Ashley Kehr:
This is Real Estate Rookie Episode 179er.

Dan Sheeks:
Credit card debt, student loan debt, car loans, things like that, those types of consumer debt, they are completely out of control in our country. And I think that’s a direct result from the fact that we do not focus on financial literacy in our schools and in our households in our country. We are a financially illiterate country overall. And so those types of bad debt, the consumer debt, credit cards, student loans, car loans, they are just going to put you deeper and deeper into a hole that’s going to be tougher to get yourself out of if you do want to reach financial independence earlier than age 65.

Ashley Kehr:
My name is Ashley Kehr, and I am here with my cohost, Tony Robinson, and we are on everyone’s favorite, a niner episode.

Tony Robinson:
And welcome to the Real Estate Rookie podcast, where every week, twice a week, we bring you the stories, the information, the education you need to kickstart your real estate investing journey. So my good friend, Ashley Kehr, what is going on? What’s new in your neck of the woods?

Ashley Kehr:
I actually, the speaking of niner, I had to start an entity for just a line of credit I was doing and I just needed a name. It’s an LLC that nobody will ever see the name for. And I actually put niner in the name, just something random. But yeah, just keep collecting those LLCs and having a couple names. Each of my kids’ names are already each in an LLC, so I was like, “What else is there that I could do?”

Tony Robinson:
What else? Tommy boy.

Ashley Kehr:
Niner. Yeah.

Tony Robinson:
What’s some other updates? What’s going on in the business?

Ashley Kehr:
So I submitted an offer last week on a campground, and I didn’t hear-

Tony Robinson:
Congratulations.

Ashley Kehr:
Thanks. And I didn’t hear anything. I did two offers, a seller financing and just a commercial loan financing, 25% down. And I did my seller financing offer super juicy, way higher, showed all the interest they would be making and I didn’t hear anything. And I actually froze, I could not work up the courage to call them. It was one of those things that we always preach, “Just take action. Just do it. Just make the call. Just talk to the person. Ask the person.” And I just could not do it, so I made my business partner do it. I literally sat on the couch hiding as he’s calling and all it was, was they didn’t see the email. She’s like, “Oh my gosh, you did? Oh, I saw the email come through, but I thought it was something you already sent me.” And literally two hours later, they called to discuss it.

Tony Robinson:
There you go.

Ashley Kehr:
I just had this internal fear that was nothing. And I probably should have called them a couple days ago instead of yesterday. So that was really good. I talked over the offers with the guy, and he’s asked me a couple things about… I did two letters of intent, asked me some questions it was like, “Well, it doesn’t matter anyways because I’m not accepting either of these offers.” So I was like, “Oh, okay.”

Tony Robinson:
[Inaudible 00:03:16].

Ashley Kehr:
Then we talked for about another half hour and I think we kind of have come to a deal.

Tony Robinson:
An agreement.

Ashley Kehr:
So I just have to work my numbers a little harder. All this morning, I was in contact with the bank. They definitely don’t want to do seller financing. I even had them talk to their CPA and they’re going to bite the bullet and pay the taxes on it so hopefully it will work out.

Tony Robinson:
Fingers crossed.

Ashley Kehr:
Well see, yeah.

Tony Robinson:
Yeah. How big is the campground or how many units is it? Or how many pads? Is that what they say?

Ashley Kehr:
Yeah, so it’s actually 200 acres but I think to make the deal work…

Tony Robinson:
Holy crap.

Ashley Kehr:
… we’re going to parcel off 100 of the acres that isn’t used and kind of on the back end of the property, and that will kind of make the deal work for me because there’s still 100 acres and still plenty of room to add onto the property if I want to. But it has cabins, it has RV sites, it has tent sites, it has a little wedding venue pavilion, convenience store.

Tony Robinson:
That’s awesome.

Ashley Kehr:
So yeah, it’s a cool little property.

Tony Robinson:
Well, fingers crossed, yeah.

Ashley Kehr:
Yeah, thanks.

Tony Robinson:
Yeah, and then three years from now, when you finally close on it, because those New York policies, we’ll get an update on that.

Ashley Kehr:
I put a July 31st as the closing date so that it’s like, because we’re seasonal here, there’s no camping the winter. So that would be like halfway through the season. So at least we can get some income before the winter months.

Tony Robinson:
Some revenue.

Ashley Kehr:
And if that’s pretty greedy of me to keep the [inaudible 00:04:41].

Tony Robinson:
Yeah, that’s awesome.

Ashley Kehr:
What about you?

Tony Robinson:
Well, yes, same on my side, Ash. We’ve been busy working on the due diligence for this resort we have under contract. So again, it’s a 23 unit cabin resort here in one of the lake towns in SoCal. I got a big packet of 200 pages from the seller yesterday that had all of their financials and reservation data. So I was up super late last night kind of coming through all that and kind of reworking our model based on those numbers. We have our property inspection is actually happening right now at this exact moment, the inspectors out there doing that, and they’re going to be out there tomorrow as well.
And then we’re meeting with our attorney tomorrow to start the syndication paperwork. So things are moving super fast. Our money goes hard in 22 days now so I just want to make sure that we do as much due diligence before that period. That way if we need to pull out, we have that option. So again, if you guys kind of want to follow along on that journey and see what it looks like, be sure to follow me on Instagram at TonyJRobinson and you can kind of see the ins and outs of how we try and pull this deal off.

Ashley Kehr:
Are you going to be sharing it too on YouTube at the Real Estate Robinsons YouTube channel?

Tony Robinson:
Absolutely.

Ashley Kehr:
Yeah, okay awesome.

Tony Robinson:
Our videographer is going to be with us when we go out there on Wednesday. So yeah, if you guys aren’t following us there, check it out.

Ashley Kehr:
I better make sure, are you going to have your videographer come to New York too for that property inspection?

Tony Robinson:
No. He’s [inaudible 00:06:02].

Ashley Kehr:
I better make sure I look good. Well, today we have a great guest on, someone part of the Bigger Pockets Community, Dan Sheeks, and he actually wrote a book for Bigger Pockets called First to a Million. A few of you may have picked it up, it was available this fall. But now he has created a complimentary workbook to actually go through the steps of creating financial independence and investing in real estate. So Dan shares with us some of the things that are in the workbook and how it can really apply to anyone. He kind of wrote it geared towards high school students and it kind of follows them through college as to what they should be doing to have that great personal finance foundation. But really it can apply to anyone. And it’s a great gift. If you know somebody graduating high school or college, it’s a great gift to give them too.

Tony Robinson:
Yeah. I mean, or if you’re just an adult with a kid that you care about, right? Whether your children, nieces, nephews, whoever, I think even you just reading it and kind of having a good framework that you can give to them super, super important. And one of the things that I love most about Dan’s framework is that he encourages people to be freaks. And as you listen through the episode, you kind of get an idea of what that means and exactly why he said that. So lots of really good information I think throughout this one that anyone can take and apply to build financial independence.

Ashley Kehr:
And you guys already know Tony and I are freaky in the spreadsheets.

Tony Robinson:
Yeah, so there’s a lot of that. But before we bring Dan on, I just want to read Ashley, one of the recent reviews that came from the rookie show. So again guys, we really appreciate if all of you could leave an honest rating and review on whatever platform it is that you’re listening to. The more ratings and reviews we get, the more people we can reach and that does help us continue to kind of impact more lives.
So today’s podcast review comes from Genalt. And Genalt says, “Found the Bigger Pockets Rookie Podcast midway through 2020 and I truly believe it changed my life forever. Hearing stories of rookies making it happen in real estate really jumps out at my investing and reassured me that I can do it too. I’d recommend the Bigger Pockets Podcast to everyone who has an interest in real estate investing. So Genalt, we appreciate you and we hope that you continue to have success in your journey as well.

Ashley Kehr:
Dan, welcome to the show, thank you so much for joining us. Can you start off with telling us a little bit about yourself and how you got started in real estate?

Dan Sheeks:
Yeah, kind of the down in dirty is I live in Denver, Colorado, or a suburb just south of Denver. I’ve been in Colorado for over 20 years. I’m a high school teacher, I teach business classes like entrepreneurship, personal finance and marketing, I’ve been doing that for about 20 years. Love my job, love working with teenagers and young people in general, that’s my passion. Also have kind of a side community that I run for young people interested in real estate and early financial independence. And then as far as real estate goes, I bought my first property way back in 2004 as a primary residence. I was house hacking it before I even knew what that was. That accidentally turned into a rental property because I moved out a couple years later and then sold it about 15 years after that. When I met my wife, honestly though, about seven years ago, that’s when she was kind of just getting started in real estate investing and so that’s when I became more serious and we became a team and have really leveled up our real estate investing in the last seven years.

Ashley Kehr:
What was the first thing that kind of piqued your interest about real estate? Was there some moment or that someone said something to you? Or why did you choose real estate investing as your wealth vehicle?

Dan Sheeks:
Well, honestly when I met my wife seven years ago, she introduced me to the Bigger Pockets Community and listening to the podcasts, that idea of passive income just blew my mind, no one had ever explained that to me. Even when I had a rental property previous to finding the community, the Bigger Pockets Community, it never really clicked for whatever reason, the passive income concept. And so when it started to add up like, “Hey, you could build a portfolio of more than one property, several properties, and you could be earning passive income of a significant amount every month to then maybe replace a W2 income,” that just made a lot of sense, and that was kind of the impetus for us leveling up and going forward.

Tony Robinson:
Dan, I think I first just want to say how cool it is that the school that you work for offers entrepreneurship classes to high school students. I did not have that or anything close to that in my high school. So just from my own knowledge, was this something that you created for this school or was it already there and you just kind of stepped into the role?

Dan Sheeks:
The entrepreneurship piece I’ve been teaching that since I got here 20 years ago, 19 years ago. I embedded that into a marketing class honestly, a level two year long marketing class. I devoted a semester to entrepreneurship, it was kind of just what I was passionate about. But then lately, three years ago, my school, we actually have a class now called introduction to entrepreneurship that is a concurrent enrollment class, meaning that it’s aligned with the community college here locally. So our students, our high school students, get college credit while taking that class. So it’s now a little bit more specific and a little bit more driven as far as a focused curriculum, but yeah, I love teaching entrepreneurship.

Tony Robinson:
Dan, I think you just shared a really important lesson with a lot of our listeners and that’s, if you have an interest, whether it’s real estate investing or something else, try and find a way to integrate that interest into your day job. I think everyone is so, and understandably so, everyone wants to leave their day job, right? A lot of people listening have this dream of retiring from their day job and being a full time investor, but it’s going to take time to get there, right? Most people can’t flip that switch on day one.
So if you’re unhappy in your day job, start asking questions if there’s ways that you can integrate your passions and your interest about investing in entrepreneurship into your day job. But maybe it’s not as straightforward as being able to teach a class on entrepreneurship, but maybe it’s, I don’t know, being the person that leads a new project, that’s doing something new that feels like you’re running a business. So I just thought that was a really cool kind of tidbit. I wanted to make sure we highlighted that for the listeners.

Dan Sheeks:
Yeah. I agree 100%.

Ashley Kehr:
Dan, you have this teaching background you’ve invested in real estate now share with us what you have done to kind of tie all this together.

Dan Sheeks:
Yeah. This is kind of where it got exciting for me, when the switch flipped, where I realized what I was learning about real estate investing, but more bigger picture, the early financial independence world. What I was learning there, for my wife and I and our family, I could then share that with the audience I have, which are students in my classroom, which aligns so well with the classes I teach anyway.
And then I also have created an online community to reach young people even outside of my school with these same ideas. It just made sense. Some of my passions are obviously working with young people. I would say 15 to 25 or Gen Z that’s that’s my niche. Personal finance education is a big passion of mine, real estate investing and that early financial independence community that those strategies that can get you to not having to work until you’re 65. So if you add all that together, yeah, I created the Sheeks Freaks Community, I wrote a book and a workbook for Bigger Pockets, which I’m super grateful to Bigger Pockets for getting on board with those and it’s just taken off.

Ashley Kehr:
So tell us more about this book because this is launching, is it today or this week?

Dan Sheeks:
The book itself First to a Million launched last December and the subtitle of the book really says it all. It’s a Teenager’s Guide to achieving early financial independence. But the workbook that goes with it, the First to a Million workbook, which honestly I think is of the two slightly more valuable than the actual book, the workbook is launching right about now, spring 2022. It is a guide or a playbook for the young person or really anybody, anybody who’s new to early financial independence, anybody who’s new to real estate investing, index fund investing, all of those strategies, frugality, mindset, entrepreneurship, the book and the workbook are I think the starting point to really create that foundation to then move forward and create a better financial future for yourself.

Ashley Kehr:
So Dan, I want to ask, how does this compare to Dave Ramsey? So he has his workbooks like The Total Money Makeover, and that’s how a lot of people get onto that financial independence journey is first by paying off their debt and that’s how I got rid of all my personal debt was following that journey. But then as an investor, his plan really doesn’t align with being a real estate investor because he’s like, no debt at all, where I have mortgages racking up left or right. So how does your plan and for financial freedom differ than his and can you tell me a little bit about that?

Dan Sheeks:
I think the way that mine differs from Dave Ramsey or people in that community is very similar to everyone in the FI community that is pursuing early financial independence, especially with real estate. Yeah, I love debt, right? I love good debt, because it makes more money and more passive income. It’s just a way to leverage. So yeah, the strategy I lay out in the book for the newcomer, the young person, are about using good debt and not accruing bad debt. There’s a chapter actually called good debt versus bad debt and how you can leverage money, especially through real estate investing, to build passive income and to grow your net worth quicker than if you were to follow say the Dave Ramsey pathway.
I will say that my book and workbook, they are not for everybody, just like real estate investing isn’t for everybody and even early financial independence isn’t for everybody. There’s a small percentage of teenagers who would actually read my book and then employ the strategies to reach early financial independence. I would never tell a young person what to do, and in my boo. I don’t. I just say, “Here are the options that you are probably not aware of because it’s not adilly discussed in our society.: And then once you know all of the options, you can make the decision that’s best for you. And so if real estate investing is something you have no interest in then don’t do it or maybe do it later. You never know what might be down the road 10 or 20 years. So it’s very different than Dave Ramsey but very much aligned with everything else we know about the early financial independence community.

Tony Robinson:
Dan, you brought up a good point about the difference between good debt and bad debt and I’m hoping we can kind of go down that rabbit hole a little bit. I just actually, our friend of Bigger Pockets, AJ Osborne, he just posted something on his Instagram the other day and it was some news article clipping that said consumer debt had reached like almost $4 trillion. So I guess first, define the difference between good debt and bad debt and how does one go about staying away from that bad consumer type debt?

Dan Sheeks:
Yeah, the statistics are pretty startling, although they’re hard to digest because when someone just throws a big number out there like what you just mentioned, it doesn’t really register. But yeah, credit card debt, student loan debt, car loans, things like that, those types of consumer debt, they are completely out of control in our country. And I think that’s a direct result from the fact that we do not focus on financial literacy in our schools and in our households in our country. We are a financially illiterate country overall. And so those types of bad debt, the consumer debt, credit cards, student loans, car loans, they are just going to put you deeper and deeper into a hole that’s going to be tougher to get yourself out of if you do want to reach financial independence earlier than age 65.
However, good debt is debt that I will take all day every day and you two know very well, it’s debt that you take on but the net effect of having that debt allows you to increase your net worth. And a rental property is the best example by far, you have a mortgage on that rental property, but overall it’s cash flowing positive because you have a tenant in there. And so you are growing your net worth, you are having positive cash flow every month, but if it weren’t for the mortgage that you had for that property, you wouldn’t be able to do that. So I would take that debt like I said, all day, every day.

Ashley Kehr:
So in your workbook, I want to go through, Tony and I had a chance to look through it. And first of all, congratulations on creating this and it has turned out awesome. I want to go through one of the first parts of it. So phase one, can you kind of tell us what that is and the list that it goes into? These are some of the first things you should be doing.

Dan Sheeks:
Yeah. And first I’ll kind of introduce the way that workbook is set up. It is really helpful if someone reads the First to a Million book first and then goes and kind of graduates to the workbook. But in the workbook, it really tells the reader what to do, when to do it, how to do it, and why you’re doing these things. And there are, I think, 19 phases or we call them freak phases, the book and the workbook all are kind of all around a theme of being freakish, which is basically being different with your money and your financial future. So if you’re a FI freak, that’s a good thing because you are doing things differently than the average Joe.

Tony Robinson:
Dan, I’m sorry. Before you go on. I just want to comment on that because I absolutely love that concept, right? I think the vast majority of Americans today have a very warped sense of what it means to be successful financially. And if you’re talking to people in your circle and no one’s looking at you like you’re crazy, then it probably means you’re doing what everybody else is doing and that you’re going to end up how everyone else is going to end up. So you want people to kind of look at you sideways when you talk about what it is that you’re doing and what your goals are and how you’re doing this with your money and how you’re investing this way and doing those things. Because if people don’t understand or if people are questioning you, it means you’re doing something that the mass is aren’t which is probably going to set you up for success. So I just had to pause there, man, because I love that concept so much.

Dan Sheeks:
Tony, you nailed it. I mean, in our society, we’re trained to spend everything we make because spending money is fun and work until you’re 65. And if that’s the path you want, then by all means, go for it, there’s nothing wrong with that pathway. But if you do want early financial independence or you do want to grow your net worth quickly, then you have to do things differently. You need to stand out, you need to be freakish from your core circle and everyone else out there. And that’s what First to a Million’s all about.
So yeah, going back to the workbook, there’s about 19 freak phases, each one is four months long, and it walks the young person through what exactly should you do in this four month increment of time to then graduate to the next freak phase four months later. The workbook is very flexible in that no matter how old you are or where you’re at, high school, college or beyond, you can start the workbook from the beginning and work through the end. You can go a little faster than it’s laid out or a little slower. But freak phase one is kind of geared towards someone who’s in high school, right about the middle of their high school journey. But again, college and beyond it still works. And so freak phase one, which has I would say about 12 different tasks to complete in that four month period is all about again, setting the foundation, getting started on your early financial independence pathway. And if you want, we can dive into a few of those or…

Ashley Kehr:
Yeah, I actually have a question on one. So implement a new freak tweak. What is that? And can you give us an example?

Dan Sheeks:
Yeah. A freak tweak is something around being frugal, right? So it is what is one way that I can help myself save a little money that I’ve never done before that is not going to change my life drastically? So a freak tweak could be as simple as on average, I go out to eat five times a week, I’m going to dial that back to three times a week. Or it could be, At my gym, I have the top tier membership, I’m going to dial that back to the mid-tier membership and save 50 bucks a month. So tweaking something in your expenses so that you are saving a little bit more money.

Tony Robinson:
Can I share one freak tweak that I did when I was in my W-2 job, and it helped me a lot. So like most people, I was an early disciple of Dave Ramsey, right, when I was growing up and I tried to do the envelope system. But it was a pain, right, no one carries cash like that anymore, it didn’t work, right? So what I did was I kind of created my own digital envelope system. So again, people thought I was crazy when I explained this to them, you guys might think I’m crazy too. But I created a bank account with Ally bank, they’re like an online first bank. But what I liked about Ally is that you could create multiple checking accounts and there were no fees for each checking account. So what I did was I had like, I don’t know, like 25 checking accounts and I had one for gas, I had one for groceries, I had one for vacation saving, I had one for utilities, all the different spending categories that I had, I had a subsequent checking account for them.
And what I would do is that I would set up my direct deposit so that instead of all my money going into one account, it would automatically get dispersed across all these different checking accounts that I had. And then I had one checking account that was for spending. So I didn’t have to carry all these debit cards, but if I wanted to go out and buy groceries, I would transfer money from my groceries account, into my spending account and then I’d spend it from there. So it was a way to kind of automate my budgeting without me having to really think about it. Every time I got paid, the money just got dispersed. When an account got low, I knew I had to slow up on my spending. So I literally had like 24 checking accounts and people thought I was crazy for that. But for me and my wife, it was a really easy way to kind of keep our budget in check.

Dan Sheeks:
I love that and that is freakish, Tony, that is absolutely freakish to have any more than two or three checking accounts unless they’re for a rental property or something. I love that, it’s a digital envelope Dave Ramsey system and I applaud that, yeah.

Ashley Kehr:
So Dan, you want to tell us a little bit more about that phase and then maybe we can hop into one more phase and kind of explore it.

Dan Sheeks:
Yeah. So in freak phase one, the the first item, and they don’t have to be done in order. The first item is to read the book First to a Million. Again, that’s kind of the foundation for the workbook. So if they haven’t already read that they should. And every freak phase going forward, all, 19 will start with, here’s a book that you should read in that four month period. I think a couple them even have two books. And so those books run the gamut of investing specific, real estate investing specific, entrepreneurship mindset, the House Hacking Book by Craig Curelop in there, Set for Life by Scott Trench is in there, couple other Bigger Pockets books and then some that aren’t Bigger Pockets. But I think educating yourself is definitely one of the triggers or levers you need to pull to really find yourself success on this pathway.
There’s another book that they should read in freak phase one, which is just a personal finance basics book written for teenagers. First to a Million, I talk about some basics of personal finance but not all so this book kind of closes the gap so that the young person now is knowledgeable about everything around personal finance, at least the basics.
Set three financial goals, implement the new freak tweak that you mentioned, Ashley. Sell a personal item you no longer want. Even teenagers I think have clutter that they’ve accumulated and if it’s something that they’ve never touched or never used, even if you sell it for 10 bucks on Facebook marketplace or eBay or Craigslist, you just increased your revenue for that month. And you’re not going to lose any sleep over getting rid of a guitar that you haven’t touched in five years so why not sell it.
Finding a new fun, free activity. So just a way to increase your happiness without spending money. There’s so many things that we can do and the book lists several that are free, that we can fill our time with without having to spend any money or very little money to do those. And the list goes on and on. Paying bills with your parents every month just to learn the expenses and income, the spreadsheets, the balance sheet of the small business that is a household.

Tony Robinson:
I want to pause on that one, paying the bills with the parents. I think that’s a really interesting concept. So I just want to make sure that I’m understanding that. So what you’re saying is like, so I have a 14 year old son so I think this book really resonates with me and the workbook because he’s getting to that age where it’s important. Luckily, me being an entrepreneur, I have a lot of these conversations with him, but what you’re recommending here is that when I go to pay the utilities bills and the mortgage payment and all these other things to kind of have him sitting there with me as I do that, so he can see, “Hey, this is how the funds of this household are being allocated.” Or is there another way to do that?

Dan Sheeks:
Yeah, you’re exactly right. And don’t just have him there have him run the show, have him sit at the table with your laptop, he’s clicking the mouse, you’re directing him. But at the same time, you’re explaining here’s where that money came from and here’s where it’s going and here’s how often I pay that, and is it a variable expense, is it a fixed expense? Is it an expense that’s going to expire like a loan or is that an expense that’s going to be there forever? There’s no better way to just teach someone, a young person about just the fundamentals of paying your bills and personal finance than actually having them involved. And again, make them the active partner and you’re just kind of in the background giving them some direction, making sure they don’t, spend an extra, the decimal point needs to be in the right place when you pay that credit card bill or whatever. So yeah, getting them involved is huge.

Ashley Kehr:
Dan, what would you say, how can a parent approach their child about taking this on? If they have no interest in this at all, how can they kind of plant the seed that here’s a great book? Because I think a lot of our listeners are going to kind of be in that boat, they’re not going to be the young high school student listening to our podcast. And those of you that are, awesome for you guys, and we love having you here, but for those who have kids that are listening and want their kids to implement this, what can they say to them?

Dan Sheeks:
I get that question a lot, but first, don’t sell your yourself short. I know this podcast has a lot of young listeners because I talk to them all the time in my community. They love your show as do I.

Ashley Kehr:
Oh, awesome. Good.

Dan Sheeks:
But you probably do have a lot of parents as well of teenagers or even younger. And so I get asked all the time, “If I’m a parent, how do I get my teenager to want to learn about these things? I give them the book, but are they going to actually read it? How do I get them to want to open that cover?” And the short answer is you can’t. As Tony knows, you cannot make a teenager do anything, they have their own mind, they have their own interests.
You can entice them or incentivize. But at the end of the day, if they have no interest in reading a book, then they’re not going to. But the advice I give is incentivize them with maybe some money. If you read this book and you finish it and I ask you a few questions and you answer them so I know you read it, then I’ll, I’ll give you a hundred dollars or fill in the blank, whatever amount of money you think is going to do the trick. Or start having conversations about the idea of not working until you’re 65. You could even throw out it as a parent, maybe a challenge, depending on what path you’re on. I challenge you to retire before me because a lot of the people in the FI community are doing exactly that.
Their parents are on that nine to five until you’re 65 grind, but they’re retiring or reaching FI 30s, 40s or maybe even in their 20s. So it’s not a contest, but I think it would be interesting to some teenagers to say, “Oh, you’re telling me that I could reach FI before you and that I could beat you there? That sounds interesting to me. And then using words like financial freedom instead of retirement, phrasing things the right way so they’re more interesting to a teenager. Retirement doesn’t get a teenager interested at all, but financial freedom or millionaire at school it’s much better to have a future millionaires club than a personal finance club. So just phrasing thing in a better way to get their interest.

Tony Robinson:
So Dan, you also, I know we’re going to talk about some of the other freak phase you have in the book, but before we move on to that next phase, I also want to kind of drill down on your four mechanisms of early FI because I think that’s a kind of a good baseline to give folks before we go on to the next phase. So can you break that down for us? What does that mean? What are those four mechanisms and why are they important?

Dan Sheeks:
They’re super important, right? If you do have a goal of reaching early FI, these four mechanisms are exactly how you will get there. And I go over them in detail in First to a Million. So just short list. Mechanism number one is to earn more. Mechanism number two is to spend less. Mechanism three, save the difference. And mechanism four, invest your savings wisely. And I mean, we could go into any of those mechanisms for half hour to an hour. There’s so many different levers within each of those mechanisms that you can pull to maximize those. But yeah, if you do those four things and you do them well, then you are going to reach early FI.

Tony Robinson:
Dan, how important do you think earning more is because like a lot of Dave Ramsey folks, it’s just like rice and beans, don’t spend a dime. And I feel like a lot of the focus in that community is on expense reduction, but I feel like there isn’t a big enough focus on income expansion. So I mean, how do you kind of balance those two things in your approach and why do you feel that income expansion is so important as well?

Dan Sheeks:
I think they’re both super important or maybe even equally important. Earning more, spending, less doing those two things is going to widen your savings gap or your increase your savings rate, which is only going to fuel your journey to early FI. And so earning more, we all have skills or time available to earn more money through a side hustle, a very easy entrepreneurial small business venture. For teenagers, there’s so many things like just working in their neighborhood, raking leaves, mowing lawns, shoveling sidewalks, or there’s so many ways to make a little bit of money online. I was just talking to my class yesterday about companies love to get teenagers input on their feelings and thoughts about different products and teenagers can go online and volunteer to be in different focus groups and they can earn money doing that in their free time. Not a lot, but anything for a teenager or someone young, especially when your income is pretty limited because you are a full-time student, anything that boosts your income in the present is just going to help you learn those skills and save more money to invest later. So yeah, I think it’s super important to earn more,.

Ashley Kehr:
Dan, let’s jump into phase 12 of your workbook. Can you go ahead and kind of explain what this phase is and why it’s important?

Dan Sheeks:
Yeah. So yeah, just kind of picking a random phase. This is a little bit more than halfway through the workbook. Phase 12 would generally happen if a young person is going to college kind of mid to midway through their college, their four year college experience, or if they didn’t go to college, they’ve been out of high school for a couple years. So it’s like every phase that I mentioned, it’s going to have them read a book in this case. It’s the Four Hour Workweek by Tim Ferris, awesome book, especially around mindset.

Ashley Kehr:
Ah, such a good book.

Dan Sheeks:
And so reading that when you’re 20 years old, that can change everything, which by the way, I think one of the reasons I wrote the book is because I heard so often in the FI community people saying, “I wish I would’ve known this stuff earlier.” And of course we all wish we could’ve known this stuff earlier. And so teaching it to young people is one of the main reasons I took the time to write the book and the workbook. So also in freak phase 12, it’s guiding them on a path to buy their first real estate property as they work themselves through the book. But they don’t have to, right, because it’s very flexible and if the young person has zero interest in owning real estate, then it guides them in other ways to build their wealth and passive income. But if they are interested in real estate, it’s going to get them to buy that first property and house hack it right around this phase, phase 12 or 13.
So in this phase, it tells them to choose a real estate agent to help them buy that first investment property, which would be a house hack and the steps to go to make sure you have a great agent to work with. Determine your systems for managing that property is another task in that freak phase. Your systems for managing the property, utilities, expenses, collecting rent, that kind of stuff. Opening a couple bank accounts, a checking and savings account specifically for that property is a checklist item. Starts submitting offers, which is exciting working with that agent and finding properties that you’ve analyzed and the numbers work and finding a right agent obviously is so key.
They’ll help you in that process and then start submitting some offers close on your first real estate deal is a checklist item. And then there’s some items that are repeating in most phases like setting some financial goals for that phase, a new freak tweak, selling a personal item, evaluating your income streams, that appears about every three or four phases, calculating your net worth is again something that comes up about every three or four phases. Networking, shadow someone for a day. These are all things that just build your likelihood to reach FI and some people, a workbook checking things off is just the way to make sure it gets done.

Ashley Kehr:
Dan, I think this phase would actually compliment the Real Estate Rookie Bootcamp where you learn how to make offers and how to purchase a property. So when you’re giving this book to someone or someone’s going through and reading it, what would you say is overall the most important action item of the ones that are repeatable that they’re doing? So the new freak tweak or selling a personal item or finding a new fun free activity. What are one of those things would be something they should be really diligent about consistency?

Dan Sheeks:
Yeah, I think the answer to that question would be networking. It is so incredibly crucial for anyone, no matter what age and no matter what your goal, honestly, to surround yourself with like-minded people and the workbook guides them through what are different ways that you can network, what are different ways you can put yourself out there to find like-minded people, both your age, cohorts and peers, but also people who might serve as more of a mentor role, all of that is networking and the community I’ve built is all about that aspect of bringing together young people who have similar goals but are freakish, right? Their good friends, their core circle at home may not have the same interest but bringing them together in a place where they can connect and network with each other and hold each other accountable and stuff like that. So I think networking is so incredibly important. You cannot put a number or a price on the value that’s going to bring to your life.

Tony Robinson:
Yeah, like I said, obviously, I’m kind of freakish myself, right, but I read the Four Hour Work Week when it first came out, I was in my early twenties and I immediately tried to start selling stuff on Amazon because I was so juiced up after reading it. The Millionaire Fastlane by MJ DeMarco was another really good book that’s kind of in the same vein as Tim Ferris. But the reason I bring that up was because that was me Dan, I felt like the people around me at that age weren’t thinking along the same lines that I was thinking. And I literally remember I had a blog and a podcast and I was like 21 years old about personal development. And I was in a mastermind with these other bloggers and podcasters and they were all like in their 30s and 40s right? Here I am this 21 year old kid and that was my circle, right? Because no one else who was 21 was trying to do the same thing. So I couldn’t agree more that there’s so much value in the network and the community that you build around yourself to kind of keep you juiced up and wanting to move forward.

Dan Sheeks:
It changes everything, it really does. Absolutely.

Tony Robinson:
So Dan, I know we’ve got several phases throughout this entire process. You start at phase one and it goes all the way down to phase 14. But depending on where someone picks this book up, do they always need to start at that phase one or maybe they move through it faster? Is there an element of customization to the phases you have here?

Dan Sheeks:
It’s very customizable. And so in the introduction to the workbook, I explain how to do that. So let’s say someone’s 24 and they pick up this book, but they are still in that beginning stage of learning about early financial dependence, learning about real estate investing and they haven’t really taken any action yet but now they have the workbook. So you would still start in freak phase one. But I explain, instead of doing that freak phase in four months, maybe do it in two. Or maybe take freak phase one and freak phase two, combine those lists and try to get that done in four months. So you’re accelerating the process. In this mindset, what young people sometimes forget, they’re so driven, right? They’re so motivated. They forget that it doesn’t all have to be done today.
And even if takes them five, six, seven years to get to some major milestones, they are still decades ahead of most people out there who never earn a penny of passive income, who never own any real estate except for a primary residence, who never start a business of any kind, that’s the vast majority of people in our country. And so sometimes I try to pull them back a little bit and said, “You don’t have to do everything this year, just take some major steps in the right direction and still allow yourself to have some fun with your friends and do some fun things. You don’t have to be 100% business all the time.

Ashley Kehr:
So Dan, before I take us into our Rookie exam, since this is a real estate podcast, I just want to go into your portfolio a little bit more. What are two or three things that you could you have learned? Maybe it was an obstacle or a challenge you had building your real estate portfolio that you could share with our rookie listeners that you have overcome in a lesson you have learned.

Dan Sheeks:
I think one of the major lessons is that you just got to do it. My wife and I have made a lot of mistakes. Some of them very costly, honestly, but obviously where we’re at now, the net effect is hugely positive. And so, we’ve signed leases with really bad tenants and regretted it, but the lesson we learned while going through the process of dealing with really bad tenants, we know that we’ll never do that again and we have the right systems and processes in place to make sure it doesn’t. Selecting the right properties, we’ve made some bad decisions there. But you can learn everything you want from books and podcasts and blogs and talking to other people who are more knowledgeable than you. But until you actually take action and start doing these things, that’s when you really start to learn.
And so I would say don’t be afraid of making mistakes because you are going to make mistakes. And it’s in those mistakes that you learn so much and you grow and your future, until you make those mistakes, you can’t get to that next level. So know that it’s going to happen.,It’s not going to be a perfect pathway. I mean, every day in my side business of the Sheeks Freaks Community, I make mistakes and I learn so much. But it’s only because of that it continues to grow and strengthen and become a better community.

Tony Robinson:
Dan, before we move on to the rookie exam, I don’t think we touched on this at the top of the show, but just what does your and your wife’s portfolio look like today? We know you started with a house hack, how big have you guys been able to scale?

Dan Sheeks:
Yeah, we have 17 units mostly in Colorado. And that’s a mixture of small multifamily and single family houses. We have three single families in Detroit or just outside Detroit, Michigan. They were all burrs, obviously all long distance. In Colorado, we have two short term rentals that we Airbnb full time and we have a house hack. So we have a three bedroom house and we rent our basement out to a young woman. I think she’s our fourth tenant we’ve had down there. That’s amazing passive income. It’s freakish, right? My wife and I have a one year old son, most couples who have small kids would never rent out a floor or a bedroom or to a stranger although our tenant right now is amazing, she’s awesome.
But in order to get a different result, you have to do things differently. It is a little bit of an inconvenience at times, but overall not really. We would never use our basement. And so she pays us basically 1,000 bucks a month, that’s $12,000 a year to expediate our investments and our net worth and reach our goals even faster. So I’m a huge fan of house hacking, especially for the beginner and the young person, as you know, if they want to get into real estate.

Ashley Kehr:
I couldn’t agree more, such a great way to start into real estate investing. Dan, how long did it take you to build your portfolio? Once you met your wife and you guys started investing together?

Dan Sheeks:
Seven years, we’ve been at it seven years.

Ashley Kehr:
That’s awesome, congratulations.

Dan Sheeks:
Thanks.

Ashley Kehr:
Okay. It is time for the rookie exam now. So being a teacher, I’m sure you should be able to ace this exam. So Dan, the first question is one actionable thing rookie should do after listening to this episode.

Dan Sheeks:
Can I say go out and buy First to a Million, the book?

Tony Robinson:
Absolutely.

Ashley Kehr:
Yes you can.

Dan Sheeks:
I honestly, I mean, I wrote the book and the workbook for that young person or beginner who’s just trying to consume all this different information and maybe it’s not making sense. This is the place to go to start fresh and really kind of sequentially learn what you need to learn. So that would be my advice, it’s a little self-serving I suppose, but it’s the best advice I got.

Tony Robinson:
All right Dan, question number two, what is one tool, software, app or system that you use in your business?

Dan Sheeks:
One of the ones that we found super useful for our, for our short term rentals is an app called Turnover BnB. And it’s a way to find people to clean or even sometimes manage your property with very little effort. So I highly recommend that.

Ashley Kehr:
Cool, thanks for sharing, I haven’t heard that one before. Have you Tony?

Tony Robinson:
Yeah, I’ve heard of it.

Ashley Kehr:
Probably, yeah?

Tony Robinson:
We haven’t used it before.

Dan Sheeks:
Of course, he’s heard of it, yes.

Ashley Kehr:
Yeah. The last one Dan is where do you plan on being in five years?

Dan Sheeks:
Five years. So my wife, she was a teacher as well for 19 years and she retired from teaching about two years ago.

Tony Robinson:
Wow. Congratulations, Dan, that’s amazing.

Dan Sheeks:
Thanks, yeah. So we’re blessed that she is able to be home with our son full-time. She does some property management, she does manage our rentals, our portfolio. And she has a side hustle as a notary signing agent, but all of that is kind of on her own time. So she manages our household. And so in five years, I hope to be either halftime myself or out of teaching altogether, but it that’s a struggle because I love my job and leaving altogether is not something I’m ready to do yet. But we may have another kid in the future as well. And once you have a family things completely change and now I just want to spend every moment I can with my family. And so in five years, that’s probably what I’ll be doing.

Ashley Kehr:
And I think there’s definitely a way to fulfill your passion of teaching and educating people without having to work at a school either and being able to turn it into your own business and, yeah. Well, I’m excited to see what you do and how you grow and congratulations on all your success so far. Everybody make sure you go check out Dan’s workbook, it is currently available on amazon.com. So Tony, do you want to highlight today’s Rookie Rockstar for us?

Tony Robinson:
Absolutely. So if you listeners want to get highlighted as the Rookie Rockstar, be sure to get active in the Bigger Pockets forums and the Real Estate Rookie Facebook Group, we got almost 50,000 people in that group, super active, super engaged. And then if you got a good story, we might share it on the show. But today’s Rookie Rockstar is Patrick Ryan. And Patrick closed on a six unit apartment building which brings Patrick’s total portfolio up to 23 units. And a few quick notes from this six unit acquisition, it was off market so they sent out some postcards, they were able to negotiate seller financing. So the sellers carrying 20% back of the loan and they use that as part of the down payments.
And then on the price, they paid about $72,000 per unit, which is really good because they said most other units are trading around 100K to 125 K per unit. And there’s a lot of upside in the rent as well. But they were able to get $16,000 in cash at closing because of the way that some of the rents were set up. So I mean, it sounds like an amazing deal all together, Patrick, congratulations to you brother for knocking it out the park.

Ashley Kehr:
Yeah. Great job, Patrick. Well, Dan, thank you so much for joining us. Can you tell everyone where they can reach out to you and find out some more information about you and of course learn more about First to a Million?

Dan Sheeks:
Absolutely, yeah. People can find me on Bigger Pockets. I’m there every day, LinkedIn, Instagram, they can also email me at [email protected] First to a Million and the First to a Million Workbook are available on Bigger Pockets and Amazon and everywhere else. Also, if there’s some young people out there interested in the Sheeks Freaks Community, sheeksfreaks.com, you’ll learn everything you need to know there.

Ashley Kehr:
And I have to add, I really think this is a great book for anybody that’s going to a graduation party this spring, this summer, I think for high school graduation, even college graduation. So if you guys are looking for gift ideas, I think this is a great one.

Dan Sheeks:
Yes.

Ashley Kehr:
Okay. Well Dan, thank you so much for joining us. I’m Ashley at Wealth From Rentals and he’s Tony at Tony J Robinson. If you guys love the podcast and you have a success story, a win, please share it with us. You can leave a review on your favorite podcast platform and we will be back on Saturday with a Rookie Reply.
(singing)

David:
This is the BiggerPockets Podcast, show 605.

Christian:
Now I’m learning accounting. I have the right person to teach it to me. I have a CPA, it took me a while to find, but I have the right CPA who makes me go through the steps and learn it before he’ll file anything. While it’s a pain, I’m understanding it. And next year, when I get here, I’m not going to have an accounting problem. I’m going to have a whole new set of problems. And that is what I’m targeting every time. When I’m stuck, I need to make sure I’m not stuck on an old problem.

David:
What’s going on everyone? My name is David Green, and I am your host of the BiggerPockets Real Estate Podcast. The podcast where we teach you how to build wealth through real estate and improve your life through the financial freedom that it can provide. We do that by bringing on different guests that have walked this journey before you to teach you what they did and maybe left some bread crumbs along behind the way so you could follow their path. We also bring in experts in the industry to teach you things like tax savings, bookkeeping, renovation tips, how to find deals, how to find on market deals, how to use an agent, how to get lending, all the pieces that you need to build your wealth through real estate investing. I am joined today by my co-host the amazing Rob Abasolo, who joins me in my interview with Christian Osgood, the partner of Cody Davis, who we interviewed on episode 554 and had a very popular episode.
Now, Cody and Christian are both young men that are somewhat new to the game of real estate, but have had a lot of success by finding off market deals and structuring them wisely through building relationships. This is pretty much a can’t fail approach. If you’ve been trying to find deals and can’t find them, if you’ve been nervous about paying too much for a deal, well, these guys are finding deals, naming their price, and working with the sellers to make it work. It’s harder work, but it is definitely something that has a much higher upside and today’s interview with Christian was fantastic. I loved this conversation. Rob, what were some of your favorite parts?

Rob:
You know, I think it was really nice to find out that you’re never really ready to scale. I think we all try to put all the systems in place and build out the teams and spreadsheets this and all the … I mean, I think kind of what we learned from Christian was that they relatively had a good structure in place, but the only way they could really scale was by throwing themselves into a deal. And he talks about that because his first two deals were two units and then his third deal was a 38 unit building. So I think that right there, he had to learn a lot on the ground. And so we talk about that. We talk about his different partnerships. We talk about networking with people and really getting to know them and knowing their heart and knowing their story and leading with that to close deals versus leading with, Hey, do you want to sell me your property? And they’ve had a lot of success doing that.

David:
A ton of it. And then they also have learned that everything is figureoutable or as they say in today’s show, everything is Googleable. And that leads us to today’s quick tip. You can use Google Maps to find just about any property that exists and then find the owner afterwards using that. Rob, have you ever done this yourself?

Rob:
I haven’t. No. Yeah, it was actually ridiculously simple. I was like, can you just, can you walk me through this? And then he told us the steps and I was like, okay, I guess it’s as easy as it sounds. Just Google it.

David:
That’s it. So make sure you listen to the full episode today so you can learn how to just Google it yourself. All right. I want to make a reminder if you like this show, go back and listen to episode 554, where we interviewed Christian’s partner, Cody, who has an inspiring story. These two are working a method that anybody can use. There’s a lot of good advice here about the right way to contact people, how to make sure that they’re talking more than you, and you’re bringing more value than you’re asking for from them. We get into some of the mistakes that they made in their scaling quickly, so you can avoid those same mistakes, as well as a really good blueprint. Any last words, Rob, before we bring in Christian?

Rob:
You know, I think my favorite part of the show was he talked about a very honest and big mistake that they had in their business, and it was a very vulnerable moment. I was like, man, I wish a lot of people opened up like that, because there’s a lot to learn from these moments. So stay tuned for that.

David:
Yes. And we’re going to be doing more of that. I’m coming after you. You come on the podcast, you’re going to share the good, you’re also going to have to share the bad and the ugly. All right. Without further ado, let’s bring in Christian. Christian Osgood, welcome to the BiggerPockets Podcast.

Christian:
Hey, thanks for having me.

David:
Yes. I think this was probably set in stone from the time that we interviewed Cody. That episode was very, very popular. If you didn’t hear our episode with Cody Davis, go check out 554. And Cody is what 21, 22 years old? How old is he now?

Christian:
He’s 22 now.

David:
22. Okay. He’s grown up quite a bit.

Christian:
He’s done it. He’s old.

David:
He’s buying multi-family properties and he was crushing it and it was a very inspiring show, and you are his other half, as I understand.

Christian:
Yep. On the business side, I am his partner on a majority of the deals that he’s done and we’ve done pretty much this whole venture together for the last 13 months or so.

David:
You’re significantly taller than Cody, right?

Christian:
I am. That is always difficult on the YouTube channel or any filming we have to be really conscious of is Cody actually showing up on the camera?

David:
I ask, because I think I saw on your Instagram, like I think I’m following Cody and he was posting pictures with someone who looked like Groot standing next to Rocket Raccoon. And now I’m seeing this is Groot.

Rob:
Let’s get this man in apple box.

Christian:
There we go. I am Groot.

David:
So let’s start off tell us. Yeah, that’s a perfect reply to what I just said. That could be the intro to this show. So start off telling us how do you and Cody sort of divvy up the responsibilities of what you’re doing? What skill sets do you each bring? How’s your partnership look, and then we’ll dive more into your portfolio.

Christian:
Yeah. Well, important thing is we can both do what the other can do. We have overlapping skills, however, we have different specialties. The way we’ve designated it is Cody brings in as much fish as he can while I build a bigger boat. Cody brings in a lot of fish. So that’s a lot of ship building. We can both sell. We can both raise capital. We can both negotiate deals. However, Cody probably does about 75, 80% of that. I do a lot of the backend accounting, getting the right systems. It turns out when you buy a lot of real estate really fast, there’s a lot of bills to pay. You have to keep track of those things. I have a little better memory for that piece than Cody. Cody is great at driving fast. My job is to make sure that we have the capacity to haul in everything that Cody brings.

David:
That is so well said. In fact, every business venture that I started, I typically operated like the Cody and I needed a Christian, and the times I did not do well was I didn’t have a person in place that could keep up with the mess that I created, frankly. Like I got all these fish, I dumped them in the boat and somebody else has to figure out what to do with them before they rot, they go stinky, someone slips on them. And so I really think that’s like, if you’re going to start a business or a partnership, what you’re describing right now is the first thing everybody needs to work out is if we are successful in getting opportunities, if they’re a real estate agent, that’s leads, people that want to buy or sell homes. If you’re a real estate investor it’s properties, we might want to buy.
That’s the hardest part is you got to fill up a pipeline full of leads and opportunities that you want to be doing something with. Well, the next piece is who is going to clean up this mess, track the accounting, follow up with the contractors, know where money’s coming in and out, help you understanding if you’re even profitable. So I love that you’re acknowledging that, because I think this is where sometimes you get two Christians where both people just want to have everything be nice and clean, but they don’t go get any leads, so you never get anywhere. And sometimes you have kind of how Brandon and I work, where we both just create big messes and that there’s nobody left to clean it up. So tell me a little bit, like how did you guys come to this understanding that this is the way that work was going to be split up?

Christian:
Well, it happened organically. I guess, sticking with the ship metaphor, what we’re going to do is when you have a partnership, you want to make sure the ship is sailing in the same direction. It’s the most important piece. So we have the same goal. We’ve agreed where we’re headed. That was the first thing that we did. That came into existence at the 10X Growth Con. I actually accidentally roomed with him. Someone had a spare ticket, they ended up not going. They had already booked a hotel room. So the two of us connected there over three days. When you’re in that environment, it’s all, hey, 10X let’s set huge goals. So we set this massive goal of, well, I’ve always wanted to hit 30 units by 30. At that time I had two units and I was 29. So it seemed like a little bit of a stretch, but we set that goal together.
Cody was really looking to expand and grow his portfolio to a hundred units, which we’re going to hit here in the next few months. And so we connected on those points and then everything else is just organic. Our first piece was we got to find a piece of real estate to buy. He got me into my second duplex. Then we bought a 38 together, which was an effective way to get to 30 units, huge fan of skipping, or not skipping, but not adding extra steps. So if you want to get to 30 units, the easiest way is to buy more than 30 units. So we started doing that and just a natural progression. As we started doing business, we found Cody brought in a few more deals, I was better at cleaning up the back end and it just kind of evolved into what it is today.

David:
Okay.

Rob:
Sorry. So just to clarify, you went to a conference, someone’s like, hey, I got an extra ticket, here’s a caveat, you got to sleep in a room with a stranger. So you guys were bunking and then, one of y’all were like let’s scale. And then the other person’s like, yeah, sounds good. And then you guys came together as a partnership?

Christian:
Yep. That’s been pretty consistently the entire partnership. Sometimes we’ll find a deal and Cody will throw it in front of me. And I feel like we’re already operating at capacity. He’s like, I love this deal. You want to do it? And I usually say, okay. And if I don’t, Cody goes well with, or without you I’m doing it. And I was like, well, I don’t want to be left out. So let’s do it. There’s certain balances between, hey, do you want to get it perfect or do you want to get it done? And my policy is strive for perfection, but at the end of the day, you just have to get it done, get yourself a new set of problems. So a year ago I had a duplex and not enough real estate. Now I have enough real estate to get started and I’m having to learn how to master accounting and get through all the legal and the pieces that come with that.

David:
This is so good. I mean, you might be what you’re describing as the case study for the right way to scale. So I just had a meeting with my real estate team yesterday and it’s sort of the end of the first quarter so we were talking about what we’re going to do going into quarter two. And I have a lot of newer agents. They’ve been an agent for 12 months or less. And our system has mostly been built on somebody comes to me, they get assigned to a senior real estate agent who’s going to oversee their deal. And then that senior agent leverages out the junior agents to go show the houses, call the listing agents, research property, sort of the senior agent’s the one that communicates with the client and the junior agent’s the one that kind of learns the game by doing all of the work.
And what I’ve been finding is that the junior agents are just very hesitant to go tell anyone they’re a real estate agent. They just want to stay in this very comfortable lane, and they keep saying, I don’t know what I’m doing. I don’t know what I’m doing. You’ve been an agent for 12 months. You know more than almost every other agent in this office, because you’ve worked with like 50 clients in the 12 months that you’ve been here instead of the average realtor might do one or two. But it’s this idea, what we found is that they have this belief that they don’t have all the answers and so they can’t go take action yet. They need to know first exactly what to do before they go tell somebody, Hey, I want to sell your house or I want to help you buy a house or they go hold an open house.
And my advice was, that’s not how you learn. You learn by going and saying, I want to sell your house. And then when you run into something you don’t know what to do you look at the resources you have around you and you talk to your broker and you talk to another agent in the office, you come talk to us and you learn. And then the next time you come across a problem, you have a little bit more confidence to take it on. That really, good entrepreneurs and business people are just problem solvers. That’s it. And you can’t get every single answer that you would ever need. It sounds like that’s sort of how you and Cody are doing things.

Christian:
Yeah. I think we’re programmed to think that way. We go through school, you go through first grade to get to second, second to get to third, you graduate high school hoping to get a high enough GPA for college. You get a first job. It scales to the second. That’s the scripted system for everyone. And so we’re trained to add steps to get where we want to go. I see a lot of people say, hey, I want to be a real estate investor so I went out and I got my broker’s license, and then I worked there for a few years and then I became an appraiser cause I wanted to value properties, and then I became a lender because I wanted to borrow money. The fastest way to become an investor is to go and buy real estate, and you have to learn to get there. So information’s important and if you want that, fortunately you have BiggerPockets. But at some point you need to transition from information to actual practice. The application is more important than the information.

David:
Rob, what say you?

Rob:
Yeah man, I actually kind of want to establish here, well, first of all, I assume that if this relationship is working and the partnership is working, you each like the tasks or the job responsibilities of each side, is that right? Or is there ever kind of any dissonance on things in that you and him don’t want to do?

Christian:
Yes. Well, one thing there’s no such thing as an even partnership, like people are just different. When you have different roles, there’s going to be different workloads. So there’s always going to be some level of dissonance you have to resolve. I’m pretty sure neither Cody or I wants to sit on hold and pay bills. That’s just not a task that anyone enjoys. However, I’m going to remember each and every one we have for the properties better than Cody. I would rather have Cody out bringing in new business and forming those relationships. He’s an amazing storyteller. So when he gets in front of clients, I just know he’s going to land that pitch nine out of 10 times, where I’ll do it seven out of 10. So we’re not always doing what we like to do, but we’re doing what we’re best at. And at the end of the day, we’re moving forward at a very, very fast pace. Not everyone’s done what we’ve done in a short period of time. And I love being able to do that. So when things are difficult or things are out of whack, we have excellent communication, so we know how the other one feels at all times. And at the end of the day, it’s about getting it done. And that’s what we do.

Rob:
That’s really nice, man. So let’s kind of lay this out tactically, because you say you kind of handle the back end and then he’s on the front end, which I think makes sense to me, but to kind of give some good definition here, let’s say Christian, my dad’s got this 30 unit apartment complex. We want to get out of the business. I’ve got this deal for you, and I hand it over to you as a sale, right? We lock it up. How do each of you work in that specific deal?

Christian:
Well, we’ll look at the pieces that we have. If there’s something on the front where someone’s obviously going to be more relatable than the other, we’ll take that sales call. So if it’s someone like we find out, hey they started really young, they did a lot of creative financing, I’m going to put Cody in that position every time because Cody’s the most relatable and his story is absolutely incredible. I don’t know a lot of people who’ve done what he’s done by 22. If I talk to someone who’s started very conventionally, they had a nine to five for a long time, it depends on the story, but if I feel that I’m really going to connect with that person, I might reach out. But again, we typically send Cody because Cody’s going to be the one to land those. In that relationship, we would take a look at the deal. My first thing I always want to do when we’re talking deal is I just want to meet. One of us is going to go out and get dinner, get coffee. We’re going to get to learn who they are, what their goals are, what they want to accomplish. And most importantly the why behind that. And once we have those pieces, we can strategize on how we need to progress.

Rob:
Okay. So you talk a lot about learning the accounting and all that kind of stuff. What is your background? Is it in accounting specifically or have you just been sort of been tossed into the accounting deep end and you’re just kind of learning everything as you go?

Christian:
Definitely the latter. We have a policy of we can’t have the same problems this year that we had last year, that’s how you know you’re stagnant. If I look at 2021 Christian, I go, wow, I don’t have the real estate I want to have. Well accounting for real estate doesn’t matter until you have the properties, right? So we scaled from two units to 71 units. Well now I better know how to account. Quick recommendation for everyone, if you’re buying a lot of real estate for the first time, don’t close it all in November and December, you don’t have a whole lot of timeline to learn the accounting, but we came in, we solved the first problem. I don’t have the real estate I need to achieve my goals. With that problem gone, we had a, hey, I’m not a master of the legal docs.
Well, we had to do a whole lot of that in creative financing and partnership structures. And we got really, really good at it. Now I’m learning accounting. I have the right person to teach it to me. I have a CPA. It took me a while to find, but I have the right CPA who makes me go through the steps and learn it before he’ll file anything. While it’s a pain, I’m understanding it, and next year when I get here, I’m not going to have an accounting problem. I’m going to have a whole new set of problems. And that is what I’m targeting every time. When I’m stuck, I need to make sure I’m not stuck on an old problem.

David:
Man. This is gold.

Rob:
Yeah, yeah, yeah. You’re looking for, I’ve never really heard anyone excited for the next set of problems, which is really funny because you’re just trying to solve today’s problems. And then you’re like, all right. My goal is next year to have a whole nother set of problems. That’s a pretty rare thing to say, I think.

Christian:
Well, that’s how you know you’re moving forward. If your problems aren’t old problems, new problems are good. That’s how you benchmark success. At least that’s how I’ve done it.

David:
I think there’s some magic in what you’re saying right now, to be honest, like this should be one of our better shows because this is what everyone who’s struggling needs to hear. I’ve often wondered why an incredibly intelligent person can go to work for another company and fall into a rut, let’s say if they get hired to be a CPA for another company, if they’re hired to be a CPA, they probably have a mindset and a skillset and they’re already kind of geared towards looking at the world that way. So they have an inherent advantage in how successful they should become. And very rarely do they ever progress through the ranks and go start their own business or become an executive in that company. Most humans, when they go work for someone else, just fall to a rut.
It’s almost like a mindset that encourages you to do as little work as possible, as slow as possible, as easily as possible. Don’t think creatively. Don’t look for ways to make things better, and just stay in that rut and wait for someone else to give you an opportunity. Wait for the boss to come say, I’m going to give you a raise and then, oh, I’ll give my best now. It’s just, there’s something about human nature. I rarely ever go into a Subway restaurant and have the sandwich maker that’s crushing it. Who’s like man, I at the bottom of the totem pole and I hate it and I just got to get my way to the top so I’m going to do the best job I could. Right?
It’s not normal. We don’t see that very often. It’s very rare. But then I also come across the business owner of the Subway and it could be a Subway restaurant, it could be any kind of business, but it’s often somebody who came from another country who had no skills who did not speak the language nearly as well as people here, who had none of the advantages was not educated, doesn’t understand the culture. By all means they should be failing. They should be at a disadvantage. And that person is the most successful one in that company.
And they’re doing things like managing people, making a schedule, ordering the food, doing the payroll, understanding profit margins, doing the marketing, solving the problems, like all of these different things that we typically hire out individually in a company, when someone owns the business, they do it all themselves and magically, they figure it out, like what you’re saying, right? So I come to the conclusion that I believe it’s the degree of responsibility that a human being is willing to take on over their own success or the success of their endeavor that determines how successful they’ll be like you, by your own ambition were not an account. You don’t keep books. That’s not something you had ever done before, but because your company needed that to be done, you rise the occasion and you figured it out.
Rob had a story where one of his children had accidentally snorted play dough right up their nose. And Rob became an ER nurse in that moment, right? Like he came up with the idea of how they were going to get it out. He executed it, it worked out, nobody trained Rob how to do that. He wasn’t like, I’m not going to move forward with having a kid until I know every single scenario there could be. It’s literally the act of taking on the responsibility of raising the kid or starting the business that puts you in the mindset that the solutions start to be made clear. And I’m going to hand it back to you to get your opinion on that. But this is what we’re getting at when we talk about the mindset, are you approaching it? Like it is my job to make as many problems as I can and solve them as well as I can. Or are you approaching it like it is somebody else’s job to take away all my fear, to give me every answer that could ever be there before I start.

Christian:
Yeah. And I think a lot of people have had that moment. For me, I think about high school in science class where you’re paired with all the smart kids and at some point someone might have had a point where it’s, hey, I don’t really feel like learning this right now, so I’m kind of going to let everyone do the work, and I’m just going to play team coordinator. You do this job, you do this job and you don’t do anything. And at the end of the day, that’s the wrong practice. You nothing gets produced if there aren’t producers. At the end of the day, you have to go out and accomplish what you need accomplished. I completely believe in finding the right people, in getting employees, in scaling and creating jobs.
You should have all these roles, but if you’ve never done it, you don’t have a knowledge base, it’s really hard to manage people and lead people if you just don’t know what you’re doing. I think there’s a ton of value in going out and actually learning the accounting myself so that when I hire a bookkeeper and an accountant, when we can scale to that level, I have a basic idea of what they’re doing, and if they leave my company, I’m not totally hosed. Like you just need to learn how to run your business if you want to run a business. I’m not free of time yet. Turns out when you buy a lot of real estate low to no money down, it’s actually a ton of work. So this is not passive income, or at least it’s a ton of work to get passive. But as you’re scaling, you just need to have the ability to know exactly where you’re headed, why you’re headed there, and then just go and knock it out.

Rob:
Yeah. I don’t think you can really ever be really fully prepared to scale. Like obviously there’s a good understanding that you want of the problem, but at a certain point you also have to just believe that you can kind of get through a lot of those problems. It sounds like you sort of went through that. It’s the classic, I guess the adage of like a fish that’s in a very small tank is going to just grow to the size of that tank, right? It’s not really going to get big, but if you give it a really big tank, it’s going to get bigger and flourish, and that seems to be what happened with you, because you said you were in two units and then your next deal was 30 units like a 30 unit apartment. Is that right?

Christian:
My third deal. I started with two. Cody got me into a deal for another two units right across the street from them, which I did hard money, 101% financed, and then did a refinance. That was my first foray into some level of creativity and rehab. Then deal number three, 38-plex Moses Lake. I would not have had the confidence to do that if I didn’t buy the first two deals, but that was scaling pretty rapidly to go from December 2020 at my first duplex to here I am today with 71 units. That was quite a sprint to get where we’re at.

Rob:
Well that’s exactly what I’m talking about. That really proves my point even more. You had two units, your next deal was two units, and so you’ve sort of mastered the art of owning and managing two units, right? And so logically next step is, hey, maybe we graduate to a four, maybe a six, hey, let’s get crazy. And maybe an eight unit and you say, no, let’s do a 38 unit and you jump into that deal. That is a tank that is much larger than what you are currently swimming in and you figured it out. So can you tell us more about the mechanics of that? Because you said 101% financed, how did that deal come across? And was this really the, kind of where your relationship and your partnership started to flourish? Because I imagine that all the problems you were excited about really probably started with this deal.

Christian:
Yeah. So that second deal is the duplex 101% financed, then that gave me confidence to use some creativity, get out of the conventional box. So deal number three to 38, I’d already communicated my goal to Cody on, I want to get to 30 units by 30. And unit count isn’t really a relevant goal, it was just my goal. And once I’ve committed, I’m like, okay, we got to hit it. My options are, I have two duplexes, so I can find 13 more duplexes and keep doing what I’m doing or I can grow and expand. The 38-plex was a stellar opportunity. It was seller financed. And Cody did a lot of the negotiations through just meeting the seller. He identified what they really needed, this property was on market for 13 years at the same price on and off. No one’s figured out how to make it work.
Cody got in front of them and just found out they had a set number that they were looking for on monthly payments. So we came up with a custom amortization schedule that got them the $10,000 a month they needed. And we were off to the races. The seller financed 15% down and we had to learn a new skill. About three weeks before closing, Cody and I looked at each other and went, huh, we should probably raise the $300,000 down we need for this since we don’t have it and none of us have ever done this. And so we had three weeks to learn, okay, how do you make $300,000 appear for the right deal with the right amount of upside? And in four phone calls, we made it happen, and now we know how to do it.

David:
Let’s unpack that for a second. Because as someone listening, you’re going to hear, okay, well I hear you telling me, I should just go make it happen, but I don’t know what that looks like. So let’s try to paint a picture for what happened on those four phone calls, what words were used, what objections were received, walk us through what that was like.

Christian:
So in every deal we are 100% relationship based. In lieu of asking for deals or dialing for dollars, we call owners of multifamily. There’s no list or target. I don’t care if they’ve owned it for one year. I don’t care if they’ve owned it for 30. I don’t care if they’re out of state, any of that low-hanging fruit. All I need to know is that owners know other owners, and if I want to be in this market, I need to know the players. So we just call owners of multifamily property and we get to know them, who they are, where they’re headed and why they’re going there. I communicate succinctly the same pieces about myself, the relatability, the goal and the significance behind what I’m doing. So now we all have a relationship.
It’s the same exact thing when you’re raising capital, I know what pieces people have, so when I make that phone call, I’ve already met with them. We didn’t talk about a deal. I talked to them about what’s happened in their life, what their target is and why they have that target. So for that we call and the phone call starts, hey, based on what you told me, I have an opportunity and I wanted to run an idea past you. And it goes from there. And it’s just an extension of a conversation we’ve already had. And if you’re getting started, that’s the only thing that I think you need to focus on, this is a contact sport. You need more contacts. Don’t worry about the deals, worry about the relationships. And only the relationships. There’ll be a time to be transactional. And if you’re getting started, you’re not there yet.

David:
So let’s role play that.

Christian:
Yeah.

David:
I will be the person who could be a potential investor and you’ve got the deal. So you’re calling me.

Christian:
All right.

Rob:
I’ll be the phone ring, ring, ring, ring.

David:
Hello?

Christian:
Hey David. It’s Christian. How are you, man?

David:
I’m good. Thanks for calling Christian. What’s on your mind?

Christian:
Yeah. Well I wanted to touch base with you. Based on our last conversation, you had mentioned that you’re really, really trying to get more units to your name, and you’re looking for a deal that has both cashflow and upside. I had a unique deal come across my desk, I want to run an idea past you.

David:
Okay. Would this be something you’re bringing to me to buy? Or is this something you’re going to buy?

Christian:
This is something I would actually like to buy with you. I would back this with equity. This would be a deal that we would do together. I found a stellar opportunity. It’s in central Washington where the rest of my portfolio is. My other partner is Cody Davis, who you remember meeting with him. He has a lot more units than I do out here, but this is the single biggest opportunity that we’ve come up with and based on our last conversation, I’d like you to be a part of it.

David:
Okay. Can you sum up what you like so much about this deal?

Christian:
Well, first of all, it’s a seller financable opportunity, which is how we’ve leveraged low down to quickly multiply money. We’re only going to need 15% down to close it. The upside on this is seven figure upside and I am absolutely sure that we can reach this in the timeline we’ve been given. We have five years to do about one year worth of renovation. Cash flow is a little light day one, but we’re going to compensate with a equity bump on the back end. So we’ll offer you two to one on your money in five years, so you put in 100, pay you 200, and as it’s cash flow, you get your percentage cash flow.

David:
All right. Now I don’t quite understand what you’re going to do to add value. Are you saying that they just need to be renovated and made nicer?

Christian:
So first of all, it’s 38 units that today is bringing in about seven and a half thousand dollars. This is ad acquisition. We bought this thing, day one was like a three cap deal.

David:
Okay.

Christian:
Terrible performance, has been mismanaged. Conveniently, we have a property management company. We’ve done this, so we know what we need to do on the rental bumps. In addition, there’s a contractor that I’ve already used on my little duplex. He did a phenomenal job. We took rents on that property from $700 a month to $1,400 a month. They’re beautiful units. We get the highest rent per square foot in Moses Lake. We know how to renovate. We know how to manage. Cody’s already raised rent on 30 units over the last few years in the same market. This is exactly what we’ve done to create value on every other property. It’s just a larger scale.

David:
Okay. So you’re saying that it’s being mismanaged, the rents are not as high as they could be, and you think you can change that.

Christian:
Yes. This property, we started, the septic tanks were trash. Water heaters were either not working or leaking everywhere, there’s a homeless camp on the site. I mean, this had everything wrong with it, but there were all pieces that we’ve dealt with similar stuff on other properties. This was definitely a stretch for us to get, but this pushed us to the next level. We knew we had the requisite experience to make it happen. We just needed the right people to believe in us, to prove concept and make it happen.

David:
So is the plan to bump rents, increase the value, and then refinance in five years?

Christian:
Yep. The first thing we do is we show energy on the property. So we have a whole bunch of bad appliances, we brought all the appliances in at the same time and start bringing them into units. Immediately started renovating all the vacants. They had a ton of non pays, who they just hadn’t made any effort on. After we put energy in the property, we started fixing things up. We repaired electric problems. We replaced appliances. A majority of the non-pay just started paying. We posted notice and asked them to pay and just started receiving rents. We moved in the first six months, we brought the income from $7,000 a month to a little over $20,000 a month in less than half a year.

David:
Okay. So how can I be sure that I’m going to get my money back?

Christian:
Well, we have enough equity in the property day one. I mean, day one, we bought it for two million. It was still, there’s no way you could buy a property like this, that many units, for less than 2.8 million today. I value it a little over three, but we back it with equity of the property, on this particular deal, we had three investors come in, each brought a hundred thousand to the table and we gave them each a 20% equity stake in the property.

Rob:
Honey, honey, that sounds like a really great deal. I think you should invest.

Christian:
What we recently ended up doing on this, you always go in with a clear plan of how you’re buying everyone out. That said, typically equity is going to be a lot more expensive than debt. We recently cashed out one of the investors. He wanted to move his equity into another project that he wanted to invest in. So we moved our pieces, we got him cashed out early, and then we converted the equity from the other two owners into debt through a note. So we basically bought them out with a new note and we pay them out of the new cash flow. So now Cody and I own a hundred percent of the building between the two of us, we’re 50-50.

David:
Gotcha. Okay. And then how are you coming up with the actual people that you’re going to call and propose this to?

Christian:
Google Maps. 100%. I have no software. I have no list. I have no skip tracing. Turns out every single off market property exists on Google Maps because every property’s on Google Maps. First thing we do is we start with location and then we ask two questions. When I have the market I want to buy in, how do I own it, and how do I never lose it? If I can answer those two questions, we can acquire absolutely anything and know that we’re never going to lose it. We can hold it through good times, through bad times, we buy on cash flow for equity growth. The location’s going to help us grow the money and multiply the money. Cash flow makes sure that we can keep it forever.

Rob:
So can you clarify when you say you find it all on Google Maps? Like, what do you mean by that? Do you mean you, let’s say Houston, for example, you’re looking there and then do you just start zooming around and saying, oh, that looks like a multi-family deal or how does that work? What’s that process?

Christian:
That’s exactly it. I look at the roofs. I go, hey, that looks like a 12-plex. I’m going to go zoom in and I’ll drop my little guy on street view and look at it. I’m like, wow, I’d love to own that building. Right now, we have a lot of wholesalers and other people who just grind the phones in the market who are calling saying, hey, can I offer on your property? I have a deal for you. Do you know what your property’s worth? I don’t do any of that. We call and we just ask for a meeting. So I’ll take Moses Lake as an example, because that’s where we started.
When I owned a duplex, I was going to call people with a 12-plex or with a 38-plex. And the phone call looked like, Hey, I just bought a property in your market. I’m a new investor. I have a couple duplexes. I’ve come to the realization that I can’t scale buying two units at a time to where I want to be. Saw your 12-plex here, I was curious how you got started. And then you just listen to them talk. I follow the 80-20 rule as close as I can. They should do 80% of the talking and I should do 20, but I’ve practiced this so I can communicate my pieces, my significance and my goal. I can communicate those really simply, really effectively without a lot of words. So when I’m talking to them, I listen to their story, we have them back and forth. And then I ask to meet them for coffee. It’s never about a transaction, the coffee, I’m going to expand on what they’ve done and how they’ve done it. That’s how Cody and I learned how to do all the creative financing.
There’s two guys in particular, central Washington, we called them, no idea how to buy their big buildings. We just know that they’ve accomplished something we haven’t. After a few phone calls and about a year of work, one of them finally picked us up, put us in a truck, drove us around all of Moses Lake told us exactly how they bought stuff low and no money down, seller financing, and one of my favorite deals we’ve ever done was three side by side duplexes. We did that deal with them, seller financed, 10% down, because we built that relationship instead of going after a transaction. They probably would’ve sold us a duplex 20% down because we have a relationship they’re now invested in having us succeed and they’re willing to get much more creative. But we all do that with Google Maps. I just, I shop the market, I click on the roof. It’s a property that I like, something I would like to own. I call them and I just try to build a relationship.

Rob:
Okay. So to click into that a little bit, you find that property, then you just go and skip trace them or use kind of softwares or services at that point?

Christian:
Nope. Google again. You could find pretty much everyone’s number on Google. We threw a little thing like eight minutes on how we do this on our YouTube page, Cody and Christian multifamily strategy, how to find every owner ever. But most of these are going to be held by LLCs. Not all of them, but LLC, you can drop it into a site like open corporate, which is free. See who owns that LLC. You can usually Google their name in their city and find a phone number. And then you just don’t overthink it. You pick it up, you dial and you let them know your pieces. This is who I am. This is why I’m calling. I want to know how you got started, and start talking, but I have never paid for skip tracing software. We’ve never paid for leads. And I know most of the players in my market and as we expand markets, we do the same thing. I have a bunch of other people who have asked for help getting started, who Cody and I have done some coaching with. It works in every market in the US. Click on a property, find the LLC that owns it, call the owner, Google their name. It’s that simple. Works for people on every level. I’ve talked to people with thousands and thousands of units and their number is just a Googleable event. Googleable. That is a word now.

Rob:
Googleable. Yeah. So it sounds like you’re effectively just a master networker. Like networking is really what got to this point. And you kind of mentioned something a little earlier where you said the 80-20 rule where they talk 80% of the time you talk 20% of the time. Why is that?

Christian:
Well, one, people love to talk about themselves. So you’re giving them room to talk. But when you’re building a relationship, I don’t know why the heck they would listen to you. If you just call them and start just talking about yourself, which is what most people do the first time they make these calls, we call it feature dumping. You’ve practiced all this in your head. You just dump everything in your head onto them. Hey, this is who I am. And this is how old I am. And I have a duplex and I want to be like you and I don’t know how you did financing. Did you ever do seller financing? Everyone does that on their first call, and at some point you just have to get through that. But the 80-20 rule just helps you remember, you can benchmark, okay, am I doing too much talking here?
If they start sharing pieces of their story with you and they really get into their story, you’re starting to build a relationship, and once that gets enough momentum, that’s where you know you need to wrap up the call, close it and basically end with thank you so much for sharing. You’ve done something that I never knew was possible. I appreciate you sharing your steps. I’m going to be in town next week, can I buy you coffee and learn more about how you do this? And if you really want a great closing question, hey, I’m newer to this. I haven’t done what you’ve done yet. How would you recommend I get started? Those are non transactional questions, but that’s how you build a relationship that’s going to get you opportunities that no one else can get.

Rob:
That’s awesome, man. So where this all comes full circle is that me and David are practicing the 80-20 rule on you.

Christian:
Yes. This is the time where I get talk because you guys were nice enough to ask me to come on. But yeah, if I had either of you on our channel, I’d be doing the same thing. I’d be asking questions and my goal is to get you talking and gets you excited about a story, because it’s really fun to share the journey that you’ve been on. Everyone has a story to tell. Your job in that first phone call, it doesn’t matter if they’re going to sell you the property or not. If they are invested in you and you’ve communicated your goal, people are going to want to help you reach there. Especially if you have a great why behind it, people are going to invest in you and they’re going to get creative to help you get to the next level. Whether they have a deal, they have someone else with capital or they have friends who have the deal. If you don’t focus about the deal, the deal comes. My old sales coaches would slap me in the face, but we do all of our transactions by not asking for the sale.

Rob:
You know, I think why this is very powerful and just the genuine kind of authentic side of this is that if you really think about why this works, most real estate investors don’t get to talk about this stuff with their friends and family. Like most of my network, my friends, family, closest friend, best friend, they don’t care at all. Anything I do, they’re like, dude, we get it. You Airbnb, shut up. You know? And so if you contact these different real estate investors and you’re interested in their story, they’re probably dealing with the same thing where their network probably doesn’t really care about their real estate business. And so it’s a very rare opportunity for them to get to speak to someone that’s like, oh my gosh, I’m very interested in what you do. And it helps them feel better about doing it because they don’t ever get to talk about this stuff. I mean that’s how it feels to me. I’m not really sure if that’s true across the board, obviously this is very anecdotal, but we could all probably relate to that in some capacity.

Christian:
It’s a smaller field than we realize, in that small mid-size multifamily, even the larger multifamily, there’s not that many players. So when you get to know the other people and you get to engage and share your story with someone who actually cares and understands and wants to learn what you did, it’s really fun to share. I love doing it. I over talk. I know that’s my weakness, but turns out that’s a weakness that most people in real estate have. We love to share. We love to tell stories. We’re really engaged. We’re entrepreneurial. So you get a lot of luck in that call. When I have friends make that call for the first time. It is so fun when they call you back and they go, oh my gosh, that worked, we’re meeting for coffee, what do we do next? I’m like, yeah, it works. People want to share what they’ve done and talk about their story. And it’s a small enough community where it’s not a difficult call to make and to land that first meeting.

David:
All right. So let’s get into some of the fun stuff here.

Christian:
All right.

David:
Tell me about some of the mistakes that you guys made, things that took a left turn, maybe some quicksand that you found yourself in, and what you did to get out of it.

Christian:
I have an excellent one for this. Most painful lesson we learned, Cody and I talk all the time about how it’s relationship, relationship, relationship, know your partners, know their pieces, know their why. We egregiously missed the mark on someone’s why. We got who they are and they communicated their goals, but we ignored their significance, this was actually on that 38-plex. I talked to him before this call, he said, I could share this story. The only investor who ever asked to be cashed out early, he had another opportunity. However, the reason he really wanted out is we got a message from saying, hey, you’ve failed to hear me and my goals, I don’t want to place capital with you guys anymore. And it was a shock, because we put him in our biggest deal, most cashflow, most upside, this was a phenomenal opportunity. And we wanted him to be a part of it.
Every time we’ve met with him, he’s talked about a few things. He’s a little older. So he is like, hey, I haven’t built portfolio to the size I want, I want unit count and I want to see some cash flow. And this thing will be a cash flow monster when we’re finishing the rental bumps and getting the property stabilized. It already cash flows decently. It’s going to get insane over the next year. So we put them in the best deal ever. We’d communicate on what’s happening with the property and what we’re doing. And every time we met, I thought he was happy. Turns out what he really wanted to do. He never had kids. He wanted to be part of the team. He wanted to contribute. He wanted to coordinate contractors. He wanted to be hands on in the field. At the end of the day, he wanted to feel needed.
And looking back through all the nights that we played the cashflow board game together, had dinner together, it came up in every conversation. He talked about cashflow, he talked about unit account, but he talked about wanting to do more for the team and we focused too much on making him money. So at the end of the day, he just got frustrated. It was, you’re not hearing what I want to do. He missed out on another opportunity because he was involved in this opportunity, and it’s the only client we’ve ever lost. We’re still friends. We still play cash flow. It ended well, we did get him cashed out, but we had a five year note where someone wanted to get out in six months because we missed the reason behind it. And the lesson there, you have to return money to people. You have to make money to raise capital. It’s super important. That being said, no one’s reason is money. There’s a deeper reason for every person. And if you want to play this game at the highest level, you need to learn their why behind everything and it goes beyond money.

David:
Have you thought about going back to that person and saying, hey, I have a great deal, but I can’t take it down myself. I really need your help with this aspect of the deal. Would you want to partner with us?

Christian:
We’ve thought about it. And I am undecided on what the best thing to do there is since we have precedent of having to pull money, it is a consideration. It is not off the table to do another deal and to try to do it right. I would probably do a smaller deal and rebuild that trust. For the time being, he was very, very gracious and he’s good at keeping business and friendship separate. So we’re still friends. He’s still helping me out with a house project. We’re still going to play board games together. I’m probably going to let it cool down a little bit on the investment side, but I am very open to trying that again. We’re going to do it completely differently.

Rob:
So Daniel, if you’re listening to this, Christian is ready. He’s ready to have you back. No, I’m just kidding. That’s not his name. I just made that up. Unless it is and that’d be so awkward.

Christian:
That would be incredible. It’s not Daniel, but we’re open to trying it again. Absolutely. Relationships, we have to do a better job of identifying the why and I’m open to having that conversation again. But the main thing is really identify what you’re doing with someone. If you know who they are, where they’re going and why they’re going there and you know, the real reasons why, you’re always going to be able to raise the capital. You’re always going to be able to find the deal. You’re going to be able to close. You’re going to be able to keep those relationships strong all the way through. That was not fun, having to come up with money to cash someone out six figures when I was illiquid, we had to move a lot of pieces to make it happen. But at the end of the day, we’re always going to take care of our clients. We did make it happen. Everything’s good.
We actually went and called every investor that we have. And we checked in with them. We thanked them. We let them know what their contribution meant for us moving forward. And we asked them how they want to participate. There were a few people were like, wow, this has been hands off. I love that it’s hands off. Just let me know when the next opportunity comes up. I asked some other people who responded with, oh, my gosh, I was waiting for this call. This goes such a long way that you asked me how I’m feeling. I actually would love to participate in the capital raise for the next deal. While it’s not something that we always need, it’s fun to let other people participate, make sure that you hit their targets. And so it was a lesson we learned, we applied it immediately. I always say, get a new set of problems. We had a big problem there. The problem is resolved and we’re not going to make that mistake with anyone ever again.

David:
Well, that’s really good.

Rob:
Let me just say, dude, thank you. That is like very honest. That is a very honest lesson that we can all learn from. I’m already thinking in my head. I’m like, who can I call back and say, hey, I’m sorry. No, that’s really great, man. It’s really honest and vulnerable for you to come out and say that because a lot of the people who come on to BiggerPockets and it is the success stories and hey, everything went well, no one really harps on something like this. And seems like you guys are going to really change a lot of how you interact with potential investors and partners from it. So in the end it’s going to be one of the greatest experiences you’ve ever had, probably.

Christian:
Yep. And as a consequence to going quickly, like you’re, you’re going to have difficult times, stuff will get hard. You just have to learn. And again, you come back and you build a bigger boat and you go back at it again.

David:
It’s really good. What about a mistake from an operational standpoint that you can share?

Christian:
Operational standpoint …

David:
Miscalculating cash flow, renovations that went poorly?

Rob:
Legal paperwork that might have missed? I think your article [inaudible 00:48:15].

Christian:
Oh boy. Oh boy. Yeah. I won’t go into the details too deep on this one. But like I, when we got the 38 structuring everything as equity instead of debt was a mistake. However, we didn’t know how else to do it. So looking back, I’m like, well, we got it done. It wasn’t perfect, but it was as good as we knew how to make it. So operationally, technically it was a mistake. Also, I wouldn’t be where I am if we didn’t do it anyway. A big one was property management. We put property management under one company. The company went under and the communication was horrible. It was a ton of work to get set up and correct all the books. And, oh my gosh, it was just months of pain. Cody and I actually opted to start our own property management company out of that. Our options were find a new vendor or just do it ourselves. I conveniently had someone in my network who was perfect, her name’s Hannah Caldwell. She runs our property management and she is phenomenal. So we had the pieces to do that. But operationally, I didn’t spend time vetting that property manager. That was just a lot of pain. I wouldn’t do that again.

Rob:
I mean, your property managers are the lifeblood of your business, right? Especially once when you get 71 units. So yeah, I think that’s one of the things that you don’t really know until you know how to vet your property managers because really property managers, they kind of run stuff. So it’s a learning experience on how to navigate those people because no two property managers are the same. I mean, not at all. Everyone’s very different on how they run businesses.

Christian:
I got a bonus answer to that question too. Before you close, check your septic tanks. We had a massive septic problem with less than a week after we closed. We closed that thing. We were just told, yeah, the septic tanks are fine, they’ve been pumped. They haven’t there’s poo coming through showers. It was awful. Add that to your due diligence. If you have septic, take a look at it before you close, because that sucked.

David:
You’ve got me going back in time and thinking about every unexpected problem. A huge proportion of them are related to septic things. Always man-

Rob:
We call that doo diligence. D-O-O diligence.

David:
Doo doo diligence. Yeah. Like the lines coming out of the, even single family homes into, to tie into the city sewer are often time needing to be looked at or needing to be scoped. You get literal tree branches and roots that can go through these things, puncture them and leak. You have septic tanks themselves that have been corroded and they’re leaking into the area. Like there’s so many ways that septic can go wrong, but it’s not something they talk about on HGTV. So nobody ever thinks about it.

Rob:
Well, they do talk about it on dirty jobs though.

Christian:
Yeah. If you want to be a good operator, you got to be number one in number two.

David:
There it is. That’s [inaudible 00:51:14]. Very well, Christian. All right, well, I’m going to move on onto the next segment of our show. It is called the deal deep dive. In this segment of the show, we will dive deep into one specific deal that you’ve done. Do you have one in mind? Christian?

Christian:
Yeah. Cody shared a lot on the 38 unit. Now if you haven’t seen his video yet, go back and watch it, because he did incredible. A really fun one because it’s really critical how the relationships came together was the three triplex deal, seller finance, side by side.

David:
Okay.

Christian:
We did that, I believe we closed that December of last year.

David:
So we will fire some questions off about that one. So the first kind of question is what property is it? It is a three triplex deal.

Christian:
Three duplex. Three twos. I sometimes mis say that’s hard. Three twos, six units, three duplexes.

David:
This was what you were talking about when you said that the owners that you knew were driving around, they sold you these on the 10%. Okay?

Christian:
Yes they did.

David:
Rob, next question.

Rob:
How did you find said deal?

Christian:
Well, we built the relationship, we met with those owners a little while back after a lot of calls and a lot of learning how to frame that call. One of the calls Cody actually made was, hey, it’s Cody. I’m the guy who called you a few months ago and botched the call. They’re like, oh, I remember you.
So we finally built that relationship. I closed the duplex that they were actually the listing agent on. That was the second duplex I ever purchased. That was how I started in that relationship. But we came in after close. They finally agreed to meet with us. First thing they did was pop us in the truck, drive around and we looked at a bunch of their portfolio. They have hundreds of units, almost no debt. They’re in their early seventies. And they just talked about, hey, this is how I structured this deal. This is how I structured this. They taught us how they bought a duplex. Then placed the second lien on it as a down payment on a larger building. So they taught us how to buy deal zero down once you build some equity, but they taught us all these different strategies and drove us around.
Those were one of the properties we passed and he mentioned in the car, yeah, we have a couple partners on this that would probably like to be cashed out. This could be a good deal for us. And then we moved on. We don’t make it transactional. So we didn’t bring that up again until a couple months later when we were in office, I was like, hey, you mentioned you had some partners who wanted to be cashed out. Where are you guys at with that? And they proposed, well, how about you guys put an offer in front of us and we’ll play the bank.

David:
Okay. So what did you end up paying for the property?

Christian:
So for the properties, we paid 900,000, so 300 a duplex, seller financed, 10% down. Those guys typically will do 20 or more and you could call them and probably do a deal because we had the relationship and they know we know how to structure these because they taught us how to structure it. They allowed us to play with 10% down, which was a huge advantage.

David:
Okay. So we would normally say, how’d you negotiate it? You just explained that right there. How’d you fund it? You put 10% down of your own money and did seller financing. Did you do seller financing for 10%, so it was half the down payment, or did you do seller financing for the whole thing other than the 10%?

Christian:
Whole thing, so it was 90% seller financed.

David:
Okay.

Christian:
But I didn’t use any of my own money on the 10%.

David:
Where did that come from?

Christian:
So this was from a client, this goes back to learning everyone’s story. So the sellers, we learned what they’re trying to do. We know they’re trying to convert their portfolio over the next 10 years into passive income through notes. So I offered to be their buyer on everything and we’ll start taking on those transactions as we go. The person who funded it, I met him a while back. He had just flipped a property and he was just asking for advice on how to move forward. He had lost money on flips, he’d made money on flips and he is like, you know what? I just kind of want to place this money in syndications or other real estate and just see it double every five years. And we got really deep into that. He has a great job at Microsoft, he doesn’t need the cash flow. He just wants to double every five years.
This deal was under market rent. It was about a market purchase, we might have got a little discount on it, but we knew we had upside in rents. Didn’t have a lot of day one cash flow. We had a lot of upside on future valuation. So when I called him, I had my normal call. Hey, based on our last conversation, had an opportunity, came up, wanted to discuss it with you. We wrote a note that says he funds the entire down payment, $90,000, we get cash flow for the next five years on this as we raise rents, no distributions, no interest, that’s just a hundred percent of it, we paid nothing and we get to cash it for five years. In exchange, at the end of that, we will take his 90 and we’ll pay him 180, which it will do in cash flow, and will probably also do in appreciation. So we’re can refinance and pay him, or we can just sideline money and pay them. But at the end of the day, zero down deal, the properties will buy the property for us, and his collateral is in the event we don’t cash him out, he gets all three duplexes, but at five years ago dollars, and we’re improving him and raising rents. So his collateral is probably better than his buyout.

Rob:
That’s amazing. Well, congratulations on a good deal. I mean, what lessons would you say you’ve learned from this deal?

Christian:
Well, I learned, like I’ve said through this whole call, relationships are everything. We couldn’t have done that if we didn’t know what people’s goals were and what their why was, because that’s a really unique structure. You don’t usually just do a deal and structure it all on the back end of, hey, we’re just going to pay you out one time in five years. That opportunity is not always available. We also learned that a little bit of creativity can take a 10% down deal and make it a zero down deal, and you can cash flow zero down. I’m not a math wizard, I leave that to Cody, but I can afford a lot of real estate for $0.

Rob:
Yeah, but you are on the accounting side of it. So I think he might throw it back to you.

Christian:
Cody looks over the numbers. I make sure we categorize everything in the right slot and everything gets filed. When it comes to doing the math, Cody is a legitimate genius. He is faster at doing math in his head than anyone I’ve ever met. That being said, I account for said math and make sure that everything actually does balance at the end of the day.

David:
All right. Well that sounds fantastic. We’re going to move on to the next segment of the show. It is the world famous, famous for. In this segment of the show, we are going to ask you the same four questions we ask every guest and get your perspective on them. Question number one, what is your favorite real estate book?

Christian:
Favorite real estate book is actually a BiggerPockets book. It’s Brandon’s book The Book on Rental Property Investing. That is the first book I ever read on real estate. I love it because while the application’s more important than the information, that book gives such a broad spectrum of stuff on just about everything. I read that and that was the point I realized, oh my gosh, I can totally do this. That book got me started. If you’re looking for just a broad entry point, that book changed my life.

Rob:
Great. Question number two, favorite business book?

Christian:
Favorite business book. It’s not directly business, but 10X Rule, Grant Cardone, the mindset applied to business has allowed us to do everything that we do. Love the guy or hate the guy, the content of that book is exactly what you need if you want to scale really quickly and scale effectively, it’s all about eliminating the distraction, setting high enough goals, and then smashing those goals way out of the park. That book has taken our business to a whole different level, and that conference is where Cody and I really connected. So for a lot of reasons, 10X Rule is my favorite book to grow your business.

Rob:
Super fair, man. That’s sounds like it was the beginning of a beautiful relationship, the beginning of a beautiful bromance.

Christian:
Yes.

Rob:
Question number three here, what hobbies do you have outside of getting seller finance deals and crushing it in the real estate game?

Christian:
Well, I got a couple guitars behind me. I haven’t played them as much as I would like to this last year, to scale from two to 71 units and leave the nine to five, I’m professionally unemployed right now, it is a heck of a lot of work. So I can honestly say my hobby right now is real estate. Like that is all I do. I talk real estate, my wife will tell you this too. I talk real estate. I think real estate. I think deals. I think systems. I’m having fun, doing what we do. However, once we get a little bigger, we get stabilized and I have a few less projects, I’ll be right back to playing guitar and will probably add to that wall significantly.

David:
All right. Awesome. In your opinion, what sets apart successful investors from those who give up, fail, or never get started?

Christian:
You don’t define the why behind what you’re doing. It’s pretty easy to set a goal and there’s a lot of attainable goals out there. For a lot of people, they’d love to have $10,000 a month, passive income. They’d like to have 20,000 a month. Whatever your goal is, it’s easy to set a goal. It’s not hard to set a timeline on it, but to actually achieve it, you need to have a big enough why behind what you’re doing. For me, one, I want to retire my wife. She works in the school district and she has a really rough school district here in the Seattle area. I want to give her the option to retire. I’m not going to force her to, but I want her to have that option where she gets to go to work. She doesn’t have to go to work.
I also have lived here for 30 years in Seattle. It’s gray, it’s cold. The food’s not very good. The people aren’t that nice. I would like to move somewhere warmer, and I would like to own my time when I do that. Those goals for me are absolutely big enough for us to get huge in scale. Cody and I have a shared goal of we want to share this with a lot of people, there’s a ton of ways out of the nine to five, this is a way that has worked really well for us. The creative financing, I haven’t seen enough people share enough depth on it. So the big why behind the massive scaling and the going fast is I want to share this with as many people as humanly possible. I don’t believe in the gurus who talk about stuff and don’t do anything. So I want to do something incredible. I want to scale the unscalable so I can show other people how to do it.

Rob:
That’s awesome, man. Thank you. I appreciate that. We can tell you’re very passionate about it. So last thing here, Christian, can you tell us where people can find out more about you? Where can people invest with you? Where people learn more about creative financing, a la the Christian method?

Christian:
Well, Cody and I have a YouTube channel where we try to put everything. There’s some people who hold stuff back. We put everything we have on there. Any strategy, we teach you how to look up owners, we use the example of how to find our actual cell number. I mean, I actually share everything. That’s Cody and Christian Multifamily Strategy. You can follow us on YouTube. We post three times a week. Midweek we do whiteboard Wednesdays where we just take five questions from people and answer there. That is an excellent place to get information on how we did what we did. If you want to go deeper, our website, themultifamilystrategy, we have a course, it’s brand new, launched on May 1st, that you can follow the link and find out exactly how we did what we did and create your own multifamily strategy and your path to success. Either one is fantastic. You can follow us on YouTube or follows us there, themultifamilystrategy.com.

Rob:
Awesome. David, what about you? If people want to invest with you, if people want to learn all about your real estate nuggets, where can they find out more about you?

David:
Got lots of nuggets, man, this is McNugget right here. So you could go to investwithdavidgreen.com if you want to invest with me, that’s pretty simple website to navigate. You can follow me online at David Green 24, see what I’m up to. I actually hired a new marketing company. So I’m doing the cool stuff that all the young guys like you, Christian, are doing, TikTok, weird little emojis in the videos, cute stuff, something I never thought that I would ever be doing. So please let me know what you think about how my content looks right now. And please help me to know that my screaming insecurities that this is a terrible idea are unwarranted and people actually like what’s being seen. Christian, I’d like to get your opinion on that as well. Check out my page and tell me what you think.

Christian:
I’ll take a look. What I found with the whole Instagram TikTok thing, you could follow me at Instagram by the way at Christian Osgood, but the content that does the best is the dumbest content. And I hate that. I hate putting out stupid stuff. That being said, if I can reach a million people on TikTok and 1% of them click to my YouTube page, and I know we have excellent content there, it’s worth the reach that it does. But I consider that the garbage part of the funnel, everyone who really wants to learn or cares what we did can trickle down to YouTube where we actually have great content, just like you, David. You have some of the best content on the internet within BiggerPockets. People should watch you there so that they watch you here. Because anything that gets clicked on is invariably my stupidest video does the best. And if I put excellent content, 12 people watch it and like it.

David:
I know.

Christian:
We do a dumb thing where Cody’s wearing a hoodie and says a couple stupid things, quarter million views in like an hour. I don’t get it at all.

David:
It’s a problem. You try to use it as a hook to get people’s attention and then say like, now actually go eat real food over here that’s going to help build you wealth and make you money. Not like just fast food that people can get right off the bat. So if you’re listening to this and you’re addicted to fast food, well, I guess you’re listening to this, you’re not addicted to fast food. So you are doing good. Rob, how about you? Where can we find out more about you?

Rob:
Oh, you can always find me on the YouTubes. Smash that subscribe button. Leave me a comment. Let me know something you learned from my videos over at Rob Built. You can find me on Instagram at Rob Built as well. TikTok at Rob Builto. Hey, if you’d like, if you’d like, just if you want, don’t feel like you have to, but if you want to just head over to Twitter and follow me too, Rob Built channel.

David:
I’ll take a moment to be serious here. Here is what I would like everyone to understand. If you are standing on the edge and you feel like I don’t want to take the leap, I don’t know where I’m going to end up. There are many options that don’t involve you just buying a property and hoping that it works out, especially when the market’s hot and the stakes are higher, because you are going to have to make decisions quicker than you ever did before, unless you’re doing what Christian and Cody do, where you get off deal stuff, off market stuff, and you can make personal relationships. The normal buyer, this is a very challenging time to try to move forward. You’re going to pay more than what you wanted to pay. There’s going to be a degree of value add that has to happen in almost any deal. You have to have a vision for how you’re going to make that property better. The days of look at it, analyze it, see the return you want and buy it are largely over, in most cases.
So do something to make this journey easier for yourself. Get connected with someone else who is doing deals, invest in a deal with someone else and just get your foot in the water. See how it feels. Get used to what the world of real estate looks like. It will help make those fears go away. Get around other people, make more friends that are in real estate that talk about it all the time. Hang out with real estate agents, hang out with real estate investors. Be curious about what they’re doing and kind of like peek behind the curtain and realize it’s not rocket science, just feels like that when you’re on the other end. Don’t think it’s got to be all or nothing. I don’t know what I’m doing, I’m just going to go buy a property. Get yourself immersed into this world. A lot of mystery will go away. Would you two each kind of agree with that advice?

Rob:
Oh yeah, definitely.

Christian:
Absolutely. Absolutely. You just got to get out there and do it. That is the end of the day, nothing replaces actually buying real estate. If you want to be an investor, there’s only one way to do it. Buy something.

David:
Yep. There you go. Get in the position where you can handle that. House hacking’s a great way to go about that. You need to buy a house anyways. You might as well start there. Get some momentum, realize that, oh, I just have to track income, track expenses, see what works, see what doesn’t work, and then go buy another property after that. So, Christian, thank you very much. I just want to highlight to everybody again, reach out to us, contact us, try to figure out how you can get more into our world so you get exposed more to real estate. Follow Christian on Instagram at, is it Christian Osgood?

Christian:
Yep.

David:
Follow Rob at Rob Built, and follow me at David Green 24, and follow BiggerPockets everywhere because they have tons of content that you don’t realize is out there. There’s interviews like this. There’s more interviews on YouTube that are much shorter, hard hitting, get to that point, also maybe more entertaining. There’s some fun stuff that’s out there. So check out BiggerPockets on YouTube, follow their channel and learn as you go. Christian, thank you very much. It was great to meet you. Please give Cody our best.

Christian:
Yes sir.

David:
This is David Green for Rob doo doo diligence Abasolo, signing off. We might have just created a thing. That might get some traction.

Rob:
Doo doo diligence, baby.

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Data also provided by

According to a recent study by TransUnion, renters in their 20s and 30s want their landlords to report rent payments to the major credit bureaus. The main reason: Gen Z renters wish to build their credit health faster.

Rent reporting has a positive impact on the industry in general. There are plenty of benefits to landlords—not just tenants—of reporting rent to TransUnion, Experian, or Equifax. For example, landlords who report rent payments to credit reporting agencies find that tenants are more likely to pay rent on time. It also improves transparency in the rental industry, especially when you interview prospective tenants. 

Survey Shows Gen Z Tenants Want Rent Reported

According to the TransUnion study published in April 2022, 27% of property managers aware of rental credit reporting were doing it.

In total, the survey included responses from 350 rental property managers and 2,039 tenants regarding including rental payment history in the credit report. 

Here are some interesting facts and figures:

• 72% of landlords say rent payment reporting is straightforward.
• Two-thirds of the landlords who do not report rent to credit bureaus state that it’s not easy to do.
• 70% of respondents said they would consider reporting rent if it meant fewer late rent payments, fewer defaults, and a lower risk of eviction.
• Nearly 50% of landlords said that rent reporting attracts more financially responsible tenants.

Why do Gen Z tenants want rent reported to credit bureaus? Here are some interesting insights from the survey:

• Only 15% of tenants, in total, have their rent payments reported. 
• Nearly 30% of Gen Z renters have their rent payments reported.
• 60% of those under the age of 30 are interested in reporting rent.
• 70% of renters who have had their rent payments reported saw their credit score increase significantly.
• 77% of renters said they would be more likely to make rent payments on time, knowing how it could impact their credit history.

According to Maitri Johnson of TransUnion, the rent reporting is a win-win for renters and rental property managers.

“With a strong push from Gen Z renters, who make up a significant portion of the renter base today, we’ll likely see reporting become an industry standard—and as a result, a critical mass of renters who can elevate their standards of living through greater access to credit.”

“Ultimately, rent payment reporting is helping more people gain access to credit that can positively change their lives,” Johnson states. “Greater financial inclusion is good for the industry and good for consumers, and I’m excited to see it gain traction.”

So, if you’re a landlord or rental property owner, there are many reasons to consider reporting rent. One reason is that rent reporting is relatively rare—73% of landlords don’t do it. This means you can set yourself apart from the competition. 

Find financial freedom through rentals

If you’re considering using rental properties to build wealth, this book is a must-read. With nearly 400 pages of in-depth advice for building wealth through rental properties, The Book on Rental Property Investing imparts the practical and exciting strategies that investors use to build cash flow and wealth.

How to Report Rent Payments to Credit Bureaus

Tenants can’t report rent payments to credit bureaus themselves. Therefore, landlords can report rent using a property management app, or tenants can use a third-party rent reporting service. For example, landlords can report payment information directly to TransUnion. 

There are several independent platforms for tenants, including Rent Reporters, CreditBoost, Level Credit, or Rental Kharma. Most of these services have a one-time fee to enroll. However, landlords will need to verify the payment. 

Another way tenants can ensure rent payments count toward their credit score is by using a credit card. Then, each month they can make a credit card payment to their landlord.

Related: Why landlords should report rent to credit bureaus.

Does Not Paying Rent Affect Credit Score?

Tenants realize that missing a monthly rent payment will affect their average credit score, like being late with any other bill. However, some rent reporting platforms only report on-time rent payments. Therefore, a tenant’s credit score may not take a hit if they pay rent late. 

Reasons for Landlords to Report Rent Payments to a Credit Bureau

Most renters are interested in rent payment reporting, making it a compelling reason to offer this service. In addition, rent reporting helps prevent late or missed rental payments. Therefore, landlords can improve their quality of service by including rent reporting in the rental agreements. 

Collect rent from tenants on time

The most noteworthy benefit of rent reporting for landlords is on-time payments. Collecting rent is the most significant pain point for landlords. So, anything that can encourage on-time payments is something positive. 

Studies have shown that seven in ten renters would make on-time payments if their property manager reported rent. Data released by TransUnion show that this figure increases to eight in ten for Gen Z renters. This means you attract more reliable renters and reduce the risk of having to evict a tenant.

Related: How much does it cost to evict a tenant?

Fill vacancies faster

Offering rent reporting as a service in the rental process sets you apart from the competition. For example, suppose there are two identical apartments, but one landlord offers rent reporting to the three credit bureaus. In that case, it’s a no-brainer for the tenant to decide on which apartment to rent.

According to some reports, 70% of rental applicants would choose the apartment that offers rental payment reporting over an identical one with the service. Therefore, rent reporting can mean happier tenants and fewer vacancies. 

Rent reporting encourages tenants to pay rent online

Providing rental payment reporting is one of the best ways to get tenants to pay rent online. Of course, the easiest way to do this is to use a dedicated rental payment app that incorporates rent reporting. But using an app for rent payments has more advantages. For example, tenants can set up recurring payments, and landlords can block a partial payment.

Even though tenants can use digital payment apps like PayPal, Zelle, and Venmo to pay rent online, these platforms have significant disadvantages. First and foremost is that there is no way to report rent. So, if you are using a digital wallet for rent collection, it may be best to consider an alternative.

Tenants can boost their credit score

Many tenants love the idea of reporting rent payments to credit bureaus. After all, monthly rent is likely one of your tenants’ largest recurring expenses. So, just how much can rent reports improve credit history? 

According to Yahoo! Money, factoring rent payments into a credit report could shoot up a score by 60 points. This could mean that a tenant could go from being a lending risk with poor credit to a near-prime score in no time—and without changing spending or lending habits. 

A high credit score means your tenants have more leverage—therefore, it’s easier to pay rent. For example, Multi-Housing News says renters with a high credit rating could pay around 10% less for financing. In addition, they can secure better terms for interest rates on credit cards.

Conclusion

Gen Z renters will keep the trend going and demand that landlords report rent to credit reporting agencies. So offering rent reporting not only makes excellent business sense. But it’s a great way to improve landlord-tenant relationships and make the rental process as simple as possible.

David Greene:
This is the BiggerPockets podcast show, 604.

Rick Shargra:
There’s really no indicator that we’re sitting in a bubble, although it’s understandable people think that because we’ve had, I believe, 122 consecutive months now where home prices were higher than they were the prior year, which ism I believe the longest run in history. So I do think market corrections could happen across the country in certain markets and certain price tiers. Do I think we’re going to have a bubble bursting? No, but the truth of the matter is nobody really knows we’re in a bubble until it bursts.

David Greene:
What’s going on, everyone? I am David Greene, your host of the BiggerPockets Real Estate podcast, the best real estate podcast in the world. Here at BiggerPockets, we are committed to helping you find financial freedom through real estate. We do that in a number of ways, one of which is on this podcast, bringing in people who have found that freedom, people who have made mistakes as well as industry experts that can help you on that journey. Today’s guest is fantastic. We have Rick Shargra. Rick is the executive vice president of market intelligence for ATTOM, a market leading provider of real estate and property data, including tax, mortgage, deed, foreclosure, natural hazard, environmental risk and neighborhood data. Rick has over to 20 years of experience in the real estate and mortgage industries, and is one of the country’s most frequently quoted sources on real estate, mortgage and foreclosure trends. He joins us today to talk about what the heck is going on in this crazy market. I am joined today by my counterpart, the always fun, always intelligent, and always aware, Mr. Dave Meyer. Dave, how are you today?

Dave Meyer:
I’m doing great. Congratulations on 600, man. It’s the first-time I’ve been here since you hit the milestone.

David Greene:
Yeah, we stepped up production quite a bit. 600 happened pretty quickly after 500.

Dave Meyer:
Seriously, it felt like it went really quickly, but the shows have still been amazing. Even with the increased production, amazing how you and Rob and everyone else just bringing value to the listeners every single week or several times a week.

David Greene:
Well, thank you. We’re trying to. Speaking of additional shows that we’re making, BiggerPockets is creating a ton of new content and that leads us to today’s quick tip. Dave, what do you have for us for today’s quick tip?

Dave Meyer:
Well, my quick tip to check out BiggerPockets newest podcast called On The Market, which is hosted by yours truly. We’ve been doing this show for, what is it, six or eight months now? BiggerNews, trying to bring you all of the recent trends and data and news that really impacts the lives and strategies of real estate investors, and we want to scale that. So once a week, now you can find it on Spotify or Apple, or we have a whole YouTube channel as well. You can get the information that helps you formulate your strategy for 2022, helps you get an advantage in any type of market, and we keep it fun. We keep it light. It’s not this dense news show, so definitely come check it out if you want to stay on top of everything that impacts the real estate investing world. I think you’re really going to like it.

David Greene:
Yeah. At BiggerPockets, we are creating an entire family full of smart people to help you build your wealth, so do check out that show and make sure you check out more of these shows. Every time you finish a video, hopefully, you have time to watch another one, because we’re putting out more and more content. A quick public service announcement from us at BiggerPockets. There’s a lot of scamming going on. We will never, any of us on this platform, will never message you and try to sell you on cryptocurrency on Forex. We don’t have a WhatsApp.

David Greene:
We are not asking for you to give us your money via social media or online portals, so please, if anyone reaches out, they’ve copied our pictures, they’ve made a screen name that looks like us, but it’s not us. Don’t send them any money. The same goes for any of us individually at BiggerPockets, as well as the company, BiggerPockets as a whole. Before you consider sending anybody money, make sure that you’ve absolutely verified who you’re talking to is the right person. All right. Without wasting any more time, we are going to get into today’s show. It should start off a little fun and then we’ll be bringing in the guest. Dave, anything else you want to add before we get into it?

Dave Meyer:
No. I’m really looking forward to this show. Rick has been someone I’ve followed for actually quite a long time, because as he’s a leading voice on real estate data, and I think you’re going to learn a lot from the show.

David Greene:
All right. Let’s do it.

Dave Meyer:
All right, David. As we just mentioned, we are going to play a quick game. It’s just called “quick takes” and I want to get your quick reactions to three different headlines I am going to read you.

David Greene:
Did you say quick three times in a row, because I am known for being long-winded.

Dave Meyer:
No, but maybe I subliminally was trying to get you to go quicker, because I know Eric will come on and tell us we’re being too slow if we don’t do this block in five to 10 minutes, but quickly give me your reaction to this. According to Redfin, the amount of market competition actually went down from February to March, and anyone who’s listening to this, a lot of this market data comes a month in arrears, so we’re talking about March data, even though we’re just ended April. It went down from 67% of all homes facing stiff competition. Multiple offers in February dropped just slightly to 65% in March. Do you think this is the beginning of a trend, or is this something you think is just a blip or an anomaly?

David Greene:
Not the beginning of a trend, it is a blip, not an anomaly. I will quickly explain this happens all the time, and that’s because of what I call “flock of bird syndrome.” Most people when they’re investing in anything, when they’re doing something scary, they like to move with the crowd. So what we find is the psychology of buyers in real estate and have often said, “Buyers drive markets. “The psychology of buyers plays a very big role in how things work out. So when people see a lot of other people making money somewhere, they tend to think, “Oh, I should go do that too. It feels safer.” It’s like crossing the river with all the other gazelles so the crocodile doesn’t get you. The problem is often by the time you see other people making money, sometimes the money’s already made. So the way it works is, well, there’s been Gazelle’s in the rivers for a long time. All the crocodile’s are now there waiting for you, so that’s the worst time, time to go in.

David Greene:
I’ve seen this phenomena happen several times in the past, every time there is a significant change in the norm. So in 2017, 2018, I can’t remember where it was, but we saw rates go up three quarters of a percent, 1%, out of nowhere, and Tara Yarbrough was telling me a lot of flippers lost money during that time because buyers froze. They were just like, “I don’t know what’s going on. I don’t want to move,” and then a couple of months go by, everybody, “Oh, I guess that’s the new normal.” They all start buying at the same time the flock of birds goes that way. We saw this happen with the shelter in place. Everyone froze, “Not going to buy real estate. I don’t know what’s going to happen.” At a certain point, they’re like, “Well, I still need a house. Nothing’s changing. I better jump in.” This is too totally expected. I told everyone on my team expect to slow down for a month or two as buyers are like, “Wow, rates went up. This is a shock. Let’s freeze and think.” When people are like, “Well I guess that’s what rates are,” they’re all going to start buying again.

Dave Meyer:
All right. We need some gazelles to cross the river. I don’t know how I feel about this. I personally get it. I think it is interesting to see what’s going to happen with rates and what’s going to see, so I’m not surprised to hear you think that people are just freezing. I have to say, man, I hope you’re wrong though, I would love to see the market get a little less competitive.

David Greene:
Oh, me too. [crosstalk 00:07:31]

Dave Meyer:
I think it’s really-

David Greene:
Yes.

Dave Meyer:
… unhealthy where we’re at. I totally respect your opinion, but I hope you are incorrect about this.

David Greene:
I hope I’m incorrect too. I would love to see the market slow down. When you’re listing a house, the way it used to work is you look at the comparable sales. You find the highest you could possibly get and you find an average one and you would try to convince your client to sell somewhere between the maximum they could possibly receive, the highest comparable and an average one. Well, now you take the highest comparable there is, you throw tens and tens of thousands of dollars on top of it. You throw another couple 10,000 as a cherry on top, and that’s what the seller wants for their house. So everything getting listed is always the new neighborhood record. What I think may happen is instead of us listing for way more than what the comps show, maybe we get back to listing at what the comps actually show and have some reason to come back into the way home prices are valued.

Dave Meyer:
All right, great, and we’re on time. Second question for you. We all know that housing inventory is extremely low. We’re going to talk about this with Rick in the next section as well. One of the main things you constantly hear about as a potential solution is upzoning, allowing people to build an ADU or to build a duplex or second home on their property. Zillow actually did a recent survey to see if home buyers were actually interested in this, because there’s this whole, “Not in my backyard,” NIMBY syndrome where people say they want it, but they don’t actually want it. But a clear majority of homeowners surveyed, 73% voice support for at least one or more modest densification options, so almost or three quarters of Americans believe in this, you can’t get three quarters of Americans to believe in and agree on anything. Do you think this will actually make a difference, and do you think we will start to see more upzoning in the next few years?

David Greene:
I think yes, if this continues, you’ll start to see it happening more often, but I think the pendulum will swing back the other way when that’s over. So you’ll start to see that more people do this and then more investors make money, and then the NIMBYs get jealous that they’re not the ones making money, and then that some new tax will be created, the ADU tax, or if you have something on your home, like a house hacking tax, that’s what I’m afraid of that may come. But in the short term, yes, I do think more local municipalities will create zoning, less restrictions and more easing of use so that people can start putting more ways for people to live in their own property.

Dave Meyer:
Excellent. That was very quick. Well done. Okay. For our last story, Fannie Mae just released a big economic survey and there was all this information in there about mortgage rates, borrowers’ appetite. You should check it out if you’re interested in this kind of stuff, but the thing that really stood out to me is that they are now forecasting a recession in 2023. Do you think we’re heading for a recession?

David Greene:
No. I think it’s more likely that we could be in a recession and we won’t feel it because prices of everything keep going up, so I think the economy in general is functioning like carbon monoxide. You don’t know you’re getting sick until it hits very, very hard. So I’ve said this before wages are not increasing as fast as the price of food and gasoline and things that we need to get by. So in that sense, it will function like a recession, even though the price of assets keeps going up. Even if you’re getting three, four, 5% raises at work, you think you’re getting a raise. You’re not, if inflation’s at eight, nine, 10%. Even at 7%, you’re still losing money, so I think what we have to accept with creating all the extra currency that’s circulating throughout our economy is you can be in a recession and not feel it’s much more like carbon monoxide, which is why you have to be listening to podcasts like this one where you’re getting this information, because it’s not like smoke that you can’t miss when there’s a fire. It’s much more silent scary.

Dave Meyer:
Yeah. I hope we’re not heading for a recession, but I’ve read and talked to a few people recently that talk about the Fed’s interest raising interest rates and they’re going to do it aggressively. Two people, both the chief economics correspondent for The Wall Street Journal, who I interviewed on On The Market and Janet Yellen, both used the words, “Getting lucky for the fed, being able to successfully engineer this soft landing that they’re hoping to do.” So I hope we get lucky, but the world’s not feeling very lucky these days to me, so I’m not feeling optimistic.

Dave Meyer:
But I just want to caution people that when you do read these things as well, like when we hear recession, the most recent real recession was the biggest recession in U.S. history. It was the biggest economic downturn since the depression, really. So even if there is a recession just to be out there, it doesn’t necessarily mean it’s going to be years long. It doesn’t necessarily going to have to be really bad. It could be two quarters of half-a-percent GDP drop. We just don’t know, but I think it’s really interesting that a lot of economists are starting to see that. Those are all the questions I got for you. I think we made it under the allotted time.

David Greene:
Yeah? It’s a new year, a new me. Right? All right. Well thank you for that, Dave. Let’s grab Rick, bring him in here and see what he thinks about the real estate market and economy as a whole. Rick, Shargra welcome to the BiggerPockets podcast.

Rick Shargra:
Great to be here. Thanks for having me.

Dave Meyer:
Rick, thanks for joining us, really appreciate it. Could we start by having you just explain to our listeners what your position is? It sounds really cool. I really like your job title, and what you do on a day-to-day basis.

Rick Shargra:
Yeah. I’m the Executive Vice President of Market Intelligence for ATTOM, a data solutions company. It’s the first-time in my career that my name and the word intelligence have been linked together, so I’m very happy about that. But my job is mostly to be out talking about these real estate market housing market trends, leveraging our data to do that. I get to go out and speak at industry events, do these kind of podcasts, meet with the press. Also, I talk to some of our customers and prospects about their data needs, their use cases, how they’re leveraging this to run their businesses, so it’s a little bit business development, but a whole lot of applied data analytics in housing and commercial real estate trends. It’s the culmination of a 20-year accidental voyage into the real estate and mortgage industries that I never set out to do, but have been fortunate and blessed to have been able to experience.

Dave Meyer:
I’m sure no one ever asked you this in all of your media appearances, but could you just tell us what is going on in the housing market and what your read is of all of the information and data that you are privileged to take a look at every single day?

Rick Shargra:
Yeah. Yeah. It’s a really different conversation than we might have had a few months ago. I’m of the opinion at this point that while we still have strong demand, we are beginning to see a bit of a softening in the housing market. Prices continue to go up, but we’ve now had nine consecutive months of existing home sales that are lower than they were the prior year. We’ve had a similar number of months where pending home sales, another metric we track, are down on a year-over-year basis purchase loan applications that the Mortgage Bankers Association tracks our lagging behind both 2020 and 2021, and we’re seeing consumer confidence at the lowest level it’s been in decades. Now that’s been affected partly by COVID and every time there’s the rumor of a new wave, we see a hit to consumer confidence, but it’s also being affected by an inflation.

Rick Shargra:
It’s being affected by the war in Ukraine, so consumers need to feel confident about entering into a long term financial commitment. They need to buy a house. Oh, by the way, with home prices going up 17% year-over-year and interest rates now being double what they were a year ago, the average monthly payment for somebody buying a house is about 26, 27% more than it was for the same property a year ago. So all of that stuff is conspiring, we believe, to start slowing demand down a little bit. Realtors I talk to joke about it somewhat. They say, “Now we’re not getting 30 bids on a house we’re only getting 20,” but you can see inventory levels starting to tick up a little bit from historic lows. You can see days on market starting to extend a little bit, so it really does look like the market is going to normalize a little bit as we move throughout the rest of 2022.

David Greene:
Yeah. I want to ask you your opinion on something. This is the stance I’ve always taken, because I’m a real estate broker myself and we sell houses. In certain markets when there’s not a ton of demand, I do think rising interest rates and other economic factors could have an impact on prices as well as availability, but in others like where I am in the California, San Francisco Bay Area, other hot markets, it’s not unusual for us to see 10 to 12 offers on a decent house, not even the very best house, even the stuff priced at the high end.

David Greene:
So if something happened that affected interest rates to where half of the buyers got knocked out of the market, we might see just half of those offers, like five to six instead of 10 to 12, which is still plenty of competition to bid way over asking price and force someone to come in really heavy to get that house, and you to have 80% of the people looking are losers every time they write an offer. Is that the perspective that you’re taking on this as well? Do people need to understand that the lack of inventory and the amount of demand is so hot that something as small as interest rate hike isn’t going to lead to the drop in prices they’re expecting?

Rick Shargra:
Yeah. Great point, and there’s a couple of things to talk about here. One is that you’re absolutely right, real estate is ultimately a local game. So what you see in the Bay Area is different than what you’re going to see in Des Moines, Iowa. It’s different than what you’re going to see in Richmond, Virginia. The second thing to point out is that the market you are talking about is not the market or the tier of pricing within that market where those interest rates are going to be particularly material. If you’re looking at the Bay Area where the median price of a home is, I don’t know, 1.2, 1.3 million, excuse me, at the high end of that market, you’re typically not dealing with somebody who’s going to be all that worked up over a point or two on a mortgage, so local conditions will dictate this. You’re also right in that five or six people bidding instead of 10 or 12 still pretty much guarantees you a good price at the end of the day as a seller, so that’s the dichotomy we’re seeing.

Rick Shargra:
We are seeing signs that demand is slowing down, but there’s still enough demand that prices continue to go up, and that’ll be the case until we start to see enough inventory coming back to the market where you don’t have to be one of those five or six or 10 or 12 bidders on an individual property. So I believe we’re not in a housing bubble, I believe we’re not likely to see a market crash, not at all likely to see a market crash, but I wouldn’t be surprised if over the course of the year, we might not see some individual market corrections and your area, particularly at the high end of the market could be one. Pacific Northwest could be one. Markets like Austin, Boise, which had price increases that were unprecedented last year, we could see a little bit of a price correction in some of those markets. But everybody has to look at this in terms of what’s happening in their local market, as opposed to the kind of national numbers that we often talk about.

Dave Meyer:
Rick, I’m not much of a crash guy either. I haven’t believed that, but could you share with our audience some of the reasons and some of the fundamentals that support your opinion about the fact that you don’t see a crash coming?

Rick Shargra:
Yeah. A lot of people really try and equate what’s going on today in terms of prices and demand to what we saw, the mid-2000s, 2006, ’07 leading up to the crash in 2008, market conditions could not be any more different if you wrote them up on purpose. In 2008, we had an oversupply of homes available for sale. We had a 12-month supply of homes On The Market. The builders never got the memo, they just kept building after the market condition changed. That was followed by a flood of foreclosures entering the market, which added even more inventory, and now the builders were competing against their own properties from a year prior that were twice as big and half as expensive. It was a nightmare, really hard to get a loan back then because the lenders had basically shut down.

Rick Shargra:
The people who were going into foreclosure we people that were not only buying overpriced houses, but they were doing it on speculation. A very high percentage of them had adjustable rate mortgages. The only way they could afford the house was with a teaser rate. As soon as that rate adjusted their interest payments doubled and suddenly they couldn’t afford those properties anymore. It was a real nightmare. There was a story in our local paper here in Orange County, California about a cleaning lady who was making about $40,000 a year and had eight properties in Santa Ana, and all eight of them, amazingly enough, were in foreclosure. You wondered what the loan officer on the seventh or eighth loan must have been thinking before they approved that loan. Anyway, market conditions, fast forward to where we are today, we have a about a one-and-a-half to two-month supply of properties available for sale. That’s about a third of what we would normally have in a healthy market.

Rick Shargra:
The builders have not been building for a decade, so they’re trying to catch up. They’re having trouble building new inventory because of supply chain disruption. They can’t get appliances, roofing materials, windows, and so it’s taking them longer to bring properties to market. We have demand that’s demographically based, so this is not false demand. The biggest cohort of millennials who are the biggest generation in U.S. history are between the ages of 29 and 32. The average age of a first-time home buyer is 33. Even with interest rates being at 5%, they’re still lower than the six, seven and 8% loans that we saw back in 2008. The other thing to keep in mind is that first-time home buyer percentage is actually fairly low this time, and that’s your riskiest loan. During the build up to The Great Recession, first-time home buyer rates were in the high 40s, 45, 46, 47%. The most recent numbers I’ve seen on first-time home buyers in today’s market is about 26%.

Rick Shargra:
That means most of the sales are in the move up market, and people are tapping into the huge amount of equity they’ve built up to make fairly large down payments on their next property, which is keeping their monthly mortgage payments lower. That’s one of the metrics you look at to determine bubble is, what’s going on with mortgage payments as people are buying new homes? Another is the spread between rental prices and mortgage payments and rental prices have been going up as fast as home prices have. Again, none of the predictors that we would’ve looked at leading up to 2008 seem to be in place. Market dynamics are all different. The quality of the borrowers is extraordinary. In fact, the delinquency rates are the lowest they’ve been since the mortgage banker started tracking those numbers in the 1970s, and the economy is supporting it too.

Rick Shargra:
We’re creating jobs. Unemployment rates are very low, and usually that’s what I would look at as a trigger. If we see unemployment rates go up, typically, your delinquency rates go up. If your delinquency rates go up, your foreclosure rates go up. We’re still dealing with historically low rates of foreclosure, so there’s really no indicator that we’re sitting in a bubble, although it’s understandable people think that because we’ve had, I believe, 122 consecutive months now where home prices were higher than they were the prior year, which is I believe the longest run in history. So I do think market corrections could happen across the country in certain markets at certain price tiers. Do I think we’re going to have a bubble bursting? No, but the truth of the matter is, nobody really knows we’re in a bubble until it bursts.

David Greene:
Yeah. I love the point you made that this looks like how it looked in 2009, 2010, or maybe actually say the run up to that, so 2000 through 2005 or ’06, but the fundamentals are vastly different. For those on the outside looking in who just see the symptoms, you’re like, “Oh, that looks like the same symptoms as when I had a cold.” But for those of us that live in this world where we’re doctors, we’re like, “This is not the same virus. This is not the same kind of cold, even though the symptoms are the same,” and I get a lot of almost anger when we say, “Yeah, the market is still fundamentally strong.

David Greene:
People are getting 30-year fixed rate loans that they can afford. Their job is very secure. Rents are going up. There’s a lot of money flowing into real estate that makes it a desirable asset,” and they just don’t want to hear that. What they want to hear is there’s a crash. So I’m always trying to figure out how do you connect with those people who want to believe we’re going to have a crash, while at the same time recognizing, who knows? It could be. One thing that I’ve not heard spoken of wanting, oh, go ahead. I’ll let you say that. I’ll ask you my question next.

Rick Shargra:
No, just, I couldn’t agree with you more. I actually get really frustrated and my encouragement to anybody who’s watching or listening to this conversation is, anybody who’s selling you a guarantee of a crash is doing that because they’re trying to sell you something. I spent 24 minutes of my life that I will never get back watching a video that a colleague sent me as proof that there was a crash coming, and I wanted reach into the computer and ring the guy’s neck because he was-

David Greene:
I know feeling.

Rick Shargra:
He was misrepresenting the data. He was coming to false conclusions. Every forecast he was making, I could have refuted very, very easily, but there’s a lot of this misinformation out there, and people really have to be careful what they sign up for. There was a guy who was predicting millions and millions of foreclosures a year ago, and I had people sending me that because yeah, since the beginning of the pandemic, I’ve been out saying we’re not going to see another tsunami of foreclosures. People just knit together really lose math, and it ought to be criminal because they’re charging thousands of dollars for courseware and training programs that are really going to just suck people drive of their money without returning any potential benefits. So it’s a pet peeve of mine and the press gets caught up in it to predicting millions of foreclosures, tens of millions of evictions, and now we’re going to have a housing crash-

David Greene:
Mm-hmm (affirmative).

Rick Shargra:
I guess you never go broke with a negative headline, but I’m sorry, it’s a pet peeve.

David Greene:
That’s my point. That’s what I want everyone listening to this to understand. Think about the last time you got angry at someone that said, “Don’t buy, a crash is coming.” The people that said that four years ago, five years ago, are you mad at them now that you lost out on five years of … ? No, it never happens. But if one person says you should buy and the market drops, you hate them with the fury of a thousand suns. It’s always the safe bet to go for the person who says, “There’s a crash that’s coming, you should wait,” and so that’s why so many of them do that, and they play into the fear. You said it, the media, every article, “Interest rates rise, is a recession looming? Tons of inventory will be flooding in the market.” Everyone likes to see that, and so that’s why media prints it. They’re not printing it because they believe it, they’re printing it because you will click on that, because that’s what people want to hear.

David Greene:
So we have to think about where we’re getting our information from that’s, and Rick, what I love is you’re giving data to support your opinion. It’s not, “Well, I’m just angry the housing prices would go up, so I’m going to find some way to vent that anger and say that they’re going to be going down.” Your theory on foreclosures is the same thing that I’ve been telling people for so long. To be honest with you, I’m going to let you share it. But when I would share it with someone and they would act surprised, I often thought, “How did you not see this?” It’s not hidden, it’s that they wanted to believe foreclosures were coming. So the obvious answer that’s right in front of them that no one’s going into foreclosure got tons of equity in their home, when market’s this hot, you’re getting equity while you’re in escrow. Even if you couldn’t make your payment, you’re going to make a whole bunch of money selling your house, because how fast it’s rising. Like “How did you not recognize that?”

David Greene:
But it’s this blinders that we put on where we want to believe there’s a crash coming, because it is hard to get a deal. It is frustrating. There is a ton of in the real estate space right now. Before we get into the foreclosure thing, I wanted to get your opinion on a question I haven’t heard asked very often. I remember in the last bubble, much of the wealth being created that was flooding into the real estate market was from the real estate market. It was home flippers. It was real estate agents that were crushed it, it was loan officers that were making ridiculous amounts of money, giving away all these loans. It was people that worked in the real estate space, making a ton of money and then they would invest it back into real estate, or they would go buy a boat, an RV. There were all these HELOCs where you could pull money out of stuff.

David Greene:
So it was this house of cards that the minute you couldn’t make money, when homes lost their value, the people making money by selling homes lost their money and the whole thing imploded on itself. But now what I see is more money coming out of tech, more money coming out of entrepreneur ventures like crypto investing and the NFT craze that we’re seeing. There’s people that are literally being millionaires because they bought the right cryptocurrency, and it’s a silly way to be making money. It’s not sustainable, but it is happening. Then you see money flowing from the overall wealth of the economy, the stimulus that we’ve created, where it’s just made so many people wealthy without them having to earn it the old fashioned way.

David Greene:
You got to find a place to park that money that feels safe, and smart people recognize real estate is a better long-term bet than buying some NFT that you’re hoping goes somewhere, or investing in a cryptocurrency that you hope becomes something better. What I’m getting at is it seems like where the money is coming from that’s going into real estate is coming from more sustainable places. You’ve got institutional capital, you’ve got hedge funds, you’ve got smart people parking their money into these areas where people are migrating to. Do you think that is another sign that the fundamentals are stronger, or do you think there’s something I’m missing there?

Rick Shargra:
No, I think that’s very well said. There was a lot of internal momentum, if you will, during, during that build up to the housing bust and the flippers then were not the flippers today. Actually, those flippers were more similar to what we saw with Zillow offers in the last year where it was an arbitrage model, “I’m going to pay full value or even too much for a property and count on increasing market prices to be able to make my margins.” Our data shows that the average gross margin on a flip was right around $60,000 nationally.

Rick Shargra:
Obviously, it’s going to vary market to market. We saw a heightened amount of flipping activity, but these flippers are making their money by going in and repairing a property and then being able to sell at a higher price because they’ve added value. If you’re flipping in an arbitrage model, your risk is much, much higher. Zillow lost $300 million in a quarter by mispricing houses and having to sell them for less than they paid. That was what we saw in the 2005 to 2008 flipping model, so when those profits started to derive, you saw the whole house of cards start to crumble. You’re absolutely right.

David Greene:
Yeah.

Rick Shargra:
A lot more institutional money coming in today. A lot more, I would say, cautious and thoughtful money coming in from individual investors. A lot more focus on longer term investments from people buying these properties. We published the RealtyTrac website, which has foreclosure data on it. Mostly individual investors use it and we surveyed them. Over the last year, we’ve seen the percentage of people doing single family rental investments continue to grow and actually begin to outpace the fix and flip percentages. So something like 60% of the investors we surveyed last time we’re claiming to be rental property owners, as opposed to flippers. To me, that’s a more long-term, conservative approach to investing, and I think we’re seeing a little bit more of that. So again, very different model and there’s a lot more capital being generated in other parts of the economy beyond real estate that had been supporting the real estate growth that we’ve seen.

David Greene:
The last point I want to make before I turn it over to Dave is I think in that 2000 through 2006 crazy, ridiculous rush we had, what people were banking on was speculation. They were speculating that the home would continue to increase in price. They had one extra strategy, which was, “I will buy low and sell high.” They did not understand cash flow. They did not understand the fundamentals of owning, managing, investing in real estate. Like you said, they weren’t improving the property. It was buy a brand new home from a home builder, wait six months and sell it to make $100,000.

Rick Shargra:
Yep.

David Greene:
That concept of speculation got somehow married synonymously to appreciation. So now when people hear the word “appreciation,” they assume that means speculation, right? Like one exit strategy, all your eggs in one basket, if one thing goes wrong, you lose the whole deal, but I’ve never seen it like that. I think appreciation applies to both rents and the value of the home, and you make money in real estate from it appreciating, but that doesn’t mean you do it foolishly. It still needs the cash flow. You still have to have enough money to hold it long term. I just noticed that a lot of the same people they get angry about, “There is a crash coming!” they get angry at the word appreciation. The minute they hear it clicks like, “Oh, that’s speculation. That’s bad.”

David Greene:
I got warned about that a long time ago. Have you seen that as well? At one point, HELOCs were synonymous with bad investment decision. Like a HELOC means you’re losing your house. We’ve finally gotten far enough away from it that people don’t automatically think HELOC means a death sentence to your family’s finances, but it feels like that same idea of buying a house and waiting long term for it to go up in value is getting labeled the same way that speculation was when people were trying to day trade real estate.

Rick Shargra:
Well, actually the last thing you said is probably the most accurate metaphor for what we saw. These were people that were literally trying to day trade real estate and that’s the wrong asset class to do day trading on. You’re just not going to see your values appreciate. Again, a company as big as Zillow, a multi-billion dollar company with multi-billion dollar valuation that’s been in the real estate market, that made its bones with a product called the Zestimate that’s supposed to give you at least an approximation of home value, and they managed to lose 300 million in a quarter by doing that kind of arbitrage, so it’s not a good play. I know a lot of flippers. They’re still very successful at what they do. We’ve seen actually an uptick in flipping activity in our data, but it’s people that know what they’re doing. It’s people that know how to price property. They’re going in and they are buying low and they’re fixing things up and they’re selling high, but again, a lot of the value that they generate is because they’re going in and making huge physical improvements in a property.

Rick Shargra:
They can just do it cost effectively and in a way that pencils out at the end of the day. Again, I think the investors in today’s market are a lot more thoughtful. They’re a lot more educated, I hope, and we’re not seeing lenders take on the reckless risk that we saw lenders take on 10, 15 years ago. That’s been the other big part of the difference is lenders have always been expected to provide the adult supervision at the party, and during that housing boom it was like they went away and left the kids home for the weekend and tossed them the keys to the liquor cabinet right before they left, and then we were all surprised at the outcome, so very different lending market. The CFPBs had a lot to do with that, putting restrictions in place, but even the commercial lenders, the people who specialize in bridge loans and investor loans have really tightened things up. So a lot of the risk that was inherent in those old models just doesn’t exist in today’s lending market.

Dave Meyer:
Rick, I want to get back to something you mentioned earlier. We’ve talked a lot about why the fundamentals are very different from the two thousands and why you don’t believe if there is a crash. You have said, though, that you think there could be market corrections in individual markets. Just for the record, based on our diatribe about people calling crashes a correction and a crash are not the same thing. A correction is a modest decline in prices that is usually part of a norm economic cycle. So can you just tell us a little bit about why you think, counter to what you just said that you don’t think there’s going to be a crash, what are you seeing that suggests that there could be some market corrections out there, and if you’re an investor, what to look out for in those markets, you think there might be corrections in?

Rick Shargra:
The latter question is harder to answer than the former. I’ll be honest with you, this is an arbitrary definition on my part, but I look at a correction as something in the neighborhood of a five to 10% price drop, and it will then recover. You mentioned normal economic cycles. There’s a lot of people involved, or wanting to get involved in real estate today who candidly haven’t been around long enough to see what looks like a normal housing cycle, and those cycles follow a predictable pattern. You see demand increase, as demand increases, you see more sales; as sales increase, you see prices go up, and then at some point prices get to a certain level where people look at it and go, “No, that’s too much money,” and then demand slows down and prices come back down with it, and you have those normal cycles. I believe we’re starting to see a little bit of in certain markets across the country, as we hit, what I call an “affordability wall; the combination of home prices going up, of interest rates going up, there’s a certain borrower.

Rick Shargra:
Who’s going to look up and say either, “I no longer qualify.” “I can’t afford that property,” or, “That’s just too much for me to be comfortable with right now. I’m going to take a step back and see what happens, or I’m going to look farther away from that property. I’m going to look at a smaller property and scale back.” Ultimately, that has an impact on demand. Lower demand ultimately has an impact on pricing. If you look back, and I did this, I don’t know I was doing this, but about a week ago, I happened to be looking back at 100 years of home prices. It’s funny when the 30-year fixed rate loan became legal in 1954 for existing homes, most people probably don’t know that before that you couldn’t get a 30-year fixed rate loan, is when we started to see prices take off, because now you could amortize your costs over a much longer period of time. If you look at that, we’ve only ever had one cycle where prices fell significantly in 100 years, and that was during the crash leading up to The Great Recession.

Rick Shargra:
If you remove the drop and the significant increase we had during that period of time, we’re right about where the historic trends say we should be in terms of home prices, but even though prices historically have always gone up, it doesn’t mean they go up consistently. There are going to be times in markets where prices up for a while and then market conditions change and they come back up. Would I be surprised to see parts of the Bay Area where home prices have been off the charts, or parts of the Pacific Northwest, where we’ve had incredible competition for housing over the last few years, or markets like Austin, or some markets in Florida see a little bit of a price decline, particularly at the higher ends where there’s not as much competition? No, I wouldn’t be at all surprised to see that. Do I think it’s the foreboding of a huge crash to follow? Not at all, really, but local investors need to become experts on their local markets.

Rick Shargra:
You want to look for things like population growth or decline. You want to look for things like job growth or decline. You want to look for things like wage increases. Are they keeping pace with, with local prices, with inflation? Inflation is the wild card, by the way. That’s really the X factor here. I believe that persistently high rates of inflation will hit people harder on the margins, so your low end of the market, particularly your FHA borrower is going to have a hard time affording to buy a house because they’re having a hard time affording to buy gas and food. That will have an impact going up the food chain to a certain extent where people are going to have to take a step back and see when they can get their finances in order, because everything is costing them eight, 10, 20% more than it did a year ago. Again, normal cycles, don’t see a crash, but local conditions will vary, but you really have to become the local market expert, much more than I can be a local market expert on 3,140 counties across the country all at once.

David Greene:
I’m so glad you mentioned what you just did, because rates going up will affect the FHA buyers significantly. They probably we’re barely able to afford houses in their area, rates jump a point or two, they can’t buy a house at all.

Rick Shargra:
Yeah.

David Greene:
Rates do not affect a person in my position.

Rick Shargra:
Right.

David Greene:
Right? So the house becomes a little less affordable. The cash flow is a little bit less. Maybe I have to put more money down, it is still vastly superior to anything else that I can invest in-

Rick Shargra:
Yeah.

David Greene:
… so I’m going to keep buying. That’s what I want to come across is that while this may make it harder for the average blue collar, mom-and-pop investor trying to claw their way out of their W2 position, which is our audience, that’s who we’re trying to help, this does not make things harder for Blackstone that can go borrow money at one-and-a-half percent, and has a 10, 20, 30 year horizon. It doesn’t matter to them if they make a little bit less money in years, one or two, and that’s who your competition is now, these iBuyer programs with tons of money flooding into them. I wish that this rate hike would cause a decrease in prices. As an investor, I would welcome that. It’s really hard to find property, but it’s not going to. They can go up a lot. For someone doing a 1031 exchange, they made $800,000 and they got to put it somewhere, okay. So they make less of a return, is that you, Dave, you got 800 grand you’re trying to figure out where to park?

Dave Meyer:
Yeah. Yeah. I am trying to park some 1031 money right now.

David Greene:
That’s been fueling a lot of the run up in prices is, it’s this self-sustaining ecosystem where, we have a city in where I live called Modesto, California, and it’s not the nicest area. It’s like maybe an hour-and-a-half away from the Bay Area. But if someone sold their house in San Jose for $800,000 and they got to park that money, and if they can’t, they’re going to pay 300 grand in taxes, they will gladly pay 50 to a 100,000 more than market value for that fourplex in Modesto. You have all these Modesto investors that are like, “Man, I can’t get a return. What kind of an idiot’s paying that much money?” They don’t see the big picture. They don’t see that idiot is saving $300,000 by buying that property or buying in the nicer areas because they know in five years it’s going to get ahead. I like that you’re mentioning this macroeconomic understanding and inflation-

Rick Shargra:
Yeah, and-

David Greene:
… it’s ripped. Go ahead.

Rick Shargra:
… and cash is king. So I think for investors who do have cash, market can conditions are absolutely tilting in your favor right now. We know that somewhere between 16 and 70% of investor purchases are funded with cash, because you don’t really care if mortgage rates go up a point or two, because you’re not financing.

David Greene:
Yeah.

Rick Shargra:
Even if you’re doing a bridge loan and rates are ticking up a little bit on those, it’s a very short term phenomenon. You can usually built that into your prices and pencil it out. But what you’re also talking about is interesting to me, because it’s one of the reasons home prices have risen as rapidly as they have, because we are seeing people not just invest in properties in Modesto, but we’re seeing people move from high-price markets to low-price markets. I call it the Boise factor.

David Greene:
Mm-hmm (affirmative).

Rick Shargra:
Boise, Idaho had property values on sales go up 45% last year. Now I will guarantee you there’s nothing happening in the Boise economy to organically drive prices up 45%, but somebody sold-

David Greene:
Unless you call Californians moving there organic-

Rick Shargra:
That’s organic, and that’s exactly what’s happening, driving the locals crazy because they’re they can’t afford to buy a house now. I’m scared to death what’s going to happen when the tax assessor gets around to adjusting prices.

David Greene:
Oh, man.

Rick Shargra:
You don’t even think about this.

David Greene:
That’s true [crosstalk 00:46:28].

Rick Shargra:
But what’s driven partly by this work-from-home phenomena that COVID led to. Sorry, David, go ahead.

Dave Meyer:
No, I was going to say actually on our other show, On The Market, we were just talking about this, that Idaho just became the least affordable state in the entire country, surpassing Washington and California for this exact phenomenon. People are going there. It’s not actually leading to an improvement in the local economy to the point where wages are going up for people, but the cost of living is absolutely exploding there.

Rick Shargra:
You sold a house in Silicon Valley, you walked away with $800,000 and you bought a house twice as big and Boise for 400,000, and you really don’t care that you paid 40% over list because you have the money, right? It’s a phenomenon that doesn’t have a long life expectancy. I do think in some of those markets, that’s one, St. George’s Utah of all places. Phoenix, we saw similar patterns in markets like that and they’re due to settle down. We probably could see some price adjustments in those kind of markets, but people ask me, “What are the next hot markets?” I always ask for a show of hands, “Who had Boise and St. George’s Utah on your bingo cards last year, because you’re the person I want to ask about what the next hot market is.” I had neither of them.

David Greene:
Well, this is why this is a good conversation to have, because if you’re buying a property that will support itself through cash flow, it’s not risky speculation to try to determine, “Where do I think demand is going to go?” So I do think about this. We just bought a property, my co-host of the regular podcast, Rob and I, in Scottsdale, Arizona, and I was very big on that because so many people in California are constantly talking about not liking it here, wanting to go to a place with different demographics, different political bend and different home prices. If you’re wealthy in California, that’s where you want to go. You want to go to Scottsdale. So I can see how like when Boise is too much, well you’re in the desert, so you have to understand that’s a completely different scenario. But in general, the people, like New Yorkers, they don’t want to be in New York right now.

Rick Shargra:
No.

David Greene:
They’re all going to South Beach.

Rick Shargra:
Yep.

David Greene:
Right? There’s probably going to be a trend. The people in New York moving into Florida, that will be their version of Boise because the taxes are better and they can still work from wherever they are. If you’re trying to figure out, “Where’s a market I can get to before everyone else does?” I do think that’s the game you got to play, because if you just want to say, “Oh, let me just go to a city and find a house on Zillow and buy it,” good luck. It’s very, very difficult. So you have to understand the psychology of the people that are moving, figure out where they would want to be and then get there before everyone else does, and hen get a very strong, fundamentally sound deal that you could afford to keep for the long term. It’s definitely made investing a lot more complicated than it was in the good old days-

Rick Shargra:
Oh, yeah.

David Greene:
… when we were like, “Send out some letters. Someone will reply offer to buy their house.” We were all getting hung up on, “Oh, but the roof needs $4,000 of repairs. I don’t want to have to deal with that,” and now we’re looking at it like, “Man, why are we stuck on those details when we see what it’s turned into now?”

Rick Shargra:
You’re happy to find a house you can buy.

David Greene:
Yeah, that’s right. There’s 12 other people that want it. It’s the Hunger Games. You got to hope you’re the one left at the end,

Dave Meyer:
Rick, before we go, I want to come back to something, you, David and I were actually chatting about before the show, but you had some really interesting insights into the foreclosure market and how investors should navigate that. Could you tell us a bit about that?

Rick Shargra:
Yeah. Unfortunately, my foreclosure background goes all the way to my beginnings of my career in the real estate and mortgage industries. I spent 10 years with RealtyTrac, during the foreclosure crisis and we were publishing the largest database of foreclosure information at the time. I can tell you that during that cycle, there were a couple of very unique things going on. One was that 33% of all homeowners across the country had negative equity in their properties, not just foreclosure borrowers, all homeowners, so that’s how far home prices had fallen. Virtually everybody in foreclosure was upside down. Because of that, they couldn’t sell their home unless they got a short sale approved, which was an incredible hassle for people.

Rick Shargra:
Although we did see short sales go up a bit during that cycle, very little was selling at the auctions, because the lenders were trying to get the full amount of debt back on a purchase, and investors simply weren’t biting because prices were too high, so a huge percentage, much, much higher percentage than normal of properties going into foreclosure ultimately, went back to the banks, or went back to the lenders and they became REO assets. So people that were successfully buying and flipping or buying and renting foreclosure properties during that cycle waited for the repossession. They knew the bank was going to be hanging onto these properties for a while. A little known fact is, a lender doesn’t have to take the law loss on a property they foreclosed on until they resell it. So in a lot of cases, the banks were simply hanging onto these properties to defer their losses, because they were under such incredible financial duress during that period, and the best deals were typically found in those REO assets. This market, again, could not possibly be any more different than that market.

Rick Shargra:
There’s a record amount of homeowner equity across the country, $27 trillion of homeowner equity, just a ridiculously high number. To David’s earlier point, I think we’re going to start to see a return of cash out REFIS, and even some HELOCs as people start to tap into that equity, largely for home improvement, because they’re not going to move because they don’t want to buy a more expensive house with a more expensive mortgage. Anyway, this cycle, according to our numbers at ATTOM, about 90% of borrowers in foreclosure have positive equity in their homes. There is no reason for those borrowers to lose a home and lose more of that money to a foreclosure auction when they can sell it in a huge seller’s market. So for any investor who’s looking to participate in the foreclosure market this time, you need to find those borrowers, those homeowners, in the earliest stage of foreclosure possible and reach out directly to them, or work with a realtor who specializes in working with distressed homeowners, and have the realtor reach out to that homeowner and try and execute a deal before that foreclosure auction.

Rick Shargra:
The other thing I will tell you, and I spent five years working for auction.com back in the day is that the auction companies are reporting record sell through rates at the foreclosure auctions. Normally, 30 to 35% of property sells in an auction. Today, that number is between 65 and 70%. So if you think about the fact that most homeowners in distress should be able to sell a house before the auction, 70% of the properties getting to auction or selling at the auction, that doesn’t leave very many properties going back to the lenders. So your strategy as an investor, this cycle has to strike way, way earlier in the food chain in before that REO takes place, before that repossession takes place and there will still be deals out there, but you’re going to have to get to them much, much earlier.

David Greene:
That’s a great point. I’m glad that you shared it. It’s very easy to look at it at a shallow level and say, “Oh, foreclosures are coming. I’m just going to wait.” But in a market like this, it doesn’t go to foreclosure, they sell it, unless they just are ignorant and they don’t understand. Then it goes to the courthouse steps and then a non-ignorant person buys it. You’re not seeing inventory sneak all the way to the very end like before. I looked at it like back then the market was saturated with homes. You said it perfectly, there was too much supply. It was like, imagine soil that is just completely saturated with water. You pour a bucket of water on that, and there’s nowhere for it to go. It just floods over and there’s too much of it. Well now it’s like pouring a bucket of water onto the sand at the beach.

Rick Shargra:
Yeah.

David Greene:
It doesn’t matter what type of water it is. It’s so thirsty. We have such a demand for inventory that it just sucks up right off the bat, and so waiting for that overflow to run to you to get a great deal isn’t the same strategy. Really, the only answer I can see is we need to build more houses. We need to make it easier for builders and developers to create more inventory in the places that people are moving to. Outside of that, it’s difficult to see how real estate is going to stumble for a very, very long time, so we just have to be creative.

David Greene:
As people listening to shows like this that are getting the inside scoop on what they can do to be successful, Rick, I really appreciate you being here to share some of this information with us because it’s the facts that matter. It doesn’t matter how angry you are or you want to believe there’s a recession coming, or somebody on YouTube is ranting about the next time, and if you don’t know what you’re listening to, you hear that you’re like, “Yeah, I’m going to wait,” and four years go by and prices are twice what they are right now. It just seems incredible, and you’ve lost a lot of money. Like we said, nobody gets angry at that person.

Rick Shargra:
That’s the person they should be the angriest at. Now the numbers are the numbers, and there’s an old cliche in real estate, which you’ve probably heard before, which is that the best time to buy a house was 15 years ago, and the second best time is today.

David Greene:
Mm-hmm (affirmative).

Rick Shargra:
If you have a long enough outlook on this, or if you’re not looking to do that arbitrage model and buy today and sell tomorrow and hope for the best, typically, for most people real estate’s a pretty good investment, if you know what you’re doing.

David Greene:
There you go. Dave, any last words?

Dave Meyer:
No. Thank you so much, Rick. We’re definitely going to have to have you back either on BiggerNews once a month or on our other show, On The Market. You’re a wealth of knowledge and appreciate your really analytical and data-focused approach to helping everyone understand the housing market.

Rick Shargra:
I appreciate it. I enjoyed the conversation and yeah, let’s do it again soon.

David Greene:
Thank you very much, Rick. This was awesome. All right, and that was our show with Rick. Man, that guy is just a gem. What a wealth of knowledge and insight. What did you think, Dave?

Dave Meyer:
I loved it. I think he provides a really well-reasoned, sober analysis of the housing market, because there’s so much going on, and it’s understandable, really to who be confused about what’s going on, but that’s why we do these shows, to bring on people who are experts and who have the data and the experience to help us interpret it. I learned a lot from Rick. I think he has a very good read, similar to how I see the housing market personally. I hope everyone got a lot out of it. What do you think?

David Greene:
Yeah. I feel like it’s so hard to know who to believe, especially, so you’ve got the increase in social media, the increase in content being made on platforms like YouTube and TikTok. You’ve got a lot of thirsty gurus that are out there trying to get attention and they’ll say whatever it is, it grabs your attention. It is very common to hear some people say, “Buy other rails that you can,” and others to say, “Don’t touch it. You’re headed to a crash.” It’s in absolute polar opposites, and you don’t know what’s to believe. So in an environment where you have all of this confusion, my advice is you ground yourself in facts. numbers can’t lie to you. Numbers are not sensational. They don’t scream and say, “Watch me, click me, follow me.” They don’t ask for your money, and so that’s what I trust. When you find a person like Rick, who based their information off of numbers, I feel much more comfortable, and that’s why we wanted to bring him in front of the audience today.

Dave Meyer:
Absolutely, and that is exactly what On The Market our new podcast is all about. It’s about presenting you this information in an unbiased, logical way so you can understand what is going on without all of the sensationalism out there. I like that you called them thirsty gurus. I think that is a very funny way to refer to gurus because they’re a thirsty bunch.

David Greene:
I just made it up right now, actually, so sometimes my own-

Dave Meyer:
I like it.

David Greene:
… genius only comes out in a spontaneous creative moment. This happens when they make sure the green M&Ms are not in my bowl.

Dave Meyer:
This is why, the green M&Ms slow you down?

David Greene:
Well, there’s an old theory about it, there was a group like Van Halen or something where they were considered divas because they didn’t want green M&Ms in their bowl. I was pretending like I was a diva there.

Dave Meyer:
Oh, oh no, not a diva. You’re a man of the people.

David Greene:
Thank you for that. So are you, and if the people want to fall more of you, the man, where can they find you?

Dave Meyer:
I am most active on Instagram where I am @thedatadeli. I know it’s an absurd handle, but I really like data and I like sandwiches, so I’m sticking with it.

David Greene:
You’ve married two beautiful things together, and you threw alliteration in there. It’s incredibly profound how you’re able to do that.

Dave Meyer:
Yeah. Well, do you know Kaylee who works on the publishing team at BiggerPockets?

David Greene:
Mm-hmm (affirmative).

Dave Meyer:
She came up with it. She came up with it in two seconds. She was like, “You love data, and you love sandwiches, datadeli, obviously.”

David Greene:
Man, at BiggerPockets we got a bench deeper than the Golden State Warriors. The talent just oozes from everywhere. If anybody wants to follow me, hear more about what I’m thinking, maybe you’re like, “Man, I really wish David Greene could have talked more, but Dave Meyer forced him to give very short answers and I wish he could expand,” well one-

Dave Meyer:
Yeah, blame it on me. It was always my fault.

David Greene:
It’s our producer trying to make sure you guys have a good show because you complain when we go too long, so it makes sense. But if you wanted to hear more, go to the comments on YouTube and say, “I wish you guys would’ve expanded on this point,” or, “I wish I could have heard more of this,” or, “I wish you would’ve asked this question,” and I will do my very best to get you the information that you’re looking for. You could follow me online everywhere on social media at DavidGreene24, there E at the end of Greene. You can also message me on BiggerPockets, or you can find me on YouTube at David Greene Real Estate.

David Greene:
The point is we want to give you all the information we possibly can at BiggerPockets. We want to flood you with value, and if we can’t do it on this hour to hour-and-a-half podcast, there’s other mediums where we can still get you what you need. So give us a follow, let us know what you thought and make sure you’re also BiggerPockets. Please share this podcast with anybody that you love. Subscribe to it when you hear when a new episode comes out and keep following us because we just get better with age. All right, I’ll get us out of here. This is David Greene, for Dave, not the thirsty guru, Meyer signing off.

Dave Meyer:
I need to get something that attaches to my chest so when I move, the mic moves with me-

David Greene:
Oh, yeah. Like a gimbal for yourself.

Dave Meyer:
Yeah. I move around a lot. [crosstalk 01:01:10]

David Greene:
You’re like Axle Rose from Guns ‘N Roses doing this snake when you’re recording.

Dave Meyer:
Yeah.

Dave Meyer:
(singing)

David Greene:
Yeah. That’s really good, actually.