\n<\/p>\n
Want to buy rental properties while the market is down<\/strong>? If you didn\u2019t already know, you could be sitting on the perfect funding source<\/strong> found right under your own feet. But with today\u2019s mortgage rates <\/strong>still double what they were last year, is taking out any of your equity a mistake<\/strong>, or could this be the opportunity of a lifetime to scoop up some sweet real estate deals at a stellar price? We\u2019ve got our expert investor, lender, broker, and ship-metaphor-making host, David Greene, to give you his wealth-building secrets.<\/p>\n Welcome back to another Seeing Greene<\/strong>, where we take questions live from BiggerPockets listeners on how you can retire early with real estate<\/strong>, build a business you love, and create generational wealth<\/strong>. This time, we\u2019ve got questions on how to use home equity <\/strong>to buy more property, then we debate cash flow vs. appreciation<\/strong><\/a> and which is a better bang for your buck. We\u2019ll also compare commercial vs. residential real estate <\/strong>and explain how these two seemingly similar assets operate VERY differently. And finally, David gives his favorite news sources on where to learn about the economy, the housing market, inflation<\/strong>, and every other variable that\u2019ll help you make intelligent investing decisions!<\/p>\n Want to ask David a question? If so, <\/strong>submit your question here<\/strong><\/a> so David can answer it on the next episode of Seeing Greene. Hop on the BiggerPockets forums<\/strong><\/a> and ask other investors their take, or follow David on Instagram<\/strong><\/a> to see when he\u2019s going live so you can hop on a live Q&A and get your question answered on the spot!<\/p>\n David Greene: Cory Meals: David Greene: Mark: David Greene: Jordan Tinning: David Greene: \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 Interested in learning more about today\u2019s sponsors or becoming a BiggerPockets partner yourself? Email <\/em>[email\u00a0protected]<\/span><\/em><\/a>.<\/em><\/p>\n Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n
This is the BiggerPockets Podcast, show 747. First off, if you don\u2019t know what I mean by portfolio architecture, it\u2019s the idea of seeing your portfolio of homes as one organism as opposed to every individual house as its own organism. You want to have some short-term rentals that spit off a lot of cash and some traditional boring rentals that provide very steady cash flow to protect you in downtimes. You also want to have properties that maybe don\u2019t cash flow great, but they build a lot of equity for you, you\u2019ve built a lot of equity into. You want to have some properties that over a long period of time, are going to make a bunch of money and some properties that in a short period of time are going to provide cash flow to get you through that long period of time.
You want to combine them all together, so that\u2019s portfolio architecture. What\u2019s going on everyone? This is David Greene, your host of the BiggerPockets Real Estate Podcast, here to help you guys make money through real estate and find financial freedom with a Seeing Greene episode for you today. First off, I\u2019m proud of myself that I remembered to turn the light green before we start recording. If you want to see what I\u2019m talking about, check us out on YouTube where you can catch the video portion of this podcast. Second off, if you\u2019ve never heard of a Seeing Greene episode, these are shows where you, the listeners submit your questions directly to me about what goes on in my head, how I buy real estate problems that you might be having and you don\u2019t know what to do when you should jump into the market, how you should jump into the market.
Every single thing that you\u2019ve thought and said, \u201cI love this podcast, but I wish David was here right now. I\u2019d ask him this.\u201d I could be here right now. You just got to go to bigger podcast.com\/david and submit your question, and we make this show for the people and by the people. Today, we have a fantastic episode. I go a little bit longer, so please, there\u2019s a reason I did that, check it out. Listen all the way to the end because we give something very, very good advice and stuff I know a lot of people are thinking about. We cover what to do when you think you\u2019ve got a deal, but the area isn\u2019t great. So in this question, I kind of dig into the three things that I use when I\u2019m analyzing should I or should I not buy this deal?
There\u2019s another question about when to add diversity to your portfolio and when to stick with what you know. This is a question a lot of people struggle with, should I just keep doing the same thing forever, for infinity or should I branch off into something else and win? Then, how I filter my news to form my thoughts on everything. One other people said, David, \u201cWhere do you get the information that you\u2019re basing your perspective on,\u201d which I thought was amazing, and I share some information about how you guys can do the same is more simple than you think, but also more powerful than you think. All that and more on today\u2019s show. Before we get to our first question, today\u2019s quick dip is I swivel at my chair to keep my energy up for you.
How do you keep your energy up and what actions do you take that help you move forward? How can you contribute more to the community of those around you and put some of your energy into the BP community? Let me know in the comments on YouTube and this quick tip will make much more sense if you listen all the way to the end of today\u2019s episode. All right, let\u2019s get to our first caller.<\/p>\n
Hey, what\u2019s going on, David? My name is Cory Meals. I\u2019m a real estate broker associate and team leader here in North Texas. I\u2019m also a real estate investor, and my question for you today is how can I leverage the current equity that I have in my property so that I can go out and buy more property to put into long-term debt? The idea is right now, I have 40 to 50% equity in all of my properties. It\u2019s duplexes and a single family property. It\u2019s roughly a million dollars in equity that\u2019s just kind of sitting there. I don\u2019t want to refinance these properties because I have 30 year fixed notes on them all in the low to mid 3% interest rates. They\u2019re all cash flow grade and I don\u2019t want to sell them either. I\u2019m not looking to trade up. I want to figure out how I can tap into this equity.
Every lender I talk to says that they won\u2019t take a second position to give a line of credit. They won\u2019t give any kind of secondary loan so that I can go out and buy more property. There\u2019s opportunities out there that I\u2019ve seen here and there, and I just want to be ready to strike whenever I come across that great deal. So anyways, I\u2019m looking for any end sighting you have on this. Also, for all of you BiggerPockets listeners, if you all are looking to move to the North Texas area, specifically Sherman, Texas, I\u2019d love to help you out. Once again, my name\u2019s Cory Meals. Thanks for taking my question, David and I\u2019m looking forward to hearing the answer.<\/p>\n
All right, thank you, Cory. Well, you\u2019re making your journey a little bit of an uphill battle here because I like the question of how do I get the equity out of my properties, but the two easiest ways are both something you don\u2019t want to do. So let\u2019s take a quick step back and just talk about what equity is. Equity by definition is the difference between what you owe on a property and what it\u2019s worth. So you\u2019re saying that the properties are worth much more than what you owe. There\u2019s about a loan of around 40 to 50% of the value of the property. So you basically have 50% in general of your property has equity. All right? What is equity at a philosophical standpoint? That\u2019s a better question. Well, if you can learn to look at money as energy like I do, it makes a lot more sense.
When you go work a job, you work eight hours, they pay you $200 for your work, you basically have $200, which is a store of the energy that your labor and your time created for you. Okay? So we know that money is money, but I stopped looking at it the way that I used to because inflation has run rampant and now, I don\u2019t know what money is even worth. What\u2019s $200? Well, it\u2019s worth a lot more than it was 10 years ago. It\u2019s worth way more than 30 years ago. At 100 years ago, $200 was probably more like $10,000, right? It\u2019s crazy, so you can\u2019t just look at money as having an inherent value. You have to look at it as a store of energy. Savings, money in your bank account under your mattress is a bad store of energy. It loses value, right? So inflation is actually bleeding away at the value of cash.
When you look at equity, what that is, is energy that has been moved from your savings account into a property and it tends to grow. It grows because the loan\u2019s getting paid down. It grows because the value of real estate tends to go up over time and it grows because cash flow that that property kicks off creates a return. So equity either grows money better than if it\u2019s in your savings account or it just bleeds less. A lot of us don\u2019t realize if inflation\u2019s at 30% because that\u2019s how much money we\u2019ve added to the supply and your real estate went up by 15%, you still lost 15% of your money. It\u2019s very hard to track exactly what inflation is. We use the CPI, but that\u2019s not the most accurate thing.
Now, I\u2019m not going to go too deep into macroeconomics right now, but I did want to just highlight the point that many of us think that we\u2019re wealthier than we really are because we\u2019re like, \u201cOh, my property improved by 15%.\u201d Well, if inflation was really at 25 to 30%, you still lost money, but you lost way less than if you just put your money in the bank. Now, if you add leverage into real estate investing, that starts to sway it in your direction. Okay? So your question is how do I get the equity out of my properties? What you\u2019re really trying to do is take the energy that is being stored as equity in these properties and put it out into buying new properties where it can be amplified even more. And there\u2019s four ways that you add equity when you\u2019re buying a property. The first is what I call buying equity.
This is just buying a property below market value. The second is what I call forcing equity. This is also referred to as value add, you force it to become worth more by something that you do to improve the property. The next is market appreciation equity. This is buying an area where prices rise faster than the average in the country, and then, the fifth is natural equity or inflation where it just becomes worth more because the dollar itself becomes worth less. So I do want you to reinvest that money, but the two ways we normally get access to that energy is either selling the property in a 1031 and moving it from the property, it\u2019s into a new property. Now, the 1031 is just a way of moving your energy that\u2019s more efficient.
You don\u2019t lose as much of the energy in the transaction because you don\u2019t have to pay the taxes, which takes away. The other one is a cash-out refinance where there\u2019s still some energy loss because you\u2019re going to pay some closing costs on that, but it\u2019s very insignificant compared to how much energy you can gain if you go get the four ways that we build equity in another property. So you sell a property that\u2019s somewhat maxed out, you get another property at less than market value, adding equity, then you add value to the property, adding equity. You buy it in an area more likely to grow and appreciate than the surrounding areas, adding equity and then, you continue to benefit from the same inflationary pressures that you got with the last one, which continues to add to equity that you were already building.
When you do real estate right, every transaction like this, every time you move your energy, creates a bigger and bigger and bigger snowball. Your problem here, Cory, is you don\u2019t want to have to sell or refinance your properties because you like the rate you have and you don\u2019t want to sell, which leaves you with limited options. You\u2019re going to lenders and asking for a second positioned loan, so if anyone doesn\u2019t know what that is, this is a loan taken on a property based on the equity of it, which some lenders would be willing to do. If you have 50% of the equity, they\u2019ll give you another loan and put a second position lean on it. Many of them don\u2019t, especially with uncertainty in where the market is headed, okay? It\u2019s actually really hard to get financing right now because while all of us are like, \u201cIs the market going to crash?\u201d We\u2019re getting all excited.
The lenders are like, \u201cIs the market going to crash?\u201d They\u2019re getting nervous. They don\u2019t want to lay it on real estate, which to be fair, we\u2019ve warned you guys about for a long time, at least I know I have. When the market turns around and there\u2019s amazing deals and everyone is excited because there\u2019s a crash, it\u2019s super hard to get financing, you\u2019re probably don\u2019t have a stable income in your job, it becomes very hard to invest in real estate when we think it\u2019s going to be easy because we think we\u2019re going to get properties at discounted rates. Based on what you\u2019ve said, you have two options. One is putting a HELOC on investment properties, which is incredibly difficult to do. The only advice I have for you on that is to go to a local credit union or savings institution, but still it\u2019s very hard to get those.
I remember looking for a solid year before I finally found a credit union that would do that on my HELOCs and I don\u2019t have any of those right now. I\u2019ve already refinanced those properties out of that or something you might not be thinking about is private lending. You can go borrow money from people on the private money and give them a second position lean on your properties and borrow money from them. Now, the rate is going to be higher probably than what you get at a bank unless you find a person who is happy to give you a 6% loan or 7% loan, even though that\u2019s less than what a bank wants, it\u2019s more than what they\u2019re probably getting on their money in the bank.
So if you don\u2019t want to sell and you don\u2019t want to refinance, the only option that I think that you have here other than getting lucky and striking gold, finding someone that will give you a HELOC on an investment property is the private lending route. The advice I\u2019m going to give you is just consider selling. I don\u2019t know what the reason you don\u2019t want to sell is, you know better than me, but if you can sell one property and turn it into two to three that each one of them, you build equity in those four ways, let\u2019s say you just take two ways. If every property you buy, you get less than market value so you get a good deal and you add value to it, you\u2019ve now increased the equity on each one that you bought. And so if you sold one and bought three, you\u2019ve won six different times over, okay?
Then, if it\u2019s in a market where the money continues to grow, that\u2019s a third way you\u2019re building equity, now, you\u2019ve won nine times over and that snowball will continue. If the reason you don\u2019t want to sell is because of the interest rates, I\u2019m just going to advise you not to let that be the reason you keep a property. That might be an okay reason not to refinance. You like your 30-year rate, you don\u2019t want to get out of that, but selling a property and reinvesting your proceeds into something bigger and better with a value add component in a better location and that you bought it less than market value, that\u2019s how you\u2019re going to build bigger wealth. So thank you Cory for reaching out. Good luck to you on that my friend. Our next question comes from Aaron and Evan both in Baltimore.
\u201cHey David, a friend of mine and I are huge fans and are ready to take action on our first property. You constantly say to buy the nicest house in the nicest area you can, and of course we\u2019re doing the exact opposite. We have the opportunity to buy an off market property for 150K that if listed, would sell for around 180K. It is a duplex, both unit is rented by the same tenants for about five years in total, pulling in 1650 a month looking good against the 1% rule. Rents to the tenants have never gone up and could marginally without risk of losing the tenants. So it seems this is a no-brainer, but what is our actual strategy here? In terms terms of actual cash flow, it\u2019s not a whole lot of dollars and in terms of appreciation, that\u2019s a little unclear because the neighborhood is not great.\u201d
\u201cWe are super excited to get our first property and simply trying to figure out how to prep to get the second. What say you?\u201d Well, thank you both Aaron and Evan for running this one by me. All right, let\u2019s start off with the big picture and then, whittle it down into the small. I look at real estate as building wealth in three ways, and so there\u2019s three things that I ultimately factor into what I\u2019m going to buy. The first is the cash flow, the second is the equity, the third is the headache factor. Very simple. So if a property cash flow is great, but there\u2019s not a whole lot of equity, I might buy it. If a property doesn\u2019t cash flow, great, I want to see a whole lot of equity in that deal or maybe I get a little bit of cash flow and equity, so I\u2019m happy.
The third one is usually going to be the decision factor for me, and that\u2019s going to be the headache. I don\u2019t ever want to own real estate in rough neighborhoods. I don\u2019t want to own real estate in any situation where it\u2019s going to take a lot of my time and energy and attention. It becomes too expensive. Now, this does work when you\u2019re buying your first deal because right now, you have a lot of time, you have a lot of energy. Anything is better than where you\u2019re at, so when you compare the property you\u2019re looking at to where you are with no properties, it starts to look good. It\u2019s kind of like gas station sushi. You\u2019re hungry. Is gas station sushi the best? No, but is it better than being hungry? It could be, so it starts to make sense, but if you\u2019re comparing this to a real sushi, you wouldn\u2019t touch that stuff, right?
The problem with gas station sushi is it\u2019s the unintended consequences that you could not predict that are going to take you down. That\u2019s what I\u2019m worried about in this deal. So here\u2019s what I am seeing, Seeing Greene, as you\u2019re telling me about the deal. In terms of actual cash flow, it\u2019s not a whole lot of dollars. So cash flow, one of the first three reasons I\u2019m looking to buy a property isn\u2019t there. In terms of appreciation, it\u2019s a little unclear because the neighborhood is not great. Okay, so you\u2019re not getting appreciation from either natural \u2026 you\u2019re not getting equity through appreciation as natural equity, which is inflation or market appreciation equity, which is buying in a great area because it\u2019s not a great area, okay?
So those two ways you\u2019re not getting equity, what about the other two? Is there a value added component to this? It doesn\u2019t sound like it. If it\u2019s not in a great area, you could dump a lot of money into this property. It\u2019s not going to really increase the value and you\u2019re not buying a lot of equity. You\u2019re buying it from 150, it\u2019s worth 180, sure, there\u2019s $30,000 right there, but if you ever had to sell it, that 30,000 would pretty much have to go right towards realtor fees and closing costs and everything else. So you\u2019re kind of breaking even and you have a headache factor, so there\u2019s no cash flow, there\u2019s no equity, and you have a headache. To me, this is a hard no. A very easy no. Don\u2019t buy this property. Probably a reason the person is trying to sell it to you, there\u2019s probably a reason they haven\u2019t increased the rents for five years.
So you\u2019re looking at that with rose colored glasses like, \u201cOh, I could bump the rinse and the tenants could still afford it.\u201d Well, the current owner might have done the same if that was possible, who knows the reason that they haven\u2019t bumped it. Maybe they\u2019re just a super nice person, but maybe they think that the tenants are going to leave and they can\u2019t afford the vacancy. I don\u2019t see any reason that you should buy it, and I see a lot of reasons that you shouldn\u2019t buy it. I\u2019d much rather see you and your partner get something in a better neighborhood where you\u2019re going to get better tenants, where rents are going to go up more overtime, where cash flow is going to increase, where the value is going to increase and you\u2019re not going to have a headache factor and just be more creative with how you make that deal work.
Can you house hack in a really good neighborhood and put 5% down on the property and rent out the rooms or make ADUs and rent those out? Can you do something that is less comfortable than just buying a rental property but more profitable, because as I always say, when it comes to house hacking, comfort and profit are opposite ends of a spectrum and you got to figure out where on that spectrum you\u2019re comfortable existing. So thank you for the question. Thank you for submitting this. I\u2019m sorry that I can\u2019t tell you to go for it, but I don\u2019t think you should go for it. Not on what I\u2019m hearing right now. Hopefully, this saves you a lot of money and a lot of headache and a lot of time, and you keep your capital for a better deal that is likely to be coming your way. Right now, it\u2019s not a time to rush and jump into real estate.
This temporary little stall that we\u2019re at from pushing interest rates higher and higher is putting more leverage in hands of buyers and less in sellers. So time is on your side for right now. Thanks very much guys. Give me an update on how that deal works out. Our next audio clip comes from Mark in New Jersey.<\/p>\n
Hey David, this is Mark from Northern New Jersey. Thanks for taking my question. I love the show. I love BiggerPockets, I\u2019ve been a fan for years. So quickly before the situation, my wife and I have good paying jobs, stable jobs. I\u2019m in law enforcement actually, and we both make total of about 300K. We have no outstanding debt. We have good credit scores and we have low monthly expenses. Our experience, we\u2019ve been house hacking for a couple years now. She\u2019s seen the power of it. We own two duplexes, both with owner-occupied financing, low interest rates. We don\u2019t have a ton of equity yet that we\u2019d be able to pull out, but they are appreciating and they do spit off some decent cash flow and reduce our expenses.
So we\u2019ve gotten that experience. Everything has gone really well. I have a great team from Realtor. I do currently manage my own properties and I enjoy it and continue to do so and I have great contractors. My question is, and the problem is I want to scale up to something a little bit bigger between four and seven units. I do know that that\u2019ll start crossing into the commercial lending. However, the down payment, because things around here are so expensive, is quite large and we do have about 100K to put down towards our next rental property. However, I\u2019m trying to think of creative ways to go about purchasing the next one. We were thinking about having some sort of seller carryback maybe on the next \u2026 on the 10 to 15%. The rest of it, I\u2019m not sure how that would work with financing the other 80 to 75% or also raising private capital either from our friends and family, but I wasn\u2019t really sure exactly how to do that.
I do \u2026 at least how to approach that, I would like to do straight debt and not any equity in the property. Any help, I\u2019d appreciate it. I do plan and continue to work. I don\u2019t plan on leaving my day job. I love my law enforcement work for now. So yeah, appreciate it and I\u2019d love to come on and talk more about it if needed. Thank you.<\/p>\n
All right, thank you for that Mark. Some really good stuff there and I see the dilemma that you\u2019re facing. All right, let\u2019s break this down. First off, the reason that I tend to talk about residential real estate more than commercial on this podcast is because residential real estate is much more flexible than commercial. I use the analogy of it\u2019s like a jet ski. You can change directions very quick. You have more creative cool things you can do. With a jet ski, you can do 360s, you can jump wakes, you can go fast, you can go slow, you can make sharp terms. There\u2019s a lot of different stuff you could do versus a battleship, which there\u2019s not a whole lot you do. You go in a straight line and you plunge through obstacles and they\u2019re safer but to change direction is a freaking endeavor.
It takes a lot of work to slowly turn a battleship from one thing to another. Residential real estate is like a jet ski and commercial real estate is much more like a battleship. When you chart your course on a battleship, you put a lot more time into analyzing that deal, underwriting that deal, making sure your course with that battleship is dead on because if there\u2019s an iceberg coming up at the last minute that you didn\u2019t see or you\u2019re going into shallow water, you can\u2019t turn nearly as quick as residential real estate. Residential real estate is flexible. However, it\u2019s not as resilient and it takes more work just like you got to pay more attention when you\u2019re riding a jet ski than if you\u2019re controlling a battleship.
You just sit back and let it do its thing. So your situation is that you\u2019ve done well with residential now you want to get into commercial. The reason I use that analogy is there\u2019s a lot of people that will try to take residential approaches to real estate and apply it in the commercial world and they\u2019ll crash. You got to be very sure of where you\u2019re going with a commercial space. It\u2019s a much more long-term approach. It\u2019s harder to build equity, it\u2019s harder to make decisions, whether it\u2019s multifamily or it\u2019s commercial or it\u2019s triple net, you make a decision when you buy and you\u2019re kind of locked in as far as what you can do. You got to execute the plan you had. You\u2019re not going to change courses like you can with residential real estate with shoppers, a lot of different ways that if something didn\u2019t work, you could try something else.
When it comes to this commercial endeavor you got, you\u2019ve got 100K, you need to make sure you put it in the right deal and you need to understand you\u2019re not getting it out nearly as fast. There\u2019s also more risk in commercial lending, especially with the mortgages because you typically get a four or five year period of time before a balloon payment is due and you have to refinance, and if you bought something at 3% and now your balloon payment comes due at eight or 9%, you might find your payment doubling or almost tripling. It can be really, really rough, when you get into this world. Your best option if you\u2019re trying to find something creative to not spend all your money is to borrow money from other people.
This is what I do a lot of the time and it works really good with commercial deals specifically. So my partner Andrew Cushman and I will typically raise money for deals that we find and we give away equity in those deals, but that becomes tricky too. You probably don\u2019t want to be a full on syndicator. What I\u2019d recommend is if you find a commercial property that you like, you have a plan that\u2019ll work, it\u2019ll work even if rates increase from whatever you\u2019re getting right now. You borrow money from someone, but instead of giving them equity in the deal, you pay them debt. They get a guaranteed return. They get 10% on their money, 8%, 12%, whatever. You\u2019re going to have to pay them to get their money, but you don\u2019t make them a partner.
You don\u2019t want them coming along and saying, \u201cWell, I think we should do this or I think we should do that, or I think we should sell,\u201d and you want to hold, that makes things complicated. So going to people and saying, \u201cHey, I can give you a loan,\u201d and if they say, \u201cWell, how do I know I get my money back?\u201d You say, \u201cWell, you\u2019ll have a second position lean on this property.\u201d It\u2019ll be secured by this property. It gives you a higher chance of being able to raise more money than you could have before, to help buy the property. You just want to be careful, because if the deal goes bad, it\u2019s now extra bad because you\u2019ve taken on extra debt. A lot of the time when we talk about borrowing money to buy real estate, we\u2019re only giving you guys the rose colored glasses result.
You could borrow money, you could buy real estate, you get all the benefits of real estate and you didn\u2019t have to put money into the deal. Well, when the deal goes wrong, it goes extra wrong. Not only did you lose all the energy and time you put into the deal and your money, but you lost somebody else\u2019s money and you got to pay them back, so now, you lost twice as much money, okay? So this isn\u2019t like a no consequences way to buy real estate when you start borrowing money from other people, which is why in general, I\u2019d tell someone to lean away from that until they\u2019ve already bought enough of the deals. Now, Andrew Cushman, who I mentioned earlier, I trust that guy with my life. He is so good at what we do. I don\u2019t worry about borrowing money to put into deals as Andrew does.
I probably wouldn\u2019t put money into your deal if this was your first commercial deal that you had ever done. Just something to think about as you\u2019re going into this and if you\u2019re thinking you only have a 100K, I don\u2019t know that jumping into commercial is the best move for you right away because it\u2019s hard to get the money back out of it. If I could put a 100K into a fixer upper property and I could buy it at undermarket value and it\u2019s an area that\u2019s likely to appreciate, you got three ways that you\u2019re going to build equity, I\u2019d do that for two years. Let the property become worth more, make it worth more at equity when I\u2019ve bought it. Then I would 1031 that money into the commercial property that you\u2019re talking about.
That would probably be an easier way to turn that 100K to 200K, 250K and then move it over, but let me know. Tell me what did you end up doing? Did you go for commercial? Did you hold off on commercial? Personally for anyone thinking about getting into commercial for the first time, the time is on your side. This is siege warfare and the other people are running out of food. Okay, the longer you wait, the easier that battle is going to be. This is not a time to rush into commercial lending because you\u2019re going to be seeing a lot of balloon payments reset and sellers have to sell properties for discounts because they either can\u2019t refinance or they don\u2019t want to refinance into the higher rate.
Okay, this segment of the show, I like to share comments from our YouTube channel. So if you\u2019re not checking us out on YouTube, consider doing that. You get to look at the green light behind me. You get to see my handsome face. You also see some of the hand gestures that I\u2019m making as I\u2019m talking. Sometimes I do this little thing when I\u2019m describing the spectrum where it looks like a fish is getting bigger or smaller. Sometimes I hold up fingers when I\u2019m making points. Sometimes I put my hand on the top of my head and pretend like I have a mohawk. Lots of things that you can see if you tune in on YouTube. Also, we want to hear from you. So if you\u2019d like to be featured on the show, go to biggerPockets.com\/david and submit your question.
All right, our first comment here, \u201cHi David. Thanks for producing this content. You talk a lot about inflation and real assets in the real estate field. I wonder what your opinion of Bitcoin is with regards to inflation and the hardness of money\/assets. It seems like you were seeing a lot of similar things as those in the Bitcoin as a commodity space. Thank you.\u201d Funny you mentioned that because I did talk about Bitcoin earlier today. All right, here\u2019s my transparent view on Bitcoin. I do own some of it, very little. I\u2019m not like a huge proponent or apologist for Bitcoin. I just think it\u2019s likely to go up in value because like you said, inflation. I don\u2019t think it\u2019s nearly the same as real estate. I don\u2019t know. First off, let me just say I don\u2019t have hard opinions on this because I have no idea.
I don\u2019t think it\u2019s going to become as much of a currency as it is going to become a way that wealthy people shield their money. What\u2019s different about Bitcoin than other cryptocurrencies, at least my understanding of it, is that you can\u2019t make more of it. So the other cryptos can just, the same things that cause our dollar to be inflated, can cause those cryptocurrencies to become inflated. Let\u2019s make more of them. My understanding is that the way that Bitcoin is designed, you can\u2019t make more of it and the work it takes to mine more coins until you get to the ultimate thing is similar to mining gold. I think that\u2019s actually why they\u2019re calling it mining, is because it takes a lot of energy to create more Bitcoin, which makes it a better currency. You don\u2019t want to just be able to print dollars or have quantitative easing and boom. With no effort, you\u2019ve got more of it.
Gold is a cool form of currency because if you want to make more of it\u2019s a lot of work and energy. It takes money to get it out of the ground. It takes time to get it out of the ground. So maybe you can increase the supply of gold by two to 3% a year by mining more of it, but think about how much money you had to spend to do that. It\u2019s close to the amount of gold that you added to the supply. So it\u2019s kind of a wash. I like that about Bitcoin, so that\u2019s why I bought a tiny bit. I mean less than $10,000. I\u2019m not talking about a whole lot of money. This is not my main investment strategy. I bought when Bitcoin went down, and if it goes down more, I might buy a little bit more of it, it\u2019s like the only thing I do that\u2019s play money, basically. Yes, I do think it\u2019s different and I think some of the principles that work in real estate will work in Bitcoin for that same reason.
I think there\u2019s a world where wealthy people who don\u2019t know how to invest in real estate because they\u2019re not as smart as you guys are not listening to this podcast, are not going to trust dollars. When they think about real estate, they just think about the house they live in, which doesn\u2019t cash flow. So a lot of people look at real estate and they see the problems of it because they\u2019re not \u2026 it still costs money to own it when you\u2019re just forking out a mortgage, they look at money that is created through business, which business is a great way to reinvest money, but you have to \u2026 there\u2019s risk there and you have to put time into it. So the people that are looking for a passive way to store their cash, I think that they will put it into Bitcoin because it\u2019s easy. It\u2019s so much easier than owning real estate.
You just click a button and you move it out of whatever you bought it, into your ledger and boom, you\u2019re good to go. So that\u2019s my opinion on Bitcoin. If you are wondering if I\u2019m a fan of Michael Saylor, I don\u2019t know a ton about him, but I do. I am a fan of his understanding of money as energy. I thought that was brilliant. I have adopted that mindset. I just think real estate works better and makes way more sense than Bitcoin, and I think all of you that are using that whole money as energy understanding will do way better with real estate than any of these Bitcoiners are ever going to do, so let\u2019s go kick their butts. All right, our next comment comes from Jacob Force. \u201cI love the passion, David. We believe in a system that has proven to work. Thank you for the knowledge, expertise and willingness to share.\u201d
Well, thank you Jacob for your kind words and thank you for acknowledging my passion. \u201cI pretty much get this way when I talk about a small handful of things. In general, I am a very isolated, introverted, stoic person but when it comes to talking about real estate or handful of other stuff, I definitely can get excited.\u201d Mike H, \u201cIs David pissed he got tricked by Rob Bill into investing in that mansion in Scottsdale that is not renting, while he keeps talking about not listening to gurus that sell courses.\u201d Well, well, well. Mike H, are you trying to draw a wedge between Rob and I? No, I am not pissed at Rob and we knew that it was not going to make a ton of money right away. I was actually the one that told Rob, \u201cThis is something we\u2019re doing for the long term, not the short term.\u201d
So no, I\u2019m not pissed. If I\u2019m pissed about anything, it\u2019s just that he really cares about decor and design much more than me and he spent way more money making the property pretty than I would. Let\u2019s be fair, Rob is a pretty guy. Go look at him. He has to wear these faded black pocket T-shirts just to downgrade how good-looking he is with that incredible quaff that sits upon his head like the crown of a king in Game of Thrones. I\u2019m a pretty homely looking guy, man. I look like a combination of Shrek, Jason Statham after Thanksgiving dinner and Dana White on two hours of sleep, okay? No one is going to sit here and accuse me of being a pretty person. So of course, I wouldn\u2019t have spent as much money as him beautifying the property. No, I\u2019m not mad and Rob is not the guru that I\u2019m talking about selling courses.
I am pissed at gurus that tell you that real estate investing is easy, that tell you that cash flow is something that can replace your income within a 10-year period. I\u2019m at pissed gurus that try to say, \u201cYou don\u2019t have to do the work. You can buy my course and it will do the work for you.\u201d Okay? So I actually have courses that I sell as well, but they\u2019re not like $10,000, $50,000 courses and it\u2019s very clear when you join it, you\u2019re going to do the work. So I often relate wealth building to fitness. The people that rip people off are selling fitness is easy by the ab roller, by the thigh master. Remember those old machines from the 30s or 40s where the lady gets on it and it puts this band around her waist and it shakes her and it was like you could shake fat off?
If you guys don\u2019t know what I\u2019m talking about, Google that, it\u2019s hilarious. At one point, that\u2019s what they told people, is you just sit there and this thing shakes you, your fat will jiggle and it will burn right off. It doesn\u2019t get you fit, and I\u2019m not the fittest guy ever. I just got done talking about what I look like, Shrek, Dana White and Jason Statham when he\u2019s got too much mashed potatoes in his system, but I do know that fitness does work and it\u2019s hard, limiting what your diet is, which to me is saving money, not spending it on dumb stuff, not spending on things that don\u2019t matter and working out really hard, which is equivalent of offense. Working hard at your job, getting promoted, starting a business, serving your clients, grinding in a healthy way are the only ways that you make money over the long term and the only ways that you get fit in the long term.
Now real estate is what you do with the money that you\u2019ve already made. I\u2019d rather see people put their money into a house act than put it into a course that tells them, \u201cAh, it\u2019s going to be easy. You don\u2019t have to work hard. You\u2019re going to be financially free in two years using my system, and it doesn\u2019t happen.\u201d I don\u2019t think Rob teaches people that, but there are a lot of people out there that do. Many of them compete with our podcast, so yes, I\u2019m going to continue to sound the bell that education is good, but if your educator is telling you, sign up for my gym and you can lose weight and get ripped without a diet, without sweating when you work out without hard work, they\u2019re probably selling you steroids and they might work for a short period of time, but the long-term consequences are not worth it, and I am a non-steroid wealth builder.
All right, Jared Franklin has our last comment, \u201cDoes your team hound you for swiveling in that chair for a whole hour? Have they tried the shock collar that activated when you swivel?\u201d All right, Jared calling me out here, but thank you for doing that in a respectful way. That\u2019s funny. Jared either has OCD or I have a bigger problem or we have some combination of the two where I can\u2019t sit still and he can\u2019t stand people that can\u2019t sit still. If you\u2019re not watching on YouTube, I guess there\u2019s another reason other than my fingers or my spiky hair with my hand looking like a shark. I also apparently swivel in my chair. If we\u2019re just being transparent, let me set the tone for being open and honest about things. It is very hard to think about what you\u2019re going to say, say the words and then continue to think about the next thing you\u2019re going to say.
Also, find a way to keep your energy high and present the information in a way that someone is going to hear and like. Have you ever listen to someone that talks and they say, \u201cI\u2019m really smart,\u201d but when they talk, they talk like this. They use big words. It\u2019s very hard to know at what point you should pay attention because there\u2019s no intonation in their voice. I can\u2019t focus when they\u2019re speaking that way, and I think a lot of people talk that way because they don\u2019t want to make a mistake or they don\u2019t want to sound dumb. Okay, I\u2019m trying to make this information taste as good as I can, keep your attention as good as I can, keep my energy high and still say the stuff you need to hear.
So what happens is it\u2019s like all hands on deck to my brain and then, I don\u2019t think about what\u2019s happening with my body, okay? So I do start to swivel in my chair as I\u2019m trying to stay in the zone. I\u2019m trying to mentally stay focused on where I\u2019m going with something and then, I start to fidget in ways. Okay? It\u2019s kind of like that, I don\u2019t know what to do with my hands thing that Will Ferrell\u2019s character does, I think it\u2019s Talladega Nights. It might be Anchorman, but it\u2019s funny you\u2019re like, \u201cWhen you\u2019re aware of it, you don\u2019t know what to do with it.\u201d So yes, they have not tried to stop me from swiveling in my chair. If they did, my fear is all the energy it would take to stop the swivel would make me one of those very boring communicators and people wouldn\u2019t like it.
Personally, I think the movement is the magic. All right, you could send your real estate related questions or your job related questions. If you want to learn how to make more money at your job, that\u2019s something I\u2019m going to be taking on as well to biggerpockets.com\/david and I\u2019m looking forward to how I can help you. Don\u2019t be shy, share your question, put it out there for everyone to hear. I guarantee you that someone else is thinking the same thing and you taking this action will help more than just yourself. I live by the barrel of monkey\u2019s philosophy. You should always have one hand reaching up to people that know more than you and one hand reaching down to people that know less than you and letting the information flow along that chain so that you don\u2019t get a big head keeping it all to yourself and you don\u2019t get isolated thinking that you suck. All right, let\u2019s get to our next video question. This one from Jordan Tinning.<\/p>\n
What\u2019s going on, David Greene? This is Jordan from Mukilteo, Washington. Wanted to make this video and just say thank you for stepping up and doing the podcast. I think you\u2019re doing a phenomenal job. I really appreciate your perspective, your detail, and your strategic nature in which you attack a lot of these real estate issues and you have some big shoes to fill, but honestly, I think you\u2019re doing a great job. That said, I am interested in learning more about macroeconomics and more specifically how that pertains to real estate investing and how we can use that to our advantage. So you talk a lot about knowing the bigger factors that are at play so that we can be smarter investors. What resources would you suggest that we look at, read and\/or consume to get better at that?
The only things I can come up with are Economics for Dummies that are very boring and really don\u2019t have any context into what\u2019s going on today with the stimulus money that\u2019s being printed or the Federal Reserve just printing US dollars like crazy. So what resources would you suggest? How would you go about learning more about some of the bigger factors that are at play and just looking forward to your feedback. Thanks so much for your time.<\/p>\n
Jordan, you are a man after my own heart. I love your take here. Guys, we love real estate investing, but I have a different approach to why I do it. A lot of people say, \u201cBuy real estate so you can get cash flow so you can work for 18 months and never work again,\u201d and I just don\u2019t think that\u2019s realistic. A handful of people can pull that off and most people never will. It\u2019s not a scenario that\u2019s likely to work out for you. You\u2019re going to end up going back to work and starting over and losing years of productivity that you could have had. Okay, I look at real estate much more as a place to put money that you\u2019ve already made and let it grow, and it does need to be the way you\u2019re going to build wealth, but you\u2019re going to build wealth, you\u2019re not going to necessarily create wealth.
It is very difficult to create wealth through real estate. It\u2019s where to grow wealth that you\u2019ve already built, and the reason that real estate has done so well over the last 10 years is not because we\u2019re all geniuses as much as we like to think, it\u2019s because of what Jordan is talking about here. It\u2019s because of inflation, and I know that a lot of people do not tune into this podcast to hear macroeconomic boring words like quantitative easing and the M2 money supply and inflation and stimulus. I get it. You just want to hear how do I get the next deal in the duplex? I do share that information. I like to share negotiation strategies specifically because I\u2019ve spent so much time in the trenches being an agent that I\u2019ve learned how to get really good deals.
I\u2019ve learned how to track them down, and I do teach people that stuff all the time. Go to davidgreene24.com and you\u2019ll see a lot of the stuff that I\u2019m talking about here, where you can learn more. However, all of that pales in comparison to understanding what\u2019s happening in the big world. So I\u2019m going to give you an analogy here. I could teach you how to swim. I could teach you how to cup your hands perfectly to be maximally efficient with your swimming, how to kick your legs at just the right way. You guys, if you\u2019re watching on YouTube, you see all these hand gestures I\u2019m making because I\u2019m trying to make the people jealous that are not watching the video or the people that think all I do is swivel in my chair.
I could teach you how to breathe the perfect amount of times, how to keep your head down and only come up to the side to get a breath in. There\u2019s lots of things that I could teach you that will make you a better swimmer. Here is the problem with that, the person who knows nothing about swimming, who doggy-paddles, who catches a wave, will go way faster than Michael Phelps, who\u2019s the best swimmer ever, when he doesn\u2019t have a wave behind him, okay? The actual benefit of understanding what the government is doing with our money supply, what we call macroeconomics, what the dollars are doing, it dwarfs the value of being a good swimmer. Now, to me, it\u2019s not either or. I\u2019m going to teach you how to swim better and I\u2019m going to teach you about the waves because why not? Sometimes waves aren\u2019t coming, and in those cases all you can do is focus on swimming.
When waves are coming, I want you guys looking behind you, timing the wave so the wave will propel you past all the people that aren\u2019t doing that, and that\u2019s what macroeconomics is. So Jordan is asking for resources where he can learn more about this, I think that that\u2019s very wise. First off, Jordan, I love your question, so reach out to me. I\u2019d like to get you connected. You guys can do that through Instagram or my BiggerPockets account or you could submit a question on here if you have the same type of thing, but places where I go to get information about this, there\u2019s a couple other podcasts that I listen to. One of them is Patrick Bet-David Show on Valuetainment. They talk about the news and they bring experts in to discuss this stuff.
So like I mentioned Michael Saylor earlier talking about money is energy. I specifically got that off of Patrick Bet-David\u2019s podcast. When Michael Saylor came in, he was preaching Bitcoin, and I\u2019m not a bitcoin believer so to speak, but I loved his perspective on money. I got a ton out of that. Another one was an episode with Richard Werner, who is the father of quantitative easing. Okay? This isn\u2019t like these secret esoteric speakeasy communities where you can learn about economics. It\u2019s all right out there for people to see, just tuning your reticular activating system to pay attention to it. Richard Werner is the person who I heard, who is the one that came up with the idea for quantitative easing, which was the government buying securities and other financial instruments and pushing money into the economy that did not exist, so we say print money, but they\u2019re not actually printing dollars. They\u2019re doing this electronically.
He\u2019s the one who\u2019s the first person that said, that I\u2019d ever heard, \u201cRaising interest rates does not stop inflation. There has never been a model in the history of economics that proved it does,\u201d which was mind-blowing because when I was in college learning about it, this was like ECON 101, right after supply and demand, and you learned about the invisible hand with Adam Smith, then you learned about how lowering interest rate speeds up the economy or makes inflation and raising interest rates slows down inflation, and it made a lot of sense. There\u2019s an inverse relationship. I went my whole life thinking it, and then I heard from the guy that created quantitative easing saying, \u201cThat\u2019s never been proven. I don\u2019t know why we all say it. It makes sense, but it\u2019s not true. It doesn\u2019t do that.\u201d
I don\u2019t want to go too long into this topic because you could tell I\u2019m passionate about it. You guys might not care as much. Let me know on the comment if that\u2019s the case, if you want to hear more of this stuff, but he made this great point that the money supply is what causes inflation. It just depends on how you define inflation. If you define inflation as prices going up, yes, you can slow that down by raising rates, but you cannot take money out of the supply just by raising rates. You\u2019re going to have more money and wherever you have more of something, it\u2019s worth less. If this is complicated, if you guys just think about diamonds. Diamonds are worth a lot of money because there\u2019s not a lot of diamonds. Okay? What would happen if we tripled the amount of diamonds that were available to people? What would the cost of diamonds do?
It would obviously decrease incredibly quickly. We just took three times as much diamonds as what we\u2019ve ever had and boom, in one day, those hit the market. No one would be paying 25 grand for a diamond anymore. They\u2019re freaking everywhere, right? Maybe you buy them for like 500 bucks or something like that, maybe even 5,000. That\u2019s a lot less than 25,000. Now, what if the financing of diamonds became super expensive? What if we said, \u201cHey, that loan that you used to use to buy an engagement ring, instead of a 5% interest interest rate, it\u2019s going to be a 75% interest rate.\u201d Well, now, even though diamonds only cost five grand instead of 25 grand, you still would \u2026 they\u2019d be very expensive because the financing to buy them went up.
That\u2019s what\u2019s happening when we\u2019re raising rates, because what happens is if the financing of 75% goes back down to five or 10%, the cost of diamonds is going to plummet with it, because you added too much supply to the market. That\u2019s why I talk about macroeconomics. That\u2019s what we\u2019ve done to our money supply. Yes, we have a temporary halt right now because we\u2019ve raised interest rates, but it\u2019s still supply and demand that\u2019s going to determine this, and at some point, those rates are going to come back down because some politician is going to get voted in, if he\u2019s the one that puts them down or she\u2019s the one that puts them down, and boom, you\u2019re going to see the price of real estate take off again, which is why I\u2019m not a doom and gloom person who\u2019s saying, don\u2019t buy real estate.
I\u2019m saying be careful buying it right now while the rate for diamonds is 75%, because it could come down more temporarily, but long term it\u2019s going to go up. So Patrick Bet-David is one place. I also just watched the news straight up, Fox News, CNN, MSNBC, whatever you watch, they will talk about what\u2019s happening in the economy. The danger in the news is when you take the perspective of the network or the anchor that you\u2019re taking it from. I don\u2019t care about that. I want to know what Jerome Powell\u2019s decision in the Fed was. I don\u2019t need CNN or Fox to tell me how to think of it. I\u2019m then going to go research different places that talk about Jerome Powell\u2019s decision and run that through the filter that I already have from my education in economics as a whole. Barry Habib with MBS Highway is one person that I think gets it right a lot of the time.
So I follow him and then, my text letter Behind the Shine, which you guys can sign up for, it\u2019s free. I put information in there about what I see happening in the economy, so if you guys just want a little quick hit, you don\u2019t want to have to put a lot of time into this. Go sign up for Behind the Shine. I call it that because my head shines and Brandon\u2019s text letter is called Behind the Beard, so I wanted to one up him and let me know if you think that my text letter is better than Brandon\u2019s because it\u2019s very important to me to win these petty battles between he and I. All right, our last question moving on is from Jamie. Jamie Tuske in Northern California, we\u2019re neighbors. \u201cSome background to help out. We\u2019re 37 and 38 years old. Full-time W-2 jobs, making about 220K a year, and we have three kids and we live in Northern California,\u201d which guys is very expensive in Northern California.
That\u2019s basically the San Francisco Bay Area up to Sacramento. \u201cWe have some cash save, but would rather not touch it and we have about 110K available to use from a HELOC. I\u2019m a project manager and I have experience rehabbing homes, so we have that advantage as well. We bought our first investment property a short-term rental this year. We use cash and HELOC funds to purchase, update, and furnish, and we currently owe about 67K on the HELOC. We like your idea of portfolio architecture and would like to expand our portfolio, either short-term rentals or long-term rentals using the BRRRR strategy and\/or fix and flip, depending on numbers, preferably with multifamily.\u201d
\u201cOne question for you is, if you were just getting started in our position, how would you move forward? Would you focus on paying off the HELOC and save more cash or move forward in purchasing more real estate and pay off the debt later? With prices declining and buyers having more advantages now, we don\u2019t want to miss the boat and the opportunity, but we are conflicted. Just looking for some guidance on the smartest way to move forward into building our portfolio. Thank you for all you do and the content that you and BiggerPockets team puts out.\u201d All right, thank you for that. Jamie, first off, if you don\u2019t know what I mean by portfolio architecture or what Jamie is referring to here, it\u2019s the idea of seeing your portfolio of homes as one organism as opposed to every individual house as its own organism. Okay, it\u2019s not accurate to just look at how a house operates.
Let\u2019s say that you\u2019re running a team because a portfolio is really a team. Do you analyze the strengths of every player? Of course you do. You don\u2019t want bad players. You\u2019re not going to buy bad deals because you don\u2019t analyze them. You\u2019re not going to make money on that. That\u2019s not all that you do. You also look at how these players will play with each other, what\u2019s the chemistry like between them, okay? If you build a basketball team of five incredibly good shooters because you\u2019ve analyzed them really, really well and they all shoot the ball, great. You\u2019re still going to lose because there\u2019s no one to play defense. There\u2019s no one to distribute the ball to the shooters, right? They\u2019re not in a position where their strengths can actually be used because they\u2019re all the same thing.
Portfolios are the same way. You may build it up to having 20 short-term rental properties and you have no time to enjoy life because while they\u2019re highly profitable, they\u2019re also taking up a lot of your time. They\u2019re also highly risky and highly seasonable. The money comes in big and then, it just shuts off. You\u2019re putting yourself at risk when you build a portfolio like that. You may have 20 properties that are all small multifamily, that cash flow pretty well and they\u2019re just steady eddies. They provide exactly what you want every month, but after you\u2019ve got 20 of them, you still can\u2019t make enough money to ever quit your job. You\u2019re making five grand a month, three to five grand a month off these 20 properties, and you\u2019re like, \u201cI still got to work.\u201d
That doesn\u2019t help you either. That\u2019s too conservative. Okay? You want to balance this. You want to have some short-term rentals that spit off a lot of cash and some traditional boring rentals that provide very steady cash flow to protect you in down times. You also want to have properties that maybe don\u2019t cash flow great, but they build a lot of equity for you, you\u2019ve built a lot of equity into. You want to have some properties that over a long period of time are going to make a bunch of money and some properties that in a short period of time are going to provide cash flow to get you through that long period of time. You want to combine them all together, so that\u2019s portfolio architecture. Jamie, it sounds like you\u2019ve just got one property, so you don\u2019t have to focus too much on that right now.
You could get a couple more of whatever works for you before you start thinking, about how you\u2019re going to bring different assets into your portfolio. I wouldn\u2019t worry about if you should pay off the HELOC right away. Now, a benefit of it is you can pay off your HELOC which reduces your monthly payment and will increase cash flow to your family, but you\u2019ll still have the capital available if the deal comes. There\u2019s nothing wrong with paying it down, but then keeping it open so that when an opportunity comes, boom, you just pull the money out, you go by the next deal. I think you are at a period of time where there\u2019s good deals coming, prices are continuing to decline over the short period. There\u2019s not a rush to jump in, but over the long period, we\u2019re going to look back at this time and say, \u201cMan, I wish I\u2019d bought more real estate.\u201d
It\u2019s a weird dichotomy we got going on. We don\u2019t know when the bottom is coming, but we know that it\u2019s not going to stay like this forever. It\u2019s when rates come back down or the economy turns around, who knows it might be a year, it might be six months, it might be three or four years. I can\u2019t tell you that, but over a 30-year period of time, we will look at this as one of the golden times to my real estate, I really believe that. So, I would look at it like I continue to analyze deals in the market where I can make money as a short-term rental. So you didn\u2019t mention where your short-term rental is, but let\u2019s just pick that market because you know it. Okay? I would look for other properties that would work as a short-term rental. Then out of those properties, I would look for the ones that have the best ability to add equity to.
You mentioned that you can run rehabs. You mentioned that you want to do a BRRRR or a fix and flip, which are both value add opportunities, so find the biggest best house in the nicest area that will work as a short-term rental, and then look for the ugliest one. Look for one that\u2019s marketed poorly. Earlier in this episode, I talked a little bit about how I can \u2026 I like negotiating. I like strategies. One of the negotiating strategies that I use is I look for poorly marketed properties with high days on market because nobody else wants them. Look for the chance to get the most value add possible, then go for the throat. Write the lowest offer that you can get away with. Try to get them to counter, find the seller that has the most motivation and needs to sell.
You\u2019ll get buying equity and forcing equity out of the same deal. Then you\u2019ll get market appreciation equity because you pick the best market. See how simple this becomes guys, if you just have the right set of goggles to look at real estate through and you know it\u2019s going to work after you\u2019re done with it because it\u2019s in a market that works for short-term rentals that you\u2019re already familiar with, do that, get three or four of those. Then let\u2019s have the conversation about portfolio architecture, what you need to add into the portfolio to balance out some of the risk, if you should 1031 out of two or three of them and move it into something else, but at this stage, you don\u2019t have to worry about that because you\u2019ve only got one property. Great question. I would love to hear how this goes.
I\u2019d love to hear about you getting great deals under market value and adding value to them and ending up with the cash flowing rental property. So go to biggerpockets.com\/david and submit an update once you get something in contract. Thank you for that, Jamie. Also, you didn\u2019t tell me where in Northern California you are. If you guys live anywhere near me, I want to know. I do meetups out here. DM me and tell me you\u2019re in Northern California so we can get to know each other. All right. That is our show for today. I went a little bit long, but that\u2019s because I love you guys and I\u2019m hoping that you got a lot of value out of this. I hope my chair swivel, didn\u2019t throw you off too much and that more of you are checking us out on YouTube where you can watch a more animated version of this podcast.
Also, I know you guys can be getting your information anywhere, so thank you for getting it from here. I\u2019m doing my very best to make these shows as good as I can and give you as much information as I possibly can to help you build wealth through real estate. Please subscribe to the channel and follow me. You can find me at @davidgreene24 all over social media. That includes YouTube. I go live every single Friday night talking about some of the stuff in more detail. So if you\u2019re like, \u201cOh, I wish he had gone deeper into this topic. He moved on too quickly.\u201d Come onto my YouTube, send me a message, and I will answer these questions in more depth in any way that I can. Also, check out my new website, davidgreene24.com to see some of the other stuff that I\u2019m doing, where I\u2019ll be speaking, where we can meet up.
Hopefully, I\u2019ll see you guys at BP Con in Orlando this year. It\u2019s going to be a blast. It always is, and last but not the least, keep saving that money. You never know when the right opportunity is going to come up, and living beneath your means is a very powerful way to build the right habits to build wealth. I will see you guys on the next episode, and if you\u2019ve got a minute, check out another BiggerPockets video.<\/p>\n