Blog

By Nathan Beckord

You need to raise capital for your startup. It’s something you can do on your own, but what if someone could show you the ropes and boost you up?

Eva Dobrzanska is the go-to expert for adding that extra oomph to your raise. She’s a seasoned professional in the field, well-known to founders seeking venture capital funding. Whether it’s providing ad hoc guidance or sourcing deals for Block Dojo’s blockchain startup accelerator, Eva Dobrzanska walks founders through every step of the investment process.

Her expertise covers a wide spectrum; she advises founders on equity fundraising strategies, investor outreach, and targeting, scaling a business and expanding internationally, and accessing the right funding. Notably, her popular “Capital Raising Mind Map” recently went viral on LinkedIn.

In this article, Eva shares exactly how she likes to communicate with investors—plus how having an alternate pitch deck can be just as important as the main deck.

The best way to communicate with investors

Cold calling and cold emailing can be daunting, but not necessarily effective. However, warm intros aren’t always possible. What’s a founder to do? With plenty of practice in the art of engaging investors, Eva offers up some tips for how she likes to communicate with investors to get results.

Create urgency

“I always tell founders that in fundraising, they have to be able to create the feeling that ‘the train is leaving the station,’” Eva shares. This means cultivating a bit of FOMO by highlighting your startup’s upcoming launches and other news. If the next quarter will be big for the company, talk about why. Also helpful: any tidbits on why your company presents a hot opportunity for a limited time.

With that, she encourages follow-up anytime a new milestone is achieved. She gives the example of opening a new distribution channel—the kind of deal that increases a startup’s revenue potential. Often, an investor who’s been loosely following your progress will bite after seeing that your success is climbing.

Do your homework

Look sharp from the jump by showing investors that you know about them. Yes, this does require some legwork, but it’s time well spent.

“You should know the most recent investment they made. If you’re a sustainable fintech business and you are reaching out to a VC who just made an investment in a sustainable fintech business, chances are they’re not going to go ahead with you. They already invested in your competitor,” Eva says.

However, you can look for investments in businesses that are adjacent to yours as representing an opportunity to put your foot in the door. Even if you’re not raising at that moment, it’s a good time to introduce yourself and share how you might work well with that company in the future.

“If you can spot a way that you could help this company, or maybe your products are complementary, or maybe you could become partners in the future . . . that’s what you should say in the follow-up email,” says Eva. She recommends writing something like: I saw you invested in this company. We are building a similar product that could open up a new delivery channel for them.

This strategy shows that you’ve done your research and you know what’s happening for the VC.

Stay visible

There’s no easy way to do this one, but Eva promises that it’s important. Maintain a solid online presence if you’re looking for an investment (or plan to do so in the future). That means having a good website and active accounts on whatever social media channels are most popular in your industry. Establish yourself as an authority, whether that’s on LinkedIn, Twitter, or Reddit.

Keep a personal touch

Eva doesn’t believe in automated communication with investors. Even if messages are disguised to sound personal, investors can usually tell what’s automatic and what’s truly customized for them. Yes, writing individual messages takes longer, but it also creates more authentic relationships.

And while you’re being personal, don’t communicate in a stodgy and buttoned-up way if the investor doesn’t. “I always try and match the tone,” she says.

More articles from AllBusiness.com:

Pitching for success

A typical investor spends three minutes and 44 seconds looking at a pitch deck. Sound short? That’s because it is. With so little time to make an impression, it’s important to hit the high notes first. Include only three key points per slide, with no more than 10 slides.

Eva has a few more tips to make your pitch deck shine:

Prepare a secondary deck for the conversation

Eva advises that founders not read from their pitch decks when they get coveted meetings with investors. Most investors will likely breeze through the pitch deck you send ahead of time.

Instead, consider each meeting more of a discussion than a presentation. Create a second pitch deck to guide that conversation. Include details like your current progress with the company and any news updates. This allows the investor to dig deeper before diving into due diligence.

Don’t give too much product detail

We know: Your tech is cool. Your cool tech got you a meeting. And yes, you should explain the basics of your product, but keep it brief.

What’s more important is the opportunity at hand. A pitch deck is not the same thing as a sales deck. You’re not selling the product to the investor. You’re selling the opportunity.

Metrics

Eva always likes to see a company’s margins. If it’s a SaaS company, she wants more than the user count. While a high total user count is impressive, investors are really more interested in the number of active users.

Make connections with investors

Eva has one simple way to sum up all of her advice for founders: “Put yourself out there,” she says. She encourages founders to attend events with other founders, like pitch nights and tech meetups. If geography is a limitation, she also recommends having a X (formerly known as Twitter) presence and using Slack channels for founders, like Gen Z VCs.

Every way you can connect with others in your innovation community before you start to raise will help you in the long run.

Article is based on an interview between Nathan Beckord and Eva Dobrzanska on an episode of Foundersuite’s How I Raised It podcast.

About the Author

Nathan Beckord is the CEO of Foundersuite.com, which makes software for startups raising capital. Nathan is also the CEO of Fundingstack.com, which is a new platform for VCs and investment bankers to both raise capital and assist clients and portfolio companies. Users of these platforms have raised over $9.7 billion since 2016.

RELATED: Should You Raise Corporate Venture Capital? Plus, the Movie Trailer Pitch

Carlos von Hardenberg of Mobius Capital Partners says while there is a lot of conflicting information and views on China, the Chinese economy is still very significant for global economy and has potential.

This article is the third in my three-part AI Showdown series, a competition in which I put the top generative AI chatbots—ChatGPT, Claude, Bing Chat, and Bard—to the test for a content marketing use case.

In the first piece, I introduced the AI Showdown contenders, covering how I use them, what I see as their weaknesses, and how you might use each tool for content marketing purposes.

In the second piece, the showdown began. I walked through the process of asking ChatGPT, Claude, Bing, and Bard to write a blog post on a content marketing topic.

Hint: I was surprised at the outcome!

In this article, the final in the series, I share the rest of the showdown, in which I have the AI chatbots create social media posts and an email designed to lead readers to click in and read the blog post from the AI Showdown, Part 2.

Let’s dive right in.

Writing social media content to promote a blog post

In this part of the experiment, I asked the chatbots to create social media posts.

I didn’t want them to lose sight of the instructions from earlier conversations, so I prefaced my request for the posts with this text:

Can you now write the social media posts to drive people to this blog post? I want one post each for LinkedIn, Twitter, Facebook, and Instagram. Recommend images and incorporate hashtags and emojis where appropriate.

Let’s see how each chatbot performed.

ChatGPT’s social posts

At first, ChatGPT provided me with CSS and other forms of code for the social media posts.

That’s not what I wanted, so I asked it to rewrite without code.

Analyzing ChatGPT’s social posts

In reviewing ChatGPT’s outputs, here’s what I found:

• The hashtags #innovation and #leadership don’t fit the content.
• ChatGPT should know that we can use more than one emoji per post.
• ChatGPT also overpromises in the social posts. For instance, it refers to 10 ingenious ideas, but I saw no ingenuity.
• The word leverage is too formal and stuffy for social media content; I use it in my writing only when discussing exerting force with a lever—or the TV show.

Overall, I gave ChatGPT a passing grade—perhaps a B-minus. It’s not an “A” or possibly even a “B.” But I could work with the content, editing it and enriching it to make it better.

Now, let’s see how Claude’s social content turned out.

Claude’s social posts

Claude jumped right in and provided its social content in seconds.

Analyzing Claude’s social media posts

Perhaps Claude finished so fast because the content was sparse. Here are my other findings:

• Claude seems to have used Twitter’s character count for all social platforms, as the posts are short.
• Emoji usage is sparse; hashtags are few.
• Claude pulls out the we voice whereas the blog post uses the I voice.
• All Claude’s graphics suggestions involve light bulbs; I expected more creativity here.

Claude disappointed me. The model is supposed to be more business-savvy than the others but failed to live up to its reputation.

Next up—Bing Chat.

Bing Chat’s social posts

Bing Chat blew me away with its blog post. Would it do the same with its social posts? I was eager to find out.

Analyzing Bing’s social media posts

I was immediately excited by the size of Bing’s response; it took three screenshots to show it all to you. Other findings:

• Except for its Instagram post, Bing didn’t use emojis. It also didn’t use hashtags.
• The length of Bing’s posts seems right on target, with LinkedIn and Facebook allowing for more content and Twitter/X requiring just 280 characters.
• With warm, passionate phrases like, I’d love to hear from you, Bing’s social posts feel more human than the other chatbots’ posts. Such passion also makes Bing’s posts feel like an actual content creator who cares about their work wrote them, whereas the other AIs’ social posts feel as if a time-strapped assistant who’s just doing their job did.
• I love the Twitter graphic suggestion for a meme of a man looking at a blank paper with the caption, Me trying to come up with new content ideas. That image will resonate with content creators.

Overall, I was surprised by and happy with Bing’s output. Coming into this experiment, I considered Bing to be third on the usefulness hierarchy, with ChatGPT on top, followed by Claude and then Bing and Bard. But Bing provided the best blog post draft, and it won again with its social posts. Would Bing take home the crown? You’ll soon find out.

First, though, look at Bard’s results.

Bard’s social media posts

Bard has been an underperformer in every way and every experiment. Let’s see if it can create solid social media content.

Analyzing Bard’s social media posts

Bard hit one high note with its social content because it was the only chatbot to suggest headlines for its social posts. And those headlines are good because they speak to the benefits readers want—leads and sales.

Here are my other thoughts about Bard’s performance:

• Bard used just one emoji—a lightbulb. And it was for Twitter. In my feeds, emojis are more prevalent on LinkedIn, Instagram, and Facebook.
• For Twitter, the body content is poor, as is the suggestion to add a short video or GIF as the image. More details, please!
• The Facebook body copy leaves much to be desired. I’m a content marketer—the target audience for the content—and would not click to read content promising basic tips on how to research industry trends and the like.
• Bard did not create a carousel post for Instagram—a missed opportunity.
• The body content is too short overall, especially for LinkedIn, Facebook, and Instagram, which allow far more copy than Twitter.

Overall, Bard did what it’s always done for me—fell flat.

Which gen-AI chatbot won the social media post showdown?

And the winner of the social media part of this competition is… Bing Chat.

Although I expected ChatGPT to walk away with the social media content trophy, Bing Chat surprised me by coming out on top, primarily due to its ability to write with passion, making it sound more human—or at least more like this human.

Which tools followed?

1. Bing Chat, first place
2. ChatGPT, second place
3. Claude, third place
4. Bard, fourth place

Now, let’s see how the chatbots performed with the final element of the AI Showdown—an email to drive traffic to the blog post.

Writing an email to promote blog content

As with the social posts, when I asked the chatbots to write the email, I gave them the same instructions:

Great! Now, can you write the text of the email? I’ll send it to my tribe. The goal of the email is to drive people to the blog post.

Let’s look at their outputs.

ChatGPT

ChatGPT’s email came in at 194 words, a good length for my list of busy executives and business owners.

Analyzing ChatGPT’s email

ChatGPT somewhat redeemed itself in my eyes because all my feedback was positive:

• I like the curiosity-piquing subject line.
• The first two paragraphs are what I call “warm-up” text. I could remove it without harming the message.
• “The cursor blinking back mockingly”—a friendly show of attitude that makes the email feel as if it came from a human.
• ChatGPT used bullet points to tease what’s in the blog post, a good tactic.
• ChatGPT also created an engaging sign-off: “To crafting magical content experiences”; I would leave that in if I were sending the email.

However, the overall email is meh—average. There’s nothing offensive about it, but nothing great, either.

Let’s see how Claude did.

Claude

Claude’s email was also a short-enough length for busy readers.

Analyzing Claude’s email

Claude’s email left me holding a mixed bag.

• The subject line—Unlock Content Ideation—puzzles me. Why ideation? Who speaks that way?
• I like the salutation—Hey friends. It’s pleasant and personal but would be even more so if it were in the intimate singular—Hey, friend.
• Claude gets to the point in the first sentence: I just published a new blog post I think you’ll love. (I wouldn’t be so bold as to say love though; like would do it for me.)
• I dislike the essential pathways language, which Claude also used in the blog post.
• Claude did a great job of creatively highlighting unique reasons why the reader might want to read the post—to develop thoughtful evergreen content, uncover inspiration through curation, or inject creativity into your editorial calendar.
• I also like how Claude wraps the email by asking the reader to let me know what they think and offering to brainstorm content ideas.
• I don’t like chat soon as a close, though, because it’s unlikely that I’ll be chatting with more than a handful of people from my list.

Despite several negatives, Claude’s email still comes out on top over ChatGPT’s. I prefer its brevity, creativity, and tone.

Let’s see how Bing Chat performed.

Bing Chat

After Claude’s email, I wondered if Bing might be about to lose the lead, having won both the blogging and social media elements of the AI Showdown.

Also, because Bing’s email is double the word count of ChatGPT’s and Claude’s, I wondered whether the extra words would be worth it.

Analyzing Bing’s email

Bing’s email has pros and cons:

• Pro: I like the subject line; it’s clear and concise.
• Pro: The writing style is friendly and conversational.
• Con: Bing misspoke in saying readers learn how to do the bulleted items; they don’t.
• Pro: The bulleted items will let readers know whether to click in.
• Con: I’m never one to end a list with And much more, exclamation!
• Con: I also don’t like the What are you waiting for? language.
• Pro: I like Bing’s closing, To your content success.
• Pro: Bing invites readers to respond to the blog post and to book an exploratory call.

To answer my question from earlier, yes. The extra words from Bing were worth it. Even so, I still considered Claude in the lead because its email was shorter and more personable.

Now, let’s turn our attention to the final contestant in the final competition of the three-part AI Showdown series.

Bard

Bard’s email was the lightest, coming in at 149 words. Were those words useful?

Analyzing Bard’s email

No, I did not deem Bard’s words useful. Here’s the rest of my feedback:

• Bard pulled in the boost leads and sales language from the social posts, which is good; perhaps I’d tweak the subject line so those words came first.
• I don’t like how Bard simply listed all 10 topics as bullet points; it’d be better to list three or four and provide more detail for each because I crave specificity. I find it’s often better to share more details about fewer things than fewer details about more things.
• The email doesn’t do a good job of selling the blog post, which makes sense because Bard’s blog post was not worth selling.

Bard, not surprisingly, lived up to my expectations of coming in last place.

Which generative AI chatbot won the email-writing challenge?

Although Bing and ChatGPT were closer competitors than they were in the blog-post and social-post writing challenges, neither pulled ahead of Claude. Claude wins first place this time, for all the reasons I outlined.

1. Claude, first place
2. Bing, second place
3. ChatGPT, third place
4. Bard, fourth place

But which AI chatbot won overall? There were four contestants, each performing three tasks. Let’s take a look.

Summary: The winners and losers

In this three-part series, I asked ChatGPT, Claude, Bing Chat, and Bard to write a blog post, along with social media content and an email to drive readers to that post.

To determine the overall results, I assigned points to each placement. The winner of an individual challenge would receive 4 points. Second place would receive 3 points; third, 2 points; and fourth, 1 point. Then I tabulated the results, which follow.

Based on the total points, the overall winner was Bing Chat, with 11 points. ChatGPT and Claude both tied for 2nd place, with 8 points. And Bard brought up the rear with 3 points.

The results were a surprise, as I hypothesized that ChatGPT would win, followed by Claude and then Bing Chat. I was confident that Bard would come in last place, which it did.

The takeaways: How to use each generative AI tool in your content creation workflow

Based on my experiences, including the experience of this AI Showdown, here’s how you can best use generative AI chatbots for content marketing purposes.

Use ChatGPT to:

• Generate initial drafts and raw content you can refine.
• Provide outlines and topic suggestions to spark creativity.
• Answer research questions to help inform content.
• Summarize or expand on information.
• Transform information into different formats.

Use Claude to:

• Review and edit content drafts to improve accuracy, clarity, and flow.
• Check facts and citations to ensure content is correct.
• Give alternative wording suggestions to improve tone and style.
• Evaluate whether the content meets goals and guidelines.

Use Bing Chat to:

• Research the web to find data, examples, and quotes to incorporate.
• Aggregate information from different sources.
• Carry on basic conversations and answer questions for content creators.

Use Bard to:

• Tap Google’s knowledge graph for insightful research.
• Generate fresh perspectives and angles based on broader connections.
• Identify related topics and questions to cover for audiences.

The key is combining each system’s strengths to enhance different parts of the content creation process, from generating ideas to drafting and refining.

And never forget—your human creativity, critical thinking, and oversight are still essential for quality results.

David:
This is the BiggerPockets Podcast, show 825.

David:
I think we all need to get rid of this virus that’s gotten into our minds that money should be passive, that we should just exist and we did hard work in the past and now money just flows to us and it just comes. That is not how it works. You don’t get really fit and then never work out again and just stay fit forever. You’re always working out. However, the work it took to get in shape is much harder than the work it takes to stay in shape. And business is the same way. You’ll work very hard to get in good business shape and then it’s just about maintaining it and it’s not that difficult.

David:
What’s going on everyone? It’s David Greene. Your host of the BiggerPockets Real Estate Podcast. The biggest, the best, and the baddest real estate podcast in the world. Every week, bringing you up-to-date content stories from other investors or episodes like today, which if you can tell because you’re watching on YouTube from the green light behind me is a Seeing Greene. Or if you just read the title to today’s show, congratulations for being smart.

David:
In these episodes, if you’ve never heard one, we take questions directly from you, our listeners, and I answer them, giving you the Greene perspective on what I think people should do, what should be considered, or what options they may have. My sincere hope is that my nearly 15 years of experience investing in real estate could benefit you, following behind me on the same journey.

David:
Today’s episode is awesome, high energy and a lot of fun. We get into, if someone can use a down payment that came from another property and if that’s a smart idea. Advice for a late starter and someone looking to diversify their W-2 who has an illness. When it makes sense to scale a property management company? Who that is good for and what should be expected and if to invest in RE or lend privately?

David:
All that and more on today’s show. And remember, if you want a chance to ask a question on Seeing Greene, I’d sure love to see it. Head over to biggerpockets.com/david and you can submit your question there and hopefully have it answered on one of these shows. And lastly, please take a minute to like, share and subscribe to this channel, if you found value in today’s show, if it was entertained, if I made you smile, just send this to someone else that you love, because I want to make them smile too.

David:
And one of our questions today made reference to my Batman voice. Awesome. Glad to hear that there’s still people out there that love it, which brings us to today’s quick tip. Batman here says, “Go order David’s new book, Pillars of Wealth: How to Make, Save and Invest Your Money to Achieve Financial Freedom.” It’s available at biggerpockets.com/pillars.

David:
And most importantly, this book is a no-nonsense straight shooting blueprint to becoming a millionaire that anyone, and yes, I mean anyone can follow. It’s the secret sauce that most people don’t get told. That includes a three pillar approach to building wealth, being good at saving money, and yes, that is a skill. Being good at making money, that’s an even better skill and then investing the difference. If you’re somebody who is tired of failing and wants financial freedom, I highly suggest that you join the movement that so many other people already have. Go to biggerpockets.com/pillars and pre-order the book.

David:
And I almost forgot to mention, there are some pre-order bonuses you can get if you go buy this now. That’s right. If you get the book now, you’re going to get my Wealth Building Cake Recipe, a workbook to get yourself started and in the right direction, access to a coaching call, and one of you lucky pre-order specialists will get a private call with me, which will give me the ability to look into your personal financial situation and give you custom-built advice for where I think you should start, where your skills are and what path you should be following.

David:
I love helping other people succeed in life, and because money is such an important part of life, it’s one of the big things we have to talk about. In today’s show, I get to share some of that insight, but if you want my advice put directly towards you, go pre-order Pillars and get your chance for a private coaching call with yours truly.

David:
All right, let’s get to today’s show. Our first question comes from Chris Connell.

Chris:
Hey David. My name is Chris Connell. I’ve been investing in Winston-Salem, North Carolina for the last three years. Thank you, and Rob and the rest of your squad. You guys have done such incredible job.

Chris:
All right, here’s my current situation. I own three MTRs, one is paid off, two cash flow at about 1300 a month with mortgages, and my wife and I would like to add to the collection. So I might add, I’m an actor and cash flow ebbs and flows. I’d rather not put 20% down on a conventional loan, so we have the idea, maybe she could bring 50% of the cash from an account she has and I could put 50% from a cash-out refi on that paid off property, we’d buy our next property in cash.

Chris:
Is this a good idea? Does it make sense? Is it absolutely insane? I’m sure you have some great thoughts about it. I love your input and direction. Thank you guys so much.

David:
Thank you Chris for the question. All right, so here’s something that you got me thinking about when you said it. You were considering doing a cash-out refinance on a paid off property to buy your next property with half of the money from your cash-out refinance and half of it coming from your wife. I believe you were saying, if I got this right.

David:
It sounds like what you’re thinking is if you pay cash for the new property, you won’t have a loan and you’ll have more cash flow. The problem is you still got a loan, you just got a loan on a property you already had, not the new one. It might be tricking your mind into thinking that you’re getting cash flow, you’re really not getting, because even though the new property will cash flow more without a note, the previous one will cash flow less, right?

David:
So are you robbing Peter to pay Paul here and not considering that? Because you’re going to be losing cash flow on a property you already have. Another thing is that a cash-out refinance will usually have a higher interest rate than a rate and term refinance, and I’m wondering if you might get a better rate on a new purchase than you would on a cash-out refinance.

David:
We’d be happy to look into that for you. If you want to send me a DM, I’ll connect you, but whoever you’re using that is a thing you should think about is, “Am I going to get a better rate on a cash-out refi or on a purchase?” Because if you get a better rate on a purchase, I don’t think you should do a cash-out refinance. You should go buy the next property getting a loan on it.

David:
Now that does sort of beg the question of, “Well, how do you come up with the money for it?” Which might be why you’re thinking that you’re going to do the cash-out refinance in the first place. I’m just… In today’s market, okay, this isn’t a hard-and-fast rule. Generally speaking, I’m not a huge fan of putting debt on existing properties to buy new properties. I’m not against it. It could work, especially if you’re in the medium-term rental game, short-term rental game where you typically can get more revenue, sometimes you can make those work.

David:
What I don’t like about it, is it’s hard enough to find cash flow in properties as is, now you’re taking on extra debt and trying to find a cash flow in property has cash flow even more. It becomes harder and harder to do. The strategy that I’m seeing this working in today’s market is taking a delayed gratification approach.

David:
You’re buying real estate in good locations, expecting it to make money later. But you’re looking to make money right now. You’re looking to sort of offset the income that comes from acting. I just want to make sure you’re making smart decisions buying real estate, and you’re not buying stuff that’s not intelligent because you feel like you need cash flow. I’ve said it before, I’ll say it again, real estate’s really not a great way to generate extra income. It does that. It can work for that. It’s not what it’s intended to do.

David:
A Lamborghini can tow a boat if you set it upright. It can do it, but it’s not intended to do that, and there will be a negative impact on the performance of that vehicle if you do it for too long. Cash flow is intended to come from commercial real estate, which is very risky right now, because we don’t know where rates are going. And from work, from starting a business, from having a job. My philosophy, what I’m telling people is if you need cash flow, you need to start a business or you need to take another job or you need to learn a skill in addition to your acting.

David:
And if you want to build long-term wealth, you need to buy real estate. I think things work better that way. I think real estate inherently has an architecture that benefits long-term ownership. The principal portion of your payments goes up with every payment over time, making long-term ownership beneficial. Inflation makes dollars worth less, which makes values go up, making long-term ownership beneficial.

David:
Rents tend to go up while your mortgage expenses will stay roughly the same, which makes long-term ownership beneficial. It’s a great retirement plan. It’s not a great right now, plan. And that’s why I’m usually telling people the opposite of all the other influencers that say, “Take my course, quit your job and live off the cash flow.” I don’t see anyone making it happen and I see a lot of heartache coming from the people that tried to force that.

David:
So I’ll sum this up by saying I like what you’re thinking. If you want to buy more real estate for future gains, for your future retirement, for delayed gratification, go through with what you’re doing. If you’re looking to just offset the ups and downs of the acting business, this would be a poor strategy to use. I don’t think that buying real estate for the cash flow it generates in year one is a super simple bet. Right now, you’re also exposing yourself to risk, just in the same way that it makes income, real estate can lose income.

David:
The traveling professionals may stop going, your market could get saturated, there could be a lot of other people that do the same thing, and now you’re losing money every month, which makes your problem of inconsistent income amplified. That’s even worse. So I’d rather see that you took a different approach of making money within real estate.

David:
If you love it, getting a job within the real estate industry or some other type of business opportunity to supplement your acting other than real estate, but keep buying the real estate, just don’t buy it because you need to supplement your income today. Also, killer hair, bro.

David:
All right, let’s check out a clip from Greg Miller in Rochester, New York.

Greg:
I’ve been an avid listener since way back in the Josh and Brandon days, but I have a bit of a unique situation. I have a W-2 job and I own three homes. I live in one of those homes. I rent out the other two as short-term rentals.

Greg:
One of those two is a duplex, so that’s a total of three short-term rentals and last year I grossed about $150,000. I’m 53 years old, but a few years ago I was diagnosed with multiple sclerosis and then last year they tell me I had a stroke.

Greg:
Even though I like my W-2 job, I’m in a situation where I want to leave it behind so I have time to enjoy my life. Because of my health conditions, I obviously want to do that sooner rather than later. And earlier this year, I inherited close to $900,000.

Greg:
I would like your advice on how I can use those funds in today’s market to generate immediate cash flow and also to provide an nest egg for my family. Thank you so much and keep up on the Batman voice.

David:
Gregory Miller, thank you for your question and congratulations on being featured on the BiggerPockets Podcast, episode 825. Glad to see a longtime listener finally getting to make their way into the show. I got a good question here.

David:
There’s an advantage that you have to getting a late start if you’ve got capital saved up, right? Everyone’s jealous of the 22-year-old that figures out about real estate investing gets an early start. Yeah, it’s great for them. However, they usually have no money.

David:
When you’re 53 getting started, you’ve got almost a million dollars to put into play. You got some pretty cool options that I’d like to get into as far as building up that nest egg that you’re talking about, and thank you for indulging the glory of the Batman. Many people don’t know that Wayne Enterprise has actually had significant real estate holdings and that’s how I got to where I am today.

David:
So let’s talk about what you could do here, my man. First off, we want to see that $900,000 grow. We don’t want you to just take it and plant it somewhere and only think about the cash flow. I’d like for you to take that $900,000 and look at some BRRRR opportunities. What I’d like to see you do is to target properties with a lot of square footage that are not priced very high. Okay?

David:
If you could find a 22, 24, 2600 square foot home next to a lot of 1200 or 1300 square foot homes, you have a lot more room to work with. You could create different units in the same house. You could make that house worth more by fixing it up. You have different ways to what I call forced equity, which is just really value add opportunity, and the reason I like that is because you’re going to put some of that $900,000 into this deal, maybe paying cash for it, fronting the rehab costs on your own, and then you’re going to get a lot of it back out.

David:
So it’s not all going to stay in the property. You’re going to be able to get it out and put it into new properties because even though $900,000 is a lot of money, it goes faster than you think when you’re buying $500,000 homes. That’s one thing that I’d like for you to look into is value add on every single deal you get. I also don’t want you to turn away from flip opportunities.

David:
There’s ways that you can maybe buy a place for 300,000 that needs a ton of work, put a hundred thousand dollars into it, so you’re all in for 400, sell it for 500, sell it for 475. There’s going to be some pretty good opportunities if you’re in the right area to grow that 900,000 at the same time that you’re buying properties with it. Don’t just get a one track mind and say, “I’m going to buy a whole bunch of duplexes.” Make sure you’re looking at all the options that you have to use that to create some money.

David:
Lastly, if you really want to build generational wealth, I need you to be thinking about location. Avoid the risk to say, “Well, I can get 30 houses if I buy $30,000 houses.” No, no, no, no, no. You want to be buying in the better areas and you have the luxury of being able to put more money down if they don’t cash flow.

David:
So oftentimes when we say a property doesn’t cash flow, what we really mean is it doesn’t cash flow with 20% down, but if you put 40% down, 45% down, 50% down, a lot of them will cash flow pretty good. You’re going to get a smaller ROI on the cash flow. That’s true because you’ve got a higher down payment put in there, but you are going to get more money over the long-term in the appreciation and the rising rents.

David:
So though 53 may seem like a late start, it’s really not. Hopefully you’ve got a lot of years under your belt and you want to make wise decisions so that when your family does inherit this real estate, someday they’re inheriting real estate that they want, not real estate that they were forced to take over. You’ll also find that your headache factor goes way down when you’re buying in better areas because you have more selection of tenants to choose from and you have a higher quality of tenant that wants to live in your property.

David:
I hope that makes sense for you. I would recommend checking out my book Pillars of Wealth: How to Make, Save and Invest Your Money to Achieve Financial Freedom because it’s going to have some ideas in there for you to make that $900,000 stretch out.

David:
Let me know what you think after this video. Please submit another question at biggerpockets.com/david and let me know what you’re doing and what your plans are and feel free to reach out to me directly on whatever social media platform that you use if you want some more advice. But thanks man.

Maxx:
Hey David. My name is Maxx Jackson from Wilmington, North Carolina, and I must ask you a question about property management. I currently manage three short-term rentals while owning only one. I’m a realtor, so I do get leads from it, but it also is pretty time-consuming.

Maxx:
My question to you is what in your eyes is the best end goal for property management? Should I continue taking on properties that people want me to manage primarily because I’m a Superhost on Airbnb, until I can’t do it anymore? Do people ever scale their property management business and then sell them entirely, or should I just keep leveraging out as much as I can and grow as much as I can, until I do not have any more time? I have some of my own ideas, but I thought it wouldn’t hurt to ask the expert.

Maxx:
Keep up the good work. I listen every week. I appreciate you and next time you’re in Wilmington, North Carolina, stop by and we can play some pickleball at my newest property. Thanks, David.

David:
Maxx Jackson. Maxx Jackson. First of all, what a cool name. I’m not surprised to hear you’re successful with the Maxx Jackson and I did notice the, I mustache you a question. If you guys are not listening to this on YouTube, Maxx has a pretty prominent mustache, looks kind of like one of the bottom of a push broom that you might see at a warehouse. Definitely makes a statement with that. So go check us out on YouTube if you want to see Maxx’s good-looking face.

David:
All right, Maxx, what I love about this question is that it’s not purely real estate. This is a business question and real estate is a form of business and you’re thinking the right way. Let’s break down the reality of how business and real estate works that most people that don’t actually invest in it, at a significant level won’t tell you.

David:
Scaling is often explained as a concept, not as a practice. Scaling is hard. In fact, in my own personal life, I am going to be firing several property managers and hiring an in-house property manager that’s going to manage my whole portfolio for me because of scaling issues. I hire the company and I love the owner. Then the owner leverages out the work to one of their employees and now I’m getting a low talent, low level motivated employee that’s not doing a good job with my short-term rentals. And after months of having them do this, you finally start to see a pattern in the numbers and you realize the problem. “I’m not getting to work with the talent, I’m working with an employee who doesn’t have the right mindset.”

David:
Now, Maxx, you’re doing well managing other people’s short-term rentals because your talent, you also realize you can’t scale because it’s hard, but the fact it’s hard is why they hired you. If it was easy, they wouldn’t give you the job. So lesson one, to learn from this, quit looking for easy everybody. If things were easy, it wouldn’t be given to you. They would be doing it themselves. We literally make money doing work in real estate because we’re doing something that’s hard. So you got to embrace the hard.

David:
Now, Maxx, I don’t think you have a problem with the hard. What you’re asking is because it’s hard, how am I going to scale this thing? And that’s where the challenge comes in.

David:
If you want to get good at scaling, the key is you have to build skills that are different than what got you good at where you are now. So I call this the three dimensions of leadership. The first dimension is learn. You’re doing that. You’re learning how to be a good short-term rental host and people like it so they’re hiring you and like you said, there’s some synergistic benefits, you’re getting leads, that’s good. But if you want to scale, the second dimension is leverage.

David:
By the way, this comes out of my book Scale, which you can find at biggerpockets.com/scale if you want to check that out.

David:
Leverage is building the skill of hiring other people to do the work. You have to hold people accountable. You have to be a good manager, you have to check in on what they’re doing. You have to have difficult conversations. Everything that you acquired in learning the skill yourself is largely useless to you when you’re trying to be good at leverage.

David:
It’s very different, and that’s why most people never grow a business because they get good at doing something and they don’t want to start over at zero and have to acquire the leverage skills. And it’s only after you’ve done both of those, you’ve learned and you’ve leveraged. Now you have to lead, which is starting over at zero all over again, developing a completely different skillset.

David:
Most people are just not willing to pay the price to scale. But Maxx, I’d like to see you do it. So here is what I want to warn you about. As you try to scale, you will have new challenges that will cause you to pull that mustache right off your face. It’ll drive you nuts. It’s okay, it gets better. You acquire the skills of leveraging other people and eventually leading them with time. But no, it’s not like, “Hey, if I could do it with two, I could do it with 20, I could do it with 200.” That’s not the case at all.

David:
Every time you stake the next step-up in business, you have new challenges that you have to take on. It’s constant personal growth all the time. I’d like to see you do it. You just need to understand that you’re going to be very busy, you’re going to be stressed and that’s the price that people pay to be wealthy.

David:
If you look at the top loan officer in the one brokerage, the last couple months, he’s literally made more money than the company has because he doesn’t have any overhead. The company has a ton of it, but he’s working 12-hour a day. We just interviewed him on Mortgage Mondays on YouTube if you guys want to go check that out.

David:
He gets up at six, he’s in the office by nine, after his workout and he works until nine o’clock at night or later. That’s what it takes to be a top producer. Now he’s crushing it, right? He’s going to have a six figure month here pretty soon, but he’s earning it. Just like you have to put in a lot of work to have a good body, you have to be very disciplined with your diet to have a good body. Wealth works the same way.

David:
Now, over time you will get better at it Maxx and it will not seem as hard in year 10 as it did in year one. But the point is it’s still going to be hard and that’s okay. We don’t have to run away from hard. We should actually run towards hard because that’s where the opportunity is.

David:
So to sum this up, yes, I do think that you should take on more short-term rentals. I think there is a really big opportunity in that space. If someone is good at being a host to make money in what I believe is going to be an economic recession, I think people should look forward to it. I think we all need to get rid of this virus that’s gotten into our minds that money should be passive, that we should just exist and we did hard work in the past and now money just flows to us and it just comes. That is not how it works.

David:
You don’t get really fit and then never work out again and just stay fit forever. You’re always working out. However, the work it took to get in shape is much harder than the work it takes to stay in shape. And business is the same way. You’ll work very hard to get in good business shape and then it’s just about maintaining it and it’s not that difficult. So as long as you’re ready for that journey Maxx and your mustache is locked in and ready to accompany you, I want to see you keep it going.

David:
All right, hope you guys have been enjoying the show so far. I love this stuff and you can expect to hear more about business in the future, because as real estate investing is getting tougher and tougher to do, because there’s more and more competition for these assets and cash flow is getting harder and harder to find. We can either sit around and cry about it and go watch Dancing with the Stars and numb ourselves with our pain and look for sympathy from everyone and just wallow in self-pity.

David:
Or we can pivot, we can look for different ways to make money. We can gain business practices and principles and experience and get out there and change careers and get into a job in the industry we love, which if you’re listening to this, it’s probably real estate.

David:
At this segment of the show, I like to get in comments left to previous shows on YouTube. I read you guys the comments that people have left. And remember, if you want to have your comment read on the show, I’d sure love to read it. Just head over to BiggerPockets YouTube, follow us over there and leave your comment.

David:
From episode 816, from yourpersonalagent7243. “Hey David, wondering when your house hack at 3.5% FHA, do you have to refi out of that to qualify for another FHA after a year?” Not a comment but a question, yet still a good question and the answer is yes, you do. You typically only get one FHA loan at a time. So you could either sell the house, pay off the loan and use an FHA loan to get your next one, or you can refinance and keep the house refinance into a conventional loan and then you have another FHA loan that you can use by your house.

David:
A common misconception is that FHA loans are for first time home buyers. This entire concept of first time home buyer was really born out of the crash. The 2010 no one was buying real estate thing. It became a marketing concept for lenders to draw someone in who hadn’t been scarred and didn’t have PTSD from the crash.

David:
So they’re like, “Okay, we don’t want to get someone to come buy a house that already bought one because they’re scared. Let’s get a first time home buyer to come buy a house because they’re not going to have the same trauma and fear about doing it. Well, what incentives can we come up with for first time home buyers?” And then they took stuff they were already offering and sort of said, “Hey, this is a perk for a first time home buyer.” Maybe they had some new stuff, but in general it wasn’t all that great.

David:
People get that confused with primary residence, you can get a 5% down conventional loan on a primary residence. You can get an FHA loan on a primary residence, you can get a VA loan on a primary residence. It just means a house you live in. And you might have nine houses on one another primary residence, you might have 15 houses on one another primary residence. You can use these low down payment loans for those, but you can only have one FHA loan at a time.

David:
Now, the good news is yourpersonalagent7243, that if you don’t want to get rid of your low interest rate on your FHA loan, you can get a conventional loan at 5% down, which is only a little bit more than three and a half percent down. So reach out to us and I will put you in touch with my crew or find a loan officer using the BiggerPockets lender finder tool and they should be able to answer these questions and if they can’t, they’re not good. Run away.

David:
All right, from episode 816, we’ve sparked a chain of comments from everyone. So thank you for helping this person get the info that they need. From 50calpulse76. “On a house hack meaning buying is a primary home. Is there a timeframe that you have to live in it before you rent it out or can you buy a home with the intent there and then immediately change your mind and not live in it?”

David:
The first comment came from Richie1317 that said, “Dude, that’s fraud and no, you can’t just change your mind. The regs require you to live there for at least a year before you can get your next loan.” Then Rullau said, “No one ever cares or checks who lives there unless the payment is not coming.” Thrivinglife said, “At least two years. Then you can move out.”

David:
Lots of different feedback here. I will do what I can to try to set the record straight. Remember how I just said that there’s a misconception with first time home buyer with primary residents? They’re not the same thing. The same exists when it comes to when you can get a primary home loan after you’ve already got one.

David:
What we tell people is buy a house, live in it for a year, then buy a new one and rent out the first one. That doesn’t mean that’s the only way to do it. The reason that we give that advice is that you typically can’t get a primary residence loan until after a year from the last one you got. So if you buy a house as a primary residence, most lenders in most cases will not let you get another primary residence loan until you’ve waited 12 months. We get exceptions at the one brokerage all the time. There is ways around it, but it’s very difficult. Okay?

David:
Now, people confuse that with, you have to live in the home for a year. There aren’t regulations from lenders that say, if you buy a primary residence you have to live in it because they legally can’t do that. If you buy a house to live in and then you lose your job and you can’t make the payments, they couldn’t stop you from renting it out to somebody else as you move back in with mom because you can’t make the payments.

David:
If you buy a house and take a job and then get fired and you have to move back to take a job somewhere else, they can’t force you to live in a house and commute by plane to the new place. So there isn’t a rule that says at least in almost all the loans I see, conventional ones definitely, that says, “You can’t rent it out.”

David:
What they’re looking to avoid is you buying a house with a primary residence loan that you never intended to live in at all. Okay? It was clearly meant to be an investment property. You lied and said it was a primary residence. That would be considered fraud. If you move into it and then something happens that you don’t like. Okay? I’m not giving you guys specifics on case law because I haven’t seen this myself, but I’m explaining my understanding as it’s been told to me.

David:
Let’s say, you move into a property and the dog of the neighbor is barking nonstop and you can’t sleep at night and you talk to the neighbor about it and they’re like, “Yeah, go kick rocks. That’s my dog. He barks, not my problem. I don’t care. I can sleep through it.” You’re not getting any sleep at night. There’s nothing that I’m aware of that a lender could compel you to stay living in that house.

David:
Lots of things like this happened. You can’t anticipate all the problems that could come up. What would be mortgage fraud is if they could show you never intended to live in there at all. You didn’t make any effort, you didn’t move into the house. “You were defrauding us from the very beginning.” That is fraud. That should be avoided. Do not do that.

David:
But when it comes to, “How long do I have to live in the house before I move out?” There actually isn’t a law that I’m aware of and I don’t know of any case law where a judge has looked at this and said, “Six months, three months.” They don’t look at it from this hard-and-fast rule like our brains look at it from, they look at intent.

David:
So if your intention was to live in the house and something changed in your life, circumstances changed. There was something wrong with the property, you didn’t like it. You are allowed to move out of it and go live somewhere else. But no, you probably won’t get another loan to buy another primary residence until 12 months had passed since you bought the first one. That could be tricky. But really good conversation we had there. I’m glad I got to weigh in on that.

David:
Guys, we appreciate the feedback and mostly we appreciate the work that you’re all putting in to pursue your goals and your financial freedom.

David:
I wanted to reveal a recent review that came in on the Apple Podcast app. “I love listening to the show, but, I regularly listen to your show. But my biggest problem is that there are so many real estate investment gurus that I don’t know who’s real and who’s fake. And I suffer from buyer’s remorse after spending $10,000 plus on, quote, unquote, “training.” Everyone agrees that we should start with training, but no one breaks down what is actually real training and not just flashy noise, bragging and motivational stuff.” This comes from Deborah via the Apple Podcast reviews.

David:
This is an amazing review, but you gave us 3-stars. I’m not the one that took your $10,000. Why are you punishing me with a 3-star review, Deborah? I think you’re mad at the industry. You’re not mad at BiggerPockets. You got to fix this. You didn’t say why I only got 3-stars. I’m pouring out my blood, sweat and tears for you Deborah, and it’s free. If anything, we should be getting six stars out of five because we’re giving you free content, not taking your $10,000. Oh, this is so sad. Hurt people, hurt people, right? That’s exactly what just happened to me.

David:
All right, on this topic of the $10,000 scam, first off, no one talks about it. I call it course shame. When someone spends a bunch of money and gets ripped off, they don’t want to go tell everybody that they know that they got ripped off, so they just silently suffer. They keep it inside. The glassy look in their eye and their lack of eye contact is they stare at their shoes at a real estate meetup, awkwardly swirling their watered down drink is how you know that someone is taken advantage of by a course, but if you don’t look for the subtleties, you will miss it.

David:
Here’s my 2 cents on the whole thing. Whenever somebody sells me on an idea and the way they’re selling it doesn’t line up with other things I’ve seen in life, I know I’m being deceived. When I’m watching a commercial for a truck and I’m seeing the thing bouncing all over these rocks and I’m seeing a really hot girl in the passenger seat staring at the guy driving at it lovingly with desire in her eyes, because he’s so cool that he has this truck and I hear this music playing and I see this dream being painted. I ask myself, “Have I ever seen this in real life? Have I ever seen a woman that fell in love with an average looking dude because he had a cool truck?” No I haven’t. I’m being sold a bill of goods.

David:
Look at influencers that are doing the same thing. Are they saying, “I will teach you how to make,” Insert ridiculous sum of money here, “for only” Slightly smaller sum of money to take their course, “and it will be easy and you can do it and you’ll make 10 extra money back.” Do you see that happen at other times in life? Have you ever signed up for a gym and said, “I want to get in really good shape.” And they said, “Oh, this is the gym to go to when you walk in the doors, it’s like magic. A six-pack just happens to come and you don’t have to do anything.” It’s not how it works.

David:
Have you ever had a situation where you paid a bunch of money to have someone fall in love with you and they just stayed in love with you forever? Nope, probably not. That’s something to look out for with these courses. There’s always going to be people that are going to be telling you they can help you and selling you and why you should go with them. They’re rarely ever going to be honest with you.

David:
This podcast is for people that want the honest truth, that want it straight from the horse’s mouth, that want someone to tell them what they need to hear, not what they want to hear. And the majority of you guys love that. So Deborah, I’m so sorry that happened, but don’t blame us. Don’t punish BiggerPockets. We are here for you for free and everybody else that’s listening, please continue to listen to our podcast.

David:
Spend 15, 20 bucks on a book. Don’t go spend $10,000 on a course unless you have a preexisting relationship with the person that’s teaching it. You know them and you trust their word and their integrity. I’ll give one last piece of advice to Deborah and everyone listening here.

David:
I have the one brokerage, we do financing for real estate all across the country. When people say, “Why should I do the one brokerage?” My answer is usually, “Why don’t you talk to one of our other clients and find out what loan officer they had and ask what their experience is like?” Because of course if you ask me, I’m going to say, “You should use us.” Every influencer out there is going to say, “Yes, you should take my course.”

David:
So ask the people that have taken the course. Go to someone that has used the service and say, “What did you get? What did you not get? Would you do it again?” I think that’s smart. So before anybody signs up for a course that costs money, it would be wise to ask other members of the group, “What is your experience and what can I expect?” And all of us in the real estate investing community can kind of look out for each other and help steer us towards the right people and away from the wrong people.

Rob:
David, my name’s Rob Browning. I’m from Escondido, California and my question today is, when is a good time for somebody entering in their later stages of their career to get into the real estate market, based off of current conditions in the marketplace? And I can tell you a little bit about what I’m looking for that might be helpful.

Rob:
I’m looking to build cash flow up over the next five or 10 to 15 years and I’m looking to become a full-time investor in real estate in the next three to five years, which would allow me to leave my current position.

Rob:
I do have money right now to invest. I’m okay withholding that and waiting for a better opportunity while I build up more cash. But again, I would like to get going as well. So that’s my question and look forward to your answer. Thanks, bye.

David:
Thanks Rob. The good news is I love your question. The bad news is these are hard to answer. I feel like I’m always the bearer of bad news in the real estate world, but it doesn’t have to be that way. Here’s what I mean. This phrase full-time real estate investor became popularized over the last 10 years, okay? So think about 2010 to right around 2020, 2021. There were deals to be had definitely at the latter end of that they were tougher, but like 2010 to 2015, there were deals everywhere, and by deals I mean cash flowing real estate.

David:
It was like a person who wanted to catch fish and there were so much fish, you just threw your lure in the water enough times, you were going to get a fish on the line. You’re going to reel it in. The people’s ability to be successful catching these fish and landing these deals was inhibited by the time that they spent at their job and you could literally make more money, as in acquire more wealth. I look at money like energy, right? So if you look at the energy that you could make at your W-2 job versus the energy that you could make accumulating real estate at good prices at cash flow, that was going to grow in value, it was clearly a better move to be a full-time investor.

David:
If you had the skill to catch the fish, if you had a lapse funnel, leads, analyze, pursue success. If you knew how to purchase these properties, if you had the financing to do it. If all those things were in place, you had the lure, you had the fishing pole, you had the skill as an angler, being a full-time investor made a lot of sense for a lot of people.

David:
Here’s the challenge. We don’t have a lot of fish to catch like we did. That doesn’t mean that there’s no fish to catch. That doesn’t mean that fishing doesn’t matter. Please don’t assume the extremes of the argument I’m making. I’m not saying there’s tons of fish or there’s zero fish. There’s just less, which makes it harder to make sense to be a full-time investor. If what you mean is a full-time acquisition specialist, there are some people that do it, but typically they are a part of a big enterprise and they focus full-time on acquisition, while somebody else focuses full-time on management, while someone else focuses full-time on capital raising these syndications.

David:
Yes, they do full-time real estate investing, but they’re doing a piece of a puzzle which sort of puts you back into the employee category. You see where I’m going with this? Becoming a full-time investor is not leaving a job, it’s getting a new job and there are less deals to go after now than when we first started to use that phrase.

David:
So the question Rob that I think you need to ask yourself is, “Will I build more energy at the job I have now or will I acquire more energy if I go to become a full-time acquisition specialist with real estate?” And maybe you make less energy doing real estate full-time but you enjoy it more. That’s something to factor into the equation as well.

David:
If we’re speaking practically, what I see people making work right now, is becoming a full-time short-term rental manager, okay? If that’s what you mean by full-time real estate or full-time investor, I don’t think it’s fair to say a full-time investor because even though you do own the property, you’re functioning in the role a property manager and you are absolutely trading one job for another one.

David:
I’d rather have you look at, “Okay, I could pay someone X amount of money to manage the properties and I could do this much acquisitions with my free time. Am I making more money and having a better life keeping the job or am I willing to make less money but I get to work with in real estate that I love?” And get very specific on what it means. Not trying to discourage you.

David:
You might live in a part of the country or in an area where there’s deals everywhere and you can still make it work. I don’t know the names of those places right now, but I’m sure there’s areas in the south and the Midwest where other investors just haven’t found yet. And there’s people out there that are crushing it and there’s tons of fish to catch and they are full-time investors. They’re probably not talking about it because they don’t want the competition from all of us that are like, “Where’s the deal? Where’s the cash flow?” I just want to make sure I clarify for everyone that’s heard this phrase full-time real estate investor, that they understand what that means.

David:
That really meant full-time acquisition specialists, and if there’s not a lot of deals to acquisition, it doesn’t make logical sense for you to quit your job to jump into that. So Rob, let me know how it goes. Let me know what questions you have after hearing this. Don’t get discouraged. Just ask yourself the question, “What role do I want to play in real estate and would I rather trade my full-time job for that?”

David:
And our last question comes from Chris Feno who says, “I have around 600,000 in equity. What’s more effective in the long run? To buy investment properties using a HELOC or use that HELOC to fund local investors projects for returns over and over?” All right, Chris, it looks like what you’re asking here is, “Should I take out my equity and use it to own real estate or should I fund other investors flips so to speak, or maybe they’re BRRRRs and earn a return on my capital?” So let’s kind of look at your two different options.

David:
If you go the route of being a hard moneylender or a private moneylender, that’s what it sounds like you’re asking here. First off, you’re going to be taxed on those gains and it’s going to be most likely short-terms capital gain taxes. I’m not a CPA, I don’t know for sure. That’s what my gut would be telling me.

David:
If there’s a way that you get away from the capital gains, you’d still be taxed at a income level and the more money you make, the higher taxes are. When you earn equity in real estate, it’s not taxed until it is sold. So even when you pull it out on a cash-out refinance, that energy still isn’t taxed. It’s a more tax efficient way of building wealth, not the case when you’re going to be making money by lending it to other people.

David:
Number two, there is risk associated in lending that money. We just never hear about it because one, no one wants to share their losses, and two, we’ve had one of the best markets for real estate investing in the history of the world in the last 10 years. So not many people were losing money because it was tough. The person that borrows your money to flip a house could do everything wrong, and the market was so strong that it would overcome. They would sell the property, even if they sell at a break even or a small loss, they still had plenty of money to pay you back. But what happens when the losses get to be big? It becomes harder and harder and harder to make the flip work, so that you could get your cash back and a lot of that equity is going to start to go down.

David:
Number three, if you take the equity out of the houses and you use it to give to the people that are going to be flipping or BRRRR-ing you’re also paying interest on that. Okay? So if you’re lending it to them at 15% or 12%, but you’re paying eight or 9% on the HELOC, it starts to look like a much less desirable proposal for you.

David:
So most hard moneylenders, at least the good ones, really anyone that’s in the lending business focuses on yield spread and margin. What they say is, “All right, X amount of these deals are going to go bad, X amount are going to go good in order to make enough money to cover my losses, I have to charge 15%, 12%, two points.” Whatever, and out of that profit, they’re going to have to pay for the losses. So if you’re paying your hard money 15%, that doesn’t mean they’re earning 15%. After all the people that don’t pay them back or the money they lose, maybe they’re earning 8% or 9%. I don’t know the exact numbers, but I hope you get the point.

David:
If you’re already paying 8% on the HELOC and your true spread, it ends up being 10%, if you’re able to get 50% on your loan, you’re taking all this risk for a potential 2% spread. That doesn’t sound as good as what you’re probably thinking in your mind when you’re thinking about what I call the gross.

David:
In my book Pillars of Wealth, I talk about spending from gross. It’s this mindset virus that we acquire, when we say, “Hey, I make $90,000 a year. I can afford a thousand dollars a year car payment.” “Hey, I make 90 grand a year. I can afford that $3,500 vacation.” When you’re trying to make a decision on spending and you’re thinking about the gross money you earn, the amount you’re spending seems like a very insignificant portion.

David:
But if out of that 90,000 you get taxed 25,000, so you’re only keeping, I believe that’d be 65,000, and out of that 65, you’re only saving $15,000 a year. That thousand dollars car payment is $1,000 a month out of $15,000 a year, that’s 12 grand. That’s almost the whole thing. All of a sudden, that looks like a really foolish decision to make. It depends on if you’re looking at the net or the gross. I think when it comes to this opportunity to do private money lending, you’re looking at the gross, not the net. I don’t think the net will be as attractive as you’re thinking. And lastly, there’s some extra risk here.

David:
If you lose your money that you pulled out of the properties to flippers, because the market goes against you or you make bad choices or you make some beginner mistakes that everyone makes, but that ended up being all your capital, you’re putting the properties themselves that you put leverage on at risk. What happens if they need some repairs? What happens if the tenant stops paying the rent? You might end up losing the properties and the money that you pulled out of them going into a new business that you’re not familiar with.

David:
So those are the risks and the upside doesn’t seem as big. When you look at pulling out the money that you have in the properties to buy new real estate, the risks are going to be if the new real estate you buy doesn’t cash flow. If you end up losing money on those new properties, that’s not good, but that’s about the only risk I can see. The upside would be a lot of inflation and a lot of gaining equity through rising home values. The rents, if you buy in a good area, should be going up every year, which means eventually every year that you keep the property, it gets sweeter and sweeter and sweeter.

David:
You can also take the equity out of the property, say $600,000 and add leverage by borrowing money from the bank. So the $600,000 of your down payment would be the equivalent of buying $3 million worth of real estate. So if you’re doing good at investing and you’re buying in the right areas and the properties are supporting their debt service, you could take 600,000 and turn it into $3 million of real estate, which after 30 years has been paid down and now you have $3 million of real estate plus whatever it’s appreciated by. It’s tough for me to see you hitting those same returns, becoming a private moneylender.

David:
The last thing that I’ll put in here is that private money lending sounds simple and it can be simple, but that doesn’t mean it’s easy. There is a skill to analyzing who you should lend your money to and at what rates, and then take it over the projects that they screw up. And it’s not a skill that you probably have right now. You have to build it, and if you’re going to lose money in building the skill, it might not be worth doing.

David:
So those are the ways that I would analyze your two decisions there. I know that there is no easy options anymore because the market’s so tough. There used to just be like, no-brainer. “Go do this.” That’s not the market we’re in anymore. We had it good for a long time. Hopefully all of you listeners took action at the time just like Chris did. That’s why he’s in the position where he has $600,000 of equity, and if you didn’t take action during that time, that’s okay. Don’t sit around and cry about it. You can still take action today. It’s just tougher than it was before, but it might be even tougher than this in the future, we may look back at these times and say, “Hey, there was a lot of opportunities. We should have taken advantage of it.”

David:
All right, that was our show for today. Just to recap what we went over, we talked about a lot of things including how another property should be bought when you don’t have the 20% saved up, is it makes sense to take from one property and use the equity to buy another? What to do when getting a late start in real estate? What strategies to use to really grow that nest egg to hand it off to the next generation? If we should scale a property management business or not, because frankly, it’s a lot of work and to own RE or two lend privately. That was our last question there, and we got to look at the two different options.

David:
I hope that our advice today gave you a clear picture of what the next best step for you is, and even more importantly, help build your confidence when it comes to moving forward in your own real estate business and portfolio.

David:
Thanks everybody for checking out another Seeing Greene episode. Love having you here and love doing these. Remember, if you would like to be featured on the show or you’d just like to support us, head over to biggerpockets.com/david and submit your question there so that I can answer it.

David:
I’m David Greene. You can find me @davidgreene24 on social media. So please go follow me on Instagram, friend me on Facebook, follow me on Twitter, and check out my website, davidgreene24.com. If you’ve got a second, check out another BiggerPockets video and if you don’t, we’ll see you next week. Thanks everybody.

Businesses in rural communities typically fall under the radar of growth-equity investors. “Traditional sources of venture capital don’t go to these markets,” says Melissa Obegi, president of impact investor Conduit Capital, U.S. “They often stick with a more tried-and-true footprint.”

That’s why RuralWorks Partners was formed. Launched last year by Community Development Financial Institution (CDFI) Community Reinvestment Fund, USA and Conduit, it aims to build wealth and economic and climate resilience in rural communities, along with the number and quality of jobs, by investing in growth-stage businesses with the potential to expand. “These companies are starved for the capital critical to bringing their full potential to bear on community resilience and job creation,” says Obegi, who is also a board member of RuralWorks.

In August, it launched its first fund, RuralWorks Impact Partners 1.

A Focus on Agribusiness and Food

In 2021, the folks at CRF and Conduit started mulling over a possible collaboration that could address the dearth of financing in rural communities, providing a way to improve local economies and expand the use of climate-smart agricultural practices. What was needed, they decided, was money that could allow agribusiness and food industry businesses to thrive and grow. Investments of $1 million to $5 million would target such areas as sustainable and regenerative agriculture, local and regional food systems and circular economy, to name a few examples. And the enterprise would also provide other services, like business advice and access to markets.

Last year, they received certification for RuralWorks as a Rural Business Investment Company (RBIC), a USDA program that licenses for-profit developmental capital funds. The move allowed the enterprise to raise equity from the farm credit system.

A three-person management team runs RuralWorks. There’s also a four-person board and an advisory council with experts in rural innovation, consumer and food businesses and private equity and blended finance.

Building a Pipeline

As for investments, since launching their fund—the size has not been disclosed—they’ve been evaluating potential targets. “We’re building a robust pipeline of opportunities and preparing to deploy capital,” says Obegi. While the primary focus is businesses operating in the Northeast, the Great Lakes region and Upper Midwest, RuralWorks also considers investments anywhere in the country.

Tech companies are likely to be in the mix. “We’re very interested in the kinds of technological developments that are being created in rural communities,” says Obegi. To that end, RuralWorks works with organizations like the Center on Rural Innovation, which promotes rural regional technology hubs, for deal sourcing. Plus, thanks to the rise of remote work, Obegi sees the potential for more talent to relocate to rural areas. In addition, a federal government focus on rolling out rural broadband should improve web access.

“It’s an example of the kinds of collaborations across non-traditional parties that address fundamental systemic and critical challenges we face,” says Obegi. “We can contribute to a blueprint for a rural renaissance.”

Ashley:
This is Real Estate Rookie Episode 326.

Nate:
As soon as I say cold calling, most people just kind of shut down. “I’m never going to do that, I can’t do that.” I promise you, you can. With your skill level, with your own unique personality, you absolutely can do this. But I think it’s a matter of managing your expectations, and I think that’s where a lot of people get gummed up. So I’ll tell you what I say and what I do, and then maybe we could dive a little bit deeper on this.

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

Tony:
And 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. And rookies, do we have an episode for you guys today? If you have ever thought to yourself, “Where can I find really good deals? How can I do that with the least amount of money possible?” Nate Robbins, our guest for today, is going to answer that question for you. Now, Nate’s a friend of both Ashley and I, he’s one of the biggest characters I think I know in the world of real estate investing. He’s always got a smile on his face, always making people laugh. But don’t let his kind of boyish charm fool you, Nate is an absolute beast when it comes to finding good off market deals.

Ashley:
You know what? That’s so funny because that exactly describes [inaudible 00:01:14] his boyish charm. And yeah, so we bring Nate on today and we talk about how he actually got started in real estate, gives you a little background of that. And it was a very unique situation, and how he took advantage of this opportunity presented to him.
Then we’re going to go into how to source a deal, how to find a deal. And Nate will walk you through the two different paths as to how he finds addresses or gets the houses that he wants to go after. And we break down exactly what you should say on the phone, exactly what you should do when you’re at a seller appointment, step-by-step instructions. As you’re listening to this, I want you to write down notes of what Nate is going to say. And kind of develop your own plan to follow this along, and just try it out.
Pick up the phone, make a phone call, go door knocking, but Nate does a really great job of describing in detail a step-by-step list for you to go and do exactly what he’s doing.
Nate Robbins, welcome to the Real Estate Rookie Podcast.

Nate:
It’s the honor of my life, I love you guys. And your audience doesn’t know how lucky they are to have you in their lives.

Ashley:
Well, thank you, that was a very nice compliment. But today we are here to shower you with love and admiration on your real estate investing journey. So Nate, why don’t you start off telling everyone a little bit about yourself, and then how you got started in real estate.

Nate:
Yeah, so back in 2016, I was working for a bank. I’d been working at a bank for about five years, I was a private client banker. And I’ll be honest, I really should not be where I am today. There’s just no logical reason way that I am where I am today. And so I was working at the bank back in 2016, and I was actually hitting kind of a midlife crisis. I was very frustrated with my work, frustrated with life. And I got off a very frustrating phone call with a client and I hung up, and I just see this random guy standing in the lobby. And not wanting to make any more phone calls, I just get up out of my desk. I wasn’t necessarily supposed to pull the clients from the lobby. Walked over to this guy and I said, “Hey man, how can I help you?” And he goes, “Well, I need to open a business account.” And I was like, “No problem, I can help with that.”
And so I brought him over to my desk, [inaudible 00:03:47] chatting with this guy and I’m like, “Dude, you’re a really cool guy. What do you do?” And he goes, “Well, I’m in real estate.” I was like, “Oh, that’s cool, I’ve always been interested in real estate.” And I bought Carleton Sheets when I was 18, trying to… Your audience wouldn’t even know who Carleton Sheets is.

Ashley:
I don’t know who that is.

Tony:
You don’t know Carleton Sheets, Ashley?

Ashley:
No, no.

Tony:
So I don’t know, I was a really weird kid, I would stay up late during the summer months. And late at night when you don’t have really good cable packages, all you see is infomercials.

Ashley:
Mm-hmm.

Tony:
And every single night Carleton Sheets had an infomercial running for this at-home kind of package that taught you how to buy real estate with no money down.

Nate:
Yeah.

Tony:
Anyway, he was one of the big real estate info marketers back in the day.

Nate:
He’s the original guru kind of thing, he sold the program and then he’d get you in your loop and he’d sell you more programs and stuff. And so yeah, it’s kind of funny. Hey, actually Tony, if you want, I’ll send you the tapes, you could listen to him again if you want.

Tony:
My dad actually had a copy, I was in his garage a decade ago and found [inaudible 00:04:51] and Sheets’ tapes also.

Nate:
It actually has some pretty good stuff in it. It’s pretty basic, but it’s really good stuff. And I’m like, “Oh, okay, cool.” Yeah, it’s nice, but-

Ashley:
Okay Nate, you don’t need to give us your affiliate link now, back to you.

Nate:
So I’ve actually signed up, but-

Ashley:
Sign up under me.

Nate:
Yeah. I can promote my Amway business also? So anyway, that one conversation with that business account ended up being a conversation with who you guys know, Tarl Yarber. I don’t know if your audience would know who he is, but was one of the most successful real estate flippers up here in the Seattle Pacific Northwest market. And so he’s like, “Well, hey, let’s grab coffee and a lunch.” And so that turned into about a two or three month conversation. And then after about three months, he said, “Hey, I’m willing to offer you a 90-day contract to come work with me.” And so I had to make the choice of, do I stay at a safe job at the bank? Or do I take a chance on a 90-day contract to go and maybe succeed or fail at real estate? And so thankfully, the fear of not knowing what would happen was greater than the fear of being safe or the need for security. And so I took the chance and it’s been an absolute wild, wild ride ever since.

Ashley:
In that moment when you were looking at, okay, 90 days, what happens after 90 days? Are you the type of person that’s like, “Worst case scenario, this is what I can do.” Did you think you could go back to your other job? Maybe if somebody listening is given that same opportunity, what’s your advice on ways that they can take that chance and kind of shift their mindset to leaping into something that may only be 90 days and not continue on?

Nate:
Yeah. Well, I got to the point, and again, I was kind of in a existential crisis a little bit in my life. And so I got to a place… Because it was a big deal, I was on a fairly successful track with my job, I had a plan, a 10-year plan. And I got to the point of saying, or I had this image of saying, “Well, I’m on my deathbed.” It was kind of future casting. I’m on my deathbed, I’m always going to wonder what if? And the fear of… I had to see, I had to know what if? What if it did succeed? What if I did make it? What if this was my chance? And I had to know even if I failed. And so I kind of hedged my bets where I left gracefully, I left kind of on an extended timeline to help my manager out. So I knew that I could always come back if I failed, but I had to know.
And so I think sometimes it’s easy to play it safe, but on your deathbed when you’re dying and you’re about to take your last breath, are you going to be glad you took the chance? Or are you going to be glad you played it safe? And I think most people… And I’m sure you guys see a lot of these same motivational things. Most people on their deathbed when they interview these people on their last moments, it’s not taking the chance, it’s not taking the risk and taking the opportunity. And so for me, I had to see what happened down this path. And yeah, I would encourage other people too, it’s man, take the chance, see what happens.

Tony:
Nate, I just want to ask, you’re talking about taking this chance, but you worked in a bank, but were you in the mortgage department? Did you have any type of real estate experience prior taking this big bet on yourself I guess?

Nate:
No, none.

Ashley:
So why would Tarl want you? What were the things that you thought… What did he see? Besides how handsome you are, what are some other qualities that he looked for?

Nate:
Have you seen this hair?

Tony:
I was just about to say, man, and how perfectly quaffed that [inaudible 00:08:56].

Nate:
It’s almost as good as yours, Tony. It’s almost as good. Yeah, well, I think obviously, I have a real hard time talking to people. I don’t have any kind of personality and I stutter a lot. So those were some of the hindrances I had, but I think I owe a lot to Tarl for where I am at today. And I think what he saw… And he’s very good at this as well, when he sees potential in somebody, he’s really open to taking a chance on that person. And so I think it was probably pretty obvious that I was miserable, and I think from our conversations together he saw somebody that was really miserable, had a lot more potential and was stuck in a place that wasn’t that great for him.
And so Tarl saw that in me, and I think just doing what I do because my strong suit really is building relationships with people, it’s communicating, it’s getting to know somebody, it’s building rapport. And so my job within the bank was as a private client banker, so I was dealing with high net worth clients. I had no real estate background, I really didn’t have anything as far as real estate was concerned to bring to the table. But my personality, my ability to communicate and talk to people, that really I think is what kind of opened the door for me to work with Tarl.

Tony:
Nate, just I want to go back really quickly to something that you mentioned about the whole laying on your deathbed thing. And I think there’s a lot of value and you used a phrase future casting in that way. And there’s a book I’m reading right now, it’s called The Good Life, and it’s by two doctors, Robert Waldinger and Marc Schulz. But basically it was this longitudinal study where they followed hundreds of people over multiple decades. From the time they were 18 until they were in their 80s, and they passed away. And they even followed on with their kids and their grandchildren. So just crazy amount of data and it just goes into hey, what are the key factors of actually living a good life based on this really long comprehensive study? And a lot of it was kind of tied into what you said about taking some of those risks. And kind of surrounding yourself with people that you really get energy from. As opposed to being in an environment where you’ve got a bunch of energy vampires that are kind of pulling life out of you.
So I just wanted to plug that book, I’m 30% through it, I’ve already really enjoyed it. But The Good Life by Robert Waldinger and Marc Schulz, if you guys are looking for a good read on that.

Nate:
Yeah, I think you bring up a very interesting point that I’m still learning. And I think at least in my life, there’s a tipping point where I’ll be in a situation or I’ll be in a job, well, not a job anymore, but I’ll be in a situation where it no longer feels life-giving, it’s an energy drain on me. And I think it’s very challenging to want to pursue safety and security over having the integrity to say, “Hey, this is no longer really helping me, it’s killing me.” And trying to make active changes. Because the reality is we’re not trees, we can move, we can make changes, and we can make those things, right? So when you realize that those things are starting to happen to you, maybe it’s a relationship, maybe it’s a job, maybe it’s something, you have the ability to make changes to improve that situation and find that vein of, “Hey, this is giving me life, this is now exciting, this is good for me, this is getting me to where I need to go.”
So just being aware of that, and I’m still learning that as well, but okay, now I need a change, let’s start working that.

Tony:
One more plug, because I said the word book. And anytime we say the word book on this podcast, Ashley and I now have to plug the Real Estate Partnerships book with Ashley and I co-authored. If you head over to biggerpockets.com/partnerships, you guys can pick up a copy of that book. But now anytime the word book or partnership is mentioned on this podcast, we have to plug the Real Estate Partnerships book.

Nate:
Okay, well, we’re going to plug that a couple more times then.

Ashley:
Pretty soon anytime the word real estate is said, I’m plugging it. So tell me, Nate, what kind of investing do you like to do?

Nate:
Well, actually after that whole thing with Tarl, I don’t actually do real estate anymore.

Ashley:
Oh, real estate, so we have this [inaudible 00:13:14]. Let’s talk about when you made that transition. You’re leaving your bank job and you’re going to work for Tarl, what were some of the things that you were doing for this job? What was the actual position?

Nate:
So this is a little bit funny, and I’ll do the [inaudible 00:13:31]. Tarl, when he hired me he was looking to replicate himself. He wanted to kind of get a step away from the business, run the business and just replicate himself. And we could probably talk about this as well, but I left the bank with a very much of W2 mentality. And Tarl was looking for somebody with more of a independent, I’m going to go figure this out and get it done. So the first two weeks I’m just sitting in the car with him like, “All right man, tell me what to do. I have no idea anything about anything, just tell me what to do.” And after about a month of that, he was starting to get pretty frustrated. And so if you talk to him ever, you’ll find out I was on my way to getting fired actually. And then we went to a Jocko Conference down in San Diego and that reframed some of his thinking, and so anyway, I got a second chance.
But what was apparent is that my strong suit and my skillset wasn’t really around the detailed operations of managing a project. Now, I can do that, but I wasn’t the skill match for Tarl. And so what it became apparent is that I’m much more stronger suited or my skillset is really in building relationships and that type of thing. And so the role that I kind of fell into or I kind of got more focused on was acquisitions. So networking with wholesalers, going direct to seller and that kind of the wholesale aspect of the business. And so just again, kind of Tarl realizing, “Hey, you’re better suited over here, not what I originally planned. So let’s move you over here and get you kind of in a better role.” And so that was kind of how I kind of fell into this whole acquisitions, door knocking, cold calling, deal finding, all that kind of good stuff.

Ashley:
That is such a real thing, the W2 mentality. And it’s also part of who you are too as far as your DiSC profile and things like that as to how you perceive the world. But being you just want to be told how to do something and you can master it instead of having to figure it out. And then there’s other people that want to figure it out and can figure it out. But that was something I struggled with too with one of my business partners, he came from the W2 world. And everything was handed to him as to, “Here’s what you have to do.” And he would just go and do it. And then it was on to the next thing of [inaudible 00:15:57] what you had to do. And there was never really a lot of decision making or even scheduling yourself or any kind of task management because everything was just given right to you.
And I think making that transition is really hard. Honestly, I think it took him a year. Now he oversees all of the maintenance for my property management company. And it is boom, boom, boom, everything is just done, he just takes action on it. But if he was doing that a year and a half ago, I literally would’ve had to sit down with him, “Okay, here’s this work order, this is what you have to do. Now let’s schedule it for this day and this time. Now go ahead and text her, tell her you’re going to be here at this time this day.”

Nate:
Yeah.

Ashley:
But now he can just go and figure it out, but that is such a big thing. So what are some of the things that you did to kind of get out of that? Because I feel you obviously haven’t stayed stuck in that W2 mentality. I can seriously doubt Tarl is still telling you exactly what to do every day.

Nate:
Well, it’s actually funny because now I’d say about 8, 12 months ago, we’ve kind of stopped doing real estate up here in the Pacific Northwest. So we work together on other aspects of that, and so if I did have any W2 mentality a year ago, it’s definitely gone now because it’s now 100% dependent on me, right? And so I’m looking, I’m trying to think back to my mentality on this kind of stuff, and I think it’s when you really, really want it bad enough, you will figure it out. People want the easy road, they want the easy five steps to make a million dollars. And that information exists except for… What did I see? Hold on, I have to read this quote today. And I posted this, right? It was like, “Building a real estate business is simple, knowing what to do is simple. Executing on what to do is hard, being consistent is hard, delayed gratification is hard, being persistent is hard.”
And so I think it’s just one of these things that it’s not wrong to have a W2 mentality, but it can be hard to succeed. And so you have to have this mentality of, “I am going to succeed, I’m not going to quit. I want this and I’m not going to wait for somebody else to come kind of spoonfeed me. I have to go get it and I’m going to go get it.” And so I don’t know if that was clear, but that’s kind my thought process on that.

Tony:
You kind of said it yourself that no one’s going to spoonfeed you, you have to go get it, Nate. So once you and Tarl had that realization of the detailed operational management isn’t kind of speaking to your natural genius, it’s more so the relationship side. What did that onboarding experience look like? How did you figure out what you should be doing every day? Or what was the effective way to go out? And just even I guess just taking them one step back, if you can first just define kind of what your new goal was after you guys have kind of decided, “Okay, here’s the role for Nate.” What was the end result you were looking for? And then how did you go about teaching yourself how to do that?

Nate:
Yeah, so one of the advantage… Now, I have to be very clear, I had an extreme advantage working with someone like Tarl, because it gave me a lot of things. It gave me access to a lot of high level people that normally a lot of people starting out don’t get, so that was an advantage. He put me in the room with a lot of very successful guys that I could pick their brain and kind of learn from their systems and stuff like that. And so that was a huge advantage. I think with social media and things like that, people today, even if you’re starting out, you can still kind of get the help that you need, but it was really nice having that kind of thing.
Now, the thing that was a challenge was that there was no onboarding process. There was no “Hey, this is how you wholesale.” It was more like, “Hey, go talk to this person and figure it out.” And so even though I had these connections, I made a lot of stupid mistakes. Which we could talk about if you want, because I’m sure your audience would love to hear about dumb things that happened, but I know I do.

Ashley:
I would love to hear about what that process has turned into for you because that was part of a lot of value that you bring. And you’ve helped me a ton with this, is how to actually talk to people to sell their property, and what those kind of processes are. So do you want to start from the very beginning of how you’re even finding a house, how you’re then finding the seller and kind of go from there?

Nate:
Well, first off, Tony, did I answer your question? Did I get to that?

Tony:
Yeah.

Nate:
Okay.

Tony:
I think the only other thing I’d add is just the goal of what it is, right? Tarl brought you in because he had a business of flipping homes. And in order to profitably flip homes, you have to buy properties at a discount in comparison to what you’ll be able to sell them for. So if I’m hearing you correctly, Nate, the role that you were then slotted to fill was to help Tarl find those undervalued properties. Am I hearing that correctly?

Nate:
Correct. And that came through, it could be a number of different ways like networking with other wholesalers myself doing that, agents. It was just I just need to bring in, I think it was about two to three deals a month is what I needed to bring in to the business.

Ashley:
Okay, let’s start with that of how are you even finding the deals you’re bringing them in? I want to create a step-by-step process so everyone listening can go ahead and write this down, make their own little checklist and kind of do exactly what you do, because you are so great at it. So first thing, how to find houses, go ahead.

Nate:
Yeah, well, thank you for that kind word. I will say there’s two tracks, right? There’s the people… And we could go deep on this if you want because this is where I’m probably most passionate about. You have the people that don’t have a lot of disposable income, and they’re going to have to bootstrap it. And they’re just going to have to get after it until they can make some additional income. And so on that vein, so we have the, “I have to just get after it.” Because they don’t have a lot of capital invest. There’s a couple of things that I would say. Number one, is I would download the Driving For Dollars App. And if people aren’t familiar with Driving For Dollars, it’s basically where you drive around neighborhoods and you’re looking for dilapidated houses, tarps on the roof, boarded up windows, overgrown lawns, vacant houses, missing power meters, things like that.
And so if you don’t have a lot of money to invest, and there’s other apps that can do this, I just prefer… because I’m friends with Tucker Merrihew. I don’t get any kickbacks from this, although, Tucker you should sponsor me. But I would download the Driving For Dollars App, and then over a weekend I would drive around median priced houses in a neighborhood that you’re relatively familiar with or a town or a city you’re familiar with. And I would drive up and down every single street and I would create a list of at least a thousand houses over a weekend. And so if you live in a place like Portland, you could do that in a couple of hours.

Ashley:
So what are you looking for when you’re looking at these properties? What was some of your kind of criteria?

Nate:
So I kind of mentioned before, if the house is vacant, if you’ve got boards on the windows, if you’ve got tarps on the roof, if it’s overgrown and with a bunch of vacant nasty cars in the thing, any signs of distress really. With this one, sometimes you can be a little bit liberal on it, you just have no idea who’s willing to have a conversation, but any signs of distress. Pro-tip, actually drive down the alleys. I don’t know in most cities, but ours, we have kind of back alleys that drive between two streets of houses. Sometimes that gives you a different perspective where the house looks good on the front, and you go down the alley and all of a sudden there’s a, “Oh, this is absolutely really bad.” So you can mark the house down, but any signs of distress, just mark it down.
And so what the Driving For Dollars App will allow you to do is you can just drive with the map open or the app open. You can drop a pin on the house and you can just kind of track your progress on what streets you’re going up and down. And I would just continue to build that list. Ideally, you want to build that list of 5, 7, 10,000, depending on your market and depending on how hard you want to go.

Tony:
Just one clarifying question.

Nate:
Mm-hmm.

Tony:
So Nate, I want to give some context to the rookies that are listening because you just said you want to get this list to not 500, but 5 or 10,000. First, how much time do you think it would take for someone to get to a list of that size, Driving For Dollars? And just like cumulatively, how much time do they have to spend driving? And then why does the list need to be so big? Because I think some people have this misconception around the volume that you need to be able to source markets off deals. So how much time? And why that volume?

Nate:
So I would say a couple of things on that. Number one, you don’t have to have 5 to 10,000 to start. If you were a brand new person, if one of your listeners is a brand new person, sat in front of me. And they’re like, “I want to get my very first deal.” I would say, “Download this app, and then go create a list of 200. Start with 200, and tell me your top 20 worst houses that you found, that are vacant. For sure there’s nobody in there and they’re really, really bad.” And so I would start, you don’t have to have that number, but if you’re going to build a business and actually grow this to continually source off market stuff, basically you want a larger list. And the reason you want that is… And I’ve seen this a lot with a lot of newer people, is that they’ll find 100 houses, and they’ll market to that, but they won’t get any calls.
Well, your section of people, it’s too small. And you just need a larger group to actually try and generate consistent leads. And so if you have 5, 6, 10,000 houses that you’re marketing to, well, then the deals will start… you’re going to get more deals that way, essentially.

Tony:
And I think just one thing to call out is that sellers’ timelines don’t always match with when you’re marketing to them. And this is, I kid you guys not, when I first started investing in real estate back in, I think it was summer of 2019. I sent out a bunch of mailers to Shreveport, Louisiana, where I was investing at the time. I got a call last week from someone on one of those mailers and he said, “Hey, I wasn’t ready to sell when I got your mailer, but I’m ready to sell today.” That was almost four and a half, five years ago that I sent those mailers out and someone’s calling me today. So I think it just goes to show that you’ve got to start planting those seeds, and then over time they all start to kind of sprout up.

Ashley:
Tony, are we going to have another story about another house in Louisiana?

Tony:
No, I didn’t even call them back. I didn’t even call them back, I’m not going back there.

Nate:
Give me the lead, I’ll deal with it. I got you.

Ashley:
Yeah, yeah, give it to [inaudible 00:26:53]. So as far as, okay, you have your list, you have the property address, right?

Nate:
Yep.

Ashley:
Are you finding other information? What’s happening once you’ve started to build this list of addresses?

Nate:
Yeah, so what I would say, again, if you have no money and you’re bootstrapping it and you’re just starting out. What I’d say is once you get to 200, I’d start taking action. Now, the Driving For Dollars App, and I know there’s other apps that will… DealMachine I think is one other one, they’ll give you a little bit of the seller’s information. Seller data is probably one of the most challenging aspects of off-market stuff, because you’re not always getting the right stuff. Most skip tracing services are probably 70% accurate. And so I probably spend a little bit too much on this, but I have three other programs that I pay every month to have access to.
And so yeah, these would be the ones I use. And you don’t have to spend all this money on these, but if you’re going to do this longterm it might be worth it. I have Whitepages, and I think that’s 60 bucks a quarter, so 20 bucks a month, I think. REISkip, you pay per skip on that one, so you put in 50 bucks and then it’ll last you until you’re done.

Ashley:
Nate, what’s a skip?

Nate:
Oh.

Tony:
Yeah.

Ashley:
You pay per skip, what’s a skip?

Nate:
Oh, good question. So basically Whitepages… let me give you this and I’ll explain all that. So I’ve used Whitepages, REISkip and People Finder PRO, and then Driving For Dollars. And so what this does is this allows you to look up the homeowner’s information, and get a bunch of emails, phone numbers and potentially mailing addresses. And so between the Driving For Dollars App, Whitepages, REISkip and People Finder PRO, I generally can find a phone number for the seller. And so if you were again, sitting in front of me, I’d say, “Once you have a list of 200, you have your top 20 worst ones. I would not think about it too much, look up, even get a piece of paper out, write it down, your seller leads, write down all their phone numbers, and then just pick up the phone and you call.”

Tony:
So you mentioned a few pieces of software, but you didn’t mention PropStream. Which I feel is a super popular one for a lot of wholesalers that I know. Is there a reason why you’re not using that software?

Nate:
I use PropStream when I’m pulling lists and stuff like that.

Tony:
Mm-hmm.

Nate:
So I do use PropStream, there’s nothing against it, it’s just for the initial find on things… I have nothing against PropStream, I use them. This is just kind of how I kind of started, and I’ve just kind of got stuck in my ways. And so this is not the only way. This is not the only way.

Tony:
Yeah.

Ashley:
Okay, so now you’ve got your list. So you gave us the example of Driving For Dollars, and actually looking at the properties. But then you mentioned sometimes you do use PropStream to actually pull lists without doing the Driving For Dollars. So when you go into PropStream, they have the filters. So what are some of the filters that you are using to kind of find the properties for you?

Nate:
Okay, so I think if I were to break this down in my mind, and maybe for your listeners, I would say that if you have a little bit of money to invest in pulling a list and hiring a professional company, then I might use PropStream. And then there’s two thoughts within this. One, you can do just try and get the cream of the crop off the top of a market. And then you can really dive in deep and then try and stack your lists. And so what that means is if you find multiple pain points on a property, that’s going to give you a better chance of maybe having a conversation, maybe having them want to sell. So what do I mean by that? I mean that if you have a house that’s vacant, that’s out of state owned, they have a code violation and they’re tax delinquent, right? Let’s imagine those are all the problems. And you can filter for that on PropStream.
Basically that seems like a great motivation for somebody that doesn’t live there, it’s vacant, it’s got problems, it’s got taxes backing up. That seems like it’d be a great motivation, so you can spend the money to then pull these lists, stack them together, and then you can call them. But that’s going to cost you a little bit of money. Or if you want to do, I’m doing some general marketing, trying to see if I can pull some easy stuff off the top of a market. So I’m actually just starting this down in Arizona, is I just pulled a tired landlord list, right? So right now just with everything, I just pulled a list and that’s an actual subtitle on PropStream. And so you can just go down from the suggested list.
Yeah, it’s just tired landlords, and so I pulled the area that I wanted to be in. And I just pulled that list, it was about 5,000. And so then I sent it over to my skip tracing company, which I just got a new one. And then I sent it over to my marketing people and we’re now marketing to that, so we’ll see what happens. Did that make sense, kind of the two thoughts there? You can go just general kind of broad spectrum over a market, or you can go real deep on a market and by stacking lists and stacking pain points.

Tony:
And I also just want to shout out, right? So as an alternative to PropStream with some of the data that Nate’s called out here. BiggerPockets also has a partnership with Invelo, that’s I-N-V-E-L-O. And Invelo also allows you to pull a lot of that kind of owner data that you’ll get from some of these other sources.

Ashley:
As a pro member, you get a $50 credit. So if you are already a pro member, go and spend that $50. And if you’re not a pro member, you can sign up at biggerpockets.com/pro

Nate:
Sweet.

Ashley:
So Nate, okay, you have your list created, you went and you either were Driving For Dollars and got some addresses, or you were going on your software and looking up properties. So now that you have your list together of addresses and now you’ve used your tools like Whitepages, things like that to find the phone numbers of the people who may own this property. When you make the call, what do you say?

Nate:
Ooh. Now, again, I’m going to preface this with saying, I’m very comfortable doing this. When I was a kid, just to give you a backstory, it’s funny how things kind of come full circle. I mowed lawns to make a living, and to make money my junior high and high school days. And so I would literally door knock people and go do this. I’m like, “Here, I’m door knocking again, it’s like I can’t get away from it.”
So this is something that I’m very comfortable doing. And something that I think everybody can do, but I think it’s a matter of managing your expectations, and I think that’s where a lot of people get gummed up. So I’ll tell you what I say and what I do, and then maybe we could dive a little bit deeper on this because as soon as I say cold calling, most people just shut down, or door knocking, shut down. “Oh, I’m never going to do that, I can’t do that.” I promise you, you can. And with your skillset, with your skill level, with your own unique personality, you absolutely can do this.

Ashley:
Real quick, part of the reason we are doing this episode today is because Nate flew out to Buffalo to visit me. And we’re driving from getting chai tea, and he sees the house with papers in the window like it might be vacant, whatever.

Nate:
Signs.

Ashley:
Pulls it up, finds a relative of the person that died in that house, and they’re five minutes from my house. And he is like, “I’m going to drive over there and knock on their door, see if they want to sell it.” I was like, “Okay, you and Daryl go, I going to just stay here. I don’t want to go do that, that makes me scared and nervous.” So part of this episode that we’re having is for me to become better at cold calling, cold knocking-

Nate:
Yeah, cool.

Ashley:
… door knocking.

Nate:
Next time I come out you’ll come with, you’ll be fine.

Ashley:
I’ll have to do it, yeah. He’ll wait in the car and make me go.

Nate:
And she was the nicest lady. So I think honestly, and we could talk about some resources and books that’ll help people with this, but I keep it very, very simple. So when I’m cold calling and we could role play. Who wants to role play?

Ashley:
Go ahead, Tony.

Tony:
Yeah, I’ll be the landlord here.

Nate:
Okay, cool. So let me just preface this and say that the only objective that I have for this very first call is going to be, “Are you open to an offer?” That’s the only thing I need to figure out. One of the pitfalls that I see with people is that sometimes they’ll see a vacant house and they’ll begin to fantasize about how amazing this house is, all the money that I’m going to make when they… And then they find out that they’re not even wanting to sell, that you can’t find a good working number. And so you begin to get way down the road. All you need to do for this very first conversation is just figure out, “Are you open to an offer?” All right. So this is how the conversation would go, and then we can kind of break it down. So ring, ring.

Tony:
Hello.

Nate:
Hi, is Tony there?

Tony:
Yeah, who is this?

Nate:
Tony, hey, yeah, my name is Nate Robbins, I’m really sorry to call you out of the blue like this. The reason for the call is I’m in the process of trying to buy a house here in Tacoma, and I noticed your house over on Main Street. It is probably a long shot, but-

Tony:
Look, I get calls like this all day. How did you get my phone number?

Nate:
You know what, Tony? I totally get that. I’m sorry, it is kind of a random call like this. So basically I drove by your house over on Main Street, homeowner information is public record. I use a program called Whitepages, it was actually a book when I was a kid. And I just looked up your own information and thought I’d give you a call. [inaudible 00:36:15] old school like that, I’d rather talk to you face-to-face, versus just sending you a letter. And so I don’t know, I’m just curious if there’s any chance you might be open to considering an offer on the house.

Tony:
Well, I get calls like this all day, Nate, so what’s your number?

Nate:
You know what? That’s a great question. Well, Tony, I’ve only ever driven past the house one time and I’m assuming you’re probably like me. I’ve been on the receiving end of low ball offers, and low ball offers are very offensive to me, and I don’t want to do that to you. And so I don’t actually have enough information to really make you a fair offer. So it sounds like you might be open to actually looking at an offer if it was a fair price.

Tony:
Yeah, I think I’d be open to that.

Nate:
Okay. Yeah, great. Well, how I make sure… I’d like to ask you a couple of quick questions right now if I can have 30 seconds. And then what I’d really like to do is then find a time to actually walk the property. I’d love to actually meet you in person, so you know I’m a real person. But would it be possible to walk it maybe this Friday? Are you going to be around?

Tony:
Yeah. All right, that’s pretty good, Nate. I feel like I threw some curveballs at you, man, and you handled those pretty well.

Nate:
Yeah, [inaudible 00:37:24] I’ve done this before.

Tony:
Because I’ve done a very, very few cold calls before trying to source my own deals. And it’s always like, “Who are you? How’d you get my number? I don’t want a low ball offer, the property’s perfect.” But you’ve kind of got a way to handle all of those objections it sounds like.

Nate:
So I don’t know if there’s a best way to do this, I have a couple of things I could give your audience. Number one, I can give you my script, which is I’m happy to do. And then I also have a worksheet that has… really, there’s six objections you are going to encounter if you cold call or door knock. And one of those is, how’d you get my number? What’s your offer? There’s some basic ones you’re going to come in contact quite a bit.

Ashley:
Okay. Yeah, Nate, we can put those into the show notes, it’ll be at biggerpockets.com/blog/rookie-326. Or you can also send Nate a DM on Instagram, and I’m sure you give him your phone number and your address, so he can cold call you, he would definitely give you a script.

Nate:
Yeah. Well, before we go too far on this, I would say you might get a seller that’s like Tony. They’ll just immediately, “What are you doing?” Or you are going to get people that are getting a lot of calls or getting a lot of mail, you will do that. Most people, however, if you are normal on the phone, are very normal. And so there’s a couple key things. Number one, again, managing your expectations like, “I’m only there to see if you’re open to an offer, if not, no big deal.” And this goes back to our original point of saying, why do you have 5,000 houses on your list? Or even if you have 500, right? It doesn’t matter if you tell me, no. It doesn’t matter because I have 499 other people I got to call. So you have that kind of thing, but when you call though, you have seven seconds to get to this line. And Ashley’s heard me talk about this before and she’s posted about it, is the reason for the call, right? You have to get to that, because you’re calling these people out of the blue.
And once you get to that line, it kind of allows you to get past their wall, right? It gets you kind of behind their immediate rejection. “Hi Mr. Seller, my name’s Nate, sorry to call you out of the blue. The reason for the call is I’m trying to buy a house, I’m trying to buy a rental.” Whatever your motivation or your goal is for your investing. And then, “I’m just curious if you’re open to an offer.” Again, yes or no. And then you might have to handle a couple of objections, which is totally fine. And I play off the, “Well, how’d you get my information?” I play it off like it’s no big deal. It’s no big deal, this is not a big deal.
“Oh, I looked it up, homeowner information’s public record.” “Cool, cool.” And then I always make a joke about Whitepages used to be a book. I’m like, “Oh, back when I was a kid, it was a book. Now it’s online, I just looked you up.” And then I just give that reason, then I don’t know if you noticed what I did is I immediately went on to say, “Do you think you might be open to considering an offer?” It’s almost like you just went past it, I didn’t even care. You do care, but you’re just kind of scooting past it, right? If that makes sense.

Tony:
Mm-hmm.

Nate:
And then he might bring up another objection. “Well, let’s just talk about it.” And then, “Okay, so it sounds like you might be open to an offer.” So you’re just kind of pushing the conversation forward. And then basically if they say, “Yes, yeah, I’d be open to an offer.” “Hey Mr. Seller, my process is because I don’t want to offend you with a low ball offer. I don’t want to offend you.” Most people don’t want to be offended. “Let me walk the house so I can make sure I make a fair offer.” And then that allows you to then kind of go to the next step of actually creating a good offer. And then if you’re going to wholesale it, if you’re going to buy it yourself, it allows you to put accurate numbers together to make the deal happen. So if they say yes, then I’m shooting for the appointment, I want to see the house.

Ashley:
So are you trying to set the appointment right then and there on that phone call too?

Nate:
Absolutely, no and yes.

Ashley:
Okay.

Nate:
Yeah, if they said no, I might toy with them a little bit, but if they say yes, I’m going to say, “Hey, cool, great.” I’m going to ask them a couple of questions about the house to sound like I’m intelligent, like I know what I’m doing.

Ashley:
Well, can you give us a couple of those questions?

Nate:
I’ll give [inaudible 00:41:41]. Yeah, no, no, no, no. I’m gatekeeping that one. No, but it’s, “Hey, have you made any repairs on the property in the last five years?” “Great, okay.” “How much do you owe on the property?” “Cool.” If they say free and clear, that allows me to think of some, “Oh, maybe there’s a creative option.” “If the right offer came across the table, what would be your ideal timeline? Do you want to sell it?” Because some people are like, “I need to [inaudible 00:42:08] this in two weeks.” Some people are like, “Oh, I have six months.” “Okay, cool.” That allows you to kind of gauge what’s important to them. And I always throw this one in. Now, some people are not going to be very comfortable doing this, but I always try and do it. I’m going to say, “Hey, do you have an ideal price range? It sounds like you’ve had…”
So if Tony, we got past all the objections, and we’re having a conversation, I would say, “So Tony, it sounds like you’ve been approached quite a bit. Do you have an ideal price in mind for what you’d like to get for the property?” And I kind of throw it out super casual, just to see if I can get a number from them. Or if they’re like, “Oh no, I haven’t really thought about it.” And I was like, “okay, cool, but have you thought of maybe a range of where you need to be?” And I try and get a range, because if they’re like, “Oh, well, I need $500 million.” Well, I’m like, “Is that for real?” Because I can always make a joke about it, like, “Hey, listen, I totally would give that to you, but my money people, they don’t let me make that decision, I have to back up my offer.”
But if they’re adamant, like, “Give me $5 million or I’m never selling.” And the most that these houses are selling for are half a million dollars. Okay, “Hey, Mr. Seller, we’re probably not on the same page. I’d love to put a real offer together if you’re serious, but if you’re really stuck at $5 million, I’m not going to be the guy for you.” And sometimes you can break past that by just saying that, but sometimes it’s that’s their number, they’re so sick of people reaching out. “Okay, thank you for your time, have a good day.” And I move on.

Tony:
Nate, so once you kind of go through the conversation and say you find… I guess first let me just ask one clarifying question. How many conversations do you typically need to have to book one appointment? Do you have a ballpark that people-

Nate:
Yes, great question. And this is again, kind of even setting expectations in your mind. I’m not going to speak for anybody else, I’ll speak for myself. There’s been times where I’ve found a house, and I fall in love with this house. It’s so nasty, it’s so vacant, it’s so… hell, my heart-

Ashley:
Smelly.

Nate:
Smelly, you can smell it from the street. And you start thinking about how amazing this deal’s going to be. And then nothing comes of it, right? You can’t find the seller, or they’re not going to sell, whatever reason. In your mind, this is the statistic, based on your skill level, it could be better or worse. But what you need to have in your mind is for every 100 contacts you make, actual conversations, it could be a [inaudible 00:44:36], it could be via email, whatever. For every 100 contacts, you should get one deal. So it kind of translates a hundred contacts, maybe you get 10 appointments, one deal, something like that. That’s not an exact science, but that will help you kind of break down the daily activity that you should have to do to try and get a deal.
So again, if you were sitting in front of me and we were having a conversation, I would say, “You have a list of 200, okay? You’re going to call these people, you’re going to make 100 contacts, 10 appointments, one deal.” That means to break it down super simple, you have to make five contacts every single day, Monday through Friday. You don’t even have to work the weekends, right? Five contacts, Monday through Friday, that should equate to one deal. Now that’s going to depend some on your skill level and different things like that. But I would expect that you would have one deal in the pipeline, one deal under contract, one deal ready to go. Now, if you want two deals a month, well, maybe you need to make 200 contacts in a month. So on and so forth, right?

Tony:
Nate, how are you keeping track of this communication with these sellers? Are you using a CRM? Or are you just kind of keeping track of it in a Google spreadsheet? Or just are you [inaudible 00:45:51] and just it’s all in your mind? How are you keeping track of it there?

Nate:
No, if you know me at all, it’s not safe in here, I’ll forget. Let’s just say there’s been a number of times where I’ve written down something on a paper, and then I found that paper months later and I was like, “Oh, I forgot to put that in Podio, and then I missed that deal.” So for me to manage my deal flow, I’m using Podio for my CRM, so…

Ashley:
What are some other ones that people can use too?

Nate:
Okay, look, if you’re super cheap, just use Google Sheets, something, write it down. What do they say? A short pencil is better than a long memory. So the idea is to write it down and track it. And then the other thing that I have to do for me is because I am a visual person. And so what I’ll do is as soon as I’m done with a seller call, if I have an appointment or a follow-up, I put it in my calendar in my phone so that it comes up like, hey, make sure to follow up with Mr. Smith. Follow up with Tony, he can meet on Friday at 3 o’clock. And so I immediately put that in my calendar, then I’ll put my notes in Podio. And then also track it through there, but yeah, I know there’s a bunch of different ones out there, but Podio is just the one I kind of fell into early on and I’m stuck with it, so…

Ashley:
Okay, cool. And kind of to wrap all of this up, when you do go to the showing, what are some of the most important pieces of information you want at the showing?

Nate:
Yeah, so whether you’re going to wholesale the property or whether you’re going to do it for yourself. And this is something that Tarl… one of the major lessons that I learned. And so even if you’re flipping houses and you’re listening to this, when I show up to the property, my several objectives, one of them being is that I will take 80 to 120 photos of the property. So I will do wide angle photos, I’ll start from the street, and I’ll walk all the way around the property. Then I’ll start at the front door, walk left to right throughout the house. And I’m getting detailed photos of the entire thing. And then I’m taking pictures of the quality of the roof, the water heater, the electrical panel. If I can sneak in the foundation, I’ll take pictures under there. I’m not crawling under there, but I’ll at least take pictures underneath.
I’m paying attention to noting if there’s slants on certain parts of the house. I’ll get under the sinks and take pictures of the plumbing, any of these big ticket items. And so this allows you to do two things. One of the biggest frustrations, because I worked with a lot of wholesalers. One of the biggest frustrations I had as someone trying to buy properties from wholesalers is they would send me three pictures of the house and an address. I’m like, “Hey, do you want this house?” “I don’t know, maybe.” But if you were to, I’ll tell you this right now, you’ll be the rockstar wholesaler in your market if you send a hundred photos.

Ashley:
Not even for wholesaling though, Nate, even just for your own information to put together an accurate offer, to put together your scope of work. And estimate what your rehab is going to be.

Nate:
Yes.

Ashley:
[inaudible 00:49:11] you can go back and you look at the pictures, you can look at the video instead of having to remember like, “Wait, how many windows were on the house now? I think there was two in the front, two in the back.” I’m like, “Okay, well, I’m going to need 10 windows. Here’s what my cost will be.”

Nate:
Exactly, exactly. So two points, so I’ll say, so a typical wholesale package for me is a hundred photos. I’ll sketch a very basic floor plan, I’ll put in some comps and I’ll put in the stats of the property and I’ll send it out. I’m like, “Hey, here’s what I’m thinking. Here’s the major list of things you’re going to have to do.” I don’t necessarily price that out, I have an idea of how much that’ll cost, but everybody’s prices are different. And so I send a package together. And so if you do that for wholesaling a property, man, you’re going to be light years ahead, you’ll get you faster answers as well.
And then to your point, Ashley, is a lot of times I’d be walking these properties for us to buy them. And so it allowed us to do a better scope of work. Or if you’re new and you’re like, “Hey, I don’t even know what this is going to cost.” If you have 150 or 80 to 120 really good photos, you could go to a contractor and say, “Hey, I’ll give you a hundred bucks. Can you sit down with me and tell me how much this is going to cost to do all this stuff?” And it’s going to allow you then to kind of put your scope of work together. It’s very easy, especially if you’re doing a lot of appointments and you’re getting houses mixed up. “Was the electrical panel good on that one?” Or, “Where is…” Oh, man, it’s really easy to get mixed up. So taking that and that allows you then to be more effective if you’re going to buy it as well.
Because the last thing you want to do is, “Oh, hey Mr. Seller, can I meet you at the property again?” And sometimes they’re cool with it, sometimes not, but that allows you to do that a little bit more effectively.

Tony:
Well, Nate, such a wealth of information brother, and I always love when we can deep dive a topic like this because not only is it instructional for the rookie audience, but I feel like Ashley and I always learn a lot when we kind of go through these deep dives as well, man. So I appreciate you pouring into the rookie audience. Before we let you go, got to pick your brain just a tad bit more, and I want to take us to the rookie request line. So for all of our rookies that are listening, if you want to get your question featured on the podcast, head over to biggerpockets.com/reply and we just might use your question for the episode. So Nate, are you ready for today’s rookie reply?

Nate:
I’m so ready.

Tony:
All right, so today’s question comes from Steven Cobb. Steven says, “Hey, I’m in the Dallas, Texas area. I’ve been out Driving For Dollars, and I have a list of about 30 or 40 houses. I’ve already looked up owners and numbers on the county website. Question, when I call the owners, how will I know how much I should offer them? I don’t even know the bedroom square footage of the property or what needs to be repaired. How can I run comps to come up with an ARV so that I know what number to offer even though I don’t have all of this info?” So Nate, what would your advice be to Steven?

Nate:
Steven, great question. Two things. One, Drive For Dollars more, get a bigger list. Two, to answer your question, this is why I always set the appointment. So there’s some things you can do, you can look up the basic square footage, bed, bath count, garage, lot size of a property. And then you can run comps generally on that, you can get a general idea of a range of maybe what that property’s worth. But you’re not going to be effective, I would say, as effective without going and walking the property. So it sounds like you have the hesitation of like, “Well, what do I offer?” Well, do you have enough information? And so that’s why when I call, if they’re open to an offer, I want to then set the appointment. So then I can go and walk the property, take my a 100 photos or so, and then go back and run a proper analysis.
You can do a rough range based on the stats, but I would say set the appointment, walk the property, dial back your expectations. Be like, “Hey, Mr. Seller, I don’t have enough information to make you a fair offer, right? So how I avoid making a low ball offer and offending you is I want to walk the property. Let me walk it, let’s do that, meet you, say hi, and then give me 24 to 48 hours and I’ll get you an offer then.”

Ashley:
Nate, thank you so much for all of your information today and taking the time to come on the episode. I know you’re sick of me and Tony all the time, so I greatly appreciate you taking the time to do this.

Nate:
No, I’m coming to the BiggerPockets Conference just to hang out with you guys.

Ashley:
Well, Tony won’t be there, but-

Nate:
Tony.

Ashley:
He’s having his baby.

Tony:
I’m MIA this year.

Ashley:
Yeah, he’s having his baby.

Tony:
Yeah, the baby’s due I think the week before BP Con, so we will be phoning it in this year, and then we’ll have Baby Robinson at a BP Con 2024.

Nate:
Yes, let’s go. Let’s go.

Ashley:
So Nate, you’ll just have to fill in as Tony for the conference.

Nate:
Done, I will wear my-

Ashley:
Practice his signature, so you can sign some books.

Tony:
Yeah.

Nate:
I’m going to wear my-

Ashley:
Black shirts.

Nate:
… my black shirts and my black shorts, we’ll be good.

Ashley:
Well, Nate, where can everyone find out some more information about you and reach out to you?

Nate:
Yeah, probably Instagram is probably the thing that I’m trying to do the most. So it’s N, the number 8, Robbins, R-O-B-B-I-N-S. And then, like I said, I’ll send you the scripting and stuff. But if people want the script or if they want the objections, I need to see if I can scan that and upload that. If they want to send me a DM, I’m be happy to send that over to them as well.

Ashley:
Okay, awesome. Well, thank you so much Nate, and we will put those documents in the show notes, go on to biggerpockets.com/blog/rookie-326. Or you could just DM Nate on Instagram @n8robbins.

Nate:
Could you say that one more time please?

Tony:
Where do we need to go Ashley? [inaudible 00:55:04].

Ashley:
Everyone knows the dash is I meant horizontal [inaudible 00:55:06] dash, hyphen. Well, Nate, thank you so much for joining us today, I’m Ashley @wealthfromrentals, and he’s Tony at @tonyjrobinson. And we’ll be back on Wednesday with another guest.

Coldwell Banker Realty’s Anna Fine joins ‘Power Lunch’ to discuss the rebounding of the San Jose real estate market, the relationship between the stock market and its buyers, and more.

OpenAI, the creators of the generative AI ChatGPT announced on X this week that two new features have been added to the program.

Firstly, ChatGPT is no longer limited to data before September 2021. It can now surf the internet to provide users with up-to-date results.

This function is currently only open to Plus and Enterprise (paid subscription) users but will be rolled out for all users soon.

Secondly, over the next couple of weeks, ChatGPT Plus users can present images and speak to the program. The program will be able to talk back.

Whilst OpenAI has suggested using these features to help plan a vacation or settle a dinner table debate, this latest evolution is a game changer for small business owners and entrepreneurs.

What Does This Mean For Entrepreneurs?

The browsing function can be used for;

• Researching current SEO keywords. ChatGPT can then write blogs to help a business increase its search engine rankings.
• Asking specific questions about consumers to help with the latest market research.
• Gaining current insights on industry regulations and compliance requirements.
• Generating content for websites and social media that is more in tune with current trends and industry information.

The see, hear and speak functions can be used for;

• Analyzing or simplifying graphs to help with understanding data for both leaders and other members of staff.
• Creative ideation with the program that doesn’t rely on the written word and therefore will expand possibilities. For some, speaking and listening is more effective than reading and writing.
• More accessible planning, research and content generation.
• Practical problem solving. For example, a manufacturer could take an image of a technical issue on a machine and as well as upload this image, could describe the issue. ChatGPT can then help advise,

Whilst these features promise more efficiency and organization, it’s important to be mindful of misinformation that could be embedded in the results from ChatGPT.

However, it is undeniable that tech-minded entrepreneurs will gain leverage in the world of business because of these updates.