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Mindy:
Welcome to the BiggerPockets Money Podcast show number 330, Finance Friday Edition, where we interview Dan Sheeks, my daughter, Claire Jensen, and talk about the ultimate teen money hack for parents.

Dan:
The authorized user on a credit card is an amazing hack to start the teenager with a good credit score before they turn 18, having money conversations involving them and paying the household bills before the strategy we’ve talked about today is implemented. They should be involved with some of the decisions for the household budget. They should be clicking the mouse to pay the bills every month. Talk to them about budgeting. Have them start tracking their income and expenses, even if it’s as a teenager not a lot of money’s coming in and out.

Mindy:
Hello, hello, hello. My name is Mindy Jensen, and today is a family affair, plus Dan. My husband Carl is here today. You know him from 1500days.com and from the Mile High Fi Podcast.

Carl:
Woohoo. Thank you so much for having me.

Mindy:
That sounds weird.

Carl:
It’s early. My brain is not working yet. I don’t know what to say. I’m lost for words.

Dan:
I think it was perfect, Carl.

Carl:
Thank you, Dan. One person appreciates me. Claire, what did you think of my intro?

Claire:
I think that this is going fabulously so far.

Mindy:
It gets better, I swear, and also sitting beside me is my lovely 15-year-old daughter, Claire Jensen.

Claire:
Hi.

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

Carl:
Scott is not here, that rhymes, so I get to read the next part. Whether you want to retire early and travel the world, go on to make big time investments and assets like real estate, start your own business or teach your children how to handle their finances, we’ll help you reach your financial goals and get money out of the way so you can launch yourself towards your dreams and more dinosaurs. I like dinosaurs.

Mindy:
Okay. Today’s episode is for you and your teen. Dan Sheeks is the teen authority, the author of First To A Million: A Teenager’s Guide To Achieving Early Financial Freedom, and he recently spoke at Camp FI Rocky Mountain, which is a weekend retreat that travels around the country for like-minded people where there are several speakers over the weekend. Dan’s talk was about teaching your teen about money, and it blew me away. I instantly thought two things. Number one, I want to do this with my kids, and number two, I want to get Dan on the show to talk about this method. So Dan Sheeks, welcome back to the BiggerPockets Money Podcast.

Dan:
Great to be back. Thanks for having me. I can’t do a Carl Jensen intro, but I’ll do my best.

Mindy:
Well, you don’t have that dinosaur thing going on.

Carl:
You have to really work at it to sound as bad as me, Dan.

Dan:
I’ll keep practicing.

Mindy:
So Dan, when you were giving your talk at Camp FI, I poked Carl and I said, “I want to do this with Claire. I want to do this with our kids.” Daphne is 12. I think she’s a little too young for this. Why don’t you share your concept, a high level and then we’ll get into it a little bit deeper?

Dan:
Yeah. The high level version, I call the method the ultimate teen money hack for parents, meaning that this is something parents can use with their teenagers, and it’s, I think, the best way to introduce your children to money, how it works, how to handle it, how to be responsible with money while they’re still in your household, so they’re still under your supervision, under your control, you can monitor the situation. So then when they leave your house, they are good to go. They understand money. They’re responsible. They have good habits set in place versus what everyone else does, including pretty much everybody I know. The teen graduates from high school, they go off to college or elsewhere, and then they start learning how to handle their money as an adult, and things don’t always go well, should we say. So this is a strategy to help eliminate those problems.

Carl:
Dan, where were you 25 years ago or how long ago was I in college? A long time ago, but I came out of college with $60,000 in debt, and lot that was credit card debt, not a lot, but over 10,000. So Dan, if we could just go back time-

Dan:
Same.

Carl:
… after you’re done with this, if you could invent a time machine, we’ll go back and then you can set me right. I’d be far better off right now. Dan, how about you?

Dan:
I was the same way. I graduated college with lots of student loan debt and continued to rack up more, by the way. I’m working on that time machine, and if I can make it work, not only will I not take out student loans, I’ll be buying lots and lots of real estate back in my 20s. I wish I could do that.

Carl:
I will invest in that syndication deal.

Mindy:
Okay. So Dan, how does your system work?

Dan:
Yeah. So to get into the nuts and bolts, I won’t go into every single detail. I will say this, at the end, if there are parents listening or people who know someone who might be interested in a detailed PDF, I’ll give them my email address and people can shoot me email and I have something I can send them. So this is a way to get your teenagers in a place where they’re responsible and they’re comfortable and they’re confident with money before they leave your household.
So you’re basically going to give them full responsibility of their finances while they’re still in your house, and it’s almost full responsibility. I would say 90% because they are still teenagers and they still probably do need some supervision and definitely some training. So the plan is completely adjustable, customizable. So as I lay it out here today, everyone should just keep in mind that you can make tweaks. You can make changes. You can do things differently. You can change as you go through it. It doesn’t have to be exactly the way I lay it out right now.
To begin, the best idea is to start tracking the spending that you as a parent do or the money you spend on your child, everything from food, clothing, school expenses, insurance, their part of the cellphone bill, everything that you spend on your child. Now, that might be eyeopening, and that might be surprising if you start adding up all the money, but it also includes annual costs. So if they go to a summer camp or once a year if they have some other expense, that should be included in the tracking.
So the goal is, as a parent, to have a very, not exact, but a very good idea of how much money do I actually spend on, let’s say in this case, Claire, in a given year because what you’re going to do then is divide that by 12, and you’re going to give your teenager a stipend, a monthly stipend that they then use to pay their expenses, and we’ll get into how that works.
One of the other ways to prepare is that I would definitely have a savings account and a checking account set up for your teenager. If they’re under 18, then that would be a joint account, which is super easy to do. If they’re 18, you could just have them open up their own account, but you might want to help them do that. So they’re going to have their own checking and savings account.
Once you figure out how much that monthly stipend, and by the way, I don’t like to call it a stipend. I like to call the paycheck because the idea here is that you’re training them that they are going to once a month get this paycheck direct deposited into their checking account, and what that looks like is that the parent just transfers the money into their checking account let’s say on the first of the month every month. You can do it twice a month too if you want and just divide it by two. So they’re going to get their “paycheck” deposited into their checking account, and then they are responsible for budgeting that money to pay all their bills throughout the month.
A lot of those bills they pay are simply going to be them transferring back to their parents the money for let’s say food, cellphone bill, health insurance, possibly rent, if you want to throw that in there too. So that’s what it looks like in a nutshell.
Now, I’ve seen it done different ways where some parents will say to their teen, “You’re going to pay for all of your expenses except for housing.” So maybe they don’t charge them rent or, “You’re going to pay for all your expenses, except we will still pay for any food you eat in the house, but any food you eat at school or at a restaurant, even if you’re out with us at a restaurant, that’s going to be coming out of your account,” but again, it’s flexible. You can do it however you want.
So they are responsible for paying all of their bills. If they’d happen to have a part-time job where they have some other source of income or a different revenue stream and you know they make $200 a month from their part-time job, then you should include that in the calculation of how much their monthly stipend slash paycheck should be because I think it’s even more powerful when the teenager realizes that when they pay every bill, part of that money is money that they’ve earned, and it teaches them the value of the dollars. So if they do have a part-time job or some other source of revenue, then incorporate that into … Don’t just let them keep all that. Have them use some of that to pay their bills.
Then so every month they’re paying their share of the bills. They can use their debit card and their checking account to buy things on their own. If they go out to Chipotle or Jimmy John’s, debit card. They can transfer money back and forth to parents depending on the bills themselves. Now, as a parent myself, here’s some extra things I would throw into that. I would teach them that when that monthly paycheck comes in to their checking account from you, that they first pay themselves first.
So they get trained that if that, and let’s just make some easy numbers here, if that’s $1,000, that X percent of that is going to go into maybe their savings account for some future investments or their future self, right? So teach them to pay themselves first right out of the gate with this system. Teach them what a weekly expense looks like, monthly expense, yearly expense, and how they need to budget for that. So if the sports camp costs $1,000, they should be putting away X amount of dollars per month, so that when that expense comes up in let’s say July, that they have the money to pay for it. They need to plan ahead for that annual expenditure that might be a big number.
They should also create an emergency fund. Perhaps that’s a second savings account. They’re putting money into that until they have three to six months of their expenses saved up. They can think about long-term savings for family vacation or investing or giving. Do they want to donate any of this money? Then their own fun and entertainment, budgeting for that stuff. So they will be paying for everything.
If the family goes out to a restaurant, let’s say they go to Applebee’s and they’re sitting down. They’re separate checks, right? So the teenager is going to order items off the menu knowing that at the end of the meal, they’re going to pay for their check with their debit card and their parents aren’t going to cover it. This will create a situation where they start looking not just at the menu items, but the prices, and they’ll start asking themselves, “Is this $6 dessert worth it? Am I really willing to spend $6 because it’s mine, and if I don’t spend it, I get to keep that $6?” So it forces them, clothing, looking at, “Do I want the name brand clothing versus maybe something from a low-end store or even a secondhand store?”
They should pay their share of the utilities, their share of the cellphone bills, school supplies, toiletries. If they have a car, then they should be taking care of all their car expenses, the maintenance, the gas, the insurance. They pay for their haircuts, their gym membership, everything, but as a parent, you’re giving them enough money. The idea is that they’re not going to run out. You’re giving them enough money and you’re allowing them to teach themselves how to budget.
The last thing I’ll say as a parent, and this is maybe the most important is you have to be able to let them make mistakes. Don’t rescue them before the mistake. So if they spend more than that’s in their account, let them do that and feel what it’s like to pay a fee to the bank because they overdraw in their account. If they missed a payment and it’s late, and as a parent, you could have due dates for some of your bills, then they have to pay a surcharge for that late payment and let them feel what it feels like to have to pay an extra $20 because they forgot to pay it on time.
If they’re learning these lessons in the house before they’re out in the real world, and you as a parent can monitor and make sure everything is going well. Last thing I’ll say is that if they do run out of money, the idea is then that they’re not going to be able to buy the things they need. You as a parent, you could step in, and I recommend giving them a short-term loan. So maybe you loan them $500 with some interest, so they can feel how that works, so that they can pay their bills for that month, and then they need to budget for paying back that loan in the following months. So that’s the down and dirty idea and, yeah, if you have questions, we can go into it.

Mindy:
Oh, we have questions. I love this. The reason that I love this is because, like Carl said, when he turned 18, he went to college and it was just like, “Here you go. You turn them loose,” and what happens? You get on campus. I think they’ve changed this now, but we’re old. You get on campus and they’re like, “Hey, would you like a free T-shirt? Sign up for this credit card?” and now you’re in debt for tens of thousands of dollars for a free, stupid T-shirt that you don’t even wear. You sleep in it maybe or do you still have that T-shirt, Carl?

Carl:
No. I have the Frisbee, though.

Mindy:
Oh, okay. Sure. So you’ve mentioned debit card. One thing that the FI community really goes nuts over is credit cards and credit card points. Do you have any guidance on credit cards with points attached? I know because she’s 15 she can’t get a credit card. I know this because I tried to get a credit card for her because they sent her an application and they’re like, “Why did you fill this out? She can’t get one until she’s 18.” I’m like, “Well, you sent it to me.” So we might do a joint card with her as an authorized user. Do you have any comments on that?

Dan:
Yeah, do it. Absolutely. I didn’t mention that, but yes, you nailed it. If they’re under 18, then I would open up a credit card account. Technically, it’s in the name of the parent, but you add the teenager as an authorized user, and they’re the only ones that use it, right? So they get their own credit card with that account, with their name on it. They can use their credit card. They can start to see and learn what it feels like to build up points, and then also, and this is a bonus, a huge bonus, not many people know this, but even though they’re a minor at that point, most of the time, those credit card payments if they’re using it, those monthly hopefully on time credit card payments will build the minor’s credit score and credit history even though they’re not 18 yet, and then that will carry over into their adult life. So I think a credit card is a great way to go, but I would make sure it’s a separate account that the parent never uses, only the teenager.

Mindy:
Yeah, and an added bonus for that is because Carl and I have 800 plus credit scores, once she turns 18, our credit score, because she’s an authorized user on our card, transfers to her. So she’ll be 18 years old with an 800 credit score.

Dan:
It’s not as hard as you think to get a high credit score when you’re young. I have many members in my community that have done it in the first year to two years after turning 18. Their credit scores are in the upper 700s. Even though their history’s short, everything on the report, everything on their history is solid. They’re making on-time payments and they’re managing it well, but if you do make one mistake when you’re young, it has a much more significant hit to your score than an adult.

Carl:
There’s one thing I really, really like about this strategy, and I’ll back up a second. I talked a little bit about my big money mistake on episode 335 of BiggerPockets Money. Is that correct, Mindy?

Mindy:
Yes.

Carl:
Okay. Yeah. It was episode 335. After I had my first job, it wasn’t too long after that that the great recession came, and what I did is I stopped investing. So at the best possible time to invest money, the stock market was on sale, I freaked out and stopped, and that was a big mistake that’ll eventually cost me probably millions of dollars if I live long enough.
So the thing I really like about this, Dan, is this gives them an opportunity to make the mistake when it’s not going to be that bad. If you’re 15 and you get your stipend or payment on the first of the month and you go to the mall and go crazy and blow it all and you have to get a loan, that’s something that a lot of people might not learn until they’re in their 20s, but this is an opportunity to do it when you’re 15 or 16 or 14, and by the time you’re in the real world and a real functioning human adult, you’re going to be set. You’re going to have it figured out. Well, you might not have it completely figured out, but you’ll be in better shape than most.

Dan:
I agree, and I’ll add this to it. So Carl and Mindy, your two daughters, which I need to say this, by the way, we all got to hang out at Camp FI. I met Claire and Daphne and we hung out and they were great with my son, Callum. Your daughters and, Claire, don’t let this go to your head, but your daughters are amazing. They are super mature, well-rounded, awesome young women, and I mean this. If my son Callum turns out to be half as amazing as your daughters, I’ll be very, very happy. They’re awesome kids, and they have the benefit of having Carl and Mindy Jensen as parents.
So without a doubt, these two, you’re Claire, and I don’t want to talk about you, you’re here, Claire and Daphne are ready to implement this strategy. I don’t have any doubt, but I would say to other parents, don’t just throw your child into this as the only thing you ever have done. This needs to be preceded by many money conversations and other things that you do in your household, including them in the household bills and budget and stuff. I wouldn’t just do this out of the gate. This is, like I said, it’s the ultimate teen money hack. So it needs to be the finale of when they’re with you at home to before you send them out into the real world.

Carl:
I’ll make one other quick comment. The other thing I really like about this is not that my children do this, but if they decided they wanted to stay in the shower for an hour, they’re going to pay for that. They’re going to directly see the results, and I’m not quite sure how to meter her that, maybe a device on the shower-

Dan:
I don’t know either.

Carl:
… a timer like, “Claire, hit the timer when you start.” Claire, you don’t do this, but I know other people who have kids who this is an issue with and, “Sure, you could take that hour shower if you want, but guess what? You’re going to pay for it.”

Dan:
It’s an extra five bucks.

Carl:
Yup.

Claire:
A way to save money. I’ll just not shower. Does that work?

Mindy:
Ew. No.

Carl:
Okay. Now, we’re getting into super lean fire.

Claire:
Just kidding.

Dan:
Well, that brings up a good point because Claire just said she would just not shower, which isn’t really an option, but what you will find when your teenagers are going through this system is that they will start finding ways to be frugal that will, I think, impress you. So not showering every day hopefully isn’t one of those, but being more selective at a restaurant. I think if the parent does decide to not charge them, I don’t know if that’s the right word, for the food they eat in the household, it’s really difficult to estimate what the value of the food they eat in the household is because if you did, the teenager is just going to sneak down in the middle of the night, eat everything in your fridge, and then not tell you about it.
So usually, parents will just say, “Anything you eat in the house is free,” and if that’s the truth, then you might see your teenagers start packing a lunch for high school as they go to school instead of going out to lunch or eating in the cafeteria and paying because that saves them money. So you’ll start to see changes in the way they purchase things, fun things, clothes because they know that if they don’t spend that money, it’s theirs, they get to keep it, and that’s a different feeling than, “Mom and dad just buy everything I need, and I don’t get to keep anything left over.”

Mindy:
To be clear, the not showering thing was the joke. I’ve met her. That’s not going to happen, but, Claire, what questions do you have about this plan and what do you think of this plan?

Claire:
First off, I love it because I think it was probably when I was two, ever since I was two I wanted independence. So this is a fun way to experience it while also having it be preparation for the real world, which I think is fun. I don’t know. It feels like growing up in a FI family just feels like a really fun game because I’ve been prepared for the future my whole life.

Carl:
Claire, do we ever talk about money in our house?

Claire:
All day every day.

Carl:
Do you know what an index fund is, Claire?

Claire:
Yes.

Carl:
Do you know what the value of Tesla stock is or the current state of the S&P 500?

Claire:
Yeah, roughly.

Carl:
Good.

Dan:
She passed the quiz.

Carl:
Claire, do you have any questions for Dan or-

Claire:
So I have a couple questions. The first one is what happens if my parents want to go on a vacation because I went to Europe earlier this summer with my school trip and I had to pay for the whole thing or my portion of it because that was a trip that I chose to go on, but I feel like my parents usually choose to go on trips. So do I get allotted more money for that? Do I have to pay for it from my own allowance? Do we calculate that into the yearly fund? How does that work?

Dan:
Good question. So you’re talking about a vacation that the family is planning to go on.

Claire:
Yup.

Dan:
Yeah. So in my mind, this is how I would do it as a parent. I would set it up this way. I would say, “Claire, we are going to Disney World in June, and you’re going, but as you know, you are going to pay for your slice of that vacation, and we have built that into the stipend.” Most families don’t. They take a big vacation every year or it’s somewhat consistent. So Claire then, on that vacation, would pay for her own airfare, her slice of the hotel, her own admission ticket to Disney World, her souvenirs, her food in the park, and her bill in the restaurants that they go to.
If as a parent, and I think any discussions about money are advantageous. So if the Disney World vacation was going to be more expensive than the average, then I think the parent and teen should sit down and say, “All right. This is going to be way more expensive than what I was budgeting for or what we had thought about. So parents, I need a little extra money for this vacation. Can you give me a little extra in the next three or four months so I can save up for this vacation that’s more expensive than the average average one we take?”
The parents might come back and say, “Well, we’ll give you a little bit extra, but to earn more, I want to see some more chores around the house or some more clean up the backyard or something like that, and then we’ll pay you some extra money to help you afford your vacation to Disney World because you are going.”
At Camp FI, someone asked the same question, and there were teenagers there, and I think it was Sarah Grace who said, “Well, what if I just don’t want to go? What if I just say I don’t want to go to Disney World and I get to save all that money?” I mean, that’s not the point. Family vacations are important. So as a parent I would say, “Well, you’re going and you’re paying for your share,” but as you know, together have the conversation to find out what’s the best way to plan and budget and give them the money that they would need to actually pay for it.

Mindy:
I did think that was funny that they both had the same first question.

Dan:
I don’t know what that says about all teenagers that they would even consider not going on vacation with their family to save a couple thousand bucks, but it’s probably not a bad thought to have.

Claire:
FI kids, they’re a whole other brand. So I had another question that I thought of while you were talking about that. Do we still get paid for chores around the house?

Dan:
I think so. Yeah. Yes. Anything that you’re doing around the house that’s extra, I think, yes, you should get paid, but if the family’s doing an allowance, I think that would go away just like a set allowance no matter what because that would be part of the stipend or paycheck, if you will.

Carl:
Claire, I’ve got some big construction projects coming off, if you would like to learn how to tile or frame or even run electricity, I’m very safe. I’ve only shocked myself a couple times. You’ll be safe. You can earn extra money.

Claire:
Okay. First of all-

Carl:
How do you feel about that?

Claire:
… I would love to learn how to tile. Second of all, I’ve gotten electrocuted by my light switch before.

Mindy:
Shocked. Electrocuted is different.

Claire:
Shocked, whatever. I got shocked by my light switch.

Carl:
Yeah, that was my fault. I didn’t put the switch plate cover on on time.

Mindy:
Yeah. Just don’t touch the hot wires.

Claire:
Okay, great.

Mindy:
Okay. Back to the questions.

Claire:
Yeah. What happens if there’s money left over at the end of the month or year, however, whatever segment you’re paying it in? Do we just get to keep that and put it in our savings?

Dan:
Well, assuming, so when you say money left over, I’m going to assume that is money left over after you’ve put money away for what you know are your annual expenses. So if there’s a sports camp in the summer and it costs 500 bucks, you’re putting a little bit of money away every month so when that sports camp comes up, you have the money to pay for it. So if you have already allotted for all of your big annual expenses and there’s money left over, awesome, it’s yours. You as a teenager get to decide what you do with that money. It can go into savings. It can go into an investment. It can go into a new snowboard or a new video game or a really nice dinner out with your boyfriend, girlfriend. If there’s money left over, yeah, it’s yours. You get to do what you want with it.

Claire:
Cool. I like that plan.

Mindy:
It could go into your emergency fund so that you could continue to save for these big expenses.

Claire:
The amount of knowledge I have about an emergency fund, I could write a whole book.

Dan:
I will say my answer, I was assuming the emergency fund was already funded, yeah, you would want to get your emergency fund to a place where it’s set before you started spending extra money.

Claire:
Can the amount of money fluctuate each month? If we’re doing something that costs more like a sports camp, I know I go to camp every summer, so do we get allotted more money for that month to cover it?

Dan:
The idea is no, that the paycheck is the same every month because when you work for a company, unless you have some bonus or commission, your paycheck is the same every month. However, again, going back to what I said at the very beginning, this is customizable. It is adjustable. It is flexible. So if the parents and the teen agree that things are a little off, then absolutely it can change or there can be a one-time “bonus” for a month, summer bonus to cover some expenditures in the summer.
It’s not like all the decisions are made and then they’re done. The parents and the teen will be communicating hopefully often, weekly, if not more often than that, about how things are going. The parents can monitor the checking account because they have access to it. They can monitor the debit card. They can monitor the credit card. They can monitor the savings account, which they should do, and if changes need to be made, then talk about it, agree on it, and make those changes.

Mindy:
Ooh, Scott and I talked about having a money date with your spouse. I’m trying to find that episode. I can’t find it, but I think having a money date with your child where you go over once a month or maybe even over the first month, once a week you come in, “How’s it going with your spending? How is it going with your budgeting, and how do you feel about the amount of money that we gave you?” because I’m assuming you help guide them with budgeting. It isn’t just, “Hey, we listened to that Dan Sheeks and Claire Jensen episode, we’re going to do that. Here’s $1,000. Good luck.”
I’m assuming that if you’re planning on doing this, it’s because you love your children. You want to teach them about money. So you’re going to sit down and show them. I mean, you could show them how to track their spending by showing them my budget over at biggerpockets.com/Mindysbudget, where I am tracking my spending. Have you seen that?

Claire:
no.

Mindy:
Oh, okay. Well, you’ve heard me talk about it, right?

Claire:
Yeah.

Mindy:
Yeah, all the time, and having a way to track your spending so you can see where your money’s going. It’s one thing I think to have $1,000, and it’s quite another to be like, “Wait. I got $1,000 yesterday and now I have a 1.50 left. Where did that money go? Oh, I forgot. I had to pay mom rent, and I had to pay for my share of the utilities, and I had to pay all of these things. I don’t really have $1,000 a month. Now I have $300 that has to get me through the rest of the month.” So I think that would be really important. We’re going to talk about money more, Claire.

Claire:
Oh, great.

Carl:
One thing I’d like to do for Claire, just to get a quick question for me, is the investing portion. Once she has a job that has reportable income, I’d like her to open up a Roth IRA and I would like to match her contributions 100%. That’ll really help her get ahead in the future, and it’ll also incentivize her to really save. Hey, Claire. For every dollar you invest, I’m going to give you another dollar, an instant 100% return. What do you think about that, Dan?

Dan:
I think that’s great. I think that would be separate from this whole strategy. I think that would just be something where you say, “It’s not included in the monthly stipend paycheck. It’s not included in your expenses. It’s just something I want to do for you, but in the strategy, you need to save money to invest in that IRA, that Roth IRA so that I can match it,” and let them budget for that.

Claire:
Okay. Yeah. I love that. I love that plan.

Dan:
You love free money, right?

Claire:
Oh, yeah. It’s my favorite.

Carl:
Claire, do you have any other questions for Dan?

Claire:
Yeah, I had one last one. It’s smaller and it might be more of a personal thing. If we’re paying for the meal at the restaurant and then we get separate checks, do we also pay for the tip?

Mindy:
Mm-hmm. That’s your expense.

Claire:
No, I like that idea. I’m just clarifying.

Carl:
You’re clarifying.

Claire:
Knew you were going to say that.

Dan:
Oh, I like that one. That’s good. That’s a teacher joke. Nice one. Probably the 1,510th time Claire’s heard it, but first time I’ve heard that one. I like it.

Mindy:
Now every Claire student that Dan has is going to hear it.

Dan:
Yeah.

Mindy:
Okay. So Dan, at what age or level of maturity do you recommend parents start thinking about this ultimate teen money hack because I know my kid is 15. I probably could have started this with Claire when she was 14. She’s 15 and a half, actually, almost 16. I don’t know that Daphne is ready at 12 and a half. She’s in seventh grade. Claire’s in high school. Where do parents start thinking about this?

Dan:
I think it’s probably right about where Claire is. I think let’s start from the back end. If you know they’re going to move out of your house at let’s say age 18, I think a good length of time to run this strategy with them would be around a year to get through at least one full year. So I would think that the latest you’d probably want to do it is about a year before they graduate high school or right about there, so around age 17. The earlier you can start it, the better, but most teenagers are not Claire. To start them at 13, 14, 15 might be too early, but it really is a case-by-case basis.
Most people listening to this podcast who are parents probably are somewhat similar to the Jensen family, where they’re having money conversations with their teens, I hope. So that age could be lower. It could be around freshman in high school, but if the family’s just beginning to have money conversations, then you might wait a year or two. Again, like I said, the ultimate team money hack for parents isn’t something you just do out of the gate. It’s the finale. It’s the end of their journey with you learning about money. There’s other things you should be doing ahead of time to set them up for success in this strategy.

Mindy:
Awesome. Dan, are there any other suggestions or tips that you have for parents who are listening to this and are as blown away about it as I was when I heard you share it at Camp FI?

Dan:
I mean, I have dozens and dozens of tips for parents. Yeah. I could go on and on. I think one tip I would give parents is the book that I have, First To A Million, which is published by BiggerPockets. Thank you to BiggerPockets. It’s meant for the teenager, but as a parent, buy that book, read it yourself, and then give it to your teen and talk about all the different topics and strategies that are in the book, and then buy them the workbook and have them work through that. I wrote those things just for teenagers, and parents definitely need to be involved with that.
The authorized user on a credit card is an amazing hack to start the teenager with a good credit score before they turn 18. Having money conversations, involving them in paying the household bills before the strategy we’ve talked about today is implemented. They should be involved with some of the decisions for the household budget. They should be clicking the mouse to pay the bills every month. Talk to them about budgeting. Have them start tracking their income and expenses even if it’s as a teenager not a lot of money’s coming in and out, but have them use mint.com or some other free app to track their expenses and their income so they can see where their money’s going. There’s so many things. There’s so many things.

Carl:
Yeah. I’ll second your book, Dan. While I was reading that, I know it’s geared towards getting your kids’ finances together, but as I was reading your book, my thought was, “Wow. There’s a lot of adults who could really benefit from the knowledge in this too.” One of the things I liked about your book is it’s all encompassing. I would say you don’t go super deep. You’re not going to go into a simple path to wealth depth on why index funds are the right answer, but you cover it and you mention it. So your book is a great starting point for a lot of different topics.
The other thing I want to say about you, Dan, is I had the honor to go to your book launch party, and I met a lot of members of your tribe, the SheeksFreaks, and seen these young people who are 21 years old just inspired by you and killing it in life. So inspirational. These people who say, “I can’t do this,” look to the SheeksFreaks. You can do it and, Dan, you can point people to a lot of examples. Super cool.

Dan:
Speaking of which, we need to get Claire in the SheeksFreaks group.

Claire:
I just started reading the book and it is so good, but yeah, I would love to join the group.

Dan:
Awesome. Awesome.

Mindy:
Yeah. Thanks, Dan. She’s reading your book. She’s like, “This is amazing. I’m learning so much,” and Rachel Richards spoke at Camp FI and she’s like, “That was so great. I learned so much from Rachel.” I’m like, “Are you kidding me? You know I’ve been telling you all the same stuff, right?”

Dan:
Welcome to my life as a teacher. For those who don’t know, I’m a high school teacher and I will talk about certain things over and over and over in class, and then I’ll have a guest speaker come in and say the same thing and my students are like, “Why didn’t you ever tell us about that? That’s so awesome.” “I’ve told you 10 times.” It’s much like being a parent. Yes.

Mindy:
Claire, do you have any final thoughts about this?

Claire:
I can’t think of anything right now. I mean, I probably will as soon as we hit stop recording.

Mindy:
That’s how it goes.

Claire:
Yeah. I’m just honestly really excited.

Mindy:
Okay. Well, we’re going to try this for a couple of months and we’ll come back and check back in with you around November. So after you’ve done this for August and September and October, we’ll circle back. Dan, I’d love for you to join us again as well to check in with Claire and see how her spending and budgeting is going. Carl, you and I have some homework to do to figure out how much money we’re going to be giving Claire, and we’ve got a credit card to look into. Yeah, don’t get excited about that credit card, girl.

Claire:
I’m scared of credit cards to be honest.

Mindy:
Just don’t spend everything.

Claire:
I won’t.

Mindy:
Credit cards aren’t scary. Credit cards can be really a powerful tool if you use them right, and they can get you into a lot of trouble, but luckily, your bossy mom will be there to teach you how to use it right.

Claire:
I know.

Mindy:
Dad will be there too.

Dan:
If you don’t want, Claire, if you don’t want your parents telling you how to use your credit card, keep reading First To A Million and that will tell you exactly how to do it.

Claire:
Okay. Will do.

Mindy:
Okay. Dan, you mentioned that you would share your email address so people can reach out and get a PDF about this plan. Please tell people where they can find you.

Dan:
Yeah. So [email protected], and SheeksFreaks is S-H-E-E-K-S-F-R-E-A-K-S. I’m sure you’ll put that in the show notes. So if you’re a parent or if you know someone who has a teenager that would maybe be interested in this strategy, just send me an email and I have a PDF I can send you that goes over everything we talked about today and then a little bit more too.

Mindy:
Awesome. Dan, I really appreciate you inventing this idea. I really appreciate you sharing it at Camp FI. Shout out to Stephen Baughier, the founder of Camp FI, for bringing you there to introduce this to us. The beauty of this plan is the simplicity, and yeah, the beauty of this plan is the simplicity in it to teach your child how to handle their finances while they still have the safety net of living with you. I’m super excited to see what Claire does with it.

Dan:
I am too, and I’m excited to check back in. I need to do this. I should have said this at the beginning. A shout out to my buddy, Adam Carroll, who actually planted the seed for this strategy a few years ago on one of his Ted Talks, I think. By the way, parents of teenagers, I will pitch this for Adam, he has a documentary called Broke, Busted, and Disgusted, and it is about the student loan debt crisis in America that every parent and every teenager, frankly, should watch. Broke, Busted, and Disgusted, Google it. Yeah. So Adam Carroll is probably the founder of this idea. I definitely took it to the next level, but I want to give him credit.

Mindy:
From episode 330 of the BiggerPockets Money Podcast, we’ve been joined today by Dan Sheeks, Carl Jensen, and Claire Jensen. I am Mindy Jensen saying it’s all about the Benjamin’s baby.

Jeana Curro, head of agency MBS research at Bank of America, and John Lovallo, UBS Senior Equity research analyst, join ‘Closing Bell’ to discuss the housing market as home prices fell for the first time in 3 years last month. Home prices declined 0.77% from June to July, according to Black Knight.

David:
This is the BiggerPockets Podcast show 653.

Tarek:
The only difference between a successful real estate investor and an unsuccessful real estate investor is the successful one kept going when they wanted to quit, okay? I wanted to quit so many times. I remember thinking, “There’s no way in hell this is going to work.” You’re telling me I can pick up a phone, call strangers, and they’re going to sell me their house under market. I’m like, “There’s no way this is going to work,” but I did it anyway.

David:
What’s going on, everyone? This is David Greene, your host of the BiggerPockets Real Estate Podcast here today with my co-host, Rob “Roberto” Abasolo, as well as a fire guest. Rob and I will be interviewing Tarek El Moussa of Flip or Flop. If you watch TV, if you have a spouse or partner that watches TV, you’ve likely come across Tarek’s show, where he is filmed in the process of flipping houses and walking through the different hurdles, challenges, and obstacles that come.

David:
In today’s show, Rob and I get behind the scenes as to what it’s like to flip houses on TV, how Tarek is able to continue to find new deals even while filming a TV show, and a whole bunch of hilarious and insightful stories of things that went wrong in his deals and what he learned about them. Rob, what were some of your favorite parts of today’s show?

Rob:
I just want to say you seem extra chipper today, and I think it’s because you won the bet at the end. I was going to be throwing you for the intro today, and I was like, “This is it. This is my time to step up and give the intro on the BiggerPockets platform.” But we had a very fun bet at the end where we play a little game called Real or Reality TV, where we guess if facts about Tarek are true or not. So, definitely stay tuned to that. I think that was a fun part, man. We had a pretty good laugh on that one.

David:
That was a lot of fun. Make sure you listen all the way to the end because we do play a game where Tarek tells us if we are guessing if what happened was real or if it was reality. So, without any further ado, we’re going to bring in Tarek in a second, but first, let’s get to today’s quick tip will be embrace failure. It’s okay. It’s going to happen. In the show, Tarek talks about how if you’re not losing money on flips, at least if you’re doing this at volume and you have significant resources, you’re not doing enough flips and you’re actually leaving a lot of money on the table. So, don’t be afraid of failure, instead renegotiate your relationship with it.

David:
And if you’d like to reduce and mitigate your risk, check out the BiggerPockets Forums, where you can ask people questions about issues that you’ve run into, corners that you’ve painted yourself into, or advice that you need to make your flip go better. All right. Without any further ado, let’s bring in Tarek. Tarek El Moussa, welcome to the BiggerPockets Real Estate Podcast. How are you today?

Tarek:
I’m doing fantastic. How are you doing?

David:
I’m doing great. I understand you met my former co-host and best friend, Brandon Turner, out in Hawaii. Is that true?

Tarek:
That is absolutely true and I must say he is one of the best guys I’ve ever met in my life. I’m sure you could say the same.

David:
Yeah. I mean, you hear him on the show and he is very likable and he is very charismatic, but he’s one of those few human beings that is even better in person. It’s hard to have anything bad to say about that guy.

Tarek:
Yeah, it was so random. So, I was just going to Maui with my family and randomly, I followed him on Instagram because I love everything he does and he’s such an amazing entrepreneur. So, I sent him a message. I’m like, “Hey, man. I’m in Hawaii. We should get together,” and he’s like, “Sure.” And the only time our schedules lined up was at 7:00 AM on a Monday morning before leaving for our flight. So, him and his wife came down. Me and Heather had breakfast with them. I couldn’t say more nice things about the two of them.

David:
That’s awesome, man. So, for those of our listeners that live under a rock or maybe they’re hearing this podcast for the first time or maybe they just found out about real estate and don’t know who you are, can you give us a little background into what your business looks like, how your TV show works, and a little bit about you?

Tarek:
Sure. I got into the real estate industry at 20 years old. And before that, I was delivering pizza and selling kitchen knives. First six months in the business of real estate, I made $0, nothing. I was a kid and I was like, “Man, I was about to quit the business.” Long story short, there was a free event coming into town from this real estate trainer named Mike Ferry. Most people in real estate know Mike Ferry. I went to this free event. At the end of this thing, I thought, “Man, I can do anything.” This guy, the way he was able to speak to the audience, he could convince you that anything is possible. So, he convinced me that anything was possible. I signed up for coaching and my life changed.

Tarek:
Within 90 days of signing up from coaching, I went from living in my mom’s garage. My parents got divorced. She rented out my bedroom and followed exactly what my coach told me. And literally, overnight, 21 years old, started making 40,000 bucks a month. Within a few months, I bought my first million dollar house and thought I was king of the world, smartest guy alive, blah, blah, blah. The ego was so big and something interesting happened. It was the year 2007. So, 2007 taught me that everything I thought I knew, I actually didn’t know. So, I had to sell my houses. I had to sell my cars. I had to sell everything I owned. I never quit real estate man and I kept selling. I kept selling and I did the short sale transaction.

Tarek:
There was a first lean, a second lean, an HOA lean, an IRS lean. I mean, this thing was a nightmare and this was the Wild West back then guys, because there was no systems in place. There was no technology. You called the bank for a short sale. There’s a 10% chance anyone cares. There’s a 5% chance someone’s going to call you back. Long story short, I worked it for about a year. At the end of the day, I got a check for about 7,000 bucks. I sold it to an investor, painted the house, hired a gardener, flipped it a week later, made $127,000. And that was the moment I realized I was on the wrong side of the equation. I was like, “Man, I got to be a real estate investor.” So, I had one big problem. I had no money. So, of course, I went to everybody I knew and you know what they said?

Tarek:
They said, “No.” They said I was too young. It’s too risky. I don’t know what I’m doing. They gave me every reason why they wouldn’t give me money. And every time someone told me it wouldn’t work, I was like, “Man, I can’t wait to prove you wrong.” So, what I found was I was asking everybody in my sphere, everybody in my circle. And then I decided I’m going to ask some people with money. So, I approached the one person I knew at the time who had money. I showed him the business plan and he’s like, “Yeah, you find a deal. I’ll flip houses with you.” And the deal was pretty simple. He put up the capital. I found the deal, did all the work, sold the house. We split profits 50/50. That was 12 years ago today. And to this day, we’re still business partners.

Tarek:
So, we did our first flip. It was a condo in Santa Ana, California. Man, I did everything wrong. See, I had zero construction knowledge. I had zero construction background, but I was hungry. I was young and hungry. So, I was the project manager. I was the contractor. I was the investor. I was the real estate agent. I electrocuted myself on that project. I had this brand new vanity light. My ex-wife, she’s like, “Oh, let’s see what it would look like up on the wall.” So, I take this metal light and I put it up to the wires hanging out of the wall. I didn’t know what live wires were. Next thing I know, I’m shaking. There’s sparks going everywhere. And that’s where I learned before you put metal near power, you got to make sure the power’s off.

Tarek:
Another thing I did is I acid washed the shower walls, but I made the mistake of not putting shoes on. I took my sandals off. So, then I burned my feet with acid. I mean, you name it, I did it. But the one thing I did right was I showed up every single day and I learned as I went. I got that first condo done, start to finish, construction, listing, closing escrow in under 60 days all by myself. I made a check for $34,000. And I remember, man, it felt like $34 million. And I was like, “There’s no way I’m ever going back.” And then I learned something really important at the end of that first deal. I finished the transaction, but you want to know what I didn’t have? I didn’t have any more flips and I didn’t have any more flips because I was doing demo. I was painting walls. I was replacing flooring.

Tarek:
And then I realized opportunity cost. I can make $34,000 flipping the house. Why am I painting walls and why am I doing trash out? So, after my very first project, I decided I want to do more house, more houses, but hire people to do the work. Here’s where the tricky thing comes in, my TV career. So, right when I bought that very first flip, I went to a real estate convention in Las Vegas. It was thrown by a gentleman named Mike Ferry. There was about 5,000 people in this room. It’s called the Superstar Retreat. I was the guy that used to sit in the back. It’s Vegas. I was out late. I wasn’t feeling so good in the mornings. And my friend is the vice president of Berkshire Hathaway Office. His manager and his manager’s wife were in the very front row of this thing and they had to leave.

Tarek:
So, he invited me and my ex-wife to go sit in the front row. You guys know how these events are. The front row is for the VIP people. That’s for the guys and the gals that make a lot of money. That’s for the players, the ballers. So, we didn’t really belong, but we were dressed sharp. We sat in the front row. At the break, everybody else in the front row, they were wondering, “Well, who are these two young kids? We’ve never seen them before.” We looked good. We were dressed sharp. We played the part. So, I ended up talking to this guy at the break and he was telling me how he had a local TV show. He would go to the grocery stores in Palm Springs, California, and people would recognize him. And I was like, “That’s interesting.”

Tarek:
I heard him talking on stage. He had made $800,000 that year. And I said, “I mean, it’s cool being recognized and all, but what does that do?” And he goes, “Well, they recognize me. Then they trust me and then they work with me.” I was like, “Man, that is so smart.” So light bulb went off and I’m like, “Man, I got to get on TV. This guy is smart.” So, I think the day or two days after, I went home and I was thinking about what this guy told me. I was like, “Man, I got to get on TV. I got to get on TV.” And I told my ex-wife, it was like 10:00 at night. She’s like, “Are you coming to bed?” I was like, “No.” I was like, “We got to get on TV.” She was like, “What are we going to get on TV for?”

Tarek:
She started laughing at me. I looked at her and I was like, “You know what? We just bought our very first flip. What if we flip houses on TV?” She shook her head at me, laughed and walked upstairs and went to bed. I stayed in front of my computer. I literally Googled Hollywood production companies and then they came up. I went to the first one. They had a button that said casting. I sent an email. This is who I am. This is what I do. I want to flip houses on TV. I woke up the next day and they said, “Send me a home video.” So that condo I did in Santa Ana, where we paid 115, I actually documented the process and sent it to the production company. They loved it. They’re like, “We want to come out and do a two-day professional shoot.”

Tarek:
So now this is my first time dealing with TV. Never in my life had I even thought about TV. They come out. We shoot for two days, real director, real cameras, everything. We made a sizzle video. A sizzle video is a three- to five-minute video of what the show could be. So, then they take that sizzle video and they send it out to all the networks. Guess what? Nobody wanted it. Nobody wanted it. And I was like, “Man, that sucks,” but that’s life. So, I just kept going. Ten months later, I’m on the golf course. I get a call from the production company. They’re like, “You’re not going to believe this, but HETV wants to do a pilot of a house flipping show.” I couldn’t believe it. I was getting a pilot for a TV show.

Tarek:
So, I shot the pilot in summer of 2011 and it got done. It went to the network and everybody’s telling me the odds of a pilot getting picked up are very slim. And if we do get picked up or we do get an answer, it’s not going to be for a long time, because everything in TV is slow. I think it was maybe two, three weeks later, I get a call. I get an email and I have a contract to flip 13 houses on global TV in 10 months. As you can imagine, you’d be thinking I’d be celebrating, right guys?

David:
Well, I’m thinking, “How am I going to find that many houses to flip that are good deals?”

Tarek:
Two problems. One, I don’t know how to flip houses. Problem number two, I have no money. Okay. So, I called my lawyer at the time. Funny story with my lawyer was my first lawyer. He was a referral. I sent him the contract. I said, “Can you review this?” He wrote back, “Yeah, no problem. I need a $2,500 retainer.” And at the time, I didn’t have $2,500. So, I wrote back to my lawyer. I was like, “Can you do a payment plan?” He’s like, “Yeah, LOL. Yeah, I’ll do a payment plan. No problem.” To this day, he’s still my lawyer and one of my best friends in the world. So, I asked him, I was like, “Man. So, what if I signed this thing and I can’t flip these houses?” And he goes, “Well, I mean, they could sue you.”

Tarek:
I looked around in my apartment at the time. I looked back at him and I said, “You know what? They can have it. If I don’t pull it off, they can have all of it. It’s all financed anyway. So, they could take it.” So, what I did is this. I learned how to flip houses season one of that show, I created a proven track record where I got other investors to start giving me money. And then that first investor that did that first deal with me saw that I was serious. He really went all in with me and he said, “I will be your capital partner. You go find those houses.” So, my first year on TV, I really didn’t sleep, because I needed to find houses and I was buying some of them at the auction. The reason I had to buy them at the auction is because we needed to start filming now as you can imagine, right?

Tarek:
But then when you’re buying at the auction, I couldn’t buy an occupied house, because what if it takes me six months to evict them? How do I start filming a show if I have tenants in the house? So, what I did is I would work all day until 8:00, 8:30 at night, my normal real estate stuff. I’d get home about 9:00, eat a quick dinner, and then I would do prep work. And almost every night from 10:00 PM until about 3:00, 4:00 AM, I would drive all throughout Southern California overnight. And I would drive by all the addresses that were going to the auction the next morning.

Tarek:
The reason I drove by the addresses is because I wanted to see if anyone lived at the houses. I looked for overgrown grass. I looked for newspapers by the front door. I looked for lights on. I looked for cars in the driveways. So, it was 3:00 in the morning, I’m driving by houses. If I didn’t think anyone lived there, I would say, “Okay, I can bid on that house.” So then of course I work all night. I pick four houses I could bid on, right? I go to the auction. My max bid is $300,000 on a house. Next thing I know, the investor next to me bids $310,000, this guy bids $330,000. Next thing I know, they’re bidding $400,000. My max bid’s $300,000. How am I ever going to get a house? How do I get a house? My numbers were way off, but I never quit.

Tarek:
I showed up every single day until one day I bid on the house. For some reason, nobody else bid against me and I got the house. I flipped it and I made a profit. So, here’s what I learned at the auction. If I showed up every single day and I worked like a crazy man every single day, I was going to get lucky, nothing more than getting lucky. For one reason or another, people just didn’t realize to bid on that specific house and I would get a house. Then that’s what would happen. I’d get outbid, outbid, outbid, outbid. And then every now and then, I’d get a house. That’s how I started getting houses for the show. And then I started prospecting listing agents to buy their short sales. And then I created systems and then I would door knock. So, I did everything humanly possible.

Tarek:
And because I signed that contract, I put myself in a position where I couldn’t fail, because if I failed, I’d lose everything. So, I did 10 years of work in one year and that’s why my business went like this. The rest is history, man. I’ve done 10 seasons of Flip or Flop. I have my new show, working on season three right now, Flipping 101, where I’m mentoring rookie flippers. We just announced our new show called The Flipping El Moussa with me and my wife, Heather El Moussa.

Rob:
So, a little known fact here. I actually, I shot a sizzle for HDTV and probably not even supposed to say that. They were very hush-hush about it, didn’t get picked up, all good. This all happened while the BiggerPockets thing was coming to light. And I was really excited about this opportunity because what really scared me about the TV world was the concept was around my tiny house village that I was building out in Tennessee. We were going to be shooting these 14-hour days, which I’m sure you’re really familiar with.

Rob:
But the question I kept asking myself and asking the producer is, “How in the world am I going to be able to do production and maintain the actual workflow of not flipping, but completely constructing these tiny houses and tree houses and everything like that?” So, I’m really interested to know, did the actual workflow of flipping a house changed pretty dramatically once the cameras were on?

Tarek:
That’s actually a great question. The biggest hurdle for me was, “How am I able to film a TV show all day, but also prospect for sellers, negotiate deals, walk properties, hire contractors, and get them sold?” So, TV actually did something very special for me. The first year almost killed me, but because it almost killed me, I was working 18-, 20-hour days, it forced me to become an entrepreneur. Meaning it forced me to learn how to delegate. So, I knew I can’t be in 10 places at one time. So, I need to start finding people to replace what I was doing. So, it taught me to scale. It taught me to be a leader. It taught me to be a CEO. Because I’m on camera, I still needed all the work to get done.

Tarek:
So, I had to hire salespeople. I had to hire managers. I had to hire marketing and I had to build a company. So, I went from being a guy that was flipping houses to a guy that was building a real estate investment company to manage those projects while I was creating a TV show. The first couple years, I mean, I was very, very hands on, because I had no choice, but now obviously, I’m more focused on the TV side of things. And in place of me, I have many employees and many systems that are just running.

Rob:
One thing I really felt nervous about stepping into that possible role was that I was expected to be the expert in every single facet of that project. I had to know the engineering, the soil reports, the construction details, the nitty gritty for actually attaching a treehouse or at least they wanted me to appear that way, but I was really learning all of this as I was going. I’m interested also, was there a little bit of pressure on your end to feel like an expert or to rapidly get to expert status while you were doing the show?

Tarek:
To be honest, that’s what they wanted and that’s not what they got. Thank God they didn’t because Flip or Flop probably wouldn’t have been the show it was. I mean, it’s the most watched house flipping show in history. And I told them, I was like, “I’m not an expert. I am literally learning as we go.” That’s the excitement of the show. I am not an expert. I am showing I am chasing the American dream and that’s the show we need to build. So, at first, they wanted me to be an expert and I was honest and I said, “I am not an expert. So, let’s just see what happens.”

Tarek:
So, they worked with me and I think we created something really special. And nowadays, I would consider myself an expert at most things. But if it comes down to the details of construction, I am not an expert. I know nothing about construction. That’s not something I want to learn. I’m more interested in being a real estate investor.

David:
I love what you’re saying here, because I got started investing in real estate as a police officer. I was working full time as a cop and I’m buying rental properties. They were in other states because you don’t really find cash flowing properties in California. I would flip an occasional house, but that really wasn’t my bread and butter. And I had the same problem. How do I do all the work of an investor who wants to do their due diligence the right way while taking calls for service, driving the car around really fast, chasing after people, writing reports? So, it forces you to actually hone in on the systems that you’re creating, cutting out the fluff, making sure you focus on the most important things. And I think it ultimately made me a better investor.

David:
It’s why I ended up writing the book Long Distance Real Estate Investing, because I detailed the systems of an investment property as opposed to Brandon. We talked about earlier, he was flipping houses in his own backyard. So, he would get sucked into, “Let me just go change the door lock. Let me just go learn how to fix a toilet.” It’s always like, “Oh, I’ll just go do the flooring myself. It’ll be easier, faster. I’ll save money.” He got stuck in the cycle where he wasn’t growing versus me. I’m notorious for I don’t know how to change the door lock. I tried one time to do it. It took up seven hours of my day with four Home Depot trips. I’m like, “Never again.” I could have paid a handyman four times what they wanted and still save money.

David:
Can you elaborate a little bit about if you really believe this is the better way to learn how to invest in real estate investing?

Tarek:
Honestly, man, like I said, I learned on that very first flip. I would go to Home Depot probably 10 times a day, because I would forget this or I would forget that. And if you got to drive back and forth, you got to find parking.

David:
How much time did we spend just driving a freaking Home Depot, man? I get mad just remembering.

Tarek:
If I spend the same amount of time looking for houses than I did going through a Home Depot, I probably would’ve put a lot more houses a lot faster. So, for me, I’m not good with construction. So, this is how I look at it. Okay. If I can hire someone to do it and it makes sense and I’m still profitable, I’m going to hire that person, because what is the most valuable thing when it comes to real estate investing, right? What is the most valuable, more valuable than anything else? It’s being able to source deals.

Tarek:
So, I learned very on after my very first transaction if I become an expert at finding deals, the rest is going to fall into place. I can hire contractors. I can hire real estate agents. I can hire landscapers. I can hire escrow companies. I can hire people, but I couldn’t hire someone to go out there and hunt for deals the way I was willing to do it. which made me very valuable. So, I’m never going to go do $20 an hour work when I could be doing $5,000 an hour work. That’s the lesson I learned really early on. I really learned it because of TV and TV forced me to delegate.

Rob:
Is there a moment where you realized that? Because it’s obviously very easy for us in retrospect, we’re like, “No, our time is valuable. We’re going to hire it out.” But did you ever find yourself in the middle of a trade or doing anything where you’re like, “You know what? I’m done. I will never mud a wall again”?

Tarek:
Yeah. Yeah. So, this is funny. So, on my very first transaction, you got to remember, my very first flip. This was after the 2007 crash where I sold my S500 BRABUS, my BMW convertible, my Escalade, all my toys. So, now, I’m driving a Honda Civic, right? So, I would drive all over town to Sears outlets. And I’m trying to slam range hoods into the back of the car. It won’t fit. And I’m like, “Man, I can’t put the supplies from Home Depot in my Honda.” So, I called my business partner. I said, “Man, we got to get a truck,” and he’s like, “We’re not getting a truck.” I’m like, “What do you mean? I need to go pick up all this stuff.” He’s like, “Go hire someone to pick that up.” I’m like, “Well, no, no, we’re going to save 50 bucks if I do it.”

Tarek:
That’s where he talked about opportunity cost and time. That was the first time I had learned that. He’s like, “Well, why are you going to go buy a truck so you can go to Sears to pick something up, to go take it to a house when we can hire someone?” My mindset was I’m saving 50 bucks. What he taught me was well, we could be losing thousands because I’m not actually working on what I’m good at.

Rob:
I was actually in a very similar situation. When I first bought my home, I was doing a lot of the remodeling myself and I decided to hire someone to help me remove a load bearing wall in my house. That wall was a 17-foot span. So, I needed to buy a 20-foot… I want to say it was a 6 by 10 or something. And the guy was like, “Well, if you want me to buy it, it’s going to be another 50 bucks. I have to go pick it up and everything.” I was so cheap and I said, “I got it.” And my wife and I drove a Subaru Forester, which is a very tiny SUV. And I was like, “Hey, we got this. We’ve done crazy things. I’ve really packed in stuff into cars a lot.” So, I go to Home Depot and I realized, “Well, this thing weighs 600 pounds first of all.”

Rob:
So, we have to get three or four Home Depot guys to help us put it on the top of the truck. And we line it up, and basically, there’s five foot of lumber on each side of the truck hanging off. And I was like, “Well, that’s no big deal. I only live five minutes from here.” So, my wife was like, “Man, I can’t believe I’m part of this.” And I was like, “No, it’s okay. It’s going to be fine.” And as luck would have it, I lived right by The Forum. It used to be a basketball arena, but now, it’s a concert hall. Concert led out right at that moment.

Rob:
So, we are stuck in the middle of Los Angeles traffic for 30 minutes while I am trying not to maneuver my car too much one way or another, because the piece of lumber is going up and down. And I was just seeing all the lawsuits that were appearing in front of me. I was like, “Oh, this is it. This is how I lose everything.” And that was the day I told myself, “I will pay for delivery for the rest of my life.”

Tarek:
Yeah, that’s it. So, that’s where I learned about opportunity costs with that Civic being at Sears outlet, trying to stub a hood into the back and it wouldn’t fit. And then, like I said earlier, after my very first flip, I pulled it off. We made a profit. I worked my tail off, but guess what? At the end, I had no other houses, because instead of looking for houses, I was working on houses. So, the best place to spend your time, I don’t care what anyone says, it’s always going to be hunting. It’s always going to be looking for deals. Whether it’s houses, whether it’s apartment buildings, whether it’s strip malls, whether it’s self-storage, the most valuable thing any investor can do is source deals.

Rob:
Well, that’s a great tip and I know that you have a set of tips here for house flippers. I know you got five. So, is there a way you can just run us through some of those for someone aspiring to get into this business?

Tarek:
Yeah. I mean, I’ll go over a couple tips and then you guys just ask me any questions you’d like, but people ask me, “What’s the first thing you do?” I mean, the first thing you do, I mean, everybody knows this. This is the tagline for my company homeschool, where we teach people how to flip houses. The tagline is this. Before you invest in anything, you have to invest in yourself. So, before you go out there and get started, you got to get a mentor, join a program, read some books, jump on YouTube, start filling yourself with knowledge. You have to invest in yourself. So, that’s obviously something very, very important. Once you start feeling comfortable, then you got to get started. And for me, the first step is becoming an expert at finding deals, right?

Tarek:
If you don’t know how to find deals, you’re never going to be in business. So, finding deals is where I spent 95% of my time when I first got in this business, nothing else. I didn’t know anything about construction, nothing. I spent 95% of the time learning how to find deals. And then once I found the deal, I was like, “Okay, the next step after you find it, well, you got to fund it.” I had some business partners put in place where they had given me private money. If you find deals but if you don’t have funding, you can’t flip it. So, a lot of times you have to wholesale it. So, you find them first, then you got to fund them and then you have to fix them.

Tarek:
Here’s the thing. My first couple contractors, it was a nightmare. Everything went wrong. Nobody was working on the houses. Everything was behind schedule. I wanted to pull my hair out, but here’s an interesting story on the fixing part. So, I’m doing my very third flip and I’d been working on this thing for five months. It looked like it has been worked on for three weeks. There was a flip that had just been bought right around the corner. And there was this huge banner outside with the construction company’s name. And I was like, “Okay, here’s another flip.” I’m not kidding guys.

Tarek:
A few weeks later, I drove by that house, the house was done. The house was done. My house was still nothing happening and this house was done in a matter of weeks. So, guess what I did? I called that contractor. I called that contractor. Hey, I never say you got to be the smartest guy or smartest person. I always say you go find smart people and you copy what they do.

Rob:
That’s actually a very actionable thing, because I would say probably 70% of the people that I ever found for any of my construction projects in LA, I would follow dumpsters. If I see dumpsters in my neighborhood, that’s a really good sign for me because I can actually see the progress of a house. And if I like the work, I can go in and poach that roofer or that stucco person or that drywall person. It was really great. I mean, a lot of the people I still work with today are people that I actually saw working and working diligently. Yeah, that has really filled up my Rolodex ever since.

Tarek:
No, 100%. One of the things when I train people is you want to find a contractor. Wherever you live, jump on Zillow. Look at every single house for sale, every single home that’s sold them last six months. Scroll through them one by one, look for ones that look like a flip, and it might even say completely remodeled. Call the real estate agent. Try to make friends with the agent. Say, “Hey, why don’t you refer me to the contractor that did the flip on 123 Main Street. If they help me with my house, maybe I can give you the listing.”

Tarek:
So, I teach people not to just work with contractors. You want to work with contractors that do two things. One, they work with investors, and two, they do volume, right? So, I only want to work with experienced contractors for my flips. I’m not going to go hire the custom kitchen guy. I’m not going to go hire the custom pool guy. I want to work with people that work with investors.

Rob:
Why is that specifically? Why is that a designation you’re looking for in a contractor?

Tarek:
Because they’re experienced, they already know what to do. There’s no learning curve. If I work with a contractor that’s remodeled 800 flips, do I really need to tell him what to do? I mean, at that point, they should be pretty experienced, right? So, I look for people that have that experience. So, as nice and professional as the custom kitchen guy might be, their pricing is going to be nowhere near, because they don’t understand the difference. A flip is a vacant house. There’s no homeowner there in the way. There’s no moving furniture. There’s no covering things up. They’re not picking every little item apart. So, it’s a different type of contractor.

Rob:
Yeah. That’s what I was wondering. Does that type of contractor tend to understand that as an investor, they can’t necessarily mark up every aspect of that flip the way they would with just like a one-off homeowner?

Tarek:
100% because that’s their specialty. They understand in order to work with investors, speed and price is important. That’s why I said we got to find experienced contractors. I used to go to Home Depot, used to track garbage bins. I used to go to Home Depot in the mornings and watch what companies would come. What would their trucks look like? How would their employees act in public? How would they hold themselves professionally? I used to walk up to the pro desk. Hey, how’s it going?

Tarek:
Hey, I got a question. What contractors buy most materials here? Who do you think are the better contractors? It’s just asking questions. Like I said a minute ago, you don’t have to be the smartest. You don’t have to know everything. You just need to find people that do know everything and that’s how you find success or at least that’s how I find success. I work with people that are specialists in the fields that they’re in.

Rob:
That’s great.

Tarek:
So, I said, we got to invest in ourself. We got to be an expert at finding deals, spend the majority of the time there, fund it, different ways to get money, fix it. That’s the contractor. And then selling it, selling it, price it right, professional photography. If staging’s warranted, get it staged. But when it’s time to sell, I treat it as professional as possible. Two important things about selling the houses, one, price, but two, where a lot of people drop the ball on is photography. Spend 250 bucks, get professional photos, because those photos are going out to the entire world. That’s what those buyers are going to see.

Rob:
Yeah. This is something I hammer quite a bit with a lot of people that I teach. They want to take cell phone photos. I mean, people will come to me and say, “Hey, Rob. My Airbnb’s not booking. I don’t understand why isn’t it booking or this flip isn’t selling. Why is it?” I’m like, “Well, let me see.” I’m like, “Well, you took your photos with an iPhone 3.” And a lot of people think, “Oh, well, it’s got 14 megapixels. It’s got the wide angle lens. Does that not work?” And I’m like, “No, you have to spend the money.” I mean, good photography, obviously, there’s a range, but we spend anywhere from $250 to… I’ve spent up to $1,000 on photos. Obviously, that’s not going to be all the time. But David and I had a luxury property that we bought in Scottsdale.

Rob:
I was like, “Let’s spend money on these photos because it’s a $3 million house.” I always say, “You don’t want to put hubcaps on a Ferrari, right?” You want to spend the money and make sure that you’re actually representing the property as accurately as possible. Have you ever been in a situation where you learned the hard way that bad photos didn’t necessarily net out in the most profitable transaction?

Tarek:
Fortunately, for me, no, because before I was a real estate investor, I was a real estate agent. So, I started as a real estate agent from 20 to 29 and I always knew the importance of marketing. So, that’s one thing I’ve always done is professional photos. Whether it’s $100,000 condo or a $20 million house, they’re getting professional photos, because those photos on $100,000 condo might bring you an extra 10,000 bucks, which could be an additional 10% return, right? Just as something simple as the photos.

Rob:
Yeah. So, I actually wanted to dive a little bit into the finding the deals, because this is something that is perhaps the first thing you want to learn how to do super, super well. What is an example of finding a deal? Is it just going to the MLS and looking on there or do you actually have super-secret secret sauce for finding a deal?

Tarek:
Yeah. I mean, for me, if you’re shopping on the MLS, you’re shopping in a retail marketplace. There are deals on the MLS, but man, it is difficult to get them. And if you get them, it’s not very often. So, it’s really hard to do multiple transactions. So, I learned early on, I don’t want to shop on the MLS. I want to work with off-market deals. I want to work with distrust sellers. I want to work with motivated sellers and that’s really where my focus was. So, there’s two ways to do it, right? One, if you have money, you can do marketing. Two, you don’t have money. You’re doing the work. So, if you’re someone that wants to get out there and do deals, you have no money.

Tarek:
Well, you got to be knocking on doors. You need to be making phone calls. You need to be sending text messages. You need to be going to 50 open houses a weekend, talk to every single real estate agent, ask them for deals, get their business card, create relationships, follow them on social media. Every single time, anyone you follow ever posts anything on social media, you comment. So, they remember that you commented and you’re always there. So, when that deal does come six months from now, that real estate agent’s going to remember, “Hey, Tarek, that guy, he’s looking for off-market deals.” I always compare it to fishing when I’m teaching people. You’re going to jump on a boat.

Tarek:
Do you want to throw one line off the back of the boat and sit there or do you want 30 lines surrounding the boat? What’s going to bring you more fish? It’s the 30 lines. So, the old school way, go out there, hit the street, find deals. And if you have money for marketing, there’s different things I do within my company, Tarek Buys Houses. We do digital marketing. We have TV commercials running. We have radio ads and we’re just always out there. We spend quite a bit of money on that.

David:
All right. That is awesome as far as how important a contractor is and the importance of photos. I’ll second that. I’d say in today’s day and age, people don’t realize there’s no realtors or sellers that have a secret list of buyers that no one else knows about. That’s the way real estate worked 40 years ago. I’ll put it in a newspaper. I’ll put it in a magazine. Everyone sees everything now, Zillow, Realtor, truly all of it. It’s like online dating. You have to have a picture that someone’s like, “I want to see that house.”

David:
Most of the houses I’ve been buying are literally I see ugly pictures. They’re dark. Sometimes agents load them in sideways. It’s just terrible and I know no one’s looking at that house. Those are the ones that I actually like to go after. So, that’s a very good tip. What other tips do you have as far as what house flippers should be aware of that you learned the hard way?

Tarek:
Oh, be aware of this really, really hard, the only difference between a successful real estate investor and an unsuccessful real estate investor is the successful one kept going when they wanted to quit, okay? I wanted to quit so many times. I remember thinking, “There’s no way in hell this is going to work.” You’re telling me I can pick up a phone, call strangers, and they’re going to sell me their house under market. I’m like, “There’s no way this is going to work,” but I did it anyways. And guess what happened? It worked. The problem is most people, they get frustrated. Most people, they get defeated. Most people, they can’t endure the pain, because as you two know, you’ve been through it. Is it painful?

David:
Mm-hmm.

Tarek:
Is it frustrating?

David:
Mm-hmm.

Tarek:
It, is right? That’s where you just got to dig deep, believe in yourself, believe in what you’re doing and keep your eye on the ball. And if you believe and you keep taking action, you keep working every single day. Eventually, it all starts to click.

Rob:
I’d like to think I’m at the point of my journey where I have the laugh sigh. When something goes wrong and my partner’s like, “Bro, you are not going to believe,” I go, “Yeah, I believe it.” That’s my answer to everything is I’m like, “Of course, of course.” I at least am now like, “Okay,” because I’ve tried to remove myself from the actual day to day and more do the investor thing like you’re talking about where it’s not how, but who’s going to address this. It’s a lot easier to move on from a situation if I can really just as quickly as I can realize, “I’m not the one that’s actually going to be fixing this roof caving in. I just have to get in contact with the contractor that’s going to do it.”

Tarek:
Exactly. And while they’re doing that roof, you know what you’re going to do? You’re going to go find another house to flip.

David:
All right. So, Tarek, what about knowing a market? How important is it for the investor to know the market that they’re in and what lessons have you learned regarding not knowing a market you’re trying to flip or buy in?

Tarek:
It’s very important to know the market. So, I buy houses at this point in my career all over the country. I mean, you don’t have to spend five years studying it. Spend a couple days, right? How’s the population growth? How is the real estate market doing? How is that local economy? What is the absorption rate? How many homes are for sale? How many homes are pending? So, you don’t have to spend years. Literally, you can just spend a day or two researching that market. And then once you understand what’s happening in that market, then you can make the decision to jump in the market. An example of this, if I want to go a market somewhere in this country and I’m like, “Okay, I want to buy houses here.”

Tarek:
If I look that people are leaving, the economy’s struggling, and for every 20 homes for sale, only one home is selling, that’s a bad sign. That means our supply is really high, our demand is really low. I’m not going to go buy in that market. Now, if I go to a market where population growth is growing, there’s no inventory, demand is strong. Maybe there’s one home for sale and five homes in escrow. What does that mean? That means there’s no supply and there’s a whole ton of demand. So, that’s the market I would go into. So, that’s how I determine the markets. I do a little bit of research on the local economy and I check the absorption rate. I check the supply and demand curve.

Tarek:
So, my partner and I, we bought this house. It was years ago. We bought it in Texas. Long story short, it was in some type of a plain flood zone, something we don’t have in California. Anyways, I thought we got a good deal, listed this thing, didn’t sell. And back then, we wouldn’t lose money on houses. So, it wasn’t something I was used to. I wouldn’t want to lose money on a house. Now, it’s okay. I understand if I make money on nine, I lose on one. I average 10, I made money, right? But back then, I didn’t.

Tarek:
So, instead of just ripping off the Band-Aid, selling this house in Texas and losing 20 grand, I put it on the market. I took it off the market. I did more remodeling, came back to it, and then tried to sell it again. And then I got it staged, blah, blah. Long story short, I kept trying to make it possible to get the price I wanted. But in the end, I ended up selling at an $80,000 loss. And if I would’ve just ripped off the Band-Aid at the beginning, it would’ve been a $20,000 loss.

Rob:
Wow. So, even at your level, I mean, you’re flipping a lot of homes. Do you still factor this in? If you’re buying 10, 1 is going to lose money. Is it a numbers game for you or is your strategy like I’m not losing money at any cost because I’ve got the systems developed? I’m curious for someone as experienced for you, how does that play out overall?

Tarek:
That is just one of the best questions you could have asked me. So, here was my biggest mistake in my house flipping career from 2010 to 2019. I wasn’t losing enough money on flips. Let me explain what that means. I was passing on way too many deals. The market was going up. So, in my mind, if I wasn’t for sure going to make a good profit, I was passing on the deals. Literally, 90% of those deals I passed on, if I would’ve just bought them and fixed them up and flipped them, I would’ve made a ton of money. I was too picky on the houses I wanted to flip. So, now, I tell myself, “If I’m not losing money on a small percentage of houses, that means I’m not buying enough houses, which means I’m not taking enough risk.”

Rob:
That’s really cool. I don’t think a lot of people are honest about that. I think everyone, I’m not going to fail at any cost, right? And I think that the big swings is where the profits come in, right? And so, every so often, you got to take an L, but if you take enough big swings and you’re successful, I got to imagine it’s a net positive.

Tarek:
Yeah. Yeah. Here’s the thing though. When you go into a deal, I know when it’s going to be a home run. When I lose on a deal going into that deal, I already know there’s a chance I’m going to lose money on this deal. It’s not like I have a deal where I’m like, “I’m going to make 300,000,” and then I lose money. That doesn’t happen. So, when I do lose money on deals, going into that deal, I know it’s a riskier deal and I have to make the choice. Do I want to take the gamble or not?

David:
Yeah. And I think that’s good for people to hear because it’s easy to tell people, “Never lose money on a deal ever.” I would also say, I want to get your opinion on this, there’s probably a point in someone’s career where that is good advice. You got your first $80,000 saved up and it’s all the money you have to your name. You can’t lose, especially in the beginning, but I’ll often tell people, some people make the mistake of playing conservative their whole life. You said that’s what you were doing. You’re just being too careful. I tend to be that way too.

David:
Other people make the mistake of just going and buying five houses before they bought their first one and trying to flip five at one time. So, I’ll often say you got to start slow. It should be really boring. Once you start to anticipate what could go wrong or you get that feeling like you just had, “Yeah. I might lose money on this house. I can tell,” that’s the point where it makes sense to ramp up your business. Do you agree that that’s the right point in the model where it makes sense to go bigger and possibly lose money to make more in the end?

Tarek:
100,000,000%. At the beginning, we are only buying good deals. Let me say that again. When you first get started, you never want to go into a deal where you might lose money, right? You need to be so confident in your first deals, but as you grow your brand, as you flip more houses, the only way to scale is by taking more risk. But the question is, how do you offset that risk? Well, pretty simple, to offset your risk, you got to make sure you have a bunch of profitable flips that you know are home runs. That’s where that 1 in 10 comes in. Listen. If I crush 9 houses and I lose 50 grand on one house, do I care? No, because you take the total profit, divide it by 10, you get the per profit average, still really good.

Rob:
Yeah. I would imagine you only care if the first flip is the loss and you’re like, “Dang it.”

Tarek:
No, let’s just say I’m new to house flipping and I lose on my first flip. Now, that’s going to be a big problem. You don’t want to start taking risk until you build up your nest egg.

David:
I look at it like a pyramid. You want your foundation of that period, the majority deals you’re doing to be boring, base hit, not a huge upside, not a huge downside. They’re just solid moves. For the buy and hold space, this would just be single family rentals in good areas where they’re going to slowly appreciate over time. And then once you’ve got a big base, you can start buying more, a little riskier. It has a higher upside, but it also could have a higher downside, but it’s in proportion to how many safe ones you have. Then at the top of the period, you got stuff like Rob and I bought, that $3.5 million property in Scottsdale. That’s like a crown jewel, but that thing might be a year or two before it’s profited.

David:
We don’t know exactly how this is going to work out, but it doesn’t matter because we have enough other cash flowing assets that it’s not going to break us. And over the long term, it’ll be a great deal. So, I think that that’s really good advice that you’re sharing with people and it’s something that you hear in other sales areas too. They tell real estate agents, “If you’re not getting turned down, you’re not trying to take enough listings.”

David:
You shouldn’t be getting every single listing that you go for. If every buyer you work with, you’re putting them into contract, you’re not working with enough buyers. There is a point where every great athlete doesn’t score on every single shot. They’re going to miss sometimes too, right? If you only shoot when you know you’re going to make it, you’re going to score two points every three games, then you’re not going to be in the league that long.

Tarek:
Yup, 100%. This all comes down to experience.

David:
So, one thing I know that you’re known for would be the actual design that you’re putting into the house. I know on the TV show, it would be worked out where your partner is the one who’s choosing the designs and you’re working on the numbers. But what advice do you have when it comes to people figuring out the area they’re in and making sure that the materials that they’re choosing are in vogue for that area?

Tarek:
Sure. I was just going to say this once. We are real estate investors. We are not designers. Do not spend all of your time designing houses, because at the beginning, that’s what I did and it takes too much time. So, here’s what I like to do. Houses are different all around the country, right? So, if I’m flipping a house in North Carolina, what I do is I will run a mile circle around that house. I will look for the closest, highest price comp. And then, however that house is designed, that’s typically the same style I’m going to do my house, because someone else already proved that that design brings the highest price in that neighborhood.

Tarek:
For example, if I’m in LA, I’m not going to do a design I’m going to do here at the beach. I’m going to go look at the comparables in LA. So, what do similar properties that are selling at the highest price look like? That’s the question you ask yourself. So, if I got a three bedroom, two bathroom, 1,200 square foot house, I’m going to look for the highest sold three bedroom, two bath, 1,200 square foot house and make my design similar to that and maybe even a little bit better.

Rob:
Man, this is a hard one for me, because I am wanting to step into this a little bit more and I am such a design oriented guy. Is there ever a moment that you’ve told yourself, “I want to be the design pioneer of this zip code and be that comp,” or is it just never really worth it to be the trailblazer in that capacity?

Tarek:
Well, I’ll give you an example of that. If I’m doing a flip in LA that all the homes in the area have a modern remodel, I’m definitely not going to do a traditional home, right? Because in LA, people don’t want a traditional home. They want a modern remodel. So, what I do is we do our own spin or our own twist on a modern remodel. So, when I say we choose a design style, our house doesn’t look like that house, but it’s the same theme, right? It could be modern, it could be transitional, it could be traditional. So, I still get involved in the designing of it with the theme, but I don’t copy the exact look, but I copy the theme if that makes sense.

Rob:
It does. And in today’s market, the other thing that I see happening a lot is there seems… I’m not going to call it greed. There just are a lot of people out there that know the market, and thus, they aren’t necessarily always pricing the homes reasonably. And they’re like, “I just want to make a big fat profit, whether or not it appraises and I’m not going to take any contingencies.” What are your thoughts around that sentiment and that attitude in the market right now?

Tarek:
Well, they’re going to get caught. I mean, if they’re so fixed in their ways and they’re not willing to be flexible, that’s where you run into trouble. You got to follow the market. If the market says you got to drop your price, you drop your price. If the market says you should take an offer, you should take an offer, because all the signs are telling you what to do. And if you go against the signs, typically, you’re going to end up in trouble.

Rob:
Has there ever been a moment for you where something like this went wrong? I know you talked about if you had ripped off the Band-Aid. Was there any other moment where you were like, “Dang it, I probably got a little ahead of myself on the price here”?

Tarek:
It does happen, but I’m good at one thing. I’m good at just cutting my losses in life and moving on. So, if I have a deal and it’s sitting on the market, it’s not selling, I don’t cry about it. I don’t complain about it. I reduce the price. I reduce the price. I sell it. I get it off the books. I make a little less money. I go find another deal to replace that lost income.

Rob:
Which is a win, right? So even if you got to break even sometimes, hey, you get your time back and you can get it into the next house.

Tarek:
Absolutely, something interesting right now. My company, I think, we have 70 flips going right now. On a couple of them, we’re losing some money, $30,000, $40,000. It’s okay, because we bought them a few months ago. The interest rates have doubled and that’s fine. So, how do I get over the fact that on some of these houses, I’m losing $30,000 to $40,000? Well, houses I’m locking up right now, some of them are showing a profit of $200,000, $300,000, $400,000. So, do I care if I lost $30,000 on this house but I bought another house that made $300,000? No, not so much. As long as I don’t stop, right? I’m always hunting for deals regardless of the market.

David:
All right. That is fantastic advice, especially the last part about knowing the market. I’m seeing this right now. In today’s market, we’re seeing a shift. People, like me, like you, that are experiencing this, we pivot fast. Like you said, you listen to the market, you go with the current, you don’t try to fight the current. And the people I see getting hurt are the ones that are just stubbornly holding out, especially in the luxury space where those price points are very sensitive to interest rate hikes. And they’re like, “No, no, no. My neighbor sold their house for $4 million. I’m not selling for $3.5.” You’re like, “Yeah, that was at a 2.5 interest rate. You’re looking at a 7.5 interest rate.”

David:
Man, that undertold will just suck you in and beat you up if you don’t adapt quick. So, I really appreciate you sharing that information, especially from someone respected in the game as you are, Tarek. I’ll sum up your points here. The first one we have is know your market. What is selling there? What is going on there? What is the inventory as far as the supply-demand curve, like you mentioned? Are you one of 20 houses for sale and there’s 2 pending or are there 20 pending houses and there’s only 2 other active homes that are for sale? That is not talked about enough in our space, but as an investor and agent myself, that is the first thing I look at every single time someone comes to me about selling their house. Then we have make sure you pay the right price.

David:
So, make sure you know, going into it, what your numbers are going to be. And if you’re doing that well, you should know there is a chance I could lose money, but you know if that’s a risk that you’re willing to take or not. Next would be the contractor is one of the most important aspects in flipping. Look for an experienced contractor that knows the market, that knows flipping, that knows working with investors, that you can say, “Hey, tell me what you think we should do,” versus they’re looking for you to be the one to call the shots. Number four was design with the area in mind. Don’t be the person doing a house completely different than every other home that’s selling.

David:
And then number five was don’t be greedy. Sometimes it’s easy to go after the numbers that you want when the market has shifted on you and the market is going to win 100 times out of 100. You’re not going to beat the market. So, all right. We’re going to move on to the next segment of our show. This is a new game we’re going to be playing called Real or Reality, where Rob and I will have to guess facts about you, Tarek, and you will tell us who is right. The first guess, the statement is Tarek’s wife has a tattoo saying, “Yes, sir, Mr. El Moussa.” Rob, what say you?

Rob:
Oh, is this real or reality TV? I think I’m going to go reality TV.

David:
All right. I’m going to go with real because I don’t see how someone could have come up with something this crazy and specific if it wasn’t real. That’s a genius.

Rob:
I went through that too. I was like, “I don’t know. This is too specific.”

Tarek:
It’s as real as the tattoo on her a*s.

Rob:
Oh, really? That’s awesome. Okay.

David:
All right. David jumps out to a quick one, nothing lead. It’s all right, Rob. Hang in there. I feel like you get better as we go.

Rob:
Do we want to set wager on this, by the way? Do you want to bet on who wins this at the end?

David:
Yeah. Whoever wins gets to do the intro for the show. How about that?

Rob:
All right. That’s nice low stakes. I was going to say whoever loses has to watch Morbius but yours is way better.

David:
Rob and I have a standing joke about how many things in the world are better to do with your time than watching the movie Morbius that we were disappointed by. All right. Next statement, my biggest flip was for $1 million. Real or reality, Rob?

Rob:
I think I’m going to go real on that one.

David:
Are we saying the profit was $1 million or are we saying the price point? It can’t be the price point.

Rob:
I think the profit, yeah, because I’m sure he sold a lot of million dollar plus home.

David:
Yeah. All right. I’m going to go with reality. I don’t think that’s true. I think he’s done more.

Rob:
Dang. Wow. Way to have faith, Dave.

Tarek:
So, what do you got, real or reality?

Rob:
I think it’s for real.

David:
It’s real. Yeah.

Tarek:
It’s for real. I’ve done seven figures on Flip or Flop.

Rob:
Now, the tables have turned or I guess they’ve turned halfway. We’re even now.

Tarek:
I have one right now. We should be closing in a couple weeks. I think it’s at about $1.15.

David:
So, I was guessing that. I thought it must be more than $1 million. I think the question was, have I got to $1 million? So, yeah, I misunderstood that, but still, we’ll give that to Rob, because I think he needs it. I’ll give you-

Rob:
I do need it.

David:
… a pity point. All right. Next one’s getting juicy here. Tarek’s wife’s show, she’s on Selling Sunset has better TV ratings than his does.

Tarek:
I’d just be real here. I’m not a beautiful woman selling $30 million houses. So, I would say that’s probably real.

David:
I was going to guess real. What were you going to guess, Rob?

Rob:
I think I was going to guess reality simply because the rating system is different. And so, just from a technicality standpoint, there are no TV ratings for her show.

Tarek:
Yeah. Well, I do know this. So, her show Selling Sunset is number two in the world for Netflix behind Stranger Things.

David:
Wow.

Tarek:
So, if that doesn’t tell you how big her show is, I don’t know what does.

David:
I have an idea how big it is just because I’m a real estate agent. So, I hear about this constantly. That’s a very, very big show.

Rob:
I have an idea as well because my wife watches it and I am always watching it with her by proxy. She’s very fascinated by it. Also, she told me, this is probably the awkward time to bring this up, but she said, congratulations. She’s like, “Can you tell I said congrats on the baby?” I was like, “I’ll work it in organically.”

Tarek:
Yeah, yeah, we’re having a baby. We just found out about six, seven weeks ago. We announced it a couple days. This weekend’s the gender reveal. We’re going to find out if it’s a boy or girl. So, I’m excited.

Rob:
Nice. Congrats.

David:
Congrats on that. Next statement here, Rob, real or reality, Tarek’s mom helps him with his flips.

Rob:
I think we’ll go real just because I want it to be. That’s very sweet.

David:
Yeah. I’m going to go real as well, because you mentioned I think in the beginning that your mom helped you with getting started or at least I have that idea in my head. Are we close?

Tarek:
That would be reality.

Rob:
No.

Tarek:
Here’s what my mom has helped me with. She helped me with a few things like removing an oil stain from a driveway once. So, maybe it is real. She helped me remove an oil stain from a driveway once. And then when I was first flipping out, I did use her as a private money lender and I paid her as an investor. So, I never took money from her, but I showed her a way to increase her income. And by the way, I never stopped investing her money and we’ve paid off her houses, which is exciting.

Rob:
That’s awesome, man. Yeah. Well, I guess we’re even on that because we both pick the same thing, right?

Tarek:
Yeah.

David:
All right. Next statement, Tarek has literally flipped over a house while flipping houses.

Rob:
Okay. Mechanics here. I got to imagine they’re transporting the house and then it fell off the truck or the crane came undone. I think we’ll go reality on that. Yeah. I think we’ll go reality on that.

David:
I want to say real. My brain tells me that there’s no way this could happen so reality. And then the flip thing, that’s a perfect thing to make up because of flipping, but there’s something in my brain that I might have saw in episode where they advertise on the commercial a sideways house or something. And so, I could completely be pulling this out of my butt, but I’m going to go with real just to switch from Rob. So, we don’t end up in a tie.

Tarek:
Okay. I might be a little confused on the question because flipped over a house. What was the question again?

David:
Well, it says, “I literally flipped a house over while flipping houses.”

Tarek:
Real and reality if we’re talking about the same thing. I did buy a house, it was on last year’s season. The foundation was messed up. I hired a company to fix the foundation. So, what they did is they stabilized the foundation, but in the process of stabilizing the foundation, they literally bent the house in half. So, the whole house was Boeing. So, I think it’s real and reality. I think both win.

David:
That’s good. I wonder if that’s what I was thinking in my mind. That could have been it, because of course, they do like the cliff hanger thing, what’s going to happen. They probably make your face look like, “Oh, the house is going to split in half.” That’s a pretty interesting thing to get into the show. All right. Next statement, Tarek was so poor that he had to buy $5 footlongs and make two meals out of it for two years in a row.

Rob:
I’m sorry. I don’t mean to laugh at that if that is true.

David:
Rob makes a habit out of laughing at other people’s poverty. Don’t feel bad.

Rob:
Well, shut up. All right. I think I’m going to go reality on that. It’s a good story, if not.

David:
All right, I’m going to shoot with real, because Tarek looks like he eats very healthy so I can see the Eat Fresh Refresh thing going on. He also mentioned that he got started at a very young age when he wasn’t doing super well. And I can tell as driven as you were, Tarek, if you were out there constantly hustling, looking for stuff, it probably wouldn’t surprise me because I used to do the very same thing. I was like, “All right, how can I spend $10 a day on food and make that stretch as far as possible?” So, I’m going to shoot with real.

Tarek:
It is 100% real. I’d get the $5 footlongs. I would turn that into two $2.50 meals. I would always eat the first one in the Subway and then I would get a water cup. I’d fill it up with 80% water and I would only steal about 20% of the lemonade just to get a little bit of a flavor.

Rob:
Little taste, right.

David:
That’s funny. Just grab as many lemons as you could put on there.

Rob:
Can I have 10 lemons and 2 sugar packets, please? I’m going to make my own lemonade.

Tarek:
I used to try to sell them on making one footlong sandwich, but making half of it turkey, half of it roast beef, but then they wouldn’t give the deal.

Rob:
Well, that’s why I was laughing at the premise that you have. You’re the hall of fame of Subway. They know you, they know your story, that you’ve got your photos on the window when you walk in because you’re like the star client.

Tarek:
Yeah, they should know me. I mean, I literally lived off of Subway. It’s all I could afford.

David:
Awesome. All right. That is a very funny story. I think I ended up winning by one point barely. All right, Tarek, this has been fantastic. We have held you hostage for long enough. We need to let you get back out there to flipping and flopping. For the people who heard the show that loved it, that want to know more about you, where can they find out more about you?

Tarek:
I’m pretty active on social media. On Instagram, it’s @therealtarekelmoussa and that shows everything about my life, everything about my shows, all the different companies we’re working on. Most excited thing I’m working on right now is my new company. I just announced, TEM Capital. Listen, like I said earlier, I’m an expert at finding deals. That’s what I’ve become a specialist in and I spent years doing that to find houses.

Tarek:
And now, I take that same skillset and now I partner with operators around the country that show us the best deals in the marketplace. So, if anyone’s looking to partner with me on some real estate, we have some great opportunities. Right now, I’m working on a self-storage in Surprise, Arizona. I am so in love with the deal. To get more information and partnering with me on real estate deals, you can go to temcapital.co.

David:
All right. Thank you for that. This has been a fantastic interview. Thank you very much for your time, Tarek. We’re going to let you get out of here. Hopefully, we get to do this again.

Tarek:
You got it. That was a lot of fun guys. Thank you.

Rob:
Awesome, man. Talk soon.

David:
All right. And that was our interview with Tarek El Moussa. Rob, what did you think?

Rob:
Man, that was really, really, really, really fun. My wife is thrilled that I mentioned her in this and then I told her, he said hi. She’s like, “Wait, for real?” I was like, “Yeah, it’s for real. Dreams come true, babe.” So, that’s it. Her bucket list is over. What about you, man?

David:
Yeah. Tarek is everyone’s wife’s favorite, isn’t he? I don’t have a wife, so I don’t have to worry about that element myself, but I thought we could probably do five more episodes with him. He’s got so much knowledge about real estate, entrepreneurship, the right attitude to make it happen. I love how he harped on don’t do everything yourself, right? Just focus on getting the next deal and work on leveraging stuff out from there. I think that’s a great business plan no matter what your business is.

Rob:
Yeah, for sure, man. Well, we got to have him on. Let’s have him back on to talk about the TV stuff, because I think there’s so much there to unpack too as someone who has a small peak behind the curtain, but obviously not to his level.

David:
Clearly, you’re referring to me with my House Hunters episode and my CNN appearances. Yeah.

Rob:
Oh, yeah, that’s right. That’s in the intro of your YouTube videos. Speaking of, where can people find you online, man?

David:
Check me out at @DavidGreene24 on social media, and on YouTube, I’m David Greene Real Estate. I’ve been making content there. How about you, Rob?

Rob:
You can find me on YouTube, @Robuilt, R-O-B-U-I-L-T. On Instagram, @Robuilt, and watch out for scammers. You’ll find five or six different accounts that mimic mine, but Robuilt is very clean and simple.

David:
All right. Any last words before we get out of here?

Rob:
No.

David:
Well, you did a great job today, by the way. I thought this was one of your better performances.

Rob:
Thank you. Man, I just needed to hear that today.

David:
All right. This is David Greene for Rob the one and only Abasolo signing out.

Ashley:
This is the Real Estate Rookie, Episode 211.

Simon:
Really putting your head down and figuring out what you’re going to do and start doing it, and it’s not going to be easy at first. Nothing’s ever easy at first. We just got to dedicate time, dedicate time. Even if that means I’m not in a position to buy right now, that’s okay. Most people might not be. But if you start taking step one and step two and step three, the next thing you know it’s 2023, and now you have money saved up. Then you can start putting things into motion. For us, I think the important thing is it didn’t happen overnight, and success doesn’t happen overnight. It took a lot of dedication, a lot of reading, a lot of just researching, and ultimately just lining the ducks up for what we wanted to accomplish.

Ashley:
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, information, education, motivation you need to kick-start your real estate investing journey. I usually like to start the show by highlighting some folks from our real estate rookie community who have left some reviews for us on Apple and Spotify. Today’s review comes from, actually that’s a pretty crazy username, 1727738AHEB. I have no idea what that means.

Ashley:
You [inaudible 00:01:16] pronounce it.

Tony:
I wouldn’t even know. I wouldn’t even know. They said, “Great and informative and fun. Great podcast for beginners or seasoned pros discussing the ins and outs of real estate investing without the fluff. This duo was easy to listen to, and they keep things fun and light. Quickly becoming my favorite and has helped me jump in feet first.” So for those of you that are listening, if you haven’t yet, please you leave us an honest rating review on whatever platform you’re listening to. More reviews help us reach more people, and the goal here is to help as many people as we can. We definitely appreciate it. With the reviews out of the way, Ashley, let’s get into some boring banter. My favorite part of the show now, what’s new in your neck of the woods?

Ashley:
I’ve got a couple projects in rehab right now. I just got a text last night from a contractor. It was actually from a garbage removal company that went into my hoarder house. They sent five pictures. I was looking at the pictures, and the first picture was of a kitchen. I was like, “What is this?” I realized it was the same house. I didn’t even recognize it. Because the sink and the cabinets and the floor have been covered in so much stuff, I had no idea what the cabinets or the floor even looked like that I never even imagined it without everything on it. I was just in shock. So I can’t wait to actually go to the property, get some footy for some Instagram reels before and after. It’s just amazing. We haven’t even done any rehab, and it’s already went through this major transformation.

Tony:
How much did it cost to dump everything, do you know?

Ashley:
It was $3,900.

Tony:
That’s not bad.

Ashley:
No. I expected it to be at least over five grand, but it was $3,900. It’s 1,500 square feet I think the house is. It was just packed full with a path that went through the upstairs, tons of stuff. Then there was a garage. Then there was a little goat barn and then just some scrap and garbage scattered around the yard. They went in, and they brought their own dumpsters, everything, and hauled it all out.

Tony:
Wow. Well, hey, I’m excited to see the progress of the hoarder house. You got to keep us updated on the IG.

Ashley:
Yeah, yeah, I definitely will. What about you? What’s new with your projects?

Tony:
We’ve been doing some hiring, but we unfortunately lost some folks that we recently hired. I’ve hired two personal assistants since Memorial Day or early May, and we’ve lost them both. One, we had to let go just because it wasn’t quite the right fit. This replacement that we hired, she walked away from us because she felt that it wasn’t the right fit. So now we’re back to square one, trying to find another personal assistant. If you’re listening to this and you want to apply and you live somewhere near where I live, alphageekcapital.com/jobs. We’re looking for good people to help us grow this business out. We’re at the point where there’s a lot of things that we just can’t do anymore. I know I’ve always been bad with my phones and my text messages, but right now the little number icons on my phone, 332, and my text message bubble says 289. Then I’ve got another 300 unread emails. So my life is in shambles. I need some help. So if you’re interested, feel free to reach out and apply.

Ashley:
Here’s just a fair warning. When our producer, Erik, started, what, a year and a half ago on here, the first thing that he was told that Tony likes the room at, what, 72 degrees and red Skittles only in the candy dish. So make sure you guys know what you’re getting into before you apply.

Tony:
Yeah. I’m a bit of a diva behind scenes. I need my black shirts pressed a certain way.

Ashley:
I know exactly when we get off of this and we’re talking to Erik, he’s going to tell me that I was wrong, that it was actually 68 degrees or whatever. He’s going to know exactly what it was. Well, today we have a couple on the show. I feel like it’s been a while since we did two guests at once. We have Simon and Chrissy on. They are house hackers who actually turned their basement into a short-term rental.

Tony:
I love their story. Simon actually participated in the Short-Term Rental Bootcamp that I led earlier this year. From that bootcamp, he actually went out, took action, and got that first deal done. They talk a lot about their journey as a couple and how Simon was able to convince Chrissy that real estate investing was the right thing to do and some of those compromises that they made. They talk about how they were able to navigate the strict short-term rental policies in Denver. But most of all, and this is the thing that stood out to me, they use a basement unit to kind of kick-start their business. I was thinking, “Man, why doesn’t California have basements?” I was literally google searching on the side while we’re talking to them.

Ashley:
It’s earthquakes, right?

Tony:
That’s what I thought, but it’s a common misconception. It’s not because of the earthquakes.

Ashley:
Oh.

Tony:
I guess it’s because on the East Coast and some of these other places, the foundation, the joist going into the foundation will freeze if they’re not dug deep enough into the surface. So you have to dig deep on the East Coast anyway, so they have to build out that foundation and that basement to hold up the joist for the house. In California, because it’s so warm, it doesn’t freeze that low, so you don’t have to dig deep. Apparently, it’s really expensive to build out a basement. Anyway, I learned something new today because of Simon and Chrissy.

Ashley:
That’s interesting. Because there are houses around here that are on just concrete slabs or they have crawl spaces and stuff. So if you live on the East Coast, your house is better built if it has a basement [inaudible 00:07:02].

Tony:
Yeah, there you go. There you go.

Ashley:
Chrissy and Simon did the bootcamp that Tony hosted. There’s actually new bootcamps coming out this fall if you guys want to join them, but you have to hurry because the deadline is August 31st. So make sure you go to biggerpockets.com/classes.

Tony:
Simon and Chrissy, welcome to the Real Estate Rookie podcast. We are super excited to have you both. Chrissy, maybe you can start us off. Tell us a little bit about both of your backgrounds and what brought you guys here today.

Krissy:
Awesome. Well, like you said, my name is Chrissy. This is my partner, Simon. A little bit about us, we started our real estate investment journey back in, I don’t know, December 2021, which in reality, it started way before that with Simon being really interested in a part of the BiggerPockets community. Simon and I had been together for a while. He had been consistently telling me about BiggerPockets and all the different real estate investing opportunities and ways to learn about real estate investing and that he wanted to house hack. I said, “Okay, what is that?” and he told me all about house hacking, what that opportunity would look like. My first and initial thought to that was, “No way.” I feel like how I grew up when you envision buying and owning your first house, I wasn’t expecting other people to be living with me, and it was not something that I was even remotely excited about. So we talked about it and we kind of moved on.
Then some time went by, we talked about it some more. Simon started sending me a lot of books, a lot of resources, and started sharing, what felt to me, pie-in-the-sky stories about how our life could change and how cool this experience would be if we were to start getting into the real estate space. So long story short, he got me on board with it all. In the fall of 2021, we got connected to a Rockstar realtor who was in the short-term rental space. Through that, we found our first property in December 2021 and launched our first short-term rental in May 2022.

Tony:
Well, first congratulations to you both for getting that first property up and running. I want to go back to something that you said, Chrissy. You said Simon was feeding you stories that you felt like were pie in the sky. I’m curious. Why did you feel what those people were achieving was so out of reach for you guys?

Krissy:
Simon and I started this journey while still working full time. Simon works in sales, I do as well, sales and marketing. For me, I was like, “We have a full-time job. When are we going to be able to do this in our spare time?” He would so often send me Instagram stories or different people to follow about how they just started this journey in their spare time. Knowing Simon and I, I was like, “We don’t have a lot of spare time. What’s this going to look like?” So it just felt like something that was really out of reach for us. Slowly but surely, he started sending me information, I would feel like, in pieces, like step one, let’s learn about what this could be, step two.
Honestly, I would probably say one of our most important steps was finding a realtor that was in this space and had done it themselves. We had, like I mentioned, a Rockstar realtor with Good Neighbor Realty here in the Denver Metro area. Our realtor, she also had short-term rentals and was doing some real estate investing. So when we started this conversation with her, as much as you want to believe and trust in your partner that these crazy ideas are real, hearing it from someone else who had real-life, tangible examples about how they were living it made it a lot more comfortable for me, I would say.
Then when we started looking for homes, I felt like I had an okay vision for how this would work, but she really helps me bring it to the next level. When we were looking at properties, she was like, “All you have to do is move a door frame, add this here, here’s your lockout, here’s your Airbnb space.” I was like, “Okay, that doesn’t sound as crazy. It sounds achievable.” So I think, step one, building your team, so your realtor that can help you with your vision, I would say, was a huge starting point for our success.

Ashley:
Well, Chrissy, that’s great advice within the first five minutes of the episode right there. Simon, I want to hear why you wanted to do real estate, maybe your point of view, and what it was like trying to get Chrissy to come on board and why you didn’t just give up and be like, “You know what? It’s not for her. We’re not going to do it.”

Simon:
It was a process, and it didn’t just happened overnight. It happened throughout several years. I remember a few months ago I was just going through my notes on my phone on an airplane ride, and I found a note of the first time I listened to BiggerPockets Set for Life, reading it, I bought the book by Scott Trench, and wrote a note, “What is house hacking? Looking into house hacking.” This was back in 2018. So I’ve been a big fan of BiggerPockets. I had the opportunity to work at BiggerPockets and surround myself with the like-minded individuals. I really knew that what I wanted my life to look like was just have the freedom, not only for myself, for Chrissy, but for the family that we are trying to build. Really looking at it not from a short-term horizon, but at a long-term horizon of what are the steps that we need to make right now in order to set us up for success over the next 5, 10, 15 years.
We started living together about a year after we started dating. My initial plan was to buy a short-term rental in Orlando. I’m from Orlando, so I had boots on the ground in Orlando. Learning everything that Avery Carl has taught us and you guys have taught us is really just managing it long distance. That was going to be my initial plan. Chrissy was not on board for that. She was anxious about managing a property from long distance. She was anxious about not being able to touch it, feeling it. So after further consideration, we decided to not go that route.
Then I really had to sell her on the opportunity of, like, “Okay, well, if we’re not going to buy a house out of state, then this is what I want to do. I don’t want to buy…” I kept telling her this. I’m like, “We’re going to buy a home. We’re going to start a business. We’re not going to buy a home. We’re not going to buy our forever home. We’re going to start buying investment property in order to set us up for success and being able to really buy the house of her dreams in a few years.”
It took a lot of patience. I sent her a lot of videos, a lot of books, which she may or may not have read. But I think it ultimately just came down to trust. I remember one night after a couple drinks setting out a five-year plan of, like, “Hey, if these are the steps that we can take right now, this is what our life can look like in five years from now.” I think that’s really ultimately what brought her on board. It really just comes down to trust and me being knowledgeable about the space, about what we want it to look like, and she really had 100% confidence in my ability to make it happen.

Ashley:
Simon, I think what you did there where you actually wrote out the five-year plan and showed it to her, I think that helps so many people when they provide that visual as to like, “Okay, it’s just not me talking,” but putting it on paper so they can actually look at it. I think it makes it so much easier to digest because you can see the numbers, and you can see what’s happening. We’ve had a bunch of guests that have come on and showed that. That’s like with my husband when we were paying off debt, I’m like, “I want to do this Dave Ramsey thing. I want to get rid of all of our debt.” I made this whole Excel spreadsheet of just like, “Here’s how we’re going to do it.” He was like, “Okay. Yeah, actually, let’s do it,” after it took me so long to get him on board with that. But I think that’s great advice right there. Chrissy, what was the one thing that made you…? Was it that night for you, that five-year plan visualizing it, or was it multiple things?

Krissy:
Yes, definitely the five-year plan and seeing what that could look like was definitely helpful. But I also think it came with a set of compromises about what he really wanted to do and what I felt comfortable with. When we first started talking about Florida, the control freak in me was like, “Absolutely not.” I was like, “I have to be able to manage this. I can’t envision us doing this across the country.” So I think that’s where the first compromise came, and Simon said, “Okay, let’s do it locally.” That was probably our first big step towards getting aligned on this journey and taking that next step.
It’s kind of funny in hindsight. Because now that we’re actually doing it, I feel a little bit silly about being so against doing it across the country, because I’m like, “Oh, we got this now.” But I needed that ability to be able to live in the moment and check on things. So I think that’s where it comes with compromise and working with your partner to be like, “Okay, this is the vision. This is how you envision it. This is actually how I envision it. Where can we meet in the middle? Then we can get started.” I think deciding to do our first one locally was the big first step in that.

Tony:
Chrissy, you mentioned a couple things. I want to go back to one of them because I was feverishly scribbling as you were talking because it was a really profound thing that you said. When I asked about the pie-in-the-sky thing, you said that it just didn’t seem achievable, but you started to just try… Instead of focusing on this big, huge task, you were just like, “Okay, what is the next step that is achievable?” I think for anyone that’s trying to tackle any goal, that is such a phenomenal framework to apply to that journey. It’s like, “Yeah, if we’re working our day jobs, the idea of retiring and sipping piña coladas on the beach, that seems too far fetched.” But the idea of reading that first book or going to that meetup or buying a ticket to that conference, those are things that I know I can do. Once I’ve done that thing and I feel comfortable with it, what’s the next step? Maybe after I go to that meetup, maybe now I go talk to that agent. Now after I talk to that agent, maybe I go talk to a lender. And it all kind of starts to snowball.
I think for so many people I’m sure, Chrissy, were in the exact same situation as you where it felt unrealistic, or it felt like too big of a journey to take, but if you just really boil it down to the next step that you feel most comfortable and confident in, that’s how you continue to make progress. I don’t even know if you realize that you said something so profound, but that was an amazing, amazing thing.

Krissy:
No. I think that’s why Simon and I actually make incredible partners in the sense that Simon has the pie-in-the-sky vision. He has the vision and the dream that I never had. I don’t think I ever would’ve dreamed this for myself. My first step is, “What’s the action plan? What are we going to do? What’s step one? I need structure. I need all the details.” He’s like, “Well, we’ll just figure it out.” I’m like, “That’s not going to work for me.” I needed the details.
Like you said, biting off as much as you can chew in the moment probably would be my best advice because that’s what we did. When I thought big picture, I was like, “No way.” Then when I thought, “Okay, fine.” Literally, step one for me is, like, “Fine. I’ll start following real estate investors on Instagram. They can come up in my feed. I’ll start to see what they’re chatting about. I’ll watch their stories, and I will get comfortable with this.” Then more and more, we went to a meetup, we started talking to other people, and they just were like, “Oh, yeah. You got this. This is not that hard.” I was like, “Okay. Yeah, we got this.” I started with those meetups. I will say, I started seeing other people like us and how they were achieving it, which also made me feel more comfortable. Then, like you said, that’s when the snowball effect happened where we started talking to a realtor, we got lending and everything going, and then here we are.

Ashley:
Along those lines of those steps that you did going to the meetups, looking at different resources, were there any other tools or things that you did that gave you that extra confidence to like, “Okay, we are ready. We can do this”?

Krissy:
For me, I would say that’s where I leaned on my partner. I know we talked about this earlier, how he’d give me a bunch of books. I did not read them. I was like, “I don’t have time for this.” Basically, I told Simon earlier, I have to say I started following Sarah’s Instagram, and I was like, “Okay, this is getting me on board. I like this. I like her. I like the vibe of this. This is all really going forward.” I just started consuming knowledge in places that I know I’d be receptive to. So I would read blogs. I would google things. I knew sitting down and reading a big book about real estate investing probably wasn’t going to be how I would feel the most connected to this. But Simon did that work, and that’s where I think partnerships come into play. So he had all of the details that I probably wasn’t so sure about.
Then I would say networking is huge. I know that networking will probably take our business, as we look at more opportunities going forward, to the next level. But I will say that talking to people that are similar in age to you, similar experiences, similar places in their career and learning how they’re doing it, I would probably say was the biggest factor in beginning to have a vision for us achieving this.

Tony:
Chrissy, I want to give you a thank you for shouting out my wife, Sarah. If you guys aren’t following her on Instagram, it’s @saraaraad. Obviously, she talks everything short-term rentals, but she’s also a bit of a character, so you guys will get a laugh. You can get some fun.

Krissy:
Definite, you should follow. It’s a great. It’s entertaining. It makes you feel awesome. I love it.

Ashley:
She’s not a character, Tony. She is the main character [inaudible 00:21:33].

Tony:
That is it. She’s the leading lady.

Ashley:
Simon, what about you? Obviously, you had been learning about real estate. You had the opportunity to work with people at BiggerPockets. What were the things that really helped you decide, “Okay, I know I can analyze a deal. I know how I’m going to manage it,” things like that?

Simon:
A couple things. Number one is you just got to start somewhere. A lot of people get paralysis by analysis. They just start looking at properties on Redfin, on Zillow, and they never start making progress. So I think the first thing is dedicate some time, dedicate your weekends, read some books, figure out a strategy, what are you going to do, but also figure out what works for you. For us, it was short-term rentals here in Denver. Other people in other markets, that strategy might not work. So you have to really figure out, what do you want to do, and what are the steps that you need to take?
Something that was very valuable for us is we were part of the Short-Term Rental Bootcamp that kicked off earlier this year. It’s one thing to watch videos and figure out how to analyze properties, BiggerPockets has a lot of tools out there, but it’s invaluable for someone to walk you through the actual steps of this is how you find a deal. These are the tools that you need to take. This is what you need to be watching out for, and this is the red flags that you need to also be looking out for. So I think just really putting your head down and figuring out what you’re going to do and start doing it.
It’s not going to be easy at first. Nothing’s ever easy at first, but you just got to dedicate time, dedicate time. Even if that means I’m not in a position to buy right now. That’s okay. Most people might not be. But if you start taking step one and step two and step three, the next thing you know it’s 2023, and now you have money saved up. Then you can start putting things into motion. For us, I think the important thing is it didn’t happen overnight, and success doesn’t happen overnight. It took a lot of dedication, a lot of reading, a lot of just researching, and ultimately just lining the ducks up for what we wanted to accomplish.

Ashley:
That’s awesome, Simon. I’ve been fortunate enough to teach a couple of the bootcamp classes, but not the short-term rental one. Tony, you were the instructor for this one, right?

Tony:
I was. I was. I’m always super happy to see when folks who attended the bootcamp actually go out and use that knowledge that we share, man. So love to hear it.

Ashley:
After you guys have learned as much as you could, you’ve found your team, built your team, what about the other parts of managing a short-term rental? Did you go ahead and find those people, like a cleaner, a handyman, before you got your deal? Or did you close on the property, get it ready, and then you’re like, “Oh, wait. We need these other people”? Or maybe you guys are doing it yourself. What did that look like?

Simon:
I can take this one. I think there’s only so much reading, so much learning that you can do, but it just comes down to, like, “Hey, let’s make an offer.” It got accepted the same day, which we were extremely lucky. We closed on the property on December 1st, but we actually didn’t move in until February 1st because the sellers were doing a rent-back. They were building a new home that was under construction that was delayed, so it gave us some time in between getting it started. Then once we got started, we found there was a lot more things going on with the house than we were aware of initially, and it took a lot of time. We moved in on February 1st. I was like, “All right, Chrissy, March 1st, we’re getting this thing up and started.” Then it was April 1st. Then it was May 1st. Finally by May 24th, we got it up… No, it was May 19th. We got it up on Airbnb. 30 minutes later we got our first booking.

Tony:
Wow, congratulations. That’s amazing.

Krissy:
Yeah.

Simon:
Thank you.

Tony:
That first booking is always the most memorable. I always tell this, but it’s almost like a gambling feeling or something. There’s this high that comes in every time your phone chimes and that booking comes in and you see the booking amount. It’s unlike anything that I’ve experienced.

Simon:
The first one was awesome. Even now, when we still get it every day, now it’s even better because it’s like… For me, I was like, I got Chrissy on board. I had her to believe on me, but I was still like, “I hope this works. She’s trusting me with all this. I hope I’m making the right decision.” Then, ultimately now, we got it listed in May. June and July, we were almost 100% occupancy, and it’s booked through October now. It’s just our basement downstairs. It’s been a phenomenal journey, and we’re just getting started.
Going back to what you asked, Ashley, it was a journey. As Chrissy mentioned, we both work full-time jobs. The last thing you want to do after working eight, nine, ten hours in your W2 is heading down to the basement and paint and build furniture and get things started. We tried to do most of it ourselves, but there were a couple projects that we needed to outsource. So we found a really good painter who painted our entire thing. We had to install egress windows to make it official for legality reasons. Then we built a door separating our kitchen from the downstairs to really split the units. Everything else we did ourselves, and it was just a lot of building furniture. I think our go-to places was Target, her favorite, HomeGoods, Ikea, and Hobby Lobby.

Krissy:
Amazon.

Tony:
Amazon.

Ashley:
Well, that’s Tony’s favorite thing to do is to build furniture. I know that from watching all the Instagram reels that are made in building furniture. I want to ask real quick about… You talked about putting in the egress windows. Can you just explain exactly what that is for anyone that doesn’t know? Then how you found out that you actually needed that and any other things that maybe weren’t up to code or needed to be. Even the short-term rental laws in your area, where did you have to go to learn those things?

Simon:
I’ll take the regulations in Arvada, and then you can take the egress windows. We did a lot of research by the short-term rental regulations in Denver. The way that it works in Denver, in the city of Denver, you cannot have Airbnbs that are not your primary resident, so they must be owner-occupied. We knew that our goal was not to just buy a property, live in it forever. We wanted to buy a property, put it on Airbnb, and then a year later move out of that property and do it all over again.
We learned by really just calling the city, relying on our realtor, that we found Arvada is a close city about 10 minutes west of Denver near the mountains, that you can have up to three non-owner-occupied short-term rental properties. So we identified a couple of other cities. It was Arvada and Wheat Ridge, basically, that it came down to. I was like, “Okay, this is where we’re going to focus our search. That is a no-brainer. We’re not going to buy properties in Denver. It must be in Arvada.” So that’s how we chose the location.
It just comes down to calling the city and having conversations with the public officials. BiggerPockets has great, great content. You can do a lot of research, and lot of people are constantly talking about the short-term rental market as well. But really just picking up the phone and calling. People can’t be afraid to do that. Call the county, call the city, speak to people, learn the regulations.
Also going back to what Chrissy said earlier is rely on a really good real estate agent. I think that’s the number one thing that first-time home buyers make a decision, a mistake that they might make is not going with the best agent that meets their needs. For us, we want to find someone that specializes in short-term rentals, that specializes in house hacks. We found someone that not only specializes in these strategies, but she has gone through the process herself, and she has been successful. She’s on her third, maybe even fourth property by now, and she knows all the regulations. So we really relied on her for advice in regards to what city we’re going to be buying the property. I’ll let Chrissy talk on the egress windows.

Krissy:
As Simon mentioned, we Airbnb our basement. Egress windows are windows in a basement that someone could exit, they could go out of. Our Airbnb is a three-bedroom Airbnb. When we purchased the house, it had a single egress window downstairs, which I believe does meet Airbnb’s requirements for the square footage in this space for having a single egress window.
But for me, when I was looking at this space, I was coming at it at at a point of experience. If I was staying in a basement, what type of natural lighting could there be? How could I feel the most safe and comfortable? I grew up in New Mexico where basements really aren’t a thing, so the thought of staying in a basement on an Airbnb, I was like, “Does that make me feel trapped downstairs? How can we make this space feel the most accessible to people?” For me, I was like, “We need these windows.”
So we looked at our budget and what we had planned, and we decided that this would be a priority for us, when building out our space, would be to add these windows. So not only does it add value to our Airbnb, but it adds value to our overall property. When we go to resell this house, if that is something we do years down the road, having those egress windows down in those other bedrooms make them full bedrooms with Colorado regulations. That was also important to us. How do we invest in the short term for our short-term rental but also in our overall property?

Tony:
Just one follow-up question, just for folks that aren’t familiar with egress windows, what does it cost to add an egress window to a basement unit?

Ashley:
Each window was about $4,000.

Tony:
That’s not too bad because you literally have to cut into the side of the home if there was no egress there before.

Krissy:
Right. We have a brick home, so they were going through brick and cement to get in there. The one thing that I will also say, a hidden plus that came out of our egress windows, is Simon and I are both pretty chatty people. So when we met the people who were doing our egress windows, we were telling them what we were doing, and we were telling them about how we have these other projects. They were like, “Oh, yeah. We could build a doorframe for you guys.” We were like, “Excellent.” I think that was kind of the snowball start of continuing to build our network when it came to people. Technically, they were an egress window company, but they also had the skills to do other things. We liked them. We trusted their work. We thought they gave us a fair price when we were comparing it to other things. So we were like, “Absolutely. When you have time next Saturday afternoon, you can come build our doorframe for us.
I would also say, too, Ashley, going back to your earlier question about building our network and choosing our cleaners and stuff, we started with one cleaner and it didn’t quite work out, but we started talking and connecting to these cleaners and were able to keep another team member who’s now become our lead cleaner. So I think, for us, it’s been really helpful to just connect with the people that are supporting us with our business. Whenever we’re here, we go down and we talk to them. We ask them how it’s going. Are we supplying everything they need? Do they have any suggestions for us? Are they seeing things that we’re not seeing? Because we don’t always look at the property every time they turn it over.
We, this summer, went out of the country for a couple weeks, and we had two or three same-day turnovers while we were gone. I was a nervous wreck. I was like, “Oh my gosh, same-day turnovers.” I’m like, “Not only am I not here to double check everything, but to also be in the same place to do it.” Everything went seamlessly. I think after the first one, because we trusted and we were so well connected to the people that were supporting us through this, that it was a pretty seamless process for us.

Tony:
I want to talk about how you two split up the duties between you. But before we do, since you mentioned cleaners and the important role that they play, Simon, maybe if you can walk us through, who is on your short-term rental team, and how did you guys go about finding those folks and vetting them to make sure they’d be able to do a good job?

Simon:
We’ve gone through a few handymen. We actually haven’t used them since launching our Airbnb, but I decided at first, I was like, I don’t want to just pick one. I want to have multiple so we can have multiple resources when and if the time comes. I would say the only person in our team besides Chrissy and I right now is our cleaner. How did I find these people? I joined Facebook groups, I used Nextdoor, and I just asked questions. I was not afraid to just pick up the phone and call people. I come from a long sales background. I’ve been in sales my entire career, and I’m not afraid of just picking up the phone and calling whether it’s a plumber, whether it’s a handyman, whether it’s a cleaner and having them come to the house. We can interview them, walk us through their process, and just speaking with a lot of people and networking.

Krissy:
I have one quick thing to add with that, we also started with small projects. So when we found a handyman, we’d say, “Hey, can you do this one thing?” If that one thing went really well, we were like, “Okay, great. Here’s the 32 other thousand things that we need done.” So I think that helped us feel confident in them, and I think it just helps to build that partnership. We take this in steps. Let’s take this in step with our partnerships as well.

Tony:
One follow up to that. I’m so glad you mentioned starting with the small things. I was thinking about this when you were talking about the rehab and the egress company. The same thing happened to us in Joshua Tree. When we first found our rehab crew out there, the first thing they did for us was they built an outdoor pergola, and that’s all we needed them for. They built a pergola in our backyard for one of our properties. Then something broke at the property and our regular handyman wasn’t available. We’re like, “Hey, would you mind? Are you able to go and fix this?” He’s like, “Yeah, for sure, I can go fix it, whatever.” And he knocked it out.
Then I think something bigger ended up happening. We wanted to like replace some cabinets or something. We were like, “Hey, can you replace cabinets?” He was like, “Yeah, I can replace cabinets.” We just started progressively asking for bigger things. We were like, “Well, is there anything that you can’t do?” He was like, “No. I was actually a home builder for 30 years, so I can pretty much do anything inside of a property.” It’s crazy to think now. I would probably lead with that if I was him, but he was just doing whatever we needed him to do. My point is is you never know what people are capable of doing unless you ask and you give them that opportunity to show and prove. So I’m glad you guys found the benefit from that in your business as well.

Simon:
It just comes down to just treating them like a human and asking questions, like, feel them, welcome. They’re on your team. Your success is depending on their work, so just being grateful for anyone that comes and helps us. Then asking those questions. It’s like, “Hey, what, what else can you help us with? Or if you can’t do X, maybe you connect us with someone that can do it.” That’s really how you’re supposed to build your team.

Ashley:
I want to ask something about doing it in the basement, so doing a remodel in the basement. How was it? Was there already plumbing down there? Did you have to add in a pump for the toilet? Then also, what about your laundry? I know in New York here, a lot of houses have basements. That’s where a lot of people’s laundry is actually located in the basement. Did you guys have to relocate that or anything?

Simon:
For us, the basement was already furnished. There’s three-

Krissy:
Finished.

Simon:
Oh, yeah. Finished, not furnished. It’s already finished. There’s three bedrooms down there and one full bathroom. The laundry is a little bit of a problem. I’ll let Chrissy talk on this because she’s very passionate about this subject.

Krissy:
Like Simon said, our basement was already finished. The only, I would say besides the window, big improvement was we didn’t really have a kitchenette down there. So we were building out the refrigerator or the microwave, and we were going through different things. Then we were like, “If someone was to need to wash something, where would they go? The bathroom?” We’re like, “That’s weird.” Like Simon said, our washer and dryer is downstairs, and it’s in a locked-out room. We were really lucky that we could put a little kitchenette up against that wall and run the pipe through the laundry room.
We actually lock out our laundry room and don’t let our guests use it. I jokingly say it’s the laundry room of death because it’s not finished. There’s pipes and ceilings. From a safety and a liability standpoint, that just something I wasn’t interested in doing. So far, it hasn’t been a problem at all with our guests needing to use the laundry.
For us, it takes planning. Sometimes that planning can get frustrating because we’ve gone two or three weeks where we’ve been at full capacity. Usually it’s they’ve checked out at 11:00, run downstairs, and throw your laundry in. We’re going to be flipping the sheets. For the way we’re doing it and the minimal access to our washer and dryer, I will say when we were first starting to read about how many sets of sheets we should have, how many sets of towels and stuff, I was reading double was around best practice. So that’s how we started. Then knowing our constraints around the washer and dryer, we went ahead and bumped everything up to three sets, which has been really good for us. So if we aren’t able to finish everything before a new guest checks in, we can do that.
But it really just comes down to capacity planning. If we know there’s a two-day gap, it’s go-time on the laundry front for us personally as well as getting bedspreads, sheets even more done. A couple times we’ve had to go to a laundromat. We just tell ourselves, the cost of our time to spend two hours at a laundromat, because you can put in six loads at a single time, is definitely an opportunity cost we’re willing to be a part of for this Airbnb.

Simon:
I’ll be honest. One of my favorite things about running the Airbnb is finding an excuse to not do laundry and just taking it to the laundromat and picking it back up. Just treating it like an operating expense.

Krissy:
Oh, lordy. We disagree about that. I’m like, “You can wait.”

Ashley:
My only active short-term rental right now is an Airbnb Arbitrage. It’s in an apartment complex. They have laundry rooms there, but they’re very small washer and dryers. You basically have to take over the whole laundry room to do all the sheets and bedding and towels and stuff. My business partner on that short-term rental actually owns a laundromat around the corner. So our cleaner actually takes it to the laundromat, throws them all into things, cleans it while it’s going in the wash. When she’s done cleaning, goes back and throws it into the dryer, and then will come back and get everything and have the second set done for when somebody comes in. But it’s definitely so much easier, I think, taking it to the laundromat and just using only two washers instead of having to use a whole bunch of them or doing multiple loads, I guess.

Krissy:
Absolutely. I will say when the time comes that we move probably out from the upstairs and decide to Airbnb the entire property versus just the basement, we’ll probably have to think through a little bit more on the laundry front because it can be a lot. But I will say, definitely recommend the multiple sets of things. I thought that at first I was like, “Why do I need so many things?” Now I’m like, “Oh, this is fantastic.” You never know when something might get ruined as well. It’s just so much easier to just move on and pull up your extras and do an Amazon order like it’s part of the business, and it’s okay. It definitely a little takes a little bit more navigating than we thought, but it’s worth it.

Ashley:
I want to ask about that. You mentioned that when you move out of the upstairs, if you were to Airbnb it, are you able to do that since it’s not going to be your primary, or since it was your primary at one time, you can?

Simon:
We can certainly do so. That’s why we bought it in Arvada. In Arvada, you can have up to three non-primary short-term rentals. So that was a leading indicator as to why we’re going to purchase property in Arvada and not the city of Denver. So that is our plan to purchase a new home next spring.

Ashley:
And do it all over again.

Simon:
Do it all over again.

Ashley:
Yay.

Simon:
Learn from our mistakes, learn how to budget a little bit better. Also, the opportunity from a revenue standpoint, it can essentially nearly double our revenue because it goes from being able to sleep a maximum of six to potentially 12 guests and open up the entire upstairs and downstairs.

Tony:
And the revenue you’ll get from your second-

Simon:
Exactly.

Tony:
… Airbnb house hack, so it’s almost like a 1.5 or 2.5 increase because you’re doubling it and some.

Simon:
Yeah.

Ashley:
Well, we want to go into the numbers of this property. We’ve talked a lot about what it is and what you’ve done with it. What was the purchase price of this? It was on the MLS, correct, and you used your agent to buy it. That was the deal source.

Simon:
Yep. It was on the MLS. On a Saturday, we saw four properties. We really like two, and we ultimately went with this one. We bought it with a conventional loan of 5% down, and the home price was $575,000.

Tony:
So it was only one Saturday. So you guys only looked at four properties, and out of those… Oh, okay, all right. It was just one of the Saturdays that you guys were out shopping you found this one.

Krissy:
Oh, I guess we did two or three Saturdays. So this was probably our eighth or ninth property that we saw before we made the decision for it. For me, I was really big on location. We, obviously, both had been living in Denver city for years, and I loved it. So moving super far out to make sure that we were in a place that allowed us this flexibility with Airbnb wasn’t something that I was super thrilled about. I was like, “I want to stay in Denver.” But now knowing how close we are and the experience of the area that we chose that we can give our guests as well as ourselves, it’s almost like I can’t imagine living anywhere else.

Ashley:
Could you explain the conventional loan? Because usually when you hear conventional loan, you hear 20% down, and if you want 3.5% or 5% down, it’s FHA. So can you explain where you found this at a bank? I know my sister got pre-approved for this loan, too. I was like, “Wait, you can do that, only 5% down on a conventional?” So maybe you can explain how you found that loan and where you got it from and the benefits of going with the conventional compared to the FHA.

Krissy:
When we first decided that we were going to do this, we thought about our financing and how we were going to be able to tackle it. Neither of us have been homeowners before, so we definitely wanted to leverage that first-time home buyer opportunity here in Colorado. So we sat down and said, “What would make the most sense for us? Should we do this property together? Should we take it in pieces? Should we do it separately? How can we begin thinking about this in the long term?” So when we decided to do this property, we decided that we were going to go at it together, but only put it in one of our names in order for us to qualify for that first-time home buyer opportunity. That is how we tackled this one together and got started in this space. It’s been good for us in the sense that we thought about it from the standpoint is leverage the things that you have access to.
We definitely are first-time home buyers. We aren’t two people that have a ton of cash. We’ve been saving really hard for these opportunities. So that’s where we said, “How can we divide and conquer, but then also conquer together?” So that made that decision for me to use my first-time home buyer opportunity on this property. Then the next one we go to will be where Simon uses his first-time home buyer opportunity for us. Then eventually when we get married in October of 2023, then we will combine everything together.
I think at least when dividing and conquering and looking at our investments and our finances, I always just thought, “Of course, we would do this together. We’re partners. We’re getting married. Like, of course.” I think we kind of took a step back and said, “What actually are all of our options?” We’re 100% not only committed to each other, but to building this together. Let’s make sure that we leverage everything that we have access to because we’re young. We’re starting from scratch. We’re pretty green in all this. So definitely doing our homework and also talking, not only talking, finding a lender that will a) lend to you is the first part, but b) that you trust and you build a relationship, too. I feel like everything goes back to building that relationship.
This was the first time we purchased a home. We sat down with our lender, and I said, “I have a stack of questions. Half of them are probably dumb, but I’m just going to throw them out here about how this works,” and just be brave enough to ask them. By the end of this, taking on a $575,000 mortgage didn’t seem as scary as it did in the beginning when I was like, “Oh my God, no way.” So I think it literally goes back down to that relationship building. We still talk to our lender. He still checks in with us, gives us updates on our property, asks us about our next one. He is definitely someone we will go back to for future properties, and he’s someone who we valued his perspective and his opinions as well.

Tony:
Chrissy, I’m so glad you mentioned that story about asking all those questions to the lender because a lot of times what drives fear is a lack of knowledge, and the fastest and easiest way to overcome that fear is to increase the amount of knowledge you have in that given subject. For new investors, if you’re not doing what Chrissy and Simon did where you’re sitting down with your agent and you’re asking them all the questions, even the ones you think that are dumb, or you’re not sitting down with your lender and asking them the questions, your property manager, whoever it is, those are the things you need to do especially at the beginning to overcome some of that fear.
Just a really quick side note, when we were trying to get Sarah on board with some stuff we were doing, I literally picked up the phone and called my lender and said, “Here, just ask the questions that you’re thinking of. That way you’re not just hearing it from me.” So it’s a really good way to get your spouse on board, too.
Before we wrap up talking about the deal, I want to just go into the cash flow numbers. You guys have had this property for a couple of months now. What kind of revenue is your short-term rental unit bringing in for you guys on average?

Simon:
We listed it on May 19th. June and July is $4,500 each month-

Tony:
Wow.

Simon:
… so $4,500 a month. That being said, June and July are the busiest seasons for it. But it’s already really excited to see that we have bookings through September through October. So really excited to see how this plays out over the next few months as we head into the winter season.

Tony:
Again, the goal of a house hack is to offset your mortgage. I would assume at $575,000, 5% down, the Airbnb’s probably covering all of your mortgage, or if not, pretty, pretty darn close to it. So as a house hack, I would say this is really successful.

Simon:
The mortgage was a 30-year mortgage. Our mortgage is at 27, so we are cash flowing right around 15, $2,000 after paying the cleaner. That’s really our biggest expense.

Tony:
You’re getting paid to live at home.

Krissy:
Yeah, it’s great.

Ashley:
We’re going to go onto our rookie request line segment. This is where anyone can call in at 1-888-5ROOKIE and leave us a voicemail, and we may play it on the show for a guest to hear. Today’s question is, “Hi. I’m a rookie investor from New Jersey. My girlfriend and I are looking to buy a house hack soon. My question is, what should we be asking an agent so we can purchase the right home for us?”

Simon:
Hey, Ju Yun. Thank you so much for your question and congratulations on taking the first step. I think what I’ll say, before asking your agent, is figuring out what you want to do, what strategy you want to pursue and what works in New Jersey. My second point would be to leverage the BiggerPockets agent finder. They have a large network of agents who specialize in working with investors. These agents are typically investors in their own markets. They understand what works, what doesn’t. They understand the regulations. They understand the strategies. They’re really able to give you detailed information about what may work in New Jersey. Because my assumption is going to be that what works for us here in Denver may not work in New Jersey. I’m sure the short-term rental regulations are different. Our long-term goals might be different than your long-term goals. So really just figuring out your why, but also finding an agent that really understands the market.

Krissy:
The only thing that I would add to that from a much simpler level, like I said, Simon’s the vision and I’m the “How do we make this happen?” is bring your realtor into your vision and ask the question as simple as when you’re looking at properties of, “How would this work?” That was my favorite question to ask our realtor. Your realtor has probably seen thousands of properties. They will probably have a vision for a property where, if you move this door or add that, here’s your lockout, here’s your house hack, here’s your Airbnb. Starting from scratch, I didn’t see it, but I had a realtor who did, and I asked the question, “Okay, I like this property. I like the neighborhood. I like the kitchen back splash. How will this work?” Leaning on them to answer that simple question might almost be one of your most important questions.

Tony:
I’m going to take us now, guys, to our rookie exam. Thanks for answering that beautiful question from Ju Yun. I’m sure they really appreciate that. Are you guys ready for the rookie exam?

Krissy:
We hope so.

Simon:
Yeah.

Tony:
We’ll go question by question, so you guys can take one… Simon, maybe you take the first one. Chrissy, you can take the second one. You guys can both maybe answer the last one together. Question number one, again, Simon, we’ll point this at you, what’s one actionable thing rookies should do after listening to this episode?

Simon:
Create a BiggerPockets account, set up your keyword alerts, and start networking with people. Don’t be afraid to ask questions, and don’t be afraid to engage with people who have already done what you’re doing and just get comfortable at being uncomfortable.

Ashley:
I think that’s the first person to ever recommend on here to set up those keywords in the forums. You know what? That is not talked about enough because that was what I did, too. Like, anything with Buffalo, anything with seller financing. Those are my original keyword alerts that would come in. Yeah, it is so interesting. You’ll get the ping of the email where somebody’s talking about this. You can go in and see what’s going on because there are so many forum posts in there, and this makes it like you get to see what’s happening as people are going through the forum conversation because you’re alerted about it. So that’s an awesome tip.

Simon:
There’s so much valuable information on BiggerPockets. Start with the keyword alerts. My favorite is setting up location keyword alerts so at least you have an understanding of the conversations that are being had about your market or the market that you’re interested in purchasing your property in.

Ashley:
Chrissy, what about you?

Krissy:
Probably very similar to Simon. I would say surround yourself with information that you know will be receptive to. So I think for me, like I said, today, if you’re interested in this, do something as simple as follow five people on Instagram who are doing it. I know everything that you see on Instagram isn’t real life. You will build furniture together, and you will cry, and it will be tough, but then you will build furniture together and have beautiful pictures for your Airbnb listing. So you’ll get both. But I would say start to open your lens and see people doing it and start to see the small things. Then, like I said, day by day, follow by follow, it will start to feel more achievable. So just baby steps. There’s nothing wrong with baby steps.

Ashley:
The next question, what is one tool, software, app, or system in your business that you guys use?

Simon:
Hospitable. We use Hospitable to manage guest communications automations when they’re checking in, when they request an inquiry, when they arrive, when they check out. It also sends automatic notifications to our cleaner. She has her calendar synced to our Airbnb calendar, so as soon as there’s a booking, it automatically pops up on her calendar. It just makes our life so much easier. I’ve said this to my friends and I’ll say it before, for us, for this business, our house right now, the hard part is already done. The hard part of finding a property, building it, building furniture, that is hard. For us now, it’s just texting people through Airbnb. Hospitable makes it so much easier for us so that we don’t constantly have to be looking at our phone when there’s a new inquiry, when there’s a new message, or communicating information with our cleaner.

Tony:
Hospitable is great.

Krissy:
100% agree. It’s forget it, forget it, and leave it. Like I said, also getting comfortable with it. When Simon first told me we were going to automate everything, but I was like, “Well, what if I need to talk to them? What if there’s a one-off situation and they need to hear from me?” He was like, “No, that’s too much work.” Now we’ve done the “set it and forget it” with Hospitable, and it’s been incredible. Of course, there’s those couple of moments where they ask a specific question and they might get an automated response, and then you respond back to them. Nobody has ever said anything. They’ve been like, “Okay, sounds great.” So 100% recommend it.

Tony:
Last question for you both. Where do you plan on being in five years? Chrissy, I want to start with you because I know you were the one that was a little bit more hesitant to begin with. So I’m curious how that’s changed over this journey that you’ve been on.

Krissy:
In five years from now, I see Simon and I close to in our forever home with non-downstairs friends living with us and multiple other properties. So our five-year plan is definitely us being in a home on our own, and then keeping the current house we’re in fully on Airbnb and hopefully having at least two or three other properties. I don’t know. We’ve talked about, like, “Could this be the future where this, one day, becomes our full-time jobs?” Potentially. But also, Simon and I really like our careers. We like what we’re doing work-wise, and balancing this in addition to all of that has been really exciting for us. We also might have a family by then, so we might have a totally different perspective on balancing all these different things. But for now, it’s definitely in our own home, not being on Airbnb five years from now, and hopefully a couple properties in addition to it.

Simon:
Yeah, that was a good, good answer. I think for me it’s having a lot of income-producing properties, Airbnbs, and leveraging that money, leveraging that income to buy more passive investments. For me, I just want to be financially free. I don’t want to rely on my W2 job, and I want to have multiple properties. Especially now in our line of work where remote working, working from home is going to be probably a forever thing, I see ourselves having properties all over the country, in Florida, possibly even in Colombia, my home country, and being able to work from wherever we want in our properties so that they’re not only a business but that we’re also leveraging them for our own personal use and being able to retire from the W2 and really managing the Airbnbs, managing our investments, and potentially getting into other investments.

Tony:
Love that. I’m sure with the projection that you guys are on, the path you guys are on, you’ll more than easily get there. So it’s [inaudible 00:59:16] to have you guys back on one day and you can tell us all about your Airbnbs in Colombia.

Krissy:
I love it.

Tony:
Before we wrap things up, I just want to give a quick shout out to this week’s Rookie Rockstar. If you’d like to get highlighted as a Rookie Rockstar, get active in the BiggerPockets’ forums, Real Estate Rookie Facebook group, or [inaudible 00:59:32] Ashley’s DMs. This week’s Rookie Rockstar is Scott Alair from Ontario, Canada. I like Scott’s post. He posted this in the Real Estate Rookie Facebook group. The first thing Scott said, before he even told his story, he said, “I will become a millionaire one day, and for some reason, I can say it confidently knowing there’s a path to get me there. I’m sure anyone can if they can just get out of their comfort zone.” So Scott, way to set the bar high for people.
Scott said that he bought a property with a 5% down payment. It was one of the best decisions he made. He bought the property during COVID, early 2020, and he put about $22,000 into the property, refinanced a few months later, and pulled out $21,000. So he is only got 1,000 bucks left in the deal. Since then, he’s gained over 20% in equity, which is about 50 grand, which he said is more than he’s ever even made at a job. So Scott, congratulations to you. Excited to see you one day hit that millionaire status.

Ashley:
That is so cool, Scott, and thanks for the little bit of advice and motivation, too, at the beginning for everyone listening and congratulations on that deal. Simon and Chrissy, where can everyone find out some more information about you guys and reach out to you?

Simon:
We are both active on Instagram, on BiggerPockets. You can find us on Instagram. I’m sure, Tony and Ashley, if you want to put our handles on the show notes. Also on BiggerPockets, I’ll put my link on there as well. Feel free to ask us any questions you have whether or not you’re looking at buying a short-term rental or any other different strategies. I think it really just comes down to communicating and learning for people that have already done it. We would be more than happy to answer any of your questions, hop on a quick call, and share further details that you may have.

Ashley:
Well, thank you guys so much.

Krissy:
Thank you so much for having us. We were super excited, a little nervous to share our story because, definitely, we don’t see ourselves as experts by any means, so we’re coming on this podcast truly as rookies. We took step one. We did the first property. So hopefully the next time we talk to you guys, we might not be full-blown rookies anymore.

Ashley:
Well, Chrissy, within the first five minutes, you were already giving away great advice so-

Tony:
Totally.

Ashley:
… [inaudible 01:01:44] yourself.

Tony:
I just want to add one thing onto that really quick before we wrap. So many people who only have one deal oftentimes sell themselves short in terms of how much knowledge they have towards the person that has zero deals. So if someone who’s never done an Airbnb or short-term rental or any kind of investment property before, if they came to you and said, “Tell me what you know about Airbnbs and real estate investing,” you will blow their minds. So don’t sell yourself short. You guys, obviously, maybe you don’t have a massive portfolio, but you guys do have a lot of experience. You’ve gone through the process. You know what you’re doing. So excited for you guys to keep growing.

Simon:
I was just going to give you guys a shout out. We love the show. We listen to it all the time. Just keep doing what you’re doing because it’s helped us tremendously as we get started and continue to expand and grow into the business that we have right now and what we hope to be in the near future.

Ashley:
Well, thank you so much. We really appreciate that. I think having guests on who have just done one deal are some of our most important and valuable guests because it is so fresh in your mind as to how you got that deal and what you’re doing right now. I think that is tremendous value. Sometimes when you have these experts on, they forget those little tiny details, those little things that actually made a huge impact on getting that first deal. So thank you guys so much for coming on and sharing your story with us.

Krissy:
Thank you for having us. This has been great. Hopefully, we can inspire another couple like us. I know, like you said, it’s like, being able to listen to people that are like-minded, not only like-minded, but you’re like, “Oh, we’re like them. We don’t have enough money for a bunch of properties, but we can tackle this first one.” I always think that’s really, really helpful to just hear from people where you’re like, “Okay, we’re on a similar playing field.”

Ashley:
Well, thank you everyone for listening to this week’s Real Estate Rookie podcast. We will be back on Saturday with the Rookie Reply. I’m Ashley @WealthFromRentals, and he’s Tony @TonyJRobinson. We’ll see you guys next time. (singing)

David:
This is the BiggerPockets Podcast show, 652.

Craig:
When you learn anything new or when you’re trying to get into anything new, education always comes first. Right. Education times action equals results. And so, you can keep adding education, adding education, education, but if that action is zero, you’re never going to get anything. But also, the other way around, if you’re all action, all action, and no education, you’re not going to get anything.
So the first step, I always think, is education. If you’re listening to this podcast and you go to one of these boot camps, your education is going to be there. By the time we’re done with the bootcamp, you’re going to be ready to take action. Then all you got to do is worry about that second part, which is action, and then successful [inaudible 00:00:39].

David:
What’s going on everyone. This is David Greene, your host of the BiggerPockets Real Estate Podcast. Here today with my co-host Rob Abasolo, where we are bringing you a fire edition of the show. We are joined by Craig Curelop and Ashley Kehr, two other BiggerPockets heavy hitters, as we bring our insight, experience and feedback into answering commonly asked questions directly from the BiggerPockets forums.
In today’s episode, we get into stuff about house hacking, avoiding time-showing properties when you are renting them, what’s going on in the market, where we’re buying and more. Rob, what were some of your favorite parts of today’s show?

Rob:
I just like the unique perspective of everybody. There’s four of us, we all come from different paths, right, when it comes to real estate, there’s short-term rentals, long-term investing, long-distance investing and house hacking. So it was really nice to get a nice, balanced view from everybody.

David:
Yes, sir. And it was pretty fun by the way. So if you want to be entertained and learn something, this is a podcast for you. We’re going to get to it in a second, but before we do, today’s quick tip brought to you by Robert Abasolo.

Rob:
Ah, yes. Ooh, quick tip you. You put me on the spot here. So if you don’t know, BiggerPockets host boot camps. So if you’re looking to get into real estate, we have a bunch of different boot camps that can help you do that. We have the Rookie Bootcamps to help you get started. We have Rookie Landlord Bootcamp to teach you how to manage your property. Multifamily Bootcamp for your next multifamily investment purchase. Short-term Rental Bootcamp to dive into investing in short-term rentals like Airbnbs and vacation homes. And finally House Hacking Bootcamps, diving into earning income from your primary residents through creative strategies on your property.
And the quick tip here, getting to that, boot camps are only $489, which is already a great deal, but it’s an even better deal if you’re already a pro member, the boot camps at that point are just $199. And if you’re just a listener of the show, you can get 10% off right now when you use promo code, Boot Camp 10.

David:
All right, let’s bring in Ashley and Craig and get to the good stuff. All right, so today’s format’s going to be a little bit different, but a bit of fun. We’ve got several BiggerPockets personalities all with their own expert analysis on different elements of asset classes in real estate. And we’re going to be taking questions right out of the BiggerPockets forums and giving our two cents on what we would do. We would hope that our answers can help you on your real estate investing journey and keep you entertain while you’re learning. Moderating us today is the moderator Rob Abasolo himself. Rob, take it away.

Rob:
Hello. Hello. Yes. You can call me Mod Rob for short. And I think that’s actually a very fitting name. You kind of moderated on my behalf. This is my job, David. I’m taking over from here. Look at me, I am the podcast host now.
So we all come from different backgrounds as you said, so I think we all kind of share a very unique experience here. I’m short-term rentals, we got long-term rentals, we got house hacking, and we got long-distance investing. So we’re pulling a lot of these questions straight from the forums. And we’re looking for everyone’s very spicy or moderate takes here. All right. So don’t hold back everybody. It’s a Friday afternoon. Let’s get into it.
First question, when do you give rent credit to a tenant? And is this something that you’ve encountered often in your rental histories? Oh, let me do the official moderator thing here, we’ll start with Ashley Kehr.

Ashley:
Well, hello everyone. My name is Ashley Kehr and I’m super excited to be here today to talk about landlording because I’m hosting a landlord bootcamp that is coming up this fall. So I have given credit to tenants before. And one of the biggest reasons I have done that is because I want to get rid of that headache. Sometimes just taking the initiative by listening to the tenant, understanding what the issue is and giving them a little bit of a credit has made a big difference. And instead of me battling with them and it becoming a bigger issue because I’m not giving them the $25 credit they want for that month for something…
And the biggest reason that I have given credits before is if they are having maintenance done and for some reason the maintenance hasn’t been done, maybe their fridge broke down and I cannot get somebody there until the next day. I’ve given people a credit to go and buy ice and buy a cooler to keep their food in until the fridge can go and get repaired. So I definitely am for giving credits just to get rid of that headache.
Another thing I’ve given a credit for besides maintenance is just like any kind of disruption that may have occurred on their property that may even be out of my control. Just maybe they’ve come in and landscapers I hired accidentally chopped up something with the weed whacker that they had outside. So I think it’s great to have a relationship where you can give a little to a tenant when these circumstances happen, instead of just constantly saying, “Nope, this is what the rent is” and being strict and firm to it.
But then there’s other times where you shouldn’t give in to a rent credit. So for example, there was a water leak into a unit and it was because of the weather. Ice had dammed up on the roof of the property. Water started seeping in behind the ice and it leaked into some of the units and it damaged some of the contents, the property that the tenants had in there. And we had our insurance cover repairing the drywall, getting in there, making sure there’s no mold forming, taking care of the unit as quickly as possible. The tenant wanted us to cover the contents that were damaged. And that is why a tenant has renter’s insurance. So that was one instance where we didn’t give our rent credit that we had the tenant go to their renter’s insurance to cover their personal property in the unit.

Rob:
So that’s interesting. Have you come across that situation often where there’s something that the tenant could have done to sort of prevent it on their end? Like in this example, they don’t have the renter insurance so is that a hard line that you draw all the time with all your properties?

Ashley:
Well, this one was because it wasn’t like any neglect on our part that something happened to the unit. So it was because of the weather that the ice build up on the roof. There was nothing we could have done to prevent that during that time. And so, that’s why we had them go… And they actually did have renter’s insurance, they just didn’t want to use it because you make a claim, your premium goes up. So if maybe there was something that was neglected on the property and that did cause damage to the tenant’s property, then yes, I would feel that it would be my responsibility to give them a credit or to give them money towards replacing whatever was damaged on the property.

Rob:
Yeah, it’s an interesting distinction because in short-term rentals, it’s the very same thing. If it’s something that’s my fault, I will always offer to try to make it right in some capacity or refund them for the inconvenience. I’ve just had two… I’ve had actually a lot, over the last week, I would say probably a list of 10, not catastrophic items, but 10 things that have just really taken my time. And so, two examples here, in my Scottsdale house, in David’s Scottsdale house, our water heater went out and it kept going out on the guests. And so, in those instances, that’s on our fault, not really a neglect thing, but obviously, the water heater, you don’t know when it’s going to go out. So we had to refund the guests for that instance.
Fast forward to like two days ago, and my guests actually happened to lock themselves out of my house. Now, we have electronic keypads on both doors, but the guests managed to lock the deadbolt for both doors and they decided to leave through the garage for whatever reason and they closed the garage. And so, when they called us, they’re like, “Hey, the code’s not working.” And fast forward to like four hours later, they were really, really, really, really mad. And I’m like, “Well, I mean, you guys locked the deadbolts and locked yourself out. You went past my fail-safes here and you still managed to lock yourself out.” And so, that was an instance where I was really sympathetic and I apologized, but it wasn’t an instance in which I would’ve offered a refund because there’s not really anything I could have done about that. I sent a locksmith out, I helped him out, I adjusted very quickly, but that’s not something that I wanted to take the blame for just because that was such a niche scenario that’s never happened in my 1000 stays, five years of hosting.
David, I know that you have properties across the country, I know you’ve really scaled your operation really from coast to coast here. So what do rent credits really look like for someone at scale like yourself?

David:
First thing I’ll say about this is that I haven’t given rent credits out before. Doesn’t mean I never would, but like Ashley said, it would have to be something where I messed up. I would also say I’m more likely to voluntarily offer a rent credit than have a tenant try to hold me hostage, which I think is what happens a lot of the time. You work in the restaurant industry for a while and you get those people that complain about everything they can about their food because they’re hoping that you’ll give them something free. That’ll usually cause me to just be more firm than I normally would’ve been.
On the other side though, I will say it’s better to give someone a rent credit than to decrease what their monthly rent is. And that’s because with rent control, that’s starting to pop up in more and more cities and inflation increasing so quickly, if you spend a couple years not increasing your rent, you can get really, really far behind and then be unable to increase it to market rent because of rent control restrictions.
And since a lot of these properties are valued based on the income they bring in, if you have a property that’s renting for below market rent, we see this a lot in San Francisco where there’s a building that comps would say it would be worth $2 million, but the rents are from 10 years ago, they haven’t been able to keep up. So the property, no one wants to buy it if they’re going to be renting out for a thousand dollars a month because they can’t raise the rents to the $5,000 a month number that they should be. So in those scenarios, rather than discounting, someone’s monthly rent, which I think a lot of landlords do when they’re trying to have a good heart and they’re like, “Oh, I’ll keep their rent low.” No bump their rent up and give them a credit instead. It’s the same to them, but you don’t fall behind with the laws for rent control.
The other little caveat I’ll add is a lot of times, property managers will ask you as the landlord to pay for something because they’re more likely to get money out of you than the tenant. So I just got a DM from someone that was asking me that the tenant screwed something up, messed up the plumbing in the toilet. And then, the property management company tried to build a landlord and say, “Hey, this is what the plumber bill was.” And they were saying, “Hey, is this on me or is this on the tenant?”
And I had the exact same scenario, I had a tenant who said the toilet is overflowing. We send out a plumber, the plumber pulls out a little stuffed animal from the pipes of the toilet. And I said, “Yeah, send me a picture of that.” And I sent it back to the landlord and said, “I wasn’t in the house to shove this thing down the pipe so I’m not paying for this plumber.” And the tenant put it on to the rent that month. So sometimes you have to pay a little bit of attention, because you just assume that the property management company’s going to bill you as a landlord before they go to the tenant because it’s faster for them and they’re more likely to get the money out of you.

Rob:
Sure. I think that’s fair. I hate when that happens, by the way. I tried not to stuff stuffed animals down my toilet as much these days, because those plumbing bills are really expensive.
But I also wanted to ask, are there any creative uses of rent credit that anyone here can speak to? I know for me, I know that I can reimburse a short-term rental guest their nightly rate or part of their nightly rate if I have to. But what I like to do is actually offer them sort of like a dinner, if you will, or sometimes we’ll send like a bottle of wine or something like that because I feel like that’s more personal.
It’s like, “Yes, I could reimburse you a hundred dollars and I’m sure you’d be happy with that,” but what I like to do is say, “Hey, I’m so sorry about that. What I’d like to do is just buy you and your family dinner. Is that something that you guys would be okay with? Just send me the receipt when you’re done and I’ll send you a reimbursement through Airbnb.” And most people, typically, are very happy with that just because they’re like, “Oh, that’s a very nice thing that you’re willing to do. And I think it goes a little bit further than just sending like a blank check in the Airbnb system, if you will.
So Craig, as our resident house hacking king here, can you tell us a little bit about how rent credits work in your space? Because I know when you’re coexisting and living in the same space as someone else, what does that like? Is it tough to have conversations that might require you to either approve or deny a rent credit to your tenant?

Craig:
Yeah. Honestly, it’s very similar to what Ashley mentioned. Right. The way I kind of look at it is I’m giving these people a product, right, I’m giving them a place to live for relatively inexpensive and in return, they’re paying me rent. And so, at any time that product is damaged, then I would be willing to hear about a rent credit. And so, kind of like Ashley said, a lot of times, if there’s maintenance or something kind of happens, there was one time recently where our water pump was broken and we didn’t have water for like three days. And I gave the tenant like a hundred bucks discount on rent for her rent convenience. And she was super happy with that. And oftentimes, I’d like to try to get ahead of it versus have them ask for it because then it makes relationship that much better if they don’t have to ask for it and they’re more likely to stay, reduced turnover, and in a rent by the room situation, turnover is actually a pretty big deal so anything you can do to reduce turnover is something I would highly recommend.
In terms of like having the conversation when they ask for it and I don’t want to give it to them, again, I try to bring it to the lease, right, I try to keep things really simple. But again, if they’re like really upfront, if they’re really crazy about it and they’re starting to act emotionally, oftentimes, depending on the amount, I will just give in just to kind of let the problem pass so they feel like they’re having a good place to live. Because at the end of the day, you need to make sure that these people enjoy where they live or they’re going to make your life…

Rob:
I mean, that makes sense. I think if you offer it up, it’s usually a delight to people versus if they have to ask for it, then tensions are always going to be a little high, which is obviously something that you probably experience in the house hacking arena. So I actually wanted to get into that a little bit. [inaudible 00:14:35]. Can you run us through some of the pros and cons of renting by the room? And this could be in the capacity of house hacking could also be if you wanted to just have a lease where you were renting all the rooms individually. Give us a little bit of kind of the both sides of this concept.

Craig:
Yeah. So the pros are, obviously, you can make a lot more money. Right. For example, I’ve got a house in Denver, it’s a five-bedroom, two-bath. And if I were to rent that as a single-family house, I’d get about 26, $2,700 a year. From a rent by the room perspective, I can get between 37 or $3,900 a month. Sorry. 26 and $27 a month or $3,700 a month. So we’re talking a thousand dollars a month difference just by renting by the room. And so, you really need to take a look at it and see if it’s worth it for you.
The cons, right, is that it’s a lot more work, there’s some tenant conflict, no one really feels like they own the house, they have ownership of the house so, there’s a little leak under the sink, they’re less inclined to fix it like someone in a single-family house might. And so, it’s a little bit more management intensive, but it’s a lot more profitable. And in expensive markets, especially ones like Denver, Seattle, and kind of these tier two type markets where you can rent by the room and make things work, I think it’s a great way to be able to house hack and to be able to cash flow and live rent free in expensive market that you can also get appreciation. It’s a way you can have your cake and eat it too with great cash flow and great appreciation.

Rob:
Sure. David and Ash, I’m curious, have y’all ever done the house hacking thing? Any point in your real estate journey, have you ever done just a very simple house hack?

Ashley:
I have not done one and I wish that I could have, that I would’ve known about it before I built my house, but I actually did it through my sister. So she was fresh out of college and wanted to buy property so I got her to purchase a duplex and I partnered with her on it. We were 50/50 partners and I gifted her the down payment for the property. She went and got an FHA loan and she lived in one unit, remodeled the whole unit, moved out to the upstairs, rented out the bottom one with increased rent. And now she lives in that unit where she could rent it out for probably $900 a month. She lives there for 50 bucks a month.

Rob:
That’s cool. David, what about you?

Ashley:
I live through her.

David:
Vicariously house hack through your sister.

Rob:
Vicariously is all that matters.

David:
I was sort of on the other end of house hacking. So I rented a room from someone else until I had maybe eight or nine houses as rentals. And then I bought the house that I live in now and I rented out rooms just to people that needed them. I wasn’t really super serious about them. The problem was parking with that property. It’s this big 2,800 square foot house with four or five bedrooms, but there’s nowhere to put the cars for everyone. It’s an HOA, you can’t park on the street. So that one didn’t work out great.
But over the years, I’ve just rented rooms out to people that needed it. And now, I wanted to get a deal that I was going to split into several smaller units, but the only way I can make it work is if I lived in it as a primary resident. So because I’m not home that much, I’m just having that house turned into several units and I’ll be living in one of them myself and renting out the other ones, and then, I’ll move out of it and rent it out. So I suppose, that would be like my first official house hack, which is kind of funny that this deep into my career I’m doing it.
But the way that I look at it is you sort of conform yourself to make real estate work for you. You don’t try to force real estate to bend to work for what’s convenient for you because that’s where you just get frustrated with it all the time. I think Craig made a really good point, the way that I look at investing in real estate at this point in my career is it’s more about principles than just like, “Give me a formula and I want to follow that exact specific formula forever,” because the market changes too much to have one formula that you can do forever.
The principle is that the more work you’re willing to do, running a by the work room is a little bit more work than just renting out traditionally, the higher your profit will be. So you can have a spectrum and on one end is comfort, on the other end is profit. And the more that you can move yourselves towards profit and away from comfort, the more deals you can make work and the more wealth that you’re going to build. So we all have to kind of ask ourselves where on that spectrum we’re willing to go. But I do think it’s important that you recognize, if you’re sitting at home saying, “I love my primary residence, I just couldn’t house hack,” maybe that’s why you haven’t bought a house in the last four years, maybe that’s why you’re not going to build wealth like somebody else who realizes that that comfort is very, very expensive when you look at what real estate can do for you over a 30-year timeframe,

Rob:
Totally. I mean, you have to basically surrender your comfort for a while, right, so that you can get into whatever dream in the real estate space that you want. I’m a very serial, like redfined scourer, and I have been my whole life. And anytime I saw a property I couldn’t afford or that was like just out of reach, I was always like, “How can I make this work? How can I make this work for me?”
So when my wife and I moved from Kansas City, our house there, I think our mortgage is like 1100 bucks, and we moved to LA, which is smart, right, we were like, “Yeah, why don’t we just pay four times more for a house out here? That makes a lot of sense.” We moved out there and we saw this house that was, I think, at that time, $624,000. So it was easily four times more expensive than our Kansas City house. But this house had a 279 square foot studio apartment underneath. And I was just getting into Airbnb and I had calculated, “Well, I think if I rent this little studio out for a hundred to $125 a night, I think I can make like two or $3,000 a month. And that’s exactly what it was.
But I always had to convince my wife on that because she’s like, “I don’t want to deal with having to talk to people. I don’t ever want to go like take them down an extra roll of toilet paper or whatever.” And I was like, “No, it’s cool. Give it to me. I like meeting my guests. It’s all great.” And so, that was solid. We lived with people from that point on for probably like three or four years after that. And that’s really what accelerated our rental portfolio because I really attribute everything I have to house hacking, because we were able to save, at this point, probably 180 to $200,000 worth of mortgages, we were able to save that up and apply that to different pieces in our portfolio now. So I wouldn’t be where I’m at if it weren’t for house hacking. So I’m very grateful for that.
And just in case anyone at home doesn’t know what that is, that it is renting out a space in your house or a space on the lot of your house and using that rent to subsidize your mortgage. That’s all it is. There’s so many ways you can house hack so get creative with it and figure out how you can get out of your mortgage. Because I think the faster you don’t pay a mortgage, the faster you can really use that money to snowball into the next thing here.
So moving on into the next question here, we have kind of a specific scenario here. So someone asks, “After a few months of having a property under contract and waiting for lawyers and title to clear everything, we are finally ready to close on an investment property. This property is a mixed-use commercial retail storefront and two apartments above. The property is occupied with leases in place. My question is what would the next step be after we close? Should I send out updated leases with our new landlord information? I know that the old leases that are being used are still binding until they expire.” Anybody have any insight on this one?

David:
I think this is right up Ashley’s alley.

Ashley:
You know what? I am ready for this question, David. So for this one, the first thing I would do, before you even close on the property, is send out a estoppel agreements to the tenants. So get the current owner’s permission to do this. And what they are is basically you’re sending them a piece of paper that asks for them to verify the information that’s on the lease. And you may find out more information about the property. So have their name, their contact information so that you do have all of that when you’re ready to close.
And then you’re going to ask, who are the residents of the property, so that you have everybody that’s currently living there. And then you’re going to go through, “Okay, how much do you pay a month? Do you pay any additional fees? Who pays the utilities? Are there any repairs or maintenance that need to be done in your property? Who handles the landscaping, who handles the snowplowing?” Everything like that and just go through it. “Do you own the appliances? Do the landlord own the appliances?” So as many questions as you can think of, you put onto this form, you’re going to send it to the tenants or go and hand it to them and have them send that information back.
And then, you can go through the lease agreements and kind of compare them. So if there are any differences, you can go ahead and clarify that before you actually go and close on the property. And then, when you do close, that’s the time to make sure they have your information to send you the new rents. You’re going to maybe send them kind of a welcome letter stating as to, “Here is how everything will work now. So your rent will be paid online, electronically through this website. You’ll have your own portal. And this is how maintenance requests are handled.” And you kind of tell them your systems and processes to handle things once they close on the property and it switched to the new management.

Rob:
Yeah. Yeah. They also asked, “Should we do a walkthrough and talk to all the tenants?” So it sounds like we should probably talk to the tenants. What are your thoughts on specifically doing a walkthrough of the tenant space if they’re already occupying it?

Ashley:
Yeah. So usually I would do that before I even get to commitment on the property or get close to closing. That’s something I would do. But if you’re doing it after closing, you just send them a notice. And usually it will state in the lease agreement that they currently have if you have to give them 48 hours notice, 24-hour notice and you would just send them a letter stating that you would be going through the property. They did say they had commercial properties so those will probably be easier to get into than the residential, where you’ll have to kind of coordinate with the tenants, but you can go through with them. And if you want to ask them what needs to be done into the property or let them know they’re going to be making repairs on the property.
And then also, taking pictures because when they go and move out of this property, it will be very easy for them to say, “Oh, well, this was like this when I moved in,” if you don’t have any kind of inspection form that’s signed by the previous landlord and the current tenants that are in place. So that would be another thing too is documenting everything and asking them if there were things that were not taken care of when they moved into the property.

Rob:
Sure. Yeah. By the way, whoever asked this question, I just want you to know, this has been a dream of mine for a long time to own a place sort of on a main street where there’s a lot of foot traffic and everything like that, the bottom floor is like a coffee shop or some kind of commercial space, and then two apartments above, one that’s a tenant and one that’s me. And then, have it be like one whole, I don’t know, like a cash-flowing machine that pays for the building. So kudos to you for locking that down.
On my next question here, David, I think you probably have some insight here just because you run such a big team that’s doing this every day. This person asks, “Are in-person rental showings a thing of the past or still valuable? In this post-pandemic world where virtual meetings and showings have become much more standard in everyone’s lives, is it possible or is there anyone out there not doing any in-person showings at all?” What’s that shift been like for your team, Dave?

David:
In-person showings for rental properties?

Rob:
I think so. Yeah. Or like selling homes too.

David:
No, people are still seeing homes, that still happens in-person. There’s not a whole lot of people that are buying stuff site unseen. Maybe an investor might do something like that, but even then, as we’re seeing more and more properties moving into the short-term rental space, it’s moving back into where you need to see the house, the floor plan, how it flows. When we were in, the only way that you rented out properties was a long-term rental, they were going to have a lease for 12 months and they were going to collect rent every single month, it was kind of like apartment complexes but just applied to residential housing. So the tenants were just going to pay whatever the market rate was for a two-bedroom, one bathroom or a two-two or something and the floor plans very rarely ever played a role in the property.
But when you’re renting at a short-term rental, you’re going to be paying more, you have sort of the pick of the litter where you want to go stay, the floor plan does become a lot more important. So I would say I’ve seen just as many showings as we ever had before. The difference would be, people aren’t going to look at a house as their first piece of due diligence. There’s a lot of work that you can do and then you kind of narrow down the amount of houses they actually go see because there’s information available that you can weed some out. Old school, you just had to go look at the house and you were going to learn everything about the house when you were seeing it.

Rob:
Yeah. I mean, they seem like they have some pretty strong opinions here because effectively, what they’re asking is, “Why should we still take them through the unit? This seems like a waste of me and my staff’s team. Gas, at the time of writing this, is crazy high. The type of properties we manage are 50 units and under spaced all over multiple cities. We fill each unit and don’t have a model unit like some large complexes.” So I think they just think that because of the technology available, it’s not really a necessary thing, but you feel like it is pretty necessary at this time still?

David:
You don’t know what a house smells like when you’re looking at a video. I can’t tell you how many times good realtors can make a house look much better than it really is. Catfishing is real in real estate investing, it happens all the time. So it’s very easy for you to-

Rob:
The original.

David:
Yeah. Wide angle lenses and show flattering angles. And then you go look at the property and you’re like, “What I thought was a dining room is half of a breakfast nook. I’m half impressed they made it look that good and half angry that it’s that bad.” So if you’re smart, you’re still going to go look at a property before you sign a 12-month lease. My advice to this person, if you don’t want to meet them there, is put a code on the door, put a SimpliSafe camera, who sponsors BiggerPockets, up on the entryway so you can see who’s going in there. Take anything out of the house that they could steal and just let them go in there themselves and go check it out and then go back out rather than you drive all the way. I don’t think they need you there to go see the unit, they just need to be able to see it.

Rob:
Ashley, what about you? What do you think? For your portfolio, how are you handling showings?

Ashley:
Yeah. Well, I’m using a third-party property management company right now, but I was going to kind of touch on what David said about doing the keypad lock. If you’re using property management software, a lot of them actually have this integrated now where you don’t even have to talk to a person to do a showing or to lease an apartment so you put all the information online. Some of the software actually has like AI intelligence, artificial intelligence that will respond. So you give this robot all the information about the unit. People look at the listing online, they can send a message to ask a question about the unit and then the AI will respond to it.
If you are going to do in-person showings, you can actually put your schedule online as to when you’re available. Someone can go ahead and click to sign up for it, sign up for that showing. You get a text message that there’s a showing at this time. Or like David said, you go ahead and you put the lockbox code. So to get the actual code, they have to scan their license, a copy of their license into the software. And then, they will get an access code that’s valid for a certain window of time, maybe it’s a half hour window of time, they get to go into the property. And then, when they leave, the code changes to something else. So instead of just doing virtual videos, like the property management company I was using, they were doing YouTube videos to do virtual showings, but there’s so much technology out there where you can get people into the unit without ever having to talk to them or without ever having to go and take the time to show them the unit too.

Rob:
Yeah. Awesome. Craig, what about you? Any final words of wisdom here on whether or not the age of showing your homes is over?

Craig:
Yeah. I think what David and Ashley said are pretty on point. One thing I would add is something that we do is we kind of do like an open house approach. And so, like Ashley, I’ve got most of all my stuff on property management now, but back when I was doing the house hacking thing more vigilantly, we would just do a… Nice, David. We would do like an open house. Right. And so, I would just say, “Hey, we’re going to be showing this house on Tuesdays and Thursdays from five to 7:00 PM.” We’d have someone show up there with their computer. They can go on there, so it really wouldn’t be a big waste of their time if no one showed up. And so, then you’re kind of limited to, “Okay, I know I’m looking to be there two days a week.” It promotes some competition if there are people there at the same time. And I found that you can usually send them applications right on site as well. And its helped us a lot. I love the open house approach if you need to do it in-person.

Rob:
Yeah. Yeah. I mean, there’s no right or wrong here, right, guys? There’s just what’s right for you. That’s what I always say. Moving on to kind of the next question here. Someone asked, “How do you stay informed on your local markets or markets that you invest in?” David, you just put in 15 offers on homes and I think you just close on them. So tell us about that. How did you come across these markets? How do you find yourself even locating any of the markets that you’re investing right now?

David:
Well, this should be an entire podcast episode. I’ll see if I can keep this relatively short to give my co-guests here an opportunity to talk. The first thing I look for is where people are moving to. So my philosophy, everyone has their own, I feel like most investors, especially those that start off, they don’t value location as much as someone in my position does. So my philosophy is, the only thing I cannot change about a house is the location. I can literally change everything else. So rather than saying, “All right, where can I get cash flow?” And just going for what looks to be the strongest cash-flowing house they can find, and then talking themselves into why they should buy that property, which often leads you into buying in these like D-minus areas that everything in your gut is screaming at you avoid it, but the spreadsheet magic is just so tempting. Right. It’s like that little hypnotizing thing saying, “Buy me,” and you start coming with all these excuses about how you’re going to make this deal work.
I start with the best areas that I think are going to have the most growth. It’s not speculation, it’s delayed gratification. I don’t really look at where rents are going to be, or I should say, the ROI is going to be incredibly strong in year one, I’m looking at it in years five through 10. Where am I going to see the most growth? And right now, this is areas where Californians and New Yorkers are moving to, they’re bringing a lot of money, they’re bringing the best jobs. So I looked for areas that have warm weather, because Californians need that. Like someone like me that grew up there, we’re not going to go live in North Dakota. There’s just no Californian that’s going to do that. Low or no state income taxes, because right now we’re paying 13 and a half and every year we hear them trying to push another bill forward that’s going to bump our state’s income taxes to 18%. So you throw that on top of almost like 45% federal taxes and you are over 50% of your income is getting paid in taxes at the high tax brackets.
And then, right now, I think the trend where we see the most growth happening would be the sort of like conservative minded political environments. I think the last five to 10 years, the liberal minded political environments were crushing it. We saw huge growth in San Francisco, in Seattle and Austin, Texas. And now, the people that are moving tend to be the more conservative minded ones and they’re the ones bringing money with them. So I’m looking in Tennessee, I’m looking in South Florida, I’m looking in Texas, and then I’m looking in some of the areas like Idaho, Arizona, Nevada, because I’m just seeing that’s where I think that the money’s going to be going to.
The next thing I look for is where is there a constraint of supply? I don’t want to go buy in an area like Kansas that has so much land that they could just build a million houses and their value’s never really going to go up. Part of the reason why Austin and Seattle did so well, and San Francisco, is there’s not really anywhere to build in any of those cities. The supply is constrained and when the supply is constrained and the demand goes up when people move there, you’re going to get, not only rising prices, but rising rents. A lot of people say, “Don’t buy real estate and bet on appreciation.” Well, appreciation happens in more ways than just prices going up, rents go up too. And it’s much more profitable when you buy in a place where rents go up significantly and consistently every single year.
And then, once I’m there, I say, where is the soft spot in this market? So my strategy has been to target the properties that other people are either afraid of buying or the buyer pool is thin. Think about climbing Mount Everest, when you get to the top, the air is very thin, there’s not as much oxygen. When you’re competing with the lion share of the buyer pool, they all want that same starter house at the really low price point that makes you feel really safe. Even when we’re having a correction in the market like we are right now, you don’t see that very much in the starter homes because 80% of the buyers are all competing over those properties.
So I’ve stepped into the luxury space and every market has its own luxury space. Some places, a $500,000 home is luxury, some places, a $2 million home is luxury. You have to figure out where that is in the market, but I’m looking for that. And then when I hit all three of those and I get the high day on markets, I’m then looking for properties with terrible marketing, really bad realtors that are selling them. I pay attention to the news and I look to see like when is the fear porn going out and everyone’s freaking out. That’s when I write the most aggressive offer.
So as odd as it sounds, I always feel like the investors are asking the wrong questions, they’re saying, “What’s the software that I can use that will do all the work for me and bring me the best deal and all by that one?” And I’m looking at it more from a psychological perspective, where do I find the seller that’s having the most fear that just wants to get that property off their hands and they’re going to be the most motivated.

Ashley:
David, even just with market analysis, since we’re kind of covering landlording, not only is it important to kind of study your market, what’s going on with purchasing there, but also what’s going on with landlord laws too and staying on top of that because those can also change just like short-term rental laws and regulations are changing in cities too. So I do have a resource for everyone to find out state specific landlord laws in your area. So you can go to avail.co/education/laws. And they actually have a breakdown of every single state and showing what the landlord tenant laws are in that state.
And then if you go to your local housing authority, so in Buffalo, New York, where I’m from, for example, there is Section 8. And the Section 8 housing authority that gives out the vouchers is called Belmont Housing. And on their website, you can actually sign up for free or low-cost houses to kind of learn about being a landlord. They actually train you because they want the landlords to obviously provide fair and safe housing for the people with the Section 8 vouchers.
And then, there’s also another one called homeny.org. And this is another housing authority in Buffalo and they give out free classes or low-cost classes too to landlords. And they also create books. Every couple years, they’ll go through and create just like a landlord guide to being a landlord in New York state. So using resources like that to stay on top of the laws.
And then, also having an attorney, having an attorney review your documents. If you have a question like one of the biggest controversial issues that I see across the country are therapy dogs and, “Do I have to allow a dog because it’s a therapy dog? What are the rules for that?” So just having an attorney that is real estate specific and knows these laws and regulations can really help you on issues that may be case by case basis and not as clear cut too.

Rob:
So what haven’t we asked about landlord? Are there any final words here before we kind of start wrapping up?

David:
Well, we could talk about the fact that you don’t have to do it. People like me don’t really landlord for ourselves, we have property managers that handle that. And I like that element just because I don’t want to have the tenant saying, “Hey, landlord/owner/neighbor, this thing’s broken. Can you come fix it for me?” And now you got to say, “Well, that’s kind of on you.” And then they’re mad at you and now this is also your neighbor who’s upset with you. So I prefer to just have a buffer in between us and let a professional handle it. And it also, in my opinion, gives me an opportunity to bring a job, a wage, a career into the real estate field for someone that wouldn’t have had it. I’d much rather let someone else kind of learn the business, doing the work for me and then I can focus on making a better process, a better system, getting more properties, whatever the case may be.

Ashley:
I think if someone’s trying to decide which way to go, there’s no wrong answer, but if you are going to self-manage and that’s how I started out, I self-manage, is make sure you take advantage of software, make it easier on yourself, but also make sure you understand fair housing laws and what the rules and regulations are, that you educate yourself on that.
And as far as going into using a property management company, just realize, it may not be as passive as you think it is. You may still need to act as an asset manager, as in, every month when you get the owner reports going through, what the charges are, making sure that when your unit is becoming vacant, that they are listing it and that it is getting rented out.
So that was a mistake I made when I hired property management. It ended up being the month before COVID started and I was like, “Oh my gosh, this was perfect timing. This is great. I feel like a weight is off my shoulder. I have all this free time, I can do whatever.” And then, a couple months went by and I was like, “Whoa, wait a minute. What is going on with these charges? What’s happening with this?” So now every month I have an asset manager who goes through the owner reports. He is the contact person for the property management company if they have any requests or approvals they need made and he just makes sure things are getting done. So just make sure you are seeing the whole picture before you decide to either self-manage or to hire a property management company.

Rob:
Right. And scale up accordingly. Right. A lot of people try to jump in and they’re like, “I’m ready to do this, go full-time. I want to buy 10 units.” I’m like, “Just do one, do your first one, make sure you like this because what if you don’t, then you have 10 properties, you got to figure out what to do.” And I’m a really big proponent of self-managing for as long as possible just to learn the business and understand the business. That way, when you do delegate it out, you understand if your property is doing a great job or not.
Craig, what about you? Any final words before we hit it into the final question here?

Craig:
Yeah, one thing I kind of want to touch on is a little bit about kind of like what market to choose. And I think a lot of people get held up on when they’re trying to pick a market for their first deal or going out of state. And really, you just got to pick one. Right. You are going to find cases for and cases against every market in the United States. I don’t think anyone is perfect and I don’t think anyone is horrible, there’s deals in every market.
Personally, when I look to find deals outside of where I live, I go to places where I know other people have invested, I know they have a team and I know that I can ask them for like, “Hey, who do you use for a property manager? Who do you use for a realtor? Who do you use for a contractor?” And that just alleviates so much time, stress and energy from me. I don’t even care if it’s like the best market or the most appreciating market, but if I can hit that easy button and get my team just like that, I think that’s invaluable.

David:
Yeah. Landlording can drive you crazy.

Rob:
As we can see in your eyes here. If you’re on the podcast, be sure to watch this on YouTube so you can get the full visual presentation here. Final question before we head out, why is education important across the board?

Ashley:
I think I kind of touched on this a little bit with becoming a landlord, is just knowing what the laws and regulations are because you can get in trouble for not being compliant. But I think another part of it is that you can save money by just knowing what you have to do upfront. So even like with doing a rehab on a property is knowing what permits to get or what needs to be done, can save you a lot of money when the building inspector comes and is like, “Oh no, you need to have a permit for this. This needs to be inspected. And you need to rip out all this plumbing.” So being educated and doing your research or having people on your team that know these things will just save you money, but also, so you don’t get sued.

Rob:
Right. Right. And ultimately, I guess what you’re saying here is that education, well, A, is a lot less expensive than a lawsuit, but also a lot less expensive than mistakes in general. Right?

Ashley:
Mm-hmm.

Rob:
What about you, Craig? Why do you think education is so important across the board?

Craig:
When you learn anything new or when you’re trying to get into anything new, education always comes first. Right. Education times action equals results. And so, you can keep adding education, adding education, education, but if that action is zero, you’re never going to get anything. But also the other way around, if you’re all action, all action and no education, you’re not going to get anything. So the first step I always think is education. If you’re listening to this podcast and you go to one of these boot camps, your education is going to be there. By the time we’re done with the bootcamp, you’re going to be ready to take action. Then all you got to do is worry about that second part, which is action, and then successful [inaudible 00:43:08].

Rob:
Awesome. Well, speaking of education, Ashley, I know that you’re hosting a boot camp here so do you think you could maybe tell us a little bit about it?

Ashley:
Sure. Yeah. I’ve hosted for the past year Real Estate Rookie Bootcamp, where we actually did a live event. And then, we did about four virtual sessions where we just went through how to basically get your first deal in 90 days, how to feel comfortable and confident with making offers. And what does that process actually look like? And now, I’m launching a new one where it is all about landlording. So whether you want to self-manage your property or you just want to know how to be a landlord so you can oversee your property management company, this bootcamp goes through everything you need to know from the day you purchase your property and you’re ready to lease it out to handling the daily operations of doing property management such as the maintenance, the communication, like collecting your rent, everything like that.

Rob:
And Craig, what about you? You’re also hosting a bootcamp, right?

Craig:
Yeah, so we’re hosting the BiggerPockets House Hacking Bootcamp. And so, in this 10-week course, we’re basing going to teach you everything. If you knew next to nothing about house hacking, you’ll be ready, willing, and able to buy a house hack after these 10 weeks. We’re going to go into how to find a house hack, how to analyze them, how to market your listing, how to get tenants, how to pick an area, how to build your team. Anything you need to know is there. And then, of course, we’ve got the Q&A for anything that we may have missed. So definitely come check it out. Hope to see all you guys there.

Rob:
Awesome. Well, if you want to learn more and get signed up for the different boot camps, you can go to biggerpockets.com/enroll. And if you go to that URL I just listed, biggerpockets.com/enroll, you actually get 10% off starting when you enroll in boot camp using the code, Boot Camp 10. Okay, so with that, that concludes the panel. How did I do? How did I do as the moderator, guys? I do okay?

Ashley:
Very moderate.

Craig:
Yeah.

Rob:
Yeah. Very moderate. I moderately did okay. That’s all I aim to do.

David:
You are the okayest.

Rob:
Well, you know what? My sister actually bought me a shirt one time that says, “World’s okayest brother,” and I really embrace that role. So people want to learn more about you, David, where can people find out about you on the interwebs?

David:
You can find me on every social media, @davidgreene24, and then YouTube, at David Greene Real Estate.

Rob:
Ashley, what about you?

Ashley:
You can find me on the Real Estate Rookie Podcast, which I co-host with Tony Robinson. You can find me mostly on Instagram at Wealth Firm Rentals, and then also, on the Real Estate Rookie YouTube channel.

Rob:
That’s awesome. Craig, what about you? Do you have any seek any Finstas out there that you want to tell us about?

Craig:
Yes, sir. So yeah, you can find us, we have a podcast called Invest2Fi and also, I’m on Instagram, I’m at The Fi Guy, and TikTok and all those good things, so The Fi Guy.

David:
And Rob, if people want more moderately valuable content, where can they find it? How about you?

Rob:
Well, you can find my moderately entertaining and comedic videos over on YouTube at Robuilt. You can find me on Instagram at Robuilt as well. And on TikTok, if you want even more moderately comedic stuff, you can find me over at RobuiltO, just add the O.

David:
And if you didn’t know, BiggerPockets has an entire YouTube channel where you can get more content just like this. I just had a video released today with Christian, where we’re talking about the market, loan products, interest rates, what’s working, what’s not working, lots of stuff that will help make you money. So after you’re done listening to this podcast, go check out the BiggerPockets YouTube channel and listen to some more.
Ashley, Craig and you yourself too, Rob, great job everybody. This has been a lot of fun. Hopefully, we can do more of this in the future. I’ll let you guys get out of here. This is David Greene for Rob, the Moderator, Abasolo, signing out.