haven’t figured it out. But I’m like, I don’t know, I’m still working through all this. I just want everybody to be taken care of. But then I have this complex where I’m like, well I want to keep helping people. That’s a big part of my platform as well. And so mindset is definitely something that is constantly evolving for me.
I know that you’re really big into this like you just talked about, but you’re also really big into masterminds and getting help that way and evolving your mindset. What are your thoughts on investing in that type of thing and getting help that way versus learning the hard way?

Zasha:
I feel like if you have a lot of time, definitely go through all these things. You can go through all these things on your own. However, if you’re looking to scale and really cut your learning curve, going to masterminds, being a part of mentorships, going to events will help give you the network and connections that you need in order to get to your goals quicker. For me, I always try to, the biggest tips I can give people is to make connections, whether that be going to virtual or online meetups, whether that be going to paying money and investing in yourself for these programs, it definitely comes back tenfold. Even for me I just went to the Maui Mastermind this last week, met millionaires and billionaires and people making a lot of money, but was also able to connect with them on a personal human level and be like, look, these are things we’re all struggling with and we need to be able to help each other.
I was definitely the smallest fish in the room, but I also had the largest social media following. So you’d be surprised on how many people came up to me asking me about that component. So really think about too how you can add value to other people when you’re going to these meetups or when you’re making connections, think of something you’re good at and how you can use that as a platform for you to help them and in turn they’ll remember you.

Rob:
You know what, I’m so the smallest fish in the pond and I love that. There is so much to gain from being the smallest fish in the pond. Because once you are the biggest fish in the pond, it’s very hard to find anyone that can help you in teaching. So for me, I like surrounding myself by people that are much smarter. There is always the stigma of education and mentorship and masterminds, but I’m just like, no, not really. You want to surround yourself with people that have similar goals, because I think personally there is just nothing more inspiring than being in a room full of people that are as on fire as you are or even more on fire.
I just actually was talking about a similar thing, Zasha, where I was in a room at a conference one time in the green room, in a room full of millionaires and billionaires, and it was so crazy because they were just regular people. I think that’s the crazy thing, because you elevate these people to be super brilliant computers basically. And then you talk to them and you’re like, man, you’re just a regular person and you figured it out and you’re smart. And you’re like, I’m smart too, I think I can figure this out. And I think it’s unlocking that. Right? Are you still a part of masterminds and mentorships or is that something that you continually invest in?

Zasha:
Yes. Every year I try to at least go to four different events. I am a part of a few mentorships and Ryan Pineda’s Future Flipper program is how I started my journey there. The first mentorship I ever joined. I was very hesitant at the time. It was $10,000 to join. I was like, but I could learn all this stuff on YouTube or I could do this on myself using BiggerPockets. It was hard for me to dish it over, but it also gave me more motivation to make sure I made the most out of this program. I was going to come out of it with achieving my goals and just connecting with as many people and making those personal connections as I could, because I was like, oh my gosh, this is a lot of money for me, going from doing it all myself to now dishing out all this money. It makes you motivated to make the most use of whatever program you’re in, especially if it’s a lot of money to you, then why would you waste it?

Rob:
Big time. That’s honestly what it all boils down to. There is so much free content out there, right? There’s the podcast, there’s the YouTube side of it. I think what really the core nugget of it is always, can you take action and is there something that you can do to take action that will really fuel you and really set you on fire to pursue these goals. I know you started scaling up from where you started to now. Can we start talking about, you said that you started partnering up with people, you live in Hawaii and then you said you had a place in Arizona that you’re flipping and then another place somewhere else, how does that all work? Why are you partnering up with people to scale? What is that strategy?

Zasha:
Basically my goal is not to build a big wholesaling or flipping team. I want to essentially split roles by partnering. Right? Majority of the time I do equity split. So whether it’s 50, 50, 70, 30, depending on if I’m the capital partner, capital raiser, or they need me to qualify for the loan because they’ve never done a rehab loan, say they own a few rentals or they need me to manage the contractors or walk them through escrow process. Or they are experienced investors and they say, Zasha, it’s Wednesday and I need $300,000. If you can raise this or bring this by Friday, I’ll give you some equity in this deal. I think there’s a lot of value in being that person that they can come to. And also I never wanted, flipping was never my goal. My goal is the passive income. But along the way, if there’s opportunities to make some active income along the way, then I’m more than willing to do that, and also helping other people get started.
Of course these are people that I’ve connected with, known for a while, met through mentorships or we have connection with each other to hold each other accountable. I’m not partnering with random people, just to be clear, but they’re bringing some sort of value or deal. I’m checking with my network maybe in that area or in that state, in that market, and being like, Hey, this person brought this deal. Is it good or not? They have the CMA from the realtor, they have the contractor bids, so they have all the details of the deal in place in order for me to make an easy decision.

David:
I was just about to ask you, how do you choose the partner you’re going to get with? Because the concept of partnering is very different than the practice of partnering. It sounds like you’re meeting them through these same groups that we’re talking about.

Zasha:
Majority of them I’ve either met through mentorships or my community. And of course each partnership is different. You could have all these numbers align. However, once you start working with them, you’ll see their personality or morals, integrity, where their decisions lie, and then you can decide if you want to continue working with them or not. I think it’s very important, one, whenever you’re thinking about a partnership, to talk about communication, to see where they’re at as far as what decisions they’re going to make or how they would think about a certain situation. And then, two, definitely getting something written down on black and white, what your role is and what their role is and what the expectations are.
Because I think that’s something that’s overlooked, and you’re like, yeah, this would be a good idea for us to partner. However, once you get in it, you thought that person was supposed to do something and they didn’t, however nothing’s written down, then it’s harder to keep each other accountable.

David:
I’ve noticed one of the big hesitations, and to be frank, I was the same way. I didn’t want to join GoBundance because at the time it was like $6,000 a year and I don’t want to spend the money, I don’t have to do that. I can read a book to learn it. I had that mindset for a very long time. But then when I joined GoBundance, I got put in touch with a person who got me a line of credit at a bank in North Florida, that ended up leading to 35 properties that I bought that they finance that I wouldn’t have been able to normally do. And through that process I learned a whole bunch. I wrote the BRRRR book, I taught people about BRRRR. Now every partner that works with me in a deal gets all of the knowledge that I gained from everything I did, brought into what they’re doing.
Like Rob was just talking about a deal we bought, he got to watch me kind of teach our realtor how to negotiate it. And now everything that I know goes into Rob’s head. Rob now applies that to all the deals he does. It builds this exponential momentum when you get around the right people, because everything that they’ve learned and spent money to invest in you get. I didn’t just pay $6,000 to join GoBundance. I paid $6,000 to get access to the hundreds of thousands of dollars of money the other members had spent developing their mindset, learning things. And partnerships sort of function in that way in that same way too. Do you mind sharing with us some of the things that you’ve learned from partners that you’ve brought in, so you didn’t just give up 50% of the equity, but what you gained from the other person and how that helped your business?

Zasha:
Majority of the time I’m the one teaching someone else or helping to bring these newbies up to their first deal. In 2020 I had partnered with someone or became an accountability partner with someone and helped walk them through their first wholesale deal, helped walk them through a first flip partnership together and then now they’re off and doing it on their own. That experience in itself helped this person take off on their own. If you think about, it’s getting to do deals together, but also having someone to walk you through, getting their connections if it’s their contractors, their escrow company, seeing who they use for their lenders, getting access to them and then also having that safety net if anything were to go sideways you know how to get through and problem solve and find a solution.
I think that’s the biggest key takeaway when you’re partnering, is that you get to leverage each other as far as finding a solution for that deal and making it happen.

Rob:
I’ve done a few partnerships. I want to ask you first, maybe I’ll give an example here, but are there any things that you’ve learned the hard way through a partnership? Was there ever a moment where you’re like, probably won’t do that again? It doesn’t necessarily reflect badly on the partnership you have now, but just a learning that you can apply for future partnership.

Zasha:
When partnering it’s very, very important for you to define your roles. And for me, I always thought partnering with contractors would be the greatest idea, because that’s most of the time the biggest headache as far as dealing with projects, is the renovation. I’ve partnered with a few contractors that didn’t really work out because they don’t understand the investing aspect. They see us purchasing a house at 600,000, we’re selling at a million, but we’re also putting 200,000 into the renovation. We’re also paying money costs. There’s a lot of costs that go into these projects that people don’t really understand that. It’s not the sell price minus the purchase price and the renovation, there’s a lot of costs in between.
And so even when you’re partnering with people that are let’s say contractors in the deal, they’re putting their sweat equity in, that’s how they’re contributing to the partnership. But there’s so many other moving parts that they may not understand and no matter how much you try to explain to some people it doesn’t register. And so at the end of the day, they might feel like they’re getting the short end of the stick and vice versa. That’s what I talked about in the beginning, is being very clear on the roles and who’s doing what, so everybody’s on the same page. But at the same time some people think that what they’re bringing to the deal might be worth more than what you are bringing to the deal.
And so that’s what I’ve learned from partnering with other contractors, is that it doesn’t always pan out the way that they really think it is. And once they realize, oh my gosh, you’re not making that much money, then they decide not to do any further deals with you and then vice versa.

Rob:
Totally fair. I’ve been in this situation where we did very clearly lay out roles and expectations and so that partnership has always worked out super, super well. But the one thing that I’ve realized with a lot of the partnerships that I started in, is I just didn’t future proof myself. I didn’t really plan for the future because it was a really good deal at the time. And I was like, great, I’m going to do all the sweat equity, I’m going to do all the work. And at that time it was great, it was gravy. But now with the way that my portfolio has grown and where I’m moving to in real estate, some of those roles and responsibilities really just don’t make as much sense for me. And I just didn’t have the foresight to really know, hey, in two years from now, if I’m successful at this, I’m going to be super busy. I should probably think about that.
And so that’s one thing I always try to tell people, is that exact thing. Because really if any tension ever starts to build up, if you’re not super clear about those roles, if one set of partners believe that they’re doing more work than the other, it can be a little bit tougher to maneuver all the way through. I know that you’ve been doing this a bit and I also wanted to ask a little bit about the mentorship versus partnership component of it. Are you ever going into a partnership specifically with the intention of mentoring? Is that just part of the job? Is that something that you’re doing less now that you’re a more seasoned and experienced investor?

Zasha:
Yes. In the beginning when I first started partnering, because I’d never partnered before, I had done maybe about seven or eight deals before I ever started partnering. For me too, the first partnerships that I had, I didn’t really know what I was doing or how it was supposed to be. And so I took the spot of more so mentoring people into being comfortable investing. Now it’s very clear roles, I bring the capital or I qualify for the capital, I’m the one making the monthly payments, whether it be holding costs, utilities, that sort of stuff, turning on the utilities, coordinating with escrow. And then you are the one who’s the boots on the ground coordinating with the contractor, making sure the timeline and the schedule is on par with where we’re supposed to be.
It’s very clearly defined roles, and if they ever want to know anything about what I’m doing, I definitely share that with them, but not necessarily take them through every single step just because I have way too many deals going on to be doing that with every single person.

Rob:
Obviously that makes a lot more sense getting started and you’re working in. And just for the record, I don’t think that there is any bad partnership when you’re getting started, specifically because you will learn so much. I think the benefit is education. A lot of people they’ll see deals that I’ve done and they’ll say, well, hey, I know that you partnered up with somebody and you gave 50% equity and they got 50 and they put up all the money, I want that too. And I’m like, well, hold on, hold on, hold on little one, you can’t always demand 50% when you’re getting started, especially if you don’t have a track record of an investor comes to you and says, hey, I’ll front the money, I’ll do the financing, but you’re only going to get 25% or 15%.
I’m totally fine for a new investor to take something like that, because it’s the experience of working with an investor and with a partner that’s valuable in your first deal more than the cash flow that you’ll ever make.

Zasha:
I totally agree. Especially when you come at it from a humbling experience. I have a lot of people who want to intern with me, hey, I’ll do this for free. But essentially too you have to think about what are you good at and what value can you bring to this experienced person? Because they probably have VAs ready to do things, they already have systems and processes in place. How can you add value instead of making them work harder to figure out, okay, what are you good at? Where can I fit you into my business? You got to make it easier for that person, but also think about the amount of experience you’re going to get or comfortability and confidence in yourself if you see somebody else doing it, know exactly their process and how they’re making it through this business. You can be a fly on the wall or help them do paperwork or something like that and just be around. That’s extremely valuable.
I wish I had somebody when I first started getting into this business like that, but I didn’t know what I didn’t know. I went to these meetups and I thought everybody was doing their own deals. Especially when you go to competitive lead generation, like going to the courthouse steps, going to auctions, everybody has the mindset of, it’s me against you. Right? That’s the mindset that I had coming in, was everybody was to each their own. And recently after joining mentorships, it really opened my eyes to the power of collaboration and having an abundance mindset. If you can win and I can win, why don’t we work together?
If you have a strength and I can help you with something that the deal needs such as capital, why don’t we work together, do our individual roles, and then we can both make money. If you’re trying to do this whole entire business on your own, you will quickly get burnt out or you will quickly find out that in order to scale you need other people.

Rob:
The abundance mindset, someone wants told me you get nothing out of being competitive with a friend or a partner. There’s enough out there for everybody. I think as soon as I heard that, it just unlocked this like, and I was like, oh man, it’s so true. Because a lot of people, on YouTube I talk about all the stuff that I do. I talk about how much money that those investments make. I talk about markets and I’ve had so many people that are like, are you crazy? Why would you give away all your secrets? Now you’re just creating your own competition. And I’m like, there’s millions of homes in the United States, I think I’ll be okay. I think it benefits people to learn and do it the right way because there’s a little bit of integrity that we have to teach people on how to do this, how to do this the right way, how to real estate correctly, if you will.

David:
Zasha, I think that the mindset work you’ve done has clearly had a very significant impact on how successful you are. It looks like every time I follow you, you’re exponentially increasing how successful things are starting to fall into place. I can see that that investment is starting to pay off. Talk to our community, tell us, what exactly are you doing? What does your day look like as far as how things are structured? And what type of stuff catches your attention, you go, I like that person, or I like that situation, I like that setup, I’m going to put more attention into this, versus the just amount of stuff that hits you in a day that you realize that isn’t worth my time and attention?

Zasha:
What has completely changed my life I feel is a morning routine, because I have a family, I’m a mom, I’m a wife, and I’m also an investor, it is very easy to get run down by the day. So waking up early, I wake up at 4:30 in the morning, then quickly I just jump out of bed and start working out, get that done. Write my affirmations. That gives me confidence going into the day. And then I write down the top three things that I got to get done to help me stay focused. Now, this isn’t always happen, there are days where I take breaks, however, for majority of the time I try to stay consistent with that. And then from there I go into Asana. I use that for my team as far as my social marketing team, my investment team, my VAs, we all coordinate in that platform and figure out, okay, what are these tasks that I need to do for that day? Get that done.
And then from there, if there’s any new deals or new leads that come in, then I evaluate that, see if that’s a market that I want to get into, a strategy I want to use, or maybe it’s potential for long term cash flow. And so recently I’ve been really getting into RV parks, and so I’m entering into a partnership that they live in that area, they already have properties in that area and they want to partner with somebody to bring capital. And so that is where I’m seeing my role as far as an investor goal, is to not necessarily focus on a specific strategy, but focus on a specific role in a deal. And so that’s what my role is going to be moving forward.
I’m trying to see if I can start a fund because it is hard once you sell a property, give the funds back to your private investors and then all of a sudden you contact them for another deal and then the money’s gone or they’ve used it for something else or they decided to renovate their bathroom and their house. I’ve been finding that getting into other bigger, higher level strategies has been the way that I have to go now.

Rob:
That’s really cool. Is that your method for scaling? Because obviously you were doing a lot of the flips, you’re partnering in that capacity, but now you’re looking at RV parks. I’m doing something very similar here. Are you doing that, A, because it’s a really cool, I think RV parks are fascinating, but B, is this just your path towards scaling?

Zasha:
Yes. It’s one of the paths. Last year I bought my first short term rental and it has made almost just as much as nine of my long-term combined. It just opened my eyes to the possibilities of doing these more hospitality sort of investments versus the long-term. I’m still going to do the long-term investments, but it’s been harder. I feel like everyone now it’s a bit more of a struggle to find deals. So if I can get into these hospitality RV parks or Airbnbs that can essentially make the deal still work without it having to be a long term investment, then I’m going to jump into those. I don’t know if that was a good explanation for that, but-

Rob:
No, it’s really good.

Zasha:
… that’s definitely what I’m thinking about. The path to me is being that person, figuring out what role, but not really concentrating on the strategy. I’m still open to bigger multi-unit apartment buildings and other strategies. It’s just focusing on what is my role, what value can I bring to that deal that will benefit everyone.

Rob:
Well it sounds like you’re out there, you’re teaching people in the community, obviously you’re very active on social media, you’re getting information out there and you’re effectively mentoring the masses, so that they often say that you are as good as your reputation. It looks like you’re killing it basically. I wanted to ask, from your perspective, what are you doing in your life and your role in your real estate career to impact the local community?

Zasha:
I feel like educating people on what exactly it is we do as real estate investors is very important. We’re not out there buying deals for really low price points and then reselling it for really high without doing any work in between. A lot of times people don’t know we buy homes that are in complete distress. They might have abandoned cars in the front, people might be in some sort of financial situation that they can’t get out of, and we are providing different solutions. And a lot of times we put hundreds of thousands of dollars into renovating these homes and then of course selling them for a profit. However, when you own a home, you get to choose who you sell it to, so you could potentially sell it to a first time home buyer.
You don’t always have to go for the highest price or the person that has the most money or is coming in for cash, you can choose to work with someone who you feel will bring value to that community. And that’s how I found a lot of people when I do buy these homes, ask me or while we’re in renovation phase, come up and say, hey, we would love for you to put a local family in there because this is the vibe of the community and we want them to contribute and not just move here and then find another place, move out. There’s different ways where you can have an impact without compromising your morals or integrity and also adding value to the community.
And then as well for the rental side, for long term, you can choose a Section 8 tenant versus someone willing to pay a couple hundred dollars more if you’re at the regular rental rate. It all depends on your financial goals and your financial situation. However, I’m at a place where that’s important to me, so it may take a little bit more footwork working with the HUD offices, it may take a little bit more time to get their rents in on time, but I’m willing to work through that in order to keep with my goal in making an impact on the community and adding value.

Rob:
Do you think you’ll continue investing in affordable housing as you continue to develop your real estate portfolio and your career and everything?

Zasha:
That’s definitely my goal, especially being from Hawaii and it being so expensive, I knew that when I was going through high school that I had to go to college and in order to move home, I had to be a doctor, a lawyer, an engineer to be able to afford to live here. And so with that in mind, I definitely want to build an affordable housing project or have affordable housing subdivision here in some sort of capacity. But I know along the way I still have to build wealth and make connections and have that in my, I guess, tool chest in order to do these bigger line items, do these bigger, I guess, envisions of projects.

Rob:
That’s awesome. That’s impact. Again, that comes down to purpose. I think a lot of people, I think if you just always focus on the financials and the money, that’s fine. Obviously you can have a successful career doing that. Doesn’t necessarily mean it’s going to be fulfilling. Right? It’s really encouraging to hear that you’re out there doing this. I’m curious, I know you probably work with a lot of potential sellers, what’s your process for working with different potential sellers out there?

Zasha:
Anything found off market when I’m working direct with the homeowners, I ask them, hey, a lot of times it’s referrals. So people refer me to other people. I’m huge on reputation, especially being from a small community on a small island. How you do one thing is how you do everything. And so when I approached them, I ask them, hey, have you talked to a realtor yet? Have you thought about getting a personal loan? If they’re in some sort of financial situation. Have you talked to your family members? Can they help you? Do you need me to mediate that conversation? I have a network of lenders and of realtors and other people in this business that might be able to help you.
And then if you want to work with me, I’m always the last option. I want to know that you’ve explored everything and I am the reason why you need to sell to me, not just because you know wanting the cash offer. I want to know that not necessarily I’m the last resort, but you’ve checked all the boxes before you came to me.

Rob:
Well, that’s cool. That’s something you don’t hear every day, genuinely. You want to, hey, I want to be the last resort, right? That’s really cool that you’re actually helping people through that process. Again, it’s a human element. Real estate you’re dealing with humans every day. You got to treat people like people. It’s the only way that you’re going to have a fulfilling successful career. Again, I guess you could do it without doing all that and be successful, but it’s like, do you want to make money or do you want to make money and be fulfilled? Why not do that? You can have both. You can have both in this industry, and I think that’s something that people always lose sight of.

Zasha:
When I feel like this is a lot of relationship based, whether it be working with other investors, whether it be working with sellers or other people, the escrow company and the title company, it’s all about relationship and trust. And so my biggest deal for example, came from me partnering with a seller. I had no idea that that was even a thing that you could do as far as being creative with it until I found out later on through mentorships. But the seller actually wanted to partner with me and said, hey, well we get a little bit more money if we hold the loan and then you do the renovations and then we sell it. And so that was an instance. That was my biggest deal honestly, was they had brought this partnership aspect to me. And then now it’s called, a lot of people refer to it as innovation, where the sellers still own the property, they hold it, and then you bring renovation funds.
We had agreed on a price of about 450. I brought 200,000 in private lending funds. We fixed it up and it sold for about 975. And so I had let them know, hey, initially the ARV was eight 50 and now the market has gone way high and now we’re able to sell it for 975. Are you okay with the initial amount that we agreed on? Because if it went the other way and it went down, you would still get that money, and they were fine with it. They are definitely a different type of people. It all depends on the relationship you have with the owner, especially when you’re getting creative like that and you don’t own the home, so you don’t have that much control. However, if your relationship is good with the owner, then that’s a different way to make it work in an expensive market and also partner with sellers.

David:
In your method of making sure that you are giving back more than you ever take, you have three things you’re focusing on. And that would be partnering, which is giving mentorship to people through deals. So you’re sort of pouring into the individuals that are learning the game that we’re playing here. Investing with integrity, which is giving without expectations. And then providing affordable housing for people that are not aware of how the game works, but still need somewhere to live that’s affordable. Right?

Zasha:
Definitely.

David:
I think that’s wonderful.

Zasha:
I want to build wealth and then make an impact too. I think that’s the underlying-

David:
Same time?

Zasha:
Yes. And you don’t have to be perfect, and that’s what I’m saying, is that you can use your resources to go through things. I think there’s been people throughout my life who have given me the insight or courage or confidence to be able, I had no idea about finances or loans or debt other than buying my own home. But as far as investing and doing all these things, it was just people along the way. Maybe lenders, the title company. I had no idea how to partner with sellers until I went through the escrow company. I said, is this a real thing? And so they helped get the legal paperwork together. They said as long as you and the seller are on that same page, then we can draft up whatever legal documentation you need.
I never really thought of that before. I always thought to traditional investors buy things with cash. They use hard or private money, and that’s the only ways. Again, it’s just asking people along the way, being curious. Right? And so I think that’s helped add a lot to my journey as well and helped me scale, because I’m not afraid to ask questions.

David:
This has been very good Zasha, a ton of actual, easily repeatable content that people could follow. I’m going to move us on the next segment of our show is the world famous deal deep dive. In this segment of the show, Rob and I are going to fire questions directly at you one by one and learn about a particular deal that you’ve done. Question number one, what type of property is it?

Zasha:
It’s a single family.

Rob:
Awesome. Question number two, how did you find it?

Zasha:
Driving for dollars with another accountability partner.

David:
This is starting to sound familiar. Question number three, how much was it?

Zasha:
375,000.

Rob:
Question number four, how did you negotiate it?

Zasha:
I had an acquisitions person negotiate the deal and they actually had the house, owned it free and clear, had a few liens on it, but were able to walk them down because they had previously talked to a realtor who said they had to clean up a bunch of the items that were on the property. They didn’t want to do that, so they were open to working with an investor, taking it as is.

David:
Awesome. How did you fund this deal?

Zasha:
All private money.

Rob:
What’d you end up doing with it?

Zasha:
I ended up keeping it using the BRRRR strategy, getting all my money back out, paying back the private lender and essentially just wanting to add another building to the property, it’s called an Ohana. That is our goal right now. We ended up splitting the single family into a duplex. It was a two story, so we split that and then now we’re going to build another duplex on the same property.

David:
An Ohana unit if you haven’t heard of it, is what they call an ADU in Hawaii, it means family. It would be like if you wanted your mom and your dad or your mother-in-law to live in your property, you’d build them in Ohana unit. My last question, what was the outcome on this deal?

Zasha:
We have multiple exit strategies for the deal. And so right now we have two renters living in it. One renter actually is church member of Brandon Turner, which his wife’s best friend lives right next door. And then also on the bottom unit is a lady who is waiting for her Hawaiian homeland’s home to be built up country.

Rob:
Awesome. What lessons did you learn from this deal?

Zasha:
Be quick to act. This deal was actually, when we were driving for dollars, we’d seen it, we got the deal and decided that we’re going to mail them, we’re going to leave our cards there and then eventually coordinated buying the property. After that, whenever I buy a property, this is a good tip for those who are just starting out or maybe seasoned investors, something you never heard about. I give my card to each and every neighbor that is around that area to let them know, hey, if you see something suspicious, please let me know. Or if my contractors have parked in your area or are making too much noise, you can always call me. I’m the new owner of the home and I definitely am trying to add value to your area and also to your home.
And so it was funny because the lady next door, I guess was Brandon Turner’s wife’s best friend and she ended up calling Brandon and saying, hey, do you know this girl Zasha Smith? She just bought this house. And so he messaged me and he said that he was actually looking at that house for a while. They drive past it almost every week. He had been meaning to knock on the door, been meaning to contact the owner, but just didn’t get around to it. I end up getting the house and now have, it’s renting right now for around $6,000 a month. The mortgage on it is about $500,000 a month, $500,000, and we pay about $2,300 a month for the mortgage. And so it ended up being a really good deal and recently just appraised for a little over a million dollars. And so he was a little sour about that.

David:
Everybody listening, go message Brandon on Instagram and tell him to listen to this episode’s deal deep dive and let him see to the victor the spoils. All right, I actually have one last question, I was wrong. Last question from me. In this deal, who was the hero on your team?

Zasha:
Definitely my acquisitions person. It happened to be, she had been wanting to invest and start her investing career, had been in a mentorship but never took action. And so we became accountability partners, because even as a seasoned investor, it’s nice to get out there and be reminded of the different ways you can find deals, not only through cold calling or texting, especially if you haven’t door knocked in a while or you haven’t driven around the neighborhood to go look for deals. And so she had coordinated contact with him, coordinated closing the deal, and I walked her through the steps of the title company, escrow and all of that. Tereva Jacobson is definitely the hero of this deal.

David:
Thank you for that. And be sure to check out the BiggerPockets marketplace where you can find your next hero to help you on your next deal. All right, we’re going to move on to the next segment of the show, famous for. Question number one, what is your favorite real estate book?

Zasha:
Of course, I’m going to say BRRRR Strategy by David Greene. I feel like, don’t reinvent the wheel, right? If it’s working for other people, then just do the same thing.

David:
There you go. That’s a way to bring a little bit of cold.

Rob:
Got to say, I agree. I agree.

David:
Rob agrees because that’s the only real estate book he ever read, which I actually am not mad about, because if he’s only going to have read one, I’m happy that it’s mine.

Rob:
That’s right. It’s also the best real estate book I’ve ever read, so very important. Number two, what’s your favorite business book?

Zasha:
The all so common, Rich Dad Poor Dad by Robert Kiyosaki.

Rob:
Awesome. Question number three, what are some of your hobbies when you’re not building your real estate empire?

Zasha:
Hanging out with my kids, definitely number one. But number two, I just started spear fishing, and so I oftentimes like everybody else get caught up in working, building wealth, looking for the next best thing, investing in other deals and you can’t take me away from my laptop or my computer. So reminding myself to go to the beach, me and my husband started a new hobby of spear fishing together and that has not only got me out of my own way as far as taking a break mentally from work, but then also built our relationship closer.

David:
I’ve always thought that looked like a blast.

Zasha:
It’s really fun.

Rob:
Not for the fish.

David:
I guess the sphere comes out as a blast, so there’s probably a pun in there somewhere. All right. Question number four-

Rob:
That’s right. It is a blast for them technically.

David:
Right. What sets apart successful investors from those who give up, fail or never get started?

Zasha:
Surrounding themselves by like-minded people or people who are ahead of them and also helping other people. And so this is what I try to put forth, especially through social media, educating other people and letting them know that just because people are ahead of you or doing all these great things, doesn’t mean that you can’t. And so putting out little tips like that, connecting with people. Also I had mentioned to you guys before this episode, that you can instantly connect with people on social media. There is a power of providing value through there, that people don’t even realize. I connected with David Greene, with Brandon Turner, I messaged Rob a few times, I don’t know if he’s seen, it might be in his hidden messages.

Rob:
It might be. That’s right. Hey, that’s a call back.

Zasha:
But it’s definitely a way to connect with people that I never even realized had initial power to it. I think if you’re just starting out, of course don’t blast people, but find a way to add value. You can instantly connect on social media, and I know that we all post and add value. So really take in what people are giving out for free and what’s working for them.

Rob:
Awesome. Well, first of all, let me just say that I followed you and I sent you a message and I haven’t heard back from you. I did send that message like 30 minutes ago while we were on the podcast, but it is there. Can you tell us more where people can find you on the internet if they want to learn more about you, connect with you and all that good stuff?

Zasha:
On BiggerPockets, definitely that’s where I keep a profile of all my deals that I have going on now at Zasha Smith is my handle name on there. And then also on Instagram at investwithzasha, where I have a big platform, always down to help. I have people helping me with my messages to get started and guide you on the biggest path. I always speak about BiggerPockets, so it is an honor to be here and be on this podcast and add value, being comfortable being uncomfortable, and just know that you guys are not alone in this journey. It is very hard for me being a civil engineer for 10 years behind the desk to put myself out there and often connect, but I’ve found it to be the most valuable and most rewarding part of this journey and making an impact.

Rob:
That’s so cool. Well, David, what about you man? Where can people find out more with you, connected to you, all that good stuff?

David:
Go follow me at davidgreene24. Very easy screen name to remember, also very boring. I’m pretty much everywhere. And then on YouTube, I’m at David Greene Real Estate, also very boring and very easy. But got a social media company that’s been putting out posts and I try to put new stuff. So when I’m out here in Scottsdale, I try to post things showing what’s going on behind the scenes and I’m doing more of what’s happening in the personal world. Zasha, I think you do a really good job of that actually, I want to mention it. You don’t just post, look at this house, look at this deal, look what I did. There’s like a kind of a mix of this is who I am as a person and this is who I am as an investor, which probably isn’t a coincidence because as you said, you want to give back and you want to build wealth and that comes across with the way that you’re posting. So make sure you go follow, investwithzasha as well as me. And then Rob, where can people find you?

Rob:
You can find me on the You Tubes at Robuilt and then Instagram Robuilt as well. And TikTok, you want me to do funny dances. You want to see me do funny dances? I’ll do it. All right. On the TikTok at Robuilto. I also do them on Instagram every so often. Catch me dancing. They’re not good, but I will dance. I’m not ashamed.

David:
Do you do the robot? Is that where Robuilt comes from?

Rob:
I don’t do the robot. No I don’t. But I just had a video pop off of me conducting a choir and that one was my best performing video ever. Fake choir, not a real choir. Go watch it, it’s funny.

David:
I saw it. It was very intense. I’ve never seen that intense side of you until I saw that.

Rob:
Well, hey, the beast exists within, you just got to let it go.

David:
Don’t let that flower shirt fool you. There’s a beast behind that cloth. Zasha, any last words before we let you get out of here?

Zasha:
Definitely I think the overarching theme is giving back, building wealth, but also making an impact. And if there’s any way that you can make an impact on your community, definitely try to do that. Whether it’s your time or money, just remembering where you came from or that other people don’t have it as good as you and trying to help them elevate.

David:
Thank you for that very much. This has been a great podcast and I hope everybody listening takes that to heart. You can actually win bigger and do better when you help other people along the way. It is not us versus everybody else, it can be us with everybody else working together. Thank you for spreading that message, Zasha. I completely second it. This is David Greene for Rob the beast behind the flower shirt, Abasolo, signing off.