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Ashley:
This is Real Estate Rookie, episode 349-er. My name is Ashley Kehr, and I am here with my co-host, Tony J. Robinson.

Tony:
Welcome to the Real Estate Rookie Podcast, where every week, twice a week, we bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. Sometimes, we bring you data, and tools, and tips, and that is what today’s episode is all about.
We’ve got an amazing guest, Ariel Herrera, and she’s a data science by day, real estate investor by night, and she’s going to give you some really cool tips and tricks about using data to be a better real estate investor.

Ashley:
All I want to say is happy holidays, and this is our present to you from Ariel. She is going to give you guys so much information that you are going to want to just sit down and start implementing what she is talking about to accelerate your business. This was also a Christmas present to Tony. If you are watching this on YouTube, you will see Tony, all smiles and distractions, as he tries out every tool that she will suggest today.

Tony:
Yeah, at one point, you’ll hear my browser kind of crash, because I’ve got so many tabs open from other tools that she’s rattling off. I want to give a shout out to someone that left us a five star review on Apple Podcast, goes by the username of Hammond’s Fam, and Hammond says, “A fountain of information every week. I’ve deep dived into real estate investing these past three years, and I’ve been listening four years, and this podcast always has great information that I can leverage in my life and in my real estate journey.”
Hammond’s Fam, we appreciate you for supporting the podcast. Listen, for all of our rookies that are in the community that haven’t yet left us an honest rating and review, please do. It’ll take you two minutes at most, but your review helps us reach more people. The more folks we can reach, the more folks we can help. That is what we’re all about here at the Rookie podcast.

Ashley:
It’ll also be your Christmas gift to us, so you can go ahead and write that into your review as to Merry Christmas or Happy Hanukkah, whatever you are celebrating this season in there for that. We would love that. Let’s welcome Ariel into the show and get right into it. Ariel, I want to start off with talking about your epiphany that you had sitting on a bus. Can you tell us about that?

Ariel:
Yes. About four or five years ago as I started real estate, my real estate journey, I was commuting in and out of New York City for my day job. One day, as I was sitting on the bus around six AM, looking at the New York City skyline, I realized I did not want to do this for the rest of my life. Even though I achieved what my parents wanted, which was to go to a good school, get a good job, I was unhappy.
The reason being is that the time taken away from the commute, working full-time, I wasn’t able to be with my family as often. When I was, I wasn’t always present. With that, I started to research what are the ways I can get out of the rat race? There were three things that kept popping up. One, start an Amazon business, two, daytime stock trading, and three, real estate. Real estate was the one that spoke to me the most. I dived deep into about nine months of research, listening to podcasts, reading books, and watching YouTube videos.
With that, there was one consistent theme that I got from real estate was that there are people who have done this for hundreds of years with less resources than I have, less time, less money. I thought, if they could do it, why can’t I? That’s when I decided to make my journey into going to my first house hack in New Jersey. At that stage, as I was analyzing my own deals, I realized, oh, my God, the data is everywhere. It’s disparate. It’s hard to actually analyze a deal quickly. That’s how I got my journey into real estate and technology.

Ashley:
Tell us about your background in tech. Give us a little bit more in how you’ve actually progressed that into incorporating it with your real estate.

Ariel:
Sure. My technology journey kind of found me, in that I graduated at Rutgers University in business management. Never thought I’d be a programmer, but coming out of school, as I was in my first job, I took a course that another employee was hosting in the middle of the day, and really, it was just to get out of work for an hour. In that process, I learned that VBA, a coding language for Excel, can help automate tasks that you do every day in Excel, it could be lookup, or copying and pasting information. I was mind blown.
I was like, “Oh, my God, this task that takes me two hours a day, I could just code it and automate it within seconds? Sign me up.” From there, started my journey in the data science space. As I started to analyze my own deals, I started to utilize web scraping, APIs, which I could get into, to be able to leverage data to really understand the properties that I’m evaluating and analyzing them.

Ashley:
Before we get into more of your backstory and hearing about your investing journey, we are going to take a short break.

Tony:
Ariel, we’ve talked a little bit about the epiphany that led you into real estate investing, and then you had the shift in your W2 job that led you to data science. Before we go too far, maybe in layman’s terms, talk to me like I’m a fifth grader. What exactly is data science, and how do you think that’s helped you on your real estate journey?

Ashley:
Or just like you’re talking to me?

Tony:
Yeah.

Ariel:
Sure. The exciting thing is that data is all around us. It’s basically information. Say, for a property, some data you might be familiar with is the size of a home, if it’s a single family, number of bedrooms, number of bathrooms, for example. You may want to look at this data, say, on a spreadsheet, where you have all that information. Now, you could probably analyze all properties in, say, New York City within a given spreadsheet, but what if you want to do that across all properties in the US?
A spreadsheet’s not going to handle that, and that’s where data science comes in. We look to derive insights from data, usually large scale of data. To do that we use programming languages like Python to do so, and ultimately create charts, visualizations, and models to help understand characteristics about the data, and what can happen in the future as well.

Tony:
I want to lean into that just a little bit more, because I think for a lot of new investors is that when they’re starting out, one of the biggest questions that they have to ask themselves is, “What city do I want to invest in?” It’s a big question that a lot of people just honestly never even answer because they’re so overwhelmed.
There’s 19,000 cities across the United States, and trying to whittle that list down to something that makes sense for Tony, or for Ariel, for Ashley, it’s hard sometimes. How did you leverage your W2 experience of data science, and taking that list of 19,000 down to a few select cities that made sense for you to invest into?

Ariel:
Yeah, so I looked at economic factors, such as job growth, population growth, unemployment rate, median household income, and some more to analyze a particular area to see if it’s improving or if it’s on the decline. Where I got those metrics from was from government sources like the US Census, Bureau of Labor Statistics, and was able to aggregate that across cities to see it in one single view within a spreadsheet, and then be able to actually draw up charts, and analyze which of these we’re ranking towards the top in their own categories, and start to eliminate cities.

Ashley:
Do you think that a new investor starting out needs to be an expert in data science to analyze a market or a deal?

Ariel:
Not at all, especially with tools today like ChatGPT, that helps to aggregate and lift up information. You don’t need to learn how to code. You can just know how to use the right tools at the right time to answer the specific questions. There’s a lot of free tools.
For example, you could use Redfin. Redfin has data section, where you could download information on a particular market, understand if it’s trending upwards, downwards in terms of pricing, or if its price drops, for example. That can help to analyze a market without using code at all.

Ashley:
Can you give us an example of what you would actually type into ChatGPT? Like say you’re looking at Buffalo, New York, and just give us an example what you would say and type in there to get information back.

Tony:
What person in their right mind would live in a city where it’s negative 20 degrees everywhere? That’s what I would type into ChatGPT about Buffalo.

Ashley:
I literally have two blankets on my lap right now. I’m freezing.

Ariel:
Yes, you could use the ChatGPT and ask, “Buffalo, New York, new development, and growth.” From there, you’d get a synopsis of probably population growth as well as job growth. The new development part I love to put into place, because it will tell you if there’s specific areas where there’s new construction coming, maybe there’s new luxury apartments in the area, and that could also signal growth as well.

Ashley:
That’s very interesting. A couple other resources that I’ve used before were Bright Investor and Neighborhood Scout to actually collect data too. Before that, I was searching every separate single website myself, going to Crime Mapping, going to the GIS County mapping software, every little place I could find data from, but that is very time-consuming. I appreciate you giving us some insight on that, of how to actually accelerate getting all of that information together.

Tony:
Yeah, ChatGPT, they’ve been making some updates to their tool as well, so it’s like 20 bucks a month, like their pro version or whatever it is. Now, you can upload data sets to ChatGPT, and it’ll analyze it for you. It’ll automatically browse the web for you now as well. The tool’s gotten really, really cool in terms of the information it can pull in quickly.
I think for a lot of rookies that are doing that initial research, using a tool like ChatGPT to say, “Hey, what are some markets across the country that have low crime scores and good population growth?” That’ll at least give you a good starting spot. Man, the way these tools are progressing, it’s pretty crazy.

Ariel:
Yeah, it is at a rapid pace. Actually my secret is actually not ChatGPT exactly, but using Bard, Google Bard, its ChatGPT equivalent, but I find it a little bit more superior. It also pulls in data from Google Maps and the whole Google Suite products. That’s actually my favorite one that I use, and it’s free.

Ashley:
Oh, awesome. Thank you for sharing.

Tony:
Yeah, we need do a whole episode on just all the AI tools that are out there. I haven’t tried Bard yet. Ashley, have you?

Ashley:
No, I haven’t.

Tony:
Yeah, me neither. You said it’s free?

Ariel:
Yeah, it’s free. You just activate it on your Google account and you could start typing away.

Ashley:
Well, we know what Tony’s doing the rest of the day. Holding a baby.

Tony:
Yeah.

Ashley:
Using Bard.

Tony:
Playing with some AI tools. Well, so let’s go back to your journey, though, Ariel. You do all this data kind of collection, and where were you living at the time when you first started? You said in New Jersey?

Ariel:
Yes, in New Jersey.

Tony:
Gotcha. Okay. A somewhat more expensive market, right? New Jersey, New York, California, all these places are a little bit more expensive. Do you decide to initially invest in Jersey, and if so, what data did you see that kind of supported that decision?

Ariel:
Yeah, so there were three things I was looking into, which was one, first, how am I going to invest? What’s going to be my strategy? New Jersey, being an expensive market, putting 20% down in a 300K home, so $60,000 down, wasn’t viable for me at the time. I started to realize that the strategy I could take was one where I would live in the property first, and then rent it out after a year, so owner occupying it.
Once I understood my strategy, the next step was, where was I going to invest in New Jersey? Even though it’s a small state, there’s a lot of areas you could find. I wanted to do a 50 minute to one hour commute into New York City, and there were two options there, train or bus. Bus can have traffic, so I chose train. I started to look at different train lines, and what train stations and cities were near those train lines. North Jersey was too expensive, so that was Xed out. The where ended up becoming on the east coast of New Jersey.
There were three towns in particular, Woodbridge, South Amboy, and Matawan that were most interesting. Then the last piece there was, “Well, what am I going to invest in?” I really wanted to invest in a duplex, but again, didn’t have the capital to fund that. I decided on a single family home, but I used data to be able to analyze properties that had an additional bedroom opportunity.

Ashley:
How did you do that?

Tony:
Yeah.

Ashley:
When I think of it, I see like, “Okay, I’m analyzing a Zillow photo, being like, “Now, could I turn that room into an extra room?” Trying to figure out what the layout is just from the photos, have somebody on my team going to look at it or on the MLS. Please, tell us more about that.

Ariel:
Yeah, so my agent that I used at the time was one of my friends. I said, “Jeremy, this is getting difficult to go through Zillow, property after property. Could you send me just a list of the properties in a spreadsheet from your view in the MLS?” He sent me that, and what I was looking for were properties that the size of the square footage was larger than the number of bedrooms, to see if there was maybe a dining room, or some extra space, maybe an office nook, that I can transfer into a bedroom in the future.
With that, I did a quick calculation of square footage divided by bedrooms, and found this one property that was about 1,300 square feet with two bedrooms, which in the area I was targeting, I knew there could be possibly a third bedroom in there. We went to visit the property, and we saw the master bedroom was facing the street, which was kind of unusual. When we went upstairs to it, we saw that there were two closets on each end, two windows, and it looked as if it had been two separate rooms at the time.
Looking back at court records, it actually was. That was what initiated me to put an offer, and ultimately go through with that property.

Tony:
We got to pause there for a second. That is such a ninja trick. I’ve never heard of anyone doing that before, like, “Hey, I’m going to get an export of all of the properties, and then just put a little formula in Excel that compares the bedroom count to the square footage.” Then basically, you were just looking for properties that had a really good ratio between square footage and bedroom count. That is awesome.

Ariel:
Exactly. Simple, but effective.

Tony:
Yeah, because especially now, given where we’re at in the interest rate environment, it’s getting harder to find good deals. You’ve got to get more maybe creative on the front end to find those deals that have opportunity to maybe add some additional value. What you just described is that’s something that every single person listening right now can do is just ask their agent for an export, and then search and filter, and do that little trick. That was cool. I really liked that. Sorry, the nerd in me is geeking out over that one. That was cool.

Ashley:
Usually, you’ll hear people talk about scrubbing the detail of the listing, the description, and looking for office, or bonus room, or something like that to look for an additional bedroom. Yeah, that is great insight, comparing the square footage to the actual bedroom count.

Ariel:
Yeah, multiple ways to go about it.

Ashley:
Yeah. You find this property, and then tell us what happens next.

Ariel:
Yeah, so once we sign to the property, next thing was actually house hacking it. What that meant was having other people live in the property alongside myself. It was my partner, him and I, as well as a family member. My mortgage of $1,800, I was only paying 600 of it, and that really helped to propel me to save more money for my next deal.

Tony:
I was just going to add some clarification there, because I think a lot of times, when people hear the phrase house hack, they immediately think like small multifamily, where I’ve got to go out and get a fourplex or a triplex or a duplex. You can house hack in a single family home.
I don’t remember which episode it was, we interviewed Craig Curelop, and he authored the book on house hacking for BiggerPockets, and he said one of his first house hacks, it was a single family home, I think, but he was renting out every room in the house, and he was sleeping on the couch. Isn’t that what he said, Ash?

Ashley:
Yeah.

Tony:
He was renting out every room and he was sleeping on the couch. Even if you go out and you buy maybe a big, single family home, even if you’re only one person, you can still house hack that. I love that you took that approach, once you realized that the small multifamily wasn’t necessarily in your price range.

Ariel:
Yeah, 100%. Honestly, at first, I was nervous about living with two boys. I was like, “Oh, my god, this is going to be like a pigsty every day,” but it wasn’t at all. It worked out very well.

Ashley:
You know what, there’s no drama, though.

Ariel:
Yes, exactly. Just sports playing in the background all day, but that’s it.

Ashley:
Okay. After you got this first property in your house hacking, is this where you got bit by the real estate bug?

Ariel:
Yes, it was. I wanted to continue investing. I wanted to live in the property for a full year, though. I started to look at other investment opportunities that would be solely an investment where I put 20% down. Unfortunately, New Jersey being expensive, I started to look out of state instead. I particularly looked at Detroit, Michigan, with affordability for properties being lower, as well, I had someone in my network who had invested there and kind of leveraged their knowledge.
What was really exciting there is I started to now get more in depth with my data analytics. I didn’t feel as comfortable at that stage asking the agent for just a download of the data. Now, I’m looking at a wider scope since Detroit’s pretty large. With that, I actually use web scraping. Web scraping is copying information from the web as if you were going to Zillow, and copying down the property address, bedrooms, bathrooms, but instead of doing that manually, you could do it automatically.
I was copying that information down, and I started to get a little bit down on myself because the duplexes were a little bit out of my price range, about 150, 160, and I was looking to spend around 130. I started to look at single family homes, and I put them up in a chart. I wanted to see the distribution, so the characteristics about the data of the properties, to see how many were three bedrooms, four bedrooms, et cetera.
I saw there was one single property that was five bedroom, two bath, single family. I’m like, “Okay, that’s kind of odd.” I go to look further into that property at the description, and long and behold, it says duplex in the description. The agent actually listed it incorrectly, and it was priced about 25K lower than the other duplexes. I was able to make an offer in that case, and get it accepted at a lower rate.

Tony:
Wait, so sorry, I just want to pause and make sure I’m understanding what the scraping process was. How did you scrape all of this data? Is there a tool that you’re using? What are the steps to do that if someone wanted to replicate that?

Ariel:
Sure. At that time, I was using Python to do so, so programming language, but today, it’s even easier. You could use tools like Browse AI, for example, where you basically screen record how you would manually go about the process, what information you want to capture, and then it will automatically get that data for you, either when there’s something new on the web page, or if you want to set it every day, every week, it’ll get that information, and put it into a spreadsheet.
At that time, I did do it with Python, and I was able to get the information across the city for all properties listed on market in a spreadsheet to analyze.

Tony:
Ariel, you’re saying that this tool, Browse.ai, I can sign up for this website, go to any website that I want, screen record the information I want from that website, and this tool, using AI, machine learning, whatever, will pull whatever data I want from that website automatically?

Ariel:
Yes, exactly. There’s many tools similar to it.

Tony:
That’s crazy. I could go to Zillow. This is one of the things I’ve been thinking about recently, and now I’m just asking you selfishly for myself at this point, but we’re looking to do more rental arbitrage, and part of the issue is like, “Man, there’s so many listings for rents, and what’s a super easy way to kind of compare the short-term rental revenue projections to the long-term rental revenue projections?”
That way, I can see what that margin is, and ideally, I only want to reach out to listings that have more margin. Could I use Browse.ai to scrape all of the listings that are currently for rent, and then also scrape the revenue projections from an AirDNA and then compare those two things together? Could I set it up to do that, or am I thinking too far ahead now?

Ariel:
Yes, you could definitely set that up. What’s really cool about Browse.ai is that they have readily available bots for Zillow as well, and I think Redfin too.

Ashley:
Well, I know what I’m doing tonight.

Ariel:
Yeah, and just to add, no code, and it takes about anywhere from 10 to twenty-five minutes to set up.

Ashley:
I better text Daryl to get me an Alani, because it’s going to be a late night. I’m just going to go into a big deep hole of researching all this and setting this all up.

Ariel:
To get started, you could do it all without code using Browse.ai, and there’s actually videos that I have of tutorials, where I take you from beginning all the way to the end of creating these web scraping bots, all on your own, within 20 minutes to set up.

Ashley:
Make sure you check out the show notes after the episode where we are going to link everything. If you get distracted and go to the show notes now, you may miss another amazing link that Ariel has for us, so make sure you wait until the end, but we’ll put them all in there.
Thanks to our great producers and editors that will catch all of these amazing resources that we are learning here. We know Tony has already, have all the web browsers open of each one, making sure he doesn’t forget to go through it.

Tony:
Yeah, I’m just so surprised that Ash and I live, eat, and breathe real estate investing, and that neither one of us have heard of this tool. There are so many things out there now that make it so much easier for the rookie investor to find their first deal. Ariel, thank you so much for showing these tools to people that otherwise never would’ve heard of them before.

Ashley:
I want to say something about that real quick, because I think that’s almost, in a sense, just like real estate investing. When you’re starting out with real estate investing, there are so many different strategies, so many different ways to make money that it’s just overwhelming with all of the options. I almost feel that’s how AI is getting today, that it’s so overwhelming with all of these different things and capabilities that you don’t even know where to start, or things that are available, things like that.
Think about just on this podcast, all of these things that we have learned, like, “Oh, my god, you’re doing what to this mobile home? That’s amazing. We didn’t even know that was a thing.” You’re still constantly learning so much and being educated of all these different ways that you can make money, and also be efficient and effective at running your business.
Ariel, let’s get back to your story, now. Now that we’ve got on these tangents, and I am sure there’s going to be another one that me and Tony are wowed by and need to implement immediately into our business. We left off that you were looking into Detroit. You were scrubbing for properties. Did you find one?

Ariel:
Yes, I did. It was that property that was a five bed, two bath listed a single family, but was actually a duplex, and was able to get that at a discount of around 25K because of that.

Ashley:
The discount was 25K, or you got the house for 25K?

Ariel:
Oh, no, the discount. That would be incredible, right?

Ashley:
I was going to say, we have heard of houses being cheaper in Detroit, but I was saying, it’s been a long time since we’ve had anyone say they got a house for 25,000.

Tony:
You said it was listed as a duplex, so did you have to go in and do any work to it, or was it truly already a duplex, and they just listed it incorrectly?

Ariel:
Yeah, truly a duplex. I went to the county website just to confirm, and it was. It was just listed incorrectly by the agent.

Tony:
Wow, that is insane. You found two killer deals just by finding little nuances in the data, which I think is super interesting.

Ariel:
Yeah.

Tony:
Then I guess just one side question, Ariel, a lot of people, I think, have fear of investing out of state, and even more so people, Detroit, with some investing groups, has a bad stigma. Were you not nervous at all about investing out of state for your second deal?

Ariel:
I was nervous, and I went in person to get some boots on the ground, just to solidify what I saw in the data. Prior to, I was looking at Niche.com, which gives overviews of neighborhoods, and I wanted to find a neighborhood in Detroit that was more so skewed of ownership versus renters. Since usually there’s pride in ownership, maybe the lawn is more up kept, less trash.
There was a neighborhood that I was particularly interested in, Bagley District in Detroit, and luckily, having boots on the ground helped me to confirm that’s where I wanted to invest.

Ashley:
Let’s kind of talk about your confidence in investing out of state. How did you build your team there and feel comfortable investing out of state? Sometimes that is a barrier of entry for people is that they don’t know anyone in a market, and they don’t trust a lot of people. What are some of the things that you did to feel comfortable and confident investing out of state?

Ariel:
Yeah, I read David Green’s book, Investing Out of State, and that really helped me, because as someone who’s very methodical, being like a data scientist, I like to have a checklist of what I’m doing. I felt like that book was my checklist. In the back of my head, my mom, she was always like, “Ay Ariel, why are you doing this? Why are you investing out of state? Just sell a property you have. Sell everything.”
That’s always her mindset, but at the same time, she holds me accountable to follow criteria. She read the book too and she was like, “David Green said to follow this step as well. Make sure you talk to your agent about these things, your lender about some other topics.” I think properly screening my agent, my lender, meeting them in person as well really helped me to feel confident and be able to invest in Detroit.

Ashley:
You were starting to talk about, before I rudely interrupted you, but you were talking about your next market that you decided to focus on.

Ariel:
Yeah. Now, it’s March of 2020, and I’ve been able to save money by house hacking the property that I was currently in. I have some money saved, and then the pandemic happens, and a lot of people are moving to remote work. I selfishly had already been working remotely twice a week, and I was like, “Ugh, I wanted to keep this secret to myself, and now everyone’s going to work remote, realize how amazing it is.”
I thought, though, there could be some opportunity here. We always hear if you could invest in 2008 way long ago, you would be well off today. I thought even though despite this, what’s going on in the world, maybe there’s opportunity here. There were two things that I noticed that I liked about working remotely. One thing was, or I guess an epiphany, was weather. If I could work anywhere, why am I working in cold New Jersey where I can’t do things for six months out of the year? Sorry, Ashley, I know you’re a New York girl, but not my preference.
Then the second piece was income. In my head, I was like, “If I could work anywhere and program anywhere in the world, why would I do it in a place where I’m getting income tax? If I move somewhere else, I could instantly give myself a bonus of 10 to 20K instantly, just by leaving the state.” I thought, “If I’m thinking that, other people would think that soon too.” April 1st is when my partner and I, he and decided we were going to do whatever it took, eight weeks, figure out a market, figure out a place to live, and rent out our property on our own for the first time.

Ashley:
That’s super exciting. Do you want to kind of give us some of the numbers on a couple of your deals?

Ariel:
Sure. A property that I have in Tampa, Florida, a single family home, purchased it for 274K, put 5% down, was able to house hack it. At that time, my portion that I was putting myself was 550 a month. When I ultimately rented it out, the whole house itself, it was at 2,500. My cash flow there was about 700 or so.

Tony:
Wow, that is amazing. I’m shocked right now. These are such good deals, and the way that you’re finding them, it’s amazing.

Ashley:
What has been your favorite deal so far?

Ariel:
Yeah, my favorite deal was probably my property in Tampa, Florida in the Seminole Heights area. At that time, I had already been living in the Tampa area for about a year, but I wanted to find an up and coming area so that I could really leverage having a house that appreciates, and then be able to use that money in the future for maybe a future rental property. I was having difficulty at that stage, because it was 2021, people were outbidding one another left and right, getting a lot of people from the north who were coming with all cash offers.
I would be sitting in a meeting, I would get a notification on Zillow, a new property, met my criteria, but by the time I analyzed it at night, there was already people who saw the property and possibly already outbid me. What I decided to do analytics-wise is I paired my notifications that I got from Zillow with Zapier. Zapier is a tool that allows you to communicate with different applications. What I would do was every time I got that email, I would strip the email, take out bedrooms, bathroom, price, and property address.
I would then take that and then go to an API, so a way to get data externally for that property. Next step was automatically calculating cash flow through Zapier, just adding a couple of calculations. Then this last piece there was sending myself a text message if it met my criteria. Now, as a data scientist, I’m sitting in meetings throughout the day, and I could just get notification once the property in my criteria also met my certain cash flow metrics. It saved me a lot of time down the line.

Tony:
Sometimes, we interview guests…

Ashley:
If you guys aren’t watching this on YouTube, you need to watch Tony’s facial expressions.

Tony:
We use Zapier in different parts of our business, but I’ve never thought to use it to help with deal analysis. You’re so close to the problem sometimes, you don’t realize that the easy solution is staring you in the face, and what you just shared is such a simple solution to be able to move faster when it comes to deal analysis.
A lot of that high level stuff, it is just basic formula. You can kind of go in and do some nuanced if you want to, but man. Sometimes we interview guests, and we end up learning more, I think, than even our audience does. I love this conversation. That’s amazing. Ash, have you used Zapier at all before?

Ashley:
Yeah, but literally just like my National Fuel invoice comes into my email, it gets filed into my Google Drive. That’s it, more of just filing stuff, the emails that I get regularly. You use it too, right?

Tony:
Yeah, we use it quite a bit, more so on the marketing side, but yeah, never for actual deal analysis, which that just unlocks a whole new level here.

Ariel:
Yeah. The exciting part there, it was actually no code to set up. Pretty easy, just using all of Zapier’s readily available tools.

Tony:
Guys, for our rookies that are listening, hopefully you’re not feeling overwhelmed by some of the talk that’s going on, because a lot of what Ariel said is like, “Yeah, you don’t need to know how to code. You can probably watch a couple of YouTube videos, figure this stuff out.” She’s given you tools that are literally just, click the buttons you want to click, and the tool’s going to do what you want it to do.
Just having the courage to go out there and start playing around with some of these things, I think, gets you on the road to using them in the way that Ariel has here. Backtracking quite a bit, I don’t know if we asked this question up top, but if you can just set the table for us, Ariel, what does your current portfolio look like today?

Ariel:
Six units.

Tony:
Across how many different markets?

Ariel:
Four different markets, so New Jersey, Detroit, Tampa, and then Playa del Carmen.

Tony:
Playa del Carmen? All right.

Ashley:
Let’s talk about that one.

Tony:
Yeah.

Ashley:
Did you do kind of the same market analysis, or was this because you want to vacation there? Tell us a little more about sourcing that deal.

Ariel:
Yeah, similar market analysis, kind of thinking, “Okay, if everyone can work remotely now and they have the choice to work, say, out of the country, where would they most likely work?” There’s two options. If you’re going out of internationally, probably Canada or Mexico would be the top, since they’re still in North America. Mexico’s warmer. I thought more people would move down there.
I started to look at cities around major airports, so Cancun being one of them, I saw Playa del Carmen was a city that’s had a lot of growth over the last several decades, and in particular, it was already growing as an expat hub. I was going into the Facebook groups and seeing people communicate there about loving living in Playa del Carmen, the low cost of living, and some information about investing there too. With that, I started to sync with multiple different agents to talk about new development condos that I could possibly invest in.
I was a bit wary at first, because there could be scams investing abroad. I read up a lot on that, and I made sure I went with a developer that already had completed 18 condo buildings. I knew that there was already backing, and felt more solidified to go through with that deal.

Ashley:
How did you finance this deal?

Ariel:
I financed the deal initially with a down payment that I had from a 401K from a job that I changed through, but I actually didn’t have the rest of the money that I would need. The deal was 160, put 60K down, but I didn’t have the 100 grand. I was like, “Well, you know what? I’m going to figure it out as I go along.” It helped me to get creative. There were two things that I did.
One, all the knowledge that I’ve had about analyzing a market and list building, I put that into courses, which helped me to raise money for my deal. On the second end was that house that I had in Tampa Florida, that appreciated quite a bit, if in only a year. I was able to get a HELOC, so a home equity line of credit, on that property, to then pay off the rest of the Mexico condo.

Ashley:
Then you just used money from that condo to pay off your line of credit?

Ariel:
Exactly.

Ashley:
That’s such a great tool to use is to looking at your other properties, leveraging them to purchase another property. I think sometimes, it’s easy to get caught up as to like, “Oh, well the cashflow on my duplex, if I take a HELOC out on it, my rents won’t cover the HELOC.” Well, no, you take the cashflow for the rents from your new property, and go ahead and pay that off.
Just because the collateral isn’t the same doesn’t mean that you can’t take rent payments to pay off debt that you used to purchase and fund that property. That’s for another property.

Tony:
Then for the Playa del Carmen property, Ariel, are you short-term renting that, long-term, medium-term? What’s the strategy on that property?

Ariel:
It’s a short-term rental, and the plan that, if I needed to, I could always live in the property.

Ashley:
I’m trying to look out your window right now and see what’s the background there. It’s not Mexico?

Ariel:
No, it’s Tampa, Florida.

Tony:
Just you being in Florida, building out that team that you need to run a short-term rental in a different country, I’ve never even done that before, what steps did you take to find good cleaners, good handymen in that local Playa market?

Ariel:
Yeah, luckily there’s already a property management company that was synced with the condo building, as most investors are taking the same strategy. I did speak with them, asked a few questions, felt comfortable, and they’ve handled that part on their own. Then I’ve also Airbnb’d my property in Tampa. I’ve taken a similar approach of working for property manager.

Tony:
Let me just, final question on that piece. What made you go the property manager route, even for the Tampa home versus doing it yourself?

Ariel:
Oh, I wanted to really do it myself completely, just to save cost, but I had to take a step back and reflect, and realize all the things that I’m doing doesn’t end up being worth my time to answer calls, to, say, clean a property when I could be coding, and developing solutions, and helping out other people. It had to do a give and take.
Luckily, in that case, with the Tampa Florida house, I was able to get 15% for a property management fee, which is actually pretty low for the industry standard, since a friend and I did it at the same time for our properties.

Ashley:
Well, thank you so much, Ariel.

Tony:
Yeah, so much good information. I feel like we keep talking, we just got to keep bringing you back. I got so many more questions to ask you about all these [inaudible 00:38:27].

Ashley:
I know, once we start actually digging into it, we’re going to have a lot of questions, but we’re going to turn to your YouTube channel to check those out. Make sure you go into our show notes to find Ariel’s YouTube channel to learn more. We do have a Rookie Reply for you today. If anyone would like to submit a question, you can go to biggerpockets.com/reply, and insert a question that we may play on a Rookie Reply episode, or we may ask it to a guest.
Today’s question is from Laurel. I’m working towards getting my first property, and I’m considering going off market to really be able to find a property that is a deal. I see properties posted on Facebook, but because I still have my W2 and work during the day, I tend to be too late to get in contact with the sellers, and the deals are already under contract by the time I found the listing. Is there a way to see properties or be notified when properties are posted to social media? Thank you.

Ariel:
Yeah. Here’s where we could use web scraping bots, similar to Browse AI as well as Applify. We can take the link of our Facebook group, plug it in, and then screen record how we would capture a deal, what is the information we want to get from that post, possibly the listing price, maybe an email we want to take from it. Then from there, we can have it set up on a daily structure, where we get information in a spreadsheet that came from that Facebook group.
That way, we don’t have to go in manually every single day to get that, or we could even set it up on another way, where we get automatic notifications every time the page changes based on our parameters. We could set that up with no code at all, be able to read in data from Facebook groups, put it into a spreadsheet, and have that ready to analyze right away.

Ashley:
Wow, that is super cool. I actually spend a lot of time on Facebook Marketplace. I really don’t like social media in general, but there actually have been a lot of great off-market deals posted on Facebook marketplace, and they do get traction so fast. I’ve been looking at lake houses. A lot of times, people will list their lake house in the Facebook group of like, I don’t know, the example Lake Association, Be Neighborly, or something like that.
It will post it. People will post it in there, or they’ll even say, “We’re interested or thinking of selling our property,” and stuff. The next day, it’s already sold. It’s gone.

Tony:
I’m just going down the rabbit hole right now of all the tools that Ariel is sharing with us. I guess just for my own knowledge, between Applify and Browse.ai, which one do you like more?

Ariel:
I like Browse.ai more. However, if there’s a custom site that you want to scrape, say it’s a foreclosure website, or maybe something about the county website, probably going an Applify way would be easier, because you can actually contract out specific freelancers for more intricate web scraping tasks. They both serve a purpose, but a little bit differently.

Tony:
Man, amazing. All right, let’s go to our Rookie exam. These are the same three questions we ask every single guest. I’m getting caught up in my words because I’m so excited from the tools you’re sharing with us. Question number one, Ariel, what’s one actionable thing Rookies should do after listening to your episode?

Ariel:
Number one thing is to be data-driven. Don’t just go into Zillow, select a property at random and say, “I’m going to invest in that.” You could use data-driven tools that are for free and readily available. We could use Bard, Google, or ChatGPT to ask questions, start to narrow down what areas you may be interested to invest in.
You could also use free resources from Zillow and Redfin. They have posts every single month from their data centers on meeting listing price, rent prices, sales cuts, and that can help you to start to analyze where you want to invest, and where has more growth versus areas that are declining.

Ashley:
What is one tool, now, this is going to be hard to narrow down, one tool, software app, or system in your business that you use today?

Ariel:
Selflessly it would be Coffee Clozers, the company that I’ve co-developed with two other folks, to help find cash flowing deals in up and coming areas, and to tag properties that have opportunity. We’re able to get information from the MLS, and aggregate that data to help pinpoint what is the right deal at this moment to be investing in?

Tony:
For our last question for you, Ariel, where do you plan on being five years from now?

Ariel:
Five years from now, I hope to be full-time within my real estate startup company. It’s accelerating, and we’re helping people find deals, as well, I would like to be financially free, where I can help underprivileged communities learn how to program. One thing that I’ve taken away from my tenure, apart of my career, is I’ve never actually worked with another Dominican data scientist. I’m always the only one, which has come with some barriers, but I would love to be able to help others get into the programming space.
Unlike other careers, where you sometimes need to have some wealth to afford the right degree, or have the right network, programming, you can just get started instantly. All you need is internet connection. You could go to a library and use their computer. As long as you have an interest and curiosity, it’s a great field to go into and I’d love to help people there.

Ashley:
Well, Ariel, thank you so much, and you have helped a lot of people already on today’s episode. Thank you so much for taking the time to share your knowledge, and experience, and for us to learn about your investing journey. Well, Ariel, thank you so much for joining us on this Rookie episode. I’m Ashley at Wealth From Rentals, and he’s Tony at Tony J. Robinson. We will see you guys for our next episode.

Sometimes, a borrower might confuse a mortgage broker with a loan officer or mortgage lender. However, there are differences between these roles. Before a soon-to-be homeowner takes out a mortgage, they should understand what a mortgage broker is, the benefits of using one, and how to choose the best broker. This guide can help borrowers decide if using a mortgage broker is the right decision.

What Is a Mortgage Broker?

A mortgage broker is the middleman between mortgage borrowers and mortgage lenders. They do not use their own capital to originate loans. Instead, a mortgage broker connects lenders with borrowers based on the needs and financial situations of both. They do this by identifying the best mortgage for each unique borrower.

The broker gathers necessary documentation from the borrower, such as income statements, asset information, bank statements, and employment verification. They will also pull credit reports, assess credit scores, and look at credit card and personal loan debts. 

The mortgage broker will complete the loan application and determine the ideal loan amount, loan-to-value ratio, loan terms, and loan type. Then they submit the loan application to a lender for approval and underwriting.

Mortgage brokers can save borrowers time during the application process. They also save them money over the life of the loan. After the mortgage lender distributes the funds, the mortgage broker collects a commission fee as compensation for their services. The broker only gets paid when the loan transaction is complete.

Mortgage Broker vs. Mortgage Lender vs. Loan Officer

Mortgage brokers differ from mortgage lenders and loan officers.

Unlike a mortgage broker, a loan officer is a representative of a financial institution, such as a bank or credit union. They offer direct assistance to borrowers taking out residential mortgage loans. Loan officers, or mortgage loan officers (MLO), are the contact for most borrowers applying for home loans from financial institutions.

Once a borrower agrees to proceed with a lender, the loan officer helps prepare the application. Then they pass it to the lending institution’s underwriter, who assesses the creditworthiness of the potential borrower. If the underwriter approves the loan, the loan officer prepares the closing documents.

A mortgage lender is the one that actually provides funding for the mortgage. Many consumers prefer to use a well-informed mortgage broker to help them find the right mortgage lender. In fact, the reason financial institutions have so many branches is that they want to connect loan officers with potential borrowers. A broker can bridge the gap by helping borrowers and lenders come together.

Some loans are more work than others, such as secured loans versus unsecured loans. Mortgage loans require a hefty stack of documentation. This is because of the many related federal, state, and local regulations.

Mortgage brokers can simplify the mortgage process for both borrowers and loan officers. They do this by ensuring that borrowers have the qualifications required by lenders before taking any steps in the mortgage process.

The Role and Responsibilities of a Mortgage Broker

Navigating the mortgage market can be overwhelming, but a mortgage broker can help. 

There is some overlap between a mortgage broker and a loan officer. Both roles know about various loan products. They can help borrowers with buying or refinancing a home. They’re well versed in the mortgage market and can advise borrowers on how to find the right mortgage. Mortgage brokers offer insight into loan eligibility, as they’re responsible for the initial screening process.

A mortgage broker works on the borrower’s behalf to find the lowest available mortgage rates and best loan programs available. To do so, they look into multiple lenders for their clients. The number of lenders accessible to the borrower will be based on the broker’s ability to work with each lender.

Brokers do not receive compensation unless the loan closes. Therefore, it’s in the broker’s best interest to work with borrowers on a more personal level. If a loan originates through a broker but a lender declines it, the broker will then apply to another lender. Meanwhile, if a loan originated through a loan officer is declined, no further action is taken with the financial institution.

Benefits of Using a Mortgage Broker

Working with a mortgage broker saves time and legwork for the borrower. Mortgage brokers know how to navigate the mortgage market and can act as a guide. They have connections with a broad range of lenders. A broker can steer borrowers away from mortgage companies with unfavorable payment terms?.

Mortgage brokers have better access to lenders. In fact, some lenders work exclusively with mortgage brokers, relying on them to bring in leads. 

You can contact lenders directly for a mortgage. However, brokers often get lower rates and better terms from lenders because of the business volume they provide. Brokers can also help manage mortgage-related fees, including the application, appraisal, and origination fees that lenders charge.

How Much Do Mortgage Brokers Charge?

Whether buying a home through a real estate broker, real estate agent, or homeowner, borrowers can work with a mortgage broker. Mortgage brokers make a commission that usually works out to 1% or 2% of the loan amount. This differs from loan officers, who get a salary and are not incentivized by loan volume or amount. 

How do mortgage brokers get paid?

Mortgage brokers receive their commission from either the borrower or the lender when the loan closes. Usually, the lender pays the mortgage broker, which allows them to advertise a “no-cost” loan. However, the broker’s commission might still be rolled into the loan via a higher interest rate. The broker may charge different fees, depending on who pays their commission.

The mortgage market, home prices, and loan competitiveness will help determine the commission rate a mortgage broker receives. In more competitive markets with high-priced properties, brokers may have lower rates. Federal regulations limit mortgage broker fees to 3%, and they must disclose any fees to borrowers upfront.

How to Choose a Good Mortgage Broker

To find a mortgage broker near you, consider reading online reviews prior to choosing one. Here are some tips on finding the best broker to get a mortgage with favorable rates and terms:

• Referrals work best: Ask someone you know, like a friend or family member, who has recently bought a house to share their experience with a broker. Tell them you want to hear the good and bad.
• Leverage your current bank: Reach out to your current financial institution for mortgage broker references. You already have a relationship with your bank, and it’s in their best interest to help you.
• Ask your real estate agent. Real estate agents can offer guidance on local brokers with solid reputations and who they have a relationship with. Make sure you do your own research, though.

Questions to ask mortgage brokers

Before choosing a broker, be sure to ask plenty of questions. Likely, you’ll be most interested in mortgage rates, but before committing to a particular mortgage broker, ask these questions:

• Do you have a list of lenders you work with?
• Can you provide a complete list of fees you typically charge?
• What’s your normal commission rate, and who pays it?
• Do you have different rates for lender-paid versus borrower-paid commission?
• Will the lender waive some fees, such as the appraisal or closing costs?
• What are the typical down payment requirements?
• Do you work with FHA-, VA- or USDA-approved lenders? 
• What is the typical turnaround time for preapproval?
• How long does it take from choosing a house to closing on the loan?
• Can you provide a list of references?

Final Thoughts

A mortgage broker can save you a lot of time when you’re searching for the best mortgage lender. Brokers have a lot of experience helping real estate investors and individuals get home loans. Their expertise can help you get the best deal on a mortgage, and they often have the right connections.
If you need recommendations for mortgage brokers in your area, check out the BiggerPockets forums. Here, you can get advice from people who share your goals and aspirations.

Find an Agent in Minutes

Match with an investor-friendly agent who can help you find, analyze, and close your next deal.

Matthew Graham, chief operating officer at Mortgage News Daily, joins ‘The Exchange’ to discuss the state of mortgage rates, their outlook for next year, and more.

Mindy:
Hello, our dear listeners, and welcome to the BiggerPockets Money Podcast where we are speaking with Jabbar Adesada today, who you might remember from episode 257.
Hello, hello, hello. My name is Mindy Jensen, and with me as always, is my real estate investor co-host, Scott Trench.

Scott:
Thanks, Mindy. It’s great to be here with my, you know the drill, money sergeant, Mindy Jensen.

Mindy:
Oh, I like. That was good. Scott and I are here to make financial independence less scary, less just for somebody else.
To introduce you to every money story, because we truly believe financial freedom is attainable for everyone, no matter when or where you are starting.

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

Mindy:
Today’s show features a 22-year-old enlisted Marine sergeant, who also just so happens to be a real estate entrepreneur with a $1 million net worth.
He also built a business that generates hundreds of thousands of dollars per year since graduating high school, with a combination of flipping, short-term rentals and long-term rentals.

Scott:
Yeah. This is the story of what energy, hustle, self-education, discipline, frugality and the interweaving, the interrelation of real estate investing into your personal life, can achieve for you in just a few short years. I know I had a similar experience to Jabbar in many ways, 9, 10 years ago when I was getting started.
Just how that foundation can set you up to absolutely see your business and personal wealth explode in the out years. It’s a real treat to do this now, because we last recorded with Jabbar in December 2021, when he had just purchased his first two properties. Actually, it was Dan Sheeks who recorded with him then, I was very jealous.
But he had purchased his first two properties by the age of 20, about $850,000 in real estate, and laid a really strong foundation of frugality and income from those properties. You’re in for a treat today, as we learn about how that set him up to absolutely explode heading into 2022 and 2023 from a business and personal wealth perspective.

Mindy:
Scott, I think what I’m hearing you say is everybody should be just like Jabbar.

Scott:
Let’s be like Jabbar.

Mindy:
Let’s be like Jabbar. Let’s not waste another second, let’s bring in Jabbar. Jabbar Adesada is a 22-year-old US Marine and real estate investor. We last spoke with him on the BiggerPockets Money Podcast in December of 2021.
At the time, Jabbar was new-ish to real estate and had the stated goal of becoming a millionaire by the time he turned 30. Today, we’re bringing Jabbar back on the show to update us on his journey and how he was able to, spoiler alert, beat his millionaire goal by nine years.
Jabbar, welcome back to the BiggerPockets Money Podcast. I’m so excited to talk to you today.

Jabbar:
Oh, that was an amazing introduction. Thank you so much for having me.

Mindy:
That’s your life. That’s not an amazing introduction. That’s just like, “Hey, here’s Jabbar.”

Jabbar:
But you said it so cool. You made me sound cooler, I thank you so much.

Mindy:
Well, was any of it not true?

Jabbar:
No, it’s true. It just sounds awesome when you say it.

Mindy:
Jabbar, before we jump into this, I wanted to recap a little chat we were having before we started recording.
I said, “Oh, so you’re a millionaire now?” Your response, what was your response?

Jabbar:
Finally.

Mindy:
Finally, and how old are you, Jabbar?

Jabbar:
I’m 22.

Mindy:
22, so finally. I thought it was hilarious and I was laughing like crazy, but also I want to point out that you’re 22. Don’t compare the beginning or middle of your journey to the middle or end of somebody else’s journey, because there’s different circumstances surrounding all of this.
I’m a couple of years older than you, Jabbar. I’ve been investing since longer than you were born. That doesn’t make me a better person, but it does make me a really bad person for you to compare your story to, because I had a head start that you didn’t. I was investing in the ’90s. You weren’t around in the ’90s, right?

Jabbar:
No, so I could be 45 secretly.

Mindy:
I just wanted to point out that yes, you’re finally a millionaire. There’s this idea around the FI community that, “Oh, I’ve discovered fire. Now I want to be a millionaire as fast as I possibly can.”
That’s a great goal, but it’s not going to happen overnight. Jabbar, how did it happen overnight for you?

Jabbar:
No. I think that really for me on my goal and my journey to financial independence, one of the things that I was intentional about at the beginning, was investing and then being extremely aggressive on my defense, which is my saving. I started off first focusing on setting up my financial foundation, which was increasing like, “How can I maximize my saving rate? How can I make sure that I am saving X amount of dollars every month?”
Then I’m just investing every single, last penny in excess of what I need. Then I started to focus on investing, but because I didn’t have a lot of money. Being a Marine just not making a lot, I was netting from my job between $1,500 to now $2,300 a month from the Marine Corps take home pay. Because I wasn’t making a lot of money, when I was looking at different real estate investing strategies, I was a lot more focused on cashflow.
Even though I was investing in assets that were increasing my net worth over time, I was increasing my income as well, because now I have a bunch of cashflow from the short-term rental properties that I had. It was a combination of just starting off with the defense, which was the saving. Getting into the offense, which was the increase of my income.
Then that also doubling as my investment side of the road, of just being able to increase my overall net worth. I’m excited to dive deep into that.

Scott:
Jabbar, we last chatted with you and I’m very jealous. I did not get to chat with you, it was actually one of our other co-hosts, Dan Sheeks, author of First to a Million, who got to interview you back in December 2021.
At that time, you had purchased your first rental property house hack that you were crushing it with a rent by the room strategy. You had just purchased your second property, which is a Smoky Mountain vacation rental for $630,000, $650,000 odd dollars with a partner.

Jabbar:
$600,000, yeah.

Scott:
Yeah. Would you mind just giving us a quick recap of the journey, getting to that point?
Then I’d love to hear and pick up the conversation from there. How did that vacation rental go and what have you been up to since?

Jabbar:
Yeah, absolutely. At the very beginning, I had that amazing house hack that started off as just my industry of rejection, because it was really difficult to be able to get that loan to be able to purchase that property so young. I bought that property when I was 19, making very little money, but I had, I think, around $25,000 or $30,000 saved up. I just had gotten my six months of credit history.
I had six months, so very slim credit history, and there’s just a bunch of roadblocks with me approaching different lenders to finally getting that one. With that one, I eventually was able to buy that property. That property ended up being something that basically matched my military income. All of a sudden, I was making my military salary and then cashflow from that. Which I think that year, my net cashflow year over year from 2021 on that property was $1,500.
It ended up being a little bit higher than I expected, $1,500 a month. At the time in the military, I was making around I believe $1,600, $1,700 a month by the end of the year. I was basically seeing, “Wow, I just literally gave myself almost 100% increase of my income by purchasing this property.” By seeing that being successful, I was able to partner with somebody on my next property.
Which basically was I didn’t put up any of the money, but I put up all of the work, the knowledge of finding the deal and putting the deal together, and managing everything. That property actually propelled me into not only getting more cashflow and additional net worth increase from that property. But it also gave me the credibility to start working with other investors to continue partnering. I did that for a little while.
I think I got up to I have five partners now on, I think, five additional of those, you put up all the money, I put in the work and then we split profits 50/50, because I found the deal, I’m managing the deal for lifetime. Then you guarantee the debt and then you also put in the money to investing in the project. Just like to wrap up today, before two years ago, I was at two units. Now, I have 25 units that I own.
Five of them are with partners, the other additional 20 of those are just solo me. Then I have also a bunch of properties, we have 12 or 13 construction properties. Flips, things like hotels, when I’m buying the property and immediately putting it on the market. I ventured off into several different strategies of real estate investing in business, to do what I was talking about with the offense.
Which I think has made the most meaningful impact and increase to my journey to becoming a millionaire rapidly, was just overall being more focused on increasing my income, because you can only save so much. But when you’re able to turn the offense or the income ladder or meter up, you have an exponential amount of room to grow there.

Scott:
Well, let’s dive into we’re in December, late 2021, and you just bought your next vacation rental.
At that point in time, you’re earning $18,000 a year in your military salary as an enlisted man. Did you even have BAH or BAS allowances at the time?

Jabbar:
No.

Scott:
No, okay. Those are basic allowance for housing and basic allowance for sustenance. Basically, they’re after-tax benefits that many military folks get, yet you weren’t even eligible for those at the time, I think at that point.
You’re really making essentially minimum wage and you have these two properties here. What was the next step on your journey and how did you get there following the last conversation we had?

Jabbar:
Yeah. The next step on my journey was, so I went into a space between December of 2021, and then I didn’t purchase my next few properties until June of 2022 actually.
Because I was having a really hard time finding deals. That was something that just got really difficult for me.

Scott:
Your first property was in Savannah, Georgia and your next property was in the Smoky Mountains as a rental.
Where were you looking for those deals leading up to that June 2022 mark?

Jabbar:
Oh God, it was terrible. I was looking all over the country. I remember I was looking in the Smoky Mountains. That was difficult. I was looking in the Blue Ridge, Georgia Mountains. I was looking in the Crystal Beach, Crystal Beach. I was looking at the Gulf Coast. I was looking at the Florida Panhandle until finally, I realized I just need to pick a place and focus on it.
Because I knew I was eligible to do another house act in Savannah, I decided that I was going to just focus in the general Savannah area, like Buford, Savannah, that type of deal so within an hour of Savannah. My next property actually ended up being a subject to property, which I had a Marine who was getting out of the Marine Corps, because he just had some difficulties with maintaining standards.
He was in a pretty distressed situation where he was going to be going back home to Texas, and he was losing his income and he also had a baby on the way. His property, he had bought it and he didn’t really have much equity, so it didn’t really make a lot of sense for him to sell at the time. I convinced him to let me do what’s called subject to or take the home over at subject to.
Meaning the mortgage stayed in his name, and then the deed, the title of the property, was transferred to my name. Now I controlled the property, and then I make the mortgage payments on the property. What I essentially did there, was I negotiated zero money down with a 10-year balloon. In 10 years, I’m going to be paying him I think it’s $80,000, either via sale, cash out, refinance.
Or he just has a note on the property, a secondary note on the property for $80,000. Then that allowed me to basically hold an asset at a 2.5% interest rate, at the time when interest rates were starting to go up significantly.

Scott:
Now this property was a military property. I assume that the seller, when they originally bought it, used a VA 0% down loan on the property. VA loans, to my understanding, are assumable.
Why did you choose to do the subject to and not move into the property and assume the mortgage into your name? What was the thought process there?

Jabbar:
Now, I hope people don’t think this is where Jabbar is greedy, because I knew that I could use my VA loan on an additional property. It would allow me instead of using my VA loan in locking it in for that year on one property.
I could get this property subject to, and then I could do zero down on another VA loan house hack, and then I’ll just have a two for one. I ended up buying those properties within 30 days of each other, which is even more awesome.

Mindy:
What was that second property, the one that you used your VA loan for?

Jabbar:
That second property was what was a triplex in Savannah, Georgia. It’s my most valuable possession. A lot of people don’t know this, but in Savannah, the short-term rental regulations are extremely strict. Maybe a lot of people do know this, but when you live in the property, the rules are very, very laxed and easy.
What I basically did, was I used my VA loan on a triplex that had an additional storage space to turn into a quadplex. I basically bought the property zero money down. I used a HELOC from my first property to fund the renovation of the fourth unit. Then I turned the three units and furnished them, and then turned them into cashflowing Airbnbs.
That significantly increased my net worth, because the valuation of that property, I haven’t gotten it appraised. This is just based off of the comps, is between $1.1 and $1.2 million. I bought that property for $695,000.

Scott:
Wow. You were able to qualify for that on an enlisted Marine income, because of the income you were generating from your first house hack, which was rental income on your tax return. The Airbnb portion of the income that you were generating.
Then because of the history, you were able to use the anticipated, perhaps long-term rental income from the additional units, to help you qualify to purchase a $600,000, $700,000 piece of real estate with a 0% down loan as a Marine.
That’s the power of house hacking getting started. If you bought a house first, you would’ve been totally ineligible for the next 10 years to qualify for another property. Am I getting close?

Jabbar:
Yeah, pretty much. The income from the Airbnb, that duplex I took over subject to, that just helped with just more additional savings. The income also from the property that I had left, was just also counted savings. It canceled out the debt that I had from the first property.
Then what really helped was the long-term, projected rents of the other three units was high enough that 75% of that was what allowed me to qualify for that loan. I got that loan at like a 5% interest rate, so really good now. Yeah.

Mindy:
Yeah, yeah. What I’m hearing is just the continuing tale of clever, think outside the box, creative ways to buy real estate, creative ways to add value to these properties.
I’m assuming you’re not buying beautiful, perfect properties that have in no way, any way to increase the value. It’s from $600,000 to $1.2 million. You didn’t get $400,000, $500,000 in equity because you added one unit. You did a lot of things to this unit, right?

Jabbar:
Yeah, the property’s beautiful. It was my first venture into renovating a property and that thing, let me tell you, drained my bank account at the time. I spent a lot of money on every single unit. Not just making that 14 unit, even though that was the biggest difference was getting those two bedrooms in there.
But really renovating the entire property, the property being a little bit on the more dated side, that all that stuff contributed to the increase in valuation. Because now it’s a beautiful, all new, renovated 2022 property.

Scott:
We talked a little bit about the valuation increase of this property. Can you give us the numbers around monthly income from a short-term rental basis?
What would the cashflow be if you converted them all to long-term after moving out of this property? Because the short-term rentals only work because you’re living in it right now.

Jabbar:
Yeah. Pretty much the way basically each unit, each unit is a two bed, one bath, and then I live in the one bedroom, one bath. If I basically got, man, pen and paper, because I haven’t done this in a while for the long-term rental math. But for the short-term rental math, each unit rents out between $4,000 and $6,000 a month between Airbnb and VRBO. My total expenses for the property are usually between $6,000 and $7,000 a month.
On the low end, if I’m doing $12,000 a month in gross rents, after everything is said and done, I’m usually at a cashflow of around, was it $4,000 or $5,000 a month? $4,000 or $5,000 a month after putting away for CapEx and maintenance things and things like that. If I converted them all to long-term rentals after me living out the property, I’d probably get $1,500 for mine and then $1,800 for the two bedroom. What is that?

Scott:
It’s about 6,900 bucks.

Jabbar:
Thank you for your help. It would be roughly about $1,000, almost $1,000.

Scott:
What’s your principal interest, taxes and insurance on the VA loan?

Jabbar:
It’s $4,500.

Scott:
Fantastic. Thank you for sharing all that. That’s awesome. You’re crushing it right now on this. It’s way more profitable to live there than to move out, it seems like.
I’ll be interested to see what happens next there, but fantastic. Can you give us the numbers on the other property, the one you bought subject to?

Jabbar:
That one, I got a really, really great deal. I took over that mortgage and since it’s a 2.25% interest rate, the total mortgage payment is $1,250. It’s $1,250, and then the total rents on that property are between $5,000 and $6,000 a month.
My total expenses are roughly around $2,000 before CapEx, maintenance and vacancy, and then $5,000, $6,000 a month. I’d roughly give it about $2,500, $3,000 a month in pure cashflow after everything.

Scott:
Okay. Coming out of June 2022, we pick up these two awesome deals. What happens next? What happens between then and now?

Jabbar:
This is where I believe real estate investing, I realized a strength that I had. My strength is I’m a really good operator. I’m able to find good deals, but I’m better at managing them, figuring out how to fund them, and basically the whole managerial aspect of it. I had a friend, my best friend, Marcel, who was in Myrtle Beach about three and a half hours away.
He was doing wholesaling and he was also becoming a real estate agent there. What I decided to do was I was like, “Hmm, my friend is doing this deal finding thing over there, and people are paying him assignment fees. What if he could just do the same thing here, and then we could just do business together as friends?” I can even expedite his journey here because I have a lot of connections.
I understand the market, I can teach him, I can help him. Basically, what I did was I moved him from where he was living in Myrtle Beach, to my very first property, that rent by the bedroom property. Then he became not only like a wholesaler, but then a real estate agent. Then what he started doing was he helped me buy three additional properties. Was it three or four?
That year, by the end of the year, time sometimes gets wonky. I believe it was three properties he helped me find as a real estate agent. I basically did the whole scenario again, where I had someone put up all the money, guarantee the debt for the property, and then he found the deal. But because he’s my resource, I was the one bringing that to the table to my partners/investors. Then we basically split the profit and cashflow and equity in that property 50/50.
That was another way where I was basically able to own more real estate without using my own capital, but by using my brain. That contributed to not only more net worth increase, but more cashflow. They’re all in Savannah, Georgia.

Scott:
Okay. Can you give us a breakdown on these deals? What are the deals that you found and who was your partner on them? How’d you qualify for them? How’d you finance them?

Jabbar:
Yeah. Pretty much what I did was I had, so for the first one it was a $200,000 property. Basically, the beautiful thing about being in a really strict area, and one of the reasons I decided about Savannah is because in the areas where everyone can do short-term rentals, guess what? You’re competing against the top short-term rental investors in the country.
People with more money than you, people who are more creative than you, people with more time than you a lot of the times. Whereas in Savannah, because it’s universally known as one of those cities that are really strict, not a lot of people know and take the time to study the market, to find where in Savannah you can legally and easily do short-term rentals.
In Savannah, I can say this on a podcast, because I’m just not afraid of giving value. Most people won’t take action on it anyways, just statistically is just in the county of Savannah, the regulations change drastically. All you need is to be outside the city limits and you need to apply for a short-term rental license. I’ve never had one that was denied.
I think it just couldn’t have been like a crime house or have any history of crime, I believe. That’s the biggest like, “This is the rule that if that property has been involved, it can’t qualify for a permit.” What I would do, basically being able to explain this to investors, I found people actually on Instagram who reached out to me to partner.
Because I did a lot of different podcasts and a lot of people knew me doing this with the cabin, and would reach out to me and say, “Hey, I want to basically do that same exact thing with you.” What I basically did was when I found a property and an opportunity, I basically go back and reach out to them, and Marcel would just find these deals on the MLS.
We’d just keep on putting offers in until one stuck, and then Marcel would sell me the property. The investor would be the one qualifying for the loan, whether it was a second home loan or a DSCR loan. They would be the ones who were putting up all the money for buying the property and then also furnishing the property.
Then another thing we did, was because I did have my cabin and I had the experience of being in an area that was highly competitive, is I knew how to be more competitive in a market where there’s not as much professional competition. I did things like add hot tubs to properties. I did things like hire a professional designer.
I did things like make sure that, now it’s a little bit even more advanced with my team, but I just did things that people in Savannah didn’t think were necessary. Because of that, I have an unfair advantage with my properties perform very, very great.

Mindy:
Okay. You said that your strength was running properties. Your strength is your creativity. Your strength is seeing a property and not taking it at face value. It’s, “Oh, what can I do with this? How can I make this into what I want it to be? How can I finance this when my income on paper says I can’t qualify?”
I’m going to partner with somebody who’s going to take on the debt for me. I’m going to add a second room or add a second unit. I’m going to live in the small unit. I’m going to do… That’s what makes you so amazing, Jabbar. How are you only 22?

Jabbar:
It’s just literally all the learning and education I got, was literally just listening and reading books by BiggerPockets. It’s like the perfect part, is that I learned how to think this by the ideas from other investors who have been on podcasts.
It’s not only BiggerPockets, it’s all the other ones as well, but it was just all that massive amount of just consumption, consumption. These things, I didn’t just think of these things, I just copied them from what other people were doing elsewhere.

Scott:
Jabbar, we have these three deals, and this is wonderful. This is an awesome story I hear. You’re buying them outside of the city, but inside of a county of Savannah.

Jabbar:
Yeah. Yes. Now I’m excited to talk about what I’m doing now and what’s completely different.

Scott:
Okay. But is there anything else between end of 2022 and these three or four properties and now that we should cover before we get to now?

Jabbar:
I could talk about lessons. I could talk about just pretty much I learned basically just with any investment, things are not always going to be immediately like your pro forma states it’s going to be. For one of the properties, we immediately had to do a capital call, which I’m also responsible for 50% of the risk. If the property, let’s say, loses money or there’s a huge expense that is not going to be covered by the money in our bank account, I have to come up with 50% of that as well.
We have a $8,000 plumbing issue at one property. We have a $6,000 HVAC unit at another property. Then at another property, just the increase in budget was so much over what we initially expected, that I had to actually come out of pocket even though it was supposed to be a zero-down deal just because it was off. I had to actually come out of pocket for the addition in construction costs for that final one in 2022.
It taught me why you want to have money when you’re investing in real estate. Real estate’s not a game where you can use everyone’s cashflow, cashflow, cashflow until you have several HVACs go out. That really changed my mind entering into 2023 realizing that I need to get actual cashflow from business. If I’m not going to get it from my job, I need to get it from business. Otherwise, I’m going to have all these properties and nothing to show for.
Or I could potentially go out of bankrupt if so many different, unexpected costs keep coming out. Because you get to $10,000 a month in cashflow but if you have a month of $50,000 in expenses and you only have $10,000 a month coming in, well, what are you going to do?

Mindy:
I love that you’re bringing this up. I wanted to ask about reserves. Honestly, I’m glad that you’re sharing that you had some issues, because you can go on YouTube and find no shortage of videos that talk about how great real estate is.
Then they just gloss over the fact that they had a $6,000 HVAC system that they had to do, an $8,000 plumbing. They just don’t tell you about that. That doesn’t mean it didn’t happen. They just didn’t tell you about it. I love that you’re sharing this with us. Thank you for your honesty. I really appreciate that.

Jabbar:
It changed my life.

Mindy:
Yeah. It’ll really like, “Boy, it’s awesome to have a great deal that doesn’t have any problems,” but you learn so much more when you run into these problems.

Jabbar:
Yeah. I actually was recently traveling, and I’m glad that you said that because everyone’s wanting things to be sunshine and rainbows. I met this millionaire, who lost his million dollar net worth, not once, not twice, but he lost his million dollar net worth five times, five times. Imagine you went from being a millionaire to not being a millionaire. It was all for different things and different lessons, but he did this example that was really cool.
Imagine you have a piece of paper and with that piece of paper, it’s nice and smooth. This piece of paper represents your journey to, let’s say, becoming a millionaire, becoming financially free because that’s what we do. It’s not for the titles, but it’s really for the time freedom. When you have a smooth piece of paper and the road to your journey is smooth, and you hit a roadblock at the top of that piece of paper, guess what happens?
You go all the way back down to the bottom. You don’t go back to $700,000, $500,000, you could go back to zero because you didn’t have any of those lessons. When you have a journey and you crumple that piece of paper, there’s all these divots. There’s all these divots in that piece of paper, that literally stop you from hitting rock bottom.
Those divots and crunches of the piece of paper represent all the journeys, all the trials and tribulations. Those $10,000 CapEx issues that you go through when you’re investing. You want to have a crumpled piece of paper. You want to have a lot of these different adversities on your investing journey, because that makes you a smarter investor.
When you have an issue, you don’t go back to rock bottom or back to square one, you’re just going back a few paces. You know exactly how to climb out of there and get back to where you were, and even go further because of all those mistakes and errors that you made. You should be grateful for them.

Mindy:
Yes, yes, yes. I could not agree more. I love it. Okay. You just mentioned a word that I want you to define for us. You said CapEx, and you’ve said this a couple of times.
Can you share what that means for our listeners? And while we’re at it, you said vacancy when you were throwing in CapEx a while ago, so explain what those are and why you want to take into account those?

Jabbar:
CapEx is going to be, it stands for capital expenditures. That’s all of your costs in the property that are going to affect it over time like the roof, the HVAC, the electrical, the plumbing, the foundation. These are things that maybe might not be an issue today, but over time these things tend to deteriorate and become issues that you have to initiate cash outflows for in the future.
That defines CapEx. It’s not like your immediate maintenance problem. Someone broke your, I don’t know, like your faucet. That’s maintenance. CapEx is going to be those things in the property, that you need to have in the property that just over time deteriorate. Then when you talk about vacancy, vacancy, everyone knows this, is your property’s not going to be 100% rented all the time.
If you see a pro forma and it suggests a pro forma meaning like an analysis of the property that’s going to be rented 100% of the time, you should be very, very skeptical and concerned. Because there’s going to be times where you have to stop maybe renting the property because of CapEx. You might have to stop renting the property because you have a tenant turnover, meaning a tenant’s moving out of the property.
There’s different reasons why you wouldn’t be receiving rents because different things happen with the property. Those expenses are things that you want to account for when you’re analyzing the property, because you want to be very realistic with your expectations for how the property will perform. These things are just things that will help you have a more accurate assumption of how good of a deal you’re actually buying when you purchase a property or an asset in general.

Mindy:
Awesome, thank you. I have a couple of questions for you. Are you still in the military?

Jabbar:
Yeah, I’m still in.

Mindy:
How do you have time to work?

Jabbar:
Well, because of just additional ventures, I do have a team now. Before it was all me and it was a lot. I never went out. Literally, the only time I would go out was to meet other real estate investors and I would miss a lot of sleep, honestly.
It was just me just running myself, just trying to take care of as much as possible and I was doing it, but then things just started getting out of reach for me. Then that’s when I started hiring people and taking a step back from having cashflow to invest in different things, to help me manage everything.

Scott:
I would love to hear about the process from getting these three properties to the current state that you’re in right now, what you’re currently doing.

Jabbar:
Perfect. Like I talked about before, I had that realization that CapEx is real. I don’t want to say cashflow is a myth, but cashflow I believe now, is truly meant to be a defensive mechanism to help you maintain and keep that property. I no longer believe that it’s something that I personally, for my long-term investing strategy, am comfortable with just solely relying on for different things like living.
If so, it should be a very small percentage. What I decided to start doing starting 2023 was I realized, I was like, “Okay, we’re not in a problem. But eventually just seeing the rate that we want to keep purchasing, we need to have some way to have larger cash injections into just my business, just to protect myself against all these unexpected expenses.”
Because it just seemed like I would have more and more, even on the properties that I had bought in 2021, I was having CapEx challenges. That’s when I decided to start flipping properties as a way to create more cash outflow. Then that also taught me about how I could renovate properties and managing contractors and things of that nature. The first month of 2023, I actually bought four properties in one month.
I bought three flips, a condo and two single-family homes, and then I bought another one of those partnership properties. That really one, the three flips ended up being profits of $54,000, $89,000 and $35,000. Those were just all me. Instead of me getting money partnering with investors and giving them equity, I would go to the same investors with similar investors. I’d have them purchase the property in cash, or loan me money to purchase the property in cash using debt.
I’d guarantee them an interest rate of between 10% and 12%. Sometimes I’d even offer points to make it more enticing to them, because I was now more so focused on that cash outlay, like that cash outflow coming back into the business. With that, I just started flipping properties. I went and I started buying a flip at the beginning of 2023 every month, one or two a month.

Scott:
Okay. Now walk us through, how long does a flip take for you? How many have you completed so far and how many are in process today?

Jabbar:
The average flip, it depends on the type of deal we’re doing because we’ve had some, and when I say we, is in June, I decided to partner with my best friend that I moved down here. But a flip, if we’re renovating it, it takes between three and five months from purchase, and it depends on a myriad of things, from purchase to sale. Three to five months is our average timeline from purchase, construction and sale.
Then if it’s a property that we’re just buying and immediately selling, we will close on the property. We’re not wholesaling it. We’re buying it and we’re immediately selling it to another investor, or we’re buying it and immediately selling it or putting it on the open market to be sold as is. We’re not touching that property at all. Those take about one to two months from purchase to sale typically.
We’ve done about eight of those purchase and sales, eight of those purchase and sales. We’ve also done about nine flips from purchase, sale and rehab. Purchase, rehab and sale, sorry.

Mindy:
You’ve mentioned your best friend is a real estate agent. Who else is on your team that’s allowing you to flip so quickly?
Because three months is amazing start to finish. Five months, that’s still a really good flip, but that wasn’t your first flip.

Jabbar:
My first flip took five months, but my second flip took three months total.

Mindy:
Who’s on your team that you’re able to flip so quickly, because it’s hard to find contractors? I don’t know if you know this, you can’t find them.

Jabbar:
Yeah. We’re having contractor issues actually right now. Pretty much I would say the biggest thing with what we had, was we had already identified or I had at the beginning it was just me. I had already identified a contractor, and that was the contractor I was using to help me renovate some of these properties that we’re keeping. That actually gave me the idea and then the confidence to start flipping.
Because I already had a relationship with this person, I had an idea of what their costs were and I started with that contractor. Then that contractor had several crews to where he was able to work on several different properties at once for us. I’m sorry. With that, we’ve ran through two different construction companies. But with them, they have usually a project manager and then a general contractor attached. Then they manage all the subs that are working on our properties.
Then for now, I also have a quality control manager that is on my payroll that is managing the project manager, and then who manages the general contractor, just to make sure that everything’s on the same page. Then my best friend is responsible for going to the projects and actually making sure that things are happening. If an update is sent from them or sent from my quality control person, he’s actually verifying with his eyes that these things are going on.

Mindy:
Do you have any issue mixing friends and business?

Jabbar:
Yes. From me and my best friend’s perspective, it’s like our business is split 50/50 and that wasn’t a business decision. That was very much a friend decision, but from a perspective of holding accountable, when someone makes a mistake, we don’t beat around the bush. It’s like, “Hey, this is what happened. You can’t do this again.” But it’s immediately solution oriented.
Everything just has to be solved. We don’t really have time for emotions, and sometimes that plays to our detriment because we work with other people who want to hear, express those things. But for us, like me being a Marine and then my best friend being very understanding the level of risk that we’re taking, we don’t have time to for anything that’s not a solution.
It’s very much so if you make a mistake, we address it and then we immediately just go after what can be done to address this mistake.

Scott:
Well, last question before we wrap up here is what’s next for you? Where’s all this lead for Jabbar?

Jabbar:
Sorry. For me now, it’s getting away from being side hustly, to more so actual business. Learning how hiring people and building out my team and building, out SOPs and different things to manage the business and keep track of things. Because it’s gotten so much to where sometimes there’s properties that I don’t even know the right address for. Sometimes there’s address discrepancies, so it’s just overall organizing the business.
Then also I would like to get into doing things like online, not guru-ish, but online education, helping other people who are young achieve and go along the same side of success. I haven’t had time to even think about that yet, but those are just future plans and just having fun. I get out the military next year, it’s super exciting. I’m finally going to be free to do what I love doing. Yeah. I was talking to Mindy before this.
I travel to Columbia. I’m a frequent Columbia South America visitor, so I’m excited to do a lot more traveling when I get out the military.

Mindy:
Because the military doesn’t offer you enough options to travel?

Jabbar:
Yeah, it’s crazy. I travel a lot too with them. Not so much lately because I’m getting out, but I’ve been to a few countries with them.

Mindy:
If somebody is listening who is 18, what is one piece of advice you would want them to walk away with?

Jabbar:
I would say that just from what I’ve realized, just growing as an investor and just going on my journey, is you just have to obsess over the education side of things first and then the rest will take care of itself. I noticed with a lot of young people, because I’ve helped quite a few young people in the military, and just as friends invest in their first property.
They want to escape the grind of just learning and just understanding what is CapEx, what is a cap rate? What is cash on cash, what are the different principles and different types of ways that you can invest? All of these, understanding the operations behind different strategies in real estate, I noticed that people want to escape that. I think that is where opportunity lies, is understanding those things very intimately.
Then when you’re taking action, you can confidently do so knowing that you’ve done all of the background education that’s needed, instead of trying to wing it or skip that. Then you’re not going to feel confident to move forward because you haven’t prepared. I guess it’s just a preparation for me. It’s something I look back to of being extremely grateful for, because I didn’t have to do 100 hours of education to become a house flipper.
I had already done it. I had already done the research before, and I just had to brush up and then start doing it.

Scott:
How much work have you done on the properties in your portfolio in the form of actually fixing things up, swinging a hammer and doing work on the property over the last couple of years?

Jabbar:
I’ve painted once. My very first property, I painted a fireplace.

Scott:
So that’s it?

Jabbar:
Yes, that’s all my experience. I painted a fireplace one time, I didn’t even paint it myself.
I took some Marines one weekend and we went to go paint, and they did probably like 75% of it, so I assisted with painting a fireplace.

Scott:
Well, Jabbar, where can people find out more about you, if they want to follow your remarkable journey?

Jabbar:
Yeah. On Instagram, @Jabbar_Investar. On TikTok, @Jabbar_Investar. That’s J-A-B-B-A-R_I-N-V-E-S-T-A-R. Investar instead of investor.

Scott:
This has been absolutely fantastic. What a wild ride you’ve been on the last couple of years. I look forward to seeing what you do when you’re released from your full-time job as a Marine right now, and seeing where this adventure leads, because I love the way you’re going about it.
I think you’re thinking about all the right things and you’re obviously taking on a lot of risk, but you know you’re taking a lot of risk and are trying to play the right amount of defense. I just really admire what you’ve been up to, Jabbar.

Jabbar:
Thank you so much, guys, for having me. It’s honestly a pleasure to be back and update everyone. I’m excited to be back again with hopefully some more exciting lessons to share.

Mindy:
Yeah. I can’t wait to see what you can do when you have time to invest.
All right. Jabbar, thank you so much for your time today. This is always fun to talk to you and we will talk to you again soon.

Jabbar:
See you.

Mindy:
All right, Scott. That was Jabbar Adesada and his amazing, wonderful, fabulous story. By the way, I want to remind everybody, he’s 22.
He did all of this stuff by age 22. I cannot wait to see what he has by age 23. What did you think of the show, Scott?

Scott:
Oh, just a fantastic human being and individual. Look at the energy and excitement he brings to his business. This guy, he’s somehow getting by with four or five hours of sleep, building a million dollar net worth, didn’t go to college, enlisted in the military out of high school, made 18 grand a year.
Didn’t even qualify for the actual benefits you get in the military like BAH and BAS that make life a lot easier for the first couple of years. Still bought his first couple of properties. Again, this self-imposed discipline. This is not a guy who’s going out and spending like a sailor even though he’s in the Marines.
I love using that joke. This is a guy who’s really frugal, and directs his energy and the best part of his attention to building a life for himself. He’s going to come out out of the military at the same age most people graduate college, not only with no student debt or things holding him back.
But with a multimillion dollar potentially net worth, and a thriving business and a reputation for discipline, industry, frugality, all of the things that you can want. The world’s his oyster in a way that it isn’t for a lot of folks. He did it the hard way without any advantages backing him up. Just total admiration for Jabbar. Let’s be like Jabbar.

Mindy:
Let’s be like Jabbar. If you did not catch his first episode, please go back and listen to episode 257 of the BiggerPockets Money Podcast where Jabbar tells his beginning story. Then go back and listen to this one again so you can catch all of his excitement, because he really is so in love with life and so excited at all the opportunities that he has available to him.
His superpower is his creativity and his willingness to learn the rules, and learn how to work within the rules creatively, to be able to make the most money he can make by investing in cashflowing assets. Doing what other people aren’t doing and really just knocking it out of the park. I love Jabbar. I love his story and I can’t wait to talk to him in a few years and see what he’s doing then.

Scott:
One thing I’ll also call out is in that enthusiasm and passion, there’s also wisdom, right? I’m hearing parts of it and I’m like, “Oh boy, how leveraged are we here? What’s the relative risk that we’re taking in this business relative position?” But when you think about it, he’s not that leveraged. He’s bought two house hacks and he’s bought one subject to deal. Everything else has been with a partner or inside of this large business.
He’s building up his cash reserves. He’s learned lessons that some people don’t learn for decades longer. I’m not going to say that his position isn’t without risk. He has serious risk in his portfolio, but he’s also got a very reasonable debt to equity position. He likely has most of his portfolio financed with long-term debt outside of the short-term projects that he’s working on.
He’s respectful of the risks that he’s taking here. He can lose, but he’s also got such a good chance to win, and I wouldn’t bet against him.

Mindy:
I would definitely not bet against him. All right, Scott. Should we get out of here?

Scott:
Let’s do it.

Mindy:
That wraps up this fantastic episode of the BiggerPockets Money Podcast. He is Scott Trench and I am Mindy Jensen saying toodle-oo, caribou.

Scott:
If you enjoyed today’s episode, please give us a five-star review on Spotify or Apple.
If you’re looking for even more money content, feel free to visit our YouTube channel at YouTube.com/BiggerPocketsMoney.

Mindy:
BiggerPockets Money was created by Mindy Jensen and Scott Trench, produced by Kailyn Bennett. Editing by Exodus Media, copywriting by Nate Weintraub.
Lastly, a big thank you to the BiggerPockets team for making this show possible.

Tracy Kasper, president of the National Association of Realtors, joins ‘The Exchange’ to discuss the housing market’s outlook for 2024, the drop in mortgage rates, and more.

Fannie Mae is predicting a recession in 2024 in its latest Economic Developments report. As a result, home sales are expected to bottom out next year before ultimately improving in 2025.

A 2024 recession has been repeatedly predicted by think tanks, individual economists, and financial experts. Fannie Mae adds its own forecast to the growing chorus of experts saying the same thing: Despite a strong economy, the U.S. is headed for a mild economic downturn next year.

An Economy Built on Shaky Foundations Means an Inevitable Crash

Why is this the most likely economic trajectory? For one, experts at Fannie Mae point out that the high GDP as of the third quarter of 2023—a very healthy 4.9%—is built on shaky foundations. This is economic growth fueled by debt spending rather than substantial growth in real income. 

In fact, real incomes grew by a very small 0.6% annualized in the third quarter. Simultaneously, the savings rate is declining and was 3.4% during the same period, a far cry from the robust 7% rate before the pandemic. 

All of these factors point to a situation where the current spending levels propping up the economy are unsustainable. Fannie Mae predicts that consumer spending will go down in 2024, reinstating a more ‘‘normal’’ relationship between spending and income. 

Therefore, Fannie Mae thinks GDP will decline 0.4% on a Q4/Q4 basis in 2024, although the negative figure is expected to result from the timing of the year-end report in the fourth quarter. It’s not indicative of a ‘‘deeper economic downturn.’’ 

The good news in Fannie Mae’s forecast is that the recession, if it does happen, will be very mild and won’t last into 2025, when the economy is expected to rebound, with a projected GDP of 1.6% for the year as a whole.

Anyone who’s read economic forecasts will know that labor market trends are a robust indicator of where the economy is headed as a whole. As of October, as the report points out, the unemployment rate is steadily growing. It’s currently at 3.9%, half a percentage up from April levels. Both initial and continuing unemployment claims are rising, which could again indicate that we are entering a recession. 

What About Real Estate?

Again, these are not alarming figures, which is good news for the economy in the long term. However, it’s not such good news for the housing market. Paradoxically, these unemployment levels aren’t quite high enough to make an immediate difference to interest rates. 

‘‘Given the unemployment rate is still below 4%, a premature easing of monetary policy would risk reanimating inflation, so we do not expect the Federal Reserve to be quick in cutting rates in coming months,’’ Fannie Mae’s report says. 

Needless to say, sustained high Fed rates translate into high mortgage rates that are hampering home sales. The Fannie Mae (FNMA/OTCQB) Economic and Strategic Research (ESR) Group expects things to get worse before they get better: Home sales will bottom out in early 2024, per the ESR report. 

There is a silver lining in this forecast, however: Interest rates will begin coming down in the second half of 2024, and Fannie Mae expects them to average 6.8% by the end of the year. This will happen regardless of whether there is a recession or the much-hoped-for ‘‘soft landing,’’ because the Fed’s fiscal policies are largely working toward the desired goal of reduced inflation rates. 

Final Thoughts

Overall, it could be a lot worse. While the housing market is currently suffering from surging interest rates and supply constraints, it will improve eventually. 

Doug Duncan, Fannie Mae senior vice president and chief economist, calls the results of the ESR report ‘‘unsurprising,” adding: 

“Housing has been and continues to be under serious affordability pressure, resulting in recessionary-level home sales activity. While many current owners with low mortgage rates will likely continue to be discouraged from listing their homes, we expect mortgage rates to trend modestly downward in 2024, which should help kick-start a gradual recovery in home sales into 2025.”

This isn’t to say that home sales will return to anything near pre-pandemic levels. This level of sales recovery ‘’will likely take years,’’ according to Fannie Mae’s experts. However, the worst will soon be behind the housing market: Fannie Mae forecasts that ‘’the bottom will be passed in 2024.’’ 

Investors should take heart. The housing market is not heading off a cliff—it’s just nearing the bottom of a trough.

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Don Peebles, The Peebles Corporation CEO and chairman, joins ‘Power Lunch’ to discuss his expectations for the commercial real estate market.

More people are moving out of state as Americans take advantage of remote and hybrid work to move across the country. In 2022 alone, 8.2 million people moved between states, according to the latest U.S. Census data.

The annual American Community Survey by the bureau found that overall, in 2022, state-to-state movers made up a larger share of movers, rising 19.9% compared to 18.8% the prior year. 

These numbers show a trend of rising state-to-state migration, even as overall movement has declined. Between 2021 and 2022, the overall migration rate dropped slightly, from 12.8% to 12.6%. 

In other words, while people are staying still overall, those who do move are increasingly likely to move to another state. So where are they going, where are they leaving, and why?

Where Are People Moving To? 

The number of people moving from one state to another was higher in the South and West compared to other parts of the country. In many cases, the states with the largest migration flows were people moving from one highly populated state to another. For example, many people living in California left for Texas and Arizona, while those in New York left for nearby New Jersey or sunny Florida.

According to one estimation of the Census data, Connecticut had the highest net rate of migration, at 1.58%, gaining 56,582 people between 2021 and 2022. Other areas with the highest net migration included warmer states like South Carolina, Florida, and Arizona.

What States and Areas Are People Leaving? 

Most of the places where people are moving out of state tend to be on the East Coast. New York, Maryland, and New Jersey were among the top places that lost residents in 2022, losing -1.25%, -1.08% and -1% of the total population, respectively.

Texas was among the states with the lowest outmigration rate at 11.7%, meaning those who did move were less likely to move out of state.

What These Trends Tell Us About the Real Estate Market 

Migration patterns have changed since the pandemic, according to William Frey, a senior fellow at the Brookings Institution. While fewer people are moving within their county, data suggests that longer-distance movement across states has risen.

“Longer-distance migration may continue to rise as younger workers become more willing to seek jobs across the country and as employment opportunities respond to the changing nature of work-residence patterns that began during the pandemic,” Frey wrote.

As people’s living habits change, that could also have longer-term consequences on the real estate market. With areas in less demand for housing, prices are more likely to fall.

For example, in Texas, which saw the least amount of people leave the state, the real estate market is in a correction. Prices in areas like Austin, once the poster child for the booming housing market, are dropping faster than the national average.

The opposite is true in markets with strong migration flows. In October, the median listing home price for a home in Raleigh, North Carolina, was 6.7% higher year over year. North Carolina was one of the states that saw a higher-than-average number of people move into the state from another state. 

The U.S. Census data also supports homebuyer migration trends, as many homebuyers are moving to large cities in the South. Home prices in Florida, for example, have steadily increased as more people move in from out of state, although prices have started to flatline. 

The Bottom Line 

It’s important to keep in mind that the U.S. Census data lags, so it’s possible that the numbers from this year will be different. Still, combined with looking at other data on where homeowners are moving to, it seems to hold up that migration trends are having an influence on prices in some real estate markets.

As more people move to seek better-paying jobs or flexible work schedules, those areas are likely to increase in price, while places that are declining in popularity (like Austin, Texas) are likely to see prices drop. 

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