When trying to hire a team with diverse backgrounds and skills, business leaders can be left wondering how to find candidates who are different enough from each other to ensure varied points of view and experience levels but also similar enough to each other to work well together and create a cohesive team culture.

Luckily, there are some questions leaders can ask themselves to help make the hiring process a little more straightforward. Below, the members of Young Entrepreneur Council discuss seven of those questions and why they are so effective at helping you determine whether or not someone would be a good fit for your team.

1. Is this candidate a self-starter?

The first question you must ask is, “Does this candidate exhibit the traits of a self-starter?” This is because self-starters typically bring a strong sense of ownership, adaptability and proactivity to the table. They are eager to learn, lead and take on new challenges, which can be invaluable in a diverse team setting. – Kelly Richardson, Infobrandz

2. How will they fit into the company culture?

When weighing whether or not to hire someone, business leaders should ask themselves, “How will they fit into the company culture?” They may not adapt well to a people-first business if they don’t seem outgoing or willing to work with others. I suggest preparing some questions so you can gauge how potential hires feel about this subject before you make a final decision. – Daman Jeet Singh, FunnelKit

3. Are their skills transferable?

If you want to hire a team with diverse backgrounds and skills, ask yourself if their skills are transferable. In other words, can their skills be used in a way that’s different from the primary job offer? If so, they are a safe bet for your team. Hiring people with diverse skills is important because you can shift them around as needed. – Chris Christoff, MonsterInsights

4. Will this candidate bring a unique perspective?

When you are considering hiring someone for your team, ask yourself, “Will this candidate bring a unique perspective, enhancing our team’s problem-solving abilities?” Diverse backgrounds foster innovation and resilience, leading to a stronger, more competitive company. Embrace diversity to unlock your team’s full potential. – Michelle Aran, Velvet Caviar

5. Will this person be able to grow and adapt?

It is important to ask yourself, “Does this person have the potential to grow and adapt?” I value having a team of people who are willing and able to learn new things quickly and who are also comfortable with change and adapting to new circumstances. This is especially important in today’s dynamic business environment since people who are willing to grow will be more innovative and, in turn, help you grow. – Blair Williams, MemberPress

6. Is this candidate aligned with the company’s mission and values?

Ask yourself if the candidate is genuinely aligned with the company’s mission and values, regardless of their background or skill set. Shared values and a passion for the company’s mission can help create a strong team culture, regardless of individual differences. This can help ensure that the new hire is aligned with the company’s goals and is motivated to contribute towards its success. – Adam Preiser, WPCrafter

7. Am I considering all the ways they could contribute?

An advantage of a diverse team is that they can bring new perspectives and skill sets to the table. One of the first things to ask yourself is whether you’re considering all the possible ways someone might contribute to the team. Make sure you’re not limited by preconceptions. For example, someone might have life skills or soft skills that would be a valuable addition to the team. – Kalin Kassabov, ProTexting

David:
This is the BiggerPockets Podcast show 763. What’s going on everyone? It’s David Greene, your host of the BiggerPockets Real Estate podcast. Here today with Rob Abasolo. Not only are we the biggest, the baddest, and the best real estate podcast in the world, we also have another bee Barbara Corcoran.

Barbara:
I try to be honest when I’m not [inaudible 00:00:19] but a lot of people like to be right. They like to be accurate, does it make sense? They ask opinions. They really sharpen their sword and they never get out there.

David:
For those that are listening too and they feel the call in their soul, “I need to be more like Barbara,” but they’re just risk-averse. What advice do you have for those poor, timid souls?

Barbara:
Get out of the game, you’ll never going to do well. I hate to be that coarse, but get out of the game. If you’re afraid of risk, you have no business being in real estate.

David:
Today’s guest is none other than Barbara Corcoran. She is a straight D student, held 20 jobs before the age of 23, is an avid TikTok user. Hosts her own podcast Business Unusual. She’s as resilient as she is brilliant. Please, help me welcome Barbara Corcoran. Barbara, good morning to you.

Barbara:
Thank you, David. Nice to see you, Rob.

Rob:
Nice to see you.

David:
In case you’ve been living under a rock, Barbara is a host of Shark Tank and the Queen of New York City real estate. We are thrilled to have you on today. I know that there’s a lot of information that our listeners are going to love. Barbara, we are going to start with a game, we call this game two truths and a lie, and it should be fun. In this case, I am going to read a statement.
Rob and I are both going to try to guess if it is honest or not, and then you are going to tell us after we guess. Statement number one: Barbara’s landlord once tried to evict her because he thought she was running a prostitution ring. Rob?

Rob:
Okay, that is very specific and I don’t think that that’s a scenario that our producers would’ve just written to be read on this show, so I’m going to go that is true.

Barbara:
True, wow.

David:
I’m going to say that it is exactly what someone would come up trying to not look like they were throwing the wool over their eyes. I think this is a double agent of a question and I’m going to go with lie.

Barbara:
Of course, it was true. I came home one night, eviction notice on my door from being a prostitute. The reason for that, he had a reason to do it. I guess my landlord, John [inaudible 00:02:17] was his name. He saw men in and out of my apartment all day long, but what he didn’t know was that I had started their business in the apartment with my two roommates and I met all my customers there.
They would come in, we’d spend an hour and then I’d go out with them. We come in again, we go out with new guys. He thought I was a prostitute, but what was great was when I confronted him, I went to his office and told him he got it all wrong, I was just a working girl. He gave me an exclusive on his entire building of 14 units. I came out smelling like roses.

David:
I think I missed what the business was. What were you guys doing when you would go out with the gentleman?

Barbara:
We were renting apartments. I started my first brokerage firm and we were renting apartments up and down the streets of the city.

David:
You were going to show apartments to these people. They would just meet you at your place.

Rob:
Now, technically, could he have evicted you for creating an unwarranted business like a commercial business in the apartment? Was that against the lease or anything?

Barbara:
I’m sure it was against the lease, but most importantly if his sentiment was that he’d wanted me out of the building for whatever reason he could have certainly asked me to move out because I had too much traffic.

David:
You turned that into a business opportunity in the sense that you were able to lease his units, right?

Barbara:
Yes, but you have to realize one of his arch competitors was three blocks south on 83rd Street, and I was renting his apartments for 10% more than the building I lived in because I was building part walls and making one bedrooms into one bedrooms and a half. I got more rent for him and he got jealous that’s really why I got his listings.

David:
Next question, Barbara once invested over $100,000 in videotapes for property walkthroughs. Rob?

Rob:
Here’s why I think this is true, I think it’s true because Barbara foresaw that comfy would sell $85 million when other people didn’t see it coming. I imagine that at this time, videotapes for property walkthroughs is probably kind of like a new revolutionary thing. Barbara’s revolutionary, so this is true.

Barbara:
Well, Rob, you’re obviously smarter than David is. What are you going to say?

David:
You threw me off a little bit with that comment there. I’m trying to wrap my head around how these videotapes would be used to generate business. You can’t put them on the internet. There wouldn’t be any reason to mail them, so you’re a smart marketer. I feel like they might have been trying to throw us off by using a marketing tool, but I’m going to go with lie just because I can’t see the benefit of this. Who’s right?

Barbara:
You’re going to get jealous of David once again. It’s true, except the number was wrong. I don’t know how you read that one, but it was $77,000 my first profit I blew on homes on tape. Put all my apartments on tape and asked my salespeople, please give them out to your customers. It’s going to make the shopping easier. Remember, this was before the internet. It was a disaster.
However, I heard that my husband was a Navy captain, had played war games in Korea on this new thing called the internet. When he told me how it worked, I slammed my apartments on there and had two sales with him the week. I was the first firm on the internet with elite time of two years because I just happened to listen to my husband and moved on it quickly.

Rob:
Wow, I would liken this to maybe back in the day in Walmart, you would walk in and they were giving out thousands of AOL CDs and you’re like, “I guess I’ll take it.” This is what you were telling your agents. You’re like, “I’ve got these VHS copies of the third floor walkup here on 8th Street. Give those out to your friends and family, see who wants to buy it. Then, it didn’t actually pan out at that time.

Barbara:
Do you know what’s wrong with that? I had my agent’s name face professional makeup and phone number with every apartment and they refused to give them out because they didn’t want to lose their customer to the next agent. I never thought of that one, that’s why I wasted the $77,000.

Rob:
Had you not done that, do you think that that business strategy would’ve taken off?

Barbara:
Probably not, but what I do know by doing it and failing so miserably I had to save face and come up with a cover, I came up with the internet, and it wasn’t a cover. It was the best thing for me to step in.

Rob:
Very, very cool. Last one, Dave, cue it up.

David:
Last statement, Barbara was asked to speak to Citigroup but then choked on stage.

Barbara:
Easy one, come on guys.

Rob:
I’m going to assume choked like, “I blew it.” Not choked like she eating a piece of steak and you’re like choking. I’m going to go no, impossible.

David:
I think this is choked like Eminem, 8 Mile mama’s spaghetti on the sweater style.

Rob:
Then, I’m going to go not true, I can’t see it. Obviously a very charismatic speaker, so false on this.

David:
I’m going to go much more logically because we already found the lie since this is two truths on the lion, I’m pretty sure this has to be a truth. We probably shouldn’t have named it that, so I’m going to go with truth.

Barbara:
Looks to me, David that you just had a IQ implant somewhere because [inaudible 00:07:21]

David:
Well, I think I still won.

Barbara:
With that deal, it wound up as a good thing because they asked me to sit down. I was mortified. I actually got paranoid and thought everybody had passed on the street had been in the audience that night for a week. Then, I realized I had to get over myself. I was going to have to public speak sometime in my life so I volunteered to teach at NYU at night and I found my star salesperson the first night I was teaching, Carrie Chiang.
She made for me in that year $400,000 when my best agent was making $42,000. For me, I learned the great lesson much more important than speaking. I learned the great lesson, get back up. Get back up, you never know what’s around the corner.

Rob:
Well, this is your opportunity Barbara, if you’d like to redo the speech little redemption, what we’ve blocked off in an hour. You can go ahead and start from the top.

Barbara:
I’m not going to do that to you guys. It wasn’t a very good speech anyway.

David:
Thank you for playing that game with us. It’s always fun to get to learn these little tidbits and personal stories of what someone’s been through.

Barbara:
David, you don’t look like having fun. You don’t look like you’re having fun at all.

David:
I have what’s called resting cop face. They called RCF.

Barbara:
Oh my god.

David:
Don’t let that fool you, Barbara. This is what I look like when I’m-

Barbara:
It’s intimidating.

David:
Yes, as a cop, that wasn’t the worst thing in the world, but I suppose as a podcast host that’s not the same thing. Would you say that most of your successes in real estate investing have been built off of failures?

Barbara:
Yeah, because I don’t know, there’s something about the universe when you fall on your face, it’s like bouncing a ball, the harder you hit, the more you could bounce up. There’s always another flip side to it, always another flip side. I learned that building my business very much so. In terms of investing in real estate outside of my firm where I bought properties and nurtured the properties and tried to increase the rent roles, I don’t think that really holds true that I learned from failure I just became very careful.
I did have a wacky formula for buying real estate and I always did well by repeating the same little dance step again and again. Do you want to know what that is?

David:
Please.

Barbara:
I shortened your question as you know. Number one, I always bought an up and coming areas. I was in Brooklyn long before anybody was buying Brooklyn from Manhattan. I was in there early and I always looked for a 10% partner. I found a local person who knew their neighborhood, loved their neighborhood, wasn’t in the business, I made them the 10% partner, I put in the cash, and they found me the best property, the absolute best property. I hedged my bet right away.
I paid them the 10% and I told them they could overpay for the property, I didn’t care. Almost every property I overpaid for, I overpaid again and again and again. I’ve just repeated that again. I also located the up-and-coming areas by talking to waiters, creative people and said, “Where are you living now?” They were poor. They couldn’t pay their rent. They had five guys living together or four girls living together. I would say, “Where are you living?”
They’d tell me where they were living. I would go at that, we can look at the area and that’s always where I bought my real estate. That’s where the biggest gain is in up-and-coming areas. They’re risky, don’t know what you’re doing and I had a partner who knew what they were doing.

Rob:
You said that you found a 10% partner. Can you explain this construct a little bit? When you say 10% partner, did you say, “Hey, go find me a cool building. If you find me a lead, I’ll give you 10% of the purchase price?” Were they actually equity partners in that property?

Barbara:
They were equity partners and they stayed with me until I sold. I hold onto properties a long time because I say you make a lot of money slowly in real estate, but when I sell, they get their 10% share and it’s substantial. Sometimes I paid off my partners with 10% that represented 50% of what we paid for the building 10 years ago because they really appreciated. Their interest was there. Their heart and soul wasn’t like a broker want to sell me something.
Their interest was I’m going to buy you the best place, the right side of the street away from that problem because they were changing areas, choppy areas. You can always make a lot of mistakes there. I never made a mistake. They always found me the best stuff.

Rob:
That’s really cool. If you’re giving someone 10% stake in the property, were they like property managers? Did you actually empower them to actually run and maintain the property as well? Was that a separate job function?

Barbara:
No, I really didn’t because I knew how to run property. I had the organization set up and that’s not really what turned them on. They didn’t want to collect rent and stuff, but why it worked so well is I had the money, I didn’t have the time. They had the time, they didn’t have the money. We were perfect partners together.

Rob:
Did you ever make any millionaires out of these partners?

Barbara:
Well, I had a different one in every locale I went into. No, probably not millionaires but close to millionaires.

Rob:
Probably pretty close if it’s 50% what you paid for the property. I’ve always said this, sorry, if you can’t afford it’s probably too late for you to buy it. You never really can afford the thing that you want. You should be buying things that scare you a little bit, things that are a little bit more up-and-coming. You said that you would go into these neighborhoods and overpay, why overpay for a property at this time?

Barbara:
There’s something weird that happens when you’re a dealer in properties. The minute I was interested in something, gosh, somebody else was interested. I would just say right away, “I’ll pay 10% more than the next guy.” Close the deal, get your hands on it, take it off the table. It shouldn’t be that way, but for me, maybe I had bad luck it always was that way. I just decided I didn’t care about overpaying.
You go into a new up-and-coming area it appreciates so quickly that 10% is absorbed less than a year later. You’ve already made up that loss and it’s not even a loss, it’s a perceived loss, but you more than make it up so why worry about it? It’s history.

David:
It’s a very narrow perspective when the only way that you look at making money in real estate is from one element, such as you only look at the cash flow. You only look at the price you paid versus what they’re asking for. I’ve broken down to 10 different ways that you make money in real estate. You mentioned one of them is what I call a market appreciation, which is this area will appreciate faster than the market as a whole like you referred to as up-and-coming area.
Well, if you have a really big chunk on that end, you can afford to buy less equity, which is what I call when you pay less than a property’s worth. You don’t have to win as much on that side if you’re getting a huge win on another side. You’re a great example because so many people in our community would say, “You should never overpay. Just go write another 7,500 offers instead and eventually, you’ll strike gold.” You may end up buying a property that nobody else wants and there’s a reason why that would be.

Barbara:
I share a story I heard as a very young broker that never left me. I was going to listen to Harry Helmsley, of course that name. The biggest commercial owner in New York at the time. I heard him lecture and I raised my hand. I said, “Listen, how do you get a great deal on a property?” He said, “I always overpay.” What? You overpaid?

Rob:
You get a good deal by getting a bad deal?

Barbara:
Right, because it makes up for it in the long run or even in the short run, it makes up for it.

Rob:
I would say, and David, I don’t know if this is true for you too, but on my end of things, when I calculate all of the cash flow that I’ve ever made from real estate, it really pales in comparison to the appreciation I’ve had on the portfolio itself.

David:
Barbara, that’s one of the things about your story that I wanted to ask you is it seems like when you got your start, you’ve talked about the snowball that first property went up in value, created the next, created the next. Now, equity from previous properties is paying for future properties. You never have to put your own money into real estate again theoretically. This is in direct opposition to the cash flow gurus that tell everybody only look at properties for the ROI, the cash flows are going to provide. Nothing else matters.
As someone who’s been very successful with real estate, who has admitted that you’re playing an appreciation game, you’re thinking at it like an entrepreneur, “If I buy this company, how much can I increase the value of the company?” Not just what are the cash flows of this company right now? What can you share about that perspective?

Barbara:
I probably shouldn’t admit this, but I don’t pay attention to it. How I look at it is I look at the property and think, “How much of a mortgage could I slam on this property with the tenants, pay the rent, and I have a little extra to pay the expenses that always come up?” A new roof or what have you. I just see how highly leverage I can get. Then, the minute the property becomes worth more and the rents go up, I go back and slam a new mortgage on it and take the money out.
Remember tax-free, take the money out, I buy another property. I believe in a high leverage, I’m not afraid of that at all. As long as I could pay my expenses, I never leveraged beyond the point where I’m not going to sleep at night that’s how I multiplied my portfolio again and again. Do you know, and this is a true story, I bought a studio apartment in Greenwich Village when I was 29. I scraped together 10%, I think it was $88,000 of thereabouts as my recollection.
I scraped together, I chickened out, and I didn’t close. They kept my deposit. I didn’t sue for it because I just purposely failed the board. It was the board. It took me three years before I could get my hands on another property because Manhattan ran away from me. There was no way I could buy something. When I finally bought a studio, I traded for a one bedroom, then I traded here for a two bedroom and I could always afford it because I appreciate a lot, then a three bedroom.
I can’t say I bought the penthouse I live in today, which is worth so much money from that property. I would’ve never been in the game if I hadn’t gotten in the game. It was such a shame I didn’t get into it three years earlier. I could’ve done so much, not that I regret that because I guess you get cold feet once in a while, but I got cold feet again very often at a closing table I’ll start second guessing myself like, “Well, how good is that area?” I just look at my partner and I think, “What do you think?” They’re such a believer in the neighborhood. I go, “No problem, let’s close.”

David:
It’s so interesting, it sounds like you’re investing in an area not as much in a specific unit.

Barbara:
I don’t care so much about the unit. I care about the area, but realize too I care about the partner. If I’ve got the wrong partner, I’ve got the wrong building. If I got the wrong building, I’ve got the wrong numbers. Another [inaudible 00:17:37] here with you, which illustrates this beautifully, is I bought a townhouse on 10th Street in Greenwich Village and I still own West 10th Street. I bought that building for $120,000, which sounds ridiculous, a five-story, eight unit building.
I remortgaged that building to date probably 9 times, maybe 10, I don’t know if I’m exaggerating. Every time I took a chunk load of hundreds of thousands of dollars out of it and I had a great standard of living. I always took that money out for one purpose to buy myself a more beautiful home or a second home. It’s been a cash cow, I would never sell that business. I said business, it’s really like a business, a separate business. I would never sell that building.

Rob:
This reminded me of a story that I’ve heard, something that I heard on your social channels actually, I think on TikTok. A story about the penthouse that I believe you own now and the origin story of how back in the day you willed it in, you manifested it, “This is going to be my property one day.” Do you think you could share that story for the listeners at home?

Barbara:
Of course, I could. I was in a bad stretch of real estate and I took a job as a messenger because I could work different hours. I had the Corcoran Group at the time, as shocking as I might sound, I probably had about maybe 85 agents, 90 agents working for me, but I couldn’t meet my overhead so I decided I needed another job. I went out and worked as a messenger. They paid very well for messenger that you delivered. I delivered some package to a lady up on 97th and 5th.
I walked into a house, an older lady, and I looked and she had a stunning terrace view of Central Park. I was blown away, I didn’t know people lived like that even though I was in the real estate because I had never seen a place like that. I said to her as she signed for the message, I said, “Do me a favor, ma’am. Call me if you ever decide to sell.” Did I believe myself? Probably not but I thought, “What the heck? I’ll put in my hat.”
What did she say? I think she said something like they’ll take me out in a box or I’ll die at this place something like that. I left, do you know she called me like 14 years later and I bought her apartment for $10 million. How do you like that? I don’t say I manifested it. I don’t think I’m manifest, I had a lot of good luck making money after that and I came out of whatever trough I was in. I was able to quit that job and concentrate on my business again. I couldn’t believe it when she called me, I remembered the view and it was no different when I went back to see it.

Rob:
When she called you, by the way, this is one of the most amazing stories I’ve ever heard, but when she called you, did she happen to remember Barbara Corcoran the messenger, or at this point had your business exploded and maybe she remembers your face and she saw you on billboards? How did she get in contact with you?

Barbara:
When she saw me as a messenger, I wasn’t doing billboard advertising. I didn’t do full pages in the New York Times and the Wall Street Journal. I became prominent in my field after that. I don’t think she even registered my face, but she must have. Then, she saw that I might have the money for that thing because I looked like a big cheese even though most times I didn’t have the money. She called me on the basis of what she was seeing in the public eye.
I’m just the messenger, she remembered me. Funny enough, two days ago I got a handwritten note from her. I can’t even remember her first name. Anyway, she said, “Thank you for answering my call. I’m so happy I called you to sell you my apartment.” I kept it as proof because a lot of people say that can’t possibly happen. I have it.

Rob:
That’s amazing. Well, I’m going to put it out there right now for all of the hundreds of thousands of listeners at home. Barbara, when you want to sell your penthouse, please call me. I’m going to give myself a 14-year clock to be able to afford a penthouse at New York City. Deal?

Barbara:
It’s a deal, but you better shorten your clock to maybe 10 years. I’m not sure I have that much time left.

Rob:
I’ll start putting the feelers out around nine, nine and a half.

Barbara:
Good enough, I won’t answer your call. I’m sure Mike wants my house.

Rob:
That house at the time that you bought it obviously is very expensive $10 million. Was that also in appreciation play? Did you know, “If I buy this, it’s going to be worth more one day? Or was it just more of, “I want this because I wanted it.” I want to realize this goal of owning this home and the financials are the afterthought?

Barbara:
Nothing’s more luscious and having a dream come true. That’s what drove me, I wanted my dream to come true. I dreamt about that place over and over again, that was the driver. I also knew as a real estate person, you buy on Fifth Avenue with the full park view, nobody’s going to build in front of it, what’s going to go wrong with that investment? Nothing, it’s golden. I had no hesitation to get a good investment as well.

David:
You’ve said before, Barbara, that one of your greatest assets as a business leader is your imagination. Coming up with ideas and being willing to test them. What are some of the ideas that have worked for you with real estate investing?

Barbara:
Well, let me tell you, always my imagination, because you know what? The little guy, when you scrap it and trying to come up from the bottom really has the corner on imagination new ideas and getting ideas into the street fast. My big competitors, I noticed they moved slow, they had committees, attorneys, accountants, they have an idea that Monday, it might come out six months later. I had an idea, Monday was on the street by Wednesday.
I very much relied on my imagination. Probably my biggest idea that made the biggest change in my business for the very first time I did it was writing the Corcoran Report. I had 11 sales for the year, it was terrible time. Something wrong with the market, I don’t know what it was. I had a complaining salesperson accusing me of not supporting them not advertising. Well, of course I had no money, I didn’t want to tell them that.
I said, “I have a great idea.” Then, after they left I thought, “Now, what kind of big idea do I have?” I thought of the Corcoran for it. I took the 11 sales average amount and it came out to $58,400 some odd change for an average apartment that I sold, my firm sold. I published a report with one line, the Corcoran Report, sorry, conditions and trends in the greater New York City marketplace is sent to the New York Times every writer wrote that day. Two Sundays later, I was on the front page of the real estate section.
According to Barbara Corcoran, prices have reached all time while using my figure, my figure based on 11 sales. That day was a bellwether change for me in my career because people would call and I could hear my agents on the phone saying, “You’ve heard of us?” Usually, they were on the phone saying, COR, COR, that kind of a thing. We were found. Suddenly, people thought I was smart. Was I smart? No, I was clever.
A lot of people like to be right. They like to be accurate, does it make sense? They ask opinions, they really sharpen their sword and they never get out there. I got the idea, slammed it, whatever it was, and threw it out to the marketplace and only a percentage worked. Believe me, the things that worked for me and my company worked at least five times more than anybody else because I was always out there trying stuff and I ran lean, mean, and fast.

David:
That is such a good point. I can’t let us pass this over. I’ve noticed this as a real estate broker, real estate investor, real estate, everything, people that come into our business from other professions, architects, engineers, anyone that was somewhat analytical.

Barbara:
[inaudible 00:24:48]

David:
Yes, you’re making the same face that we all make when we get those people, they want to make a spreadsheet of the 18 properties that they don’t want to buy and go over all the reasons they don’t want to buy it with you.

Barbara:
Isn’t that true? Yes, the spreadsheet bankers, finance guy, oh my God.

David:
Anyone that has an analytical mind is also trained to not make mistakes. They’ve got this emotional relationship with numbers where they believe making a mistake will lose you money or cause you pain in some way. The way you win at life is to never make a mistake. It is a very difficult gateway that you’ve got to go through to make money in real estate where you learn making mistakes does not lose you money.
Like you just said, throw as much out there as you can, the more things that stick are what are going to make you money. You can do nothing wrong in a day, make zero mistakes and make no money. You can do 20 things in a day, 17 of them were wrong, but your three wins we’re still more than the zero wins that the analytical mind had. I know people that are listening to this are having a hard time gaining traction, they’re having a hard time getting going.
Listen to what Barbara’s saying here, stop thinking that avoiding mistakes is the way that you win in the space with real estate. Any advice on that topic, Barbara?

Barbara:
I would say that I tried, you have some very brilliant people in the game, people well-educated. I always lose my money with Harvard MBAs. I’m sorry, I shouldn’t say that, but I always do. If they’re in the game, I’m like, “I’m not going in there anymore.” You get a left brain type of person, terrible for investing in real estate because they lack one thing in their DNA, they’re risk-aversive. If you are risk-aversive, you can’t win at real estate.
You got to have blind faith a lot of the time. I think, “What am I crazy? I’ll do it anyway because I’ve come this far, I’ll do it anyway.” It’s different. Maybe they run funds and then punch numbers, but they never make a lot of money. I’m telling you, the scrappy first generation immigrant that doesn’t know any better is much more apt to make money than the Harvard educated kid that just came out of schools we’re working for 10 years.

David:
It’s not to say that numbers don’t matter, it’s that being in love with the numbers is the problem, it’s having the vision, it’s seeing the opportunities. That’s such a good point. It made me think about when someone wants to date someone, nobody wants to be courted by a guy who just overanalyzes everything and never makes a mistake. They want a person who’s going to put themselves out there, be passionate about what they’re doing.
Try different things, show the love that they have for someone that matters so much more than the person who’s like, “I made sure we had reservations at every single restaurant at the exact same time. I scanned the menu before we even went, so I knew what I was going to order.” That is what makes anyone fall in love and real estate won’t fall in love with you if that’s the approach you’re taking.

Barbara:
It’s so true what you just said.

Rob:
Barbara, out of curiosity on this, the Barbara Corcoran Report that you mathed out, “The real estate is at an all time low in New York City.” I know that you mathed it out based on yours, but was there actually any truth to that number on a broader scale? Was that pretty close to what was actually happening? Did anybody ever call you and say, “That’s not true. How did you know?” I was kind of curious how that your data actually ended up comparing to the actual data of New York. Did you ever look into that?

Barbara:
No, I didn’t. It was already out, it was printed, I was getting the notoriety. Who knows if it was accurate? Who cares if it was accurate? The main thing was nobody else had a number out there. Nobody was producing numbers. After that, over the next 10, 20 years, people started mimicking my competitors because they realized all the reporters called me. Why? Not that I had better opinions than them or was more experienced, I was certainly less experienced but I had a number to give them.
What do reporters need more than anything else? They don’t need your opinion. They already have an opinion when they call, they want a good sound bite. More importantly, they want numbers to back up their own opinion and I gave it to them. If I had a reporter call me and say, “I’m working on a Russian oil well story and I wonder if you have any rich Russians that I could talk to?” I found them a Russian to talk to, or two or three. They came to me like a source.
I feel like a media joint. “What do you need? Got it. What do you need? Got it.” It’s not important whether your number is right or not, you do the best you can, was that an accurate number? Based on my sales, was it in line with the field? Probably but I didn’t care. I already had the number, it got the notoriety, it was onto the next [inaudible 00:29:13] report? The next [inaudible 00:29:16] report. I just kept churning the things out.
The Richard Gere report, the Madonna report, the Hillary Clinton report, the Guggenheim Museum report. I would grab any number average out, pop it out there. I didn’t have the decency enough to wonder if my numbers were right.

Rob:
I love it. You said you were clever, obviously what was happening here is you’re a genius marketer and that comes into play with something that I heard about, a word of mouth campaign that you had when you were trying to sell out a unit or sell out a building. Could you tell us that story too?

Barbara:
You’re probably referencing the one-day one price sale. By the way, exaggerated, I’m not marketing genius I just take risk. I’m good at that. I swear to God, that’s the baseline of the whole thing. No, I had 88 apartments that an insurance company and developer came to me for, two. Came to every bill, every broker in town, we need to sell these interest rates, we’re 18%. Can you imagine that? That’s why when everybody’s excited about the high interest rates now, I’m like, “What are you talking about?”
Interest rates are 18%, no one was buying anything. They said, “We have to sell these 88 units that we don’t want to auction. We don’t want a public sale because we don’t want to be embarrassed.” I looked at the units, they didn’t have kitchens, they high floors, low floors back, apartments, creepy lobbies, they had everything wrong. I went back and said, “No, there’s no way to sell it. I’d like to tell you differently, no way to sell it. I met with the developer in the insurance company.
Interesting about motivation. The developer, Bernie Mendik, who has since deceased, he said to me, “You’re a smart girl, you’ll figure it out.” I had arise to his occasion. I went home that night and thought of a puppy sale my mother brought me to where all the puppies were given away and there were too many buyers for the puppies, so I did an exact knockoff on that. I went back and I said, “We’re pricing all the units alike, back apartments, high floors, low floors, all alike.”
You give them the mortgage so they don’t have to worry about the mortgage at 2% down from the 18%. We’ll have a one-day sale first come, first serve. I opened that office on the Upper East Side in the morning around, it was due to open at I think eight o’clock, but I was there at 6:30. I had over 150 people in line waiting for those 88 unit apartments. I said go, I gave them the sheets, the addresses. They ran, husbands, wives, single people ran to see the apartments they wanted the best one. It was sold out. I would say with less than two hours I made $1 million.
Who would ever see that thing coming? You know what the key to it was? It wasn’t enough to go around. Even the guy who got the loser, the really disgusting apartment with the same price as everybody else, he was happy because he saw how many people were waiting behind him and couldn’t get anything. That was just a marketing way, a secret sale with no advertising to support it but it worked like a dream.

Rob:
Many units did you say that you sold?

Barbara:
88 Units. And the average sale price, well right now won’t sound like anything, the average sales price I think was $64,000.

Rob:
Wow, that’s 88 units. I’m sure that’s got to be a record in New York for the fastest building ever sold out. If listeners want to hear more about this story, you tell this a little bit more as well on TikTok in your Get Ready With Me video, right?

Barbara:
Yes.

Rob:
Looking at that one, I believe it had over a million views.

Barbara:
Yes, I think it may have. I think it’s because I look so good without makeup.

Rob:
It’s a very fun series. I think your social platform and in all of the stories that you tell really, really are a very fun thing to watch. I find myself on your reels all the time. Something that you mentioned a little bit earlier about the 18% interest rates. I say this all the time, I say that interest rates used to be 16% to 18% back in the ’80s, ’90s. Then, a lot of people say, “Yeah, well the cost of living back then wasn’t all that high, so it’s not the same.”
Well, and that’s what I was going to ask, it’s all relative. When you sort of look at it, having seen your career play out, do you feel that like a 7.50%, 8% interest rate is really detrimental to the success of people in today’s market?

Barbara:
Well, it is in this one regard. It keeps people out of the market because of their expectations. Remember we got until last year, we were accustomed to 3%. I think that’s what the mortgage rate [inaudible 00:33:32] We got accustomed to that. Everything is relative like, “I wish I had gotten it then I missed the boat.” No, it’s not that way at all. It was just as expensive to live in New York, I’m telling you but people still borrowed at all along the way 14, 15, 16, once it got beyond 16, people started pulling back.
Today people are pulling back at what, 5%? Where is it now? I don’t even keep track of it, honestly. It seems so cheap to me. I don’t think that’s true the premise that people are giving you at all. No, I still feel like there’s deals to be done because of the low interest rates. I’m going to labeled it as high. All of my buildings in the last year at a higher rate, I probably should have done it a year early, but it’s still a cheap rate, my god.

Rob:
Well, you did mention, you know, would buy this property and then you would slam a new mortgage on it once the rents went up. That concept I believe you’re talking about is a cash-out refi. Basically, the value of the building would go up and if the rents went up and you could do a cash-out refi, you’d have a little bit of a higher mortgage, as long as you could cover your bills, you would take that money out and reinvest it somewhere else, right?

Barbara:
I’m talking about a lot of money back out. I’m not saying I had a mortgage of $200,000, I put 250 on it. I would wait five years. For the $200,000 I would then put an $850,000 mortgage on put in my pocket. Listen, refinancing is the way you really get rich in holding real estate that’s what I never like to sell. It’s just a bank that’s going to keep on giving. That’s how I look, I feel like I’m in the banking business, but I have real estate to back it up.

David:
On that topic, you, you’ve mentioned several strategies that are somewhat, what’s the word I’m looking for here? They’re not common, when you hear this overpaying and when you say overpaying, what I’m assuming you mean it’s just paying more than the list price. It doesn’t necessarily mean you overpaid because real estate is worth whatever someone’s willing to pay for it.
Focusing on the location over the actual unit, putting an emphasis on solid fundamentals of an area and an asset class over over-reliance on the analytics of a specific unit and getting, not looking at the numbers with a microscope looking at them with a big picture plan, picking the right partner to invest in. This is very different than the gurus that sell real estate investing courses that say, “I will teach you how to analyze a property and you can just look at every single property individually.”
The question I wanted to ask you is, do you believe this works primarily in markets where you’re likely to see appreciation where money is flowing? Something like New York City, Manhattan, maybe South Florida right now, some of the California markets. Do you think that’s part of where your strategy came from, was the area that you were in and the business that you were involved in?

Barbara:
Not really. I think it would apply anywhere. There’s always primary estate that’s golden that everybody’s clamoring for that you don’t have enough to go around. Then, there’s always the next area, next store. The people say, “I don’t really like it so much, I don’t want to have my kids go to school there.” All the reasons why, those are the areas that are the sweet spot, and that’s everywhere not just New York.
It happened to me because I was in New York doing Brooklyn. I thank God picked Brooklyn versus New Jersey. I don’t know why, I really didn’t know New Jersey, but you could always find an area. It works. I just don’t think it’s about a particular area. There’s always something up and coming. Do you know what is a great way to find out if you’re right in your premise? You travel there at night. I never went into any area of Brooklyn and even found a partner or starting investing, I used to get a car at night, rent a big driver because I didn’t know what I was headed for.
I would cruise the streets. What do you think I would find at night? A lively evening community of creative, generally gay communities, having a ball. The gays always moving first is how I found. Then, after that I would go and I would see the baby carriages and hallways stuffed in collapsible cheap carriage. The yuppies are starting to come in. You see a lot at night when people aren’t at work. You see what’s happening, who’s living there.
I remember I bought one building on the very Upper West Side because I saw old ladies all sitting on the bench with pigeons and they weren’t getting mugged. I thought I would never sit on that bench, but it was safe enough for the old ladies, so I realized something’s changing here. I think you have to just be personally involved and have your mind open. I have even chosen particular blocks based on the trees.
I know it sounds weird, but it’s so darn pretty. I’m thinking everybody’s going to love this block, look at flowering trees. More important to me than the numbers, because when I look at the numbers, I’m just seeing today’s numbers, but I’m projecting what tomorrow’s numbers might be and I’m buying on that basis.

David:
That is such a good point. Not getting wrapped up in, I call it the year one result. When we analyze the property we’re looking at right now in this snapshot of time, what can I expect it to do? You’re not buying it for a year, you’re buying it forever if you’re Barbara and you keep refinancing them. You can’t analyze for what it’s going to be like in 30 years. There’s some intangibles that go into this and you’re sharing a lot of that.
I have one last question, but before I ask it. I know you have a technique involving waiters in restaurants and getting valuable information from them. Can you share that with our audience?

Barbara:
The best, you go to a restaurant there’s always good-looking young waiters. They want to be dancers, they want to be writers, they came to New York. New York is such a wonderful place to draw people in. They all come to New York, but they’re making their rent. They’re working at night. I always make a habit saying, “Where are you living? Where are you living?” Then, I make a mental note. Now, on my phone, I used to have a little pad with me make a mental note.
Then I’m out there within a week looking at it. That’s what I do, it’s a little routine. A lot doesn’t pan out, some areas are too darn early for me. They scare me because I’m like, “I’m so happy I had that big driver with me. That’s not a good area.” Most of them pan out, so I always think you have to tap into youthfulness and people who are short on cash to identify up and coming. I think it’s your best guide.

Rob:
It’s effectively asking locals what the secret spots are. “Hey, where are you at? What’s the cool bar? What’s the cool club in town?” Basically, just following the scent to finding these little pockets that no one really knows about.

Barbara:
Yes, and they’re choosing the right property within that pocket and that’s where the partner comes in.

David:
Last question from me, Barbara. For those that are listening to you and they feel the call in their soul, I need to be more like Barbara, but they’re just risk-averse. They don’t have experience accepting that risk is a part of life. What advice do you have for those poor, timid souls?

Barbara:
Get out of the game, you’ll never going to do well. I hate to be that coarse, but get out of the game. If you’re afraid of risk, you have no business being a real estate. If you want to make money, you have to take a risk, it’s just that way. If you’re measuring what you’re about to go into based on what you could have bought it for last year, your memory is your greatest deficit. We’ll hold you back, if your mind is wired that way, get out of the game.

David:
Well, that is fantastic, Barbara. Thank you very much for sharing that advice.

Rob:
Perhaps the most honest advice and honest answer we’ve ever gotten on the show, by the way. I love it.

Barbara:
Thank you so much. I try to be honest when I’m not bullsh*tting.

David:
As you know from two truths and a lie, there’s often a lie mixed in with truths and sometimes you have to be able to figure it out, but it can still be fun when you do so. Barbara, for people that want to find out more about you, where’s the best place for them to go?

Barbara:
It’s @BarbaraCorcoran on all the social media platforms. If you just have want to have fun just follow me on Instagram at TikTok. I have a blast, but I also give great advice. I try to do both.

David:
Rob, how about you?

Rob:
You can find me @Robuilt on YouTube. You can find me @Robuilt on Instagram. Be sure to follow the raw belt with the newly added blue check mark, which is a beautiful day for me. You no longer have to get asked if I’m going to invest in Forex or anything like that. Make sure it’s the blue check mark. Be sure to also find me on the Apple podcast platform where you can leave the BiggerPockets Podcast, a five star review because this is one of the best episodes we have ever done. David, what about you?

David:
Yes, thank you for that mention about the blue check mark. This is my cup that I keep full of the tears of internet scammers as they are crying themselves to sleep every night, unable to scam people pretending to be us. You can find me at my website, davidgreene24.com or any social media that you like. DavidGreene24. Please do go give me a follow. Barbara, you’re such a pleasure to talk to you. Thank you so much for being here and for calling me out.

Barbara:
[inaudible 00:42:12] I don’t call you yet, I’m doing it today. Thank you so much, really. Thanks for the platform.

Rob:
I want to say Barbara such a big fan. You are a hero of mine and I think honestly, I held it together pretty good on this podcast considering how dang excited I was to interview you. Thank you so much for joining today.

Barbara:
Let me remind you that you were the winner of the contest, you got two out of three, your partner and only got one out of three.

Rob:
I’m going to be the winner in nine years when I buy the penthouse. That’s really what I’m holding out for.

Barbara:
I’m waiting for you call. Is this you?

David:
It is. This is David Greene for Rob [inaudible 00:42:46] Abasolo, signing out.

By Nellie Akalp

The franchise model of doing business streamlines the entrepreneurial process. By operating as a franchisee, you can become a business owner without much of the preliminary groundwork involved in building a company’s infrastructure and systems from scratch.

But even though a franchise location is associated with a larger brand, its owners hold responsibility for forming a business entity and managing all of the operations and administration at their site.

In this article, I’ll discuss some of the nuances of starting and operating a franchise entity.

Franchisee vs. franchisor: What’s the difference?

First, let’s clarify some of the terminology I’ll refer to throughout this post:

• What’s a franchisor? A franchisor is a business that sells the right to others to open stores or sell products or services using its brand, expertise, and intellectual property.
• What’s a franchisee? A franchisee is an individual or business entity licensed to operate their privately owned business (a franchise) under an agreement with a franchisor.

For example, McDonald’s is a franchisor; the owner of the McDonald’s location in your town is a franchisee.

Franchising and forming a business entity

Forming a legal business entity supplies liability protection to business owners and may provide some tax advantages. The underlying purpose for setting up a franchisor’s entity is slightly different from why it’s important to set up an entity for a franchise location.

Franchisor entity

A franchisor forms an entity to sell rights to franchisees to open and operate a franchise location using the franchisor’s brand, intellectual property, and expertise. An independent legal and accounting entity, the franchisor entity protects its owners and the main business from the debts and legal liabilities of franchisees.

Consider this hypothetical example: Subway is a franchisor. Suppose someone wants to sue the business after slipping and falling on a wet floor at a franchisee’s location. The individual would sue the local franchise business, and the main franchising entity would be protected.

Often, franchisors choose the Limited Liability Company structure for their entity. Technically, a franchisor entity can be formed in any state. However, it’s wise for franchisors to discuss their options with an attorney and tax professional before deciding.

Franchisee entity

A franchisee entity is one set up by a franchisee when purchasing the rights to operate a local franchise. Many franchisors will require the franchisee to set up their entity before drafting contracts or a Franchise Disclosure Document (FDD), so the paperwork can be put in the entity’s name. Franchisee entities are usually LLCs. Many franchisors will not allow a corporation to purchase a franchise because the issuance of stock would have significant legal and tax implications.

A franchisee should almost always register its entity in the state where it has its physical presence, regardless of whe re the owner’s residence is. The physical location of the franchise will require permits, licenses, lease agreements, etc., and therefore the business must be registered in that jurisdiction to obtain them.

Naming a franchise entity

Many franchisors create an entity under a name that implies its purpose of selling franchises—for example, Your Company Franchising Inc. or Your Company Franchise Sales, Inc. This makes it easy to differentiate entities.

As for franchisees, they may use the franchise’s brand name for marketing purposes by establishing a DBA (a fictitious name). However, their legal entity’s name must not include the name of the franchise being purchased (because the franchisor has trademark rights to that entity name).

For example, franchisees would avoid registering their legal entities as Smith Subway, LLC or Smith’s Burger King, but might instead set up DBAs like “Subway Store #1234” or “Burger King Woodland Hills.” Franchisors usually have a specific way franchisees should format their DBAs.

More from AllBusiness.com:

What about multi-unit franchises?

A multi-unit franchise is when one franchisee purchases multiple locations. Typically, the franchisor will want each unit set up as its own separate legal entity with separate DBAs and permits.

In some cases, franchisees can start a parent company that holds all their entities beneath it to keep things simple. However, this only works if the franchises are all owned by the same people.

Entity requirements for franchised businesses

In addition to the contractual obligations to franchisors, franchisees must comply with federal, state, and local requirements when setting up their business entity:

• File formation paperwork with the state to establish the LLC or corporation.
• Obtain an EIN (employer identification number).
• File a DBA (doing business as) to establish a fictitious name for the franchise location.
• Create an LLC operating agreement (or corporate bylaws).
• Register for payroll tax and other employment-related taxes.
• Complete sales tax registration (usually does not apply to service-based franchises).
• Filing for any required business licenses and permits to operate legally at their location.

Becoming a franchisee

Are you curious about what it takes to start and operate a franchise? Here are resources to help as you assess the feasibility and explore the possibilities:

Starting a franchise business lets you enter the world of entrepreneurship with built-in brand awareness and established systems and processes. That doesn’t mean it’s entirely “plug and play,” though! Make sure you get the legal and accounting guidance you need to ensure it’s the right fit for you.

About the Author

Nellie Akalp is a passionate entrepreneur, business expert, professional speaker, author, and mother of four. She is the founder and CEO of CorpNet.com, a trusted resource and service provider for business incorporation, LLC filings, and corporate compliance services in all 50 states.

How would you describe the housing market right now? Is it up? Flat? Down? Crashing? Each option is a little bit correct and a little bit wrong. That’s because these days, there is almost no way to describe the housing situation in the United States on a national level. To understand what is happening and to make solid investing decisions in 2023, you need to be looking at regional trends and individual market metrics. 

To shed some light on the differences in market behavior, I dug into the 295 largest housing markets in the country and wrote up the most interesting trends and findings from my research. 

Sales Price

Of the 295 markets studied, 200 of them are up or flat year-over-year. This is true, even though on a national level, housing prices are down about 3%. Meaning although about two-thirds of markets are still up YoY, the depth of declines and size of the markets seeing negative price growth is dragging down the national average. 

For the most part, the pandemic-era craziness is over, but there are actually still 37 markets with double-digit growth. Macon, Georgia, is up 28%, with many of the other red-hot markets coming in the Midwest. Springfield, Ohio; Saginaw, Michigan; and a few places in Wisconsin still have growth of over 20%. 

Of course, there are markets that are seeing big declines as well. Austin leads the way with -14% growth, followed by Sacramento and Boise at -12%, and other major markets like Seattle, Phoenix, Los Angeles, and Denver are all seeing some of the worst corrections. 

What stood out to me when looking at sales prices is how pronounced regional differences are. For the most part, western states are seeing big declines, while markets in the Midwest and Northeast are doing fine. The South is mostly growing still, but there are some markets in decline there too. To help visualize some of these regional differences, I selected markets (somewhat at random) from each region.

As you can clearly see, Boise has seen steep declines but has started to level off. Madison and Orlando are relatively flat, and Rochester is still on an upward trend (even though seasonality makes it look like it’s declined for a few months, it’s up YoY).

Inventory

The prevailing logic over the last year is that inventory was going to rise considerably with higher interest rates, and in some ways, this is true. Of the 295 markets studied, 183 had inventory up YoY. Some markets have truly skyrocketed, with markets like The Villages, Florida; Austin, Texas; and Spokane, Washington, all seeing inventory more than double. 

This seems like an alarming statistic because rising inventory can precede steep price declines, but year-over-year data might be misleading us. Inventory was extremely low during the pandemic, so I looked at current-day inventory and compared it to the same months in 2019. What I found was that only 20 markets have inventory higher than pre-pandemic levels. This is extremely low! Even with higher interest rates, there are only a handful of markets in the entire country with inventory levels that have fully rebounded. 

What’s even more remarkable to me is how low inventory has stayed in other markets. In Muncie, Indiana, for example, inventory is only 21% of what it was in 2019. Meaning for every five houses for sale in 2019, there is now just one. When you look regionally, low inventory levels are primarily concentrated in New England. Massachusetts, New Hampshire, Vermont, and Connecticut all have several markets with desperately low inventory. 

Even in Boise, which has seen a steep correction, inventory fell in line with seasonal patterns this Winter and is not accelerating out of control. 

New Listings 

One of the main reasons inventory remains so low is the lack of new listings. Of the 295 markets, only 16 have seen growth in the number of new listings in the last year. This is as close to a national trend as it gets in the housing market right now. Surprisingly, those 16 markets are primarily concentrated in Florida and Texas. 

In certain markets, sellers are in revolt. Burlington, Vermont, has seen a 68% decline in new listings this year, as has Truckee, California. Other areas with ultra-low new listings are in New England. That makes sense—declining new listings and low inventory tend to be closely correlated.

If you want to know why the housing market isn’t crashing on a national level, this is one of the main reasons. There is very little to buy, which is offsetting the decline in demand that has come with rising interest rates. 

Days on Market

Days on market (DOM) is an excellent indicator because it helps us understand the balance of supply and demand in a market. In markets where there is excessive supply, DOM goes up. In markets where there is excessive demand, DOM goes down. Balanced markets stay flat. 

What we see right now is that 246 markets have rising DOM. Even though inventory has remained low—properties are sitting on the market longer in most parts of the country. But how much longer varies dramatically. 

In Boise, the average days on the market went from 13 one year ago to 88 today. That is an increase of nearly 600%! No wonder prices are falling in Boise. The chart above does a great job of showing what’s happening right now. Markets that boomed, like Boise and Orlando, are reverting. Meanwhile, the more “boring” markets like Rochester and Madison are holding almost perfectly steady, as they have for years. This is generally true for many major metros in the Midwest and Northeast. 

Sale-to-List Ratio

The last metric I looked at is the Sale-to-List ratio, which measures, on average, how much below or above the asking price properties are selling for. Despite dropping demand, there are still 49 markets in the U.S. that are averaging above-list sales. Of all markets, Rochester, New York, leads the way with the average home selling for about 107% of the list price. Madison is also above 100%, which again is no shock given the supply and demand dynamics. 

For the other 246 markets, however, buyers are getting discounts on the sale price. I’ve been talking about the concept of “buying deep” for months (buying under the asking price), and it seems that in 84% of markets, this is happening. In Key West, Florida, buyers are buying at 95% of the list price, Austin is 96%, and in New Orleans, it’s about 97%. 

To me, this is a perfect example of why it’s so important to understand local market dynamics. If you see that inventory is rising and you’re in a buyer’s market, you can offer less than the asking price—and as the data shows, you’ll probably get it! However, if you’re in a strong seller’s market, you may still have to write competitive offers and won’t have the luxury of being as patient as you might like. 

Conclusion

Hopefully, this analysis has shown you that trying to describe “the housing market” is not possible right now. Every region and every individual market is behaving differently. There are markets still in the grips of the pandemic boom with massive growth and low inventory. And there are markets seeing steep corrections. 

How you invest in 2023 should largely depend on the dynamics of your local market. Some markets will support flipping right now, while others are better for rentals, and some maybe shouldn’t be touched altogether. As an investor, I encourage you to stay on top of the metrics I outlined in the post above and use them to help you make investing decisions. 

What are you seeing in your local market, and how are you adjusting your investing tactics accordingly? Let me know in the comments below!

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

While historically family-owned, the parking industry is today largely dominated by two players: SP Plus (SP+) and ABM. But the industry is facing some challenges. Aside from the rise of e-commerce and ride-hailing, a post pandemic world where workers are rarely driving into urban areas is forcing the industry to pivot and expand its services, as well as heavily invest in technology. It remains to be seen if those strategic decisions will pay off.

A robust content creation strategy is no longer just a nice-to-have for your business. Without great content and a high-ranking internet presence, your business practically doesn’t exist.

Content is both an important facet of your company’s reputation and a critical factor in achieving its business goals. Your content educates your readers, engages your audience and establishes you as an authoritative subject matter source. If you’re not already set up for content success, here are some ways to give your brand the content makeover it needs.

1. Be Everywhere and Be Useful

You can’t just rely on weekly subscription-based emails anymore. Your company needs a comprehensive strategy that bridges multiple channels and covers all angles. Your website should have a blog that’s updated regularly—at least once weekly. You also need well-researched white papers and studies to demonstrate your industry expertise. Use data and infographics to illustrate your points. Round out your written content and visuals with videos, podcasts and webinars.

And don’t just use your content to talk up your company. Think about what will make readers want to come to your site. Feature actionable advice that your readers will turn to, time and again, for help. Where possible—and appropriate—consider timely newsjacking pieces that link your company’s offerings to current events. These pieces should showcase why your product or service is more relevant than ever.

2. Find Your Audience

Before you get too far into content creation, think about whom you want to appeal to. Who are your readers, and what can they stand to gain by immersing themselves in your content? If you offer a B2B technology solution, maybe your blog can provide actionable tips for small business owners. If you sell beauty products, consider common skincare complaints and position yourself as a solution. Whatever the product, think of your content as helpful advice, not advertising.

Finding your audience doesn’t just mean knowing your target demographics. It also means meeting your potential customers where they are. Do you need to be on Instagram? TikTok? The hottest new beauty blog? Figure out where you should post your content, especially on social media, so your most likely readers will stumble upon it.

3. Explore New Content Solutions

If you’re feeling out of your depth in deciding how to meet the content needs of your organization, you may want to think about partnering with an experienced content solutions provider. They can assist with services like preparing technical and software documentation and developing employee and customer training. They can also help pair you with scalable technology solutions or transition to a new type of content management system.

Some content creation solutions providers, like Contiem, can do an audit of all your content needs and walk you through each stage of revamping your entire content ecosystem — whether that’s creating, managing, or delivering the quality content your business needs to succeed. When you’re struggling to gain traction, the right provider can take a close look at your content and figure out what is and isn’t working. And then they can set you on the right path.

4. Boost Your Search Results

To be truly successful in the content world, you have to stay on top of search engine optimization. Plugins like Yoast SEO can boost your Google rankings by helping you optimize your keyword distribution, assess your content’s readability and more. Use alt tags and metadata wisely, and make sure your links are current and flow naturally within the sentence structure. Pin your links to relevant keywords, avoid overlinking and don’t force links or keywords in where they don’t make sense.

In short: don’t go crazy. It’s no longer so easy to trick the search engines into doing your bidding. The most important thing is that your content be relevant, interesting and updated regularly. For optimal traffic and rankings, you should post on your site or blog about two to four times a week. But don’t just post garbage (see point 1). Make your content pertinent and educational so your readers will keep coming back for more.

5. Analyze and Iterate

Once you’ve got your content up and running, you’ll require a system for tracking what’s effective and what’s not. Which channels and types of posts are performing well, and which can you spend less time on? A host of tools and tips are available for measuring content engagement and effectiveness. Use Google Analytics and other services to keep an eye on your metrics.

You should be monitoring not just how many people visit your site, but who they are and how long they stay. You’ll also want to note how many visits actually turn into conversions. Track the number of people who like your content enough to share it with their circle. In addition, consider who’s choosing not just to read your content, but to subscribe to updates. Lastly, look at your costs and figure out what to cut or invest more in.

Great Content Serves a Need

It bears repeating that the most important component of a good content strategy is usefulness. Your customers don’t read your content because they want to be advertised at. They come to you because they believe your content has something to offer them. Think about what causes you to remember a great piece of content or makes you want to share it with friends or co-workers. The best content centers the reader and builds trust in you as someone who can make their life easier.

David:
This is the BiggerPockets Podcast, episode 762. I don’t know that I’d say it’s apparent that the dollar will no longer be the world’s reserve currency, but it is moving in that direction and I’ve been talking about this for years. So we’ve known that inflation’s going to be a problem since before COVID, especially during COVID. We’ve known that we’ve printed so much of our money and America’s position within the global market has weakened to the point that other countries don’t feel like they have to keep the dollar as the reserve currency. If the world stops using the dollar as the reserve currency, there is a very high chance that money that is in other countries is going to flood back into our country.
What’s going on everyone? It is David Green, your host of the BiggerPockets Real Estate podcast here today with a Seeing Green episode where I do my best to bring the heat to teach you more about real estate, to answer your questions and to expand your knowledge base when it comes to real estate investing, and I think we hit it out of the park today.
Today’s show is fantastic. We talk about what to do when your STR or short term rental is no longer cash flowing and it’s time to move on to a new deal. We get into when you should use the BRRRR methods, specifically when you’re using HELOC money, as well as some other issues regarding HELOC money and the best use for it, how the dollar may impact real estate vesting in America, what’s likely to happen if the US dollar loses its position as the reserve currency of the country, which we’ve been talking about on the podcast for a while. All that and more on a fantastic show.
All right, before we get to our first question, today’s quick dip is find the expert and let them do the work for you. Learn to leverage your community. So many of you’re asking great questions and you’re coming here, but what I then do is want to connect you with the expert that can answer it even better.
We at BiggerPockets, have a lot of ways that we can help you with that you can listen to our regular podcast where we bring in experts in different fields, from bookkeeping to construction to appraisals to subject to financing, everything that you could ever want. Contact those people. You could also use the agent finder under the tools on the biggerpocketss.com website to connect with a lender, with an agent, with a multifamily specialist, whatever you’re looking for. You could check out biggerpockets.com/bootcamps to take a course from a person who will teach you on a specific strategy or you could reach out to me and I’ll put you in touch with my team, my people and the people that I use. But whoever it is, however you’re doing this, make sure you’re talking to the expert and not trying to figure this out yourselves. I wouldn’t recommend anybody represent themselves in court. And in the same way, I wouldn’t recommend that anybody try to learn the jobs of other people involved in the real estate transaction. Focus on what you do best and let them do what they do best.
All right, let’s get to our first question. I’m excited.

Josh:
Hey David, my name’s Josh. I’ve done about a half dozen deals now in the Grand Rapids and Lansing area of Michigan. So I’m getting my feet wet and doing okay. And my question revolves around, I’m doing my first BRRRR and it’s actually working out pretty good. I purchased property for 42,000. I’ve got 55 into the rehab, all said and done, closing costs and everything. And I just had a desktop appraisal done because it’s not quite finished yet. I had a desktop appraisal done and it came back at 140, so I should be able to refi at 75% LTV and take all my money out, which is great.
The issue is that typically when I evaluate properties, whether or not I want to buy them, I look at my cash on cash for the first 12 months, but then after that point, I transition to evaluating properties based on return on equity once they’re in my portfolio. This property, because of interest rates is only going to cash flow about $150 a month, which is fine because I’m leaving nothing behind. So it’s an infinite cash on cash even though it’s a little lower monthly cash flow than I would like typically, but it’s a play and that’ll grow.
But the issue now is that I’ve got $40,000 in equity and I’m only making $150 in cash flow a month. That’s a really low return on equity on day one. So from a ongoing evaluation standpoint, it looks like I should sell the property and flip it instead of keeping it as a BRRRR. So my question is with interest rates where they are, is it ever the right choice to BRRRR or flip? Or I guess if you’re looking at return on equity, is it ever the right choice to BRRRR instead of flipping, or should I just be flipping? Or how do you look to evaluate? Because my return on equity’s going to be really low, but I do want the long-term benefits of another long-term rental in my portfolio. So I’m just a little curious about how you would evaluate these and what your advice would be for a BRRRR property with a low return on equity because it’s a BRRRR property. So thanks a lot, appreciate the podcast

David:
Josh, my man, such a good question and such a good position to find yourself in. This is just going to highlight so many good teaching points. You just won on The Price Is Right, and you have to choose between a Ferrari or Lamborghini. That’s the situation that you’re in. You’ve got 100% of your initial capital back out of the bur, but you’re recognizing with the equity that’s left in the deal after the refinance, the $150 a month is not an incredibly high cash flow.
Let’s go your two options. You could sell it and get the equity back out of the deal, put it into something else, or you could hold it. Benefits of holding well, you don’t need to get money out of that deal because you’ve already got your initial money out so you still can buy more real estate. This isn’t stopping you from buying more real estate. Holding this property over the long term will lead to appreciation and likely rent increases. How to capitalize on that? Is it in an area that rents are likely to keep going up every single year and the property’s likely to appreciate every year? If it’s not in one of those areas, if it’s in a stale market that just doesn’t grow, rents don’t increase, we might lean a little bit more towards selling and getting the equity out and putting it into something else. If it’s an area where growth, I’d lean more towards holding.
Now let’s look at the benefits of selling that property. You would get a little bit more equity out of it likely if you sold because you’re going to be leaving, that’s something about BRRRR is you get all of your money out, but there is still value left in the deal. For the people who argue BRRRR is risky because it’s increasing leverage. It’s not. When you refinance it, say 75% loan of value or 80% loan of value, that is no different than if you put 20% or 25% down on a house. Just because you get 100% of your capital out does not mean you get 100% of the equity out of the deal. You’re still leaving it in there. But if you sell, you’re also going to have closing costs, you’re going to have realtor commissions, you’re going to have expenses associated with it. So for more expensive properties, the portion of closing costs is a smaller proportion of the overall money you’re getting out. On inexpensive properties, your closing costs are a higher percentage of the money you’re getting out, so it usually makes more sense to try to avoid selling or even refinancing in some cases cheaper real estate, whereas more expensive real estate, you have the benefit of if you have to sell, you’re getting more money back than what you’re paying in the closing costs.
Another expense you’ll have if you choose to sell are capital gains. You’re probably going to have to do a 1031 if you want to roll over your gains so you don’t pay taxes because those can be significant on deals like this. Whereas if you hold it, you can avoid that. So once you’ve considered all of this information, you’re in a little bit of a better position to decide if keeping makes more sense than selling. If you sell, you’re going to have taxes. You’re also going to have closing costs, may not get as much of that equity back out of the deal as what you’re hoping to unless you do a 1031 exchange. And if you do a 1031 exchange, you got to have the next deal lined up. Those can be tricky.
Most of the time, Josh, you’re probably going to be better off holding it, keeping equity in the property, getting your infinite return, that 150 bucks a month and moving on to the next deal. The only time I would say you’re better off to sell and not keep, has nothing to do with the BRRRR just has to do with location. In the same sense that I would look at my portfolio and say, I’m going to keep the properties that are in good locations. I’m going to sell the properties that are in inferior locations. You’re in the same boat. I’d look at it the same way. Thanks for your question though, and great job.
All right. Our next question comes from Joe and Florida. “How are you evaluating your portfolio and future investing strategy now that is becoming more apparent that the dollar will no longer be the world’s reserve currency?” Oh boy, Joe, you’re asking the questions I love, but this scare me.
I don’t know that I’d say it’s apparent that the dollar will no longer be the world’s reserve currency, but it is moving in that direction and I’ve been talking about this for years. If you listen to this podcast, you hear the stuff that they’re going to talk about on the news before they start talking about it on the news, and that’s because most people don’t look at what’s going on under the hood of their car until the light comes on, the check engine light, the check oil light, whatever it is. We’re sharing with you guys from BiggerPockets what we see happening under the hood before the light comes on.
So we’ve known that inflation’s going to be a problem since before COVID, especially during COVID, we’ve known that we’ve printed so much of our money and America’s position within the global market has weakened to the point that other countries don’t feel like they have to keep the dollar as the reserve currency. I will come right out and say, I don’t know what’s going to happen, but I will share my opinion on what I’m planning on happening because you’re asking about my opinion and my portfolio.
If the world stops using the dollar as the reserve currency, there is a very high chance that money that is in other countries is going to flood back into our country. That means we will have even more inflation than what we have. Just because we’re feeling inflation, most people don’t pay attention to what’s going on until the symptoms come, but you can’t measure your sickness by the symptom. You have to know what’s going on inside your body. It’s pretty bad. We printed a lot of money so that we could avoid recessions in the past and there will be a price to pay for that and it will come from the weakening and potentially destruction of the US dollar.
Now there’s things that are working in our favor. Other countries have done the same thing. They’ve printed too much of their money, but we see what happened. Look at Venezuela, look at a lot of other countries that have had serious, serious problems with inflation, which creates affordability issues, which leads to poverty and at BiggerPockets is we’re trying to prevent poverty from happening. So the short answer is that’s why I say we need to buy real estate. That’s why I’m buying real estate. If we get massive inflation, the property I bought for $1 million will stop sounding like it’s that much money because everything’s going to cost $5 million at some point. The things that we think are expensive right now won’t be expensive, and I just guys just think about this.
At one point in our lives, my parents were paying rent that was like $250 a month, and that felt very expensive, but it was because at that time I could buy something of value with the quarter. We used to have, when I was a kid, coins actually were kind of important. I can’t remember the last time I needed a coin. Their just a pain in the butt. At some point we’re just going to get rid of coins. We hardly ever use them. Okay? At some point a million dollars sounded like a lot of money. It still sounds like a lot of money. It’s not nearly what it was. And there will come a point in history where we look at a million dollars and think why is millionaire a word? All of the book titles that have millionaire in them aren’t going to be very important. If any of you that are the younger listeners have wondered why we talk about six figure jobs, that’s a badge of honor. You’re confused by that. Well, when I was a kid’s six figure jobs meant you were really, it was like the equivalent of making $250,000 a year to be able to make a hundred thousand dollars.
This is what inflation does. That process will be sped up if dollars come back into our country or if we can no longer just keep printing money. That’s a secondary issue. If the dollar’s not the world reserve currency, we can’t just keep making more and more of it and having other countries hold it. What would happen is we would have to actually create more products in America.
So not that Seeing Green is meant to be an economic show, but that does affect real estate. So if you think about generally speaking, we import goods from other countries. So other countries make cars, medicine, clothes, everything. I’m wearing a shirt right now that was made in America, but that’s very rare. Most of them don’t come from America. We import useful things from other country and what do we give them in exchange? Dollars. Now, dollar has value because it’s the world’s reserve currency, and so it’s considered the safest form of currency, but if that stops happening, they’re not going to want our dollars. They’re not going to send us their cars, their clothes, our medicine, the things that we need, our supplies, they’re not going to trade that for dollars. They’re going to insist on something better, more of those dollars which creates inflation or something of value in return.
If that happens, we’re going to have to make more stuff in America, which means it will be more expensive. We have labor laws here, we have regulations, we have working conditions that have to be met. We have people that expect a higher wage. I think everyone can agree with me that in general it’s been hard finding people in America to want to work. COVID showed what that was like. You’ve been to a restaurant, they all have signs that say, “We’re sorry for low staffing. We are trying to hire, if you know anyone who wants a job, have them apply.” We can’t hire anybody. It’s becoming very difficult to get American’s to work, which means if we have to produce our own goods, we’re going to have to pay a lot more for those than when we’re importing them from a country like China or India that has a labor force that is willing to work for less.
So what does this mean? It’s not good news. It means everything’s likely to get more expensive, and that’s why I’m encouraging people to buy real estate. Real estate will collect income that is in proportion to whatever happens with inflation, so rents can go up when inflation goes up, the value of the property will go up as inflation goes up. It’s another source of income when everything becomes less affordable. Don’t know. Don’t have no idea if that’s the way it’s actually going to play out. Nobody does, but that’s my take on it. That’s what my concern is and that’s why I’m out here sounding the alarm that if you can own a home instead of renting, you should.
All right, our next clip comes from Quadre in California.

Quadre:
Hello David, and thank you for taking my question. My main question was I recently received a $200,000 HELOC on a property that I currently rent out in Wildomar, California, and I was thinking about taking that money and trying to invest it in properties in the Midwest. My main question is pretty much a two-part question is how should I go about that? One, should I use the money to buy a property cash, or would it be better for me to purchase properties with a 25%, 20, 25% down payment and go about acquiring properties that way? Thank you.

David:
All right, Quadre, thank you for that. Congratulations on the HELOC. Let’s break down your options. If you go pay cash for a property with the HELOC, I just want to differentiate because your mind will play tricks on you. You’re not actually paying cash for a property. That property still has debt associated with it, although the lien is not on it. The lien is on the investment property that you took the HELOC out on.
Now, think about what rates are right now. Your HELOC rate could be 8, 9, 10, 11, 12% depending on the situation because it is investment property. That’s the equivalent of getting an adjustable rate mortgage on the new property at 10, 11, 12%. I don’t know exactly where your rate is, and that means it can go up. Okay, so if you’re going to go buy that property, it’d probably be very hard to find one that cash flows with a mortgage at above 10, 11, 12%. So don’t get caught thinking that you’re analyzing the second property as if it doesn’t have debt because they’re going to look like they cash flow, but they’re not actually going to cash flow if you add the debt, at least it’s a great deal. Okay? Everything I’m about to say, throw out the window if it’s a great deal. We’re assuming this is just a standard base hit deal We’re talking about.
If you go buy a property and you use the HELOC for 25% of it, you end up paying the higher rate interest, say 10, 11, 12% for 25% of the mortgage and get a lower interest rate, say something in the sixes or maybe low sevens for 75% of it, which would make the property cheaper, but it will increase your risk. You’re now going to have a lot more financing on this property, okay?
I would need you to bring me a specific deal for me to be able to tell you if you should use the HELOC or the loan or a hybrid, and we don’t have that, so I can’t give you that specific advice, but I can give you general advice. In this market for most people in most cases, I like using HELOCs for short-term purposes, much more in the down payments on new property. I like flipping, starting a business, investing money in some way that’s going to get you a return. I like a wholesaler using a HELOC to spend money, 10 grand, 20 grand to send letters that’s going to turn into revenue when it comes back and they wholesale it much more than I like them using it to buy a cash flowing asset because those are very, very hard to acquire and find right now. So just something to keep in mind. And if you want me to give you more specific advice, just submit another question and be like, here’s the deal I’m looking at. Do I want to do it this way or that way? I’d be able to give you better advice with that information.
All right. In this segment of the show, we talk about YouTube comments from previous shows. I love getting into this because they get to hear directly from you the audience. First off, if you’d like to be featured on the show, head to biggerpockets.com/david, submit your question just like our other awesome guests have done. And if you don’t want to do that, head over to YouTube and leave us a comment on today’s show and I just might read it on a future episode. Want to increase the likelihood that your comment or question will get featured on Seeing Green? Make it good, make it funny, make it engaging, make it interesting. We look for the best ones to put on the show.
These comments come from episode 750. The first is from Zach Pate. “Building the foundation is so crucial, something I tried to put a lot of emphasis on prior to jumping into real estate. By skipping this, it’s like trying to build a house on sand. It will never hold up.” Wow, you just went full-blown Confucius on us right there, Zach. That’s powerful.
And I’m going to step into the role of broccoli. Okay? Seeing Green. I’m going to give you your green. No one likes it. No one likes vegetables. I don’t like them either. In fact, you didn’t ask, but I’ll tell you a little thing about me. When I do eat vegetables, I almost have to combine it with some kind of meat. I had asparagus today. I just don’t like vegetables, so what I did was I mixed it with the protein that I was eating. Little quick tip about David Green there, vegetables are not my favorite, but if I eat them with something I do like I can stomach them.
So I’m trying to take that principle of how I eat vegetables and feed it to you guys in the podcast that I do. I’m trying to give you what you need to hear, but mix it in with something that you want to hear to make it a little more palatable. When it comes to building wealth, when it comes to becoming a millionaire, when it comes to whatever your goals are, it’s not going to be what you see on people’s social media reels. They’re going to take the full dinner and they’re going to highlight the ice cream sundae and show you that to get you to come to the restaurant. They’re not going to show you that in order to get the sundae, you actually have to eat a lot of vegetables first, but wealthy people know this.
The people that are making really, really, really good money in real estate are not living passive lives. They are working a lot, a lot. And sometimes it’s okay to say, I don’t want that much money because I don’t want that much work or risk associated with it. The foundation is everything. You’re going to a build a foundation by having the right habits. The book I’m working on for BiggerPockets right now is called Pillars of Wealth. I’ll give you guys a URL for that. When we have a pre-order for it and it basically breaks this down. You have to be good at saving money and budgeting, you have to be good at making money, I call that offense, and then you have to be good at investing. You need to be good at all three. If you don’t have all three, you don’t have a foundation and you’re going to build something very quickly that’s going to collapse when the market changes, so thank you for that, Zach.
Our next comment comes from Lillian Luna Garcia. “Hi David. I have a question. I have listened to the BiggerPockets episodes for over a year, and I’ve recently got my first deal. I closed at the end of January. I wanted a fourplex but was not penciling in, so I got a duplex in Riverside, California County.” Hopefully you use one of our agents. I’d love that. “I’m house sacking and I’m remodeling the first unit to rent it out. The back house has a large garage and I want to make it into ADU of one bedroom, one bath, move into that, then fix the other unit to make it a two bedroom, one bath. However, I have to use my credit card to pay for my investment. Do you have a better strategy I can be using to speed up my project? I’m currently doing one unit at a time, paying off my credit card than doing the next unit. My goal is to make my duplex into the fourplex I originally wanted. Any advice helps. Thank you.”
All right, Lillian. First off, if you had used a David Green team agent, tell your agent that you want to talk to me about this and because you used us, I will answer this for you directly, but for everybody else to hear the advice that I would give you, I’m hoping you don’t have to use a credit card. I’m not thrilled with that option unless it’s your last, last, last resort or if you make really good money and have a really safe job, maybe you can take that risk. One thing you could do is finish the first part of it using private money, okay? So find a person out there who’s getting no return on their money, offer them a 6% return, a 7% return, and make interest only payments to them for a couple of years and use their money to do these remodels. Okay? That’s the first thing you could do.
Then when the remodel is done, you could refinance it, get your money back out, pay off that note, or just keep paying the 6% or 8% interest. Whatever you negotiated, that would be much cheaper than a credit card, would be the first thing I’d look for. Make sure you give yourself longer than a year. You’re going to want a couple of years in case something happens. Other than that, Lillian, you’re thinking the right way. You couldn’t find the fourplex, so you bought the duplex and you made it into a fourplex. This is not just looking for a great deal, this is making a great deal.
And our next comment comes from Casey Brightwell. “Awesome podcast. I’ve been listening now on and off for about a month. Great advice.” Thank you for that, Casey, and from EJC. “David, you speak often about the need to increase the velocity of money to build wealth. I’m starting to look at my 401(k) as stored energy that I’d like to put into motion to accelerate my wealth building journey.” Wow, this is a disciple of David right here. Way to go. I love the way you’re talking. “I took a loan out on my 401(k) when I bought my primary residence years ago, so an additional loan is not an option. I also looked into an in-service withdrawal, which I’ve heard some plans allow for an investor to roll into real estate. My retirement plan does not allow me to do this. I’m curious what your thoughts would be on taking a withdrawal that would result in penalties and an increased tax burden for the given year in which the withdrawal is taken. I’ve gotten hundreds of thousands of dollars locked into my 401(k) and that money doesn’t seem to be performing as well compared to my real estate portfolio. I’d like to continue to build my real estate empire and I almost think that the penalties will be a wash in the long run. What are your thoughts?” This is a super good question.
All right, so first off, if the penalties are evened out by the gains you make in real estate, yes, that can be something to be done, but there’s not a guarantee they will be, so we’re going to tread really lightly when it comes to doing anything that would incur penalties or a tax burden or in involve you risking retirement funds. Something that I was thinking when you were describing this is, are you able to take this retirement plan and roll it over into a self-directed IRA? We have a show coming up with an expert in this area, being lookout for Karin Hall and The Power of Investing in Realty and Alternative Assets With Your Retirement Account, should be episode 770.
That could change everything. If you could just take it from the form of energy it’s in, turn it into a self-directed IRA, which is a different storage of energy that has more flexibility for getting the energy in and out of it, otherwise the money in and out of it, that could answer your question there. If you can’t and you’re going to do it with penalties, only do it for a screaming deal. I’m going to say that again, only do it for a screaming deal. Do not do this for a base hit or a decent deal. When we say it’s okay to get base hits or we want to look for base hits, that’s assuming we have cash that we’re putting into them that is useless as far as increasing its value just sitting in the bank, losing money to inflation, you’re better off to put that into a deal. If you’re putting money into a deal that’s going to cost you money because you’re taking it out of your retirement account, it needs to be better than a single, right? Maybe it has to be a double, triple, double and a half, something like that.
All right, I hope you’re liking today’s show. If so, please go into YouTube and leave me a comment and tell me what you’ve liked about it, what you like about Seeing Green, what you think about my vegetable eating confession that I gave you guys and what you’d like to see more of on the show. Also, if you’re listening to this on Spotify, be look out for the polls. If you’re listening to the show, head over to Spotify and leave us a comment. We want to get better and stay relevant, so drop us a line and share your thoughts and fill out the polls that Spotify asks you about what you like about the show.
Our next question is a video question from Harold Blanco in Springfield, Massachusetts.

Harold:
Hey, David, how are you? My name is Harold Blanco. I’m calling from Springfield, Massachusetts, and I have a couple of questions about lending actually. The first one is the lending requirements, what are the lending requirements for a person that is a self-employed or has a owner of a small business? As you can see behind me, that’s Paula’s Barn Inc Child Care, my wife and I, we run a childcare business out of our house. And I’m looking into buy another house to house hack because this house is childcare. It’s a business more than anything else, but both my wife and I, we work here and this is our business, this how we get our income. And I would like to know what are the requirements, especially for this time that it’s so difficult when the interest rate so high and maybe banks are not lending as comfortable as they used to. Also, I have another question about lending. Does having an IRS debt or debt with an IRS have any influence on the getting a mortgage loan? Thank you and I hope you have a wonderful day.

David:
Thank you, Harold. This is a good question and it also is a good opportunity for me to make a teaching point. Questions on the specifics of a certain trade, like tax questions, mortgage questions, contract questions for real estate, sometimes even construction questions or bookkeeping questions. We do want you bringing those to me here, but I just want you to know I will never be able to give a solid of an answer as a good person in that trade. Now, part of the value I can bring you guys is if you reach out to me, I can connect you with the person who is going to be good. I can connect you with my CPA, I can connect you with my bookkeeper, I can connect you with a loan officer that I know is good at this. Because I can give an answer, but it will never be as good as the person who’s swinging a hammer every single day when you want to ask about floor choice, right? I sound like I know more about construction than someone who doesn’t get into it. I don’t know anything about construction compared to the people that are in it every day.
Very similar to jujitsu. You guys are waiting for a jujitsu analogy. Wait no longer. I am really, really, really good at jujitsu and fighting against people who don’t know and don’t know how to fight. The minute that I get against somebody who does train, I am terrible, okay? 15 year olds could whoop me. And there’s something to be learned about that in life. We’re often comparing the people that we look at to ourselves who know nothing and like, whoa, that person’s great. But in their world, are they great? Are they one of the better people at their academy? Are they one of the better people in their world?
So Harold, when it comes to self-employed lending, it is a completely different set of rules just like you mentioned, some income counts, some income doesn’t count. Some debt, like the stuff that goes to the government counts, sometimes it doesn’t. You’re going to have sometimes child support or alimony payments or back taxes. Most of the time our loan officers will check with the individual lender and say, in your loan program, can they use this income? How many years of income do you need to see from their childcare business before you feel good crediting them that income? And how much of it will you credit? How many years of taxes does this need to be claimed on? And the reason I can’t tell you right off the bat, this is the way it works, is every lender has different requirements.
Now, a good mortgage broker’s job is to go do what you are asking for you. You tell them, here’s what I got. They take what you got, and they go look for the person that will accept it. We call this 1099 approvals or self-employed. They’re definitely trickier. They take more time. This is why, especially if you’re self-employed, you don’t want to wait till you get a deal on contract and then run to a lender and be like, “Can you get me a loan?” You don’t understand what you’re asking for. It’s very difficult. W2 loans tend to be much easier to give. So reach out to me directly, I’ll put you in touch with one of the one brokerage guys. They can answer these questions and for everybody else who’s thinking the same thing, it feels safe to get the information. How does this work? But the answers change. Just like if you learn construction codes, those codes change, the rules change, the way that things are done often change. You actually have to have a contractor that’s aware of what the shifting regulations are.
So a little quick tip for everybody that’s listening here, send me your questions, but know that it’s better to be directed to the expert in this field that can tell you like a CPA that knows a tax code that’s changing. Then make decisions based off information you heard on a podcast two years ago, things like bonus depreciation changes with what can be taken, things like the full-time real estate professional status change. You might have been listening to a podcast from a year ago and we said, if you’re W2, you can’t take bonus depreciation against other forms of income, but now there’s the short term rental loophole they call it, that you could use. So you always want to talk to the person directly. Just let us at BiggerPockets, put you in touch with who those people are. Thank you, Harold and fingers crossed for you and your wife’s business man. I love, love, love small business owners. Way to go.
All right. Now, I was going to move on from this question, but I actually took a minute to talk to my partner in the One Brokerage, the company broker Christian Bachelder, and got his take on this as if we had contacted him ourselves, and I will tell you guys what Christian said. “First and foremost, it’s important to understand there are multiple ways to qualify.” I mentioned that to you guys as well. “If this is specifically referring to conforming guidelines, which I’m assuming it is, which means if this is for a Fannie Mae, Freddie Mac, conventional type of loan, any self-employed, our business income typically needs to be seasoned for two years on tax return for conforming loans. That’s a general rule.” Which is why you hear people say you need to show two years of income, two years of income. You hear that a lot. That’s because that’s one of the conforming loan rules.
“We take the average of the net income, not the gross, and add back depreciation, then divide that number by 12 to get monthly income.” Many of you, your heads are already, I don’t understand all that. He’s using a bunch of big words, which is why I tell you to contact a mortgage broker and let us figure it out for you. “That’s what we use to calculate a debt to income ratio, which is what we use to get the pre-approval. If the borrower has been in the business for more than five years, it’s possible to qualify with only one year of tax returns instead of averaging out the two years.” So if you have five years of experience in the industry, sometimes you can use last year’s income, not two years of income.
“There’s also non-conforming products that you can qualify based on deposits in your bank account. These are called bank statement financing,” I’ve used these loans myself because it’s a pain in the butt to show them all my different income streams and sources and have it all verified, “That are very forgiving to self-employed borrowers who do not report their taxes perfectly. Second, and regarding IRS having the debt you have influence your debt’s income, it does. The monthly payments, if you’re on an assignment plan that has more than 10 months remaining will be added to your debt’s income ratio just as any other liability would be.” So we would factor that into it for you, give you a pre-approval based on that.
Now, had you contacted us, what we would’ve probably said is, or you can skip all of that, not worry about qualifying off of your income at all, use a debt service coverage ratio loan that we can qualify you based off the income the property makes and you can skip all your debt to the IRS and all of the income and all of the taxes and all the things, Harold, that I think you don’t want coming up, which supports the fact that I’m saying you should contact the person directly and let them solve your problem for you. That’s what a good person does, is they solve your problem for you.
All right. Our next question comes from Jesse Dylan in Central Massachusetts. “Hi David. I’m about to sell one of my properties for the first time. I’ve owned it for less than a year, but isn’t performing nearly as well as I expected it to despite tons of analysis and pivoting.” Can’t say that I’ve never been there. “It’s a single family house that I bought as a short-term rental, and it doesn’t work as a long-term rental or a medium term rental rookie mistake.” Yeah, but way to go take an ownership of that, Jesse.
“It’s far from breaking even. Otherwise, I just write it out as it’s in a fine high cost, high appreciation state. Not a good feeling to have made a bad investment, but I’ll at least be breaking even and I learned a lot.” Good attitude about this so far. “I should walk away with 95K, but would have to buy something for 525K plus to do a 1031 exchange. Finding good deal that’ll work with less than 20% down on a time crunch seems impossible right now, especially because I’d want to get into a two or three family close by, so I couldn’t use a vacation home loan again. I’m considering not doing the 1031, using the money how I want. Then figuring out how to offset the $14,000 tax burden. I could add another unit to another property and cash out refi when rates are lower, buy another two or three family with 20% down around 400 K nearby, invest passively in someone else’s deal, buy a camper to medium term rental on my house hack property. The options are overwhelming. If cash flow is my primary goal. What are your thoughts?”
All right, let’s break this down into different components of your question. First off, if you’re selling it and and you’re going to have a gain after everything that’s going wrong, that’s pretty good, but I thought you said you’re breaking even. So I don’t know where the $14,000 tax burden comes from if you’re breaking even on this, you might not have a tax burden unless you 1031 into this deal from a previous deal. And when you say $14,000 burden, does that mean your gain is $14,000 because you’d only be paying a percentage of the gain, which would be insignificant, or does that mean your gain is like 80,000, 70,000 and so the percentage you have to pay is 14,000? I need a little clarity there. Because even paying 14,000 in taxes isn’t end of the world if you’re getting $95,000 back.
Another thing you could consider. When we had Tom Wheelwright on a previous Seeing Green episode who helped me out here, we talked about how you don’t always have to do a 1031 to shelter the gains. Sometimes you can take the gains on a 1031 buy real estate, do a cost segregation study, get bonus depreciation that you take up front, and that is enough to offset the gain that you made when you sold the property so you don’t owe taxes. So that’s another thing you could look into if you have a CPA you can talk to, if you don’t, let me know. I’ll connect you with one of my folks.
Now, if assuming we are past the tax issue and now we’re talking about what do I do with the money, you brought up a lot of good options, but here’s what I’m picking up from your question. There seems to be, and I’m totally reading into this because you just wrote it out on a document, but there seems to be a lot of urgency in what you’re saying here. You have all these different options. Do I want to invest passively in someone else’s deal? Buy another property and do a cash-out refi when rates are lower? Buy another multifamily property? Buy a camper to put in the back of a deal I already have to get a little bit more money coming in? I don’t think you need to be filling any urgency at all right now, Jesse. You’re good. You got into a deal. You realize it was harder than you thought. You bought it right, which is super important, so now you can get out with without a loss or with a very minimal loss, you got a good education. Don’t feel like you got to jump back into something and run full ahead of steam into this.
Now, if I break down why people do that, why I’ve done that, why this happens in life, it’s almost always because we are unhappy with our life right now. We don’t like our job, we don’t like our relationship status, we don’t like our car. We don’t like something about our lives and we think real estate is going to fix it, and so we get into this irrational exuberance, just I have to get in there and I have to go buy another property to make everything better. You don’t. Take stock of your life as a whole. If you’re not happy with certain parts of it, they might have nothing to do with real estate and fixing those problems will help you not make emotional decisions when it comes to real estate and instead you make financially sound decisions when it comes to real estate.
So with that $95,000, I would consider looking for a different house hack, a second one, okay? Can you buy another property in a better area, that’s a better property, that has more units, put 5% down and take the house you’re living in right now and rent that out, would the numbers work there? That’d be the first option. I’d also keep some money in the bank. It’s not the end of the world to have some reserves when we don’t really know what’s going on with our economy, with our country, with where America sits as a whole with the next election that’s coming up. This is the most uncertainty I’ve ever seen in the market. I like the idea of sitting on some cash right now and waiting for a great, great deal.
All right. I hope that helps. If my answer has got you thinking of new things, Jesse, please submit another question. Let me follow up with this on a future episode. I’d love for us all to be tracking your journey. And if you want to know more about Jesse’s story and see the cool person behind the question on Seeing Green, please check out the Real Estate Rookie Show, episode 231, but don’t listen until you’re done with this one, okay? You’re in class right now and you’re not excused.
All right. Our next question comes from Derek in Knoxville, Tennessee, an exploding market. “Hi, David. I’m 24 years old.” That’s a good number right there. I like 24. “And I just moved to the West Knoxville area. I’m trying to invest in a house hack in West Knoxville, which is the nicest neighborhood, and I have a full-time job in marketing. I like it and it pays decent. I also picked up a part-time job on the weekends at an apartment complex as a leasing agent, but it doesn’t pay very well. What are some of their fields related to real estate that I can venture into without a high barrier to entry while still working my full-time marketing job?”
Okay, let’s see here. You got a thing for marketing, which is always confusing to me when people say that they work in marketing. I never know what marketing means. Does that mean that you make flyers? Does that mean that you come up with SEO? Side note for everybody who’s in marketing or everyone who says, I’m in marketing, make sure your next statement is telling everyone what that actually means. This is just one of my pet peeves because I can’t give you a great answer because I don’t know what skills you have, right? If you told me you were an electrician or that you were a bookkeeper, I’d have a very good understanding of what advice I could give you, but marketing is just so vague and means so many things.
Let’s work under the assumption that Derek here is very good at getting eyeballs on whatever he’s responsible for. I’m guessing that’s why he’s working in the apartment complex as a leasing agent, because he’s good with people. He’s a very charismatic person, he’s friendly. He likes human beings. That’s also why he likes marketing. Look for people that need marketing, and that’s going to be a real estate wholesaler or a person who’s looking for creative financing or even a flipper. All of those people in real estate need marketing skills to find them off market opportunities. They can’t just go to the MLS and look for the deal, they have to go out into the world and get deals to find them. So if you have solid marketing skills and you want to work in real estate, that’d be a great opportunity is find a person who’s already flipping a lot of houses, a person who’s doing wholesaling deals because you’re going to learn from being around them, and you’re also going to actually have value that you can bring to their company by getting motivated sellers on the hook to hand it off to them.
Now, I want to ask you Seeing Green listeners, do you like the topic that we just covered? Are you interested in hearing more about real estate adjacent opportunities? Not a full-time investor, but not a different W2 job. Do you want to hear more about ways you can make money in real estate that don’t just involve owning the property? If so, leave me a comment on YouTube and we will work that into future Seeing Green episodes.
All right, we have time for one more question. This one comes from Anthony Wilson in the DC area.

Anthony:
Hey, David, Anthony here. Live in the DC area. I recently bought a quad-plex in the Detroit area, is my home area as an investment. I’m having a hard time renting out a few of the units because they’re two bedrooms, but the rooms are very small, so I’m wondering, should I take the wall down and make it a one bedroom that’ll be a decent size and maybe that’ll attract a better quality tenant, or should I keep fighting through with the two small rooms? One of them can probably just be a nursery or an office. I’d love to hear your feedback. Also, I’m looking to house hack for myself within the next year to get a place. Wasn’t sure about staying in the DC market, but I might be here for a while now, so I’m going to go ahead and do it. Love to hear your insight on both of these issues. Thanks.

David:
Wow, that’s a really good question, Anthony. We don’t get this very often. Should I convert my two small bedrooms into one big one? First question I would want to ask, where are you getting the intel the bedrooms are too small, so tenants don’t like it? Is that from a property manager? Is that your intuition or the tenant reps saying, I won’t rent your house because the units are too small?
Let’s assume that the intel is legit, that it’s coming directly from tenants. One thing I would consider before tearing down the wall is renting out as a medium-term rental or a short-term rental where people aren’t as likely to care about the bedroom being small because they don’t live there. They’re just needing it to sleep in basically. If you rent this out to traveling nurses or traveling professionals, they’re there to work. They’re there to work as much as they can, make as much money as they can. They just need a place to sleep, and this is better than a hotel room. Those people won’t care about a small bedroom. The person that cares about a small bedroom is going to be the family who is going to be using this for a living, and they have all their stuff that they want to put somewhere. Their kids need a place to play. So understanding your tenant base will really help make the decision on if you should tear down that wall or not.
Assuming that you can’t do the medium term rental or short-term rental and you you’re going to have to tear down that wall, I would still look for a way to use the space more creatively. If I was going to make one bigger bedroom, I would include a nook in there for an office space or a play area, something that was more than just a place to put a bed, right? Like the nursery that you mentioned. I like that.
Now regarding the second part of your question is house hacking in the DC area. I would recommend you to look into Section 8 Housing. Dr. Joe Osmo has been featured on the BiggerPockets Podcast several times. He’s also popular in the forums. He is known for doing very good with his Section 8 method because rents in DC for the Section 8 tenants are proportionally higher than what the cost of the home is or disproportionately higher. So you get a very solid price to rent ratio using that strategy in your area. So if I was going to house hack, I would look for a property that has as many bedrooms as I could possibly get that fit within the guidelines of the Section 8 program. I would live in one unit bedroom. I would rent out the others however you’re going to do it. After a year, I would now have a great Section 8 property that I could move out of that I only had to put 5% down or three and a half percent down to get.
You see where I’m getting at here? Don’t just look at the first year you own the property, buy it for the long term and take advantage of that. It’s the best advice I could give you in the DC area when it comes to house hacking. Sorry to hear about the problem of the bedroom being too small. I’d love to see you. Just to recap, try to rinse it out as a medium or a short-term rental before you tear the wall down and lose the bedroom.
All right, everybody. That is our show for today. This has been Seeing Green. I remember to turn the green light on. I wore a green colored shirt here or a green themed shirt. I talked about broccoli. I talked about vegetables, a lot of green, and hopefully I taught you all how to make a little bit more green through real estate.
If you’re listening to this on a podcast app, please take a second to give us a five star review, those help a ton. And if you want to know more about me, follow me, see what the heck I’m up to, you can check me out at davidgreen24.com or your favorite social media @davidgreen24. I recently posted a very short video on my Instagram that showed my legs, and I got quite a few DMs of people saying, I did not know you had legs, and I definitely didn’t know that they looked like that. So if you want to see what my legs look like or decide like, does David even wear pants because we’ve never seen anything from the waist down on any of these shows, you could do it on my social media.
Lastly, keep in mind that not only do we do the podcast, but we also have videos on the BiggerPockets YouTube channel. So subscribe to that. Leave us some comments when you watch them. And keep an eye for BiggerPockets webinars. We do those from time to time where we teach you guys information for free on specific topics like how to get your first, second, or third rental property, how to use the BRRRR method to grow and scale your portfolio, long distance real estate investing, how to get your next property in the next 90 days, how to make this next coming up year, the best year you’ve ever had. We have a lot of different topics on these webinars, analyzing Properties. We show you exactly how to run the numbers on them when we take real estate from being scary and make it much more simple. So keep an eye out on actually biggerpockets.com to see when those will be and sign up for those. And if you have a minute, watch another BiggerPockets video. I’d love to teach you some more. If not, I will see you guys next week. Thank you so much for watching. Please share this episode with someone that you love and know that I love you guys. Thanks for giving us your attention. I will see you on the next one.

Berkshire Hathaway Chairman and CEO Warren Buffett and Vice Chairman Charlie Munger preside over the 2023 Berkshire Hathaway annual meeting. The two discuss the U.S. property market and commercial real estate.

Griffin Parry detects a sea change in the way software-as-service companies charge their customers. As he sees it, increasing numbers of vendors regard pricing as a strategic lever as they compete for business in a crowded marketplace. In particular, instead of charging fixed subscriptions based on an agreed number of users, they are adopting more flexible usage-based pricing models. “The problem,” he says, “Is that usage-based pricing is difficult to do.”

Parry – along with partner John Griffin – is co-founder of M3ter, a London-based startup specializing in usage-based pricing. Launched in 2022, the company has just raised $14 million in Series A funding to expand its operations in the U.S. and introduce new analytics-based decisioning features.

And you could see this is a bold move. The concept of usage-based pricing has gained traction over the past couple of years M3ter is not the only platform provider in the pricing game. But Parry sees a rising tide of demand and an appetite for workable solutions and that creates opportunities for specialist startups.

Market Tailwinds

In a report published in September 2022, consultancy Bain & Company noted that charging based on usage rather than subscription was “fueling some of the fastest-growing and highest-value SaaS companies,” Snowflake, Datadog and Twilio were among those cited in the report.

It’s a simple enough concept. Traditionally, software-as-service has been sold on a subscription model, with the price staying fixed, unless the plan is changed. The usage-based approach model allows users more flexibility. This might mean cutting down on costs if usage drops or, conversely, the ability to scale up their use of the software – and pay a bit more – when required.

Now that sounds pretty straightforward. After all, it’s a model we may well be accustomed to as consumers when we pay for metered water, electricity or phone calls. So why is this a growth market, providing opportunities for startups such as M3ter?

Parry says there are some helpful tailwinds in the market.

Product Led Growth

“The rise of product-led growth is helping,” he says. Over the past few years, it’s become easier – although by no means that easy – for vendors of all sizes to sell to enterprise customers by finding corners of the organization that are willing to try out a product, often on a free-trial or freemium basis. The idea is that once some people start using it, others within organizations will follow. A usage-based approach to pricing can be helpful, not least because it allows end users to scale up usage relatively easily.

Then there is the macro-economic situation. We are living through difficult economic times. Buyers of software products are looking more closely at pricing. In particular, they are looking for pricing models to suit their needs.

But here’s the question. Given that usage-based pricing is not in itself a new concept and that aforementioned utilities are among those who have been doing it for years, why don’t SaaS companies simply build their own billing systems?

Pain Points

Parry acknowledges that there is more than one way to create a usage-based offer. “You can build your own platform or do it using a spreadsheet,” he says. “And in the past companies have had to do it for themselves.”

But, he argues, it’s not easy to get right. When running a previous company – Gamespark – Parry says he and co-owner John Griffin dabbled with usage-based pricing but it was difficult to do. When the company was sold to Amazon, he worked at AWS (Amazon Web Services). Again, he says he saw difficulties implementing a usage-focused approach.

One of the major challenges, he says, is to ensure that everyone has the usage data. That includes, not only billing departments but also customer facing staff. “Anyone who speaks to customers needs to have the data at their fingertips,” he says. It also needs to be transparent for customers. Unless they know why they are being charged a certain amount, they may not be happy. So any system needs to combine usage and price data and distribute it to whoever wants and needs it. “If you make errors, you get revenue leakage and a poor customer experience.”

Strategic Pricing

There are of course non-technical challenges around pricing. It may well be the case, a vendor can charge on a usage basis, but is that actually what the bulk of customers want? A subscription-based approach may be a bit of a blunt instrument, but it is predictable. Finance department personnel can sleep easy knowing that costs aren’t going to jump because of a spike in users.

Bain’s report found 80 percent of users saying usage pricing delivers services that are better aligned in price terms to the value they receive. But it is important to get the model right. That could be simple as pay-as-you-go or a model that moves the end user through tiers of payment depending on activity.

For his part, Parry acknowledges that he is not an expert in strategic pricing. The role of M3ter and its competitors is to provide their customers with the means to align pricing with the demands and requirements of users. Customers include Stedi, Sift and Clickhouse.

The Data opportunity

Parry also sees a data opportunity. Part of the Series A money will be spent on adding analytics features. As he sees it, the customer usage data can be deployed to underpin a huge amount of automated decision making around pricing.

Usage-based pricing is on the up. Parry says that in 2020, 34 percent of software companies used the model. Today it’s 61 percent. Uptake has been in part driven by the economic environment which has forced both users and vendors to focus on the cost equation. However, when the world economy improves, he believes the trend will continue.

For startup companies working in the software arena, the concept may help them with their product-led growth strategies. It also creates a growing market for flexible pricing enablers.