Richard

Alexander Goldfarb, senior REIT analyst at Piper Sandler, joins ‘Power Lunch’ to discuss how to look at opportunities in the REIT space, why the single-family REITs are outperforming multi-family REITs and more.

Mindy:
Welcome to the BiggerPockets Money Podcast show number 337, where we talk about why the military is the best job straight out of high school.

David:
Not to talk smack about the college world, but you take a kid fresh out of college, let’s put him in the Harvard MBA program, right? Like top-tier, fresh out of college, never had a job before, but this kid is brilliant. And you throw him against an infantry guy who’s never done a thing in business. And I’m not going to say that the Harvard guy won’t win, but I will just say that the decision-making power and the ability to make those decisions under pressure, you don’t know how you’re going to do until you get into some of those situations. And so there’s something to be said for being in those kinds of situations that transfers into life. People crack under pressure. It’s nice to have an opportunity to learn that before you’re playing CEO.

Mindy:
Hello, hello, hello. My name is Mindy Jensen and joining me today is my military expert co-host, David Pere.

David:
What’s up Mindy? How are you doing today?

Mindy:
David, I’m doing really good. I am so excited to talk to you about all the things. But before we do, David and I are here to make financial independence less scary, less just for somebody else. To introduce you to every money story, because we truly believe that financial freedom is attainable for everyone, no matter when or where you’re starting.

David:
Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, or start your own business, we’ll help you reach your financial goals and get money out of the way so that you can launch yourself towards your dreams.

Mindy:
Ooh. That was a good radio voice, David. Okay, David, when we were discussing this episode prior to hitting record, you came up with the title, “Why the Military is the Best Job Straight Out of High School. And you had a really great reason to back up your statement. What is that?

David:
Well, there’s a lot of reasons and I could argue this back and forth, but the overarching theme is, would you rather be 22 years old, a $100,000 into student loan debt, no life experience outside of school and looking for your first job? Or 22 years old, four years of life experience outside of school, also a degree, no student loan debt and a four year employment history with an honorable discharge to back you up to a new employer?

Mindy:
Okay. That sounds a little bit better than the $100,000 in student loan debt. Okay, David, I want to get a bit of background about you for anybody who is unfamiliar with your situation. What is your military background and what is the financial situation when you go into the military? What does that look like typically?

David:
Yeah. I joined the Marine Corps in 2008, right out of high school. Not because I had these grandiose streams of becoming rich, but because I wanted to get out of Arkansas, didn’t have money for school and didn’t like school. So I was like, “I want to travel the world. This sounds like an adventure.” And for the first seven, seven and a half years that I was active duty, I made all the normal Marine Corps, stupid decisions or military or just young guy. I blew all the money on tattoos, cars, Harley, rifles, women. I mean, you name it. The money that came in went back out. Alcohol. That was in there too. So it is what it is. And in 2015, somebody handed me the book, Rich Dad Poor Dad and I read it and was like, “Oh, this is cool.” And then as I was trying to research, I was reading more books and learning more about real estate.
Actually, that’s how I found BiggerPockets. Because every time I’d Google a question, BiggerPockets would come up with the answer. And so then I read book on managing rental properties, a book on investing in real estate or rental properties, all the things. Bought a duplex, house hacked, and was like, “Oh, this is cool.” So that was 2015. And in 2021, I left the military after 13 years active duty as an enlisted Marine with a million dollar net worth, financial freedom and over 100 rental units. And basically at this point, I’m kind of like, all right, cool. Well, I’m going to talk to other service members about how to build wealth, because I think they are uniquely positioned to do so. And a lot of them just don’t understand.

Mindy:
I think this is really important to highlight. You just said you left the military as a millionaire with over 100 rental units and a bunch of other stuff that I can’t remember, because I’m stuck on those two. That’s not your typical exiting the military financial position, right?

David:
No. Absolutely not.

Mindy:
But then you also said the military members are uniquely positioned to do exactly what you did and you messed it up.

David:
Oh yeah.

Mindy:
You didn’t even do it right until 2015, you messed up a whole bunch of stuff. Imagine what you would’ve done if you would’ve been listening to the BiggerPockets Money podcast when you first started and you learned of all these amazing things, you could be a batrillionaire right now, David.

David:
Well, a prime example is that currently I have … Well, it’s dropped. When I did the math, I had $120,000 in my thrift savings plan. I currently have like 96 or 97, but it’ll go back up. But that 120, when I did the math, would’ve been worth closer to 300 had I just known which fund to put the money in. I had it in the wrong fund. I had it in basically bonds. Government backed securities. And so from 2008 to 2015, when I realized that mistake, which was basically every year during that period was a 10 to 30% return on the stock market. I was invested in government backed securities and I was contributing and doing all the right things that if I had just known which account to put the money in, it would be almost triple the value that it is currently.

Mindy:
Wow. I think that’s something that isn’t unique to the military. I think that’s something that when somebody decides that they want to open up and account, an IRA, a 401(k) or Roth IRA, whatever they’re doing, they put money into the account. I’ve had people ask me, “Well, I put money in so I’m invested, right?” Did you direct where that money should go? You have to direct where it goes and then they go back in and they’re like, “Oh, for the last year it has been sitting in cash. I have no value other than what I put in there. I missed some gains.” You could say that you missed some losses. I am not going to even get into the timing the market versus time in the market.
For that, you are going to go back to episode 335 with Jesse Kramer and Carl Jensen where we talk about timing the market and how basically, long story short spoiler, it’s a bad idea. But time in the market is very important. Because you brought up the TSP, let’s talk about that. The TSP for somebody like me who is not in the military and doesn’t really know what I’m talking about with regards to the TSP, that’s like the 401(k).

David:
Yeah, absolutely.

Mindy:
Same contribution limits that I have. So why is the TSP so great if it’s just the same as my 401(k)?

David:
I mean, the main reason is that now when you join the military … For the record, now when you join the funds go into a life cycle fund instead of the government backed security. So you’re already in a better spot. But currently with the new retirement, as of 2020, the military will match 5%. So I think if you’re in the military, the reason it’s better is that you’re going to get a 5% matching contribution, which means if you contribute 5%, it’s an instant, guaranteed 100% ROI on day one, as well as a pay raise. So if you’re in the military, that’s why I say at least the 5% in the TSP before you consider anything else. But I think the more the merrier. I mean, there’s a few things here and there, but they’re so similar. The biggest one is just the fees.
I think most of the funds are between 0.4 and 0.5% fee annually, which is really low. So that adds up very quickly. And then there’s a couple of other things here and there that I’m sure are super nuanced. But the biggest one outside of that is that if you’re in the military and you go to a combat zone, your limit as of 2022 is not 20,500 for the year, it is 57,000 for the year. And so you could go to a combat zone and you are taking your tax exempt cash and you stuff it into your Thrift Savings Plan, you could put $57,000 away this year.
And by the way, if you do that in the Roth, because with the Roth, you pay the taxes up front and not on the back end, well, your pay is tax exempt so you do not pay the taxes on the front end because that pay is tax exempt, you’re in a combat zone. You do not pay the taxes on your earnings when you pull it out because it’s a Roth. And so it’s the life insurance argument for triple tax exemption, same thing except better returns and you’re not life insurance. So I love it.

Mindy:
Okay, hold the phone. I liked the 5% employer match because there’s a lot of people who are … I call it an employer match. I shouldn’t. I should say 5% government match, but the government is your employer, so we’re going to call it the employer match.

David:
Yeah.

Mindy:
You just said that if I am in a combat zone, which does happen from time to time if you’re in the military, unfortunately, you can put up to $57,000 into your TSP. Whereas my 401(k) is still 20,500. Actually mine is 27,000, because I’m over 50 this year. But 20,500, if you’re not over 50, an extra 6,500 if you are. But if you’re in the military at any age, that’s not over 50, that’s any age, 18 years old going into a combat zone, you can put in $57,000 into a TSP, which they have a Roth option. And if you listen to this show, you will hear Scott Trench talk about how much he loves the Roth option. I love the Roth option. Holy cow, that’s almost Peter Thiel Roth winnings.

David:
Yeah, it’s crazy, right? I see the wheels turn. Imagine if you deployed five times and each time you were able to put anywhere near that. Now that being said, a new enlisted service member is not going to be able to put $57,000 into the TSP, because that would be like 120% of their base pay. Because you can’t make the deposits off all of your benefits. It has to be out of your actual paycheck.

Mindy:
Okay. That’s fair.

David:
There are definitely people who can. And realistically, even if you only put 25,000 in, that’s still 4,500 more than you would be able to outside of the combat zone. And the only thing I would disagree with you on that you said, and I don’t know that I speak for all service members on this, but I speak for at least some, is the word unfortunately that you used around combat zones because there’s a large amount of us who join and that’s like the itch. It’s like, “Send me. Put me in coach, put me in.” Obviously there are not always desirable outcomes from that, but-

Mindy:
That’s the unfortunately that I’m discussing is the undesirable outcomes when you don’t come back. That’s pretty sad. Okay. I’ll give you that. Everything else, that is pretty flipping amazing and I will go ahead and say that you have proven your point that the military is the best job straight out of high school. Now, for those of us who haven’t been in a combat zone, when I go there, the military pays for everything, right? I’m not paying for my own food and housing. So I could conceivably put all of my money in there.

David:
Oh, there’s a lot of crazy options. There’s also an SDP, Saving Deployment Program, which I did. Or Saving Deployment Plan, something like that, which is a government backed, 100% guaranteed, 10% ROI savings account that you can direct your paycheck to, but you can also fund with the stroke of a check. And up to $10,000. So if you had 10 grand in a bank account and you deployed, on day one, you could transfer the $10,000 into the SDP. You would’ve a government guaranteed 10% ROI. So it’s basically a 10% bond. And then when you leave the combat zone, you pull it back out. And so there’s a lot of very interesting things. And to make it even more interesting, combat zone doesn’t necessarily mean I might drive over a bomb or a spicy road bump as I like to call them. It could mean Kuwait.
Kuwait is not an area that is currently under any attacks, but it is in a area that is close enough that you could get called in and so while at Kuwait, you rate combat zone tax exemptions. And so there are locations and periods of time where you rate that. In fact, and don’t quote me on this, but we mentioned Doug. I believe sub-mariners rate that pay depending on which sea or gulf they’re in. So there’s a lot of very interesting situations where you might earn that. And then even crazier, while you’re earning the zone tax exemptions, you’re also getting hazard duty pay. So you’re getting a pay raise. And there’s other things that go into that. But yeah, your chow hall’s covered or you’re on MREs. I mean, while I was deployed … This was not while I was making good decisions. I did the SDP and I did increase my TSP contributions. But then in seven months I had like $17,000 of pure pay or left over even after buying basically just protein powder and supplements and cigarettes and whatever else while I was deployed.

Mindy:
It feels like we could talk about combat zone benefits forever, but I’ve got other things that I want to talk about. I know you have a website where you talk about all things military and money. Do you have an article or something about the benefits of combat zone pay?

David:
I do.

Mindy:
Okay. We will include a link to that in our show notes, which can be found at biggerpockets.com/moneyshow337. David, what is the name of your website? What is your URL?

David:
Frommilitarytomillionaire.com.

Mindy:
Frommilitarytomillionaire.com. Okay, great. And I bet there’s a ton of really great articles. I do have to confess, I haven’t spent a lot of time there because most of them don’t apply to me. And I think that’s really important to note. This super awesome Roth TSP with the $57,000 limit, I’m not eligible for. Now that I’m 50 they’re never going to let me join the military. So you really do need to get in there a little bit sooner. Let’s talk about some of the other benefits. I think one of the most well known benefits of the military service is either the VA loan or the GI Bill. So pick one and we’ll talk about that next.

David:
Let’s go GI Bill first so that your listeners stay paying attention because the VA loan’s where the real goods are.

Mindy:
Okay. So the GI Bill, when we were discussing this before we hit record, I said, GI Bill and you said, yes and there’s tuition assistance. I thought that’s the same thing. Can you please clarify the difference between GI Bill and tuition assistance?

David:
Yeah. And just for sake of clarity, I’ve been out of the military for a year so some of the amounts have probably changed, so I’m not going to speak specific dollar amounts. So don’t cite me on that. But I want to say it’s like six grand. That’s what I think it was. But tuition assistance covers school while you’re in up to, I think it’s $6,000 a year. And there’re stipulations. You can take two classes at a time. You have to pass them. If you fail one, then you might have to do some remission to be able to be eligible or you have to pay it back if you fail. There’re some things. But if you pass your classes … And I say this, I have a couple of friends who’ve done this. So I have an associate’s degree that I did with tuition assistance at nights while in the military.
But I have friends who have their bachelor’s, their master’s. I have a friend who has a doctorate degree all paid for by tuition assistance without touching a dollar in their GI Bill. So my example, I have the associates and I stopped there because well, I hate school and was like, “This is just a waste of my time for what I’m actually doing in life.” There’s no degree that says real estate investing, although my associates is in real estate studies, which is nothing more than what I needed to be an agent so a total waste of time. I digress. I have the GI Bill still. Zero usage. And I have transferred a percentage to each of my kids, 1%. So that down the road, depending on which kid goes to school, I can give them the GI Bill or I could use it myself now that I’m out.
So if I wanted to go back to school, I could and it’d be covered. If I give it to my kids, it’ll cover one of their schooling or half of both of their schooling. I could give it to my wife. I mean, there’s a lot of cool options. So yeah, theoretically, if I stayed in for 20 years, I could’ve earned my master’s degree and still given my GI Bill to my kids.

Mindy:
You seemed to make a very distinct point that you had transferred 1% to each kid. Is that something you have to do before you separate from service?

David:
Yeah. You have to do it at a reenlistment after eight years, which is where I got hosed, because it’s not clearly articulated. So when you reenlist, basically they were like, “Do you want to transfer your GI Bill? Or do you want to keep it?” And I was like, “Eh, I’ll keep it.” I was like, “I can transfer it later, right?” “Yeah, you can transfer it later.” Wrong answer. You have to do it during a reenlistment. Unless if you’re a commissioned officer, you have to do it with four years left on your obligation. But if you’re enlisted, you have to do it at a reenlistment because you have to have four years left. It’s a retention bonus or retention incentive. Which I actually disagree with the way that it’s handled because I did 13 years and wasn’t going to be able to transfer it without going into the reserves.
But what really happens is you hit that eight year mark, you reenlist, what you should do is you should transfer 1% to anybody you would ever want to allow to use your GI Bill. Your wife, your kids, your dog, whatever. And once you transfer a percent, then you can go in the system and you can tweak that percentage at any time. So if one of your kids goes to school, you can say, “Yep, they get a hundred because the other one didn’t.” Or, “50/50 because they’re both going to school.” Or, “Neither of them went to school so my wife gets it all.” Or whatever. But if you don’t make that change, then you’re going to have to wait until the next time you reenlist to transfer. And if you don’t reenlist again, then you will not be eligible to transfer it because it is a retention bonus. So play the game right. Transfer 1% and then you can adjust allocations down the road because you earned it.

Mindy:
Okay. And that also sounds like you could go into a great bit more detail on your website. Have you made a video about that? Is it in your book?

David:
Yeah. There’s some information in the book on it. I might have an article or two on the GI Bill. It’s not exactly my expertise because I haven’t used it so I don’t know that I have anything super detailed on it. Although I’m thinking about using it because you can get a pilot’s license with it and that sounds fun. So depending on if my kids actually seem like they’re going to go to school, I might just use it.

Mindy:
Okay. Wow. You don’t even know what I’m going to ask you next. But that’s another financial advantage of serving in the military is the free skills you get. And the one that I can think of off the top of my head, the big one is the airline pilot skill. Because yes, you can go to airline pilot school. I have no idea about it. I’m not eligible to be a pilot because my eyesight is horrible. I’m not correctable to 20/20. I cannot see. They won’t let me fly and it’s been my whole life. So I found this out very early. I never looked into it. But I know it’s super expensive to go and learn how to be an airline pilot. It’s like hundreds of thousands of dollars or four years of your life in the Air Force. I mean they all have planes, right? Does the Army have planes?

David:
Yeah. They all have at least some equivalent. Well, I don’t need to be talking smack about different branches of the military, but let’s just say that there are branches of the military that are assumed to have more aircraft than others and that assumption’s not always correct, depending on how you think about things and what kind of aircraft you’re talking about. Like the Marine Corps has way more helicopters than you would ever know. The Navy has an exorbitant amount of planes. The Army is more helicopter and the A10 or whatever, but it varies. The Air Force is definitely the heavy mover logistics side more than the combat side for aircraft.

Mindy:
Okay. Oh, okay. Well that’s interesting. I didn’t know that either. So what are some other skills that you can get in the military besides the airline pilot, which you might use your GI Bill for, but could also have been a pilot if you-

David:
Yeah. I have plenty of friends who did that. In fact, I got a guy who I used to … When I was a Cub Scout leader for my oldest in Hawaii, I was the assistant den leader or whatever. And the guy who was the den leader, he was a Lieutenant Colonel. He retired and he flew the private jet for the general and he’d been a pilot his whole career and now he’s working airlines. So yeah, totally doable. I will say that being a pilot in the military is not necessarily the easiest gig to get into, but I do have a lot of friends who have done it and had successful careers in and out of the military. I think the intangibles honestly are better, but there’s so many … I mean, medical field. There’s doctors and nurses and whatever. That’s a good one. They’ve got Jags, like legal officers. The military goes and tries to poach law students and say, “Hey, we need Jags.” And so, you can get those for the doctor’s side. You’re learning all these skills in an area where you can’t be sued for malpractice. So there are benefits to that, even though the pay may not be as good.
I was a transportation logistics guy. I drove big trucks and did big picture logistics. I could do a lot with that right now. But I mean even infantry. You think infantry, oh, this sky learned how to shoot a gun so that’s not transferable. Maybe. I mean, yeah, you could do security, whatever, but the real benefits are the intangibles. You learn how to lead. You learn how to make decisions under pressure. You learn how to make decisions quickly under pressure. You learn how to be a critical thinker. You learn how to work as a team. You learn discipline and whatever. Those intangibles I think are actually what’s more important.
Not to talk smack about the college world, but you take a kid fresh out of college, let’s put him in the Harvard MBA program, right? Like top-tier, fresh out of college, never had a job before, but this kid is brilliant. And you throw him against an infantry guy who’s never done a thing in business. And I’m not going to say that the Harvard guy won’t win, but I will just say that the decision-making power and the ability to make those decisions under pressure, you don’t know how you’re going to do until you get into some of those situations. And so there’s something to be said for being in those kinds of situations that transfers into life. People crack under pressure. It’s nice to have an opportunity to learn that before you’re playing CEO.

Mindy:
That’s a really good point. That is. And I didn’t even think about that because I wasn’t in the military. I didn’t learn how to make decisions. Boy oh boy. You’re like, oh, take your four years out of the military and you’re right out of college degree. I’m like, oh yeah, I was trash when I was making decisions as a college kid.

David:
I went to Afghanistan when I was 20. I turned 21 in … Oh no. I take that back. I turned 21 four months after I got back from Afghanistan. And so the seven months that I did there and the things that I learned there, you put me against my friends from high school that were in college at that point in our lives, I don’t know that there’s anything they could have beat me on outside of math.

Mindy:
And that’s fair. And you know what? They’ll beat me at math too and I went to college. I have three college degrees and math is not in any of them.

David:
And not to say … Many of them are successful now. I’m not here to critique that. But some of them are still paying off their student loan debt too.

Mindy:
And I’m going to agree with you on this. At age 22, the fresh out of college kid is not … Fresh out of Afghanistan, I think you’re going to have a bit more backbone and forcefulness.

David:
And my intent behind us talking about this is not to be talking smack about college and saying if you go to school you’re terrible and you have to join the military. It’s just that I spent time as a recruiter in the military. So I hate the stigma that if you don’t go to college, you’re a failure. That idea that you have to go to school and that is the route. It’s not necessarily always the best route. And so I like to encourage other options. And I think that an option that allows you to travel the world, gain real world experience and go to school for free once you figure out what you actually want to learn … Because how many people change their major? Oh yeah, there we go. There’s a statistic that’s over 50%. I think it’s like 67% of people change their major and of that, 50 or 60% change it again. You don’t know what you want to do when you’re 18, 19 20. So why not spend a few years trying to figure that out in an environment where it doesn’t cost you a fortune?

Mindy:
Absolutely. I really like that. I’m going to throw you over to the episode number 44 with Tinian Crawford, Captain DIY. He got his associate’s degree in just six short years. For those of you who are unfamiliar, that is a two year college degree. And he uses 0% of it. He was not in the military. He was in college going and he’s like, “College just isn’t my thing.” And now he’s an electrician. He was working for college and then decided to go out on his own. And he’s like, “I have to block out time to have time for myself. Otherwise, I’m just busy all the time. I could work 24/7/365 and still be busy all the time.” And college isn’t for everybody. So what do you do if college isn’t for you? Well, maybe the military is for you. Here’s some more options. Here’s some really great options.

David:
Learn a trade.

Mindy:
Learn a trade. But here’s some really great life experiences that you’ll get while in the military.

David:
And while I made the joke about trade and we were talking about careers, and then we can pivot to the good stuff, the VA loan, all of those trades are available. You can do cybersecurity. You can do counterintel, you can do intelligence, you can do communications. But you can do plumbing. You can do electrical, you-

Mindy:
In the military?

David:
Yeah. We need plumbers when we set up a base. We need electricians when we run pretty much anything. They’re wire dogs. There’s water dogs, whatever. And in those occupations you can earn journeymen certificates while serving. So I have three or four journeymen certificates for various things while in the military through … I can’t remember the name of the program so I apologize. I think the certificates are actually in the closet back there. I’ve never used them because I don’t have a job, but you can earn those journeyman. So you could leave the military as a journeyman electrician with four years experience, no debt. And there are ways to really set yourself up for success. Yeah.

Mindy:
Wow. I didn’t even think of that.

David:
Yep.

Mindy:
Well that’s why it’s not the Mindy show today, it’s the David show. Okay. One last really quick question. When you go to Afghanistan, does your passport get stamped?

David:
Unfortunately, no. In fact, when I was stationed in Japan, I could not convince them to stamp my passport until the one time I flew back on my own for leave rather than on military orders. So the only two stamps that I have in my passport that is now expired and I have a new one, but the original passport, the only two stamps are Mexico when I was in high school and Japan the one time I flew home on leave. And I went to 13 countries in that first three years in the military. None of them are in my … So I’m like …

Mindy:
Because that would be a cool stamp. I’m not going to Afghanistan anytime soon. I’m not going to Kuwait. I’m not going to Iran. I’m not going to North Korea. I’m not going to any of those places because-

David:
I’ll never go back to Kyrgyzstan. Yeah.

Mindy:
That’s a bummer. Okay. Now to the VA loan. The [foreign language 00:28:26]. The big, big, big, big, big dog. The VA loan is amazing. And I’m a real estate agent. I was under misconceptions about the VA loan for the longest time until I met John Lallande. I believe he was episode 303 of the BiggerPockets Money podcast. He was my go-to lender forever. I met him through David because I was helping a veteran client, active duty military, active duty Marine client buy a house and he was using his VA loan. And as I was talking to John, I’m like, “Wow. Really? They can do that? They can do that?” I was writing up this contract and they paid $0 out of pocket. They got a check when they sat down at the closing table. After buying a house, they walked away with a check because of the VA loan. Let’s talk about the VA loan. Who is eligible for a VA loan?

David:
Service members and vets, federal employees.

Mindy:
Federal employees too?

David:
Sorry. No. That’s my bad. Service members and vets.

Mindy:
Okay. Well, but it’s more than that, right? If I sign up today and I’m in the military today, I can’t go and get it, right? There’s a-

David:
Yeah. There’s time requirements on that. And there’s a couple different stipulations, but the biggest one is 90 days on active duty orders before you’re eligible for the VA loan. So even a reservist, if you deploy for more than 90 days, you can then use it. If not, you got to wait the six years for the reserves. But if you’re active duty, within your first three or six months you could use it.

Mindy:
It and you have to be honorably discharged, right? You can’t use this if you’re dishonorably discharged.

David:
Yeah. If you’re big chicken dinner, as we call it, bad conduct discharge, or other than honorable … Or sorry, dishonorable. If you’re either of those, then you can’t use it. But if you’re other than honorable, general, or honorable, you could use the VA loan.

Mindy:
Okay. Why would somebody want to use the VA loan?

David:
Oh, I mean, why would you not? It’s the best primary residence mortgage in the market. I could go on and on and on about that.

Mindy:
Go on and on and on about that. Why is it the best primary loan residence? Okay. That’s a very interesting stipulation. Primary loan residence. So you, David, can use your VA loan?

David:
Yeah.

Mindy:
Okay. But you can’t use it on all of these rental properties that you’re buying?

David:
No.

Mindy:
Okay. So this is only for owner occupant.

David:
Yeah. It has to be owner occupant loan. And the word is intend to occupy and people like to misuse that and say, “Well, what if I just say I …” No. What it means is you intended to move into it. And then they understand if you have orders to Maryland and you buy a house 60 days prior to moving there because you can close on a house up to 60 days prior to occupancy, and then three weeks later, the military is like, “Ooh, Maryland. California.” And you’re like, “Crap.” Well, you already bought the house so you’re not going to be hosed because you got a change of station.

Mindy:
You did intend to occupy it. You didn’t buy it knowing that you weren’t going to move from your house down the street. That is not intending to occupy it. And I want to highlight, and John said on his episode, he’s like, “Look, mortgage fraud is mortgage fraud. And I will tell you that it’s mortgage fraud. And if you want to go out and try to explain to …” Did he say the FBI? It’s a serious deal. If you want to go and try to explain to the FBI why it’s not mortgage fraud, good luck. But you are not going to get any backup and you are not going to win.

David:
Yeah. It’s a felony charge. I think it’s a $10,000 fine and up to five years in prison or something like that. So what I always tell people is, look, there’s a million loopholes. There’s a million ways to skin this cat. There’s a million ways to get out of it or get around it or whatever. And you might not get caught. But people do get caught. And the reward of owning a house is not worth the risk of becoming a felon and spending time in jail when you could just do it the right way and still own a house. So it is what it is. In fact, I just made a post that’s getting all kinds of fire on my Facebook group because somebody basically messaged and said … Well, first they used the incorrect version of your and there so he’s getting ripped up for that. But he messaged me. It was on TikTok I think. And he commented and just said, “Can you teach me?” Or, “How do I ‘intend’ to live there?” Or something like that. The question do was basically how can I pretend-

Mindy:
How do I show intent?

David:
Yeah. And I responded with three words. You live there. That’s the way to do it. You actually move into the freaking house. Problem solved.

Mindy:
And that is for all primary residence loans. That’s the conventional loan. That’s the FHA loan. And that’s the VA loan. If you’re trying to get a primary residence loan, you are saying that you are going to live there for 12 months. If you are not going to live there for 12 months, if you have no plans to live there, you are committing mortgage fraud. Will you get caught? I don’t have a crystal ball. I don’t know. But like David said, it is not worth it. There are so many ways to make money in real estate. You should not be committing mortgage fraud.

David:
Yeah. And on the big picture, selfish thing, if enough people do that, there’s always the chance that the VA revamps their program and it’s not as good as it is now. So it’s not worth ruining the benefit. So to answer your question, I think the reason the VA loan is so incredible is that the guidelines are incredibly loose. The actual VA guidelines are very, very, very minimal for them to guarantee the 25% of the loan. And so it’s up to lenders. Most lenders have their own overlays and their own whatever. For a prime example, there is no minimum credit score requirement per the VA. So if you found a bank that would lend it to you with no credit score, like a zero, okay, the VA will guarantee it. You’re not going to find a lender who will give you a loan with zero credit score, but I’ve seen as low as 500.

Mindy:
That’s pretty garbage.

David:
Pretty significant.

Mindy:
Yeah. Okay.

David:
There’s not a 50% DTI cap. So I’ve seen somebody buy a house, a duplex in Venice Beach, a $1.93 million duplex that John actually did the loan on and he bought a … He house hacked it. His debt to income was like 76% and he got approved. Whereas you know with an FHA or conventional, once you hit 50, you’re done. That’s it. 49 is the limit. What’s another one? Oh, there’s no loan level pricing adjustments. So with an FHA loan or a conventional loan, your interest rate will adjust at 740 credit score, 680 credit score and 640 credit score. So somebody with a 739 credit score will have a lower interest rate than somebody with an 800 credit score. The VA loan does not adjust the first time until 640. So somebody with a 641 credit score using the VA loan will have the exact same interest rate as somebody with an 820 credit score, which is why the rates on the VA loans are often better because if you fall in that 640 to 740 window, every other mortgage product out there will have the adjustment for interest rate and the VA does not.

Mindy:
That’s interesting. I didn’t know about all of these. I knew about the 0% down, which you haven’t even mentioned yet, which is kind of like whatever. And I do want to circle back to the house hacking, but you have a no down payment loan. The only loan that I know of that is available to non-service members is the USDA loan, which is intended for rural properties. It’s an interesting kind of loophole to get a 0% down loan, but only rural properties qualify. But the USDA map doesn’t keep up with progress. So it’s entirely possible if you’re buying a new build in a place that had no houses three years ago, that could qualify for a USDA loan.

David:
It’s weird. And to my knowledge, the USDA still has MIP and PMI. I’m not 100% on that. But the VA loan does not have mortgage insurance premiums or private mortgage insurance at all, which is something that separates it from a 5% conventional or a three and a half FHA. Now, the one thing is the VA loan does a funding fee, which is rolled into the loan. So it doesn’t come out of pocket. It is 2.3% of the loan amount on the first use, and 3.6% on consecutive uses of the VA loan. So if you buy a $100,000 house, it’s 2300 added to the loan. I have a full breakdown on this, so I won’t go into super details, but it boils down to about $11 a month for every $100,000 you borrow. So if you buy a million dollar house, zero down, it’s about $110 a month that you’re paying for just that funding fee, which is peanuts compared to mortgage insurance premium and PMI. To put it in perspective, my $80,000 duplex, my first purchase with an FHA loan, my PMI was $81 on a $80,000 property.
So the math’s not even remotely close. And I will tell you, and I will argue all day about risk and opportunity cost and all of the other things. Putting 20% down to save that 2.3% funding fee will never win over putting zero down and reinvesting the 20% or putting zero down and having the 20% sitting in a bank account so that if something goes wrong, you have reserves. So I could go on and on and on and on and about all of those things but I like to say that, because everybody’s always like, “Oh, but the funding fee.” Yeah, it exists because it exists, but it’s still better than any other mortgage product with less than 20% down. And it’s better than putting 20% down.

Mindy:
So if I do use my VA loan and I put 20% down, there’s no funding fee?

David:
Yeah.

Mindy:
Okay. But on anything less than 20% down, there is a funding fee, which makes it sound like I should never put any money down and just pay the funding fee.

David:
Absolutely. Yeah. There’s very few times where I think it makes sense to put any money down with the VA loan, just because of opportunity cost.

Mindy:
I do know that there are some misconceptions on VA loan caps.

David:
They have the zip code caps. In January 1st, 2020, it went away on your first use. And then you can do a one time restoration if you sell your property. So that’s why that guy was able to buy an almost $2 million duplex, zero down while active duty. Because there’s no limit on your first time purchase, as long as you qualify for the mortgage. So if you’re buying a fourplex in San Diego County, you could buy $1.2, $1.3 million fourplex because the rent from the other units will balance out your debt to income and blase blah. After the first time use, then the limits come into play. And really it’s probably better if we don’t get down that rabbit hole so I’ll just throw this out there. The entitlement things for uses of the VA loan after the fact, I’ve seen someone buy four houses with the VA loan so it’s very doable. But what happens is that after your first use, the answer to all of your subsequent questions is it depends on your situation. And so it’s going to be 100% different for every single person. So go talk to a lender and give them your actual situation. Don’t come to me and be like, “Can I use the VA loan again?” Maybe. It really depends.

Mindy:
Okay. I am going to say yes to all of that, except I disagree with you on go talk to a lender. There are a lot of lenders who do great work. There are a lot of lenders who do great work and do terrible jobs with the VA loans because that’s not what they do all the time. If you want to get a VA loan, you need to speak with somebody who knows what they’re doing. I’m going to throw out a plug for Cross Country Mortgage. If you have a VA loan need, reach out to David, reach out to me, [email protected] I will connect you with them. I have somebody who can do a 17 or 21 day VA loan close. If you are familiar with the VA loan and you’re like, “Never going to happen.” Yes, it will. They’ve done three or four. I can’t remember how many military clients-

David:
I’ve seen them do 14.

Mindy:
Yeah, David’s done 14 with them. And when I say I, I mean my clients who were in the military. I’ve done zero. I don’t have VA loan entitlement. But I have worked with them and they have closed lightning fast. There are ways to do it. There are ways to take what, 45, 60 days to close on a VA loan? And that is never going to get you a property. That is just going to get you headaches.

David:
Yeah. Happy to make introductions to lenders or agents or whoever. I mean, we’ve got a pretty large network of people. And to just bring your point home, if you have an agent or a lender who’s telling you, the VA loan is not competitive in your market, then you need to just find a new agent and lender because they’re wrong. And I have data within my community to prove based on the amount of loans that I have seen done. I mean, John did $20 million worth of loans on his own for people in my Facebook group in just the state of California in 2021. In San Diego and Orange County. The hottest market in the country and the hottest market we’ve seen in decades. And you’re going to tell me, “Oh, you can’t use the VA loan in competitive markets.” Wrong. Your agent and lender doesn’t know what they are doing and you should change.
And just to the two biggest things that I hear outside of the funding fee are the inspection and the appraisal. And everybody’s always, “Ooh, they’re so terrible. It’s not going to get approved.” And blah, blah, blah, blah, blah. The inspection’s not that crazy. And the appraisal process for the VA loan, if you look at the national averages, on average VA loan appraisals come in higher than non-VA loan appraisals. But the appeal process is where it gets really crazy because you’re an agent. If you have an appraisal come in $40,000 low and you call that appraiser and you’re like, “Hey, here’s a whole bunch of reasons that we think you’re wrong.” Their ego gets involved. How often do you think they actually change their … I mean, it’s not very common for them to say, “Oh, you’re right. Yeah. We’ll give you the extra $40,000.” When you appeal with the VA, it doesn’t go to the appraiser.
It goes to the VA. And so there’s no ego involved and they will actually look at your data and go, “Oh yeah. You know what?” And then on top of that, if they say no, you can then go a third time and I’m drawing a blank on the organization, but there’s a third person that you can go to a third time and … And I’m going to mess up the specifics on this one, because I’ve not actually seen it done but I know it’s a thing. If all of that fails, there is a … And I’m going to call Chris and confirm exactly where this is so I can link to it in your show notes. But there is a way to essentially say, “Yo, this guy’s moving here in 30 days and if you don’t do this, he’s not going to have a place to live.” And they can rush order and you might even … I’m like that’s level four. So there are ways to get your VA loan bumped up, the appraisal, that there are not in other loans. So your appraisal process is actually way better with the VA loan. The inspection, okay, yeah, sure. It’s whatever, but it’s not any worse than the FHA loan.

Mindy:
It’s better than the FHA loan. I have two horrible experiences. One with the appraiser whose ego got involved. He’s like, “I’m not taking your additional data.” “What do you mean you’re not taking my additional data? I have all of these that prove that my property is worth way more than you’re saying.” And he’s like, “No.” Just refused. And it was a conventional loan. There was no appeals process whatsoever. And with the FHA loan, oh my goodness. The FHA appraiser is like, “Well, it’s fine at value as long as you do all of these things.” And I’m like, “All of those things? This is crazy. Okay, fine. We’ll do this. We’ll do this.” Some of them were legit. You have to have a smoke detector and a carbon monoxide detector on every level. Great. Three levels. Here’s three. I don’t care. There was an electrical outlet that was tripped outside. So we hit the reset button and now it works. And we had to find an electrician to come out to certify that the outlet worked, even though we made a video with a lamp plugged in and we’re like, “See, it’s on, it’s off. It’s it works.” And it was a nightmare.

David:
I hate that.

Mindy:
I really hate the FHA loan.

David:
I that so much because okay, you’re remodeling a house. If you had an extra smoke detector, does your value go up? No. So why are you hitting me on something that’s so stupid? It’s a safety thing and it should get pinged on the inspection as something to fix. Sure. But does a smoke detector affect the value of the home? Let’s be real.

Mindy:
She did take pictures as proof that the smoke detector was in there. I didn’t have to have some, I don’t know, smoke detector inspector come out. But it was so hard to find an electrician. All the electricians are like, “No, I’m not coming out there for that.”

David:
Yeah. Not wasting my time for that. Yeah.

Mindy:
Yeah. Finally, the buyer’s brother. She’s like, “Oh, my brother’s an electrician.” I’m like, “Get his butt out here to certify that this stupid outlet works.” It was a nightmare.

David:
Or just certify it and we don’t even care if he showed up.

Mindy:
Ooh. I would never put that in writing David.

David:
Not saying that’s the right thing to do. I’m just saying, hey, an electrical outlet that was a GFCI trip should not be a hit on your appraisal.

Mindy:
Shouldn’t. And with the VA loan, it wouldn’t be. My inspection process with the VA loans have always been very smooth. And when I was talking to John about what do I do if it doesn’t pass, he’s like, “Does it have an oven?” I said, “Yeah.” He’s like, “It’s going to pass.” He’s like, “It’s a nice house. If it was falling down, if it was a dump …” It doesn’t just have to have an oven, but there are parameters. They don’t want the service member to be buying a house that is a rat trap, infested hole. They want them to buy a nice house or a decent house. So there are minimum thresholds that they have to meet, but all of the houses I was selling were nice.

David:
Well, let me make the caveats and I’m going to go very, very brief, just overview of other things that are out there and not going to go into detail. And I’m going to tell you that the reason I’m not going into detail is because, again, these are very niche things where every single lending company is going to have a different way they do it, different things that they allow and don’t allow. And these aren’t necessarily the easiest programs to find. So I’m going to just keep it very broad. However, these are things that I have seen done personally. So it might not be the easiest to find a lender, but Mindy and I are happy to help you out with finding someone who does these things. The VA has a renovation loan. It is better than the FHA 203K. It is also zero down. It will do more than the FHA 203K.
And I’m going to just leave it at that because, again, every lender’s different, but I promise you it’s better. And I have a breakdown of that on the website. I can link that to you if you want. It literally compares. And it’s like VA wins. The VA has a one time use construction. You can buy a piece of land and new build with zero down with the VA loan. You can build a barndominium with the VA loan in doing that.

Mindy:
A what?

David:
Oh, you haven’t seen these things? It’s like the new trend. Barndominium. Basically, you build your house into a barn. So you build a 70 by 50 or 50 by 50 pole barn. And then you build your house into the back part. And the front part is … It could be a hangar for an airplane or your cars or your trucks or your tractor.
So it’s a big thing in Texas and states where people live on a farm and they’re like, “Well, I need a barn and I need a house. Why don’t I just put the house in the back half of the barn and build a really baller barn?” And the VA can build that. I mean, there’s stipulations on the construction type. And again, every lender’s different. But I know a lender who I have personally talked to who has done that for a client. So a lot of weird things that you can do with the VA loan, because again, the guidelines are pretty loose as long as you got lenders who are willing to … And they’re more willing to work with you because who’s guaranteeing the loan? Oh, that’s right. The government. All right. Pretty secure.

Mindy:
Wow. Okay. So yeah, there’s some pretty strict parameters. You have to be a vet or active duty, honorably discharged or not dishonorably discharged. And you have to live in it. It’s your primary residence. There you go.

David:
And you got to qualify for the loan.

Mindy:
Oh. And qualify for the loan. Yeah. I guess that’s a point an important fact too. But that seems really easy. So here’s some parameters that you have to follow. We didn’t even talk about house hacking, David. How do you house hack with a VA loan?

David:
I mean, the same way you house hack with anything else. You can buy a fourplex with the VA loan, you can buy single families with ADUs. One of my favorite ways, my buddy Rio did this and we should totally have him on the podcast to talk about this sometime because he’s just a cool dude. Him and his wife, they’re both awesome. Great people. John and I used to go to this house. We always joked that it was like the Playboy hangout. We would go to the house to … That was where we went to watch the Super Bowl. We’d have to set a curfew, be like, “Okay, John, we both agree that we will leave at this time no matter what.” Because otherwise you get sucked into partying all night. Great dudes. They’re entertainers. But he has a five bed, four bath amazing house, ironically on Players Lane.
I don’t remember the numbers, but that was the address in California. And it is right outside the main gate in a really nice subdivision. Like the kind of place that you have no business buying as a young service member. Single family, $600,000, $700,000 house that’s worth million, million two now. Three car garage. Just awesome. And he rented four of the bedroom. He was a single at the time captain. Now he’s married, but he rented four bedrooms to other lieutenants and captains who were single. He was making $1,000 a month to live in this house. Now that he’s moved out because he got stationed in Japan, he’s making $2,000 or $3,000 a month to live in this house. And by the way, all of his roommates are commissioned officers in the Marine Corps who are single, make good money, respect where they live, love to have a good time. There’s a reason that we always went over there. They had a garage that he turned into a gym. He had a room that he knocked a wall out of and turned into a pool hall. I mean, it was the coolest house you could possibly own as a young … At the time when he bought it, he was a Lieutenant. So pretty young in the military.
So there’s that. And then there’s fourplexes and everything else. I mean, anything you can do with an FHA or whatever. And just as long as you buy smart, house hacking is the best … I mean, I can go on and on. It’s the best way to start in real estate.

Mindy:
It really is. You cannot use the VA loan for an investment property, except you can use the VA loan for an investment property when you live in one portion of that investment property. So why not start your real estate empire with your VA loan, your 0% down VA loan and live on Players Lane?

David:
Yeah.

Mindy:
David, this was huge. This was so much fun. I learned so much about the military. I do believe you backed up your initial statement, which we said at the beginning of the show, the military is the best job straight out of high school. Please remind people where they can find out more about you.

David:
Pretty much any social media platform as either Military Millionaire or From Military to Millionaire.

Mindy:
Okay. And your website. Your website, your book, your podcast.

David:
frommilitarytomillionaire.com and we wrote a book. The No BS Guide To Military Life: How to Build Wealth, Get Promoted and Achieve Greatness.

Mindy:
Who’s we?

David:
Oh, me. I just try to not sound like an egotistical jerk. So I say we as if my team did stuff.

Mindy:
You wrote a book. You are a published author.

David:
Yeah. And it’s one of those books, I wrote it as everything that I wish I’d known the day I joined the military. So it’s kind of like a chronological order for if you were joining the military, here’s a book to hand someone and say, “Hey, if you do this, I can’t guarantee you’ll be financially free millionaire by the time you leave in four years, but I can guarantee you’ll be a lot better off than you would if you hadn’t read it.”

Mindy:
Why didn’t you call it everything I wish I had known the day I entered the military?

David:
Because The No BS Guide To Military Life is what the people voted for. I do almost everything via a poll and I have a very large Facebook group of service members and when I polled them on 20 different things, this was the clear winner so we went with it.

Mindy:
Okay. And what is that Facebook group called?

David:
Military Millionaire.

Mindy:
Military Millionaire. Is it? I thought it was From Military to Millionaire.

David:
I mean it probably shows up that way. The URL though is Facebook.com/groups/militarymillionaire.

Mindy:
Military Millionaire. Okay. Awesome. David, thank you. Oh, did you mention your podcast?

David:
I have one of those too. Military Millionaire podcast. Pretty much everything. You just Google … I tried to keep in … And for the record, the reason it’s From Military to Millionaire is because when that whole platform started, I was not by any means a millionaire and it was just documenting my journey. So it’s not an ego trip. It’s just, I was prophesying my future.

Mindy:
There you go.

David:
And I got lucky.

Mindy:
Well, you said it and it came true. Okay, David, this was so much fun. I really appreciate your time today. I appreciate you sharing all of this information. If you are thinking about joining the military, if you have kids in the military, if you have kids who just aren’t on the path to college, this episode is for them. Please share this with them. Please share David’s website, his book, his podcast. He is a wealth of information, clearly, as you just heard. He is a wealth of information on all things military.

David:
Why, thank you Mindy.

Mindy:
Okay, David, should we get out of here?

Speaker 3:
I suppose so.

Mindy:
From episode 337 of the BiggerPockets Money podcast, he is David Pere and I am Mindy Jensen saying Uncle Sam wants you.

David:
This is the BiggerPockets Podcast show 663.

Oren:
Write this down, raise the stakes. If somebody believes there is low stakes at this pitch, at this meeting, at this interaction, it is going to end like this, “Hey, this looks great. Love this. Love what you guys presented, something we’re really interested in looking at. Send me the deck. I’ll talk to my committee, my partner, my wife. We’ll take a look at it. If we have any additional questions, we’ll get back to you in the next week.” That requires no training. All buyers, all investors say that unless there are stakes. So raise the stakes.

David:
What’s going on, everyone? It’s David Greene, your host of the BiggerPockets Real Estate Podcast, here today with my co-host, Rob Abasolo with a fantastic show, and I really mean that. Today, Rob and I interview or Oren Klaff, the author of one of my favorite books you’ve heard me speak about often, Pitch Anything. Oren is probably, I would consider him to be the world renowned expert in teaching the concept of frame control and how to hold people’s attention so you can get them to see things from your perspective and invest in your deals.
He’s hired by the big guns to come in and raise money for very big projects and he was gracious enough to share his time with us today sharing very high level concepts that you usually won’t hear anywhere unless you pay tens of thousands of dollars to take courses to teach you stuff. This is the stuff high-powered business people will go sign up for and you’re getting it today for free.
Our show with Oren, I’m just going to give you disclaimer, we hit the ground running and he’s like a Tasmanian devil of value. So in these two episodes, Rob and I are actually going to stop it a few different times throughout the show to explain how the concept that Oren is describing would relate specifically to our industry of real estate investing, as well as give you some color commentary on how this might apply in your own business. Rob, what were some of your favorite parts of the show?

Rob:
Well, Dave, there were a lot. There were a lot of favorite moments in this because he was speaking to my soul, I think. I’ve been really going down the investor journey and working with investors. I mean, I think probably in the last year alone we’ve had at least a hundred Zoom calls with different people and we’ve really figured out who we are, who we want to be as real estate entrepreneurs and investors. So I really reflected a lot just in this episode because he really put a little knife in all my wounds and was like, “Yup. You were doing it wrong the whole time,” and I’m like, “Yeah, yeah, I was, I was,” but it’s really nice in retrospect to be like, “Okay. Well, here’s the silver lining. I learned it the hard way so that everybody at home can learn it the easy way.”

David:
That’s the role that you and I are in. We’re the vanguards that go ahead and make a whole bunch of mistakes, everything gets messy and ugly, you lose money, you lose employees, you go through pain and frustration, and then after you finally go through all that and you figure out the answer, our battered and torn bodies come back and say, “Okay, guys. I went out there and I figured out that’s where the tigers are. Don’t go there.” We’re all scraped up and clot. Our clothes are falling off, and we’re like, “This is the way that you can go and you can avoid all that pain,” and that’s a privilege we have of sharing that with everybody who listens.

Rob:
That is today’s retroactive quick, quick, quick, quick tip. Well, this is particularly topical for me because I threw out my back this week. So I’m just in shambles. I hit 32 and the old body’s just breaking down limb by limb, but it’s okay, I’m going to push through. I’m a survivor.

David:
Rob, you’re back in the gym, so everybody should know that Rob has taken his role as the co-host of the podcast seriously, and he’s now training for the BiggerPockets Olympics.

Rob:
That’s right. Well, I was. I was at back in the gym. I joined and I am out. I canceled my membership today and I said, “I don’t know when I’ll be back.”

David:
“I don’t know when I’ll be back.” Yeah, so pray for Rob’s back. He’s going to the chiropractor today to get that work done. I have, actually, I’ll say it public, I have scoliosis. I’ve had it my whole life and it’s horrible. My back goes out all the time. My shoulders get messed up very, very easily and my neck. So jujitsu frequently will throw me into problems playing sports, lifting weights. It’s always something that can tweak it. So back problems suck. You’ll be on my mind, Rob. I hope you get through that.

Rob:
Thank you. Well, you’ll always be my broliosis.

David:
Appreciate that. When you guys see Rob at BP Con, make sure that you either give him a free massage or at least a high five and hope that his back gets better. All right. There you have it, folks. Without any further ado, we’re going to bring in Oren. Buckle your seatbelt and get ready for a wild ride.
Oren Klaff, welcome to the BiggerPockets Podcast. I’m thrilled to finally have you here.

Oren:
Yeah. You might not be so thrilled 30 minutes from now, but for the moment, Hail fellow, well met.

David:
Thank you very much. Now, if you’ve been listening to this podcast, you’ve no doubt heard me mention the book Pitch Anything as one of my all time favorite books. I often recite this when people say, “Hey, David, what’s a book that I should read? What book do you recommend?” I’ve read this book four times. I love pretty much everything about it. It’s helpful in so many ways. It could have been probably three or four different books because of the concepts that are in there. Oren, do you mind giving from your perspective the gist of the purpose of the book, what type of information is in the book and who it was meant to help?

Oren:
Yeah. So I mean this book was mainly written to help losers struggling through life. Well, no, that was me. That was me at one point, struggling through life. So the book was cathartic in terms of it was meant to help my prior self get to where I am faster. These are the things that I lived through, going into meetings and supplicating to the buyer, waiting for business to happen, sending emails, “Hey, just checking in,” doing a pitch and then saying, “So what do you think, guys? Are you interested? Can I answer any questions?” taking the beta position. Once I learned what an alpha and a beta is, for me, it was like I went to the wardrobe to get a shirt to go to my job at an investment bank, go up an elevator, go to my tiny office overlooking a freeway, and answering to the managing directors and getting them coffee if they wanted coffee.
I went home, went to hang my shirt in the wardrobe, open up, and Narnia was back there, and I’m like, “Holy! There’s an entire universe in my universe that is a different reality from what I’m living.” Then I didn’t ask any questions and I’m like, “There’s lions and dragons and spaceships and all kinds of wonderful stuff,” and I just dove into the wardrobe and living in a different world, all from understanding what a beta position is, what a supplicant is.
So long answer to a short question, but it wasn’t till later when I really started understanding some of the biomechanics of this stuff. When you were in the beta position and you are … When somebody else feels powerful over you, there is a physiological response in them in which they do the following three things. They view you as transactional, “How much can I get from you without investing anything?”
Second is they view you as only at a surface level. They don’t care about your family. They’re not interested that you surf or play racketball or a squash champion. They don’t care that you have a value system or ethics. They just view you at a surface level, and that rolls into the third and most significant thing in the way people view you is that they take risks around you they would not take around their peers. Well, that means they would take phone calls, check their phone, ask you for incredibly insensitive gives, try and reduce pricing, try and get you to give away what you have. So that’s what people who feel powerful do physiologically.
So the book is intended to show you how to stop that from happening, from putting yourself in the beta position. You walk in a room and I walk in a room. I don’t know you from a block of ice. Everything unfolds from there. If you’re in the beta position is because you put yourself there, and by default, by putting yourself in the beta position, you’re putting the other person in the alpha position or the power position, and even if they’ve never done a deal before in their life, they become a master deal maker from being in the power position, seeing you as transactional, seeing you at a surface level, and taking huge risks.
If anybody here is old enough, you guys obviously have seen Trading Places, the final scene with Mortimer and whatever, where they say, “Hey, you won the bet.” They’ve ruined people’s lives. They exert incredible emotional distress on people and it’s all for the bet over a dollar. That’s what happens when you take the beta position is that people will bet your life away for a dollar, and that’s what this book is intended to do or not just the book, but this is why I don’t just do deals today and I invest time writing and I invest time on these kinds of podcasts because of the millions of people that I’ve touched.

Rob:
Awesome, man. Okay. So lots to unpack here. I want to get into this. First, I want to say I very much love the concept of the book, and I feel like my life is I’m a walking, talking example of the idea of Pitch Anything. I don’t know if anyone really at home knows this, but before I was a content creator, I was in advertising. I was a senior copywriter at an agency for about 10 years, and it was just very funny because you were served a brief and you create ideas that answer the brief and they were never the good ideas, right? I would come up with these really crazy, out there, wacky ideas and I would say, “Okay. I’m going to give them five ideas that answer their problem. I’m going to bring a wacky one just to let them know that I’m creative,” and it always seemed like the wacky ideas or the funny or the out there ones were the ones that always went through, were the ones that would pique the interest of my creative directors.
After leaving advertising towards the end of that, I was in improv, and improv is the art of pitching anything to your scene partner no matter how dumb it is, and allowing them … Basically, you’re becoming very vulnerable because you’re going to throw a wacky idea out and you are just crossing your fingers that they’re going to pick it up and run with it.
So there’s certainly this power dynamic that comes from that, from the advertising pitching in a boardroom of directors, they’re the alpha, you’re the beta. Same thing in improv where you are the beta and your partner can be the alpha. I’m curious in the actual book here when you talk about this relationship, is the desired outcome to do away with the alpha and the beta roles or is the desired outcome to become the alpha role within the relationship?

Oren:
Yeah. So this is a great question. I mean, the alpha and beta roles exist. There is, in my worldview, there is no egalitarian flat win-win. We’re all looking for the same outcome even in a win-win in which you say, “Hey, we’ve approached this for both sides,” it is impossible to really reconcile a perfect deal. The alpha and beta exist. One person will, by definition, get a better deal than the other. I think most people have in their, I haven’t really done a scientific investigation but experientially from having been in billions of dollars of transactions, people have a notion you don’t get anything you don’t ask for in business. Once they feel empowered and have had some success for doing that, people are automatically going to grab the alpha role.
Here’s what you have to understand. There is an alpha and beta. However, most people who occupy the alpha don’t know how to handle that role professionally, fairly, with parity, with integrity, with transparency, with honesty. So if you believe that if you were in charge of this deal, if you were actually making the pricing points, and you were making the closing conditions, and you were making the equity-to-debt ratios and the debt service, and you were deciding on which part of the deal, in your guys’ terms of art, which part of the deal was interest only, what the balloon was, what interest rate was fair against the fed open interest rate window, if you were deciding all of that from the alpha position, would the deal be likely to be done fairly, honestly, transparently with parity for everybody involved, and survive the test of time so then people look back on it and say, “That was a well constructed deal”? Because if you feel that that’s true, you should take the alpha position because the other guy is going to take that position and ruin the deal.

David:
All right. This is a great point. Now, Oren is speaking in terms that are known to his industry as an alpha, beta. We wanted to take a quick minute because these can be confusing terms because the phrases alpha and beta are often used in different terms like an alpha male describing a certain kind of guy. That’s not what we’re talking about here. What we’re talking about when we talk about alpha position is the person that has the most leverage in the situation. That could be the person with the most experience, the person that has the deal and their contract and they’re trying to bring investors into their deal or it could be the person that has the money that someone’s trying to pitch to, which would put them in the alpha position.
Now, what Oren’s saying is when you’re in the alpha role, it is your responsibility to put a deal together that works for everyone. If the person who’s in the alpha role isn’t doing that, they’re making a one-sided deal, the deal’s not going to get done. This is why you should strive to be in the alpha role because when you’re the one that has the experience, the knowledge, the way to put a deal together, that’s a win-win. If you’re not in the alpha role, you’re not able to do that successfully. Rob, did you have anything you want to throw in there?

Rob:
Yeah. What he just described was legitimately just my investor journey for the last two years. My partner and I, the way we structure it is, obviously, I have the content, I teach people how to do this, and people send me inquiries to invest with me. Then my partner, my COO, he basically will go and he’ll meet with the investors. There is a bit of an interesting power dynamic because you just never really know walking into the conversation who is the “alpha”, right? A lot of the times you would think it’s us because we’re the experts here, but then there is, like he was saying, the empowerment that comes from successful investors and they’re like, “Hey, I’ve done this. I’ve made the money doing this, and I’m giving you my money and thus you have to do what I say.”
So over the past year, our entire process of how we work within investors has completely changed. I think getting started it was all about, “Oh, sure. You want this? Okay. Great. Yeah. You want to pref here? Great. Oh, you don’t want a 50/50 split? You want 60 and we get 40?” Just over time, I saw how bogged down my partner was just fulfilling every single request. So when people would say, “Oh, well, when you work with investors, do you usually do this?” and we would always say, “It depends,” and it’s because we were willing to bend over backwards because we were getting our bearings on how to work with investors, but now, I’ve really had to be a lot more stringent with people walking through the door for the exact reason that Oren was talking about, where we are in this for the win-win, right? My reputation is at stake here.
If I mess a deal up, that is on me for my career, and thus it behooves me to put together the best deal that’s going to be worth it for me to put my time into this and that will make my investor a good return. So we do have people that try to negotiate all the time and I always tell my business partner, “The moment you allow negotiations to open, they think it’s pawn stars and they’re like, ‘Tell you what, I’ll give you 40%, I get 60, and I get a 15% pref.” I remember one time my partner gave that investor a 15 pref and I was like, “We’re not going to do this. I’m sorry. I know that you negotiated it. I know that we’re at the finish line, but that is not worth it for us.”
We get nothing out of this. We get a small equity share in this property, but we’re giving up all cash flows to this pref that’s impossible for us to win, and if it’s impossible for us to win, it’s impossible for us to be motivated to keep this deal alive. So yeah, I don’t know, it’s just really interesting to hear it from him. You’ll always be all pro because that’s what it sounds like. It’s like if you’re going to be in the “alpha” position, you got to make sure that it’s a win-win for everybody and it checks the boxes and there’s no negotiation on that, I think, personally.

David:
This is super applicable to our industry of real estate because we’re always working on a deal where two sides are negotiating against each other, a buyer and a seller, and then you’re working on a partnership where two people are looking to get into a deal. Sometimes they’re in equal position and then other times when it’s a syndication or something, you’ve got one person setting the terms and the other person deciding if they want to be a part of it. So this is very helpful information because it will come up constantly in your career. It comes up in the world of real estate. I always tell agents who say, “Hey, I want a better commission split,” and I got so tired of hearing that I said, “Okay, fine. You can have it. You name your split. What do you want?”
“Can I have 80/20? You can have 90/10?”
“Yeah, you can have it all. Okay. You got it, but you need to know when you walk out this door, when that client comes, I’m going to give it to the person that’s on a better split for the company. So you won the battle where you got 90% of the commission, but you lost the war because you’re not going to get any of the leads.”
You have to be thinking about both sides at all times. Oren is just someone who has spent so much time mastering this and being in these environments that he’s come up with this way of looking at it where you do have an alpha and a beta, and we want you as the BiggerPockets listeners to be in the alpha position.

Oren:
I want to go back to something so critical that you mentioned, improv. So I lived on Sunset Boulevard in Beverly Hills in West Hollywood for years. I think when I was 44 or something, I went, I’ve signed up for improv. So I show up in the class and it’s a bunch of 22-year-old actors and actoresses, whatever the right, mainly waiters and waitresses in the class.
So I walk in and they’re like, “Oh, hey, you’re looking for the DUI class to get your license back? That’s down the hallway. This is improv.”
I’m like, “No, no, I’m here for the improv class.”
They’re like, “What is this 44-year-old dude in a suit doing in improv?”
It’s the ability to create novelty is I think what is amazing about improv. So in context, novelty, right? As the years progressed, what I realized is the way I execute novelty, it raises the stakes. This is not just another meeting with another dude that you are at the end of the meeting going to say, “Hey, yeah. That’s super interesting. We really want to invest in this area. We like your presentation. I need to talk to the committee. Send us the deck. We’ll review it. If we have any questions, we’ll get back to you in a couple weeks.”
So with the ability to deliver novelty and differentiation, you can also raise the stakes and saying, “That’s not happening here. This meeting is not only to your benefit, it’s to my benefit as well.”
If you have improv chops, then you have the ability to say, “David, listen. Great that you have these questions. Great. I could invest some time in being with you today, and as much as you need to evaluate our investment, the whole period, the going in cap rate, the going out cap rate, the debt-to-equity ratio, the debt service coverage, the underwriting on the asset, the competition, make sure environmental is done, that the underwriting matches the appraisal where difference from the appraisals document, you got to evaluate all that stuff, but as much as you’re evaluating us, our track record and the asset, we also need to leave some time for me to evaluate you.”
That is raising. So that’s what improv is gives you the ability to say things that are novel to the environment you’re in with seriousness and raise the stakes. So I think you can agree that the goal of improv for an audience is constantly raising the stakes, right? Each addition to the scene has to hold somebody’s attention longer, make them laugh harder, build to something, build momentum. No audience wants to stay in stasis, in the same emotional state that you’ve created.
So if you know how to raise the stakes, then you’re driving towards a decision, and I’ll say, “Hey,” and I can give you some things that obtain frame control immediately, right? Certainly, if anybody listening to this has some time to go spend inside of improv, then you have the ability to say things that you know you should say, but you’re just not sure how to get them out of your mouth, and improv gives you that ability.

Rob:
Yeah. I mean, when you summarize it, effectively, what a lot of improv comes … The number one golden rule of improv is what we call yes-and. If your scene partner pitches you something, you say, “Yes, and this other thing that makes it crazier, funnier, wittier, more off the cuff,” and you keep yes-anding each other until you get to a moment where you agree that you’re on this concept and you run with it.
The number one downfall of most improv scenes is no-but, right? If you say, “No, but this …” you’ve now denied your partner, and now you’re deescalating the situation in a lot of ways. So I think that makes sense and there are some pretty useful applications of that even in real estate because, for me, in the whole Airbnb world, we’re all about creativity and creating unique experiences. When I’m concepting a new experience or new listing with my partner, we are trying to yes-and each other to say, “How are we getting to the best product?” versus saying, “No, no, but this, the logistics here are terrible,” and shooting ourselves in the foot. So I do think that this is why I really thrive with a lot of my partners because we’re very complimentary in making sure that we’re basically escalating every single deal that we have on the table.

Oren:
Well, I think, yeah, if you’re listening to this and you want to write something down, “Hey, these idiots have been occupying my time for 15 minutes now. I’m not sure I’ve learned anything,” write this down, raise the stakes. If somebody believes there is low stakes at this pitch, at this meeting, at this interaction, it is going to end like this, “Hey, this looks great. Love this. Love what you guys presented, something we’re really interested in looking at. Send me the deck. I’ll talk to my committee, my partner, my wife. We’ll take a look at it. If we have any additional questions, we’ll get back to you in the next week.” That requires no training. All buyers, all investors say that unless there are stakes. So raise the stakes.
One thing, I just want to revert to improv. This is not a sales pitch for Second City in Chicago or that you should move to Los Angeles but you should and you should also go to Second City in Chicago, but one thing it gave me is the ability to reframe people’s own behavior and lens on themself in a outrageous way. I have to deal, and I’ll just give you an example of what I mean by that, and this is something that you could take home with you and if you use this, if you’re doing transactions, this is something you’ll make a couple million dollars with that we’re going to go over in the next 30 seconds.
I talk to billionaires. I talk to guys who manage billion dollar funds. I talk to hundred millionaires. I talk to private equity groups. I wouldn’t say all day long, but at least every day that I come to work. Invariably, a billionaire is busy and, for me, I’m in the beta position going in for that meeting. Very high view of themselves, low to middle view of me, and they always come late, always. Never have them come on time. Every once in a while you have somebody super punctual, but they always come late.
So I’ll say, “Hey, David. Great. You’re here for the 108 call? Hey, David, are you here for the 108 call?” So everybody managing a billion dollar fund, it immediately gives them a lens to view their own behavior. I’ve had billionaires start off calls, apologize, “I’m so sorry. We had a three billion dollar shipment stuck in the port of Los Angeles. They needed my final sign off. The DocuSign wouldn’t load. This is food for the food bank of California to save the lives of small children. I’m so sorry that I created this thing,” because they know the value of time, whether you’re important or not. They know that their ability to show up and do what they say is just a marker of quality in business and they didn’t get to running a billion dollar fund by showing up to meetings whenever they want.
So that is immediately, they’re starting off the meeting apologizing to me for their behavior. Now, we are becoming peers, and now they can see me as a person, as somebody with high values, and somebody who is not a beta and supplicant for them to order around and tell me to do whatever they want.
So there are indications to people that you are a peer, even if they’re a billionaire, if they’re a billion dollar fund, they have to understand that you are not a commodity, that what you have cannot be bought anywhere, and they cannot impress their values on you, and your value system is as important or more important than theirs, and when they behave awkwardly, weirdly, out of phase with our culture, you are there to scratch your head and go, “Hmm, don’t quite get what’s going on here. I like you. You guys are super credible. You’ve done some amazing stuff and you’re our dream client, but also, I don’t understand what I’m seeing. Can you help me square this circle?”

David:
I think something that’s fascinating about what you’re describing, because what you’re saying is you know coming in you’re in a beta position. That’s a very simple thing that you did that changed the dynamic of the relationship that maybe didn’t put you completely in alpha but, like you said, put you in peers. I just want to highlight very briefly, the point of this is because you need to get your point across. It’s not to fuel your ego, it’s not to feel-

Oren:
A million percent. Someone will not listen to you. You cannot pitch and you cannot close from the beta position. Until they perceive you as a peer, you’re not closing that deal at anything near numbers that would be fair to you. Nobody closes a parity deal with lots of margin in it with somebody they believe they have power over. So until you’re perceived as somebody who is busy, has momentum in their own business, is not needy in any way for this transaction, and is offering a opportunity for a partner as peers, they will continue to negotiate and chip away your deal until they feel like they’re in the super majority position.

David:
It’s important we highlight that because the phrases alpha and beta have as stigmatism to them where you often hear, “I’m an alpha male,” right? It’s not about the way you come across. It’s in this specific relationship and you’re bouncing around them all day long. There’s a position of first position, which is alpha or beta, which would just be second.

Oren:
So another word that has a lot of stigmatism with it is control. I am looking for control. Why? Because I am a better governor of the outcome for you than you are. You will negotiate too aggressively. You will negotiate a deal that won’t hold together all the way through legal, and you’ll negotiate a high friction deal. In the same deal between you and I, it’s better for me to have control because I’m going to craft a deal that can be stress tested, that will last through legal, that will get to the other side, that can withstand an argument, that can go through friction and still be a deal.
So I want deal control because I’ll put together a deal of quality that everybody will in the end be happy with the outcome. You will put together a controlling deal that benefits you, puts me at risk and my legal, my partners. I’m not going to perform because at the end of the day, even if you get one over on me a year from now, I learned that my desk service coverage is incredibly high, I’m going to look for litigation, I’m going to blow out of the deal, I’m going to file bankruptcy in the SPV, whatever it is. So I want deal control because I’m going to do a better job with control than you will, not you, David, of course

David:
We see this a lot in the relationship between real estate agents and their clients, particularly when you’re selling a home. So I would notice this if I would go in and I let them stay in the alpha position, they’d say, “Okay. Well, I want to pay you a 4% commission and you’re going to work around my schedule and we’re going to list my house for way more than it’s worth,” and they thought they won. What happen is I would see repeatedly they get a terrible experience. No one buys their house. No one’s motivated to work hard for them because they chipped away the commission. They out-negotiated their own agent, which usually means their agent sucks and isn’t going to fight hard to get them money. When you let your client win, they lose.
This is where your book came in so helpful because I realized I need to be comfortable taking the control because I am the freaking expert. They’re not. I sell houses all the time. They don’t. If I give them the control, it’s giving the control of an eight-year-old what they’re going to have for dinner. I’m sure they’d like it, they’re not going to make good decisions so it’s going to lead to everyone being upset.
This is why the concepts in your books, which, frankly, I think they can make people a little uncomfortable because you are learning how to be in a position of control, but if you are the fiduciary, if you’re the expert, if you can see the angles better, you got to have it. So this comes into play a lot for real estate investors that are trying to raise money for their deals, that are trying to acquire properties from a seller who doesn’t know what their property’s worth, all kinds of scenarios that it makes your job so much easier when you understand the dynamics that are actually happening within the relationship.
I also think that there’s a large contingency of people that want to move forward in a particular endeavor of life. They want to buy properties. They want to build wealth. They want to get a better job. They want to ask for a raise, and all they could say is, “I just don’t feel confident. I just don’t have confidence to do it,” and they don’t understand they’re living in that beta position every day and, physiologically, it changes how you feel.

Rob:
So this is very interesting to me because, again, he’s really harping on a lot of the pain points that I’ve had. When you think about investing, you have your buy box. You have the criteria that you look at when you’re buying a property. For me, I invest in four different places when it comes to short-term rentals. I invest by national parks, state parks, vacation destinations, and eclectic towns. That’s my buy box, if you will, for short-term rentals.
I never depart from that because my strategies work there, but as we started to come into this journey with investors, I started to realize that there’s an investor box too, if you will, where basically, you have to set the parameters of how you work with investors and when you’re willing to walk away. A lot of people think that because money is being offered to you, you have to take it. When you’re starting out, I understand that notion and you probably should, but when your experienced and when you’ve cut your teeth in the industry a bit, you got to stick to your guns, truly.
So for now, when we’re working with investors, it’s very clear. We take this kind of split. If there’s a pref, this is what it is. We call the shots on the design. We call the shots on the location. We handle everything. When we have an investor that wants to come in and basically be another cook in the kitchen, it’s a no for us. So now, we have this criteria, and as much as we want to work with people that are really nice and that respect us for what we’ve done, it’s just not worth it for us because the more that we give to an investor, the more that’s always taken away from us, not necessarily just in equity but in time. Really, that’s what it all comes down to is he just talked about it for a little while ago how important time is. So if you’re burning all your time trying to make a deal work, it’s probably not worth it, Dave.

David:
That’s a great point, and it also opens the door to another great point, which is that many people that will be hearing this are going to be experiencing a little bit of uncomfort, maybe discomfort, possibly some cognitive dissonance because control is a tricky thing. When you’re in a position of control, it should come with responsibility. So you’ve always heard that Spider-Man phrase, “With great power comes great responsibility.”
A lot of people don’t want responsibility, so they inherently just don’t like control. Others have been in a situation where someone had control over them and it resulted in pain. So a common defense mechanism is to say just avoid a situation where anybody has control over anyone else. Then there’s other people who just need to be in control all the time, and that can be bad too because sometimes they shouldn’t be in the position of control.
The person that should be is the one that has the experience, that has the knowledge, that can put a deal together that works for everyone. If you want to get ahead in life, if you want to build wealth through real estate, you’re going to have to, at some point, get comfortable with the fact that you need to own the control you have. When you are the buyer in a transaction and there’s no other buyers that you’re competing with, you have leverage over that seller, and using it will allow you to save more of your capital and get a better deal so that you’re incentivized to buy more property.
When you’re selling a property and there’s eight interested buyers, you have control, you have leverage, and you can put a deal together that makes more sense for you so that you’re incentivized to want to do this again. The same is true if you’re the person that finds a deal and puts it under contract and you’re bringing in investors. They’re depending on you as the person with the control to put a deal together that will make them money.
When a mistake is made by someone in control, it can be catastrophic. If a mistake is made by someone who doesn’t have control, the limitations are there that it can’t get that bad. It’s what I’d like to encourage people to do as they’re listening to this is to ask themselves tough questions. Are you okay acknowledging that there is an alpha and a beta in situations like this and it’s in your best interest to seek to be the alpha? If you’re not ready to be in the alpha position, what knowledge, what information, what can you do to improve your position so that you do a better job when you’re in the alpha position? When it comes to real estate, you can make a lot of money in this industry, but it’s not going to happen if you don’t have the control.
So there’s discomfort that can come from that, but it doesn’t have to be that way. When you know that you make good decisions that make everyone money, you put win-win solutions together, you take properties that are not being managed well and you put them in their highest and best use, you should have a form of confidence that comes with that. Rob, have you had an experience like that in your life where you recognized, “I need to be comfortable in this position of power that I never had before”?

Rob:
100%. You got to think about it, right? It’s what he’s saying. You want a win-win scenario here, right? That’s the outcome. This might seem like a win-win scenario, David, but it’s not. Investor says, “Hey, Rob. I’m going to give you money. Go buy the house. Here’s the splits.” I take a bad deal but, hey, I get a free “house”, right? Then at that point, once we’ve closed the deal, we run it, we perform, we perform well, but then I say, “I never want to work with that person again because the negotiation was terrible. Now, I’m going to go find another investor, brief them, pitch them on another property, and work with them, and find the better deal.” That to me is not a good scenario because at that point, I’m looking for strategic partners that will invest with me not just for one deal but for several deals.
So you really have to try to put together a deal that’s a win-win like Oren’s saying for the exact reason that, look, it’s either I’m going to get a crazy good deal and the investor, and thus the investor might do it, but they’ll never invest with me again or the investor gets the crazy good deal, and I get the bad deal, but I go through with it, but then I never invest with that investor again. Both of those are lose-lose scenarios to me.
So I think you’re really trying to prevent any friction in the future by just setting the stage that it’s like, “Hey, I’ve underwritten conservatively, just so that you know, so that we are winning across the board and we’re getting this thing to the finish line together.”

David:
That’s it.
Would you mind sharing the story in your book, I’m former law enforcement, so I love it, of what it’s like when you’re interacting with the cop who’s pulling you over? I just thought that that was brilliant when you’re describing what emotions the cop is feeling versus the person being pulled over.

Oren:
Yeah. So I mean, I would love for people to read the book and have that for the first time, but maybe I can give you the opposite story of that. So right there is what I would call a college kid’s poster sports car, apex sports car. I could walk over and touch it. Happy to turn the camera if you want to see it. So I have a friend who is a police officer in the California State Police. On Christmas, we met up in Orange County, and he got in the car and was driving it up the freeway. It was Christmas and it was fun, and he was coming up 140 miles an hour behind a car, and people would look and see some jerk in a super hyper sports car behind them.
So they were freaking out, and he was pointing them to pull over. So they were getting pulled over by a state trooper on Christmas in a hyper car. We were having fun with it. Obviously, I don’t want to mention the guy’s name, but the emotion … People pulled over immediately, and just the emotional chaos of being mad at someone for driving up behind you in a jerk sports car, and that’s why I’m not naming which car it is, and then they’re a state trooper, it’s a massive overwhelm.
I said, “Joe, hey, let’s just stop doing it.” He’s six-foot-three in all his gear and fully showing himself to people. I go, “Let’s stop doing it.” This is massive emotional overwhelm for people in which they can … They were shaking. You can just see them visibly disturbed and stopped being funny really quickly.
So I’m not sure if that helps, but in terms of frame control, and getting this alpha position, and controlling people, and getting them to see things from your perspective, you’ve got to put them in some emotional state in which they are in a situation that they’re unaccustomed, they want something, they’re excited about something, and they’re in an emotional state in which they’re unaccustomed to being in.
I’ll give you an example that’s not in the book, which I think you’re looking for, but I do want people to read that and experience it for the first time. So I was in a meeting with a venture capital investor for a genetics company. There were 10 of us in the room, and they brought their expert into the meeting, their genetics expert. She was incredibly aggressive about the company’s IP, about the company’s technology, about the company’s ability, questioning the company’s claims.
I said, “Susan, this is all fantastic. We can break all, but the questions you’re asking all require 45 minutes to two hours to answer, and we’re here for another 30 minutes. None of your questions are answerable. You’re looking at one of the best genetics companies in Southern California. You guys are 70% on the way to ask to making the investment, and you’re asking the unanswerable questions. So one, why don’t we set some breakout sessions? You can sit with the scientists and get solid answer to your questions. Two, you stop frazzling everybody in this meeting wanting to help you in a situation in which it’s not possible to do so. Third, is there any way you think you could help this deal move forward or do you only want it to move backwards?”
So that is a complete reframe, and I’ll give you an example. She completely became emotionally destabilized. Nobody talks to her like that, but I didn’t confront her that she’s wrong or these things, but I did say, “What is your values?” So if you want to move somebody emotionally, you show them that their values are out of phase with what I would call the moral center. Values are where you can get somebody emotional without trying to be right or wrong.
So the way you call somebody’s values into play is you say, “First of all, there’s two steps to this,” and everybody should be doing this, anyway. “Take the moral center always. Show up on …” You know in the Navy they say, “Hey, if you show up early, you’re on time. If you’re on time, you’re late, and if you show up you’re late, don’t even come to the meeting.” Obey the rules of business, which are timeliness.
“Second, work hard.” Business is about work. Whenever you’re working hard, you occupy the moral center, right? Who is out of phase in America with values? People who show up unprepared, don’t work hard, and want things for free. Anytime somebody shows up, they want a big win, they want a deal to really happen, they’re hoping to get something for themselves, but they haven’t worked hard, they’re not timely, and they haven’t prepared. You can just say, “I’m confused. You want these big win. You want something that’s incredible and hard to get, but some of the things you’re doing don’t make sense.”
This is how you summarize that, “We cannot work harder on your deal than you will. We don’t have the upside. We don’t have the benefit. We have other things to do. We will do what we say, but we cannot work harder on your house, on your asset, on your deal than you will.”
So one is you always want to show up doing the work, preparing, and timely. That lets you have the moral center. From the moral center, you can share your values. Once your values occupy the strongest position, everything they do can be compared to you, not the other way around, and that is true frame control. You can read the book and you can go through the examples and everything like that, but if you want to hear it from me directly, true frame control in which other people have to react to what you’re doing is when you have the best set of values in the deal, and then you control everything no matter how many billions of dollars they’re bringing to the table because you are not needy.
One of the core values is I will show up on time, I will work hard, we’ll bring everything we’re supposed to be, we’ll prepare, we’ll invest ourselves, but we will not work harder than you will on your deal. We will invest a certain amount of time in order to try and get to a transaction. If we can’t visibly see you contributing to our transaction happening, we’re out.
Another set that goes into the value is, “We like this deal. We like you, David. We love what’s going on here. We’ll probably overinvest in this, but it has to fit in our business model. You can ask us to do almost everything, but we won’t be bad business people. So it has to be fair to us. It has to be a timeline that makes sense for our business, and the agreements have to happen on a pace that every other real estate deal happens on because we are busy,” and that’s where I’ve arrived at. “We are busy.”
Acting needy frames you as the beta, frames the other person as the alpha, puts them in the power position, and then they’re going to start to exert control and weird behavior on top of you, and you’re just going to constantly have to be reactive to the things that they’re doing and seeing.
How do I know if I’m the beta? I’m reacting to what they’re doing insane. If they’re reacting to me, then I’m the alpha and they’re the beta. There are not two alphas, there are not two betas. This is the function of human interaction.
So to finish that thought, I many times will go in and say, “Hey, David. I love you. I love everything you’re doing. I want you in this deal. To me, there’s no one else.” I would even say, “I need you in this deal,” right? So why would Oren Klaff who said never be needy in multiple printed journals and books say those things? Because I have the other side of it, which is to say, “I need you in this deal. Your money is the best money for this deal. If you’re my partner, this is going to be a love affair that’s going to last 20 years until one or both of us die. We’ll probably be that couple,” and here’s the improv, right? “We’ll probably be that couple that when one of us dies within three hours, the other one will die, and it’s all going to start here because we just can’t live with each other, and it’s all going to start here with this investment. Honestly, I mean, I feel that way.”
So that’s prima facie needy position, but on the other hand, now I exhibit that I’m busy and I don’t need it, but on the other hand, I’m super busy and you’re busy as well. This is two trains passing in the night. If we can’t get comfortable with each other on this 45-minute call and do two more calls this week, even though it’s Wednesday, it’s going to be sad, it’s going to be frustrating. It’s going to be another tier spilt into a full beer, but that’s the way it goes. Life is not fair.
So it’s the desire and the emotional state of being ready to work hard and bringing resources to the table, but also not needing this at all. That frames the walk away. Hey, if I’m willing to walk away from you, as much as I want it, after expressing that I wanted, if I’m willing to walk away within five minutes of starting the pitch, well, what will happen if you are high friction and difficult to deal with at the end? You’ve already seen my willingness to walk away, and now I say, “Hey, I don’t know. This seems high friction. Might not be for us.” That has teeth because you … So wanting the deal but not needing it is the ultimate in the alpha-beta frame control.

David:
Now, this is some gold. One of the things that I learned in realtor training is the one who ask the questions is the one controlling the conversation. So they would actually run us through exercises where I would be talking to someone like Rob and I would be holding a pen as long as I was asking him questions, but if he could switch the conversation around to where he was asking me questions and I had to reply, he would take the pen out of my hand.
When you do an exercise like that, you realize how real it is that when someone’s asking questions, they’re the ones that are controlling where the conversation goes. You notice people doing this to you that are really good, that have a very strong frame in certain situations. So if a client walks into an open house or I should say a lead and they say, “Tell me about the house. Tell me about you. Tell me about area,” and I’m just responding to everything they say, they control that whole conversation. They’re probably going to walk away and go find a different agent that made them feel safe. I didn’t.
If I control the conversation, if I say, “Well, what are you guys looking for in a home? What did you like about this area? Did you know property taxes are higher on this part of town than they are over there? Did you know we can get you loan that doesn’t have PMI?” I put myself into the alpha position simply by asking questions and then was able to reveal to them knowledge I had that would make me a more attractive agent to choose.
Oren’s getting into the same thing right here. When they’re responding to you, you’re the one who’s in control. When you’re responding to them, they’re in control. Think about a time you’ve been on stage and you’ve been listening to the speaker. Was the speaker responding to you or were you responding to what the speaker said? A speaker should be holding control. You want to look for this at any time in a relationship where you want to be in the first position or the alpha position. People need to be responding to you. Rob, do you have any thoughts on that?

Rob:
Yeah. I feel like one of the other things I took away from this was, honestly, just being honest with your business model because I think what happens, especially when we’re getting started, is we become yes people, right? So if the investor’s like, “Hey, I’ve got 100 grand to invest. Can you do this?”
“Yeah, yeah, we could do this.”
“Can you do this?”
“Yeah, sure. I’ve never done that before, but why not?”
So we get into this yes mentality. Whereas what it sounded like he was saying it’s like I actually am to the point now where when investors are pitching me wacky ideas, I’m like, “Look, I appreciate it. I’ll handle the wacky ideas. All right? I like your idea, but it would be irresponsible financially for me to do that for you, not just for me to go and be the guinea pig with your money, but to all the other investors that I have that I only invest in these capacities.”
So that’s another way that you, again, taking the control. It’s like being very honest with what your buy box or what your model is because we have done that, we have crammed a lot of different ideas. We’ve tried it. We’ve always succeed in everything like that, but at the end of it we’re like, “Wow. The return was pretty much the same and we worked 15 times harder.” So that’s why it’s like, “No, let’s stick to the script and what we’re good at.”

David:
Well, Oren describes that as your values or dominating in the relationship, and he makes another very solid point. If you want to control the frame in any interaction, make it that the other person has to operate by your values. So if you think about when you’re standing in front of a judge, you don’t have a ton of control. You’re not there to tell the judge what you think should happen. There is a value system and the judge is the determiner or the judge of if you cross the boundary or if you didn’t. Same as interaction with the police officer, same as when you’re a student in a teacher’s class that holds strong frame. There are rules to the classroom that you have to follow and you don’t get to make them.
So the one who makes the rules in the transaction is the one who’s in the position of control. Well, that’s what you just described. We do our deals this way. We operate like this. You’re very honest and transparent. Here is the code that we operate by in this environment and if you’re going to work with us, you’re going to have to follow it.

Rob:
Those are always people that, honestly, I appreciate the most because the world is made up of yes people. Everyone just wants to make everybody happy most of the time. There are times where I’m talking to someone where I just want to be like … I want people to always be agreeable, but when people are like, “No, I don’t really do that,” I’m like, “Oh, thanks for being real.” That is something that I really appreciate.

David:
Now, they hold your attention more, right? Now you’re like, “Tell me more. I want to hear more about how this person does things.”

Rob:
Yup. I’m always very fascinated by someone who can just be extremely honest and upfront.

David:
Yeah. So do that in a way that holds your value. So if Rob’s putting a deal together, he’s going to tell the investor, “Nope, we don’t do it that way. Our value system, it has to be worth it for us,” what Oren described as, “We’re busy.” What he’s really saying is we have a lot of other opportunities. So if we’re going to work with you, this has to align with our value system, and by imposing your values on the other party, you put yourself in the position of the alpha, and now they have to cater to what you’re looking for, which gives you the control to put the deal together in the way that works best for everyone.
I understand this is high level stuff, but this is fascinating stuff if you want to get into the upper tiers of being successful. All of us that have been on this journey for a while have learned we have to get good at this stuff, not just running a deal through a calculator or learning how to fill out a loan application.
So thank you very much for your attention. We love that you have spent this time with us and you’ve gotten to hear some stuff that, frankly, people have to spend a lot of money to get Oren’s time and information in the degree that we have. So this interview was a little too long to make it to one episode, so we’ve split it into two and provided some commentary to make it applicable specifically for real estate investors.
So check out the next episode of the BiggerPockets Podcast where we’re bringing Oren back to finish the interview that we did today and provide some more commentary. If you want to know more about Oren in the meantime, check out orenklaff.com. That’s ORENKLAFF dot com, and you can learn about what he has going on, as well as Rob. Rob, where can they find you?

Rob:
You can find me on Robuilt at YouTube, Robuilt on Instagram. I think as of today, I just hit 50,000 Instagram followers, a lot of those are the BP audience, so thanks everybody for doing that, I guess I should say, and if you want to catch me on TikTok, Robuilto.

David:
You can find me online, @DavidGreene24 and on YouTube, @DavidGreenRealEstate, most boring YouTube name ever, but easy to remember. Any last words before we get out of here, Rob?

Rob:
No. Just go listen to this one again. Really, I’m being very genuine when I say that I wish I had heard this podcast two years ago. It would’ve saved me a lot of heartbreak, heartache, and trauma, but not really. I’m always happy to go through what I did, but it will help you. Take notes, listen to it again, and use it to inform how you carry on with your real estate career because this is a big one.

David:
There it is. In the same way that I hear people say Rich Dad Poor Dad changed the way that they looked at finance, this book, Pitch Anything, changed the way that I looked at interpersonal relationships and dynamics when you’re talking to other people. So I would recommend everybody read this book, especially if you want to build big wealth through real estate.
All right. That is our show for today. We will see you on the next one. Be sure to subscribe to BiggerPockets so you get notified when it comes out. This is David Greene for Rob Flower Child Abasolo signing off.

CNBC’s Diana Olick joins ‘Squawk Box’ to report on the signs that show the red hot rental market may be starting to cool despite strong demand.

Ashley:
This is Real Estate Rookie, Episode 218.

Henry:
Also, when you sit in these seats, the people who are in the room, they’re going to make assumptions, people naturally make assumptions about people, and they assume that the people who are in these power seats are the people who are doing deals, movers and shakers, people they need to meet. And so more people will naturally come and talk to you, and help you build relationships. And so you kind of take the hard part out of networking, which is for a lot of people just going up and having conversations with people, and now you’ve put yourself in a position where people are going to want to come up and have conversations with you.

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

Tony:
And welcome to the Real Estate Rookie Podcast, where every week, twice a week, we’ll bring you the inspiration, information, and motivation you need to kick out your investing journey. And I want to kick off today’s episode by reading one of our recent reviews. This one says, “If I could give this show 10 stars, I would. This podcast has helped me so much about investing in real estate, I recommended as it listen for both experienced and new investors.” So we appreciate that feedback. And if you’re listening to this podcast, and you haven’t left us a review yet, ask yourself, “What are you doing?” The more reviews we get, the more folks we can help, and that is our goal here at the show. So Ashley Kehr, what’s up? What’s going on in your world today?

Ashley:
Well, as most of you listening know, the best conference of the year is coming up, and it is BPCON in sunny San Diego. So we thought we would use this Rookie Reply to kind of prep you guys if you are headed to BPCON, how to make the best of it, or if you’re going to any kind of meetup, or networking event. So we brought in Henry Washington to kind of help us discuss, what’s the best way to network and take advantage of the opportunity you will have going to BPCON, and meeting all of these real estate investors and like-minded individuals? Henry, welcome to the show.

Henry:
Thanks for having me, this is super cool. I was saying, I feel like I know you guys, like we’ve all met and been friends before. You guys put out phenomenal content, so thank you so much for what you do.

Tony:
Thank you, brother. Appreciate that, man. Excited to have you on.

Henry:
Thank you.

Ashley:
Okay, so real quick, why don’t you just tell everyone a little bit about yourself, and who you are?

Henry:
Yeah, Henry Washington. Let’s see, I started doing this real estate thing back in 2017, I bought my first rental property. The goal was to buy one house a year for the next five years, and I didn’t know what I didn’t know. After I bought that first one I was like, “Wait a minute, this is way more powerful than I thought, and we need to revisit those goals.” So we ended up doing about five deals in our first year, and now we’re sitting at about 80 doors, and we flip about 10 houses a year, so that’s me from a real estate investment perspective.
Part of that journey was I started a social media, because I felt after I did that first deal, and I actually saw how powerful it was, that first deal changed my life. And I felt like this overwhelming responsibility, that I needed to share this information with as many people as possible, I couldn’t be the only person that was struggling financially before making this kind of a decision to start investing in real estate. And that has led me to all this craziness, of now I get an opportunity to work with BiggerPockets, and produce content for BiggerPockets, and it’s just been this amazing journey. But all of that really came to be because I went to the BP Conference in 2019 in Nashville, that’s really where all of this started. So I’m excited to be here on your show talking about it, it’s a full circle thing for me.

Ashley:
Well Henry, first of all I have to say you’re a way better person than me, because the reason I started my Instagram account was because I wanted to be a guest on David and Brandon’s real estate podcast.

Henry:
Well, it worked out.

Ashley:
So Henry, BPCON 2019, that was definitely an awesome event. I was there, Tony was not cool enough to be there, but he was there last year, will be there this year. So let’s talk about, what are some of the things you should be doing to prepare yourself for going to a conference or a meetup?

Henry:
Yeah, I think this is a great question. It’s one that’s come up a lot recently, so I feel that’s for good reason. Networking events are fun, they’re super fun, and a lot of the value that you’re going to get out of a networking event actually doesn’t come from the content that’s being taught or shared, it comes from what you’re able to build with your like-minded entrepreneurs there that are at the conference. And so for people like me, who I’m a natural extrovert, it’s exciting, I look forward to it. But not everybody’s like me, you’ve got people that are introverts, and the thought of just being in a room full of people who want to talk to them is extremely terrifying. And so what I’ve found with networking events in general, not just with conferences, is you’ve got to be prepared to get out of it what you want to get out of it.
So don’t have an expectation that BiggerPockets is going to teach you all of these things, and that’s what you’re going to get out of it, have an expectation that you’re going to go take from that conference the things that you want to take from that conference. And sometimes that involves you being strategic. And I would say introvert or not introvert, when you’re at a networking event social norms are kind of in place, and there are things like power seats. Power seats exist. And so when I went to that first conference in 2019 I hadn’t done it before, it was actually my first legit conference I had ever been to on any topic. And I didn’t know what to expect, and so I told myself, “Well I’ve got to get out of it the most that I can. And the best way I can do that is to go make sure that when I walk into a room, I walk into a room with confidence, and I go and I sit in the power seats, and I sit front and center, so that I can get the most out of whatever the speaker is saying.”
And what I learned by doing that, is when you sit in these power seats, the people that are around you typically also have that same mindset. So they’re either movers and shakers within the industry, or they’re people that want to get the most out of their experience. And if you position yourself in these seats whenever you walk into the main sessions, the breakout sessions, the people you’re naturally going to have conversations with are people in that same mindset. And how can you find a better accountability partner than one who’s already taken the accountability on themselves, to sit where they can get the most value out of whatever topic is being taught?
So if you’re intentional about just saying, “Look, I know peopling isn’t something I’m great at, so let me make it easier on myself and go sit by the people who I feel I could benefit the most from.” You’re kind of giving yourself a leg-up from that perspective. Also, when you sit in these seats, the people who are in the room, they’re going to make assumptions, people naturally make assumptions about people, and they assume that the people who are in these power seats are the people who are doing deals, movers and shakers, people they need to meet. And so more people will naturally come and talk to you, and help you build relationships. And so you kind of take the hard part out of networking, which is for a lot of people just going up and having conversations with people, and now you’ve put yourself in a position where people are going to want to come up and have conversations with you.

Ashley:
Henry, I am very much an extrovert. I sit here and I blab to Tony all day long, but I’m behind a screen, it’s not in person. But for me, going to a conference, or even worse being one-on-one with someone I don’t really know in that awkward silence, and not knowing what to say. If somebody else is also an extrovert, or they’re not very conversational, and just can’t keep the conversation going, it will be awkward silence, because I will just be racking my brain, what can I talk about? And nothing will ever come out. So one thing that helped me when I started going to meetups, is I would find somebody online that was going, and I would follow them, I would send them a message, and say, “Hey, I saw your attending.” Because even on the BiggerPockets forums for meetups, you can see people who say they’re going to attend the event, you can message them, and I would make that one connection.
And they’d have a profile picture, whatever, and visually, when I went to that meetup, I would look for that one person, and I would find them first. And it’s like, “Okay, at least I know I’m in the right place because that person is here too.” Because that’s happened to me before, where I went to the wrong location. But I think having that one person that you’ve already kind of built the tiniest connection with can really help you ease into, what’s going on? And if it’s someone else that it’s their first time too, it’s like, “Okay, we’re both new here, we both don’t know anyone, let’s go and make friends and network together.” And I think that has really helped me a lot. But you mentioned here accountability partners, can you kind of expand on that a little bit more, and maybe tell everyone what they are if someone doesn’t know?

Henry:
Yeah, absolutely. An accountability partner is exactly what it sounds like, it’s someone who you establish a friendship, relationship, working relationship with, who has agreed to help hold you accountable and vice versa. So when you have an accountability partner, it’s being able to have someone who you can share your goals with, and then have that person and you be the same for them, hold them accountable to taking the actions that are going to help you get to those goals. Conferences are great, and they’re going to give you the conference high, it’s awesome. You’re going to feel like you can conquer the world after day one at a conference, day two at a conference, and then you have the conference low, because you got to get back and apply those things. And having and establishing an accountability partner to be that person who you can connect with on a weekly, biweekly, monthly, whatever you feel like is comfortable basis in order to help hold you accountable is huge.
I don’t know how many times I’ve gone to a conference and got a million great nuggets and wrote them down, and then didn’t execute on them when I got back. And having that accountability partner, where you can meet up virtually, in person’s great, but virtually works too. Where you can meet up virtually, and say, “Hey, this is what I got out of the conference, and these are the things that I want to focus on coming out of that conference.” And then setting some time based guidelines around those little things that you want to accomplish in your business, and then having that accountability partner just hold you accountable to them, following up with you on a reoccurring basis to see where you are with them is super helpful to helping you get the most value you can out of an event like this.

Tony:
Yeah. Henry, I want to ask you a question, Ashley, I want to ask you this as well. When you first made the decision to invest in real estate, how many people in your closed circle were already investing in real estate?

Henry:
Zero.

Tony:
Zero. Ashley, what about you? When you first made that decision, how many people?

Ashley:
I was a property manager, but I only knew the investor that I worked for. But it was more his brother that had got him into it, and he was just kind of coasting along with what he had. So he really didn’t even have that much knowledge, it was a second income, he had another main business he focused on. But it was two and a half years until I found BiggerPockets, and after I found BiggerPockets I tripled my portfolio in a year, just from finding people in the forums.

Tony:
And that’s the value. And I’m asking the question because I assumed I knew the answer for both of you guys, and it was the same for me, when I made that decision to invest in real estate there were zero people in my closed circle that were also investing in real estate. And I want to tie this back to the accountability partner piece, because it’s so easy when you’re first starting to get discouraged, to get off track, to lose discipline, to lose focus, especially if everyone else in your circle is telling you, “Don’t worry about reading that book, let’s go grab a beer. Let’s not do this, let’s go do this other thing.”
And it’s easy to get caught up in what’s normal, so you have to find other people that are mentally in sync with the goals that you have, because when push comes to shove you want someone that’s going to pull you back towards your goals, and not someone that’s going to pull you further away. So when we talk about the accountability partner, what are some things that maybe people should be looking for in this person to help make sure that there’s a good fit? And then I guess as a secondary question, once you find the person that kind of meets that criteria that you’re looking for, how do you start that relationship? Are you sending a text like, “Hey, you want to be my accountability partner?”

Ashley:
You slide into their DMs.

Henry:
“Do you like me?” Absolutely, no, that’s a phenomenal question. So what to look for, I’d be lying to you if I told you I knew exactly what I wanted to look for in an accountability partner, or even that I was going to find an accountability partner at the 2019 BiggerPockets Conference. But now that I have worked with accountability partners, I can tell you what’s worked well, and what hasn’t worked well. I’m a gut feel kind of person, and so when I’m at these conferences and you’re networking with somebody, you can tell through conversation if somebody feels genuine in how they speak to you, if somebody feels genuine in their eagerness or their willingness to be supportive and helpful of you, and you’re going to tell when someone can’t.
And so as you’re networking with people, one of the things that I like to do when I’m networking with people, is I want to listen, or hear for, or even just go so far as to ask for, “What is the thing that you need most in your business right now? What is the thing that’s holding you back from getting to where you want to go?”
Trying to understand people’s pain points, not because I want to know what’s failing for them so I can do better, but I want to know how I can be of service to people. And if they say something, where I feel like I might know someone who can help them, or I might have a tool that can help them, or I might have a recommendation for a tool that can help them, or in any way I can be of service to that need, I want to be able to do that, and do it quickly, and provide value to people. And if you can provide value to people, especially without them having to ask you, and your focus is on, what can I do for the person across from me? More than it is on, what can I get out of this experience? You’re going to naturally be pulled in the direction of people who are similar, and those are the people that you should build a relationship with, because that relationship is built based on you guys being of service to each other.
And so I say, the best way to get a thing that you want is to give it freely. And so if you want help in a certain area, be of service to people. And if you can be of service to people, you’re naturally going to be drawn… And the people are going to want to help you. And so if you can just keep that in mind as you’re having conversations with people, just trust that gut feeling, that this person seems genuine, this person has a portfolio that’s similar to mine. Maybe they’re investing in a market that’s similar to yours, you want to look for some similarities, because you want to be able to relate on some level on what you’re doing.
If somebody is investing in trailer parks, and you’re investing in single-family rentals, they can probably hold you accountable, but being able to provide advice that translates may not be as easy. So look for some similarities, look for people that you feel are genuinely interested in helping you, and the best way to do that is to be genuinely interested in helping them. And then the other thing to think about, is it’s almost a business partnership or a marriage, you want to be able to work with people who aren’t afraid to tell you what you need to hear, who aren’t afraid to tell you, “No.” Who will give you honest feedback. And we all have to be self-aware enough to be able to create an environment where someone feels safe enough to be open and honest with you.
And I think that that was one of the really cool beneficial parts of the accountability group that we formed, is none of us had a problem saying, “Hey bud, you said you wanted to do X, Y, and Z, but your actions over the past two weeks haven’t seemed like they’re in line with that. Do we need to reevaluate your goals? Is there something else going on in your life that we can help you with or talk about?” But being able to have an honest and open communication with you, because if you just find an accountability partner who’s going to be a yes man, and say, “Well, I mean, I know you wanted to buy 20 doors this year, and you didn’t make any offers this week. And I know life gets tough, and you just got busy, so we’ll try again next week.” That’s probably not the accountability partner for you, so those are some qualities I’d look for in people.

Tony:
Henry, you brought up a lot of really good points, and one that I just want to echo, is you said, “Look for people with some similarities.” And when I think of that, I think of the word parity, you want your business or your position in life to be somewhat similar to this person, and their business, and where they’re at in their investing journey.
Ash and I had a mastermind that lasted for maybe six months last year, and as we put that mastermind together, one of the things we said is that the sides of the business of each person has to be in a decent range of one another. Because obviously I would love if Grant Cardone was my accountability partner, but it’s like you said, how much value can I give to Grant Cardone? That would just be almost a one-sided relationship, where I’m just asking him all of these questions. So it’s super beneficial for me, probably not super beneficial for him. And same for Ashley, and I, and you Henry as well, if someone who has zero deals, it might be super beneficial if we were their accountability partner, but then it just becomes a one one-sided relationship for us. So I think looking for parity when you’re trying to find that person is super important.

Ashley:
Yeah. Tony, I think you should mention the criteria we actually set, because it was super specific.

Tony:
I honestly don’t even remember.

Ashley:
I remember, I’ll do it. So first we did a range of how much money you had made the previous year just from your investment property. So we wanted someone who was in the same range of what they had profited off of their investments, so it wasn’t somebody just starting out, or it wasn’t somebody who was already making mega millions off of their investments. We wanted someone kind of in the same place that we were.
And then also they had to be content creators too, so they had to do real estate investing and be content creators in some way or form. So we had a couple people who were really big on YouTube, had a podcast, things like that. So those were the two strict criteria that we set. And then also they were selling a content piece in some way, so a couple of us were writing books, a couple had online courses, or things like that. We have the BiggerPockets Bootcamps, and things like that. So there was criteria that we set, and then we made a list of, who are people we know? And all of them were actually guests that had been on the podcast, let’s reach out to them. Then we reached out individually to them to see if they were interested, and all of them said, “Yes.”

Henry:
Those are phenomenal points. And I want to just point out for people that it’s not like you’re setting this criteria, or you’re looking for somebody similar so that you can have this exclusive club, it’s not that kind of a thing. When you have multiple people in a room, or virtually in a room, who have similar businesses, you’ve probably all approached it differently, and you probably all have different best practices. But when you’re all in that same world, that same environment, if Tony says something that he’s doing in his business, or he hears a problem that I’m having in my business, and he can say, “Hey, we’re doing A, B, and C.” The ease of implementation for me is a whole lot easier, because I have a very similar business. And so the trajectory of growth can be a lot higher, because I can implement faster, because I’m in a group of people with similar size businesses.
If Grant Cardone comes in and tells me I should do A, B, and C instead of X, Y, and Z, and it requires me to hire a staff of 50 people, I’m not there yet. But if Tony and I have similar portfolios, and he’s like, “Hey bud, I heard you’re approaching A, B, and C with X, Y, and Z, why don’t you try one, two, and three instead?” I go, “Oh, I got a one, two, and three right here. Yeah, I’ll put that in place.” It makes your growth path so much easier, because you probably already have all the pieces somewhere close to you, and just having that like-minded person with a similar business can really help you grow a whole lot faster.

Ashley:
And I want to mention too, because I think this is an important piece to that mastermind that Tony and I put together, was it was free, so it wasn’t this big planned out paid thing, whatever. So you right now listening, you could do the exact same thing that we did, is look at the people that you think… Instead of waiting for somebody to slide into your DMs, go and start your own, and have it free. And we set the commitment of six months, so six months we were done with the mastermind, it was just you had to make that time commitment. So I think that’s something you guys should take away too, is don’t wait for other people to network with you, make sure you’re going out, and you’re making connections, and you’re providing value. The first ever mastermind I was in was from Instagram, where somebody just sent 10 of us I think a direct message, and said, “Hey, I want to start a mastermind once a month, do a virtual call, who wants to join it?” And that was it, so everybody start your own little accountability groups.

Henry:
It’s amazing.

Tony:
Well, that leads me into my next question, Ashley, you said to start the group. So Henry, what’s your recommendation? So you find someone, you got a good vibe with them, how do you actually get the relationship set up so that you guys are holding each other accountable?

Ashley:
How do you ask them on the first date?

Henry:
Yeah, absolutely. Well you just got to work up the nerve and do it, Tony, you just got to do it.

Ashley:
You don’t have any pick lines.

Henry:
No, I’ve never been that cool or suave. So again, with my group it happened naturally. So the way it kind of formed, was I was there early, which also was a pro tip, because lots of people come in early, and you can get some pretty sweet, cool, personalized networking in early. I was actually able to network with Brandon because I got there early, he got there at day early, and so I was able to have time to chat with him before everybody showed up and he was the ultra celebrity status Brandon, and couldn’t even get around him because there was a crowd. But it was super cool, because I was able to have candid conversations with him because there was nobody else there. And so the way it happened for us, was I met somebody, we were there a day early, so we established this kind of relationship, and we just kind of checked in with each other as the conference was going on.
Who did you meet? What was valuable to you? We had a similar size portfolio in a similar type of market. And so not only was I able to get value out of the sessions that I went to, but because he went to a session, or he’d met somebody, we were able to kind of say, “Hey, maybe we should go talk to this person because of the similarities in our business.” And so at the end what we said was, “Man, it’s been super valuable just networking with each other here, and sharing resources here. I’d like to continue this, would you be open to just having a weekly call, check in one day a week, we’ll talk about our goals, and then we’ll see what we did for the week?” And we were all in for it. And then we added two other people to it, and one of the people we didn’t even meet at the BiggerPockets Conference, it was just an investor friend of mine who I had heard say he wanted to do something similar.
And so that’s how we established it, we just said, “Let’s check in once a week, we’ll talk about our goals, and we’ll see what progress we’re making towards our goals, and we’ll just see how it goes.” We didn’t even have some formal agenda, this doesn’t have to be this well planned out, I’ll send you the agenda before the meeting starts, and then somebody will take minutes, and then they’ll recap the meeting. It doesn’t have to be all that, just share some goals, hop on a call once a week, once every other week, but be consistent about it. And what I liked about our group is it was more than two of us, which meant that if somebody had to miss we still had enough people to have a valuable call. If it’s just two people and someone’s sick, or they got a sick kid, or life happens, then your call doesn’t happen, and it’s easy to fall out of that rhythm. But if there’s more than two of you, then it’s a little easier to stay on track.

Ashley:
Henry, is there anything else that you want to add for anyone going to a networking event, or for when they go to the conference? One last piece of advice.

Henry:
Yeah, make the time to do the extracurriculars as well. Go to the networking events before the speaking sessions, go to the networking events after the speaking sessions. Not because you want to go have fun and be around the partiers, but the money is made through the conversations that people are having outside of those events, that’s where the real return on your investment comes. And like I said, for people like me, it’s easy to want to do that, I’m an extrovert, but that’s not everybody. So you’ve got to really hold yourself accountable to go into these events, working up the strength. So find the time to do the things that you need to do during the conference to decompress, if you’re not an extrovert, if you need to get to the gym at a certain time in the morning, or if you need to just find some alone time and meditate. Make time in your schedule to do those things so you can decompress, so you can have the energy to go to the things where people are going to be networking and having conversations.
Sit in the power seat, sit where people are going to be wanting to get the most out of that, because those are great people to start networking with. And don’t be afraid to just go up and have a conversation with anybody. I got to have a conversation with Brandon before the conference, and I went up to him and had a conversation with him, not long after that I was on the BP Podcast. Is that a coincidence? I don’t know, but it worked out well. But if I never go and have that conversation, then I’m not sitting here on this podcast with you guys getting to share my experiences with everybody. And that’s just one of the benefits that came from it, that accountability group that I formed, I doubled my portfolio that year, and is it a direct result of that accountability group?
Maybe. I got a lot of tidbits, and I didn’t want to show up on a call and be like, “Well, I didn’t do anything this week guys.” That accountability means something, and it worked out well for me. So I hope that you guys take that seriously, and networking is something you need to plan for too for some people. So plan to be outside of your comfort zone, wealth is built just outside of your comfort zone, get comfortable in uncomfortable situations. I heard you mention awkward silences, that’s okay guys, it’s okay to have an awkward silence, nobody dies. We’re all real estate investors, we have awkward, uncomfortable conversations all the time with people, with sellers, with contractors. We’re okay doing it in that environment, you should be okay doing it in this environment too.

Ashley:
From now on, Henry, all I’m going to be hearing is your voice inside my head. “Nobody’s dying.”

Henry:
You just look at each other a little longer, it’s fine. Give him a wink awkwardly back at him, and say, “It’s fine.”

Ashley:
Yeah. So the only thing I want to add to that, Henry, and I think that’s wonderful advice, and that happened to me last year at the BiggerPockets Conference. 2:00 AM, pizza parlor, Tyler and [inaudible 00:28:51] cornered me, and just this conversation we had in five minutes was this aha moment for me. And just set off this light bulb, I was like, “Okay, I’m going to do this.”
And I think one thing too, is that when you are at the conference, you’re going to be having so many conversations, you’re going to be learning so many things from the speakers. That each night, or sometime throughout the day, you should sit down and write down what you’ve learned, who you’ve met, and what action you are taking from those things. Because when you leave that conference, you’re going to be so pumped up, hyped up, that you want to… “Okay, I’m going to do all these things.” And then it’s like, “Wow, there was a lot of things, where do I even start? And what do I even remember?” And then taking time each day, or maybe even twice a day to write those things down, so you can go back through your notes and be like, “This is when I want to prioritize. Oh yeah, I forgot about that, I want to do that.” So that’s something that has really helped me too going to conferences. Tony, what about you?

Tony:
Yeah, I think just one thing that that everyone should recognize, is that there’s a common misconception around extroverts versus introverts. I’m a podcast host, I create content on social media, YouTube, and people might look at me and think that I’m extroverted, because I can get on a stage and talk in front of people. But the true definition of introvert versus extrovert, is an extrovert is someone that gets energized by being in a room full of people, whereas an introvert, they get re-energized by being by themselves. And I’m 1000% the latter, I need that alone time by myself to have the energy to keep going. So if you are an introvert, just recognize that maybe you need to take a break during the BPCON, just to go be by yourself for a little bit, that way you have the stamina to keep going. So just use that definition as you’re moving through BPCON, whatever conference you’re going to. And if you do need some time to yourself, take it, that way when you go back into the big sea of people you’ve got the stamina to keep going.

Ashley:
Yeah, and that’s great advice, Tony. Well, Henry, thank you so much for joining us for this week’s Rookie Reply. Can you let everyone know where they can find out some more information about you, and reach out to you?

Henry:
Yeah, absolutely. Thank you for having me, it’s been super fun. The best place people can reach me is Instagram, I’m @thehenrywashington on Instagram. You can also check me out on the Market Podcast.

Ashley:
Thank you so much, and thank you guys for listening to this week’s Rookie Reply. I’m Ashley, @wealthfromrentals, and he’s Tony, @tonyjrobinson on Instagram. And we’ll be backed on Wednesday with another guest.