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By Rieva Lesonsky

“Women’s History Month is an important time to celebrate how far women entrepreneurs have come. We know they are starting businesses at historic rates. But we also need to think about how to continue to break down barriers in outcome-driven ways.”

Those words from Pam Seagle, the head of Women’s Programs at Bank of America, perfectly sum up the challenges America’s women business owners face every day. Yes, women-owned businesses positively impact the American economy. They own over 13 million businesses, employed 10.8 million workers in 2019 (closer to 12 million today), and boast $1.9 trillion in annual revenues.

But at the same time, it’s hard to celebrate. As Seagle notes, so many barriers stand in the way of achieving true success and economic parity. For instance, of total small business loan dollars, only 4% go to women.

The venture capital picture is even worse—companies with female-only founders received “just 2.1% of the total capital invested in venture-backed startups,” according to PitchBook. Hello Alice says this is truly “baffling when you consider that women-led tech startups continuously demonstrate significantly lower fail rates and generate higher returns for investors.”

And adds Sharon Miller, the president of Small Business/head of Specialty Banking and Lending at Bank of America, “While the Women’s Business Ownership Act of 1988 removed certain barriers, including ones that prevented women from accessing capital equally, there are still residual effects that make business ownership challenging for women. For example, approximately just 12% of decision-makers at VC firms are women, which contributes to a lack of understanding and connection with lenders.”

Amy Millman, the managing partner of StageNext, a relatively new venture fund that invests in women-owned businesses, agrees with Miller saying, “Women don’t speak banker.”

Ironically, I first met Millman around the time the Women’s Business Ownership Act of 1988 was enacted. At that time, according to “21st Century Barriers to Women’s Entrepreneurship: Majority Report of the U.S. Senate Committee on Small Business and Entrepreneurship,” there were 4.1 million women-owned businesses in America. The Senate Committee report attributes the subsequent success of women entrepreneurs to this “landmark legislation,” which, among other things, authorized the Small Business Administration (SBA) to establish a certified loan program for lenders, created the National Women’s Business Council, and directed the Census Bureau to collect information on women-owned businesses.

And yet, here we are 35 years later, with 29% of women business owners polled in Bank of America’s Small Business Owner’s Report (SBOR) saying they don’t believe they will ever have equal access to capital.

Women entrepreneurs’ funding challenges are underscored in a report by Hello Alice, “Standing in the Gaps: A Roadmap to Redesign the Capital Continuum for Women Tech Founders,” which surveyed almost 20,000 women tech founders. According to the report:

• 53% of women business owners say they have unmet financing needs, with loans and credit cards cited as the most common forms of financing sought
• Nearly 90% don’t have access to a business credit card
• 61% use a personal credit card to fund their businesses

Some of the primary reasons cited for the funding gap:

• Conscious and unconscious bias
• Unequal access to networks and education
• A disproportionate responsibility for caretaking and household work

Women lack access to capital

So, in addition to not speaking the same financial language as funders, the fundamental question is, why are women business owners still dealing with financial challenges? Geri Stengel, the president of Ventureneer, says that while many factors affect gender disparities in access to capital, one, in particular, is that women’s “networks tend to be smaller and [they] have fewer connections to financing sources. And, whether it is conscious or unconscious, they often face bias.”

Bank of America’s Seagle says lacking “access to capital can deter women entrepreneurs from following their dreams.” And she thinks women should explore all available financial resources, including grants and the recently expanded Access to Capital Directory from Seneca Women and Bank of America.

Elizabeth Gore, cofounder and president of Hello Alice, says, “Women entrepreneurs who have faced challenges accessing capital need to know they are not alone in this struggle. According to our [report], only 19% of those surveyed funded their businesses through small business loans. However, there are various reasons why accessing loans can be difficult, such as insufficient lending history, low credit scores, or inadequate cash flow.”

But there are alternatives to traditional business loans. Stengel points to “an array of financing options that have entered the market, including rewards-based crowdfunding, regulation crowdfunding, and online lenders. And women are funding women as angel investors, limited partners in venture capital funds, and VCs. It is critical that women entrepreneurs learn which financing options are right for their situation. If they did, they would raise money faster and at a lower cost.”

Moving forward faster is key. Millman urges women to be less patient. She says, “Women race forward till they get to the wall someone erected. And then most of them wait at the wall. But some people figure out how to get over or around the wall. The system was designed by someone [men] in their own image. If you didn’t fit that mold, you didn’t get through. So you have to be willing to disrupt it.”

Women entrepreneurs face extra challenges

Many women business owners are also challenged by their responsibilities at home and need to figure out how to simultaneously build a business and a family. If that’s you, as a working mom herself, Miller says to remember, “Not every day will be perfect or easy, but that’s when you [need to] rely on your support system. Remember you are never alone, and it is okay to struggle. Lean on people you trust—family, friends, colleagues, mentors—to lift you up when you’re facing a challenge or need support or advice.”

Gore, also a working mom, says she knows how difficult it can be to balance responsibilities at home with the dedication it takes to build a business. “But,” she says, “isn’t that what makes us the best owners? Our incredible ability to manage time! Throughout my career, I’ve found value in educational resources, mentors, and the support systems of women who can relate to these hurdles.”

Miller says it’s normal for entrepreneurs to feel discouraged at times, but encourages them to “‘own their chair,’ embrace their success, and lean into the confidence that led them to start on their entrepreneurial journey. There are common themes in raising a family and running a business, and it’s about striving toward your goals, routing yourself in passion, and pushing to see yourself and the people around you succeed. Although difficult, don’t forget why you’re taking on this challenge.”

Feeling discouraged doesn’t mean giving up. Channeling her inner Yoda, Millman adds, “You either do, or you don’t. There is no try.”

It’s time to make some noise

Part of that challenge is to work together to fundamentally change attitudes about lending to women. Is that possible? Stengel says it is, but we must “hold funders accountable by outing the lack of diversity in whom they fund.”

Gore agrees, saying that “reducing bias” is key to “improving lending opportunities for women.” And she adds, “To achieve more objective decision-making, [lending] institutions should commit to collecting data and analyzing trends that can reveal personal biases and overlooked opportunities.”

Part of changing attitudes is making some noise. Gore says it’s “critical to celebrate the stories and accomplishments of female founders and highlight their unique challenges. We should be shouting [about the underfunding of women] from the rooftops to bring attention to the problem. Raising awareness and pushing institutions to change can help eliminate these barriers.”

More articles from AllBusiness.com:

The future for women business owners

Both Miller and Gore are excited about what lies ahead for women entrepreneurs. Gore sees strength in numbers: “I see incredible opportunities for female founders, especially if founders, institutions, and investors work together.” Miller cites the recent surge of women-owned startups: “Over the past three years, the number of women entrepreneurs is growing significantly faster than men entrepreneurs, and women business owners are well positioned for growth despite the current economic environment. I believe the momentum will continue.”

To reimagine the lending environment for women business owners, we need actual tangible goals and solutions. According to Hello Alice, we need to:

• Address early and short-term funding gaps through equitable, frictionless grants
• Increase access to business financing and banking to help founders manage volatility
• Reduce bias and increase transparency in venture funding to support scale

Millman says you need to know where you are and where you’re going but be open to exploring your options along the way. “You should always have a Plan B, and a Plan C and D as well.”

Seagle believes part of the solution is access. She says women need “access to capital, access to training opportunities, and access to the market to propel their ventures to success.” To fill that demand Bank of America partnered with Seneca Women to launch a new online Marketplace for women entrepreneurs, offering access to new markets and giving consumers opportunities to shop and support these women-owned businesses.”

Women have the power

Despite the challenges, says Bridget Weston, president of SCORE, “women-owned businesses are growing at unprecedented rates [because] they’re creative, resilient, and expert multitaskers.”

The problem, Millman says, is that women business owners seeking funding are “still doing the same thing, thinking lenders know more than they do. Women keep chomping at the bit to impress them. Don’t! Instead, focus on what you’re doing. Ask yourself, ‘What did I do right that informs what I do next?’”

As Glinda the Good Witch told Dorothy, “You’ve had the power all along.” Millman agrees, saying the solution lies within us. “Change the way you think,” she urges. “If what you want doesn’t exist, how can you create it?”

As we move forward, Miller sees endless opportunities. She says, “There are numerous possibilities for women business owners. As we lift each other up, we see that we are capable of not only reaching our goals but also exceeding them.”

Resources for women entrepreneurs

There’s an array of resources available for women business owners, particularly from the companies of the women interviewed in this article:

Bank of America:

Hello Alice:

SCORE:

Ventureneer:

Also, check out the First Women’s Bank and its Resource Center.

About the Author

Rieva Lesonsky is CEO of GrowBiz Media and SmallBusinessCurrents.com and has been covering small businesses and entrepreneurship for over 30 years. Get more insights about business trends by signing up for her free Currents newsletter.

Ashley:
This is Real Estate Rookie, Episode 272. I have purchased two properties before that had back taxes on them, but I had to negotiate with the owner. Part of the closing, the agreement was I was paying their back taxes for them, or it was taken out of the sale proceeds. So my recommendation would be going and finding the owner of that property because you actually might be able to put them in a better situation than if that property is put up for sale and they get nothing from the property if it’s put up for those back taxes. My name is Ashley Kehr, and I’m here with my co-host, Tony Robinson.

Tony:
Welcome to the Real Estate Rookie podcast where every week, twice a week, we bring you the inspiration, motivation, and stories you need to hear to kick start your investing journey. I want to start off today’s episode by shouting out someone by the username of Leo Zang. Leo says, “This is a goldmine for real estate investing, tons of valuable information and suggestions for real estate investors. You will find the roadmaps to success here.” Leo, we appreciate you for leaving that honest review. If you are part of the rookie audience and you have not yet left us an honest rating and review, please do us a huge favor, take the 90 seconds it takes to log into your phone and open up the app and leave that review. The more reviews we get, the more folks who can help, and that is always our goal here at the Real Estate Rookie podcast. All right, Ashley Kehr, what’s up? How you doing?

Ashley:
Good. I just got back from a girls’ trip in Las Vegas. I went with some other real estate investors. It was a nice little weekend getaway.

Tony:
Here’s the million dollar question. Was that trip better than the trip that you had with me and Sarah to Vegas? And there’s only one right answer to this.

Ashley:
When I went with you guys, that was my first time at a pool party. When I went this weekend, it was my first time at a Vegas club. I’ve probably been to Vegas almost 20 times now, but I just never had any interest in doing any of those, except with you and Sarah, I did the pool party. Then this weekend with my friends, I did the nightclub. I hated the nightclub. I hated it.
Sarah, first of all, gave us the advice to not buy a table and said that we need to get invited to a table, so that’s what we did. We didn’t buy a table. We get in, get on the guest list, whatever. We’re in there. It’s so crowded, like awful. People are elbowing you. Not enjoyable for me. My friend Serena, got to give it to her, girl, gets a guy to invite us up to the table. So there we go. We’re in the table. We’re not crowded and packed. That was somewhat better. But I still have the music just banging and vibrating through my body. What do they… like EMD music? I don’t know where it’s just like… But, yeah, definitely, pool party, way better, for sure. You got sunshine. There’s better drinks. So Sarah ordered the good white tequila with the juices, way better.

Tony:
I know that you’re a real estate investor because you call it the genre of music, which is called EDM, you call it EMD, which is short for earnest money deposit.

Ashley:
[inaudible 00:03:11].

Tony:
That’s like the most real estate investor thing. I love that EMD music. It just gets me going.

Ashley:
I feel like this episode is really aging me, too.

Tony:
Well, look, we’ve got a slate of awesome questions for you guys today. We’re going to talk about driving for dollars and finding properties with tax liens. We’re going to talk about being a real estate agent and if you can use your real estate agent license to help you with your down payment. We’ll talk about renovations and how we estimate project costs. We give a big shout out to James Dainard. Then we talk about taxes, which are always an important topic for real estate rookies. We finish off talking about some FHA loans and some permitting for renovations as well. So lots of really good questions. Hopefully, you guys get some [inaudible 00:03:56] from this as you always hopefully do from the Real Estate Rookie Reply episodes.

Ashley:
Our first question today is from Lucas Dominique. “After driving for dollars, I’ve come across a house that on county records says that the absentee owner has delinquent taxes on the property. The property is vacant as well. My question for anyone who can help is, is this considered a tax lien? If so, would I be better to address the courthouse about my interest or the owner? I would love to get a better understanding of this scenario with someone who has acquired property through this method. Thanks in advance.”
My personal experience with this is that if the property is delinquent on taxes, the county has no right or the courthouse has no right to sell the property until it is put up for auction. In Erie County where I live, they do an annual tax auction where the properties that have back taxes that fulfill the requirements of it’s been a certain amount of time that they haven’t been paid, they will go up for auction, and that is when the county can sell those properties.
I have purchased two properties before that had back taxes on them, but I had to negotiate with the owner. Part of the closing, the agreement was I was paying their back taxes for them, or it was taken out of the sale proceeds. So if I bought the house for $50,000, there’s $20,000 in back taxes, $20,000 went to pay those back taxes and then $30,000 went to the owner. So my recommendation would be going and finding the owner of that property because you actually might be able to put them in a better situation than if that property is put up for sale and they get nothing from the property if it’s put up for those back taxes where maybe they can walk away with a little bit of money if you are going to purchase it directly from them.

Tony:
Great advice, Ashley. When we talk about sellers who are sometimes motivated to sell below market value, someone being in a situation where there’s a tax lien against the property is one of those potential situations where the seller might be willing to sell to you at a price that’s lower than what they could sell in the market because they do know that there’s this tax situation happening in the background.
Lucas, if you use a software like PropStream, or there’s tons of other software tools out there, but punching the address, you can usually find the owner and just reach out to them. Maybe you can bring up the tax lien if you want. From a lot of the folks that I know that go direct to seller, they usually don’t mention the exact reason that they’re reaching out. Even if this person’s working a tax lien list, they won’t usually call the person up and say, “Hey, Ashley. I see you got a tax lien on your property. Can I buy it from you?” They’ll just say, “Hey, Ashley. I’m calling local owners in your area, and I came across your property. Would you be interested in having a conversation?” and see if you can, like Ashley said, solve that problem for them. Yeah, I think it’s a great idea. There are people that literally do nothing but tax liens, so it’s a great way to get some off market deal flow.

Ashley:
The next question is, “If I’m a real estate agent, when I buy my own properties, would I be able to apply my commission towards the down payment?” This question is from Amber Yanhart, and it is from the Real Estate Rookie Facebook group. Tony, what’s your take on that?

Tony:
Neither Ashley nor I are agents, but I do know that there are a lot of agents who represent themselves on deals for that exact purpose of being able to either collect that commission themselves or save the commission of paying it to someone else. Yeah, you should be able to take your commission and use that towards the down payment.

Ashley:
Can you use it towards the down payment, or is it just going to decrease the purchase price? I don’t actually know the answer to that. If you go to the bank and you’re buying the property and you’re buying it, say, for $100,000 and you’re getting your commission, I guess at the closing table you are getting that check for your commission of the property, if that can be applied as a credit to your down payment or if that’s just going to be money off of what you’re getting. I would think that you could put it towards your down payment as a credit.

Tony:
Here’s the only reason why I say that. Maybe it varies from state to state. We did a deal in the past where we essentially wholesaled the property to ourselves, and we were able to get that cash from the wholesale deal at closing as well. To your point, I think it would just be a line item on the settlement statement that says commission, and then instead of it going into your pocket, it’s just applied towards your cash to close at the end.

Ashley:
Tony, can you tell us a little bit about that wholesaling to yourself? How did that happen, and what does that look like?

Tony:
Wholesaling to yourself is a great way to pay yourself twice on any deal. For example, we had a deal that we were working on where we found it off-market. Usually, if you find a property off-market and you’re buying it from a wholesaler, when you go to close, there’s all of your regular closing costs, but then there’s an additional line item on your settlement statement that says wholesale fee or transaction fee, whatever it is, to the person that you’re buying it from. At closing, those funds get distributed to the wholesaler, and then you pay your funds out afterwards.
But if you wholesale the property to yourself, what happens is you get to essentially get paid at closing a small amount. Then if you go to flip that property, then you get paid again. Essentially, we close on a property, we got a check for 5,000 bucks when we closed because we wholesaled it to ourselves. Then when we flip that property on the back end, we got another bigger check for actually completing the rehab. You do take a little bit less money on the backend because you’re giving it to yourself upfront, so your private money loan, your hard money loan’s going to account for that fee, but it is a way to get some cash in the short run if you need that for whatever reason.

Ashley:
That’s awesome to know. Thank you for sharing that with us.

Tony:
I actually learned that from Derrick Acuff, who was a previous guest on the podcast. I can’t remember which episode number he was, but if you guys look up “flipping a house” on Instagram, Derrick’s a really smart guy. They do a lot of flipping in wholesaling out in Texas.

Ashley:
Our next question is from David Sargente. “What’s the best way for someone with no renovation experience to get a working understanding of the processes, cost, and basic construction knowledge before going into it? Can any of you recommend books or YouTube channels, etc.? For books, J Scott has a phenomenal book with BiggerPockets called Estimating Rehab Costs. Obviously, it’s not going to tell you that this is what you should be paying for the price per square footage, of laying down luxury vinyl planks, or how much it will cost to have somebody come in and install that vinyl plank for you. But it gives you an idea of what you need to get costs for and how to build your estimates and what goes into actually rehabbing a property. So I highly recommend checking out that book. It’s a easy read but a great reference to go back to.
The other thing I recommend doing is kind of practicing with figuring out how much a rehab cost, so find a YouTube video about how to install a toilet. Look at all the materials you need, go to Lowe’s, homedepot.com, and actually pull up each of the items that it tells you so you’re looking at what is the cost of a toilet, what is the cost of the wax seal, all the things that go into installing a toilet, looking at what those cost. You can even go further beyond and then start to build out an Excel spreadsheet with links to all of these different materials so that when you are going in and rehabbing a project, you have the cost of materials right there to really help you build some kind of estimate.
Then you’ll want to find out what labor costs are, so you can reach out to different contractors. Call a plumber and estimate… Just ask them, “What’s your average cost to have a toilet installed? How much does it if you’re…? I’m going to ask for water lines. Maybe they can give you a general idea, like per foot how much it costs to install a water line. There are definitely a few things that are going to be really hard to estimate without having somebody come out and look at your project. But there are things you can at least get an idea.
Like to install tile, “Do you charge per square footage of tile?” Obviously, it will vary on the type of tile you’re having installed, too. So call around and get ideas of what that is. Flooring is usually a very easy one, or even painting where you can get a general number of price per square foot of how much it costs to install those things. Even going to your local hardware store, you’ll see signs all the time: “Ask us about getting your flooring installed.” Ask them, “What is your price per square foot?” and you can use that to run your numbers off of. Tony, I took on a business partner to kind of learn rehabbing, but for you, you’ve outsourced a lot of your rehabs. How did you learn how to actually come up with these estimates?

Tony:
First I’ll say, David, we interviewed James Dainard back on Episode 165. Actually, it was a two-parter, 165 and either 166 or 167. Anyway, go back and listen to that episode because James Dainard gives a world-class breakdown of how he estimates his rehab costs. A lot of it aligns with what Ashley said. But if you want two hours of deep diving how someone that’s flipped, I don’t know, probably a thousand [inaudible 00:13:46] homes-

Ashley:
That’s because I was trained by James Dainard.

Tony:
James gives a really amazing breakdown in that episode. So David, I encouraged you to go back and listen to that. There’s a couple of things that we’ve done in the past when we were kind of dipping our toes into the world of rehabbing. When we first started our business back in 2019, we were buying long distance. This was my first time ever taking on a rehab project, my first time ever just doing a real estate deal in general. I had zero basis for something like that might cost. So what I did was I went onto Zillow and I found properties that were recently sold that were renovated to the level that I wanted to renovate this prop that I had under contract. I showed those photos to a couple different contractors and I said, “Look, here’s what the current photos of this property look like. Here’s the kind of vibe that I’m going for. Can you give me a ballpark, without you even going to the property, on what you think something like that might cost?” They can give you a very rough estimate of what that might cost.
The second thing you can do is ask the contractors for photos of their previous work and ask them what the actual project cost was on that, and now that number gets even a little bit more concrete. While the individual project costs might vary depending on what you’re doing, what you’re really trying to identify is the average cost per square foot for that type of rehab. You hear a lot of flippers say this, that there’s the light cosmetic, the medium, and then the full-on gut rehab. Every single one of those has a different price per square foot that they apply to that. Gosh, it’s been a while now, but I want to say for the houses we were doing in Louisiana, they were pretty heavy rehabs. We were at 30-something bucks a square foot back in 2019. I kind of backed into that number by talking with contractors and understanding what they were charging other clients for similar work.
The last thing you can do is just pay them to go walk the job. This is something else that we leveraged when we were doing these remote rehabs in Louisiana is I found a contractor, I found a couple, and I said, “Look, I’ll pay you take an hour or two, whatever, go walk the property and give me a more detailed bid on what it might be.” Honestly, a lot of them didn’t even take the money because they were just open to getting the work. So they say, “I’ll walk the job for free.” That, today, is maybe a little bit harder because a lot of the good contractors, I think, are still kind of busy. They’re probably starting to lighten up a little bit now just because things have slowed. Trying to do that a year ago to get a contractor to go walk a job for free probably wasn’t happening because they were all booked out for years. So depending on where we’re at in the market cycle, that’s a little bit easier said than done.

Ashley:
I think that the contractors, you’ve used them before, they’re more willing to go and walk those properties for free wanting to continue business with you. Even if contractors do have the time, for them to give you a detailed scope of work takes a lot of time, and then especially if you take that scope of work and you end up hiring someone else based off of that scope of work.
The property management company that I currently use, they actually sent out an email recently saying that they are no longer providing scope of works to owners for turnovers. They have found that too many owners are taking that scope of work and going and doing the project themselves or hiring other contractors or whatever it is. They’re having owners that aren’t even responding to accept or decline the bid on doing the estimate. Now they’re also charging. They did charge to have their maintenance guy come, whatever their hourly rate is, I think it was $45, I think it just increased to $55, but they were charging their hourly rate to have that scope built out. But now they’re also charging a $250 flat fee. That’s on top of their project management fee, too, because they felt like so much time was wasted going and doing these scope of work, so they’re only going to be doing it now if you pay that fee.

Tony:
It’s solely understandable. I feel like as a business owner, I can understand why they might feel that way. That’s why I think a lot of it comes down to relationship, Ashley. If you have a relationship with this contracting crew already, there’s some trust that’s built up there. I think it’s easier for them to go out and just walk a job for you. Our crew in Joshua Tree, they’ve never charged us for a bid, but it’s because they know that we’re pretty much going to use them for every single job that we do out there. So I think the more repetitions you get, the easier it becomes, I guess.
The last thing I’d say, David, is if you can find another rehabber/flipper in your market and walk one of their jobs, that’s one of the best ways to really get hands-on, tactical, tangible data on what a rehab might cost. That’s what Sarah and I did when we started rehabbing out in Joshua Tree. We found a buddy of ours, Brian Davila, who’s a flipper here in SoCal, and we spent the day with him just walking a few of his jobs and asking a bunch of different questions around pricing. “Hey, what does it cost to do this? How are you paying for this?” That gave us the confidence to go out there and start doing it ourselves at a higher level. If you can find someone, David, that is already doing it, walking their jobs is a great way to get that insight as well.

Ashley:
Where do you find people like that? You attend in-person meetups in your markets, or you go onto the BiggerPockets forums and ask if there are any investors in the area that are doing rehabs in your market. The best is when you can actually find an investor who is also a contractor. I love that because you’ll be able to get both sides of it. You’ll get the contractor side of him, but also the investor side as to these are the ways that you can save money as an investor because you don’t need to do this, you don’t need to do that. Where residential contractors that are just doing for people’s homes are going to have a different mindset going in.
James Dainard even talked about this on his podcast episode. He’ll only work with contractors that work with investors. He doesn’t want people that do residential remodels because there is a different end game. There’s a different result of those remodels. For residentials, for the people to enjoy their home, it’s not what’s the most cost-effective way to get my maximum return on my dollar by having renters in there or by flipping the property. I think go to a meetup, go into the BiggerPockets forums, go to the Real Estate Rookie Facebook page and connect with contractors or even investors that are contractors, too, and see what kind of guidance or information they can give you. Of course, think of a way that you can also provide some assistance to them or help them out in some way, some value to them, too.
Our next question is from Bill Seth, “Sorry for the newbie question.” Bill, please don’t apologize. We love these newbie questions. That is what we are here for. This question is, “Do flippers get taxed heavily when selling since most don’t own it for more than a year?” The answer is, yes, you are taxed at ordinary income. Almost just like you had a W2 job, but when you sell the property, that tax isn’t being withheld from you like most companies do. As a W2 employee, they’ll withhold some of that and pay some of your taxes throughout the year for you. You are also self-employed. When you work a W2 job, your company is paying part of your payroll taxes and now you have to pay, I think, it’s another 6% as self-employed since you don’t have a company you work for paying that on your behalf anymore. So it does end up being more taxes that you are paying for the property and definitely a lot more taxes than you’d pay if this was a long-term buying homes and you’d be paying a lower capital gains tax.

Tony:
We had Amanda Han back on Episode 255. One of the last questions that we asked Amanda in that episode was, if you had to rank all of the different real estate investment strategies by preferred tax treatment or best tax treatments or worse tax treatment, flipping and wholesaling were at the very bottom because those are considered active income, and things like long-term rentals and short-term rentals were at the top because those are more passive income, and there’s some other things you can do along with those. Yeah, you are definitely getting the absolute worst tax treatment when you are doing things like flipping homes.
One of the suggestions that I’ve been given, and again, I’m not a CPA, I’m not an attorney, but one of the suggestions that I’ve been given is that if you plan to both flip and hold rentals, ideally to set yourself up to get the best tax treatment, you should have one entity or LLC for your rentals and then a separate entity for all of your active income. So if you’re flipping and wholesaling, you do that in one business, and then if you have your rentals, you do that in a separate business. Doing so allows you to get some slightly preferred tax treatment as opposed to doing it all under one entity. Definitely not a bad question, Bill. There’s thousands and thousands of pages of the tax code, so I think Ash and I are always happy to give some more insight on what’s worked for us and what hasn’t.

Ashley:
I feel like we’ve been talking about this a lot more recently is the tax planning and talking to a tax specialist who can help you figure out all these things. It’s something that’s very easy to outsource is somebody who is knowledgeable in taxes and bookkeeping and accounting where it’s something you don’t need to take the time to learn the ins and outs. Yes, you should have some knowledge of how the tax system works, but working and paying for a specialist is highly worth it. Tony, you’ve been working, doing tax planning. I think it was you and Tyler Madden, who was also a guest on here, who recently told me that the cost of paying for that tax planning has far outweighed what you’re going to save in taxes going forward.

Tony:
Absolutely, right? One of the biggest mistakes I made was waiting too long to get great tax strategy help. We’d already built up… we had 10 or 14 properties before I even thought about hiring a tax strategist to help me with those things and even longer before we got a really good bookkeeper on hand. So for all of the rookies that are listening, I know it can seem daunting to invest money up front to get the right bookkeeper, to get a good tax strategist, get a good person doing your tax preparation. But if your goal is to make this a full-time business and to have a relatively large portfolio, you will literally save yourself money and make more money, keep more money at the end if you invest a little bit more upfront to set your business up the right way from a tax perspective when you have one property as opposed to trying to go back and do it when you have 30. Ashley, how big was your portfolio before you hired professional tax help?

Ashley:
I’ve always had a CPA. When I worked at the accounting firm, I did my taxes on my own just because I had access to nice tax software and everything and it was pretty easy. But our farm income has always been somewhat complicated, so I always had the guidance of an experienced CPA when I worked as an accountant to help me through the farm income and how to do depreciation and things like that. Then I quit. Then after that, we have always just used a CPA to do our taxes again. As far as the tax planning, that was just recently where we ended up signing up with Amanda Han, too.

Tony:
I can’t say it enough. All of our rookies that are listening, find a good tax strategist today, day one. Even if you have zero properties, just pay for a consultation and say, “Hey look, here’s what I’m planning to do in the next year. What is your recommendation?” Then as you start to get those properties under contract, then actually put that person on retainer and make sure you chat with them on a regular basis.

Ashley:
You know what? It’s going to be cheaper probably, too, going in with one property or two properties, instead of waiting until you have 10 properties and they need to go back and look at previous years and be like, “What did you do? How can we make it better?” Where if you only have those couple properties to start with, they’ll be like, “Let’s start here,” and then you add on a little more each year. It’s just easy to add those on because they already have you in their plans.

Tony:
We always talk about real estate investing as being about, how much cash flow are you getting on a monthly basis? What’s your cash-on-cash return? How much equity are you building? But one of the other amazing benefits of investing in real estate are the tax benefits. I have a friend who still works a W2 job. He’s a six-figure income earner, but he has a small portfolio of short-term rentals. He literally pays zero in taxes from his day job because he was able to take the passive losses from his short-term rental portfolio and apply that to his W2 income. So for the three years that he’s had his properties, he’s paid zero dollars in income taxes for his W2. Outside of all the big things, cash flow is sexy and appreciation, don’t forget, the tax benefits and depreciation are some of the biggest levers you can pull as a real estate investor.

Ashley:
Our next question is from Ryan Hoffman. “With FHA, how often is it possible to roll the closing costs into the loan? I’m ready to purchase my first multi-family house hack, but I would like to be sure that I will have enough reserves remaining after paying the down payment, if, say, I were to purchase a fourplex instead of a duplex.” With this question, I honestly don’t know the answer specifically to an FHA loan. I’ve never done an FHA loan, but I helped my sister get one. We bought a house together, but she got the FHA mortgage, and I actually gifted her the proceeds for the down payment and for the closing costs.
I do know that banks, especially small local banks, will offer no closing cost mortgages where you can actually wrap the closing costs into the loan. Sometimes you’ll have to pay a little bit higher interest rate than if you went ahead and paid those closing costs. So you have to kind of weigh that out. Is it better to pay more upfront and get that lower interest rate for 30 years, or is it better to… it’s going to take you a while to save that money, but you want to get into a property now to pay a little bit higher interest rate going forward?
There’s also programs where you can get assistance to help with your closing costs. I know banks will sometimes offer to first-time buyers where if you save so much money, they’ll match it, and then you go ahead and buy a property with them. It’s like a first-time home buyer loan. It’s completely separate and different from the FHA, but there’s more strict regulations and rules around it. For example, my friend, his girlfriend did it. She has to live in that property she bought for five years, so they’re kind of stuck there for five years because she did the loan that way. So just be cautious of the different rules that come with some of these assistance programs.

Tony:
Like Ashley, I’ve never closed on an FHA loan myself. We’ve used a lot of different types of debt, but never an FHA. But just like you, Ash, there are so many down payment assistance programs out there, especially if you’re doing something where you’re house hacking. When Sarah and I bought our primary residence back in 2018, there was a program called CalHFA in California that essentially covered all of our down payment. So we had our primary, our first mortgage with loanDepot, or whoever it was that we closed with, and then we had a small second that covered our down payment. Then a year later, we were able to refinance, pay off that small second, and then we have one long-term fixed debt.
There are so many good options out there. I’d say the more you can chat with different loan officers and mortgage companies, the better idea you get of what the options are. I think, Ryan, the mistake that a lot of new investors make is that they only talk to one person. They talk to one bank. They talk to one loan officer, one mortgage officer. Whatever that person tells them, they think that that is the absolute truth and there’s nothing else outside of that. I think the more exposure you can get to different lending institutions, credit unions, banks, mortgage officers, mortgage brokers, the more flexibility you’ll have and the better options you’ll have as you look to close on this deal.
For example, we bought a lot of our homes using 10% down second home loans, and a lot of lenders didn’t even know what that was. I would have people that were messaging me on Instagram and said, “Hey, I had up my mortgage person and they don’t even know what a second home loan or a vacation home loan is.” Just know that just because these people, it’s their profession, they don’t have all of the answers to every single question that pops up. So I think exposure to more people is how you tend to get better options when it comes to loans and mortgages.

Ashley:
Just like we always stress here, tell them what you want to do. Don’t ask for some specific loan product. Tell them how much reserves you have, tell them that you want to buy a fourplex, and see what they can offer to you as options that you have because you may be surprised what a bank can come up with.
We have one more question for you guys this week. This question comes from Rebecca Tillman. She has a question about renovation permits. “Does anybody actually check these when it’s time to sell your property?” James Dainard, when he purchases a property, since this episode is all about things we’ve learned from James Dainard, is that he will always pull permits when he purchases a property. Part of it, he wants to see what actually is legal in there.
I think one of the reasons he does this… We just had a couple on our show that talked about, they were purchasing a property that they knew there was not a permit for an addition. They didn’t think it was a big deal because they didn’t need to use it as a bedroom or whatever. When they went to actually go and get a permit for other things in the property, I think it was maybe the plumbing or something, the inspector came in and told them they would not issue the permits for the other things until the addition was taken off the back because it’s not permitted. So I don’t really hear of just a residential home buyer going in and asking for permits or pulling permits on a property. Tony, have you ever sold a house or know a family friend or anybody who just went and pulled the permits on a property? I only know of investors that do that. I think that’s something that people should do in their due diligence.

Tony:
Yeah. A lot of times, especially if it’s your primary residence, you’re like, “This is my home. I’m going to do what I want with it.” You’re not as concerned about the permits or things like that. It was Devana and Reid. I can’t recall what episode number they were. They had the sober living facilities. They ended up spending a ton of money trying to get that addition permitted, and it wasn’t even part of their initial budget. So that is a big risk that I think you run into where, if the property wasn’t permitted correctly, you can end up paying for that person’s mistakes out of pocket yourself.

Ashley:
I think especially if you’re going in and rehabbing the property, check and pull permits. I hope you’re not asking that question to see if you can get away without pulling permits because you definitely want to pull permits because it can cause way worse issues down the road. I think we had a couple guests on before that have talked about running into this where maybe they thought their contractor actually pulled the permit and got it issued when they didn’t. Then the building inspector comes in. They have to rip out all the new drywall so he can actually check out the electric inside the walls, and they have to go back and put the walls together. So you never want something like that to happen. You never want to take that risk.

Tony:
That’s why when you’re analyzing these deals as rehabs, it’s important to maybe give yourself a little bit more time. If you think you can finish a job in three months, maybe underwrite the deal so that it takes you eight months. That way you have some breathing room in there to pull permits for the first time and understand what that process looks like. If your county’s anything like the counties that we rehab in, permits that used to take 30 days are taking 90 days right now. Just make sure that you’re giving yourself that flexibility to account for things like pulling permits, that you’re not up against the gun and your budget gets blown because you didn’t account for those timelines.

Ashley:
Well, thank you guys so much for joining us for this week’s Rookie Reply. I’m Ashley @wealthfromrentals, and he’s Tony @TonyJRobinson on Instagram. We will be back on Wednesday with a guest. See you guys then. (singing)

“The future isn’t human or artificial intelligence; it’s human plus artificial intelligence,” insists Anirudh Singla, co-founder and CEO of Pepper Content. The content management specialist believes that the rapid advance of generative AI will help businesses such as his, rather than replace them.

Founded six years ago, Pepper Content connects businesses in need of content with experienced and expert creators that are able to help them develop it. Working with around 150,000 creators, it has helped more than 2,500 businesses develop content, including blue-chip clients such as Amazon, Google and Adobe.

Importantly, Pepper Content identifies the leading voices in any given content segment so that clients are working with creators who have genuine expertise in what they’re writing about. The company already uses AI to support creators – its technology is based on the increasingly ubiquitous OpenAI GPT-3 – but also offers a range of tools to help marketers identify what content they need and to analyse the impact of the final output.

The next stage in the development of the fast-growing business is the roll-out of what Singla describes as the first end-to-end content marketing platform. “This is category creation,” he claims. “We believe that every company is now a content company, but if that’s the case, every company needs an efficient way to scale up their content creation.”

Pepper Content’s big idea is that just as customer relationship management (CRM) platforms have become a must-have for businesses seeking to professionalise their interactions with customers, so content management platforms will become vital to the growing number of businesses intent on driving sales and engagement through content.

Effectively, the goal is to industrialise content creation. Businesses that once employed a handful of writers to create small numbers of content are now seeking to generate thousands or hundreds of thousands of outputs, Singla explains. To operate at that scale requires new technology as well as human interaction.

To that end, Pepper Content’s platform seeks to automate and centralise much of the work around content creation. It will undertake keyword research, identify expert creators, manage the creation process, and employ data analytics tools to assess how the final piece lands. That insight can then feed back into the next content creation process. “Every piece you publish should be more intelligent than the last one,” argues Singla.

His pitch, in other words, is that the platform will manage content at every step of the way – something that generative AI can’t match. “The platform enables building an SEO content strategy, content operations, content analytics, and distribution,” Singla argues. “It solves three main objectives that most marketers struggle with when it comes to content: growing organic traffic, scaling content efficiently, and providing content return on investment.”

By building generative AI into the middle of the platform, at the point where the creator is tasked with writing the content, Pepper Content is acknowledging the disruptive power of this new technology. But Singla is convinced that the additional value the platform’s tools provide on top of that technology will be a unique selling point for the platform.

One advantage the company has is that it has been able to build the solution on the basis of feedback from its existing clients, with more than 200 CMOs and marketing leaders having provided feedback on what they would want from such a platform.

Singla is also excited about the potential to expand on the initial offer. The platform will initially generate traditional written content, but new functionality offering multi-media content is imminent – the ability to generate video, for example, should be available within months.

The company is convinced that an end-to-end content solution of this type, which incorporates generative AI rather than seeking to compete with it, will be attractive to customers – particularly to enterprises looking to scale up their content creation quickly. “The future of content marketing is all about the right technology, people, and processes.” insists Rishabh Shekhar, Pepper Content’s co-founder and COO. “This is a way for marketers to work far more efficiently.”

For their part, content creators will also hope the company’s diagnosis proves right, amid predictions that the creator economy will simply be replaced by generative AI solutions. It has to be acknowledged that the jury remains out on that one.

Do you ever wonder how many mortgages you can have at once? In 2009, Fannie Mae updated its same borrower policy, amending the maximum number of conventional mortgages any one person can have from four to 10. However, qualifying and finding a lending institution that’ll give you more than four can be difficult. 

In this post, we’ll discuss what’s required to have multiple mortgages (including an example), the pros and cons of having multiple mortgages, and how to manage them.

Real Estate Investing With Multiple Mortgages

While you can take out up to ten mortgages, the qualifications become more strict after your fourth. Here’s a side-by-side comparison:

When shopping around, ask mortgage lenders about their additional loan requirements, if any. 

Advantages of Having Multiple Mortgages

Having multiple mortgages comes with several benefits, including:

• More Rental Income: The more properties you rent out, the higher your rental income will be. One triplex can bring you $3,000/mo, and five could get you $15,000/mo. 
• Easier to Achieve FIRE: More properties and bigger returns also mean you can achieve financial independence and retire early (FIRE). 
• Larger, More Diverse Portfolio: Owning multiple properties allows you to expand into different neighborhoods and markets. You may discover that some aspects of your portfolio yield better returns than others and look for comparable properties. 
• More Tax Benefits: Real estate investors can enjoy additional tax incentives when owning rental properties, including depreciation and cost segregation. These can help reduce your tax burden. 
• Possibility of Combining: If you have multiple mortgages through the same lender or insurance company, you can sometimes combine all of your payments into a single payment, making tracking easier. 

Complications of Having Multiple Mortgages

Managing multiple mortgages can have its downsides, too:

• Greater Loss Potential: The more properties you own, the more expenses you have. You can profit with rental income, but only so long as you have tenants willing to pay your desired rent, and vacancies, upgrades, and remodels all eat away at your profits. 
• Harder to Manage: Managing ten properties usually takes more time than two. You need to put the extra time in or hire a rental property manager to do it for you.
• Requires Expertise: Renting a room or the bottom half of your duplex doesn’t require you to be an expert investor. The more properties you take on, the more you must know to ensure they’re all in good standing and well-maintained. 
• Stricter Guidelines: Many lenders won’t offer you another conventional loan if you already have four, and those who do will have tougher requirements. 
• More Paperwork: More mortgages usually means more of everything else—more bills, insurance requirements, liability, maintenance, legal documents to fill out, etc. 

How to Manage Multiple Properties

Have processes that work for you already in place before expanding your portfolio. At the very least, you need a rent ledger to keep track of your tenants’ charges, balances, and monthly rent payments. Your ledger should also include information like the principal balance of each of your properties, payoff timelines, mortgage payment due dates, and notes outlining potential maintenance upgrade requirements. 

It would help if you also created templates for anything you can think of to streamline your processes. The more you can automate, the more time you’ll spend on other tasks.

Also, don’t depend on your lenders to tell you when mortgage payments, insurance, and property taxes are due. It’s your responsibility to pay on time, not theirs. That said, keeping your payments from overlapping may be beneficial if you have multiple lenders for each of your properties. This will help you identify when and where your money is going.

Alternatives to Financial Multiple Mortgages

Affordability is often the most common barrier to having multiple mortgages. Qualifying for one loan is hard enough sometimes!

If you cannot secure a traditional loan for your next investment property, here are a few other options worth considering:

Hard money loans

Hard money loans are secured, short-term loans from private lenders or individuals. Instead of needing excellent credit and a low LTV ratio, hard money lenders accept tangible assets as collateral—often property. If you default on this loan, you risk losing that collateral. 

Repayment periods for hard money loans are typically three months to a year but are longer. You can also expect to pay a higher interest rate for them, usually 10-12%. 

Cash-out refinance

A cash-out refinance you to convert your home equity into cash, which you can use for your next investment. It’s a cornerstone of the BRRRR method and a great way to make extra cash without taking out a loan or paying interest. 

Here’s how it works:

Suppose you have a mortgage loan for a $500,000 property paid down to $200,000. This means you have $200,000 remaining on your loan and $300,000 in equity. If you want to convert some of that $300,000 into cash, you can take out a new mortgage—let’s say for $250,000. Your new mortgage is $250,000, while the other $250,000 is cash in your pocket. 

Portfolio loans

This loan is a type of mortgage a portfolio lender may offer. Rather than selling your investment portfolio to another company, your lender retains the portfolio loan in-house. This lets them establish more flexible mortgage terms, often to your benefit. 

However, portfolio lenders are also opening themselves up to risk. Portfolio loans don’t have to meet conventional requirements, but if they don’t, these lenders cannot sell them on the secondary mortgage. 

Blanket mortgages

Blanket mortgages let you finance multiple investment properties under the same mortgage agreement. These mortgages make the lives of real estate investors much easier because they have much less paperwork to keep track of. 

Also, suppose you decide to refinance or sell one of your properties within your blanket loan. In that case, a clause “releases” the property from your original mortgage without disrupting the other properties under the “blanket.” This means that you don’t have to repay the entire loan. 

Is Having Multiple Mortgages Right for You?

Owning more properties also means more work and increased expenses. If you lack that capacity, owning multiple properties may be more stressful than it’s worth if you lack that capacity. 

However, taking out multiple mortgages can result in substantially higher returns if you have investment experience and a sound business strategy. Are you ready to expand your real estate portfolio? Check out more of our expert tips and strategies regarding investing in real estate.

Find a Lender in Minutes

A great deal doesn’t sit around. Quickly find a lender who specializes in investor-friendly loans that are right for you and your investment strategy.

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

Everyone has a blend of strengths and weaknesses; fortunately, with work, it’s possible to improve both the strong and the weak points. To be an entrepreneur and an effective leader, it’s important to recognize areas where you may need help or improvement and to actively work on those areas so that you—and your business—can continue to grow.

But determining how to improve oneself isn’t always easy, so to help, nine members of Young Entrepreneur Council discuss some of the ways in which they actively work on their weaknesses in order to grow as leaders and business owners.

1. By Seeking Out Opportunities To Practice

I struggled with public speaking and presenting in front of a large audience. I knew that if I wanted to grow as a leader I’d have to work on this weakness and improve my public speaking skills. To work on this, I sought feedback from my team and I worked with a coach. I made efforts to improve my public speaking skills by practicing daily in front of the mirror. I actively looked for opportunities to speak in front of a small crowd. This helped me get more comfortable with public speaking. A good leader should always demonstrate self-awareness and a growth mindset. Just by acknowledging your weakness you can become a better leader for your business. – Benjamin Rojas, All in One SEO

2. By Embracing New Experiences

Stepping outside our comfort zones is essential for growth and development, not just as leaders but as individuals. I believe that embracing new experiences and continuously pushing ourselves to try new things can help us build on our strengths while improving our weaknesses. One practical example of this in my life is my recent decision to incorporate exercise into my daily routine, despite my initial hesitation and lack of prior experience in sports. I recognize the vital role physical activity plays in maintaining both physical and mental well-being, and I am eager to see how this small step toward embracing new challenges can positively impact my overall growth and leadership abilities. – Miles Jennings, Recruiter.com

3. By Recognizing My Limitations

My biggest weakness is that I overextend myself and rarely say “no” when someone asks me to do something. To combat this, I’ve been working on ways to get better at delegating my tasks and day-to-day responsibilities. Because I’m a leader, it’s important to recognize my limitations and trust others to help carry some of the workload. By delegating tasks, I can free up time and energy to focus on what’s truly important and lead my team effectively. Not everything that I do needs my immediate attention, and I have to trust that other people can help me. I constantly remind myself to be patient and to celebrate my progress along the way. – Andrew Saladino, Kitchen Cabinet Kings

4. By Surrounding Myself With Those I Admire

I surround myself with peers whom I admire. No matter what field you’re in, it can be so easy to get jealous of your peers’ accomplishments. “They got a promotion after being at a job for less time than me? Where’s my promotion?” or “They have a new office? Should I get a new office?” There comes a point where you have to say goodbye to the id and recognize that your peers have a lot to teach you. If they’re killing the game, learn from it. One of my favorite ways I’ve incorporated this into my life has been by starting a content creation channel with my sister. I trust her completely to tell me when my content isn’t hitting its mark or when something needs improvement. Having that honest feedback from someone I admire has been a huge factor in my growth. – Isabelle Shee, GROW

5. By Taking My Education Into My Own Hands

I started exploring search engine optimization in 2013 as part of growing our business. At the time, I had no idea how SEO worked, despite having some knowledge about search algorithms as a software engineer. However, I was determined to learn and improve in this area. I started by reading books, watching numerous Google office-hours videos and experimenting with different methods. Through a continuous learning process, my team and I mastered SEO, and we continue to engage in continuous learning today to stay up to date with the constant changes of search engines. This experience highlights the importance of continuous learning in addressing weaknesses and growing as a leader, especially in areas where formal education may not be readily available. – Kazi Mamun, CANSOFT

6. By Leveraging Self-Accountability Check-Ins

I use self-accountability check-ins to actively work on myself. I ask myself—and my team—the following questions: “What am I tolerating?” As in, what am I tolerating from myself, my clients, my team, my career? The next question is “What am I avoiding?” Is there anything I’m scared of, or that keeps me up at night or that I’m dreading? I find that when you tolerate things, it breeds resentment and poor boundaries. When you avoid something, it typically means you need additional support in that area. These self-accountability check-ins are massively valuable. – Rachel Beider, PRESS Modern Massage

7. By Asking For Feedback

We all have a blend of strengths and weaknesses; what matters is our pursuit of continued growth. One way I actively work on my weaknesses is by asking people close to me what leadership elements I could improve on. As humans, we rarely accurately assess our strengths and weaknesses, and I’ve found it incredibly useful and humbling to hear what I could do better from the people I trust. Of course, the most important thing is to implement what you have learned in a meaningful way. It’s one thing to know what to improve, and it’s another to put it into actionable steps. For example, if you struggle with delegating responsibility, you may find it helpful to use the Delegate and Elevate tool by EOS Worldwide. I am constantly reading books and using resources like this to grow as a leader. – Ryan Meghdies, Tastic Marketing Inc.

8. By Learning From Others

One effective way I work on my weaknesses is by learning from others who have achieved success in leadership and trying to incorporate a similar approach. This never-ending process brings forth my weaknesses and provides me with a guide on how to overcome them. I found that the key to improvement is to keep building a better version of yourself by learning from successful people without complacence. You cannot be perfect, but you can always improve and achieve better results in life. – Kelly Richardson, Infobrandz

9. By Having Advisors To Lean On

As a leader, it’s so important to have advisors and mentors to lean on. I’ve found that this is the only way to continually get feedback on your strengths and weaknesses on a regular basis. Beyond building your advisory board, it’s important to schedule regular check-ins so that both your advisors and you can develop a cadence of accountability. Without experienced people in your corner constantly giving you feedback, there’s no way to learn and grow as a leader. – Arian Radmand, IgnitePost

David:
This is the BiggerPockets Podcast Show, 743.

Janice:
I bought the land right. So the land was actually two parcels. It’s being sold together, but no one figured that out, for some weird reason. I ended up selling half of the parcel or half of one of the two parcels. And so all in, I was at 381 and the appraisal came in at 565,000.
That’s very cool because a lot of people… The journey to build this house, very hard, but once you do it one time, it’s like, it’s actually not that hard to build a house, again and again and again, and you built $200,000 of equity or something like that, just doing that.

David:
What’s going on everyone? This is David Greene, host of the BiggerPockets Real Estate Podcast, here with my partner in crime, Rob Abasolo, and our guest, Janice Stitzer, with a fantastic episode that we recorded together in Denver, Colorado. In today’s episode, we get into all kinds of cool stuff, including leaving one market and getting into another market, moving your money from a market that might be crashing, into one that you think will have a run. And a trending topic, new build construction, the new BURRR, B-U-R-R-R build.

Rob:
Nuber, N-U-B-E-R. I just coined it.

David:
Thank you for that.

Rob:
You’re welcome. That’s what I’m here for.

David:
Before we get into today’s fantastic episode, I want to tell you one, listen all the way to the end, if you’ve ever wondered about the origins of the word podcast. We solve that riddle for you today. And two, our quick tip of the day is going to be, newer folks, listen to how we talk in the beginning about how real estate felt way too expensive and we didn’t want to get into buying it, and we had all kinds of fears and we tried to save money on contractors and all these other ways that end up just costing more money. And experience, people. There’s a ton to learn here for somebody who’s wanting to know about permitting, zoning, new home construction, what goes into construction, easy ways you can get ripped off by contractors or rip yourself off by doing things in the foolish way, buttering bread and training dogs, all of that and more in today’s show.
Today’s guest is Janice Stitzer. This LA native started off in the finance world. Janice didn’t find the magic in working at Disney and Fox. It was just a corporate job, and she was built for more than that. Searching for alignment to her interest while house hacking in ADU and LA, Janice landed a job at a discount brokerage in 2005, 2006, where high volume and saving deals became the norm, but she saw the writing on the wall about how the housing market was shaping up. She and her entrepreneurial-focused husband sold the house and moved to Denver in 2006, where they knew no one, for a better cost of living and a chance to start a family. It sounds like the BURRR-fect way to get started. Janice, welcome.

Janice:
Clever. Thank you.

Rob:
Welcome to the show.

Janice:
Thank you.

Rob:
BURRR-fect. That’s good.

David:
Thank you. Thank you. I read it right off of the notes here.

Rob:
I was going to say, did you just come up with that?

David:
All right, so take us back in time, when you first sold that house in LA with the ADU. What did that afford you? What doors did that open?

Janice:
That was our seed money. It was difficult to get into that. It was when we purchased that house, we set out, the ADU was the target. We knew that that was going to be our ticket to affording the house, much like you.

David:
Just living at all.

Janice:
Living at all in the Los Angeles market. And so we found it, it was a stretch, and that was when the mortgage market was giving out money. I mean down payments with a credit card.

David:
Whoa.

Janice:
And yes.

Rob:
Is this our first success story of the 2005 to 2006-

Janice:
Is it?

David:
You didn’t lose everything, right?

Janice:
No.

David:
You actually got out, timed it. Well put the money into better market, right?

Janice:
Yeah. So we bought that house with a credit card down payment because we did not have any money. My husband just started a gym business and I had just recently graduated from college, new into the corporate world, trying to figure that out. And so we did ask around for for family money, but they said no. They were like, “You know what? You guys are adults and we’re not going to do this.” But that was what was going on at that time, was free money.

Rob:
This is relatively significant because I feel like back in this was 2005?

Janice:
That was 2003, 4, when we bought the property.

Rob:
So back then ADUs weren’t really nearly as popular as they are now.

Janice:
No, no. This was a main house, a garage, and then the granny unit on top of that. So it was a needle in a haystack, so to speak.

Rob:
And it was already built?

Janice:
It was already built. It was turnkey. We really didn’t have to do anything. Not that we could have afford to do anything, but we had a network of people, and one of my husband’s clients was like, “This is a good one. If you don’t buy it, I will.” And so that was our sign. We have to do it. We have to jump into this, however we can afford it, we’re going to find a way.

David:
And this was pure necessity. You weren’t intending to be a real estate investor. You didn’t have a great plan. You just knew, I want to live in LA. It’s really expensive. The only way we can make this work is if we buy a house with several units and rent out some of them and live in the other one.

Janice:
Right. There was intent behind it for sure, but even back then, 350, 000 was a significant amount of money.

Rob:
That’s what it cost back then?

Janice:
Yeah.

Rob:
Oh my goodness. That’s crazy.

David:
This is why I’m always saying that housing always feels expensive. When you buy, it doesn’t matter. It always feels like you paid too much. And when you look back 20 years, 30 years, you’re like, can you believe that we were only paying a million dollars for a house because houses are going to be $4 million?

Rob:
It’s true. I was scared when I bought my house in LA. I was scared to talk about it with people. I was scared to talk about it with my family. I didn’t want them to know. I was terrified to tell them how much it costs. And back then it seemed expensive, and now it would be really, really cheap to buy what we paid for it. So you got in “early”?

Janice:
Early and then fast-forward two years, we’re like, “Okay.” My career changed, not that it even had any footing. I was, like I said, you guys know, Fox and Disney, tried the corporate thing out, for my parents, checked that box off. And I was like, “I do not like this. It’s not for me commuting an hour and a half, two hours one way.”

David:
And that’s about a two mile drive in Los Angeles.

Rob:
Exactly, yes.

Janice:
I mean, if you guys are in, know California, Encino to either Burbank or over at Fox Studios across a hill 405, that was a nightmare. That I think, that was really the straw that broke the camel’s back. I’m like, this is-

David:
So, the quality of life sucked?

Janice:
It sucked. It sucked.

David:
You didn’t want to raise a kid in that area. You were retired of the commute. You were doing well financially, but you weren’t happy, right?

Janice:
No. No.

David:
So you decided to move. Tell us how you made the decision of where you were going to go?

Janice:
We were thinking of moving within the Los Angeles area. Everything that we looked at was a lateral move for double the price. So I said, “You know what? Why wait?” At this point, I still tried to make it work. We put in a couple offers, and at that point, I was working for two real estate agents and things were nutty, completely nutty.

David:
And this was ’05?

Janice:
’05, ’06.

David:
Yeah. This was the peak of the hottest market.

Janice:
Peak, peak.

David:
Even people think the markets we’ve had have been hot. They weren’t as hot as it was in ’05, ’06.

Rob:
Really?

David:
Yeah.

Janice:
I mean, we were juggling 20 transactions at the same time. So I was already thinking, we need to start, we need to sell. Just take some money off the table. If we were going to start somewhere else, we’re going to do it now.

David:
Were you reading any of the writing on the wall? Were you seeing the teachers buying million dollar homes?

Janice:
Yes.

David:
And the no income loans. And at that time, they were just building developments everywhere. I mean, everywhere you look, they were just putting up new homes. Could you just see this is going to end badly?

Janice:
It was just so easy to sell anything. And the brokerage I worked for, they’re no longer around, but they were trying to basically have the commission be a total of 3%. So other brokers, agents didn’t want to play that game. It’s one thing if an agent decides to take a little bit of a discount, but to suggest that the other buying or listing agent or the buyer’s agent take-

David:
So what you’re saying saying is typically real estate transactions or real estate commissions, I should say, the agents are going to split whatever it is. So if it’s 6%, one agent gets three, the other agent gets three. Your brokerage was trying to do 3% total, which meant that the buyer’s side was going to be getting a significantly lower portion, 1, 1.5%. And it’s hard to get a buyer’s agent to show your homes if they’re getting half the commission that they could get on a different house.

Janice:
Right. But at that market, and we were already, the internet was already established. People were starting to get on Zillow and Redfin I think, was starting to be established maybe, back then. So people had access to that stuff.

David:
That was a big change because it used to be, if you tried to give only a percent and a half to the buyer’s side, none of the agents would show your house, so you would lose money. But when Zillow came along, the buyers see the house on Zillow. They tell the agent, “Go show me that house.” And the agent’s like, “What am I going to say? No?”

Rob:
They’ve also leverage in that-

David:
That’s exactly what happens. So that opened the door.

Janice:
It’s not ethical, but of course, they want to earn their standard or suggested standard commission. But things were just selling. I mean, multiple offer situations, much like what we experienced in the past two years. So there’s a lot of mirroring between now and ’08, I feel like.

David:
So knew was time to get out of Dodge. How’d you decide that Denver was the new place you were going to go?

Janice:
My husband. I would’ve never imagined leaving LA because I was born and raised there. I knew nothing else. And he’s from the East Coast, moved to LA for a little while, that’s where we met. But he’s been to Colorado numerous times and basically said, “Let’s move. And the winters aren’t that bad.”

Rob:
Cut to 2023, and it’s five degrees outside.

David:
I just went for a short walk outside and there’s snow everywhere, and my shoes were soaked, and now my socks and my feet are freezing, is recording.

Rob:
I’ll let you borrow some socks.

David:
I appreciate that, man. I would’ve thought the Rocky Mountains were rockier than this.

Rob:
I’ll give you the socks I’m wearing off my feet.

David:
Thanks, man.

Rob:
Some people give you the shirt off their back. I’ll give you the socks off my feet.

David:
The socks off your feet. Did you wear two pairs of socks?

Rob:
Yeah, my feet are getting sweaty. Wait, the first pair, those are the sweaty ones. I’ll give you the dry ones.

David:
Right on. So what’s funny is that you got out of a hot market in Southern California before it crashed, and then you got into the Denver market, which then became one of the hottest markets in the country a couple of years later.

Janice:
That’s because all the Californians are moving here.

David:
That’s a great strategy. See where Californians are going, just get there first. I’ve been saying that for a long time. So when you got here, what did you guys do to start over? You’re no longer working for Disney and Fox. Your corporate career has switched. How did you guys decide to make a living?

Janice:
Well, my husband’s a third generation contractor, so we’ve figured, okay, if anything, that will be our fallback. But we came to Denver with the plan of buying, refinancing, renting and repeating. And at that point, Denver was already seeing REOs on the MLS.

Rob:
But what’s an REO? Just for everybody.

Janice:
Real estate owned. The bank already took it back and put it back on the market, on listing. So that process takes quite a while. And for that to, I mean the MLS was full of REOs, so we were picking up properties, Denver bungalows for 75 to a 100 000. This was at the height of the foreclosure, which is crazy, right? Crazy.

David:
Did your husband think that you were paying too much?

Janice:
No. I mean-

David:
Because you were coming from-

Janice:
We were coming from California.

David:
350, $400,000 houses, right?

Janice:
Yes. Yes.

David:
So these seemed like they were free.

Janice:
Exactly. Because coming from LA, the main house we lived in was a 1000 square feet. And these bungalows were about that.

David:
For a quarter of the price.

Janice:
For a quarter of the price.

David:
And this is where all the people who already live in Denver are like, “Yeah, you Californians keep coming here. Those houses would still be 75 grand if you guys didn’t come here and drive up all the prices.” So there’s a downside to it as well.

Rob:
Yeah, I think people in Denver are like that. Everyone in Texas is like that. Everyone in Tennessee is-

Janice:
Anywhere you go.

Rob:
Anywhere in [inaudible 00:13:12], Florida too. Yes, exactly.

David:
All the places where people make the most money in real estate. We Californians make it unaffordable.

Janice:
But it’s not like California trended down either.

David:
No, that’s true. Inflation, man, everything goes up. So you come here, how many of these houses were you buying? Were you just buying a couple of them or did you go all in?

Janice:
We were buying a couple. So we were doing all of the rehabs ourself.

David:
Okay, so you can only go so fast.

Janice:
We can only go so fast. And for the most part, they were cosmetic. So not even replacing cabinetry, paint, maybe new countertops, new appliances. We throw 15, 20 grand into it. And even at that time, we were able, so we paid cash, we funded the renovations with cash, went back to the bank and refinanced it.

David:
You were doing BURRR before we called it BURRR.

Janice:
Yeah.

David:
Did you guys have a name for it back then?

Janice:
I don’t know. Fix it.

Rob:
Flipping a house?

Janice:
Fix and flip and rit. We weren’t that clever to coin the term BURRR, or else.

Rob:
Or else you would’ve.

Janice:
I’d be in your seat.

Rob:
That’s right. It was all the coining of the term. So I want to know, because you said that this was… All the foreclosures were already starting to pop up and everything like that. Was it really hard to BURRR because were ARVs being affected by this? Because I know a lot of people right now, that are flipping and they’re basing all of their values based off of values from a year ago. And so there’s a little bit of discrepancy there, right now for a lot of flippers. Was that the case back then too?

Janice:
The price discrepancy wasn’t that great because we were able to pull all of our cash out. So for one reason or another, there wasn’t this huge discrepancy where the delta between ARV and renovating was… I just think that there were too many people who were afraid to come back in.

David:
Oh yeah, absolutely. There was some shell shocks, some PTSD, from you’d expose the real estate. You see the value shoot up, everybody runs in there. It’s like a gold rush and then the bottom drops out. So many people were not wanting to buy. That’s actually when I got into the market, I didn’t know any… I mean, I should say I didn’t know any better. I didn’t buy when prices were going up, but I didn’t have that same emotional fear of the bottom dropping out and I stepped in, into the bottom. So what you were doing is you’re buying these properties at 75 to a 100 grand, putting 15 to 20 grand into them. They’re appraising at what? 130, 140 Or so?

Janice:
150. Yeah, was our sweet spot.

David:
And then you’re doing cash out rebuy.

Janice:
Right.

David:
Yep. So you’re getting a 100% of your capital out. You go buy the next one, which is a great efficient method, but it can only scale so fast because you have to do the rehab yourself. You have to wait to get your money out before you go buy the next house.

Rob:
You’re using your own capital to do the stuff.

Janice:
Exactly. At this point, we didn’t know what we know today with all the information that’s out there. Anything that we know we read in books or maybe heard word of mouth.

David:
Word of mouth.

Janice:
Yep. Yep.

David:
Isn’t this crazy? There’s so much information out there. This stuff gets around so quick.

Janice:
It’s different today, it’s way different. And I don’t know if, maybe we were either too dumb to know. We were just like, okay, we’re jumping in, we’re doing this.

David:
Well, who wouldn’t do that? You’re getting a 100% of your money out. You’re getting a rehab house that’s going to cash-

Janice:
You would think. But yeah, there was a lot of hesitancy in this market, in the Denver market that-

Rob:
And what year was this for reference, roughly?

Janice:
2006, 7.

Rob:
Oh, okay. So it was as soon as everything started kind of caving-

Janice:
Yeah, we left a market that was still hot, came to Denver, and it had already happened. And I think the other thing about the Denver market, which was unlike the LA market, was that the valuations weren’t as high. People weren’t able to use their homes like credit cards. And that’s the downfall of what was happening in the ’08 crisis.

David:
All the HELOCs that people were taking out there, buying boats and cars and RVs and vacations and renovations and adding pools.

Janice:
Right. So that was the bigger, that was also the other thing driving California in that market, which wasn’t as apparent here.

David:
So you had something that was working. What made you switch that up and get into something bigger?

Janice:
Well, the mortgage crisis. We did that numerous times and then hit a roadblock. One of our last transactions was, oh yeah, we came to the signing table. They changed our LTV, our loan to value, so we had to leave money in the deal, and that was, the lending just stopped at that point.

David:
So you weren’t able to refinance and get your money out of these deals?

Janice:
We got the final one, which scared us, was the one that they changed the rules of the game.

David:
So you realized you could no longer continue as you had?

Janice:
Yes. Yes.

Rob:
But you didn’t lose money, you just left money in the house.

Janice:
Yep. Yep. That’s right.

Rob:
You’ve done this a few times where you leave… You may not be able to get the full ARV up, or the full LTV.

David:
Yeah, but see, the difference is I knew if that happened, it was like I made a mistake. The ARV wasn’t as high as I thought, the rehab was too big. I think what you’re describing is that the lending pipeline shut off, to where you weren’t going to be able to do cash out refis at 75% loan-

Janice:
Right. Because the LA market came crashing down and the lenders and the whole was that big…

David:
Too big to fail.

Janice:
Too big to fail thing too.

David:
The Big Short, is that what you’re talking about, the movie?

Janice:
Exactly. That whole debacle, just everything came to a halt.

David:
So what happened is everybody started going into default. The banks ran out of money to keep lending, then they got scared that that was going to keep happening. So they were like, nope, don’t lend at all. So even if you do the perfect BURRR, you’re not able to even get the money out of the deal. They’re just not doing home loans anymore, for investment property, at least. They probably still had some primary residence type of thing. So what did you move into?

Janice:
So we moved full on into construction.

David:
Like a business?

Janice:
Yes, establishing a business and going into that as our main, basically our W-2.

Rob:
Were you building for other people specifically?

Janice:
We were not building for other people. We went into roofing specifically.

Rob:
Oh, okay.

Janice:
And because yeah, at that point, builders weren’t building, they weren’t building new inventory. So the captive audience were people who were able to stay in their homes.

Rob:
Yeah, that’s what I was going to say. People always need a roof, right? I mean, maybe there’s flippers that aren’t doing as much renovations.

David:
Do a bathroom remodel maybe.

Rob:
But you still need a roof, just like you always need to get taxes done. There are certain kind of industries that I feel like regardless of what’s going on.

David:
There’s a lot of snow out here too.

Rob:
There’s a lot of snow out here.

David:
Roofs take a beating. It’s not like we’re working in California. You could have a literal hole in your roof in California. It’s only going to matter-

Janice:
For years.

David:
Four times a year.

Janice:
I go back to California and I go, what? People have roofs that look like they’re 50 years old?

Rob:
I’m trying to get you to patch that hole in your ceiling for two years now, man.

David:
You just get a bucket, it so much cheaper.

Rob:
It’s like a 1000 bucks, dude, just spend a $1000 and get some socks.

David:
So you start this construction business and you’re moving out of the investing world into more of a business world. So what role were you playing in the company at that time?

Janice:
At that time, I was the back end. Back office doing what I do, what I know, the financial piece of it, and managing everything else on the back end.

David:
So your husband’s getting leads, giving bids, securing jobs, managing the workforce. They’re going in there swinging the hammers. You’re collecting payments, managing accounts receivable, logistics, organizing.

Janice:
A full fledged construction business.

Rob:
How quickly did it take? Did it take off or how quickly did it take to build that?

Janice:
It took off because here’s why. In Colorado we have hailstorms, and so it’s almost a yearly event. We can’t predict it. But when insurance covers your roof and all you pay is your deductible.

David:
It’s a great point.

Rob:
It’s easy to get people to spend money when it’s insurance money.

Janice:
And you’re improving your house. So-

Rob:
That’s brilliant.

Janice:
We did that for a while until I said, we probably should pivot. We can’t rely on something that’s so niche that is weather dependent, because-

David:
It’s probably exhausting also, right?

Janice:
Oh yeah.

David:
You never get out of that. And you’re always-

Rob:
It’s somewhat seasonal too.

Janice:
It’s very seasonal. It’s very seasonal.

David:
Okay. So you realize, you made some money, I’m assuming, doing this, right?

Janice:
Yes.

David:
So you’ve got some more capital set aside. You’ve got your rental properties that are doing well. How did you decide your next investing venture?

Janice:
Well, along the way, we did have a couple of other investors that we said, “Hey, we’re in the Denver market. There’s still a little bit of room. We can partner up or we can do some of the renovations.” And we learned pretty quickly that if we didn’t have an equity position, we’re just earning a paycheck. So we did a few of those in between. And the other BURRRs that we kept, those were just passive. And that was just running in the background, basically. And going back again to the information, I think that my zest for knowledge was, it just kind of whittled and I just went passive.
And I had this belief that I needed to pay off the loan. And so I started getting aggressive with that. And for a while, that was really the goal until, I think podcasting became a thing, starting to get new information. I’m like, ‘Oh my God, why am I paying off this loan? Why am I doing that?”

Rob:
And that was, you were paying off the loans on all your BURRRs?

Janice:
Yeah. Which-

David:
That makes total sense. So you sort of felt like you’d hit the end of the road. You’re like, “Well, we’ve done everything there is to do. What’s left? Might as well just pay off the loans.” And then you start listening to podcast and all these ideas are coming out and strategies other people are using and opportunities in your mind just starts firing with possibility. And you shake your head, “What am I doing? There’s more to be done.” So what was the next step?

Janice:
So the next step after I snapped out of it, was I need to strip these properties, strip the equity out of these properties so that I could get the velocity of money going and acquire more. So that was my next step, is we’re going to do BURRR version 2.0 out of all of these properties, strip the equity and just grab whatever I can. And once COVID hit, I was like, we need to really change things up. I want to go into development.

Rob:
So this is kind of the concept of return on equity, where you’re starting to realize, I’ve got all this money sitting in my BURRR in all my different properties. It’s not making me any money, but it’s there.

Janice:
Exactly.

Rob:
Adding to your wealth, but you want to actually take the money out of that so that you can reinvest into other things. That’s sort of like one of your big revelations at this time?

Janice:
Yes, exactly. And just understanding the fact that if I strip the equity, grab that equity, and even if I have to leverage, if I get covered debt, that’s really all that matters. Cash flow on top of the covered debt. So because, during COVID, I think we all kind of went through a personal… I don’t know.

Rob:
Revolution.

Janice:
Revolution of whatever that might be. We all wanted to be closer to nature.

Rob:
Oh yeah, for sure.

Janice:
I just went and bought 12 acres of land and I said, “I’m going to build an A-frame.”

Rob:
Just randomly. You were just like, “I’m going to-

Janice:
Well, you know what it was? I was looking through a Dwell magazine, and I don’t know if you guys have heard of Den Outdoors?

Rob:
Of course. Yeah.

Janice:
I think they launched during COVID.

Rob:
Yeah, they’re great. They did. Yeah. So Mike is the founder and he was very fast about it. His designs are really, really, really, really good.

Janice:
They’re awesome. I mean, to the point where that, however, his marketing team is, or whoever does his renderings.

Rob:
Yeah, it’s all in house. Yeah, I’m building a den right now.

Janice:
Really?

Rob:
Or we’re getting it quoted right now, but we want to build it.

Janice:
That’s exciting. Yeah, I saw that article in Den. I’m like, I have to have that. And so that’s basically, one of those things where it was so quick, you hear people say that, right? It’s this gut reaction where it’s like, “I have to do that.” So went in, I had stripped all the equity out, sitting on some cash on the sidelines going, “Okay, well let’s do this.”

Rob:
Was it a problem pulling from your cash flow? Because I’m very much a big fan of the return on equity aspect, but since you’re doing this full-time, you’re a full-time real estate construction investor, and so you’re living off of the cash flow off of a lot of your BURRRs, I imagine. But when you-

Janice:
We weren’t.

Rob:
Oh, you weren’t? Okay.

Janice:
We weren’t. We were, it went to go pay-

Rob:
Okay, you were just [inaudible 00:27:02] straight-

Janice:
Yeah, back into the loan. So yeah, for a while we were just not thinking, really.

Rob:
And I’m curious because starting at 2005 and 2006, what was that interest rate journey? Was it high back then because I know 2020 was really, really low. We’re in the threes. We’re in the fours, obviously not as high in the six and sevens.

Janice:
Well, yeah, on a couple of them I had a refinance 3.0. So that’s what happens when you buy into a market that’s at the very lowest point. Not that I knew, but that’s the opportunity that you have and the advantage. So because the second time the rates were just so low that how can you not?

Rob:
Can’t afford not to.

David:
Were you doing cash-out refis or were they rate and term to get lower payments?

Janice:
The second one was rate and term. The third one was a cash-out refinance.

David:
Okay, so you bought 12 acres, you built an A-frame on it. How did that property end up doing?

Janice:
It’s the same magic. We built it for, 350 was the build cost. That’s like the top number one questions that I get on my DMs. Like, “How much did this cost?” I bought the land right. So the land was actually two parcels. It’s being sold together, but no one figured that out, for some weird reason. I ended up selling half of the parcel or half of one of the two parcels. And so all in, I was at 381 and the appraisal came in at 565,000. So it’s the BURRR…

David:
Build.

Janice:
The build, refinance, rent, or in my case, STR,

Rob:
The Burster. I love it.

David:
So this was a short term rental that you built this A-frame?

Janice:
Yes. I mean there were some personal preferences of like, yeah, I get to enjoy this too.

David:
Oh yeah. But I mean, it was used as a short term rental when you weren’t using it, right?

Janice:
Oh, yes. For sure.

Rob:
And that was the plan when you built it, or were you?

Janice:
That was the plan because again, I’m all about covered debt and if someone else is paying for my mortgage, then I’m all over it.

David:
This was the original idea of the VRBO is you take a-

Janice:
Exactly-

David:
Rental you want to use, and when you’re not using it, you let someone else do it.

Rob:
And yet, back then breaking even was like, you get this house. You break even. You’re like, woo-

David:
Someone else is house pay… I have a free house. It’s crazy that not only do we get a free house, we get cash flow on the free house with $200,000 of equity and then we’re still picky, like, “Well, it used to be better. It used to be easier to do than it’s doing right now.” So were you nervous to get into the hospitality industry when before?

Janice:
Oh yeah.

David:
Yeah. So tell me what that was like?

Janice:
That’s part of the… I mean, that’s actually the main reason why I joined Rob’s host camp because I had no clue. I went for something that was so passive that I I forgot about it, literally. To something that I knew that was going to be so active and I just wasn’t set up for understanding what needed to be done from just operational wise. I didn’t know the ins and outs of what was out there. The different hosting or even Airbnb, was somewhat of a learning curve.

Rob:
I mean, you did just fine though. I know about this property. It seems like it’s doing okay, right?

Janice:
Oh yeah. I mean, we actually only launched it this fall. So it did, this whole thing was built during COVID, and that was the other tricky part about this, is that we basically overpaid for materials. We overpaid for-

Rob:
For lumber.

Janice:
For lumber, for logistics, transportation, everything. And it still worked out.

Rob:
That’s very cool because a lot of people… The journey to build this house, very hard, but once you do it one time, it’s like it’s actually not that hard to build a house again and again and again. And you built $200,000 of equity or something like that, just doing that. And I think the math on this is really crazy, that if you just did that five times, you become a millionaire in real estate.

Janice:
Well, at the same time we were building this, we also were doing another BURRRster, but not build, a buy, renovate the traditional sense, but we intended to short term rental that as well. And that didn’t do as well. I mean, not everything can be a home run, but that one was a nail biter because it’s just not the same valuation when an appraiser looks at a property that’s built in the 1960s, that’s when it was built. Versus something that’s brand new construction, they just view it differently.

David:
You say it didn’t do as well, you’re not talking about cash flow, you’re talking about-

Janice:
Not cash flow.

David:
The value of it was worth when you-

Janice:
The ARV-

David:
The renovation.

Janice:
The ARV.

Rob:
Oh, okay.

Janice:
The ARV.

David:
That is a good point. I think appraisers don’t like seeing that you bought a property for 200,000 and the comp show 550, they just don’t giving you that value.

Rob:
I mean, I don’t like paying for it either. When I’m looking at Zillow, I’m like, they just bought that for $500,000 less two months ago. And I’m always like, “No, Rob, if it pencils out, it pencils out.”

David:
That’s true.

Rob:
It’s really hard-

David:
And don’t know how much money they put into it or how much time they put into it, but when you are building something, I do think that appraisers are more likely to, there’s nothing making it hard for them to give the… They’re probably going to give it more than the value of something that already exists because it’s a new construction. So one of the things that I would think, you guys seem like you’re pretty locked in with being able to tell what it’s going to be worth when it’s done. But what about the cash flow? Did you have hesitation about knowing what kind of revenue that property was going to bring in?

Janice:
Again, I’m going to defer back to Rob because he built his tiny house in Joshua Tree and there’s really not… It’s like a Blue Ocean Strategy, if you guys have ever read that book. There’s not really a tangible, there’s no comps out there, you’re making your own comps.

Rob:
If you’re the first one in a market like that, especially for a unique build, it’s really hard, right? There’s a little bit of, it goes back to the art and the science. Right now at this moment, there’s this church that I’m looking at that’s been completely renovated. It’s a six bedroom church. It’s like 7,000 square feet and I want to turn it into an Airbnb, but there is not a single comp that corroborates the success of what this church could be. But I know that if you build it, they will come, for the most part. And so I’m very close to pulling the trigger on that, but I’m just like, it’s hard being the pioneer sometimes, but you just got to lean on your past experiences sometimes to sort of guide your decisions, I think.

Janice:
Yeah, there really isn’t any guide. I will still refer to market comps and use that as my guideline, as well if I have to leave money in the table or equity in the deal, then I’m okay with that. That’s how I went into the A-frame, with that point of view.

David:
Somebody does have to be first. I’ve often thought about this with oysters. Who cracked open a sea rock and looked at that seed booger and was like, “That might be food.”

Rob:
“That’s probably going to taste good. Joe, you eat that first.”

David:
Once you see everyone else eat oysters, you’re like, “Okay, I’ll eat an oyster.” But somebody had do it first.

Janice:
I see people eating oysters and I still don’t eat a oyster.

David:
They’re disgusting. I don’t like them either.

Rob:
Oh, come on. I love a Blue Point.

David:
Some people love oysters.

Rob:
I love oysters.

David:
So be the oyster. But one of the blind spots, I feel like when you’re getting into the short term rental industry is literally, I don’t know what it’s going to rent for. And that is scary. We see this a lot with the medium term rentals that are going out. I get this question all the time, “How do you know what it’s going to go for?” But you don’t. You don’t get that same security that you get with traditional rental properties because you’re getting an upside, because there’s no ceiling. It could go great for you, you don’t ever get to have both.
Building new construction properties is a similar pattern. When you’re buying something that’s already there, there’s only so many things that could go wrong. And most of it can be found on an inspection report. The roof, the plumbing, leaks, electrical. And if you know what you’re doing when you’re looking at a house, these surprises don’t happen. If you have a person look at a foundation, it’s not very often the oops, turns out the foundation’s crumbling and we just didn’t see it.

Rob:
There is no foundation. Oh my gosh, we messed up.

David:
Yeah, exactly right.

Rob:
How did we not notice this? There’s no slab.

David:
Most mistakes that come from rehabs of existing properties were sloppy due diligence. And that’s not to criticize anyone, that’s just what happens. And you learn your lesson, it doesn’t happen. New construction’s different. You have much less control over how things are going to go because there’s so many more moving pieces. So what are some of the other blind spots that people need to look out for if they’re thinking, “You know what? This market’s too expensive. I’m just going to build my own house.”

Janice:
I would say, even given that the fact that we are in construction, we hired a general contractor for the area. There’s a market up there and I mean, this is located in a mountain town, small town, and those people, those contractors, those subs do not market. I mean even in Denver, you have good subs. They do not market on Google. They’re all word of mouth.

David:
Oh, if they were on Google marketing, they wouldn’t be available as a good sub anymore. It’s so hard to find.

Rob:
No one answers the phone in this industry.

Janice:
And we’re two hours away, two and a half hours away. And for us to manage it, it’s not smart, number one. And even though we were probably, we were hands on, we were again, in the middle of COVID, scrambling for materials. We were running some materials up there, but just the fact that he has his own avenger team, right? I mean, Rob talks about that all the time, that they will only work directly with that general contractor. They do not want to work with…

Rob:
They won’t be subbed out with other people.

Janice:
No. They need people to speak their language. They need them to tell them when to show up, when things are actually ready. Not when, “Oh, can you come by and give me a quote?” And you’re still in… You’ve torn everything apart.

David:
People waste contractors’ times all the time without realizing that they’re doing it. It’s just-

Janice:
Exactly.

David:
Out of ignorance, people will do that, “Oh, can you come give me a quote?” And that contractor’s got to take time off a job drive till two to three hours of time that they’re going to spend. Then they got to talk to you. Then they got to go draw up the quote that could be a half a day or a day’s worth of work that’s gone. And then the job never happens.

Rob:
And they never hear from you again.

David:
Yeah, exactly. “Oh, well, he was cheaper. So I went with him.” And they just… We’re not saying you got to hire everyone on the first shot. But people are not aware what they’re asking for when they’re like, “I just want to get a quote.” My family was blue collar workers. My dad was a painter, my uncle, my grandfather, were painters. I saw the work they have to go into just to generate a quote. It’s not a thing. It’s like asking someone to comp a house. You’re not just going to look at it and give an answer. You’re going to go dig in and dive in and spend a lot of time doing that. And so that, you end up finding exactly what you said, the best people stay loyal to the person that butters their bread, protects them, takes care of them, keeps feeding them.
And if you are that good sub and you take too many side jobs and your contractor finds out, he might be looking to replace you with someone that he can count on when he wants to go get the job. And that is something I found when you try to cheat the system and you’re like, “I don’t want to hire a contractor, I’m just going to go find my own person.” You’re often getting someone that couldn’t get full-time work working for a contractor.
I love what you said because we sometimes think we’re saving money doing this. I mean, I am guilty of this just as much as anyone else, where that contractor said 15 k, I can find a guy to do it for 9,500. I’m going to save some money. And then the job takes three times as long. And you make three $5,000 mortgage payments and you’re like, this just turned into a $50,000 remodel. But I only had to pay 9,500 for it. So what’s your experience with that?

Janice:
What’s that say, you’re tripping over pennies to save dollars? So I mean when we broke ground, I was like, we need to finish this in eight months. That was a tall order, I know.

Rob:
I was going to say, that’s ambitious.

Janice:
It’s ambitious. But when you are seeing the rate interest rates going up expeditiously, so from when we broke around to when we got C of O, was 15 months and the interest rates rose 400 BPS.

Rob:
And for everybody at home, that’s certificate of occupancy.

Janice:
Certificate of occupancy.

David:
Which is what the city or county has to issue saying you are allowed to use this as a residential.

Janice:
And even from the lending standpoint, because we were refinancing, they want to see a certificate of occupancy.

David:
They don’t want to lend on something that can’t be used, if they have to foreclose, that no one could live there.

Janice:
It needs to be finished up to a point of being safe to live in. And at that point, we weren’t done, to be honest. We were still waiting on back splash. I don’t know what else we were waiting on. Just cosmetic.

Rob:
You had those cosmetics.

David:
Flooring. What are some of the things that you need to have for it to be a habitable? Flooring part of it?

Rob:
Cabinets have to be in there.

Janice:
Cabinets.

David:
No exposed electrical or plumbing. That all has to be there.

Rob:
Which is fair.

David:
But some of the cosmetic stuff, that is true. The back splash might not be there. Paint might not be finished.

Janice:
Dishwasher.

Rob:
I think it’s past rough electrical where the electrical outlet is all wired up, you don’t need the plate on it necessarily.

David:
And so people can use that information to get deals. Because I’ve looked for properties, not so much recently, but in the past when there was less competition, where they were like 98% of the way to a certificate of occupancy, but they would’ve had the, what’s the word? I’m blanking… The subfloor in with hardy backer, but no tile. And they’re like, “Nope. Can’t live in that house. It just has the hardy backer. Well, I’ll go in and buy it, knowing we just have to lay tile right on there.”
But my competition could not get a loan to buy the property because a lender won’t lent without a CFO. So I can go in and pay cash for this thing because it’s uninhabitable, but it’s not a complete tear down. It’s not a huge project. That used to be a strategy that we could use. Now it’s just something you have to be aware of, like you’re saying, because you can’t refinance until you actually get that. So what are some other blind spots? We’ve mentioned the certificate of occupancy. We’ve mentioned knowing what needs to go into running comps to see what the property’s going to be worth. You mentioned that you got your own contractors instead of trying to work the subs yourself. What about some of the stuff like rough-ins or contractors ghosting you for work not getting done? Have you guys had any issues with that?

Janice:
Well, the punch list. That was, after certificate of occupancy, there’s the punch list and them coming back for it takes a long time.

Rob:
Yeah. Because at that point you’ve basically paid the most of the money.

Janice:
Yeah. Yeah. For the most part, they’re maybe waiting on the 10% of that final punch list.

Rob:
And at that point they’ve started another job where the big money is coming in. They at the foundation 25% milestones hits.

David:
This is one of those things where if an investor could just take one thing to get right, it would be do not pay the contractor all the money to start the job.

Janice:
But it’s weird that they almost don’t even, they’re like, “Okay, 10%. I think I’m good.”

David:
They don’t need the last 10%.

Janice:
They don’t need the last 10%.

David:
Because they’re making the 90% on the other sucker that pays them all the money up front to go start that other job. And then they finish that one halfway through. At least we get ours to 90%. That is, it’s such a crucial thing. You have to give them some money because they’re not going to front their own money to buy materials and pay their labor. But I typically try to keep it around 20 to 30% to start the job. And then I just stay in contact with them. And as they show me that the work has been done, I give them another draw. What you don’t want to do is give them 80% of the money, 100% of the money right off the bat and trust that they’re just going to finish the job.

Rob:
That’s crazy.

David:
Right?

Rob:
For sure.

David:
A 100% of the people that have been ripped off by a contractor that I’ve talked to that come to me, “What do I do? Do I need to take them to court? They’re not returning my calls.” I just asked one question, “Did you already pay them?” There’s that dot, dot, dot.

Rob:
It’s always that.

David:
Yes.

Rob:
No, man. Usually, so a punch list is basically where your house is basically done, but you have all these little things that the follow through wasn’t quite there, or there’s like a drywall crack that needs to be patched up or something that needs to be touched up with paint. And so it’s this list of things that you give your contractor and you say, “Hey, I need these things to be done.”

David:
The dishwasher’s not running. The electrical outlet wasn’t wired correctly and it’s not working. It’s like when you walk a new home, if you ever had a new home that was built, this is where they put the blue tape on the walls, right? Like, come in and have the person fix this last thing. You hung the wrong lighting fixture in the wrong area. The doorbell doesn’t work. Whatever that stuff is. And then none of us know how to fix that. Can you go in?

Rob:
But really though, a handyman has basically done all my punch lists ever.

Janice:
Yes. So we did have to have someone, bring someone up from Denver to finish out some of the punch list items, just to get it to the point where I could shoot pictures. So those are the just, it’s always that 10%.

David:
Yes. The last 10%.

Janice:
That takes the longest.

David:
That’s why you want that big juicy last 25% draw hanging over their head. And it’s funny, have you ever had a dog to try to get to do a trick and they don’t want to do it when your company’s over? But then you put a treat in your hand and all of a sudden they remember how to roll over. That’s exactly how I look at it. It’s amazing how you remembered how to finish that punch list when there’s another 25 to 30% coming. But when you’re holding a piece of broccoli to the dog, that’s like the 10%, I’m not really that hungry. I’m not going to roll over for that.

Rob:
But they would eat the broccoli if it was in a bowl of food.

David:
Yes. They would get it done if it was part of what they needed to do to get paid. That’s a great point there. So I understand you have a shower door story. Can you share that with us?

Janice:
Yes. The shower door story… My contractor, I was like, “I need this shower door. I mean, I guess I could hang a shower curtain, but we want a glass shower door.” And he’s like, “Okay, I’ll call my guy.” I said, “Who’s your guy?” He tells me. I’m like, “I called that guy.” He’s like, “Well, he’s my guy.” That’s the Avenger team.

David:
So that guy will answer the contractor’s calls.

Janice:
The guy, the glass dude said, “I’m too busy.”

Rob:
Except the contractor, as David said, butters his bread.

David:
Yes, he does. That’s right. I mean, if we’re going to go with that dog trick analogy, I’m not trying to compare contractors to dogs. I realize that could have gone in a bad way.

Rob:
All the contractor are like, “How dare you?”

David:
But it’s like when your little sister’s yelling at the dog, it doesn’t do anything. And then dad walks up and boom, sits, right? Because it’s like, I’m not making that guy mad. He’s the one that feeds me. It’s that same idea, as you came along. And they’re not loyal to you. They’re loyal to the person that butters their bread.

Janice:
Exactly. So you really do. It’s again, that time that, because I would’ve been high and dry trying to find, call Home Depot everywhere and then transport this thing myself and have my handyman go and install it.Where this guy goes in and cuts this piece of glass and comes back with it. Perfect. I mean, it’s custom, pretty much. So it was just the timeframe of launching on Airbnb and that helped to just really, he did come back. I mean he’s a good contractor, but yeah, like you said, he’s onto the next job because he needs to get his timelines going. He has milestones to make on all of his other jobs.

David:
Or the next three jobs sometimes,

Janice:
Right, yeah. They’re juggling multiple.

Rob:
Starting them at the same time.

David:
And so we only look at our situation, our house, the contractor’s like this middleman, who’s trying to deal with the clients that want things done. They’re usually not math geniuses or business gurus. It sounds like you and your husband were pretty good at this, but I don’t think everyone has a Janice working their books on the backend. They’re struggling, they don’t even know how to bid a job. Then they get the job and now they have to manage a herd of cats, getting their employees to show up and work every day. That industry is notorious for having people that do not want to show up and work from nine to five, or nine to nine. They’ve got issues, they’ve got drama. They’re fighting with their girlfriends, they’re stealing your tools. A lot of them get into drugs and they’re unreliable. It’s always a challenge as they’re like, “How do I get my labor on all these different jobs?” And then they got to pull someone off this job to come.

Janice:
Well, when there’s delays for anything and during the timeline we were building, there was just delay after delay. And it wasn’t really the contractor’s fault. It’s-

David:
Materials.

Janice:
It’s materials. And there’s just normal delays in construction, period.

David:
If you have to go through the permit process.

Rob:
But I think the most frustrating thing though, is whenever you do have all the pieces and all the materials and you drive by your house and nobody’s there. And you know that the contractor’s just had another job, doing a different job and you’re like, “Man, I literally can’t advance.”

David:
And you’re bragging about only paying 9,500. That other person was willing to pay 15 grand and their job’s getting done.

Rob:
Their job is done.

David:
And yours is not.

Rob:
I always, I do say that. I mean, I think-

David:
Sometimes when you win you really lose.

Rob:
Especially in short term rentals. I think it’s very important because you’ll sometimes might have to pay three or $4,000 to get done a month or two earlier.

David:
But what revenue would you have made?

Rob:
Exactly. You could be making like five to $10,000 more.

Janice:
You’re talking about interest rates too. I mean.

David:
Yeah, you have a story about that, don’t you? In one of the cases, the time from breaking ground to receiving your certificate of occupancy, the rates rose by 400 basis points.

Janice:
Yes. So we ended up having to pay down the rate. And now looking back at that rate, we are at 8.8. We were quoted 8.75 and we paid two points down.

David:
But you were originally around in the mid-fours?

Janice:
In the mid-fours when-

David:
When you started the project.

Janice:
When we got quoted getting,

David:
Yeah. That caught me on several of them, actually. It just happened to be when I bought a bunch of houses, right after that…. There’s nothing you can do. You can’t-

Janice:
No, no.

David:
That’s a great point. Time is often more expensive than the money that it would take to get the job done faster.

Janice:
Right. Because if you… That amortization over 30 years or versus-

Rob:
Hundreds of thousands of dollars.

Janice:
It’s hundreds of thousands of dollars. And so the other point of hiring a general contractor for that area is that they know the permitting department. They know the inspectors.

David:
That’s nice too.

Janice:
It’s not like I’m calling, “Can you come and do a rough in inspection of my electrical?” “That’ll be two weeks.” Versus my contractor calling. “Okay, we’ll be there tomorrow at 9:00 AM.”

Rob:
A good contractor, yes, can get anybody on the phone because they’re just trusted. So, all right. So you kind of worked it out with your contractor. You get this house done. Can you tell us a little bit about how it actually went? Did it perform well? Were you crushing it out the gate? How did it actually go when you launched on Airbnb?

Janice:
So the other timing factor is that we missed the summer season.

Rob:
And that’s a busy season for you?

Janice:
And that’s a busy season. But we launched in the fall, we have leaf peeping season, so out of the gate, I mean it was a success. We have been operating for five months now. So on average we’re doing gross, 7,200 a month.

Rob:
A month?

Janice:
A month.

Rob:
That’s good.

Janice:
Yeah. Yeah. I mean we have our shoulder seasons here, but that’s pretty good. Considering our net is anywhere from 4,000 to 4,500, which is solid.

Rob:
That is good.

Janice:
Especially when I pulled out all the money that I initially invested. I have-

Rob:
Infinite return.

Janice:
Infinite returns.

Rob:
So you put all your money in, you get it back. This is what I call getting a free house. Everyone on YouTube gets mad though because they’re like, “It’s not a free house if you still have to pay a mortgage.” It’s a free house in my mind.

Janice:
It’s a free house because someone else is paying my mortgage.

Rob:
And then you basically make 48 to $50,000 a year in profit.

Janice:
Yes.

Rob:
And if you did that twice, you make six figures.

David:
Not only is it a free house, it’s a free 50 grand.

Janice:
Yes.

David:
Everybody else is giving you these things, which is how investing works when it’s done well over time. All right. So you figured out how to get a free house and you figured out how to get free revenue. Obviously you’re going to want to do more of this. So what project are you working on now?

Janice:
For sure. So we’re going in on scale. We want to do eight units, which that’s our next project. Eight micro cabins in Salida, Colorado. And it’s the exact same model.

Rob:
That’s a great location too.

Janice:
It is.

Rob:
For short-term rentals.

Janice:
There’s fourteeners, if you guys know what they are. People love to come and hike them. A lot of river activities. So it’s a great market and I’m basically doubling down on what I did with the A-frame, but doing it on one, basically outdoor hospitality is what-

Rob:
You’re octupling down.

David:
Yeah. You’re doing eight units.

Janice:
Yes. Yes. Good catch.

Rob:
Octupling down. Definitely a word.

Janice:
Yes. And then what? 10 xing on my other project that I have in Buena Vista, which is close by and that is on 39 acres. So that is a different play because it’s located in an opportunity zone and there’s a bigger learning curve there. But I’m building my Avenger team.

Rob:
Dang that cool. So really you went from sprinting on a new construction, which is really what it feels like on your first build, to now you’re entered the marathon phase, you’re in it to win it.

Janice:
Oh yeah. Oh yeah. I’m making up for lost time, is what I’m doing here. So with those properties I get a lot of people asking me, “How can I do this? How can I buy land?” And I just, land is probably the most crucial piece. And with these particular properties, I worked backwards. I worked from looking at what the zoning maps are and going, I’m not going for conditional use or special use. I’m going straight for use by right. And so with the eight unit micro cabin resort that is zoned for campground, which is hard to find, given it’s only one acre, but the fact that I could go straight to permitting, gives me that speed again, that’s going straight to construction.

Rob:
So when you say, use by right, that just means it’s zoned for that, plus you don’t have to go through crazy conditional use permit or special use permit application?

Janice:
No planning and zoning.

Rob:
Wow, cool.

David:
So when you’re talking about buying land, you mentioned that people ask that question. We’ve also mentioned that buying land can be the difference between a deal that works and a deal that doesn’t. What are some things people need to be aware of when buying land?

Janice:
So my top red flags whenever I look at a piece of land is number one, flood zone. Deal breaker for me, maybe not for some people, but if it’s located in a flood zone, I will not do it. Insurability issues. Potentially, building issues. Along with that goes with, if something’s in a wetland, those two go hand in hand, you more than likely can’t build. Utilities is a big one. Water, sewer, electricity, all of the things that we take for granted. If those things are not on site or reasonably close by, it’s going to be very expensive.

Rob:
I mean, even if it’s reasonably close by-

Janice:
Oh yes.

Rob:
Electrical can cost tens of thousands of dollars if it’s a 100 yards away. It’s crazy.

Janice:
Right, right. Yeah. I had someone call me go, “I think it’s a half a mile away.” I’m like, oh.

Rob:
Yeah. Because if you ever go on Zillow or Redfin and you see these beautiful pieces of land, they’re 100 acres and they got views of the mountains and there’s a spring and then in the photo, there’s this little baby deer and you’re like, “Oh my gosh, it’s only $27,000.” And it’s like-

Janice:
There’s a reason why it’s that cheap.

Rob:
There’s no utilities anywhere for miles.

Janice:
Exactly. Exactly. And then, what goes along with that is accessibility. If there’s no road or if you have to build a road or if it’s landlocked by other neighboring adjacent properties, that’s going to make it somewhat difficult.

David:
Meaning you can’t get into this property.

Janice:
Correct.

David:
Because you have to go to through somebody else’s property to get there.

Janice:
Whenever I do my due diligence, it has to have public access. What’s another red flag? Site grade’s a very big one. Anything above 15, I won’t do.

Rob:
What does that mean?

Janice:
15% grade. That will just make it expensive for your dirt work. Then you have other foundation things that you will have to do. And it’s, I go for either anything 10% and below. So water is a pretty big one. That is a big variable. If, like Rob said, we all want this beautiful piece of land, but there’s no public water going to these parcels and the variable is digging a well. You don’t know how far you you’re going to have to dig. And on my project, anything that’s going into the eight to 10 dwellings or units, they’re deeming those commercial.
So if we’re doing a commercial, well that’s a whole different animal and water is public. It’s not something that you could just go and apply, “I want a commercial well permit.” Certain counties will have you go in front of a water court and you have to get a water engineer to basically state your case on why. There’s just so many intricate things that we all don’t, have any of that expertise. So it just gets expensive to do that.

David:
This is so, people always say, “Hey, I just want to build because it’s too expensive to buy. What do you think about that?” There’s so much to it. I couldn’t even warn you of all the things you have to know about, because how many people would’ve thought of any of these things on their own? If there’s like-

Rob:
[inaudible 00:57:00] the hard Way.

David:
That’s exactly right. So let’s sum up, was it five things that we went over there?

Janice:
Five things, yes.

David:
So we had water access and-

Janice:
The utilities in general. Yep.

David:
Utilities.

Janice:
Sewer.

David:
Okay. The site grade.

Janice:
The site grade.

Rob:
Floodplain.

David:
Floodplain. And was there-

Janice:
Wetlands with that. The other one was zoning.

David:
And zoning. Yes.

Janice:
Zoning’s a big one because if you can’t build what you envision, then you’re stuck with a piece of land that you can’t do anything on.

David:
Other than try to sell it to someone else who hopefully doesn’t know how the process works too.

Rob:
That’s what happens all the time too. You see these beautiful pieces of land and they’re like, “We’ve already got the plans drawn up and everything.”

Janice:
Exactly.

Rob:
“Oh my gosh. They’ve done all the hard work.” And then you ask the realtor a question, they’re like, “Oh, I don’t know. I don’t know. Why would you ask that? I don’t know. Got to figure it out.”

David:
It comes with plans. You’re like, “You just didn’t tell me $3 million to run the electrical into where these plans were drawn up for.” Okay. Well this has been fantastic. I think you’re the first person we’ve talked about that’s given us this much detail into building properties and how easy it is to mess that up. So I appreciate you sharing this with all of our audience, who may have had these hair-brained ideas that they’re going to run into this thing without knowing what they’re doing.
My personal opinion, you should leave development to the experts and I don’t recommend people get into it, unless they know an expert. And I think you seconded that by just talking about having the right construction people, having the right contractor, having your Avengers that know how this works, can make the difference between losing a lot of money and having a successful project. Is there any last words you’d like to leave the audience with?

Janice:
Well, I mean if you do want to build something and it’s along the lines of a single family home or even a cabin, that’s probably going to be your easiest point of entry. If you’re thinking, “Oh, I’m going to do a multi-family development.” If you go into any county or municipality and you go, “I want to build a house.” They’re going to say yes. Again, it’s the permitting. So that’s going to be the path of lease resistance.

David:
So do you have any advice for people that want to learn more about this? What would you tell your niece if she wanted to get into development?

Janice:
Well, I’m actually doing a little bit of consulting and putting out some information on Uncommon Developer, if you want to check that out. I just started that because I get the same questions over and over again.

Rob:
Is that your website or your-

Janice:
It’s my website.

Rob:
Uncommondeveloper.com.

Janice:
Yes. My Instagram for the A-frame is Backcountry A-Frame and I share a little bit about that process in the highlight reels. So I’m very transparent about the process and the cost there.

David:
Okay. Rob, where can people find out more about you?

Rob:
You can find me on the YouTubes over at Robuilt, R-O-B-U-I-L-T. And on Instagram, at Robuilt as well. What about you?

David:
You can find me at Big 5 Sporting Goods, looking for some new socks because my feet are freezing from walking in this snow. And after that, you could find me at DavidGreene24, all over social media and my new website, Davidgreene24.com. I’m one of the only old people left who is still making websites. Although I guess, Uncommon Developer. Right? That’s a website. It’s like we’re coming back.

Rob:
I just made a website yesterday.

David:
No way.

Rob:
I just named my direct booking website. I’m really excited.

David:
What is it?

Rob:
It’s called Neekleeps.com.

David:
Nique?

Rob:
Yeah, like unique.

David:
N-I-Q-U-E?

Rob:
N-E-E-K sleeps.com.

David:
Spelling it cool. This like when you try to put an X in something because that makes it cool, like Spanx?

Rob:
Well, I was going to do Neekly, but I know that you don’t like when people just add the LY at the end.

David:
I so don’t like that. Living in the Silicon Valley area for too long, they just started to add LY to the end of any word and call it a tech company, Shirtly.

Rob:
I-Unique.com.

David:
Couchly, Computerly, Podcastly. Yeah, it’s everywhere.

Rob:
Hey, you ever wonder where the word, the term podcast comes from?

David:
That’s a great question, Rob, do you want to get into that?

Rob:
Oh, off air jokes. Okay.

David:
All right. Well thank you very much, Janice. We appreciate you sharing your story. It’s been fantastic, as well as some of the struggles that you had and the doubt that you had before you jumped into what you’re doing right now. So thanks for coming here. We’ll make sure that we check in on with you and see how that project goes. And I’m glad that Rob brought you in.

Janice:
Thanks for having me.

David:
This is David Greene for Rob “Neek” Abasolo, signing off.