\n<\/p>\n
Want to know how to buy a rental property<\/strong>? If rising home prices, rent prices, and fierce market competition have you struggling to get something <\/strong>under contract<\/strong><\/a>, your real estate saviors, David Greene<\/strong> and Rob Abasolo<\/strong> are here to help. In 2022\u2019s hot housing market, it can seem almost impossible for new real estate investors<\/strong> to get their foot in the door. But, if you follow what the experts are doing, you may be able to lock up your next investment while other buyers are stuck in bidding wars.<\/p>\n Whether you\u2019re wondering how to buy your first rental property<\/strong><\/a> or your next rental property, David and Rob have answers for you. They\u2019ve partnered up to buy luxury short-term rental<\/a> properties in sunny Arizona, all while recording the exact steps they\u2019re taking to land a deal<\/strong>. If you\u2019re already investing in real estate, some of these steps may seem familiar to you, but the gems that David and Rob drop <\/strong>are rarely discussed (and incredibly helpful).<\/p>\n So, if you\u2019re ready to start your <\/strong>real estate investing<\/strong><\/a> journey<\/strong>, build wealth, rake in cash flow, and build passive income, you\u2019re in the right place. David and Rob define their ten steps to investing success <\/strong>so you can spend less time analyzing deals and more time collecting rent checks.<\/p>\n David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: Rob: David: \u00a0<\/p>\n<\/div>\n Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here<\/a>. Thanks! We really appreciate it!<\/p>\n
This is the BiggerPockets Podcast show 589. What I look for is me. So I think I\u2019m a good realtor because I buy a lot of real estate. So if you come to me and you say, David, I want to buy real estate, I\u2019m not looking it from a perspective of a salesperson, I\u2019m looking at it from the perspective of someone who wants to help build your wealth. I like to work with other realtors who also own real estate and who like real estate. They don\u2019t have to be a realtor, they want to be a realtor.
This is David Greene, your host of the BiggerPockets Real Estate Podcast, here today with my co-host Rob Robuilt Abasolo. How\u2019s it going today, Rob?<\/p>\n
Oh, it\u2019s going good, man. Just in the throws of putting together offers and negotiations and re-negotiations and triple re-negotiations. But I think we\u2019re getting to some closure here, which I\u2019m really excited to share with the audience at home.<\/p>\n
Yes. If I\u2019m going to use a jujutsu analogy, which I do too much of already, we\u2019ve got our joke sunk in and we\u2019re just slowly, slowly tightening it. And this deal is about to submit to our plan. So on today\u2019s show, Rob and I are going to walk you through the 10 steps to make sure that you get a property under contract in 2022.
So we actually have a rhythm, a pattern, a plan, if you will, of what we do to make sure we are moving forward on our plan of getting a property under contract. And it\u2019s only been, what do you think, Rob? Like a month or two? How long do you think we\u2019ve been going at it for?<\/p>\n
Eight weeks at this point. In six months, it\u2019ll be eight months.<\/p>\n
There you go. But only two months of actual focus.<\/p>\n
Two months or so.<\/p>\n
Yeah. Like looking to get a deal. And we\u2019re narrowing in on the one that we wanted the very most, that we think is going to be awesome, that we\u2019re super excited about. We wanted to make a show that shared what we did to get to this point, right? Everyone always says, here\u2019s the deal I got. They hold it up there and they wave it in front of you and they say, look, how cool I am. I got a good deal. And then you listen to you go, oh, I wish I could get a good deal, but I\u2019m just not as good as them. And I kind of suck. So that\u2019s what we\u2019re trying to avoid.
Here\u2019s all the work that went into the after picture, right? No one shows you that. They just show you what the six pack looks like. Well, this is what the actual workout routine looked like to get to have a six pack like Rob. So I\u2019m very excited to be able to bring this to people today. This is a very practical show. If you write down these 10 steps and you and your partner or you yourself start executing them, you will get to a point where your offer is accepted as well.<\/p>\n
Yeah. I think we talked about this on a previous show. Or, hey, maybe it\u2019s in a show that\u2019s coming after this one. But consistency is the number one most important factor to success, I think. Especially in this game, in this market, so many people that come to me and they\u2019re like, is it too late? Is it oversaturated? Is it so competitive? What do I do?
And I\u2019ve heard you just say it time and time again that you don\u2019t find good deals. You make good deals. And that\u2019s kind of this deal that we\u2019ve been working through. It, really on the surface, wasn\u2019t what we wanted, but we started laying out our terms. We\u2019ve been very consistent about chipping away at the other side. And I think now, after consistency and some tenacity, now we\u2019re finally getting to a part where we\u2019re seeing progress. And it\u2019s by following this system that we\u2019ve just been doing for years now, right?<\/p>\n
Tenasistency. The word that Rob created on today\u2019s podcast.<\/p>\n
Hey, you heard it here first. It\u2019s actually going to be the first book that I write tenasistency.<\/p>\n
I like it. Brandon used to make up words. And now Rob is doing the same thing. So we are really excited to bring this show to you, especially if you\u2019re someone who knows that you want to take action, you just don\u2019t know what that should look like. This is what it should look like. For today\u2019s quick tip it\u2019s going to be, check out BiggerPockets agent finder. If you go to the website, you can find their agent finder service, which will help find you a real estate agent that is familiar with the BiggerPockets way through the actual site.
When you are looking for an area that you want to invest in, like Rob and I did, you\u2019re going to need to find an agent. Now we describe on the show how we found ours, but you can also use BiggerPockets to do it even easier. So I highly recommend that you check out their agent finder system and find an agent who understands investing in your needs today.<\/p>\n
I wish I would\u2019ve heard that quick tip first before all the work that I went through. But duly noted, David.<\/p>\n
Yeah. It\u2019s funny how I say that on the podcast, but I didn\u2019t say it to you when I was asking you to go do something.<\/p>\n
I want people to take out their notepad and I want them to write down, verbatim, everything we say. No. Create your system. Honestly, I think that\u2019s the real important message from today. Go in, have a system, stick to it. the more you can be disciplined about not straying away from your system, I think the more results you\u2019re going to achieve in the long run in your portfolio.<\/p>\n
I agree. And make sure that you\u2019re okay with tweaking that system. So whatever you create in the beginning is not going to be what you have in the end. It sort of evolves like everything else in life. So you don\u2019t need to have it perfect to get started, but you do need to have something.<\/p>\n
Something yeah. That\u2019s right.<\/p>\n
All right. Let\u2019s get into the show. Mr. Abu Solo. So nice to have you joining me today. How are you?<\/p>\n
It\u2019s a Wednesday. I don\u2019t know when this is going to be released, but it\u2019s always a good day here whenever I\u2019m recording a BiggerPockets Podcast.<\/p>\n
Yeah. And in addition to it being a good day because of the podcast, we also have some potentially good news where you and I are very close to getting something in contract. You want to share a little bit about the background of where we are on this property we\u2019re trying to buy?<\/p>\n
We\u2019ve really been working this one. I probably, in most other circumstances, would\u2019ve not necessarily called it quits, but no, I don\u2019t know, maybe I would\u2019ve because it was kind of one of things where a lot of convoluted communication going on and disgruntled sellers with offers and everything like that.
So you and I approached a property that was 3.4 million in Arizona. And we put an offer in, not too much under, but at around 3.25 million, because it been sitting on the market for six months I think. And they effectively told us to kick rocks at first. You came in, you swooped in with an all-star strategy that we\u2019ll get into. It really worked out to the T. And now we\u2019re just kind of waiting to hear back on some of those final details. So we won\u2019t count our chickens yet, but it\u2019s looking pretty good.<\/p>\n
Yeah. And what we really want to do in today\u2019s show is we sort of want to share with everyone what the rhythm looks like of how we approached buying a property. Because I think this will work for anybody. Doesn\u2019t have to be with a partner, but it doesn\u2019t involve account ability, predictability structure, and a plan. That\u2019s what we\u2019re trying to give you, is if you look at the whole idea of being a real estate investor as a human body, this is a skeleton, this is what everything else sort of hangs off of.
So we have 10 parts to this plan. And the first is that we have to determine the criteria. So this could include finding an asset class, finding the area, want to invest in, and then picking a price point. Now, in different episodes, we\u2019ve talked about those things. So we don\u2019t want to get into them too deep, but I will share that our plan was that we wanted a short-term rental in a high appreciating market that we thought was going to be friendly towards short-term rentals. And we wanted to get into a price point that we felt would help remove some of the competition.
So we didn\u2019t want to be chasing after $400,000 houses because so many other people are there. We basically wanted to get into a price point where we felt like there\u2019s not a lot of other investors that are in the same arena as us because we frankly didn\u2019t want the competition. Is it anything you want to add to that Rob that you can think of?<\/p>\n
Well, Yeah. We also wanted to just find a deal that was worth our time.<\/p>\n
Yes.<\/p>\n
And that\u2019s really important because we\u2019ve batted around dozens of properties at this point.<\/p>\n
Such a good point.<\/p>\n
And you\u2019ll shoot something down, I\u2019ll shoot something down because we\u2019re just like, this doesn\u2019t excite me for this reason. So, honestly, the best learning experience here is getting into a partnership with somebody that you haven\u2019t partnered up with before. And what you and I have really done is we\u2019ve explained each other, our respective philosophies in investing in why we do things a certain way. That way, whenever the partner shoots something down, we can respect that decision because we understand where they\u2019re coming from.
So it\u2019s been a really, really fun process. I\u2019ve done partnerships now, Oh, I don\u2019t know, seven, eight times they\u2019ve all worked out. I think if I remember correctly, you\u2019ve typically shied away from partnerships, is that right or-<\/p>\n
That\u2019s true.<\/p>\n
\u2026 you haven\u2019t done as many?<\/p>\n
Yeah.<\/p>\n
You want to talk about why, or maybe we can hold off into the very end? We don\u2019t want to spoil all the good stuff yet. Yeah.<\/p>\n
I\u2019ll give you the gist and then we can get into at the end. The main reason I haven\u2019t got into partnerships is that most of the time, the assumption is we\u2019re cutting the work in half, but you actually end up doubling the work. Because what happens is everyone ends up doing their job and then they have to explain to everybody else why they did that job and sort of satisfy the curiosity. So it ends up being more time.
And a lot of the times we get into partnerships because we\u2019re afraid of doing it on our own, which is a terrible reason. You actually want to get into a partnership because you know you have a very good skillset in one area, which you wouldn\u2019t have developed if you were afraid. You\u2019ve already, at that point that you\u2019ve developed a skillset, taken action to a certain point and your partner has to.
And the last is that the time element, like what you said, there has to be enough meat on the bone in this deal to justify all the work we\u2019re putting in this partnership, which is why I\u2019ve only done it on multifamily properties that were bigger. I never did it on single family homes. I could get into the more later, but do you have any questions after hearing that?<\/p>\n
I knew that. I was just throwing you a softball, but I think that makes a lot of sense. Because, honestly, I\u2019ve done so many partnerships now. And one thing is when you partner up with so many people, it\u2019s very tough to kind of go big or go home with every single partner. And so if you\u2019re just going to partner with somebody on just one house, you\u2019re right, man, there\u2019s a lot of education, a lot of handholding if the other person is new to it.
And then if you\u2019ll never actually end up doing any other partnering or any other houses, flipping or anything like that, then it was just a lot of education for one deal. Whereas you and I are trying to cultivate something a little bit bigger. We\u2019re trying to go pretty big here. And so that\u2019s why we\u2019ve sort of been really taken our time with really understanding our viewpoints and everything like so.<\/p>\n
Very good point. Now, point number two, out of our 10 steps here, has to do with our viewpoint that we\u2019re forming. So Rob and I look at every deal that we evaluate through a matrix of five different areas. The first is the revenue that it creates or the return on our investments. So that\u2019s usually the first thing we look at is, hey, would this property cash flow? And how much would it cash flow?
The next thing we look at is the equity. And that\u2019s either, are we getting it at a really good price, so there\u2019s equity built in, or is this an area where we can reasonably expect appreciation to be happening and why? That\u2019s where we start.
The third is we look at debt, like how can we use debt on this property? Is debt a benefit to us? Rob and I believe that in this environment borrowing more money, especially if it\u2019s at a rate lower than inflation, is a good strategy. If you\u2019re a Dave Ramsey fan, you. Well, you\u2019re probably not listening to us talk about real estate using debt if you\u2019re a Dave Ramsey fan. So I don\u2019t worry about that, but we look at debt when it\u2019s used wisely and prudently. That\u2019s good thing.
The next thing we look at is time. Like, would this property take all of our time? Even if the revenue looks great, that revenue stops looking great if it\u2019s a 30-hour a week job to manage this property, to get that 60% ROI. And then the last thing is risk. Like how much risk are we taking on in ordered buy this deal?
So every time we have a property that we\u2019re going to analyze, we look at it through these five, I call them prisms, right? Imagine holding glasses up to your face and you\u2019re looking through those glasses at the property, what are you seeing when you put on that different lens? Is there anything you want to add on to that, Rob?<\/p>\n
I mean, for the most part, I think kind of in the price point that we\u2019re in, risk is sort of the big one, for me personally, because most of actual properties that I\u2019ve purchased I would say cost between, well, $165,000 from my tiny house, all the way up to $624,000 for my house in LA.
So now we\u2019re looking at properties that are at a minimum, two million, three million. And that right there places a whole new level of skepticism and critical thinking and scrutiny for every single deal. But the strategies that we\u2019ve learned are whole career, they still apply the same. You got to be willing to take a risk every so often. And I have my whole experience, I have my whole life here of always being strategic to rely on and really take a bet on myself that I can figure anything out. If I have a little bit of confidence in myself, there\u2019s never been a time where I didn\u2019t succeed at what I do in this space.
And I know you probably feel the same way. And so when you really just kind of walk yourself the back from all that, it\u2019s not as risky as-<\/p>\n
It feels that way.<\/p>\n
It is, obviously, but it does feel that way. It does. Yeah.<\/p>\n
Now it\u2019s important to highlight when you\u2019re doing this, as Rob and I do it, when you put on your risk goggles and you look at the deal through the prism of risk, you\u2019re going to see risk. What you\u2019re not doing is just looking at all your deals with risk goggles and saying, oh, I found risk. Don\u2019t do it. Risk is going to be there.
Instead, what you\u2019re doing is you\u2019re looking at where the risk is and determining, do I have a plan that will mitigate if something goes wrong in that area? That\u2019s what\u2019s key about this whole thing. So you can imagine looking at a three and a half million dollar residential property is going to involve some significant areas of risk. We\u2019re going to be renting out for a lot of money per night. That could change. What if we can\u2019t get, whatever, 1500, $2,000 a night for this property?
You\u2019re going to have a lot more expenses associated with an estate this big. You are going to have the fact that if there is a decrease in the market, these properties, they\u2019d be very hard to sell. People still need to buy starter homes even when the market drops. They don\u2019t have to buy luxury homes.
So what we do is we sit here and we say, all right, here\u2019s where we have risk. How are we going to mitigate it? What is our plan? We come up with a contingency for every area that we can see when we put on our risk goggles. And there\u2019s very practical things, right? We\u2019re going to be borrowing some money to buy this place and to fix it up. Well, we\u2019re going to keep at ridiculously large amount of money in reserves so that even something goes wrong, we have like three years of reserve set aside that we can pay somebody back.
That is an example of how we look at risk. We see where it is, but we put a plan in place. We keep moving forward. And you could do that for everything. If you\u2019ve got your ROI goggles on, how can I improve the ROI on this property? Is there a place where I can make it go higher? As far as the appreciation and equity, there\u2019s no appreciation here. Well, that means that I need to get this property with more equity built in. Or, there\u2019s no equity in this deal, we\u2019re going to be paying at the top of the market. Well, is the market continuing to move up? Because that can grow equity, right?
It\u2019s not is it or isn\u2019t it there? It\u2019s, where is it missing and what is our plan for how we\u2019re going to improve it? And so that\u2019s just, what I wanted to highlight is we look at every deal through these lenses, but they\u2019re is no perfect deal. Every deal will have something. Or in every one of these areas will have something that you don\u2019t like. Your job as the investor\u2019s to figure that out. Anything you want to add before move on to number three?<\/p>\n
Yeah. I just want to talk about a little bit of the discipline here that just between you and I, what actually we do on a weekly basis. Because we are pretty consistent. I don\u2019t think we\u2019ve missed a week yet, but we basically meet every single week. Same time unless there\u2019s something comes up and we have to just move it, move it to the next day or something like that.
But we meet every single week. Most of the time, I would say 80% of the time or maybe 90% of the time, we Zoom, which I think is important to me. Well, first of all, I\u2019m ADHD. So when I\u2019m on the phone, I just know that it\u2019s going to be so much easier for me to walk around and look at the dust on my door frame or on my fan or start making my bed. I always make the bed when I\u2019m on the phone. I\u2019ll remake it. I\u2019ll take the sheets off and make it several times.
So being on zoom really forces me to be there, be in the moment, give my time to\u2026 Because our time is valuable. And so you want to respect your partner\u2019s time and everything like that. And we\u2019ve been really consistent about that. And I think that has really, even if we don\u2019t have something to present, we\u2019re still excited to meet, I think.<\/p>\n
Yeah. So that for exist to number three, which is that we meet weekly to review what we got going on. And this is incredibly important. I really, really want to just pound this point. If you are an investor and you\u2019re committed to getting your first deal, maybe you got Brandon Turner\u2019s Intention Journal, maybe you attended a webinar where we talked about how to get your first property, or maybe you just heard on this podcast, you said, I want to do this.
My philosophy is, if it is not in my calendar, it does not exist. If I\u2019m going to go have dinner at my mom\u2019s house or I\u2019m going to my niece\u2019s birthday party, it has to be in my calendar. If I don\u2019t put it in my calendar, it doesn\u2019t exist and there\u2019s no way I can guarantee I\u2019m going to be there. And if I do put it in my calendar, I can\u2019t schedule anything else for that time. That\u2019s what I love about it, is I block off the big things first and everything else goes around it.
So you not going to have success finding a property if you\u2019re new and you\u2019re not used to this if you don\u2019t block time off to do the things that you need to do. And Rob and I block a time off every week where we\u2019re going to meet and review the properties that we are considering.
Now, Rob, I just want to thank you for being incredibly gracious because the reason we don\u2019t meet a hundred percent of time on Zoom is a hundred percent David. It\u2019s me every time that say, ah, I\u2019m stuck, I\u2019m not going to make it back to the office. Can we do this on phone? And you\u2019re very cool about that. But it is important that you do the meeting in a structured way, right? So we like ours on Zoom, because we can share our screens, we can go over the properties that we\u2019re reviewing.
Now what\u2019s happening is Rob and his partner are showing me the properties that they\u2019ve looked at throughout the week that they think they have the best chance with and saying, hey David, here\u2019s what we like about them. Here\u2019s what we\u2019re not sure about. Here\u2019s what our thinking is. What\u2019s your opinion? And then I will weigh in with my perspective based on the experience that I have with real estate. And they\u2019ll learn from what I\u2019m thinking and I\u2019ll learn from what they\u2019re thinking.
And what we end up coming up with is a list of questions on every property. Now, some of them we dismiss, right? Maybe during this, we realized they\u2019re an HOA that doesn\u2019t allow for short-term rentals. That\u2019s happened a few times where they only let you do it six months out of the year. Those get thrown out. Other ones, we say, yeah, this would work, but we need to figure out these things.
And in that meeting is when we determine what we would need to know. This is why it\u2019s so important you have the meeting. So we have our list of properties. We then get our list of questions. Now we\u2019ve got our work set out for the next week. And that would lead us to step number four, which is delegating tasks. Rob will say, hey David, here\u2019s what we need from you. Can your lending team solve this problem? Can you tell me what you think? Do you know a realtor in this area that could help us answer this question.
And I\u2019ll do the same thing. I\u2019ll say, Rob, can you look this one up on AirDNA and tell me what you think. Can you look at a comp that would show maybe the rents will be higher than what AirDNA is giving us. We will delegate the task that we have on an individual property. And then that\u2019s what we\u2019ll work at for the following week until we meet again. And anything you want to add there, Rob?<\/p>\n
No, no. I think we can move into number five because this really sets the tone and the communication for the entire week. And number five here is, communicate throughout the week for follow up. So this would be text messages, emails, voice notes. I actually really like voice notes. We send a lot of those. The only thing I don\u2019t like about them is, when you send them, if you don\u2019t hit, keep, they erase.<\/p>\n
Yes.<\/p>\n
And all of the golden nuggets that you send me, they\u2019re gone. They\u2019re gone after I listen to it one time. But it\u2019s really nice because we may not be in a scenario where we can take a phone call. I\u2019ve got two kids and all that. You might be in meetings and everything like that. But we can relay some pretty nuanced things that are very hard to relay via text message. We send emails. This is where we\u2019re kind of introducing each other. Like if you\u2019re introducing me to a realtor that you\u2019re connected with, or if you\u2019re introducing me to someone on your lending team, this is where I can then pick up the communication and drive that ball forward a bit.<\/p>\n
Yeah. That\u2019s important. So if you\u2019re working with a partner like what we just mentioned in step number four, when we\u2019re delegating tasks, okay, Rob, you\u2019re going to work on this and I\u2019m going to work on this. You don\u2019t want to just get and then say, oh, I don\u2019t know what to do. I\u2019ll wait until the end of the week and we\u2019ll discuss it. You just lost five days of possible productivity.
Instead, Rob\u2019s going to say, hey, this is what they\u2019re saying. What do you think? Or I\u2019m going to be like, hey, I\u2019m stuck on it. This is worth it. Can you look this part out for me? I need help accomplishing my part and you can help me with it. And that\u2019s when this communication happens.
The voice notes, they\u2019re powerful. It sounds simple, but there\u2019s times when you\u2019ve received a text that was like three feet long and you just think I\u2019m not even going to read that. That\u2019s something that should have been a voice note.<\/p>\n
My entire inbox. I\u2019m like, no.<\/p>\n
Exactly right. And then there\u2019s other times where you get that phone call and you\u2019re like, I just don\u2019t have time to take this call. So the voice note is the perfect medium between the two. And if you have a partner, this is something that you need to be working on yourself. If you\u2019re meeting every week with yourself to review where you\u2019re at on every property, make sure you\u2019re working throughout the week to get the answers to the questions that you needed so that when the week comes, you actually have information to be able to move forward. This is the structure that\u2019s so important, is we\u2019re treating it sort of like it\u2019s a job. Not just like it\u2019s a hobby.<\/p>\n
I\u2019d like to squash a bug here. Just something that I\u2019ve really been wondering since the day I met you. And I just want confirmation on if this is an urban legend or if it\u2019s true. When I first met you, when I did the BiggerPockets Podcast like six months ago, I was like, oh yeah, I\u2019ll shoot you a text. And then you\u2019re like, man, I\u2019ve got 1200 unread texts right now. I was curious, do you actually have 1200 texts? Because I think about that every single time I text you.<\/p>\n
It\u2019s more now. In fact, what happened is I need a new iPhone because you hit a certain point where it stops displaying the number on little text thing. Like it doesn\u2019t even tell you how many unread text messages you have. I hit that. So that\u2019s one of the things I say to human beings. If you take the same road everybody else has taken, you\u2019re probably not going to get there, right? Like, Rob, text me. And if you don\u2019t hear back, you don\u2019t take it personal. You\u2019re like, all right, I need to email his assistant Krista and get time on David\u2019s calendar. And then boom, you\u2019ve got all my attention.
And I use that hack all the time. If I\u2019m trying to get ahold of somebody who\u2019s over 30 years old and they\u2019re really busy, I send them a message on Facebook Messenger because nobody else uses that other than 30-year-olds or older. Right? So if you look at my Facebook Messenger, I have like two or three unread messages. If you look at my text, I have a million. So that\u2019s just a little a quick tip for everybody there, is find the road most traveled.<\/p>\n
Quick tip. Okay. It\u2019s good to know. All right. Well, I always send the gentle\u2026 Just I write bump anytime I hear back bump. Just a little friendly reminder.<\/p>\n
Yeah. Everybody who\u2019s listening. If you\u2019re in my life and you text me, just bump me all the time. I don\u2019t get upset about it. I\u2019m never going to say, why are you bumping me? I\u2019m like, I know I need bumps. I need to get bumped all over the place. It\u2019s really hard to get ahold of me. And I\u2019m aware of that. Thank you, Rob, for your patience there.<\/p>\n
Go to the day. I need to get bumped everywhere. All right, cool. So moving on to number six. This one is receiving information from your realtor. This is really\u2026 Man, this is big, because we get so amped up and step five here, texting, I\u2019ll text you bangers all week and be like, dude, check out this house. It\u2019s going to gross $250,000. And then we get all excited and we\u2019re like, oh, what if we do like a hot tub and oh, a golf card, and a basketball court. And we get all excited. But it\u2019s kind of one of those things where I\u2019m usually better about this, but on some of these luxury properties, one cannot help but get excited at certain properties, because they\u2019re like dream properties. And then you talk to your realtor and your realtor\u2019s like, oh yeah, that isn\u2019t an HOA. And they will not allow short-term rentals. And you\u2019re like, no, I spent three hours counting this out. Happens all the time.<\/p>\n
Everyone does this. This is where experience has led me to sort of being able to direct in these situations better than someone who\u2019s not. Experienced by my own properties. And frankly, the thousands of houses that we\u2019ve helped our clients buy, I had to learn how to do the same thing. You don\u2019t want to get too emotionally connected or put too much time into a property that you don\u2019t have a good chance of getting.
So when we first look at them, it\u2019s easy to just want to run as far down the path as you can get, even in your mind of, oh, I can do this and I can do this. And I love it. And I have to have it. And as a realtor, I\u2019ve learned, if that house has been on the market for two days, don\u2019t do that. There\u2019s 30 other people that are doing the same thing. And you know what? It kind of goes down that don\u2019t take the road that everyone else is taking, right? Like if you\u2019re trying to text me, that\u2019s not the best method. You don\u2019t want to look at houses that everybody is looking at, especially if you\u2019re going to put all that time into it.
So what\u2019s important is that you identify, is this a property that would work for what we want? You go through your matrix, which for us is these five prisms that we look at. And then we say, do we have a chance of getting it? So oftentimes, the first step is having our realtor call the listing agent and saying, how many offers do you have and where do we actually have to be? And if the listing agent plays this dumb game of, I don\u2019t know, highest and best, that\u2019s like one of my pet peeves is this little parrot on the shoulder of a pirate that just says highest and best, and they call themselves a realtor. That is not selling a house.
If you\u2019re a listing agent doing that, they are not earning you money. They need to be aggressively trying to get a good offer from the other side. But if we get that and they\u2019re like, oh yeah, they just said highest and best And they just don\u2019t really care, we\u2019re probably not going to go after that property. Okay. Let everybody else have it. That\u2019s why we went after the one we\u2019re talking about now that\u2019d been on market 190 days or whatever it was because they weren\u2019t getting a ton of action and we knew that we had a better chance of putting time into it. So that\u2019s huge.<\/p>\n
Well, I\u2019ve actually got a new policy now. Whenever a realtor says highest and best, I actually submit lowest and worst. So I\u2019ll submit an offer for $2 and see if it\u2019s a-<\/p>\n
Put that in your pipe and smoke it.<\/p>\n
Highest and best.<\/p>\n
That\u2019s really good. So a lot of what the conversation involves around in the beginning is something that actually should be happening in the due diligence phase. Okay? That\u2019s why you have an inspection period. And it\u2019s just it\u2019s easy to not be disciplined and to do all that up front and call it work. And this is how you get your heart broke, right? Like you try to date too many people that aren\u2019t interested in you, you\u2019re just going to get tired of the rejection and stop dating and become like a cat person. Right?
That\u2019s not what we want to do. We only want to actually put our efforts of pursuing the properties that we have a reasonable chance of getting. So part of this is experience, but the other part of this is just working the system that we have, where we know, all right, realtor, we need you to go find out, can we get the property? What price would realistically get it at? They\u2019ll bring that information back to us. We will then kick in and say, okay, at that price, would this work? How much equity? We look at it through the prism. How much equity be in there? How much risk would be in there? How much revenue would we expect? And if they have nothing, then we go look for a different property.<\/p>\n
Well, yeah. Let\u2019s talk about that a little bit. Because there\u2019s obviously the communication\u2026 Well, not just the communication, but the actual selection of your realtor-<\/p>\n
Yes.<\/p>\n
\u2026 is so important. So can we talk about what do we look for in a realtor? What kind of questions do we ask? How do we even choose ours? I would like to tell that story in a second.<\/p>\n
Yeah. So I\u2019ll start and then I\u2019ll let you tell our specific story. I\u2019ll start with a general. What I look for is me. So I think I\u2019m a good realtor because I buy a lot of real estate. So if you come to me and you say, David, I want to buy real estate, I\u2019m not looking at a firm perspective of a salesperson. I\u2019m looking at it from the perspective of someone who wants to help build your wealth.
I like to work with other realtors who also own real estate and who like real estate. They don\u2019t have to be a realtor, they want to be a realtor. Now, that means they\u2019re going to be picky about their clients. So you actually have to be on your A game to get them to work with you. And a lot of people don\u2019t like that. They want the realtor that answers their call right away, that they can boss around. I don\u2019t like that. If I can boss around my realtor and I haven\u2019t proven why I should, they\u2019re probably not that great.
So what I tend to look for when I\u2019m going into a market is what is our strategy. That\u2019s why the number one thing that we talked about was determine your criteria, what asset class, what area, and what price point, because you want a realtor who works in that area, owns in that area, sells in that price point, and understands that asset class. That\u2019s actually what you\u2019re going to look for.
We kind of talked about that, Rob. And I connected you with a couple people. And then with this specific issue, we had a bunch of questions and I said, hey, we need to find a person that is an expert in this asset class. Why don\u2019t you call the brokerages in the area and ask who their luxury specialist is, and then find out if has these questions. And I shouldn\u2019t have been surprised. You completely hit it out of the park on your first try. You came back with a rock star. So tell me what you actually did to make that happen.<\/p>\n
All right, man. So I woke up. I went out to my front door. I took out my yellow pages. I found it. I was like, all right. And I flipped all the way over to the S\u2019s and found Sotheby\u2019s. I mean, we all know that Sotheby\u2019s is obvious one of the more lucks places out there. And so I called him up. And it was like the receptionist of the place. And I was like, listen here, bub, Robuilt and David Greene are looking for a luxury house. I was like, excuse me, do you have anybody that might be able to help us please?
And so they were asking and I was like, look, it\u2019s really important to me that they know short-term rentals because I already know short term rentals. And so if they don\u2019t know, I\u2019m going to know that they don\u2019t know. And so she was like, okay, okay, great. She actually ended up patching me through to two people. They were like partners. I think they partner up on selling houses and everything like that.
And I talked to the guy. He was super nice. I mean, really, really nice. And I started kind of interrogating him a bit and being, well, what does short_term rental mean to you? And we kind of went back and forth. And it was pretty clear that it wasn\u2019t his wheelhouse, but that\u2019s okay. We talked it through and I was like, hey man, honestly, I appreciate your time, but I need someone that can help me accurately estimate how much we\u2019re going to gross on a property like this because it\u2019s $3 million.
And he is like what, you know what? I know a guy. And I was like, you do? He\u2019s like, I know a guy. He doesn\u2019t work here. He actually works at a competing brokerage. And he\u2019s really great. This guy knows everything there is to know about short-term rentals. He owns five luxury short-term rentals. He owns a property management company that manages 70. This is going to be the guy. And I was like, hey, I just want to say, thank you, because you just gave over a $3 million lead to a competitor. And I know he\u2019s your friend, but that\u2019s super nice of you to do.
And that\u2019s what he did. And I called the guy. I talked to this new realtor. And he was schooling me, man. He knew everything there was to know about luxury. And his insight throughout this whole process has been so helpful for us because now I can run my comps and I can go back to him and say, hey, am I off here? I have calculated $47,559 and 49 cents. Is that right? And he\u2019s like, yeah, that\u2019s pretty close. Or, actually in this neighborhood, it\u2019s a off because of this, this, and this, and this.
And so there\u2019s a little bit of a synergy there that I get to work with. And it wasn\u2019t necessarily easy to get to that realtor. There was a little bit of work involved, but now it\u2019s going to dramatically affect us moving forward because now we got the best of the best.<\/p>\n
And that perfectly highlights step number six, receive information from your realtor. If you know your asset class, your area, and your price point, you can go to the realtor and say, what do you think we need to do to get these properties? What should be be aware from? And that\u2019s some of the stuff he provided, because he owns these things.
One of the concerns I had was, we\u2019re being told this is the revenue that\u2019s going to get in tonight. That seems really high. How can we verify that? Well, he happens to own properties and he actually said you\u2019re probably going to get more than that. You\u2019re more than okay on this one. Avoid these ones. So we got information from the realtor that helped us to develop the strategy that we use to move forward.
And number seven, the next step would be communicating what we need to that realtor. So that\u2019s where you say, here\u2019s what I want you to look at up. Here\u2019s a question that we\u2019re stuck with. Can you ask someone else in your office if they know what to do in these situations. That is also very important, is that after your weekly meeting and the tasks are delegated, that you go communicate with your agent and say, here\u2019s what I need to know. Is that something you can help me with? Or is that not something you can help me with very clearly?<\/p>\n
Well, we also want them to go in and sort of suss the situation, if you will. Right? So if this property\u2019s been sitting for 1, 2, 3, 4, 5, 6, 7 months, we kind of want to know why, and we want to know if the sellers are at all motivated. Why hasn\u2019t it sold? Has it fallen in escrow or has it fallen out of escrow?
And go in and do a little bit of recon. Run some recon on the property. Get back to us and let us know why. And usually, they\u2019ll go in and they\u2019ll talk to the listing agent. And that property that\u2019s been on the market for six months, that listing agent might say, oh yeah, you could pay. By the way, the seller\u2019s super motivated. Between you and I, let\u2019s get this done. That\u2019s not exactly how it worked out for us, but that\u2019s really important to have. A realtor that can play the game of bit. I think that\u2019s going to work out in your favor whenever you\u2019re really going back and forth in negotiations.<\/p>\n
Yeah. And I\u2019ll probably highlight here before we move on that when you\u2019re telling your realtor here\u2019s what we need, a big piece of it is telling them to call the listing agent and find out if we wrote an offer today at this price, would it be taken? Just don\u2019t waste your time in a hot market if there\u2019s 14 other people that want that house and you\u2019re insistent on having very strict criteria. It\u2019s great to have strict criteria. That\u2019s why the first step, is you should figure it out. But if the property isn\u2019t going to work for that, don\u2019t try to make it work. Just move on from it and find a house or a property where it\u2019s still going to work for you and they\u2019re more motivated.<\/p>\n
Yeah. It\u2019s been really interesting because we tend to only look at properties that have been listed for a while because I we\u2019re just so tired of competing. Why compete with a hundred people when we can go find the diamond in the rough that\u2019s been listed for a while and see if we can make that one work.
And for the most part, I think most of our options have been things that have been sent for a bit at that higher price point, which is really great for us because we see where we can add value to the property. And we know that we can maybe come in a little bit lower. And if we can\u2019t come in a little bit lower, maybe we can start asking for things like seller credits.<\/p>\n
That\u2019s exactly right. Now, I use this a strategy on the David Greene team with all of our clients, because I tell people, stop chasing the house that\u2019s been on the market for two or three days. You\u2019re going to get your heart broke. You\u2019re going to grossly go over asking price. But of course it\u2019s tempting. But it says it\u2019s only $800,000 on Zillow. Why can\u2019t I get it for that price, go work a miracle?
But this is the strategy that I use myself. We\u2019re looking at one here that had been on the market 190 days. I have an offer out on one yesterday that was sitting on the market at 2.4 and sat there until it expired. And we got a hold of the sellers off market. And I\u2019m now trying to put a deal together with them because their motivation level is different after their house sat and expired.
I only go after properties that I think the seller wants to sell it just as much as I want to buy it. If I want to buy it more than they want to sell it, they\u2019re going to get a lot of other buyers and they\u2019re going to sell it for more. So be disciplined in how much time you spend on a property. The first thing you should be looking at after it matches your criteria, which for us are those five things, is do I have a chance of getting it? If the answer is no, don\u2019t put any more time into it. Wait until it falls off the market or it sits there for longer. If the answer is yes, then you can dig in with a little bit more due diligence.<\/p>\n
Yeah. If you\u2019re excited about a property, just a rule of thumb. If you see a property, you pop up on Zillow and you\u2019re super excited at how beautiful it is, and you\u2019re even more excited at the price point, you\u2019re probably not going to snag it for that price point. It\u2019s pretty rare.<\/p>\n
All right. Step number eight is actually writing an offer. So we\u2019re going to do a show in the future with a lot more detail about this, but just let\u2019s focus on this deal that you and I are working on that we\u2019re probably going to have in contract today. Can you share a little bit about the offer that we wrote, what we asked for and why?<\/p>\n
Yeah. So I alluded to a little bit at the beginning of the show, but this house was on the market for, I think just under six months by a couple days. It was listed at 3.4 and we made an offer with a couple of interesting contingencies. So we came in at 3.25 million, so about $150,000 less than asking. But then we also at asked for a $75,000 credit to be applied toward closing costs and other things like that.
So really when you start mapping it out, the offer is closer to 3.175 million. And then we also ask for all the furnishings to be included as well. They weren\u2019t necessarily all my favorite furnishings, not necessarily things that I would choose, but they were pretty good. They were good enough for this property. And I was like, I\u2019m happy with 90% of this stuff.
And so when you factor that in, that stuff could be anywhere from 35 to $50,000. And that\u2019s really important for us, especially in this short-term game where cash-on-cash is a really important metric in our matrix, right? And so if we can save $75,000 in closing costs and we can save $50,000 on furniture, we\u2019ve just saved over $100,000 dollars in cash. And so our cash-on-cash, our ROI really starts going through the roof.
Was there anything else on offer that\u2026 Oh. Yeah. And then we also asked for a 60-day close,<\/p>\n
A 60-day close because we wanted more time to be able to raise money. And then we asked for a home warranty that would cover anything that might break in the property. But I want to highlight here, is that price is not the only thing that matters. Most people get stuck on price. They think they won or they lost based on the price.
This property, from what we\u2019ve seen so far, we have to do inspections still, appears to be turnkey. We\u2019re not going to have to spend hardly any money in fixing this thing up. And now that we\u2019ve taken out our closing costs and we\u2019re actually able to buy down our rate with that 75,000 credit and get it to be a cheaper monthly payment, and we don\u2019t have to furnish it, even if we paid more than someone else, our cash-on-cash return would be much higher in theirs.And we would have more capital to buy another house.
That\u2019s the thing, is we structure the deals so that we have minimal money in it while still keeping incredibly big reserves so that it\u2019s not risky. And getting to borrow the majority of the money at a lower interest rate. Now, people get really good deals on properties, but they need a ton of work. And then they dump a bunch of money into it. And then they got to borrow money from somebody else, like a hard money lender at 12%.
And so even though the price was better, what they actually end up spending per month ends up higher. So it\u2019s not only about the price. And that was one of the ways that we\u2019re able to work this deal out to work for us, where the other people who were looking at that property probably just got stuck on the price and couldn\u2019t see past it.<\/p>\n
Yeah. Literally, you and me, just with the credit and the furniture, you get to keep $60,000 in your pocket, I get to keep $60,000 in my pocket. Not only that buying that rate down, that\u2019s not necessarily a big deal on a $300,000 house, but on a $3.25 million house, buying down a half a percentage point, that\u2019s a pretty significant difference, not just in the monthly, but in the actual interest that we\u2019re paying on that property over time, over the life of that loan.<\/p>\n
That\u2019s exactly right. So that\u2019s one strategy that we use on the David Greene team that we brought into this one, was a lot of the time, if you got a deal with a seller and they\u2019re willing to take 500 grand, it might be better to give them 520 with a $20,000 closing cost credit that you can use to cover your closing costs us, to fix the house up, to buy down your rate. Because when money is cheap like this, borrowing more of it is less expensive than when rates are higher.
Another thing moving on to number nine actually offers strategies like our strategy with this deal is when we first submitted that offer, they said, no. They told us to go\u2026 You said kick rocks? I think maybe pound sand might be more appropriate because it\u2019s in the desert. Right? Surrounded sand in Scottsdale.
So they told us to go pound sand. And we said, that\u2019s fine. This is normal. Right? My experience as an agent, I understood that the sellers were in an emotional place. They received our offer as kicking the pants. Like this to them was like an insult. That it was lower. And if your house has been on the market for six months and it\u2019s not selling, you have some unrealistic expectations. They should have already dropped the price.
So here\u2019s what we said to the realtor, ignore them for a couple days, then we want you to go back to them. And this is what I would do if I was the buyer\u2019s agent representing us, is I would say, hey, my clients are going to buy this house if I tell them to buy it. They rely on what I\u2019m saying. They don\u2019t really understand whether they should buy this one or another one. They told me to go find them a deal that works for their numbers. And that\u2019s my job.
So if I tell them that this is the one that\u2019s going to work for their numbers, they\u2019re going to do it. But the numbers need to be right here. Listing agent, what do we have to do to make this work? And we are going to put the onus on that agent to go work on her own clients and say, guys, what do you need to feel good about this deal?
That is different than what most agents will do, which is they\u2019ll protect their own ego at the expense of yours. So what they\u2019ll do is they\u2019ll say, I got a lot of clients. I don\u2019t really need this sale. But my clients really want the house, what do we got to do you here? That doesn\u2019t work. You want it to be the opposite. You want your agent to say, I want to put this deal together. Tell me what has to happen in order to do it. My clients will listen to whatever I tell them.
That\u2019s literally what I say to the agent on the other side. And what happens is it now gets the listing agent to go to her clients and be an advocate for us. She\u2019s or he is going to go say, listen, we got an offer here. We haven\u2019t got anything else. I think this is our best shot. What do you guys need to feel good about this deal? And then she\u2019s going to go back to our agent and say, here\u2019s what they said. And he\u2019s going to say, oh, that just the numbers won\u2019t work at that. What can we do to get him to this point instead?And we let the agent sort of whittle down the sellers until they got to the point where they were good with us.
Now, I knew if this house had been on the market for six months, that there\u2019s a very good chance that they\u2019re not going to maintain their resolve to keep going. That was one of the things that Rob really liked about it, is he\u2019s like, dude, this one\u2019s been on the market for a long time. There\u2019s not a lot of houses that are at this price point. There\u2019s not a lot of buyers that are looking at this price point. They can\u2019t move on with their life until they sell it.
And that\u2019s what you want to remember, is when it\u2019s been there for a long time, when that offer comes in, their knee jerk response is no, most of the time. But then what happens is their thoughts start going into, what else could we use this money to buy? If we got rid of this thing, we could go buy that house in the Caribbean, or we could buy that multi-family property that we could use to retire. All that stuff starts moving through their head and it slowly weakens their resolve to hang on at.
And lo and behold, about a week, maybe a week and a half later, a realtor came back to us and said, yeah, they\u2019re willing to accept your terms. They just asked for a few little things to be different.<\/p>\n
Yeah. I actually want to point out the phrase I that he put out there. And I think he said putting them on ice. He\u2019s like, oh yeah, I call that putting them on ice. And so that\u2019s basically\u2026 That\u2019s ignoring them for a little bit. And then coming in strong and saying, hey, I want to put this together. And then that realtor came back and said, oh, highest and best, whatever. And then he was like, okay.
Then he put them on ice for, I don\u2019t know, however long, several days. And then he came back and then he is like, hey, I really want this of my clients. They\u2019re not going to go for it. I\u2019m the decision maker here. I\u2019ve comped it out. The numbers have to be here. And yeah, they accepted most of the terms and were kind of working through what that means.
But all in all, a pretty\u2026 I called you the morning he told me that. He sent me a text and he said call me. And I was like, oh, okay. This is always my favorite text from a realtor. And then he was like, all right, hey, they didn\u2019t really counter your counter after they had let it expire. And I was like, man, David\u2019s going to be so happy about this. Because it worked out exactly how you called it, man. It was like pretty funny. Exactly how you called it, hey man, I guess what you\u2019re talking about.<\/p>\n
Well, thanks, Rob. This is David Greene team pen. I\u2019m holding up here. That\u2019s why I learned it. Right? So that\u2019s why we wanted to share this, because most of our listeners won\u2019t have the experience that I do being in these situations and they wouldn\u2019t have understood this is a stride that will work. So I wanted to make sure we conveyed that. Because it did worked awesome.
The last thing, step number 10, is have several irons in the fire. And this is what we do so we never get too in love with this deal. While we had it on ice when they rejected our offer and we said, hey, just let them chill for a minute, let them think about it, we didn\u2019t just sit around crossing our fingers and feeling tempted to adjust our standard. We went out and looked for other homes. And it let our realtor tell their realtor, hey, these guys have me looking for other properties. If you guys don\u2019t want to put this together, they\u2019re going to find something else. I\u2019m going to find them something. You be the thing that I find them.
But you got to be willing to keep looking. You cannot fall in love with any one deal. So we sort of set that one off to the side and we kept evaluating other properties. We kept meeting every week. We kept bringing new properties into this perspective that we had so we never fell in love with one property. This will help you in two ways. One is it will stop you from falling in love with the property you should not be in love with. Two is, if that property is really good and you just don\u2019t want to accept it when you see everything else is not as good, it will make it more clear that\u2019s the right property to go for.
This is what we do to make sure that we protect ourselves in those two ways. Anything you want to add there, Rob?<\/p>\n
No, I think that\u2019s\u2026 Obviously, I very much overanalyze every deal and I think your advice to me. Because in this market, it\u2019s crazy. We\u2019re just lucky to get an offer accepted. Period. But your advice was like, hey, stop being a sniper and start throwing grenades. And I was like, all right. All right, I\u2019m going to ease up a little bit on every single criteria. Then I just started. I was like, okay, I\u2019m just going to look at all of the other prisms in the matrix, I guess, if you will. And I\u2019m just going to cash flows there, but I\u2019m just going to really start evaluating deals on all those other points and start looking at dozens of deals. And I\u2019m like, all right, we have all of these to fall back on right now if this one doesn\u2019t work out.<\/p>\n
Right. We call that the call of duty strategy, right? You don\u2019t win a call of duty by just hiding in one little spot and waiting. You have to go out there and go crazy. Now, once it\u2019s in contract, we will go into sniper mode. That is when we look down the scope at every little single fine-tuned detail to make sure we like the deal. It\u2019s not appropriate to do that before you even have it in contract. That\u2019s how you\u2019ll just burn yourself out. It\u2019s too hard to look from a scope if you\u2019re trying to see the whole field. So that\u2019s what we\u2019re getting at there. I forgot about that. That\u2019s a really good analogy that you brought into this.<\/p>\n
Yeah. Well, hey, it was just yours. I\u2019m just throwing it back out there. But yeah, we\u2019ll get into that whole strategy of the actual due diligence of a luxury property in a different episode. But this is pretty good synopsis on everything we\u2019ve been going through for the past what? Eight weeks or so?<\/p>\n
Yeah. That\u2019s exactly right. And I really believe this method works. I do it with\u2026 When I partner with someone, this is how I do it. And when I was in super buying mode, this was a strategy that I had set up when I was buying three to five deals a month. And I was using the birth strategy is I\u2019d meet with my realtor every week. We would discuss these things. I had a prism that I looked at every property through. I would look at the list and say, here\u2019s what I need to know.
Now, it\u2019s obviously more fun and better to do it with a partner like Rob who understands this asset class because he\u2019s done it a ton. And I don\u2019t really have to teach as much as Rob is bringing value. That\u2019s what you want your partner to feel like. Is their angles that you don\u2019t see. And they know stuff that you don\u2019t know yet. And Rob\u2019s really experienced with this. So that makes it a lot more fun and easy.
But the system\u2019s the same. And that\u2019s what we\u2019re trying to say. These are the 10 things that you need to do if you are serious about wanting to get your property under contract. So thank you for joining me here, Rob. I\u2019m going to let you get going, but I\u2019m going to give you the last word.<\/p>\n
Ooh, wow. So much pressure. I guess\u2026 Hey, the personal note here. I\u2019ll let you know what the realtor says. He\u2019s going to be getting back to be here in like the next hour or so. So the ultimate cliffhanger for everybody listening at home.<\/p>\n
So if it works out great, we\u2019ll start our series of due diligence, like we said. And if it doesn\u2019t work out, that\u2019s fine, we have other irons in the fire. We\u2019ll talk about them at our next meeting. We win either way. So, thank you very much. This is David Greene for Rob call of duty Abasolo. Signing off.<\/p>\n