BiggerPockets Real Estate Podcast - 10 Things We Hate About Real Estate Investing

Episode Date: November 1, 2024

Real estate investing is great…sometimes. Other times, it’s NOT fun to be a real estate investor. While the pros, like financial freedom, generational wealth, and passive income definitely outweigh the cons, there are times when real estate investing makes you sit back and think, “Wow, I’m not having fun right now.” So we’re here to vent some of our biggest frustrations about the real estate industry, and if you’re an investor, landlord, house flipper, or property manager, you’ll probably relate.  These are the things that grind our gears the MOST. Now we’re not saying to ditch rental properties and real estate investing because of these downsides. Despite all these investment property pains, we still believe real estate is the best asset class for investing. But you will be hit with the headaches that we go through if you decide to invest. The good news? We will give you actionable tips to avoid the worst of these throughout the episode. If you’re brand new to real estate investing or are thinking of buying your first property, this is advice you need to hear before you begin so you can make the most money with the least amount of stress.  In This Episode We Cover: Why you really (really) don’t need to become an agent just to invest in real estate  Getting blinded by “exit strategies” and how it’ll cost you in the long run How Henry learned to work with contractors so he doesn’t get scammed or ghosted Why we’re begging you to stop doing “virtual staging” when selling a house  Etiquette for agents writing property descriptions (stop saying everything is “cozy”) How to improve your relationship with your tenants so you both can enjoy your lives  And So Much More! Links from the Show Join BiggerPockets for FREE Let Us Know What You Thought of the Show! Grab Henry’s New Book, “Real Estate Deal Maker” Property Manager Finder How to Work With Contractors and Manage a Job Site as a Flipping Newbie Connect with Henry Connect with Dave (00:00) Intro (00:41) 1. Becoming an Agent Just to Invest (04:58) 2. Bad/Slow Communication (07:30) 3. Being Blinded by Exit Strategies (12:30) 4. Unrealistic Expectations (17:03) 5. Working with Contractors (23:22) 6. Agent Property Descriptions (25:07) 7. Virtual Staging (30:47) 8. SO. MUCH. PAPERWORK. (33:19) 9. Shady Wholesalers (37:36) 10. Tenants vs. Landlords Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/real-estate-1038 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [e-mail]. Learn more about your ad choices. Visit megaphone.fm/adchoices

Real estate investing has given me a lot. A career I love, financial freedom, and something to talk about with all of you for tons of hours every single week. But I'll be honest, sometimes I just hate it. What's up, everyone? It's Dave. I'm here today with Henry Washington, and we're going to vent a little bit today and talk about the things that we just don't like about real estate.

Because we all know that those exist. So, Henry, let's just not waste any time. I know you've been itching to do this episode. It was actually, it was your idea at BPCon. We were just joking about this and now we're here doing it. So tell me one thing that you just can't stand about this business that we've voluntarily chosen to devote our lives to. Oh, man. You know what really grinds my gears, Dave?

Lay it on me. Investors who get their real estate license before they do a deal or think they need to get their real estate license before they do a deal. I can't wait to jump in on this, but tell me why it bothers you so much. Hooks me. You don't even know how you want to invest yet. You have no clue. You haven't done a deal, but you're going to go spend a whole bunch of time and money getting a license to do what?

Do you think it's just a stall tactic? Like, people aren't ready to invest. And so you're like, oh, I'll just devote myself to more schooling or more education before I actually have to make any sort of decision. In all seriousness, I think it's partly. a stall tactic. I think it's partly us attacking a problem the way we've been trained to attack it, right? Like, go study something and then get a license or get a degree, right? Like, that's just how we've been trained since we were kids. And thirdly, it just makes you feel like you're doing

something, moving towards your goal in a sustainable way, but it's really not a sustainable way at all. So I think it's like, it's this false narrative that you're doing something, but you really aren't. And I'm not saying that having your license as an investor can be helpful. It absolutely can be helpful, but you don't know in which way it can be helpful to you or not yet because you haven't done a deal. You have no idea if it's going to be useful to you or not. Have you ever thought about getting your license? I have thought about getting my license. For me, like, I don't want my license. I don't. I don't need it. I can run my comps just fine without access to the MLS. I get plenty of deal flow. I have great relationships. I leverage an agent on my team to help me get all those things. And I don't have the fiduciary responsibility that agents have. And I'm not saying I'm going out there and not being respectful of the people I'm buying homes from. But I don't need my license. I don't need the time that it takes to put in to get my license in order to be successful. And so I don't. What I wish now having done deals, what I would like a license for is I would love for like my wife to have.

have her license. Yeah. Where's Jess at? Right. Let's get her on this. You trust me. Just on this would be perfect. But having her have a license would be great because now I know that the way I do business, the way I generate leads, what happens is I get a lot of people that I find through direct to seller marketing who just want retail. And so I take those leads and I pass them to my real estate agent and he gets listing leads from them, which is fantastic. I want that. But if my wife had her license, then I could pass those leads to my wife, who could then pass them to my real estate agent. He would still get the listing, but now she would get a percentage of that because she's a licensed professional providing a referral to a licensed professional, right? So I am leaving money on the

table for some of those leads by my wife not having a license, but I wouldn't have known that if I just jumped right into getting my license right away, and it would have wasted a lot of time and effort and money. Yeah, for sure. I think there are perfectly good situations where people should become an agent before investing. But I sort of liken it to, so I really like outdoor activities, like skiing and hiking, I like exercising. And, you know, there are those people who, like, go out and buy all the gear before they do the first time, like, like doing the thing. It's like before you ever go on a jog, you buy, like, the nicest shoes. You got that stupid vet. with like the tiny little water bottles and that's like for your first run like maybe in your

10th you actually need all that stuff but like you don't need it for the first one yeah those straws that you can turn river water into purified water you're going on a one mile hike exactly and don't get me wrong I've definitely been that dude before but I'm just trying to caution everyone that it's not actually necessary All right. Well, that was that was a very good one. Thank you for bringing that one thing you don't like about it. All right. I'm going to go to a second one that I think you share. It's how bad some people in this industry are at just like basic communication. Like picking up a phone, responding to text messages, answering emails. So I work both. I have a real estate portfolio. I also work at bigger pockets at a corporation. And the standards for how? how quickly you're supposed to respond to something are on total opposite ends of the spectrum. Like, in my business at Bigger Pockets, like, everyone's engaged and is responding within a day or two to things.

And like, when I go to work with a contractor or something, it could be like a week and a half. And they just don't, they literally say nothing to you. And it drives me absolutely insane. Oh, man. Yes, I agree. And all my friends and family listening to this will probably be like, Henry, you can't talk about this because you're the worst at risk. I am the worst at responding, but I am not in the customer service industry. Like, I don't know how these folks make money.

Like, I tell people, when you're building a team, one of the most important things you need to look for in a team, yes, you want them to have the skill set you're looking for. Yes, you want them to understand investing. But what's important is, are they willing to communicate with you in the way you want to be communicated with? Everyone's different. Some people just want emails. Some people want text. some people want a phone call. Like, you know how you want to be communicated with.

And when you're picking that team or building that team out, setting the expectations that, like, this is the way that I communicate and would like to be communicated with on the front side. And if they're willing to do that, man, that goes a long way. Like, I will pay a little more for a service from somebody who's going to communicate with me and the way I need to be communicated with. Totally. I just, it doesn't happen to be in any other part of my life, even with other service businesses.

Like when you call the doctor, they call you back. Or, yeah, if you like need an appointment at, you know, the barber is usually pretty communicative if you want to have an appointment. But there's just this funny thing. And it's not all people. This is obviously just a generalization. But it happens quite a lot. And it's not just one part of the industry. You know, like people like to hate on contractors.

Some contractors are great. Agents have that stigma too. Agents do it too. Totally. Yeah, absolutely. So I actually, yeah. It just happens all over the place. It drives me nuts.

It just makes everything harder than it needs to be. 100%. I couldn't agree with you more. All right. Let's move on to number three. What's the third thing you hate about real estate? The third thing I hate about real estate is when people buy just purely based on an exit strategy or say differently when they're looking purely based on an exit strategy.

So like when you hear people say, I want to flip a house, right? And so they're looking at everything through this lens of flipping a house. or they say, I want to do a short-term rental. And so that's all they're looking for. And I don't think that they have any clue how much money you could potentially be leaving on the table by not taking the exit strategy lens off of your looking glasses and just look for a good deal because a good deal might want you to monetize it or might need to be monetized in a different way than you're thinking.

And you could be leaving a whole lot of money on the table because you were only looking through one lens. So what do you look for? Just value? Yeah, man. I look for value. I want to walk into value or equity, as they call it, on day one. And the more value or equity that's in a deal, the more options you have for an exit strategy.

And a lot of the times we want to do an exit strategy, but we may not be set up in order to do that exit strategy right away. In other words, like, you may want to flip a house, but you could get a lead that the lead isn't great for a flip, nor you were set up great. for a flip. You might not have your contractors ready yet. You might not have the money to take down the deal with the, with the funding you need to take down the deal yet. There's a lot that needs to happen. And so what I tell people is understand what a good deal looks like in the market that you're looking to buy the deal. So that requires you to go do some research and get some

market expertise so that you understand, hey, in my market, I need to buy traditionally at, you know, 60 cents on the dollar, right? I need to buy it 50 cents. on the dollar, right? It's going to be different for each market. It's going to be different for sub-neighborhoods within each market. I have neighborhoods here where I'll buy at 90 cents on the dollar because it's just the value and appreciation in that area is tremendous. And I have some neighborhoods where I'm not going to buy it unless I'm getting it at 40 cents on the dollar. Right. Totally. Right. And so you just need to understand that about your market. Understand what a good deal looks like. It's an example. I yesterday closed on a house and this house like I was thinking,

you know, this would be a good flip, right? Before I even went and saw the property, but I knew I was getting it at a good price. We got the deal locked up at $60,000. Like I had that agreed to before I go look at the property. I go and I look at the property and it is across the street from a lake. It's up on a hill. It's got these beautiful views. And I'm like, you know what? This would be a phenomenal short-term rental. I should think about doing this as a short-term rental. It did need a hefty rehab. It needs about an $80,000 rehab. But because I have it at such a low price, I have options now. I bought it for $55,000. I can now, if I want to, clean it out, get all the stuff out of it, stick it back on the market, in the current condition that it's in, probably sell it for $85 to $90,000 without doing a thing.

Wow. Yeah. Unbelievable. I could also renovate it, put it in good condition, and list it as a long-term unfurnished rental and get about $1,800 a month. That would get me cash flow right now in this market because I'm all in for what, like $150 or less. Or I could do it up real nice, furnish it and keep it as a short-term rental, or I can sell it for $250,000, right? Like, there is so many options that are open to me because it's a good deal, and we don't want to take that money off the table by only looking at deals through one lens. Yeah, that's such a good example. My only question, though, to you is, do you think it's beneficial for new investors? Like, if you're looking for your first deal, does it make sense to sort of narrow down what you're looking for?

It does in terms of narrow down what your buying criteria is. Like what price point you think a good deal is. That's it. Like go find a good deal. Because how you monetize that deal is going to depend on your financial situation at the time. It's going to depend on the resources you have available to you. It's going to depend on the team you have around you.

Right. There are, you could want to do a short-term rental and not be set up to do that successfully when you get that deal. So in other words, go find the good deal and then monetize it in the way that makes sense for the deal and your financial situation. That's great advice. Well, thank you. And way to turn something you hate into very good actionable advice to everyone listening to this right now. That's why you're here.

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slash bigger pockets. That's rent, r-e-di-i-com slash bigger pockets. Did you know your house gets bored when you leave? I can't actually prove that, but it probably misses out on the action, the footsteps, the late-night fridge raids. Yeah, when you're gone, your place is basically on unpaid leave. It's sitting there in the dark thinking, I could be contributing right now. Your side room wants a side hustle. Even your Wi-Fi is like, we could be networking. You're

You're on vacation, spending money like it's a sport while your staircase at home is fully capable of sending your income upwards. Here's the twist. You can go on a trip and actually earn money. Airbnb makes that possible with the co-host network. If you're away for a while or have a secondary property, you can hire a vetted local co-host with real hosting experience to handle it all. A co-host can handle guest communications, it can manage reservations and keep things

running smoothly, so you don't have to check your phone between beach days. That means less stress and more time enjoying your trip. You can relax, knowing guests are taken care of and your place is in good hands. You travel, your house works. Everyone wins. If you're ready to host but could use some help, find a co-host at Airbnb.com slash host. Thanks for taking with us. Here's more of me and Henry on Bigger News. All right, I'm going to go on to my second hatred, which is unrealistic expectations. this is, I have to say, this isn't really real estate investors. This is more our industry, Henry, which is the real estate investing education industry. And a lot of people on social media who just spout out like stats and ideas that make real estate investing seem so

much, one, more profitable than it is. But also at the same time, it makes it feel less attainable, right? Because if you're going out there and saying like, I'm buying 15% cash on cash returns. No, you're not, first of all. You're just not unless you're buying in a rough neighborhood and doing like a ton of rehab. And second of all, that sets this unrealistic expectation for people who then go out and probably, to your earlier point, find good deals. But their only means of comparison now is to these unrealistic, just not true deals that people

are talking about on social media. And so they don't wind up getting into real estate or buying. a good deal because they think it's not good enough. Yeah. This is true. You do have to be careful what you expect getting into this game. And so, like, there's two sides to this coin. Like, you need to understand what real expectations are.

And then you need to understand, like, how to evaluate someone if you're thinking about learning from them. Like, you, like, as an example, yesterday, I shared a video about how I screwed up a project. Like, I screwed it up pretty good, right? Nobody's batten a thousand out here. So like you need to listen to people with a grain of salt. But yeah, like I literally talked yesterday. I had a flip.

I sold a flip. Well, I'm selling a flip. It should close today or tomorrow. But I held this thing for two years. Two years. Were you renting it? No. It was vacant for two years.

I waited too long to hire a contractor before we got started. And then I hired a bad one. who just took forever to get anything done. I did not hold them accountable. I didn't do a good job making sure they showed up every day and got things done because I had so much other stuff going on. And this wasn't at the top of my priority list. And before you know it, months had gone by,

very little work had been done. But I had paid him a substantial amount of money. Also, I under budgeted this thing by a lot. Like, I probably underbid it by about $50,000. And so I ran out of my rehab budget money before the project was close to being done. Like, I screwed it up royally. And to fix my mistake, I had to bring in a partner to bring the rehab money and then give up 50% of my deal to this partner for bringing the money that I needed. And at the end of the day, we got the house done.

I got it on the market. We got it sold. And I'm going to walk away making about $20,000. and I know that sounds awesome to people, but I should have been walking away with about $120,000 to put that into perspective. Yeah, you have $150,000 worth of headaches, right? This was a six-figure flip that I'm now walking away with 20 grand, and thankfully, I bought a great deal that I could sustain that big waste of time.

But like, this is, this happens to experienced investors, right? But it just happens. This is what it is. This can be you too. Exactly. So be careful who you're listening to. Yeah, exactly. It's honestly a lot of it's just like a volume game.

If you do it enough, you're going to be successful. If you're like, you know, you get your average up high enough, then you're going to be fine. But these things are totally going to happen. And I just want to say before we move on, like, I think the other thing about unrealistic expectations is that like you have to be a full-time investor or you need to become some like tycoon like for real estate to be worthwhile. Or you need like 100 doors. Exactly. Yeah. Like I know a ton of people who have like three doors and are super happy with it.

You know, it's just paid off doors would be unreal. Exactly. Yeah. Life changing. Yeah. If you buy three doors now, pay them off by the time you're, you know, if you're retired 20 years or now, that's your retirement. That's enough.

You know, like that's going to be enough. Just do the math. I'm not just making that up. That's real. So anyway, that's my number two hate. Let's move on to your, to your. third one. What do you got? All right. My next hate, and I'm going to get a hot of hate for this. Man, I hate working with contractors. It was only a matter of time. I hate it. I hate it so much.

I always think that I always start a clock in my head every time you're in a room with real estate investors. How long does it take until this conversation starts? A minute? Two minutes? should. We should play over under on how long it takes before bad contractor stories. Look, full, full caveat here, guys. I do hate working with contractors. And it's a hundred percent my fault. Like, it's not the contractor's fault. I agree with myself, too. Yeah, yeah. It's a lot of it has to do with my lack of organization at times, my lack of having standard procedures at times like I am a free spirit by nature. Like I like to fly by the seat in my pants. I like to give everyone the benefit of the doubt. One of my life rules is I start everybody out with an A. Like if you're

on a grading system for people, when I first meet you, everybody has an A. Right. And then you got to work your way down from there. Right. Like you, you, how far have I gone down? I mean, you're a solid C minus right now. And that's, you know, that was my GPA high school. I'm used to that. I killed it as a student. Are you getting me? Yes. Oh, man. In all seriousness,

no, Dave, Dave's my guy. Dave still, Dave's gone up, right? Oh, wow. But, like, that's my,

that's my, that's my life motto. Like, give everybody the benefit of the doubt, and as they betray your trust or give you reason to, to downgrade them, then you downgrade them, right?

And that's bitting me in the butt with contractors because, you know, I'm just going to assume that you have my best interest at heart, and that's not going to, be true all the time. I'm just going to assume that you're going to show up when you say you're going to show up. And obviously, that's not always going to be true. I'm just going to assume you'll bill me for what you said you're going to bill me for. And that's not always going to be true. And so I'm just bad at, I think, managing contractors and expectations. And it's forced me to have to be a better

operator, which is a good thing. Like, I know now that when I work with a contractor, that I need to do it in a standard way. I need to have checks and balances in place to make sure that. I know, I know, they're doing what they say they're going to do. They're showing up when they're saying they're going to show up. And so I have gotten better at it. I truly have. And I'm much better now than I was when I first started because it's forced me to have standard processes and procedures and to hold people to the fire and to not trust anybody from day one. But it's so against like how I like to operate as a person that I don't enjoy it at all. And so I just hate working with contractors. And it's not their fault. It's my fault. I sort of agree with you. To me, it always reminds me. I got this advice, before I started working at Bigger Pockets, I had started a business, not real estate business. And someone gave me this advice that like every degree of separation someone you work with is from founding the company, the less they care. And that's not their fault. But like, it's frustrating as someone who really cares about your business to like be working with people

who care about their own business because they should. That's what they're supposed to be doing. But it's kind of this like constant reminder that you're like, this person doesn't really care. about me and does not care about my business. And like I feel on guard, you know, like I'm always kind of like more, you said yourself, like you usually trust people. I find myself being like way more skeptical around contractors than I am with normal people. And I just don't like being that way. I don't like operating with that way. And I want to operate in my natural state. And I just, I can't. That's how I ended up with the property for two years, right? Exactly. You've made 20 instead of 120.

Totally. And so for people to have some practical advice from this, it's like, understand this from day one. Like you've got to have a standard way that you work with people. And just at a high level, some of the things that I do now are before I have a contractor come and bid a job, I put together a very high level scope of work and I send it at a contractor. Because what I learned through this process is not every contractor wants to do every type of job. They're comfortable with certain levels of rehab, certain types of homes, certain years of home, certain types of things. And so what I'll do is I'll put together a high-level scope of work and I'll send it out beforehand. That way, if they're like, hey, this isn't my cup of tea, we're not wasting time in looking at a

project that they're not going to want to bid. Because when a contractor sees a job, they don't want to do. They may still bid it, but they're going to give you the craziest most expensive bid because they're trying to make it worth their while for doing it. Right. So then you have this negative interaction already off jump with a contractor. So I send them the scope of work on the front side. So they know the size of the prize if they even want to do that job before they get there.

The second thing we do is once they put together, a bid, we take my scope of work and their bid, and we break the project out into phases so that there's a phase one, phase two, phase three, sometimes phase four, depending on how big the project is. And we establish on the front side, I'll give you X amount of dollars up front for you to get materials. And that's it. You don't get any more money from me until phase one is done. We both have to walk the property and make sure and agree that the phase is complete. And once that phase is complete, you get your money for that phase. And then they use that money to buy whatever materials they need for phase two. And we do that same process three or four times until it's done.

That way, everybody's on the same page. And we literally sign off after each phase. Like, that is a very structured way of working things. It is not my natural state, but it's the way things need to be done for me in order to make sure that I don't end up in the position that I was in before. That's one of the things that you learn over time, too, is like where to set the standard. I think it's hard for investors at the beginning because you don't know what's normal. Yeah. That's why forums like bigger pockets exist because you can go on there and try and understand what's normal and why you listen to podcasts like this. And you could do things like Henry said.

But as time goes on, you get used to like what a good relationship with a contractor. It looks like. And unfortunately, sometimes they go in and out and you have to trade them out. But like you should stick to your standard going forward. And unfortunately, that means finding new people sometimes. Absolutely. All right. I for my, this is such a stupid one. But it just tries to try. I just hate the way that real estate agents write descriptions of properties. Like, it just... Everything is the most lovely place on the face of the planet. Yeah. Like, if you describe a property as a quote-unquote investor special, I know that just

means $50,000 overpriced. Like, it is deeply overpriced for what it is. Or like saying that it's a unique opportunity. Like, okay, so I had this freshman year of college. I had to take a writing class and I wrote this paper. And my teacher told me that I had the quote, he called it the freshman vernacular, which was basically like you just put as many adjectives into the writing as possible to make it sound really fancy. Like I'm looking at this description right now. Just someone wrote, with modern updates and unprecedented proximity to essential amenities.

It's like, no one talks like that. Don't write your descriptions that way. Just talk like a normal person. That's all I got. It just annoys me. That means they painted the walls a neutral color and it's close to a bike shop. Yeah. Yeah, it's right next to a minus.

It's by a chick flay. Hey, that is an essential. Yeah, that's fair. Chick-fil-a-old. Well, that one was quick, but that's all I got. I just, I can't read them anymore. I just don't want to read them. Investor special means the ARV is 350 and they're selling it for $295.

Yeah, exactly. Yeah. It's special for investors who have no idea what they're doing. Yeah, that's fair, fair. All right, that was mine. What's your, I think we're on your fourth. Number seven we're up to things you hate about real estate. Oh, boy, boy, this one, this one really grinds my gears.

I hate virtual stuff. staging. Like, I hate it. Like the AI staging. Like the AI virtual staging when you list a property. And so, so for those who don't know, virtual staging is, uh, you can now use AI or tools that'll basically take the pictures of your house and then like place virtual furniture in it for the listing photos. And so that when people are browsing the listing photos, they can see your place staged what it would look like with furniture in it. And I.

hate it. Here's why I hate it. Because when it first came out, before AI was even a thing, there were tools that you, that would do that, like, email your pictures to someone and they would, like, do it for you. And the couch would always be, like, floating, like, three inches above the ground. So, like, I was shopping for a personal home at the time. And we browsed this house. And I'm like, oh, man, it just looks amazing. Like, the, like, the state, the fake staging looked so good that I thought it was actual. aging. And it just looked fantastic. And so we got to look at this house and I walk in the door and the house smells stale because it's been sitting vacant for so long. There's nothing in it.

It had been listed for a while. So it was like dusty and there were dead bugs on the ground. And like those things are normal in a vacant house. Like you can walk any vacant listing. If it's been vacant for a while, you're going to see a couple of dead bugs. It's going to be a little bit dusty. Right. But the expectation was set so high for the virtual staging that my first feeling walking in the door was a giant letdown. It's like you hear those stories about people on dating apps who like put photos of them from like 10 or 15 years ago. I got catfish. You got catfish by a property. But it's like what are you expecting? You're just setting people up to be disappointed. Yes. Yes. Absolutely. And so like when you're showing a property, especially now guys.

So again, practical advice here. Now it's different. The market has slowed down, guys. Home sales are slowing down, which means you have less eyeballs on your property than you did a few years ago. And like, you have got to capitalize on the eyeballs that you get into your listing if you want it to sell sooner than later. And you do not want people's first sentiment when they walk into your home to be disappointment or let down. Like, you want them to be excited. So we physically stage properties every chance we get.

And we do it in a way that like we only stage living areas, bonus spaces, and like dining spaces in office, like things that people need help seeing what furniture would look like in there. Yeah. Like will a king size bed fit in here? You know, people want to know that. Is this like a comfortable workspace for me? Absolutely.

So we typically aren't staging bedrooms unless they're very small. and we want to make sure people realize that, yes, you can get furniture in here. Other than that, we're not staging bedrooms. We're only staging main living areas or bonus spaces. Like as an example, I have a house that we're about to list on the market right now. And there's a weird, smallish room that's almost like a super wide hallway that's between the kitchen and the primary bedroom. And so, like, I don't want people to think, is this a bedroom you have to walk through? And I don't want people to think, that's a good point.

This can only be used as a hallway. And so we're staging it with a desk, like a work desk and an office chair in there to show that, like, this could be a flex office space if you want to. Right. Rather than that way, I'm forcing people to think about what this could be versus letting their minds wonder about. Yeah. This is a weird room you have to walk through. I like that. And so, like, we're physically staging when we can.

And when we can't, I don't like the virtual staging. Now, when you do virtually stage, because I think it can be a good tool if you do it properly, when you do virtually stage, make sure your house is clean, make sure that thing smells good. Or just put the dead bugs in the virtual staging so people know what to expect. Like, one of the things people should do is go and get like those Glade plugins and put them like right by the front door and then into the living room and get like a food smelling one, like vanilla or cookie. So that smells good when you walk in. And then also when you virtually stage, make sure you put the virtually stage picture and then right after it, the picture of the same room vacant. I like when people do that, actually.

I've been seeing that a lot more recently. That's a really good. It's just, it's more honest and straightforward about what you're doing. Yeah. It's like, here's an example. Here's what it actually looks like right now. Exactly. Like, don't just put the virtually stage pictures.

Put the picture that it actually looks like right after it. so people understand that it is vacant and understand that this is just an example of what it could look like. Stop lying to people. Stop lying to people with your virtual stage. Yeah. I love it. That's a great one. I had a thought about that one, but once you said it, it is just the worst. And it's just so, just misrepresented so much. Okay, time for one last break. We'll see you on the other side. Thinking about wholesaling or flipping your first property, but not sure where to start. The truth is, deals don't just fall into your lap anymore. You need to go out and create opportunities. That's where PropStream comes in. With PropStream, you get instant access to over 160 million

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sign things with the pen and like have to keep records and like I'm filling out forms with the government all the time? I'm like talking to utility companies. Like, why isn't there just a button and I can press. You can tell me what I want to buy from the grocery store two weeks from now, but I have to actually physically sign a contract. Yeah, exactly. It's similar. I don't know how often you rent cars, but it's like, can you go to the rental car booth? Like, they have all your information. And then when you get there, they just make you enter all the information again. It's just so stupid. I feel like that's half of the transactions in real estate is like half the time of managing your portfolio is just re-entering your EIN and your mailing address into just like more

forms that people are just making you feel out. That's not true. It's the worst. I just like, why do I have a sticky note on my computer with all my EINs on there? Like, I shouldn't have to do that. Like, you know what it is. You gave it to me, government? Yeah, yeah, exactly.

You know exactly. If you don't know what an EIN is, it's like a social security number for your business. It's an employee, it's a tax ID number, basically. But it's just a stupid number that you have to memorize. That's how I feel about taxes, too, in general. It's like, the government's like, hey, we need you to fill this out. We know exactly how much money you're going to have to pay in taxes or not paying taxes, but we're going to make you fill all this out and guess.

And if you're wrong, you go to jail. Yeah. It's like when you got in trouble with a kid, your parents were like mad at you and they know what you did, but you don't, you've done so many things wrong. You don't know which one they caught you for. So you're just sitting there guessing. But honestly, it's true. Living in the Netherlands, like, taxes here are ridiculous.

It's so easy. They just tell you exactly what you need to pay. It takes a couple of minutes. And then, like, if you pay too much, they goes right into your bank account. They don't even ask you. It just goes right into your bank account. It's so easy. It just doesn't have to be that way.

All right. Well, that's my one. What is your last number nine thing that you hate about real estate? Oh, boy. This is a big. one for me. Like, this is specifically for wholesalers of real estate. Okay. Um, when wholesalers say, well, if I can't assign it, I'll just back out, right? That whole methodology. Can you explain what that means just for people who don't wholesale? Yeah. So when you wholesale real estate,

uh, essentially what you're doing is you're going and you're finding a deal typically direct to seller and you contact that seller and you look at a property and you make an offer, right? You say, I'm going to, I will buy this property from you for, let's call it $100,000. Let's say that house they put under contract for $100,000 is worth $200,000, right? ARV is $200,000. They'll go and they'll find a flipper and say, hey, Mr. Flipper, I've got this property. I'll sell it to you for $110,000. It's worth $200,000.

And that flipper goes, that sounds like a great deal. I'll take it. So then that flipper then gets assigned that contract, which means they have to sign an addendum to the original contract. That addendum says that they are now taking the place of the original contract. original wholesalers spot in that contract. But they are going to purchase the property for $110,000. And so you get to closing and there's a $10,000 difference between the $100,000 purchase that was originally put under contract for and the 110 the new buyer is buying it for.

And that $10,000 is an assignment fee that goes to the wholesaler who originally found the deal. I think there are ethical ways you can wholesale real estate. I'm not saying wholesaling is unethical. I'm saying that there are a lot of people who do it very unethically when they first start out because it's sold to people as this way to get into real estate with no money and no experience and no credit. And just so I can clarify, like, the reason it's unethical is because you're basically lying. Yeah, you're not being forthcoming with the seller about what you're doing and you're basically taking their potential sale off the table when you don't necessarily intend to close on it. Right. And so you put the property into contract as a wholesaler. And a lot of them will say, well,

I'll put it under contract and then I'll go try to find a buyer. And then if I can't find a buyer, I have all these clauses in my contract that allow me to back out. And this happens so frequently. And it's just a bummer for like the person that's impacted is that seller, that person who has a problem property or a problem situation that they're needing to sell their property. You've said that you're going to buy it and they believe you. And then you go and you try to find someone to buy that property and they can't buy it because you didn't find a good enough deal. And so now for a month or two months or however long you have it under contract, they can't go sell that property to anybody else. They're the ones who are left out in the cold if you back out of that contract.

Now they're stuck with the same problem they had a few months ago, but now they've lost all this time. And you really aren't impacted as the person who didn't do what you said you were going to do. And I think that that's just a wrong way to approach this business. And so many people do it. And it just pisses me off. Yeah, man, I, I totally respect that that pisses you off. I totally agree. I think it's, first of all, like you said, it's, it's unethical. And it's just also, it's just bad business. You know, it's like you're not setting yourself up to be successful over the long term. It's just like trying to do something, shortcut your way into a quick buck. It usually doesn't even work. And that's not the main point, though. The main point,

as you said, is that it's just not being a good operator. Like, if you have to do that to make money, then your business isn't good enough. Like, I know that's just, that's just the way it is. Like, if you can't do it right, don't do it. If you, you should be able to operate on the premise that I am only going to put something under contract that I will close on if I need to. And if that's the mindset that you take, you'll get a bunch of deals that I think people would love to buy off of you, right?

But you will also not want to put anything under contract. If you know that like at the end of the day, if I can't find somebody, I'm going to buy it. You're going to think long and hard about that offer before you make it. Totally. I completely agree. All right. Well, that's a good one. And for our last one, our 10th thing that I hate about real estate, mine's a little bit serious here at the end, as yours was.

So we're getting a little more serious and introspective here at the end. But my last one is this like perceived. adversarial relationship between tenants and landlords. That, like, for some reason, like, it doesn't, I don't understand why this industry works in a way where tenants and landlords are presumed to not like each other and to not have each other's best interests at heart. It's a symbiotic relationship. Exactly.

I don't understand it. And I know there are bad actors. And let's be clear, there are bad actors on both sides. There are bad landlords and there are bad tenants. But I think 90% of relationships between landlords and tenants are positive, at least in my experience, they have been. And so I just don't get this idea. You hear a lot on social media. People hate their landlord.

Landlords complain a lot about tenants. Like, why can it be like every other industry where there is voluntary exchange for mutual benefit? Like that's the basis of our entire economy. That's how this works. And I know there's like a lot of emotion related with homes and housing as there should. be. But I just think it would be so much better if we could reframe this as a positive relationship because it can be and it should be. This may be an unpopular opinion, but I feel like the responsible party in this relationship for it to be better is on the landlord. This is the landlord's

responsibility to make this better. Why is it the landlord's responsibility? Because we as the landlords are the service provider. We are providing the service to the community. They are our customer. And too many times landlords get this holier than now attitude because they own the property. And when you approach things from a holy and then now attitude, you're going to get people who respond to that in a negative way. It's not the situation where you want to look down on a tenant. It's a situation where you don't make money or build wealth without a tenant. Like you have to have the tenant and you want to have good tenants.

I understand that. Yes, I get you want to have good tenants. that's on us again. For sure. To be good at evaluating tenants. That is our responsibility. But if you want to build wealth, you need to have good tenants. If you want to have good tenants, you need to know how to look for good tenants.

And if you want to have lasting tenant relationships, you need to take care of your tenants. Like, it is on us to fix this relationship, period. Well said. Completely agree. I'll add one more thing before we get out of here. It's just also about having realistic expectations. because sometimes you hear like, oh, the, you know, the dishwasher broke, the tenant must have done something. No, dishwashers just break.

They just break. None of them are good. They're the worst. They're truly the worst appliances known to men. They're so terrible. That's number 11. Dishwashers. The dishwashers are, though, worse.

But anyway, it's like people act like repairing and maintaining a property is some money that is being, stolen from them, which is this is just part of the business. Every business has expenses. These are your expenses. It just comes back to having these realistic expectations. And I think that the basic lesson is we got to treat people like people. Totally. Like you just treat them with respect and they'll treat your property with respect. Set that expectation. When I was managing my own properties for every tenant that before they signed a lease, I would meet up with them and I would just set expectations. I would say, look. Totally. My job is to give you a clean, comfortable place to live. If something's broken,

I want you to tell me about it. I want to fix it. And I want to fix it in a timely manner. I know not a lot of landlords do that. I'm not that guy. Yep. If it's broken, let me know about it. Give me an opportunity to fix it. Let me take care of it. Let me take care of you in that property. And that sets the expectation that they know on the front side, like, hey, I want to be a good landlord. I want you to have a comfortable place to live. I say, and then at the same token, I say, that's my job. Your job is to pay rent and pay rent on time. If you continue to do your job, I will do my job and I will try to exceed your expectations as much as humanly possible. And that just always set a good tone so that people understood that I want to take care of them. Like, that's our job to take care of

people. And when I did hire a property manager, because now a property manager takes care of my properties, you know, one of the selling factors, what one of the selling factors was for me to pick them? When I was interviewing them, they said when they said when they, they were talking about their tenants, they corrected me. They said, yeah, we don't call tenants, tenants. That's not what they are to us? And I said, well, what do you call them? They said, they're our residents. And I said, that, that's what I need. I need someone who's going to manage the properties who understands that the residents are just as important as the landlords. And if we both don't have this symbiotic relationship, then nobody's happy and nobody's making money.

Totally. Yeah, I completely agree. And it's honestly, it's not that hard. Like you said, it's just like being reasonable and setting good expectations and genuinely caring about it. And you can have a great relationship with pretty much any tenant. That was a good way to end. So let's get out of here. But Henry, thank you so much. One, for coming up for actually, I think it was your wife, Jessica's idea to do this show. But so thank you to Jess for this. And for coming with these very funny and cathartic stories that we can share about the industry. Because don't get us wrong. We love this industry. It's been wonderful to us, but there are downsides to every business, and these are just some that bother us. All right, well, thanks for being here, man. Thank you so much for having me.

This was a ton of fun, man. Absolutely. Thank you all so much for listening. And if you're watching on YouTube, let us know the things you hate about real estate in the comments, or you can always hit Henry and I up, either on bigger pockets or on social media. Don't have me, bro. I said what I said. Let us know if any of these things resonate with you, you disagree, or you want to add one on top. Thanks for listening. We'll see you next time. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday.

I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K, copywriting is by Calicoke. And editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.w.w.w.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk.

So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. Bigger Pocket's LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.