Who would have thought that a software company charging its users could be such a controversial topic. But there’s a lot to the Twitter debate, and everyone is weighing in with their opinion. In October 2022 Elon Musk bought Twitter for $44 billion. Just after, he declared the platform’s legacy approach to verification a “lords and peasants system” that was, “bull***t.” Now, he’s taken a stand and changed the playing field with new program Twitter Blue costing $8 a month and including the once coveted blue tick. But who is playing ball and who is refusing to take their seat?

Dillon Kivo is CEO of Authority Titans, founder of Kivo Daily and Wall Street Journal bestselling author of The Authority Playbook. He works with influential entrepreneurs and aspiring personal brands to create them an online presence that secures their reputation and creates opportunities. Having successfully secured Twitter, Facebook and Instagram verification for his clients, Kivo has mixed feelings about what entrepreneurs should do about Twitter’s new system.

I interviewed Kivo about why entrepreneurs should or shouldn’t pay to become verified on Twitter.

Here’s why entrepreneurs should pay for Twitter:

Access more features

“There’s no doubt that paying for Twitter Blue brings access to more features,” said Kivo. “It’s a compelling proposition.” Subscribers of the programme not only get a verified blue checkmark once reserved for notable individuals, but they can post longer tweets and longer videos. They have the chance to undo a tweet just before it’s actually sent and they can edit some tweets within the first 30 minutes. There’s a new Top Articles section and two-factor authentication security options, as well as increased visibility.

“If you’re an existing Twitter user, these additions will enhance your experience for sure,” said Kivo. Twitter users have been begging for the ability to edit tweets since the platform’s inception in 2006. Now you can edit to your heart’s content, but it’ll cost you. With the new Twitter Blue revenue firmly in place, users might hope that these features keep expanding. Musk himself said he enjoys hearing what users want, recently tweeting that negative feedback is “great for reducing [Twitter’s] ego-based errors.”

Achieve better engagement

In his tweet on 25^th April 2023, Musk confirmed a suspicion many held, that verified accounts are now prioritised. Exactly what this means is shrouded in mystery, but you can be pretty sure that your tweets will show more prominently in the timelines of your followers and perhaps that your replies are somehow set apart too. Maybe more weight is given to your retweeted and engaging content, maybe you get suggested when users search for who to follow.

“Paying $8 a month to be seen by more people in your target audience makes sense for most entrepreneurs,” said Kivo. “Especially if you’re already active on Twitter, it’s like buying a cheat code that gives you rocketfuel instead of petrol.” So why wouldn’t you do that? Businesses pay for premium listings on directory sites all the time. Twitter Blue is transparent; you’re not trying to fool anyone that you don’t pay. Thanks to years of visibility, blue ticks on Twitter give a first impression of legitimacy, so capitalise on the brand to benefit your business and see it as a simple advertising cost.

Subscriptions are common

Although the media would have you believe there’s more to this than meets the eye, on the surface, Twitter’s verification program is simply a software company with 450 million monthly users, looking to grow by adding a subscription service. How else does a software business monetize? “Facebook makes money by running ads; selling user data to advertisers. But how many people would prefer to pay and see no ads?” asked Kivo. Twitter is testing that theory and ascertaining the appetite.

“It’s totally normal to pay for Netflix,” said Kivo, “so why not Twitter?” Software platforms aren’t free to run. Servers, data and customer support cost money, which has to be recouped somewhere. Estimates put Twitter’s ad revenue at $3bn, whereas Facebook’s is reportedly ten times that. Under new management, most businesses cut old services and add new ones. Musk is clearly not afraid to trial and error his way to Twitter success.

Access more features and achieve better engagement by adding one more subscription to your list of several. That’s why entrepreneurs should pay for Twitter Blue. But there’s a flipside to this story that we’re exploring in more detail.

Here are some reasons entrepreneurs shouldn’t pay for Twitter.

If you don’t focus on Twitter

Twitter is by no means the only social network. Once part of just a handful of platforms, creators are now seeing results doubling down on TikTok, YouTube, Instagram, blogging or podcasting. LinkedIn organic engagement is high right now and podcast listenership numbers are growing exponentially. There are plenty of other options for your time and energy. “If Twitter isn’t your main social platform, it might not make sense to become verified,” said Kivo. Divert your efforts elsewhere and forget about Twitter entirely. “You can even edit your bio to tell your followers where you’re active.”

On a similar note, if you can’t justify the spend because you’re not seeing the return, forget about Twitter all together. A social media manager used to be one person; now that job title doesn’t really exist. Completely different skills are required for each platform, and it’s the same with your activity. If you’re not prepared to be Twitter-first, you can’t just repurpose old content and expect it to fly. Go hard or go home.

You don’t like Elon Musk

If you don’t like Musk or don’t agree with his methods and principles, you might not want to pay to become verified on Twitter. “If you have to like and trust the CEO of any company you buy from, keep your cash out of his pocket by not paying for Twitter Blue,” Kivo suggested. There are several people on this bandwagon, who believe Musk charging for verification is either an abuse of power or a shameless bid for cashflow. They are vocal about the potential for impersonation, new scams and misinformation that can come as a result of anyone with a debit card having access to a blue tick.

“Does paying for Twitter Blue mean you endorse everything Musk stands for?” asks Kivo. If that’s the meaning you have assigned, then think carefully before upgrading your account. You have to be able to live with yourself. If your principles are strong and stubborn, and you’re prepared to compromise any potential business gain to stand by them, take your $8 a month elsewhere.

It will change again in future

With all the changes that have already happened since October 2022, there’s a strong precedent for more to come. Twitter somewhat backtracked on removing legacy ticks, reinstating them for some users who hadn’t subscribed. Who’s to say this won’t change again in the future? Maybe Twitter Blue will mean blue ticks, Twitter Gold will mean gold ticks, and there will be a whole other class for the “notable but not paying” class of user. Who knows. Biding your time could be the right strategy as the dust settles on each decision.

While you’re waiting for Twitter to regain stability, do other promotion instead. Kivo recommends you, “get press in notable news outlets, focus on your product and become genuinely noteworthy.” A better offering means more customers, which means a bigger company. This can lead to the fame and fortune you might have previously associated with being verified on Twitter. “There are plenty of other ways to build your brand online,” added Kivo.

Pay for Twitter if you want to access the additional benefits of doing so, if Twitter is a platform on which you are very active, or if you’re comfortable with a monthly fee for something that you use and get benefit from. Don’t pay for Twitter if you don’t focus on Twitter, if your dislike of Elon Musk is getting in the way, or you want to see what happens before you get involved. No one will force your hand either way, the choice is completely yours.

David:
This is the BiggerPockets Podcast Show 760.

Dave:
People are eager to buy into the housing market right now. Affordability is low, but as soon as affordability improves even a little bit, people are sort of jumping back in and are buying. Denver where I mostly invest, which was up until a couple weeks ago, one of the markets facing the biggest corrections. Activity there has just exploded over the last couple weeks. So I think it’s way too early to say the correction is over, but I am surprised by how brief that correction so far was.

David:
What’s going on everyone. This is David Greene, your host of the BiggerPockets Real Estate Podcast. Here today with a bigger news episode co-hosted by my buddy Dave Meyer, and we’ve got a great one for you today. Dave, how are you?

Dave:
I’m great. It’s good to be back. I feel like we haven’t done this in a while and I love doing these shows.

David:
These are some of my favorites and a lot has gone on in the world of real estate since the last time we did this. So we have quite a bit to talk about what were some of your favorite parts of today’s show.

Dave:
I am just sort of fascinated about what’s going on in the housing market as I always am, but I think people will be kind of surprised to hear the state of the real estate market because the headlines and reality are not exactly aligned right now. And I also really liked what you shared at the end because not everyone in the real estate investing education space shares the challenges that they have, but I think you shared some of the challenges in today’s market that even really experienced investors like you experience.

David:
Dave, I think you also made a great point. If you listen to an episode a month ago or you watched the news three weeks ago, our market is shifting more quickly and with more volatility than it’s ever has in my lifetime, and these shows become that much more important, which is why we keep bringing them to you. But you may be surprised when you listen to today’s show to hear about some of the changes in the housing market.

Dave:
Yeah, I mean people always say like, oh, real estate’s not the stock market, and it’s not like it doesn’t change that quickly, but it’s definitely becoming a little more volatile and I guess newsworthy. The things are really changing at a much faster pace than at least I’ve experienced in my career, which makes for really interesting things to talk about and discuss like we do in this episode.

David:
And we are going to get into that soon. Before we do, today’s quick tip is brought to you by Dave Meyer himself. Dave, what do you have for us?

Dave:
Yeah, so I wrote a report trying to summarize what has been going on in the housing market and macroeconomics through 2023 thus far, and you should go download it. It is completely free. Just go to biggerpockets.com/q2update. Q2 like quarter two, so it’s biggerpockets.com/q2update and I gave you all my thoughts, all the data I can find about the housing market to help you make sense of this weird and confusing market and give you the ability to make informed and smart investing decisions nonetheless.

David:
All right, so make sure you go check that out. It’ll be good for you, much like your vegetables, but it tastes good because it’s written by Dave. Let’s get to our first headline.

Dave:
Our first headline for today is obviously about inflation. We got new data that showed that inflation year over year has dropped to its lowest level in two years, but is still pretty high by pretty much any standard. The headline CPI, which takes into account the broadest set of goods and services came in at 5%. We also saw that monthly it went up just 0.1%, which was encouraging and it did come down from 6% in February. So the headline data, at least to me, David, I’m curious, your opinion was somewhat encouraging.
On the other side though, we did see core prices, which for anyone who’s not familiar excludes a lot of volatile things like food and energy costs. Those seem to be a lot stickier and they actually went up just a little bit and is now higher than the headline CPI. It is now at 5.6% and it grew 0.4% in just a month. So what do you make of this new inflation data?

David:
Man, I mean it’s going up even as we’re taking such drastic efforts to keep it from going up. That’s the part that ruffles my feathers a little bit. If it was just happening on its own naturally. But with the Fed and the government locked in on how can we stop inflation, it feels like it’s their number one priority and it’s still creeping up like that. It makes you wonder what it would be doing if we weren’t making these great efforts.

Dave:
That’s a good question. I hadn’t really thought about. That’d be like 40%, we’d be like Turkey. Turkey has 100% inflation or like Argentina.

David:
Yeah, I have this analogy shocking that I used to describe what I see happening with inflation, where we’ve printed a lot of money, we have more supply, but imagine that we just 10x the amount of diamonds that were in circulation, it’s not like the population, the common population would know that there’s 10 times the amount of diamonds, they would probably still be selling at the same price of what diamonds cost. And then one day you’d go in there and you’re haggling over the price of a diamond and the 20 year old working at the diamond shop is like, all right man, fine, that’s cool. I’ll do it. And you’re like, oh, that was kind of easy. And you tell your friend and they’re like, really? I was actually thinking about getting diamonds for my girlfriend for Christmas. And so they go in there and they’re like, you think I could get that for 30% off. And the person’s like, it’s the 30th of the month, I got to hit my quota. All right, and I’ll throw in this too, and holy cow.
And then someone posts on Facebook and everybody starts to realize you could get diamonds cheaper. At that point, the price of diamonds would start to go down and then it would just become a free for all like, how much can we get these things for? You’d be seeing people pushing the limit of every way they can because diamonds are inherently less valuable when there’s more of them.
I look at the situation with our economy in a similar way. We’ve made more dollars, but we didn’t go tell everybody. Not everyone knew that there was a lot more dollars floating around. So stores ownership, people that are producing the goods, they’re raising the turkeys, they’re having eggs, they’re growing the food. They’re not just going to jack the price up, they’re going to test to see, well, how much can I charge? How much can I raise it? And then as people keep paying it, they just say, oh shoot, we can do this more. And this ripple effect is sort of moving all throughout the population, both from things measured in the CPI and things not measured in the CPI including the real estate market.
So I think we’re sort of in this era now where people that charge for their services or goods are testing to see how much can I get away with because we’ve increased the money supply and even though we’re doing everything we can to slow that down, I feel like it’s inevitably going to continue. Do you think that my analogy falls apart with your understanding of macroeconomics, that the diamond analogy isn’t the best way to look at it?

Dave:
No, I think you’re right in that as there is a huge increase of supply in money and how that ripples through the economy is obviously still being filled. And to your point, no one a year or two ago was like, oh, they printed trillions of dollars. I’m going to raise prices 20%, right? I mean even as a property manager, as a landlord, people weren’t doing that with rent. They were probably raising it a little bit and reacting to both their increased costs and people’s willingness to pay. And it does seem like that has continued, but I am encouraged that it’s slowing down at least.
At least the headline is slowing down, and this is a little wonky, but there is a good indication that the core prices will start coming down in the next couple of months, but it’s just going way slower than anyone had hoped. But I do think it is probably peaked and it is going to keep going down. It’s just going to be a bit slower and more painful than we expected it to be.

David:
I hope so. I feel like inflation is one of the most dangerous things that happens to your finances because you don’t see it coming. It’s a carbon monoxide. When taxes are increased, when tariffs are increased, when there’s something that’s just out there in the open that you can see, you can prepare for it, you can make wise decisions, but with inflation, you never know. You just go to the gas station and it’s more expensive. Or you go to the grocery store and all of a sudden the steak that used to cost $11 is now $24 in here, especially the people trying to eat healthy. Have you seen this in the sandwich market or deli’s just crushing me right now?

Dave:
Oh, it’s insane. My friend sent me a $29 sandwich he saw the other day. He didn’t eat it, but that’s crazy. But I think your point about it being slow is so true because also the way it works is that it’s not always the same thing that’s been going up a lot. For example, used cars went crazy. Now they’re actually back down to below where they were pre pandemic, but food prices are still up really high, for example, and have shown really not a lot of signs of slowing down.
So I think that’s where you see a little bit of an abatement or it gets better for you in one area and then it’s a whack-a-mole situation where every once in a while it’s going. And I think to your point, it just takes time for that to ripple out. And one of the good things about… it’s not good, but one of the things that is hopeful I should say is that the way that we know and track rent in the CPI is like it’s still showing that rent is going up a lot right now, like 8%, 9%, but that is one category that we know from private sector data, like has been going down or at least flatlined for almost a year now.
And so the way the CPI tracks this rent is really slow. And so even though that’s like the mole that’s popping up right now and is pushing core CPI high is rent, we know that it’s actually down. It just takes a while for the CPI’s poor methodology to show that. And so that is why personally I’m hopeful that it will start to go down, the core CPI, but it’s going to be a while. I don’t realistically think it’s going to be, you know, we’re get the 2% target this year, but I do think we’ll get significantly closer to that by the end of 2023.

David:
Yeah, I definitely hope so because if we all got job cuts at work, we’d be furious. If they came in and said, you’re getting a 10% decrease in pay or a 5% decrease in pay. But if food goes up by five or 10% or the things you have to buy, it’s the same thing in practical terms. And so it’s hurting especially the people that are not listening to podcasts like this that are not financially savvy, that they’re not really aware how things work. They’re just a good old fashioned, I show up, I put my boots on, I trade time for money, I use that money to go buy the things that I need. They don’t realize that this is happening. And if you’re not buying assets, if you’re not buying things that appreciate with inflation, you’re getting hammered.
So congrats everybody who’s listening to this, you’re already in a stronger position.

Dave:
Totally. And the other thing about inflation that I think is so damaging is that just destroys economic confidence, which is really important for an economy. People need to believe that things are going in a good direction for the economy to grow. And we’ve seen this over the last couple of years because there have been some parts of the economy that have done well over the last year, but since inflation is so bad, it has just been overshadowing all of the economic bright spots that there have been and that leads to a downturn.
Economic sentiment really matters, and I think we really just need to get inflation under control. As painful as it is, we need to get it under control so that people start feeling confident about their own financial positions again and that the decisions they make about their spending are sound because prices aren’t going to go up and they can plan for their future appropriately.

David:
That’s a very good point. And it’s not just with the financial system that’s kind of with our country as a whole, with the world as a whole. We saw what happened when you get a bank run, what happened to Silicon Valley Bank and other banks. In fact, the Fed had to come out and say all deposits will be protected just to stop that from happening because when everybody panics, it doesn’t take much to take down an entire system that we all rely on.
So when people lose faith in the strength of the dollar or the economic system, can create panic like that movie The Purge kind of highlights how we just live on this fringe line of safety that we all have this unspoken societal agreement that we’re not going to kill people, we’re not going to just take things that we want. There’s a consequence for that, but when that breaks down, it can lead to just crazy bad times. And we’ve seen that throughout history at times, and so one of the reasons we’re talking about this is we definitely don’t want that going down.

Dave:
I like using The Purge as an example. It’s a good movie.

David:
In some more housing news. We have a housing market recovery that seems to be taking place. So a couple points to note here. In March, mortgage rates ended the month over a 30 basis points lower than where they started and more buyers have returned to the market. Home prices fell a year over year in February. The median existing home sale price decreased by 2% in February compared to a year ago. And housing starts, which I wish we paid more attention to, increased to 9.8%, nearly 10% with building permit applications rising almost 14% from January to February while mortgage rates decreased 6.32% in the last week of March.
Now housing starts mean that that’s obviously that there is a lack of supply. It means that builders have confidence that if they build these houses, people will buy them, just like you talked about with people needing to have confidence in the financial system. Many decisions are made based on the psychology of the market. Like what will people do if we do this? So the housing market seems to be heading in a good direction. What do you think about this so far?

Dave:
I am surprised. Let me just say that I personally, if you listened to on the market, I’ve said it on this show, have never to date been convinced or even thought that a “crash” was probable. I didn’t think that over the last year or two when people were saying interest rates are rising, they’ve gone up quickly, price are going down 20%. I’ve never really believed that. I’ve said repeatedly that I think houses prices will go down this year is the most probable case, but probably under 10%, somewhere like three to 8% declines. That said, and so I still believe that.
But that said, I did not think that we would start to see this much activity in the market in Q1. I kind of thought it would take until the Fed paused raising interest rates, maybe we get some more stability in mortgage rates that we would start to see people jump back in.
But what it feels like, and I’ve talked to a few agents and lenders, so I’m curious your opinion on this, David, is they’ve said that anytime rates go below 6.5%, people are just calling them instantly. That seems like some magic number and it just shows that people are eager to buy into the housing market right now.
Affordability is low, but as soon as affordability improves even a little bit, not even as much as I would expect, people are jumping back in and are buying, and this is happening obviously in certain markets more than others. But Denver where I mostly invest, which was up until a couple weeks ago, one of the markets facing the biggest corrections like activity there has just exploded over the last couple of weeks.
So I think this is fascinating. I think it’s way too early to say the correction is over, but I am surprised by how brief that correction so far was.

David:
We’re seeing the same thing in California when rates went down, it was three or four weeks ago, our escrows on the David Greene team jumped by almost 50% in that period of time. It’s immediate. So oftentimes we look at lagging indicators like, well, houses aren’t selling right now or they’re not selling for as much or they’re selling for less. And we don’t look at the fundamentals of why we just look at, oh, the CPI’s up or the CPI’s down, houses are selling or houses are not selling.
Well, my theory was there’s all this money sitting on the sidelines that’s waiting, and the minute you get the smallest chink in the armor, interest rates come down a little bit. Boom. Everybody comes flooding in and it’s like every house is getting five or six offers. They’re back to non-con contingent. They’re back to all cash sometimes. I mean it’s been wild to see how quickly that spark causes this huge fire. And so my theory is that there is a lot of money sitting on the sidelines and frankly, real estate feels safer than any other investment option still.
There may be money that’s waiting to jump back into the stock market. I’m not a stock market expert, so I can’t comment on that. There may be a big crypto community that’s waiting to see that they’re going to rush back in. I don’t know how other asset classes work. My theory is everyone’s worried about every asset class that isn’t real estate and even though it is not easy to get cash flow, that’s because there’s so many people that are competing for these assets and we’re not making more of them frankly.
So I think it’s positive if you own real estate and you want to see the value of it increasing and it’s positive if you’re trying to feel good about should I be buying or a price is going to crash, it’s not so great if you’re the investor who wants to get that great deal. And you’ve been hoping that prices would continue to decrease and competition would continue to go away.
With the spring buying season ahead of us. Dave, what do you think home buyers should anticipate in regards to prices and inventory levels?

Dave:
Why do we have to make these predictions? It’s so hard. I will say this. I think that that prices are going to follow a normal seasonal pattern, and this is going to be nerdy, but basically David, you’re probably aware of this, that prices go up in the spring and the summer, then they peak somewhere around July and then they slowly go down until December, January. That happens every single year basically. And I think that pattern is going to happen just slightly lower than it was last year. That’s basically what we’re seeing.
Prices are down 2% year over year, but they are going up, like prices are up from January to February they went up. From February to March, they went up. But March of 2023 is lower than March of 2022. And so I think that is sort of the pattern that we’re going to see that prices are going to stay mildly below where they were in 2022. But I think that right now things are changing rapidly, but the way where we’re sitting right now in the middle of April when we record this, I think the spring and summer seasons are going to be pretty busy. What do you think?

David:
That’s how it’s looking right now. Great news, if you’re somebody who owns property, not great news if you’re someone who is looking to get a great deal, but I agree with you and you made me think of someone you were talking, Dave, if I brought you a deal, great neighborhood, like B+, A- neighborhood in California with a 20% cash on cash return the minute that you buy it, would you jump on that deal?

Dave:
Yes, absolutely.

David:
Right. I would move heaven and earth to get to that deal, right?

Dave:
Why? Do you have one of those?

David:
I wish.

Dave:
Could I have it?

David:
There was a time in 2010, 2011, 2012 where we turned those down because the 20% ROI was not sexy enough to get us interested. We were looking for 25%, 30% on a deal before you can make it work. And now if you just have a 2% return, we’re like, Hey, that sounded pretty good. I can make that work. It has to do with expectations, and those expectations are based off of what we see when we are looking at deals like your brain looks like that. It looks at all your options and it wants to find the best ones.
Just keep this in mind that so many people are willing to pay what they’re willing to pay for real estate. They’re willing to get the smaller cash on cash return because they’re comparing that to other asset classes where it is either way riskier or there is no cash on cash return, whereas real estate still makes money in a lot of different ways.
People get tax advantages from it. People can shelter their W2 income buying short term rentals. People can get out of the job that they don’t like and replace that with real estate, even if it’s not a huge cash on cash return, if it’s getting them their time back, they’re more likely to do it. They know that they’re going to have rent increases over time. They know the property’s going to increase. There’s lots of ways real estate make money outside of just that ROI that you get from the cash flow right off the bat.
As people are trying to find safe places to put their money because of that I word we talked about earlier, inflation. Real estate is continuing to be the most attractive looking vehicle. And then we haven’t even talked about the fact that most of these buyers are not investors. They just want somewhere to live.

Dave:
Yeah, totally. Yeah. I mean everyone’s makes a big deal out of investors and the share of properties that go to investors has gone up, but 70% of properties are sold to owner occupants. So it’s like that is who is driving this majority. And we talk about it’s boring, but good old fashioned demographics people are having, there’s a lot of millennials who want houses right now, and that doesn’t go away that much.

David:
That’s right. Your competition’s not listening to BiggerPockets and running ROI. They’re just looking at their rent going up and saying, I want my own mortgage.

Dave:
Yeah, exactly. All right. Our third headline is about de-dollarization. Have you heard about this recently?

David:
No.

Dave:
Basically the US is the dominant currency reserve in the world, and that is a bit complicated, but in short, basically in order to make international trade easier and to stabilize exchange rates, central banks like the Federal Reserve across the world hold other countries currencies “in reserve”. The US is by far the most, it’s 60% of the world right now. Of all reserve currencies is US dollars. The next biggest is the Euro and it’s 20%, so it’s really dominant.
But of late, there are some signs that dominance is cracking. So the examples are the BRICS nations. BRICS stands for Brazil, Russia, India, China, and South Africa. A lot of large emerging economies announced that they are going to introduce a new alternative currency to be used as reserve. China and Brazil have agreed to settle trades in one another’s currency. Russia and India said that they want to move away from USDs. The finance minister of Saudi Arabia said they were open to moving away from using dollars for oil and gas trades, which hasn’t been done since the 1970s, since the US went off the gold standard. So there’s a lot of signs that this might be happening, and I am curious what you make of all this.

David:
Well, now that you mentioned what it is, I have heard of it. I hadn’t heard of it called de-dollarization before, but it is, I think this is kind of significant. It’s one of those things that you wonder why more people aren’t more concerned about it. Maybe it’s just we don’t want panic to happen in the country. But one of the reasons if you don’t understand macroeconomics that we’ve been able to print so much money is that there is a demand for it across the world, is a short way to put it. Other people trade in our currency, so Oh, we made too many diamonds. We can ship a bunch of them off somewhere else. We can keep our own supply levels low. So the price of diamonds stays expensive, right?
Well, if other countries start saying, you know what? We actually don’t need to pay your diamond price anymore. We are going to use rubies for our engagement means or for our means of jewelry, and the demand for diamonds goes down, those diamonds all have to flood back into our country, which causes inflation. Much like you hear us talk about, we need to reduce our dependence on other countries for oil because if they’re the ones that produce the oil, they set the price, we have to pay what they want us to pay. We want to have our own oil so we don’t have to do that. Well, that hurts them economically. They’re doing the same thing back to us. And so what I see is that at a global level, it’s becoming more competitive economically, and if that ends up happening, that is a scenario that could lead to more inflation, which is what we started off today’s show. It seems like everything always comes back to that, doesn’t it, Dave?

Dave:
Yeah, it does indeed. I mean, I think that this is an issue. I have done a lot of research into this. We did an on the market episode that came out on April 21st. If you want to hear more about the history of how the US became the reserve currency, all that sort of stuff. And you can check that out on the market. But what seems to be happening is, one, like you said, David, other countries just don’t want to be entirely dependent on the United States for a few reasons that if you’re coming at it from their perspective sort of makes sense. One is that the problems in the US ripple through the rest of the economy. We saw that in 2008 that crisis financially started in the United States and then spread throughout the world, largely because there’s a lot to do with the US economy and they’re well intertwined.
The other thing is, as you said, the US has flexed a little bit being the currency reserve country on the geopolitical stage, and when Russia invaded Ukraine, they seized, the US government seized 300 billion in Russian reserves. And so other countries are looking at that and they’re like, we don’t want to let that happen. What I don’t think is happening is I haven’t heard any country say “We’re not going to use dollars”. I think what they’re saying is they want to get more parity. Because if the US is 60%, the Euro is 20%, everyone else is like 20%. They want to create a system where they’re not too reliant on any one country.
The thing is, there isn’t really another contender to the US dollar right now. And so I do think because all these countries have stated that they want to do this, that it will probably reduce the US’ share over time, but until another currency comes along, that actually makes sense. I think it’s not going to be a pressing issue, but this is obviously not my area of expertise, but from the research I’ve done, that’s sort of what I’ve gleaned.

David:
I think that’s wise, but it does show the intention, right? So I don’t think this is something that in the next two months we’re going to see it changing anything. This is one of those things that you need to pay attention to this because five years down the line, 10 years down the line, significantly big changes could have happened. That’s a terrible way to phrase that. But significant changes could happen to a big magnitude that started at this point right now. And a lot of people like, they just want to know what, what’s going on right now? What do I need to know? Where’s the deal at? How do I get an opportunity? I just want give me, give me, give me right now. I just want my 15 minute reel that tells me where my 15 second reel that tells me where I’m supposed to buy.
It’s not wise to look at it that way. It is wise to slick about what’s happening at the big picture and then make your individual decisions based on the current market, but your overall portfolio should be based on what you see happening at a national level.

Dave:
Yep, absolutely. Well, so again, if you want to learn more, we talk about some surprising benefits that could happen if the US is not used as much. Some of the other risks, there definitely are risks and benefits. So check out that episode of On the Market if you want to do that. But David, what’s our last headline here?

David:
Our last headline has to do with vacation home demand, which is a trend that has been sweeping the country. It’s been all the rage for the last several years now. Demand for vacation homes is down by more than 50% to pre pandemic or from pre pandemic levels. The number of people locking in second home mortgages dropped to its lowest level since 2016.
So curious, Dave, do you think that the high interest rates are scaring off buyers looking for a second home, or do you think it has more to do with saturation in the vacation home, like short-term rental market?

Dave:
Oh, man, I like this question. It’s something I really like talking about, but I think it’s a combination of things. So interest rates definitely, right? People might be willing to bear higher interest rates for primary residents because that’s important to them for reasons that go beyond finances. Second home, it’s like, all right, I don’t need a second home, so I’m probably not going to pay 6.5% Interest rate on that. I think that is one of the major things.
The second thing is the work from home craze is stabilizing. Now, if you look at the data, it shows that work from home seems to have peaked. It’s come back down a little bit. Less days are being worked from home, but it’s flatlined now. It’s pretty stable. And so I think the idea what happened during Covid where people were like, oh, I just want to get the hell out of this city in this little shoebox that I live in, and I’m going to try and get somewhere with some more space or somewhere that I can spend time with my family and maybe not be in close proximity to other people.
That rage seems to be over. And then I think the third thing that’s really important here is other asset classes. Like people, the crypto markets and the stock markets went absolutely insane for two years and people were taking money from the stock market. They were taking money from crypto and they were putting into real estate. They were flush. And they were like, I’m going to go buy a house in the Smokey Mountains or in Joshua Tree or wherever. And now that is also not true.
So it seems to me there’s like this confluence of different things that are going on that are dissuading normal people from buying it. And then I think with investors, when you look at the oversaturation of the market, they’re probably scaling back and it just seems like demand in these markets might be down for a little while.

David:
I think that’s a wise assessment. I think you’re spot on there. The vacation rental home really did disrupt the balance of the housing market in general. Before you had Airbnb, VRBO, everything was different about real estate. There was no 30% cash on cash returns that you could get getting a home unless you bought in 2010. You had a way for market distress. You couldn’t just buy in a healthy market, get a return like that. Well, vacation rentals changed it so people flooded into those markets.
People like me got involved not just for the cash on cash return, but I’m like, I can own a house in Malibu that isn’t going to bleed money every month. I can make money on a beach house in Malibu. I can buy in Scottsdale, Arizona. I could buy in these wonderful markets at grade A location, location, location. This is where you want to own real estate. And I could turn it over to a property manager and I could make money off of this thing.

Dave:
Do nothing.

David:
Exactly. Now I’m soaking up inventory that used to go to people that just were wealthy people that wanted to live on the beach in Malibu or wanted to live in South Florida. They wanted to live in Scottsdale. I’m also driving the prices higher because I’m willing to pay way more for that house than someone who’s just going to live in it because it’s going to make me money.
In a sense, it’s not that we don’t care about the price, it just isn’t a significant factor. If I could pay 200 grand over all the other homes, but that property’s going to make me 60 grand a year and I’m going to do nothing, it’s worth that to me. So what we started to see was inventory that used to just go onto the open market for regular people to buy a home sucked up by these short-term rental investors.
We also saw people getting into rental property investing that were not involved because they could make it work with short-term rental investing. We also see now tax benefits going to people that are making good money outside of real estate, that short-term rentals open up doors.
So all these people flood in and they’re buying short-term rentals and it’s like the new gold rush. Everybody’s going to California to strike it rich. And then you get there and you realize, oh, this is not like I thought this is a bloodbath. I’m competing with all the other people. I could actually lose money here because so much money came into this. The neighbors are making my life hell. The cities are now trying to respond to this new trend, and they’re overreacting, they’re shutting people down. They’re just trying to run a normal business. It’s sort of inflexion. And it’s in chaos right now.
So it does not just surprise me that we’re seeing vacation home demand go down. It was ridiculously too high. People were buying vacation homes that were never intended to be vacation homes. They’re just using that loan in order to get in for 10% down and still buy short term rentals.

Dave:
I totally agree. That’s a great point about the regulation too, that that’s another thing that is still shaking out. And I think if you combine that with all the other risk factors right now, the risk is just pretty high in my mind, there’s a lot of risk.

David:
Oh yeah. I got in, this is just an anecdote for my life. I’m sure it’s not a statistic that would work across the country, but I got into several vacation rental markets, bought properties that were already licensed by somebody else, and as soon as the neighbors saw the for sale sign on the property, they knew it was going to change hands. This has happened to me over six different short-term rentals that I bought. The neighbors in every one of these properties joined together, formed a coalition, went to the city government and called the city planning department and have done a coordinated effort to stop me from getting licensing on this property.

Dave:
People really don’t like it.

David:
But I’m saying this because I don’t want other people to get in the same boat. I bought the property having no idea this was going to happen. And that has happened to be over six different properties across the country, all from neighborhood coalitions that are like, we don’t want short term rentals. And this is not like house parties being thrown. This is literally just this hatred for real estate investors that has made its way known. And I know that as people are listening to me talk, they’re thinking the same thing. Yep, I’m going through that. I’m going through that. It definitely has put a damper on the demand for that asset class.

Dave:
Yeah, for sure. I mean, you probably just scared like 50,000 people away from wanting to buy a short-term rental. So demand’s going to be down even further.

David:
Yeah. That’s the tip of the iceberg for what problems that I’m having with those properties. But that’s one of the things that can happen when you need to go through a municipality or a government. It’s very easy to get caught up in these weeds that you can’t necessarily get out of. Whereas if you buy a property that neighbors don’t care about, you could do your work without permits, you could not have a license at all. Nobody even sees anything about it. So short-term rentals are complicated. They’re a situation ship, they’re not a relationship. Try to avoid getting in those sticky situations if possible.

Dave:
Okay. We have a new report for you. It is 100% free for anyone listening to this. It is something that I wrote. It’s called the State of Real Estate Investing, and it basically just summarizes all of the macroeconomic and housing market conditions that are really influencing the decisions that we all as investors are making right now. It’s really easy to use. It’s a hundred percent free. You could just find that on BiggerPockets.com. Just go to biggerpockets.com/q2update. Like quarter two. That’s biggerpockets.com/q2update, and hopefully it will help you make informed decisions as an investor. And of course, if you have any questions about it, you can always hit me up. So go check it out.

David:
Yes, you should go check that out. And Dave, it’s been so nice to see you again. There you have it folks. We have inflation, the housing market recovery, de-dollarization and vacation home drama, all brought to you by the good people here at BiggerPockets. This is David Greene, for Dave the $29 sandwich man, Meyer signing off.

Dave:
Just to be clear, I did not eat it, but I want to. I would. If I’m being honest, I would.

“Not all readers are leaders, but all leaders are readers” was first quoted by Harry Truman and the Truman Library Institute has President Truman’s recommended reading list to prove it. Though times may have changed since Truman shared his reading list, reading is still vital to becoming a better business leader. The following books will help you get started.

1. The Predictable Profits Playbook — Charles E. Gaudet II

In The Predictable Profits Playbook: The 7- and 8-Figure CEOs’ Guide to Generating Consistent and Sustainable Growth, Charles E. Gaudet II challenges leaders to examine why one entrepreneur has to struggle through eighty hours a week just to make half as much as the entrepreneur working twenty. He debunks the age-old beliefs of working hard and clawing your way to the top, sharing advice on building the right processes, systems, and teams.

In this book Gaudet shows entrepreneurs how to boost marketing dollars that results in a consistent revenue stream.

2. Change Your Mindset, Change Your Life — Garrain Jones

Author, coach, and speaker, Garrain Jones has surmounted difficulties and obstacles most will never encounter. Jones’ mission is to help others dig out the gifts inside them, so they can follow in his footsteps and live extraordinary lives.

In Change Your Mindset, Change Your Life: Lessons of Love, Leadership and Transformation, he shares his proven strategy that changing your mindset can change your life. Jones breaks down the aspects he deems vital to becoming and living a successful life. He helps leaders determine what is holding them back from greatness, how to build confidence, and the importance of positive thinking.

3. Agile Companies — MJV Innovation

This book encompasses concepts on business transformation, design, thinking, and agility. MJV Innovation is a global consultancy to Fortune 500 companies around the world.

In their newest book, the MJV Innovation team teaches readers how to produce more value for customers and distinguish themselves from the competition. Agile Companies: A Practical Guide breaks down MJV Innovation’s five work models – Scrum, Kanban, Scaled Agile, Metrics, and Design Thinking. This book teaches entrepreneurs about the Agile mindset, business agility, and management systems that focus on managing systems, not people.

4. The Extraordinary Power of Leader Humility — Marilyn Gist, PhD

Professor Marilyn Gist knows about leadership and has successfully taught students how to be great leaders for years. In fact, she led the development of the leadership EMBA degree program at Seattle University, which is ranked eleventh best in the nation. One of her core beliefs is that leadership is a relationship, and as such, she believes that humility is key to healthy relationships. Humility both inspires and motivates.

In The Extraordinary Power of Leader Humility: Thriving Organizations & Great Results, Gist offers entrepreneurs a model of leader humility based on the questions people ask of their leaders. She includes educational case studies as examples and provides recommended behaviors for readers to grow as leaders.

5. Mind Your Mindset — Michael Hyatt and Megan Hyatt Miller

Leaders deal with limiting beliefs. The way to conquer them is by redirecting your brain to tell a new story. Leaders who test their assumptions, live truer stories, and experience higher level outcomes in business and in life.

Michael Hyatt is the founder and chairman of Full Focus, a performance coaching company. Megan Hyatt Miller is the CEO of Full Focus and the architect of Full Focus’ standout culture. In Mind Your Mindset: The Science That Shows Success Starts with Your Thinking, these bestselling authors and leaders outline a framework drawn from insights in psychology, neuroscience, and cognitive science.

6. Dare to Lead — By Brene Brown

Brene Brown is a research professor at the University of Houston who has spent decades studying courage and vulnerability. In Dare to Lead: Brave Work. Tough Conversations. Whole Hearts., Brown combines that knowledge with research she conducted with leaders and change makers.

Brown believes leadership is not about titles, but a leader is someone who takes responsibility for recognizing potential in people. Brown answers the question of how to cultivate braver and more daring leaders. It’s a must-read for anyone who wants to be a brave leader.

If improving as a leader is a goal for you this year, add these books to your shelf. Each one provides a valuable perspective and helpful information.

Real estate prices fluctuate based on supply and demand, but because so many demographic, economic, and policy changes influence the markets, it’s virtually impossible to know what to expect. 

Before the COVID-19 pandemic, for example, economists weren’t predicting a downturn in commercial real estate. Now, Morgan Stanley’s chief economist warns of a crash more damaging than the 2008 financial crisis. On the other hand, unexpected gains are common as well. In May 2020, Zillow predicted a drop in home prices and home sales followed by a slow recovery in 2021. But instead, a homebuying boom caused prices to skyrocket before 2020 came to an end. 

With the ever-changing markets, what seems like a good investment one year can look like a poor choice the next. But even with all the uncertainty, there are some enduring truths in real estate that you can always depend on as an investor. And understanding these tenets can help you navigate the shifting landscape with more confidence.  

1. Due Diligence is Essential to Every Deal

“Due diligence must always be done before you put any money into anything,” says Bradley K. Warren, Strategic Real Estate Investing Advisor at Real Estate Bees. “That is what most people fail to do, and it’s why they lose money when they invest in real estate.” It starts with market analysis to ensure a market is viable before you even look at properties. 

You may need to analyze market rents or construction costs and get estimates from property management companies or contractors to form an ROI hypothesis. Due diligence also includes analysis of property taxes and homeowners insurance when estimating a deal’s overall performance and extends to examining the physical asset as well—for example, you may want a mold inspection in addition to a standard home inspection. The more thorough you are, the less risky your investment will be. 

Warren also says to look at the track record of anyone you look to for real estate investing advice. “A lot of these gurus make more money selling their course on how to invest in real estate than they’ve actually made investing in real estate,” he says. Due diligence includes collecting references and evaluating past successes and failures of potential mentors. 

2. Location, Location, Location

This probably goes without saying, but location is everything in real estate, according to Kristina Morales, a Realtor with 20 years of experience in multiple markets. The right location can yield both greater-than-average cash flow and appreciation. 

Look for cities with growing economies and thriving cultural scenes, and identify neighborhoods that are safe and boast nearby amenities and green space. Even within the same neighborhood, one property may be better positioned for high returns than another. Get hyper-local and consider whether a property is too close to the freeway or too far from the park. 

3. Home Values Revert to the Mean 

Home prices tend to follow the principle of mean reversion. Following a period of rapidly rising prices, home values tend to fall until they reach the statistical long-term mean for that market. If prices have been rising exponentially in a market, that market is likely to experience falling prices. It’s why prices are expected to fall the most in pandemic boomtowns like Austin and Phoenix, where home prices skyrocketed due to an influx of new residents and other factors. 

The good news is that housing price increases during periods of appreciation are generally more pronounced than housing price decreases during a downturn from the fundamental value, or what is typical over time in that market. And investors can use this knowledge to buy while prices are low, waiting to sell until prices are high. Of course, knowledge of individual markets is helpful as well since home prices in cyclical markets like San Francisco tend to vary further from the mean than home prices in linear markets. But no matter where you’re looking to invest, remember that what goes up must come down. 

4. A Good Investment Requires an Upfront Exit Strategy

“Be clear about your exit strategy before you even invest,” says Warren. That’s because knowing whether it’s a short-term or long-term investment changes your approach and what constitutes a good deal. Whether you’re aiming to rent the property for decades or flip it as quickly as possible, Morales says to purchase with your sale in mind. “Have the foresight that one day you are going to have to sell it,” she says. “And as an investor, what are those things that are going to draw renters to the property, or what is going to draw buyers to purchase your flipped property?” 

5. You Need a Good Realtor and Lending Partner in Any Market

“There’s no condition in which the value of your Realtor and your lending partner doesn’t play a crucial role,” says Morales. You might think that you don’t need a listing agent in a buyer’s market, but regardless of the conditions, building the right team is essential. Morales says people often run into trouble when they don’t interview prospective real estate agents. She says to ask questions, such as:

• How long have you been in the business?
• Are you willing to work with investors?
• Do you have experience working with investors?
• Do you know about this area?
• What resources are available should I need a contractor?
• What’s your negotiation style?
• What can I expect from you from an education standpoint?

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6. Even with the Best Tenants, There Will Be Conflicts

According to a survey from renters insurance company Lemonade, 36% of landlords say they resent some of their tenants. Even when you screen your tenants and establish good relationships with them, you should expect some disputes. It could be a disagreement over who’s responsible for a repair. It could be a violation of a community rule that causes tension. The important thing is to maintain open communication and be transparent while resolving the problem collaboratively. This can prevent conflicts from becoming costly court cases. 

7. House Price Cycles Are Long 

House prices generally cycle through four phases: A recovery phase, when prices are at their lowest. An expansion phase, when job growth facilitates demand for homes that leads to a low supply of homes. A hyper-supply phase, which is often the result of an attempt to meet demand, and finally, a recession phase. 

These price cycles are long, and it typically takes longer for prices to move from trough to peak than to fall from peak to trough. Getting from a price bottom to the prior price peak has taken a median of 6.7 years across metropolitan areas, but full price cycles from peak to peak can last decades. Some markets endure longer price cycles than others. For example, in 477 U.S. cities, home prices are still trailing behind where they stood during the peak of the early 2000s housing boom.

It’s worth noting that the National Bureau of Economic Research has only recorded a few dozen business cycles in U.S. history, with peak-to-peak durations varying widely and unique circumstances surrounding each downturn. It’s, therefore, difficult to confidently predict how the economy will respond to different drivers. Even while tracking numerous variables that impact economic behavior, economists are unable to predict a large share of recessions and often miss the mark in forecasting their severity, according to the International Monetary Fund. 

Even if investors watch for the warning signs, identifying the recovery phase (an advantageous time to buy) isn’t always possible. But one pattern is consistent, and that’s the extended duration of house price cycles. In other words, if you buy a property in a cyclical market when prices are at their peak, you’ll need a dose of patience if you want to capture appreciation. 

8. Diversification is Key to Weathering Recessions

If you buy a multifamily residential building that turns into a cash cow, you might be tempted to buy more multifamily residential buildings in the same area, but this is ill-advised unless you already have an array of real estate assets, like warehouses, vacation properties, REITs, and vacant land. 

Even if your knowledge and experience is with one particular type of asset, you should diversify your investments. “Have some money in a number of different areas,” says Warren. “Understand the wider investing strategy, so if one of your assets goes down, hopefully, others are going up.” Not only should you look to diversify within the real estate sector through both active and passive opportunities, but you should also hold non-real estate assets like stocks and bonds. 

9. It’s All About the Kitchen and Bathrooms

“Kitchens and bathrooms still sell. It’s probably the number one thing that will attract somebody to the home,” says Morales. The average ROI for a minor kitchen remodel is about 71%, according to the Cost vs. Value Report from Remodeling Magazine. Outdated kitchens and bathrooms, on the other hand, can deter buyers. Other buyer must-haves may be location dependent. Morales says people are looking for basements in Ohio, for example, and not having one cuts your buyer pool in half. Parking and privacy can also be deal-breakers.

“When you’re looking to invest in a property, think about its marketability regardless of the market cycle,” suggests Morales. A lot of times, people get caught up in the emotion when there’s no inventory. But you may not be selling in the same market, so think about the objections that the next person’s going to have about the property.” 

10. Real Estate Will Never Be a Perfectly Competitive Market

Investing in real estate is different from buying a potato from the grocery store because real estate transactions have too many complexities, constraints, and moving parts for the market to be perfectly competitive. Perfectly competitive markets (like agriculture) tend to have many sellers providing a homogeneous product and buyers who are knowledgeable and can buy the product easily and frequently. For perfect competition to exist, the market must be easy to enter without transaction costs or government policy constraining buying and selling activity.

In real estate, every property is unique, transactions are expensive and complex, buyer and seller knowledge is limited, available supply and demand often depend on government policies, and there are few participants in the market at a time. The real estate market isn’t perfectly competitive and probably never will be. But it’s interesting to consider whether real estate would become a more accessible or affordable investment if players in the market strived toward the elements of perfect competition—for example, what if zoning restrictions were lifted and technology allowed for lower transaction costs? 

11. Let’s Face It. You Can Never Have Too Many Properties

The more wealth you have, the more properties you’re likely to have. While millionaires owned an average of two homes in 2018, according to a report from Coldwell Banker, the nation’s demi-billionaires (the top 0.001%) owned an average of ten homes. Why? Perhaps it’s because smart investments in real estate are strong drivers of wealth for the ultra-rich. 

Or perhaps when there’s enough money to get a villa in Tuscany, a New York penthouse, an Aspen mountain chalet, and a California beachfront home, you don’t choose. You just buy them all. Whether demi-billionaires are racking up properties for enjoyment or to build even more wealth, the fact remains: There’s no such thing as too many houses. 

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

Starting a business is a challenging journey, especially when you don’t have access to many resources. However, many successful entrepreneurs have shown that with the right mindset and approach, it’s possible to achieve success even with limited resources. In this article, we’ll explore 10 popular strategies that can help you do that:

1. Build A Strong Network

Networking is one of the most effective ways to gain access to resources you might not have otherwise. Attend events and conferences related to your industry, join online communities, and reach out to potential mentors and advisors. By building a strong network, you can tap into a wealth of knowledge and connections that can help you grow your business.

In the connected world of business, the reality is that the people you have access to are likely the most powerful resource at your disposal.

2. Embrace Partnerships

Another way to gain access to resources that can benefit your new business is to look for complementary organizations that could draw value from your project and reach out to them. Of course, this would be much easier to do if you have a good network and authoritative people behind you – hence, the value of networking for founders.

3. Leverage Social Media

Social media platforms offer a cost-effective way to reach potential customers and build brand awareness. Identify the platforms where your target audience spends time, create engaging content, and engage with your target customers or other potential stakeholders in your business.

Consider that the digital environment plays a critical role in almost all marketing strategies for startups that don’t require a big resource investment.

4. Offer A Freemium Model

If your product or service lends itself to a freemium model, offering a limited version for free can be a great way to attract customers without a big marketing budget. This approach allows potential customers to try your product before committing to a purchase and can help you build a loyal user base over time.

5. Focus On Customer Retention

Acquiring new customers is always important, but retaining existing ones can be even more valuable in the long run. Focus on delivering a great customer experience, and consider offering loyalty rewards or other incentives to keep customers coming back.

In addition, research on customer loyalty indicates that returning customers tend to spend 33% more than the ones who are new to the business. Furthermore, boosting customer retention by as little as 5% can result in a profit increase ranging from 25% to 95%.

6. Build A Referral Program

Word-of-mouth marketing is how your business can grow without a marketing budget. A referral program can help you capitalize on it. Encourage your existing customers to refer their friends and family to your business, and offer incentives for successful referrals. This is one of the main strategies Dropbox used to grow to a Unicorn without excessive marketing spending.

7. Use Automation Tools

Automation tools can help you streamline your operations and save time and resources. Look for tools that can help you automate repetitive tasks, such as social media posting or email marketing, or that can help you manage your workflow more efficiently.

8. Focus On A Niche Market

While it might be tempting to try to appeal to a broad audience, focusing on a specific niche market can help you stand out and build a loyal following. Identify a specific customer persona or segment that your product or service is uniquely suited to, and tailor your marketing efforts accordingly.

9. Be Scrappy

Finally, the most important strategy for succeeding with limited resources is to be scrappy. Look for creative solutions to problems, and don’t be afraid to try new things. Remember that most successful businesses started small, and with hard work and determination, you can achieve your goals too.

“Having the money to buy something, or pay someone, often robs us of an opportunity to be creative.” ― Mokokoma Mokhonoana

David:
This is the BiggerPockets Podcast show 759. All things being equal. It is absolutely better to buy a new home than it is to buy a resale home. But all things are usually not equal. In any market, they typically build homes in the most desirable areas first. So, after they built on the best land, they then go to slowly inferior land as the construction develops. Location will always be the most important rule of real estate. The only thing that you cannot improve or change about a house is where it is.
What’s going on everyone? Glad that you’re here. This is me, David Green, your host of the BiggerPockets Real Estate Podcast here today with a silky, smooth, Seeing Greene show. If you haven’t heard one of these before, there are variation of the podcast where I take questions from you, our listener, and I answer them directly, so everybody else can hear giving financial advice, real estate help, guidance, encouragement, support, even a little bit of chastisement if you need it. Whatever it is, it get you over that hump and into building wealth through real estate.
In today’s show, we talk about several wealth building strategies and ideas, including what to think through when a family member leaves your property, if you should buy a new home and make it a rental, if the numbers work or if you should stick with resales, and how to evaluate a bigger opportunity versus keeping the great interest rate that you have. All questions that are on people’s minds everywhere with the shifting economy that we are going through all for your listening enjoyment.
Before we get to our first question, today’s quick tip, brought to you by Batman. What is something hard that you can go do today? Can you disrupt your comfort zone? I just want you to start small and put big intention behind making a change towards tomorrow. Don’t let your brain tell you you need to go do something huge. You got to build momentum to get to something huge. Can you take a short run? Can you eat a piece of broccoli? Can you do 10 pushups right now? Can you just do the littlest thing that before you check your phone, you do five calf raises just to get in the habit of doing something different than what you’ve been doing, get new juices flowing to your brain and seeing new results?
And remember, if you want to be featured on an episode of Seeing Greene, just go to biggerpcokets.com/david, submit your question there, and hopefully we can get you on the show. All right. Let’s check out our first question.

Clint:
What’s up, David? Love the podcast. Thanks for everything you do. My question is this. I purchased my first rental property in December for $220,000. I used a HELOC from my primary residence for the down payment, and I was planning to do a BRRRR after the six-month seasoning period is over, which is July, and the goal was basically just to recoup the down payment and move on to the next one. The house is in a great, great market, and I have almost 100,000 in equity after six months. My current interest rate is 3.5% which is fixed. The HELOC is adjustable interest rate, but it’s at 4.5% over a 10-year period. The current cash flow is about $400 a month after all expenses, so it is cash flowing pretty good. The problem is the rates have skyrocketed in the last six months since December, and a cash-out refi would basically eliminate all of my cash flow, whereas the HELOC interest rate is not fixed, but worst case scenario could basically double to like 9% and I would still be cash flow positive.
So, I’m struggling a little bit on an exit strategy to pay back the HELOC. Do you have any suggestions for a different strategy to recoup my down payment, pay off the HELOC? I’m actually considering doing a flip in my area with the simple goal of just paying down the HELOC. Once I do, my cash flow will increase about $200, give or take, so I’ll be at about $600 a month once I pay down the HELOC.
So, my question is really, do you have any other strategies for recouping costs when the BRRRR strategy doesn’t necessarily make sense right now because of interest rates? Am I missing something altogether? I would love your feedback. Love to hear what you have to say about this particular scenario, and thanks in advance.

David:
All right. Thank you, Clint. Couple things to go over here. I don’t know that it’s that the BRRRR strategy doesn’t work right now because of interest rates. It’s more that when you got into the BRRRR… when we get into the BRRRRs, we’re basing the end result off of today’s interest rates, and when interest rates go up, that means the deal doesn’t work out like we originally analyzed it too. So, what’s happening is, we’re paying more for the property upfront than we should if we knew what the interest rates were going to be at the end. So, I still think you made a good move. You still have a lot of equity in this deal, and you have two very good interest rates, one in the threes and one in the mid-fours. This is much better than I was thinking I was going to hear when I first started listen to your question, so let’s tackle what your options would be here.
First of all, you mentioned paying off the HELOC to increase your cash flow by $200 a month. That would work, but that isn’t the reason I would want you to pay off the HELOC. I would want you to pay off the HELOC because it’s not going to be 4.4% when it adjusts. You’re incredibly lucky you’re there. Some of the HELOCs that I’ve been seeing on investment properties have been quoted as high as 11.5%, so you need to pay that thing off for safety reasons, for defense, not for more offense, so to speak.
Now, that would move us into talking about, I guess, another question. Should you refinance, get your money back out, or should you keep these rates? I’m leaning towards keeping the rates, but here’s how I would make the decision if I was you. If you pull your money out, can you invest that money and get a $400 a month return on that money because that’s what your cash flow is on this current deal? If you can invest that money and get $400 in another deal, it makes sense to keep the original one breaking even and just paying off the mortgage and getting rent increases every year that eventually become cash flow and acquire another asset that replaces the 400 you lost. So, if that’s the decision that you make, you end up with two properties instead of one. You add equity to the second property just like you did to the first, which increases your net worth. You replace the cash flow that you lost with a new property, so you don’t lose anything there, and your original property doesn’t cash flow, but it will cash flow later because real estate will go up over time and so will the rents. If you’re not able to reinvest that money in another property and get that same $400 a month, it might make sense to just keep the rates that you have and look to make money in a different way.
The real estate, which you kind of alluded to and you talked about house flipping, I think that’s a great idea. If rates are going up faster than you can control to make the BRRRR work at the price you pay in the original amount, you probably want to move away from BRRRR, right? Like BRRRRs are very close to flips. You could flip a property instead of refinancing, and it’s a very, very similar process. Maybe you plan on that. You go after the equity, you know what the cashflow will be if rates are at a certain point, but if rates go up more than that, you just sell it. You actually could probably sell the property you’re at right now, and you could recoup some of your money that way. You don’t have to refinance it to get the money out. You could sell it, turn that into a flip, and then go do it again.
So, this is why knowing different strategies helps because in certain markets like this one where you started with a BRRRR, it worked as a BRRRR. It just didn’t work perfectly. You’re not able to get your money back out of it. You ended up with a great traditional rental here. You could just flip the next house. Look for a property, has a lot of meat on the bone, add value to it, buy it right. Decide at the end, do I want to flip it and get some cash which I could use to pay off my HELOC, or do I want to keep it refinance and go on to the next one?
But that’s the advice I’d give to everybody that’s in your position where they’ve got BRRRRs that are having a harder time working out. Just ask yourself if selling it makes more sense or if holding it makes more sense. As long as there’s new deals that are coming into your funnel here, you’re fine to sell real estate and buy new ones. The problem becomes when you don’t have new deals coming into your funnel. If you sell the property and flip it, you end up with nothing, you have nowhere to reinvest that money again, and you have no long-term cash flow. So, what you want to avoid is having no deal flow. As long as you’ve got deal flow, whether it’s a hold, as a BRRRR, or whether it’s a sell as a flip, you’ll make money in one of those directions and keep snowballing it into new deals.
Thank you very much. Let me know how that turns out.
All right. Our next video clip comes from Kyle Wilkin in Asheville, North Carolina.

Kyle:
Hey, David. My name is Kyle Wilkin. I live in Asheville, North Carolina. We bought our first home in 2020, so we got a really good interest rate. We currently rent out our basement and are able to pay our mortgage each month with that money. So, we’re trying to figure out what’s next. And my question for you today is how much is too much when we’re making this first step in our investment careers? There’s a farm that’s 22 acres, has four buildings on it. We would rent out three of those and live in one of them because we would have to sell this home to put the down payment down on that farm.
So, I’m not asking if it’s a good deal because I think it’s a good deal, but my question is just if you were in the beginning stages of investing, would you recommend us making a leap for something bigger like this farm where we can store my landscaping equipment because I have my own business and rent out three of the homes and potentially have some more land to sell off later, or create other business stuff like wedding venues or stuff like that, or would you recommend us sticking with what we have in our home and the income from our basement until we can get another single family home? And that would allow us obviously to have more cash flow at the beginning stages.
So, I’m just curious what you would advise people like us who are just getting into the game. Thanks, man.

David:
Kyle, this is a great question. I love this. All right. Thank you first off for saying you’re not asking if it’s a good deal. You already know it’s a good deal because now I can give you advice based on the assumption that this property’s a good deal that has three houses that could be rented out as well as a barn to store things.
I’m assuming when you say good deal, you’re meaning that it will cash flow and that the return will be something that you’re happy with. Now, the part where your question gets tricky is that you’re saying you have to sell the home you’re in to put the down payment on the farm. I don’t love to put the down payment on this next opportunity. I don’t love that. You’re living for free right now. The tenant is literally making your entire mortgage payment renting out the basement. That is a big win for you. I don’t know what rent would be. I’m assuming it’s somewhere around $2,000 a month, so you’re cash flowing positive whatever that mortgage is that you’d normally be paying. Let’s assume it’s $2,000. Is this next deal so good that it makes it worth losing that $2,000 a month of cash flow? Because in your head you’re probably thinking of it like this property is a net even. It’s just breaking even. It’s saving you a lot of money, a lot of money. And by the way, you’re not taxed on money that you save. You’re only taxed on money you make. So, a $2,000 savings of not having to pay mortgage is probably more like making $2,500 a month. It’s even better if you sell this property to buy those ones, can you say that it will be the same, right?
I would rather see you take a HELOC on this property you have that’s already awesome for you. Use that as the down payment money for the next one assuming that you have the equity. If you don’t have the equity, can you borrow money from somebody else to buy the next deal? Because as long as you’re paying less than $2,000 a month for the money that you borrow, it’s still better than selling your house and having to take on a mortgage somewhere else.
Now, I think you mentioned that you could move into one of the three houses, so you’d be renting out the other two and getting the storage for your equipment. Run the numbers that way. Can you buy this property with three homes on one lot, live in one of them, also, not have a mortgage, and be a net benefit to where you are right now?
So, let’s just assume it’s apples to apples, right? Right now, you’re living for free. If you buy that one live in one of the units, you’ll be living for free again. Is that real estate worth more than the one you have? Because that could be a win, right? Let’s say you go from a $300,000 of property to $700,000 of property, but it’s still a breakeven for you. Now, you have three potential units going up and rent instead of the two that you’re in right now. There’s an argument to be made that that could work. Is the storage of that barn going to save you money that you were spending to store your equipment somewhere else, and what’s your quality of life like? Do you enjoy the house you’re in more than you would enjoy living in that one?
Here’s what I want to make sure you’re not doing. You crushed it on your first deal. You’re living in North Carolina, you’re living for free on a house act. That is incredibly difficult to do. Most people don’t get to live for free. It’s a win if you just live for less than what it would be to pay the full mortgage. I don’t want you to think that every deal’s going to be like that one and be in a rush to jump into the next one because you had a good experience on the first one, but I also don’t want you to miss out.
So, if I was in your situation, I would look into getting a HELOC on my primary and using that for the down payment. I would look into borrowing the money from someone else and paying them interest to use their money to buy the new property, or I would analyze where I live now and what I’m saving versus where I would live there and what I’d be saving. And if that is a superior move to where you are now, yes, you could sell your house, and you could go buy that property. Just make sure if that’s the road you take that you put it under contract contingent on selling your home so that you don’t lose your deposit. If you’re not able to sell your house or you don’t want to put your house on the market, try to sell it to get the money, and then, when you go to buy this other property, it’s off the market or somebody else has bought it. Let me know how that goes.
All right. Our next question comes from Wendy Clark in Meridian, Idaho. I love your podcast with the very helpful in-depth information you provide and with your sense of humor and your chair swiveling. That is funny. She’s mentioning the chair swiveling because when I start talking and thinking at the same time, I sometimes fidget a little bit, right? So, I’ll do this thing with my chair, or I have a couple other little idiosyncrasies, and she’s calling me out on that. That’s fun.
I currently have no portfolio, but I own my home free and clear in my trust, and I want to know if it’s possible or smart to move into the ownership of my real estate investing LLC instead to rent the house. It’s individual, three bedrooms, two baths to traveling nurses for short to medium term rentals as it would be part of my new REI business, and would this be doable? Is it smart or not smart or helpful?If you’re not the person to ask, I apologize. If not, who would you kindly direct me to be the person that I could ask this to?
Thank you so much, David, for all that you do to teach us and move us forward and upward on your REI journeys. With gratitude, Wendy.
Well, first off, Wendy, that is very sweet of you. You said a lot of very sweet things in here, and I can tell from the way you worded this that you are overwhelmed, and your mind is a little bit jumbled with all the options. Let’s try to take this big ball of yarn and straighten it out into several little strings that we can analyze more clearly.
You did mention that your home is owned free and clear in a trust. So, does that mean that there’s a stipulation that it cannot be used to generate income, or if it generates income that you’re afraid that that means the income has to stay in the trust? That could be what you’re getting at here. I would wonder if you do rent the home out even though it’s in a trust. If you could claim the income as business income that is not related to the property itself? So, maybe the appreciation of the home or the loan pay down the equity that stays in the trust, but the cash flow that comes out of running it.
Could your LLC rent the home in the trust and then keep the additional cash flow? That’d be one way I would look at it. The first thing is you have to ask a lawyer. That’s who you’re going to go to that understands trust law because I don’t. I’ll just tell you that right now. I’m thinking out loud, but I don’t know if that’s the case. Then, you want to talk to your CPA and find out “What would the tax implications be if I do this?” If you don’t have a CPA, and you want to sign up with a new one, you could email me in. I’ll put you in touch with the one that I use, but that’s exactly what I would do.
Then, rather than them saying, “No, you can’t do it.” Here’s what everyone needs to understand. You go back and say, “How could I do it?” Or you throw options, and you wait for them to say, “Oh, yeah, that could work.” So, I just came up off the top of my head, could your real estate investing LLLC rent the home in your trust, and then, lease it out to traveling nurses and keep the profit that it makes while paying your trust rent to use the home that you’re not in anymore, right? I don’t know that that would work, but that’s what I would throw in front of the CPA or the lawyer to find out if that would work.
I love that you’re asking this question of me. I love that you’re being involved in Seeing Greene. You’ve got a great idea. It’s not going to be as challenging as what you’re probably thinking. There is a way around this problem. You just got to ask a CPA and a lawyer what to do. I’d start with the CPA because they’re usually going to be cheaper, and then, I’d ask them if they had a real estate lawyer referral you could talk to.
Thank you, Wendy, for your awesome question, and let me know how that goes.
All right, everyone. Thank you for submitting. My favorite part of the show is we have questions that we can answer, and that’s what you’re all here for. Please make sure to like, comment, and subscribe to the channel.
In this segment of the show, I’m going to read comments that you, I, audience have left on previous shows to see what everybody thinks. These are often fun, insightful, sometimes mean, but usually cool.
Our first comment comes from Professor X. This was just perfect. The answer to the question scenario about paying off properties was exactly what I needed. I’m going to keep working and enjoying living at the same time.
I love hearing that because it’s more about just getting a bunch of money. It’s about getting money in a way that you enjoy and enjoying life while you do it. Thank you, Professor X.
Our next comment comes from Marshall Hennington. By the way guys, these all come from episode 747. If you want to go listen to that and find out why people are commenting.
Excellent, David. You’re a good dude and very humble. I have followed BiggerPockets these last three years, and it inspired me to have acquired two homes, a triplex and two fourplexes, and I’m currently an escrow on another property, and I own my own main home. All due to taking action. Yes, it is. Five years ago, my credit sucked, and I was in debt and had student loans. I cleaned up all those problems and that was five years ago. Now, I’m building a small portfolio. I also plan to pay off three properties in the next three years. If I can do it, anyone can do it. Get to work fellows and start your new life.
Marshall, that is an inspiring comment. That is an encouraging comment. It’s a freaking awesome comment. I love hearing this, and what I love about it is you didn’t just say how you got a deal. Most people come and that’s their question. How do you get the deal? Okay, I got the deal. How do I get my next one? But you actually talked about how you cleaned up your entire life to get the deals. Real estate didn’t just get you some cash flow. Real estate caused you to clean up your credit, pay off your debts, manage your money better, put systems together to scale the multiple properties and be disciplined enough to pay them off.
There are so many benefits that you picked up from your pursuit of real estate, and this is why I tell people, let real estate be the carrot that drives you to make better life decisions. This is my opinion. I don’t speak for everyone. But when I hear people say, “David, how do I buy real estate with no or low money down?” My first inclination is to say, “Why do you have no money? Is there a good reason?” Maybe you have child support payments that are just destroying you, or maybe you’re a caretaker for a sick parent or child and you can’t go make more money. That’s okay. You should not feel any shame about that. But what if it’s just that you’re 38 years old and you still live at your mom’s basement chasing the dream of being a video game engineer, and you need to let that go and get your grown man on.
What if you have terrible spending habits, and you make good money, but it flies out the window just as easily because you’re not disciplined? Is the fact that we don’t have money an indication of a bigger problem in our lives? It’s easy to look for a way around that. Well, how do I buy real estate without having to change anything about my life? I don’t like it. I’d rather that we said, “I want to buy real estate.” These are the habits that are getting in the way of buying real estate. I need to change them, okay? If you want to have a six-pack, of course, there’s always an answer around it. You could get liposuction, okay? You could have ab implants. I think that that’s a thing that people actually get to look like they have it, or you could say, my lack of exercise, my poor diet, my lack of sleep, my issues are stopping me from having a six-pack.
I’m going to go make changes in my life so that I could get what I want, way healthier. Not only to get the six-pack. You get better cholesterol levels, more healthy life, better energy overall, a better mood. A lot of you might meet people at the gym that are friends. A lot of benefits that will come out of making these changes. The book I’m working on for BiggerPockets right now, keep an eye out for it. It’s going to be called Pillars of Wealth. Has to do with the ways that you can change your entire financial picture, not just one part of it which is real estate investing.
Marshall, thank you so much for sharing that. I hope you post that in the BiggerPockets forums as well.
Guys, we love and we so appreciate the engagement. Please continue to like, comment and subscribe on this YouTube channel. And if you are listening on Spotify, even if you’re not listening on Spotify, but you have the Spotify app, do me a favor, go there and keep an eye out for polls. Spotify has recently allowed us at BiggerPockets to ask questions to see what you like about the show, what you don’t like, and how to make it better. So, keep an eye out for those polls and engage with them, participate with them whenever possible because we want to make the show as good as possible. If you could take a quick moment right now to leave me a comment on today’s show and let me know what you thought, what you liked or something that you noticed, I would love it.
All right. Our next question comes from Casey Penessey.

Tom:
Casey says he and his brother have several rental properties that they want to sell. They do want to reinvest, but they’re a little concerned about the timeframe restrictions of Section 1031. Remember, you can exchange properties in a 1031. You use a qualified intermediary, and by doing so, you avoid most, if not all of the income tax from selling the properties.
So, you really have two choices. The first is you do have… You would meet those two tests which is 45 days from the time you close on the old properties to find or identify up to three potential new properties that you choose from, and then, 180 days to close on those new properties.
You can also do a reverse 1031 exchange which means, you can actually buy the new properties before you sell the old properties, and that gives you a lot more time to actually be dealing with this. So, the 45 days is 45 days after you close, but you can do it up to two years before you sell the new property. So, you just need to work with a qualified intermediary who really understands reverse 1031 exchanges to do that.
The other option you have is to sell the property, recognize the game, and then, close on a new property or new properties by the end of the year. What happens then is your new properties, you’re going to get bonus depreciation for 2023. That’s 80% of the cost of leasehold improvements and contents of the building which probably is about 20% to 22% of a property with a good cost segregation, and that is probably enough to offset the tax from the game. Actually may save you money. So, be sure to run the numbers and decide, “Do I want to do a regular 1031 exchange, a reverse 1031 exchange, or do I want to simply recognize the gain, and then, buy new properties?” But be sure you do that by the end of the year so that you match up the tax benefits from the new properties in the same year as the tax consequences of selling the old properties.
All right, David. What do you think?

David:
I think that was some fantastic advice, Tom, and I don’t really have a whole lot to add to it. You covered every single base that I was thinking, and you did it much better than me because you know taxes, and I don’t. It’s nice to see you on the podcast again. I love when we get to hear from you. You’re my favorite tax person. You made a very good point there. I’ll just highlight that.
When you are trying to shelter income from one year, it has to be the real estate that you bought in the same year. You can’t be in January closing on a property and use the depreciation to shelter income from the previous month in December. The cost segregation studies don’t always have to be done at the time that you buy the property. You could buy it in December and do your cost tag studies in January for the previous year’s taxes, but you do have to buy the property in the same year that you are taking the loss.
Very good point there.
All right. Our next question comes from Arjun Kadam. Arjun owns one property aside from his personal home and has about 500,000 in equity at this point.
Hey, David. I’m a huge admirer of you, and oh, I have a not so secret admirer. There we go. And really wanted to ask you a question that’s been on my mind for a while now. I’m a new investor in the Phoenix, Tucson market. In the last four months, I’ve made over 10 offers on resale properties, and each offer has been over asking. I’ve been seeing that because of the huge spike in the values of homes in the last two years, especially in Phoenix. There’s not much of a difference in price between a really old house versus a brand-new house. In some cases, the difference is as low as 10 to 12K. Considering that a new house will not have any capital expenses for five to eight years and will also attract better renters, do you think it makes sense to invest in a brand-new home as long as the numbers make sense for it to be a good rental? What suggestions would you give to someone who wants to buy brand-new properties for rental investments? Are there any red flags? I have never really seen anyone discuss the prospects of buying a brand-new home as a rental property on BiggerPockets and would like to really hear your thoughts on the same. Thank you.
All right. First off, Arjun, congrats on asking what might be the best question of the entire Seeing Greene episode. This is awesome, and I love how you’re thinking. In fact, my mind used to work in a very similar way when I was a new investor. So, assuming that you want to have a career like mine, you’re off to a good path. If you don’t want to have a career like mine, well, I don’t blame you because sometimes, I don’t even want to have my own career, but you’re asking good questions, nonetheless. Let’s get down into this, all right?
All things being equal. It is absolutely better to buy a new home than it is to buy a resale home, okay? So, now again, this is the caveat of all things being equal. There are less capital expenditures. You’re getting better technology. They’re more energy efficient. Your tenants are going to like them more. There’s a lot of benefits of buying a new home, but all things are usually not equal, and here’s where we’re going to dig in on this, okay? Arizona’s not the perfect market to make this point, okay? So, what I’m saying is in general, markets like Arizona, you probably would be better getting the new home construction. Not every market’s like that, and here’s why.
In any market, they typically build homes in the most desirable areas first. Now, Arizona’s different because it’s all desert. So, of course, there’s some areas that are better than others, but objectively speaking, it’s just a different part of the desert depending on where you are if you’re like in Phoenix, right? So, you don’t have as big of a difference between homes that were built 50 years ago and homes that are built today. But what if you’re in Austin, Texas? They’re going to build the best homes in the best part of the area. What if you’re in San Francisco, California? They’re going to build the best homes on the beach side with the cliff views, the ocean views, the closest proximity to the freeway. What if you’re in Southern California? They’re going to build the best homes in the best locations with the best weather and the best views.
You see where I’m getting at? So, after they’ve built on the best land, they then go to slowly inferior land as the construction develops. So, you get more homes being built further away from the ocean, further away from the downtown centers, further away from all the infrastructure that you want. You got to drive farther and fight more traffic to get to the best restaurants or the best entertainment.
Now, of course, this is not hard and fast across everything. I imagine in areas like Kansas, it’s not a huge difference. There’s just a bunch of land, so part of it is understanding the market that you’re getting into, but you’re asking very good points. New construction is better. What I want to make sure that you get right is that location’s even more important than age of construction. Location will always be the most important rule of real estate. The only thing that you cannot improve or change about a house is where it is, unless you pay to have your house picked up and move somewhere else, which usually is not financially feasible. You’re better off to just buy another house somewhere else. You can’t move it, which is why location is the most important thing. It’s also the first thing tenants and owners search for, “Where do I want to live?” Then they say, “Okay, what’s the best house?” Nobody looks at pictures of houses and then says, “Oh, I really love that. When I’m going to buy it? By the way, where is it?” You start with location first. That’s always the most important part.
The other thing with new construction is it often comes with more regulations than stuff that was built previously. In almost every market I’ve seen, if I buy a 40-year-old home, a 50-year-old home, it has almost no restrictions on renting. There’s no HOAs. There’s way less likely to have the covenants, codes, and restrictions that say what I cannot do with the property. You get freedom.
On all the new home construction, you get hit with the HOAs that say, “You can’t or can’t do this. These are all the things you have to do with the property. We have regulations for this part of the city where you’re not allowed to rent it out this way.” You see what I’m saying? When you buy new home construction, you are also buying into new rule sets. Not all the time, but most of the time. So, if that’s the road you’re going to take, make sure that you have a very good agent or broker that can look into this for you to make sure that you’re not missing out.
Buying a property that you’re now not able to rent out to people or that has more expensive HOAs or other restrictions that won’t let you use it the right way. It’s because of that that I have typically not bought very many brand-new homes. I usually end up buying the resell myself because they’re in the better locations, and they have less restrictions on how I can use them, but I love how you’re thinking. This was an awesome question.
All right. Our next question comes from Nels in Minnesota.
Hey, David. I’m a newbie investor from Minnesota with no properties under my belt who has been consuming all things real estate investing for the past year. So ready to get into the game, especially with my lease ending this summer. I’m all in and will likely be house hacking a small multifamily property by myself, but there’s more to the story.
My grandfather passed during the pandemic, and he left behind two properties to my mom. We are a close-knit family, and she wants me to manage what has done with these properties. I’m thrilled to not only help set her on a path’s retirement but take my own steps towards financial freedom as she wants all decisions to benefit her, my siblings and me.
The properties, number one is a partially completed project in rural Wisconsin, not far from where I live in Minnesota. Think of a completely empty house with not much other than a bunch of tools and new appliances, none of which are even hooked up. An evaluation of this property puts it in the $150,000 to $200,000 range. The second property is completely paid off, three bedroom, one bath with a nice size lot in San Jose, California. Well, San Jose’s right down the street from me. My grandfather show… My grandfather has owned it outright since ’69 and not a thing has been updated since as far as I can tell. It needs work, but it’s valued right around a million.
Although my grandfather’s passing is unfortunate, we have an opportunity to create a family legacy because of him. If you were in my position wanting to take steps to both retire my mother and launch and scale a real estate in business myself, how might you attack this strategically?
Here’s my initial thoughts. Sell the Wisconsin home to get my mom’s some financial cushion and use the excess plus some of the equity in the San Jose home to add value to that property. Work with a local property manager out there to make monthly cash flow. However, if we want the cash-out refi route, we would also be able to put equity into additional properties and really get the ball rolling. Is this option a no-brainer?
On top of this, I make a high W-2 salary working in tech which will also fuel this engine. All in all, I feel like there is so much potential in all of this, and I’m okay making mistakes, but I’m needing a little push to jump off this diving board.
Thanks for all, you, Rob, and everyone at BPD. You guys make learning so fun and dreams achievable.
All right. Nels, that is a lot of detail and a really good situation for you to be in. First off, sorry about your grandfather. That is very sad, but the silver lining is that your grandfather left quite a bit of opportunity to his family. Another reason that I encourage people to invest in real estate, when you’re gone, that real estate stays, and the people that you love can really benefit from it. That’s got to be a really good feeling to know, on your deathbed, getting ready to pass that your family is going to receive a huge blessing when you go to take the sting out of missing you.
Second, you live near me. You need to reach out to me directly to talk about some of this real estate stuff. We’re going to do our best to answer what I can on the show, but you’re going to need a little bit more detail and opportunities. I do like what you’re thinking. I don’t think it makes sense for you to keep this project in Minnesota. You might have to put a little bit of money into it before you sell it, but it is probably something to sell. You don’t have experience in managing property. It doesn’t sound like this is a highly appreciating area. You’re better off to sell that property and get the money and put it into something where it going to get a higher return, which could be that second property in San Jose. Here’s why.
You mentioned it’s a three bedroom, one bathroom, right? I’m a real estate broker, and I serve in that market. If you were my client, and I hope that you will be, you would come to me, and I would say, “Look, we got a three bedroom, one bathroom. Can we turn this into a four bedroom, two bathroom?” That would increase the value a lot. If it’s worth a million as is that we’re talking like hundreds of thousands of dollars that you can increase the value of this home. “Can we convert the garage to add more square footage? Is there a way that… You sent us on a nice size lot. Do we have options to make this property worth more in addition to just updating it?”
Now, you also said to be put in touch with the property manager. I’ll be able to help you with that, but let’s make sure that it makes sense to rent it out. You might be able to sell this thing after you’ve made it worth more and buy a lot of rentals. Buy an entire apartment complex with the money that would come from this paid off thing that would cash flow much more than this property would, which would then allow you to spread that cash flow amongst your family. Maybe take ownership of that apartment complex and split it up amongst you, your siblings, and your mom, like you said, and everyone benefits.
Really, you and I need to sit down and look at how much money we would get out of the property in its current condition, how much we would get if we upgraded it, and how much we would get if we sold it and reinvested the money into somewhere else. But the one thing that I do think you’re on the right path with the selling the Wisconsin property, you’re going to have a hard time finding tenants in most rural areas as a general rule, and I don’t think that that’s an area likely to appreciate, so you’re better off to probably sell it and take some of that money, put it into the property that is going to benefit a ton from being upgraded and basically, build your family’s financial future from this point forward on the backs of what your grandfather left you.
So, thankful to him for what he did for you, and thankful to you for having a heart that wants to help your entire family. Make sure you reach out to me.
All right. Our last video comes from Veronica Gordon from Chicago.

Veronica:
Hi, David. My name is Veronica. I live in the suburbs of Chicago. Love your podcast. I’m learning a lot from listening to it. I appreciate your candid stories and your honest advice.
Hey, I am reaching out to you today because I want to know what your next step would be in scaling our business.
My husband and I have two long-term investments and we just recently completed a flip for our long-term investments. We have property A that makes about $200 and profit free and clear that I’m not so happy with, and our second property makes about 400 plus in profit and both of them are townhouses.
Want to know what would be your next step? Sell property A, 1031 it, and find something else like a multifamily. Sell both properties since they’re townhouses and we could be making a little bit more on them, or do we invest out of state? Maybe look at short-term rentals. What would your next steps be?
We’re in our ’40s. We’re looking at maybe getting some passive income for our retirement, and also, helping to fund our children’s college.
Love your show, and I appreciate your advice that you can give me.
Thanks. Bye.

David:
All right. Thank you for that, Veronica. This is another really good question here. Okay. You’ve got two town homes. You just completed your first flip. You didn’t mention how the flip went, so we don’t have anything to go on there, but if the flip went well, I would encourage you to keep doing that. I think this is a market where if you can get really good discounts on real estate, flipping makes a lot of sense. You don’t necessarily have to hold it. As much as I would’ve advised people to four, five, six years ago because the appreciation that we were seeing that was exploding is slow down a lot, so you’re not missing out on as much if you’re not holding the real estate.
Regarding the two properties you have, $200 a month in cash flow and $400 a month in cash flow. You can definitely improve that.
In general, townhomes don’t make great long-term investment properties compared to regular homes. The rents don’t go up on them as much. You can’t do as much to improve the value of the house, so they’re likely to appreciate every year and they’re likely to get more rent, but not as much as if you got the money out of the town home and into a home.
So, the first thing I would look at would be selling, like you said, property A. 1031 it into a multifamily property that’s likely to have more cash flow. That might not be as easy as it sounds because rates are likely higher now than when you bought it. So, the townhome might be cash flowing at the low rate. But if you sell it and reinvest the money, unless you get significantly more rent, you might not get an increase in cash flow.
So, I need you to run the numbers looking at whatever that equity is you have in the townhome at today’s rates. Would it cash flow the same or more in another property? Now, assuming that it does, one option that you could get into would be buying multifamily real estate. Another one would just be buying a single family home in a great neighborhood and trying to find one that could have two units, a house with an ADU. Can you find one of those? Could you find a couple of those? If you can, then, you have the obvious recourse of selling the second house and going and doing the same thing again.
Another option that you might want to look into. Can you sell one of those, and use the money to house hack? Can you get a better home in a better neighborhood with more than one unit that you guys could move into, live in a smaller space, and get more rent? Not just because you’re getting more cash flow, but also, because you’re buying into a better location that’s going to appreciate over time.
All of your goals have to do with the future. You want cash flow when you retire. You want help paying for your child’s education. You need to be thinking about the biggest payoff you can get when you need it, which is not right now. So, if you sacrifice a little bit of the cash flow in the near term to get a bigger payoff in the longer term with better appreciation buying into a better property, you will make more money with that strategy than just maximizing the cash flow right now. But even if you don’t do that, you can still probably improve the cash flow by getting out of the town home and getting into an asset like small multifamily that’s likely to cash flow more.
Another thing, just throwing this out there, what if you sold both of them in 1031 into an apartment complex? We’re likely to be seeing a lot more of those coming into the market because people that own them have balloon payments due and rates are much higher than when they first bought it. So, if you could go find an eight unit, a 10 unit, a 12 unit apartment complex, can you sell both of them? 1031 into that, get way more cash flow, and then, set yourself up so that cashflow grows every year because you have 12 units increasing at rent, not one unit of a townhome or two units of two different townhomes. That can set you up very nicely.
I think that we’re poised in this market. There’s a lot of opportunity for new blood to be getting into the commercial multifamily space. So, people that never were buying apartment complexes can get in on those smaller like five unit and up stuff, and they should be doing it because the people who own them now are not going to be able to refinance or sell for as much as they want to with the increase in rates and the cap rate expansion that we’ve seen.
Thank you very much, Veronica. Love the question.
All right. That is our show for today, and guess what? I remembered to keep the light green for the whole time.
Thank you. Thank you.
I’ve been practicing this all week. I come into my office. I visualize success. I go and I turn the light from blue to green, and it is working, and so, I want to encourage all of you to do the same. What can you visualize right now that you want your life to look like that will change, and what hard thing can you go do? I missed jiujitsu for nine months because of life happening, and I finally went back this week, and it kicked my butt. I’m exhausted from that different kind of exercise, even though I’ve been lifting weights for six months. How many ways have we fallen out of shape in ways that we don’t realize it?
Have you been steadily showing up to work at your W2 and doing a good job, but putting your future goals aside? Did you go into your journal and make a plan for what you wanted your life to look like, and you were sticking according to those goals, but there’s other parts of your life that you haven’t been analyzing or evaluating that are falling apart? What can you do to build the smallest bit of momentum today? Something different. Can you start the day with a five-minute run? Can you do 15 pushups today? Can you read a book that’s different than you normally read? Can you listen to a podcast that you normally wouldn’t have listened to? Can you do anything that will shake you out of the complacency that we so easily fall into and get our mind thinking in different ways?
Thank you very much for joining me today. I want to see you win, and that’s what we’re here for. If you’d like to be featured on Seeing Greene, just go to biggerpockets.com/david. And if you’d like to know more about me, you can find me at David Greene 24 on all social media, so go, give me a follow, and then, check out my website, davidgreene24.com and do this. Go to my website. Check it out. Then, DM me on your favorite social media, and tell me what you like about my site. I would love to get your guys’ feedback just like you love to get mine. Let’s make this a two-way relationship here.
Lastly, if you’re listening to this podcast and you didn’t know that BiggerPockets has a website, we do, and it’s awesome. You are absolutely missing out if you’re not checking out the website and all the resources that BiggerPockets has to offer you. So, go there. Make a profile. Start checking that out and find yourself lost in that wonderful world just like I was when I first found it myself.
This is David Greene for Seeing Greene signing off.

Crystalee Beck has built a million-dollar copywriting business from her home in the Salt Lake City area while raising four children ages one, four, seven and nine.

She is founder and CEO of Comma Copywriters, a copywriting agency that serves tech and real estate companies. She also runs the Mama Ladder International, a community for moms who want to start and grow businesses. She shares what she has learned about how to do it all on videos on a her YouTube channel, from which you can see one example below.

“I wouldn’t be a business owner without my babies as the motivation,” says Beck. “I wanted so much to be there for them, and said I’m going to figure out how to do both.”

Beck is part of an exciting trend: the rise of million-dollar, one-person businesses. In 2019, the U.S. Census Bureau counted 43,012 businesses with no employees except the owners that brought in $1 million to $2.49 million in revenue, up from 41,666 in 2018. Another 2,553 hit $2.5 to $4.99 million in revenue, and 388 made to $5 million in revenue and beyond. There’s no telling how many more of these businesses are likely to spring up, thanks to free and low-cost resources like cloud-based and artificial intelligence tools and robust freelance platforms for hiring talent.

She’s mastered lifestyle design to pull it off. Working 20-25 hours a week from Monday through Thursday, Beck relies on 47 freelancers in 20 states. She is expecting to hire her first payroll employee this year.

Beck began developing the skills that allowed her to create her successful business at her first jobs. Graduating from Brigham Young University in 2009, Baker got a job doing content development of in-flight training materials for flight attendants at SkyWest Airlines and became a flight attendant herself.

Wanting to get paid to write, she earned a master’s degree in communication at Weber State University. Then, after two years as a freelance features writer at Deseret Digital Media, she worked as a corporate communications specialist at a global agency and then as a social community manager for Market Star, an outsourced direct sales organization.

After getting laid off, she started Comma Copywriters in 2016. “I had a little bit of warning it was coming,” says Beck, who had been freelancing on the side. She was juggling being the main breadwinner with being the mother to a one-year-old, with her husband in graduate school.

“I practically skipped out the door,” she recalls. “I was so excited to have some freedom to do with my day what I wanted to do with it.”

She got serious about growing the business quickly. “I bought myself a business license in February 2016,” she recalls. “I wrote in my journal ‘This is going to be a million-dollar business.’ I had no idea how I was going to get there.”

One of her early projects was writing Joyce’s Boy, a book that captures the life of serial entrepreneur Alan Hall, who’d been the president of the agency where she worked.

Through her network, she won other clients. At first, Beck simply responded to what those clients requested. “I call those first couple of years my sandbox years,” she says. “I was playing the sandbox. I would just do what people were paying me to do.”

Soon Beck had more work than she could handle. Rather than try to do it all herself, she recruited a few freelancers.

Beck pulled in $100,000 in 2017, her first full calendar year in business. The business continued to grow, and by 2019 she rebranded it under the name Comma Copywriters.

One of Comma Copywriters’ selling points to clients has been that assignments are delivered on time or they’re “on the house.” Last year, Beck says, the company delivered more than 21,000 pieces of content, and 99.94% was on time.

She doesn’t worry about other agencies and freelance platforms clients may consider using “I don’t think about competition,” she says. “I think of them as options, rather than competition. We’re a supplement. It ends up being much more cost-effective for our clients to hire us than a full-time headcount writer internally.”

As the company has scaled up, Beck has organized the company into three groups of writers based on the types of clients they serve: B2C (business to consumer), B2B (business to business), and agencies. “Team leads” manage each group. She also has a team support manager and a client success manager.

When recruiting writers, Beck has found she does well by looking for people who match the company’s core values: Freedom, Accountability, Humility, Curiosity and Care. Many are women who appreciate the opportunity to be part of an organization that offers them steady work and professional development while they are managing household responsibilities. “I feel we really have the best of both worlds for our writers, who want the flexibility of being a freelancer and the support of a team,” says Beck.

To keep her freelance team motivated and aligned, Beck offers bonuses for on-time work, holds monthly professional development events and brings them together at a team retreat annually. After writers have been with the company for three years, Comma Copywriters gives them a $1,000 bonus to devote to ticking something off their bucket list. One woman invested in camping equipment. Another went to Disneyland.

Comma Copywriters leaves it up to writers how much work they want to take on. The team communicates about projects via Basecamp, a project management software. That’s allowed the company to keep things running smoothly, no matter what is going on. Last year, when the company broke $1 million for the first time, four out of seven members of its leadership team had new babies.

An important focus of the business is giving back, particularly to women. One way is through the Comma Cares program. For each client it works with, Comma Copywriters sponsors a girls’ education through a nonprofit partner, Kurandza.

Beck also started a sister business, The Mama Ladder International, a year after launching comma. It offers workshops and a retreat to help women start and grow businesses, in response to demand. “I had all of these women coming to me and asking how you start a business with little babies,” she says.

The Mama Ladder offers the HIGH FIVE Grant for Moms, which provides a $5,000 grant, along with several others, to mothers who want to grow their businesses but lack access to capital. This year, Lowe’s and Clean Simple Eats are sponsoring the grants for the first time.

Beck knows from her own experience that raising children and achieving significant business success are not mutually exclusive. “There’s nothing a motivated mother can’t do,” she says.