BiggerPockets Real Estate Podcast - 112: “Little Old Lady House” Investing with Mark Updegraff

Episode Date: March 5, 2015

Get ready for another incredible episode of the BiggerPockets Podcast! On today’s show we talk with real estate investor and property manager Mark Updegraff about buying homes from little old ladies, managing tenants with less stress — and who has the bigger beard: Brandon or Mark. If you want to learn about developing a buying criteria, how to get great leads through BiggerPockets, the “extra step” you should most definitely take while screening tenants, and a whole lot more, then don’t miss out on this entertaining show! In This Episode We Cover: What everyone should know about growing beards How Mark got started in real estate How to find a 100 percent value neighborhood Perspectives on Section 8 and slumlords The “extra step” you should perform during tenant screening Lessons learned from Mark’s very own property management business Clever methods for finding deals How Mark get leads through BiggerPockets Mark’s take on real estate agents How to develop a solid buying criteria Thoughts on get-rich-quick schemes when it comes to real estate And SO much more! Links from the Show: Trivia Email 100 Day Challenge BiggerPockets Webinar Replay (Pro benefit) BiggerPockets Plus and Pro Accounts Cheesy Eddie’s Zillow Trulia BiggerPockets Podcast Show 83 with Marcia Maynard BiggerPockets Forums BiggerPockets Meet Google Drive BiggerPockets Podcast Show 111 BiggerPockets Webinar BiggerPocket’s The Book on Investing in Real Estate with No (and Low) Money Down Books Mentioned in this Show How We Bought a 24-Unit Apartment Building for (Almost) No Money Down: A BiggerPockets QuickTip Book The 10X Rule: The Only Difference Between Success and Failure by Grant Cardone The Book on Flipping Houses by Mr. J Scott The Fountainhead by Ayn Rand The Frackers: The Outrageous Inside Story of the New Billionaire Wildcatters by Gregory Zuckerman Tweetable Topics: “We go through our policies up front so they know that we take our business seriously.” Share on Twitter “I’m not trying to sell people things that I don’t agree with.” Share on Twitter “The secret to why I’ve been so successful is that I don’t screw around.” Share on Twitter “The first person to establish a relationship to the other agent has an upper hand when it comes to closing the deal.” Share on Twitter “Your net worth is in your network.” Share on Twitter Connect with Mark Mark’s Website Mark’s BiggerPockets Profile Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast, show 112. I'll be able to do new business ventures because I've freed up my time, because I've built this source of income where I can pay my bills and then I can go out and I can do something else. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the hype, you're in the right place. Stay tuned and be sure to join the millions of others who have benefited from bigger. Pockets.com. Your home for real estate investing online. What's going on, everybody? This is Josh Dorkin. Host. To the Bigger Pockets podcast here with the man with a plan, Mr. Brandon Turner. What's going on, Brandon? Speaking of plans, so I've been doing this like 100 day challenge lately. It was actually

like a website called like 100 daytay challenge.com. And it's like every day I wake up in the morning and I do like this hour long like goal planning, like setting like milestones and goals and every seven days. Anyway, so I said I had five big goals for myself for the next hundred days. I set them all. And then today was day seven of it. And so I did like my first weekly review. And I realized like just by the act of doing that of like working my plan every single day,

I'm like 85% to every one of the goals. Like I'm almost great. Yeah. And I'm like, why did I do this like five years ago? Like now I'm thinking like the great, you know, A few weeks back, we talked to Grant Cardone about big goals, right? Like, this is exactly what he's talking about 10x. Anyway, I just wanted to share that because I'm pretty, I was like, I was pumped this

morning when I saw like almost all my goals are met already and I'm one week into this thing. So I'm going to like double or triple or 10x every one of those goals just. That's great. That's great. Yeah, I keep running across things and reminders of the same thing. I unfortunately don't have an hour in the morning to do that because I have children screaming. I force myself to wake up an hour earlier than the earliest. I have to be up.

I'm like, okay, I'm forced to myself. get up an hour. It's miserable. I know. I got to do it. One of these days, man, I'll start jumping on that 4 a.m. wake up call, 3 a.m. and make moves. Yeah, there you go. Awesome. You're making moves anyway. You're always, you're a, you're a little more productive than I am, I think. All right. Well, we got an interesting show today. Some cool, uh, insight from a successful and, uh, very, uh, opinionated. Let's put it. Gentleman, Mark Uptograph. Mark's a good guy. He's been around bigger pockets for a long time. And he's, he's held. a ton of folks on the site, and we're definitely excited to have him.

And he's wicked smart. He's a smart. He's a wicked smart. He's a wicked smart. Before we get into the show, no, he's not from Boston, Brandon. But before we get into this, why don't we get to today's quick tip? All right. So on episode number 92 of the Bigger Pockets podcast, I actually shared my story of how I bought,

you know, how I invested in real estate all the way up to this point. And in there, I talk about how I bought my apartment complex for. for pretty much no money out of pocket. So after I did that show, I got a ton of questions from people. And ever since then, people wanting more details. So I actually sat down, wrote up every single detail I could think of the entire process. And then we decided to turn it into a Kindle book. So it's our first quick tip book.

And it's titled How We Bought a 24-unit apartment complex for almost no money down. And you can get it in the Kindle store for 99 cents. What a deal. And you can read it in under an hour. it is a quick tip, focus on quick. It's a quick read under an hour. And as of today's recording, Josh, I don't know if you saw this,

but we are the number one Kindle book on Amazon in the real estate investment category. Oh, yeah. Yeah, that's awesome. That's great. That's great. Yeah, no, we're selling a lot of these 99 cent books.

They're awesome. They're awesome. No, it's great. And, you know, we love putting stuff like that out for folks to consume. Yeah. So just go to, what is it, BiggerPockets.com slash 20.

Yep, the number 24. BiggerPockets.com slash 24. You can it'll redirect right to Amazon to 99 cents. And if you did read it, leave me a review. That'd be cool. Yes. Moving on. Pro tip.

That's awesome. Pro tip. Pro tip. This week's pro tip of the week. All right, guys, it's no secret that Brandon does a free webinar almost every single week on various topics related to real estate investing. Well, if you are a pro, yeah, yeah. If you're a pro member, you can head to BiggerPockets.com slash pro replay and watch

replays of all of them. So pro members, head over there right now. Check it out today. And if you are not a pro member, you can sign up today by visiting BiggerPockets.com slash pro. Now, let me just make a quick note. For those of you guys who are like, oh, well, you're going to make everybody become pro to listen to your webinars. That's my old lady voice. Good. I like it. Yeah. I mean, our webinars are free. They're free and there's replays for a week. But, you know, after that, if you want to access all the archives, you will have to upgrade. and again, you can find those at biggerpockets.com slash pro replay.

There you go. All right. Let's do our trivia question first, and then we'll get to the show. Last week on the Bigger Pockets podcast, we spoke with Jefferson Lilly, a San Francisco investor who's running a remarkable investment company focused on mobile home parks in the Midwest. And he had a ton of great tips for all different types of real estate investors, not just mobile home guys. But one of the most powerful tips came when he shared his strategy for determining if there's enough interest. in mobile homes in a particular area, so he knows if he wants to buy there. So the question today is, what website did Jefferson say that he uses to determine this?

If you think you know, send an email to trivia at biggerpockets.com for your chance to win the digital version of the world's greatest real estate book of all time, the book on investing in real estate with no and low money down. Nice. Well, well done. Thank you. Awesome. All right.

Well, before we get started really quick, this is show 112 of the Bigger Pockets podcast. and if you are a listener, we would love to get your feedback at biggerpockets.com slash show 112. You can also ask questions to our guest. And there's links to listening to the show on iTunes, Stitcher, SoundCloud, things like that. So definitely go there and check that out. You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast? Easy.

Just use Indeed. When it comes to hiring, Indeed is all you need. That means you can stop struggling to get your job notice on other job sites. Indeed, sponsored job posts help you stand out and hire the right people quickly. Your job post jumps straight to the top of the page where your ideal candidates are looking. And it works. Sponsored jobs on Indeed get 45% more applications than non-sponsored post. The best part, no monthly subscriptions or long-term contracts. You only pay for results. And speaking of results, in the minute I've been talking to you, 23 people just got hired through

Indeed worldwide. There's no need to wait any longer. Speed up your home. hiring right now with Indeed. And listeners of the show will get a $75 sponsored job credit to get your jobs more visibility at Indeed.com slash rookie. Just go to Indeed.com slash rookie right now and support our show by saying you heard about Indeed on this podcast. That's indeed.com slash rookie. Terms and conditions apply. Hiring Indeed is all you need. Most investors spend all their time talking about their high level returns. But that's not the number that actually matters. What actually matters is what you keep after taxes, and that's where multifamily real estate quietly stands out. With built-in advantages like depreciation, the right

deals can generate steady cash flow while reducing the tax drag. Bam Capital structures its multifamily investments around those fundamentals, pairing tax efficiency with disciplined operators and a long-term approach. This isn't about chasing hype or guessing market timing. It's about building durable, tax-aware wealth over time. Learn more at biggerpockets.com slash bam. Managing properties can feel like a full-on circus. You're juggling vendors, tracking payments, chasing approvals across multiple properties, and maybe a few HOAs, all while trying to keep tenants happy and owners confident. One delay can throw everything off and suddenly your day is all clean up, no progress. That's why hundreds of property managers rely on Bill to streamline their finances.

Bill for property management lets you add all your properties, assign permissions, pay bills, and receive payments quickly and efficiently, without the usual bottlenecks. It syncs with platforms like QuickBooks, Zero, NetSuite, and Sage intact, so your accounting stays aligned. You can automate bulk payments across properties and HOAs. Choose flexible payment methods like Same Day ACH, international wires, card, or check,

and set custom roles in approval policies. There's even a dedicated bill inbox for each person, property to keep everything organized. Ready to simplify your workflow, book your free demo at Bill.com slash Bigger Pockets, and get a $100 Amazon gift card. That's Bill.com slash bigger pockets. Well, let's get to the show today. Like I said, we've got Mark Optograph. So let's bring him on. Mark, welcome to the show, man. It's good to have you. Hey, thanks, guys. It's great to be here. Thanks. Thanks. It's nice to have a guy with a, you know, a good looking beard like myself. Look at that. Wow. Yeah, look at that. He's a good looking at that. He's a good looking at that. He's

a handsome man right there. Do I need to go? You guys want a room? You might want to start growing a beard. Come on. What's look at this? Can you grow up here, Josh? No answer. I actually did see a picture of Josh with a beard. He, uh, you were dressed up, well, you were playing a homeless person, weren't you or a drug addict or something on a movie? I was. I was. Yeah. And you had a nice looking beard as well. I had a nice manly red beard. Yes. Yes. Yes. I did. It was red. But you're not a redhead, right? You know, I, I, I've, I've I've got a little red. I would not have guessed that. Anyway, we're going to talk about hair? We're going to talk about real estate. This is the lumber sexual show of the homing garden show or what?

All right, here we go. Mark, you are an investor and a real estate agent and you've been on bigger pockets for like 40 years. So we're going to cover kind of all that stuff today. You've been on longer than Josh has been on. I mean, so why don't we just start at the beginning, though? I mean, how did you get into real estate investing? I just sucked it up and bought a house. I mean, everybody else said, you're crazy, man. Don't, don't buy a house, especially not where you're buying it. It was kind of a transitional area where there was still a lot of crime and it was a little rundown, but I could tell that there were some seeds that had been planted a long time ago. I'm talking 10, 20 years ago. People started getting into this neighborhood. And they had the same hope that I did. If you think of it as like an exponential curve, they were at the very beginning of the exponential curve. And so their real estate agents said, hey, this is the up and common area, you know, buy a house, plant your flag, fix it up. And it took a long time from when those initial people started buying those properties until when I entered. And, you know, I just hit it at the right spot. So, you know, we'll dig in more detail into everything. But back then to today, did you plant your flag at the right time or what? Oh, hell yeah. Has that neighborhood transitioned? Yeah, it's completely transitioned. Like our values are up 100%. Wow. Wow. Nice. You know, I'm going to start with a question that I did not have in my list just because I want to know.

Like, how do you know an upcoming neighborhood like that? I mean, what were the characteristics that defined that neighborhood that gave you an idea that you should buy there? That's a great question. And what do other people look for in that? Because I want, I want that. I want 100%. Yeah. Let's say independently owned businesses.

You know, we didn't really have any big box stores at all. It was the local folks that were part of the community and really they wanted to have their business near where they lived. So a lot of people would just walk to work. And so it started with some friends of mine about 10 years ago. They opened up a restaurant on South Avenue. And other than their restaurant, which was, it's called Open Face. I'll plug them. There was a cheese, yeah, cheesecake shop that had been there since 1976.

And they make the best cheesecake in Rochester. So we had a name of the cheesecake shop? Cheesy Yetis. You got to plug them, man. Cheesy Eddies. Go check it out. So, I mean, they were kind of pioneers. We had a restaurant that's the women have since left.

and it was our favorite restaurant. My wife and I called The Slice of Life where we could get the Buffalo Tempe sandwich. And that took us to that neighborhood weekly because it was that delicious. I'm not kidding you. And that's where we'd be approached. People would try to sell us drugs in the streets. And we didn't feel like it was super safe, but we loved eating there. And we weren't going to let it bother us.

So really those were the only businesses in that area. And now the whole commercial corridor is completely filled with market rate. We've got lots of bars, restaurants. shops, we had a bike store, wine store, etc. But it takes a certain kind of person, right? I mean, you know, not everybody's going to want to hunker down and live in an area that's transitional in an area that's got, you know, a fair amount of crime. You know, some people like to wait till the end, right?

And they pay for it. They do pay for it. So, you know, other than, you know, the potential for, you know, having people do drug deals outside your house. I mean, you know, what real estate downside is there to getting in on a neighborhood like that? The downside is the housing stock is extremely deferred. I mean, we're talking slumlords where I bought properties from one of these slumlords. I won't mention his name. But he was bragging about the fact that he moved somebody in and they didn't have a toilet or a shower for like three months. He's laughing about it. I'm like, you've got to be kidding. Wow. That's crazy. What's his name?

I'm just kidding. Wow, that's crazy. It's crazy. And, you know, I mean, the risk is that it doesn't turn, right? You know, so I, I tried, I gambled on something like that years ago and it didn't turn and went the other way. And I was like, okay, I lost, you know, try again another time. So, you know, it very well probably could have gone the other way. Right. But you should have a stable rent market, right? So even if it goes the other way, it's only going to go down so far when you get to to Section 8 DSS, unless you just can't fill the unit. Right, right. So even in the worst parts of Rochester, people are still renting there. They're not paying exactly the same rate, but you'd be surprised they're not really paying

that much different because the subsidies kick in and... Or they're not paying at all. Well, somebody's paying. Yeah, someone's been in, right? Yeah. Interesting. So Section 8, and I'm assuming that things have transitioned as well, you've got a portfolio, and as things have gone from transitional to better, presumably, you know, the

a larger majority of your properties were Section 8 at one point, and, you know, that's changed, or no, not at all? No, I started out just saying, I'm not putting these people in these units. If we want this neighborhood to become better, you can't do that. You know, you have to be part of the solution and not part of the problem. We do manage a lot of, not a lot, but a fair amount of Section 8 and DSS for other clients at this point, because we have a management company that's getting close to about, you know, 80 units or so. And just the mentality difference between somebody that pays their own rent and somebody that has a subsidy is hugely different.

And they'll seem like a great person going into the unit. And then all of a sudden, you know, they're in your unit and things just completely changed. And they're like psychotic, racist, you know, just absolutely absurd behavior. So it's a shame. So you accept them. You manage them for other people, but you don't put Section 8 in your own properties. Is that what you're saying?

It depends on the location. Okay. You know, if I can't find somebody that's not Section 8, then, you know, I can consider it, but we're going to screen the same way. It's not like every single Section 8 person is a deadbeat. We have great Section 8 people that, you know, they're going to school, they're trying to advance themselves, you know, maybe they've been divorced or they've had some other situations in life where they need the subsidy to help get through. And those people are great. But you have to really, really screen. We actually added another criteria to our tenant selection process where we do

a final interview. And so after we've gone through all the background, all the credit checks, employment verification, etc., etc. We'd bring them in and sit them down for like a half hour and just talk to them. That's fascinating. Never heard that before. What do you talk about? What kind of questions? What are you trying to get to?

What's the goal? The goal is to provide enough open-ended questions that they're going to stick their foot in their mouth at some point. And then we're going to say, okay, we'll be in touch. And it's like basically that shouldn't happen. It should only happen maybe 5% of the time or something because we've done a very good screening process on the front. but then we just want that extra step just to say, okay, maybe this is the person that looks good on paper and then all of a sudden is a nightmare to deal with. And so we like the half hour to really get to know them and kind of let them tell us about themselves and just figure out if it's the kind of person that's going to end up being a difficult tenant. So since implementing that process, and I don't know what your eviction rate was prior, but have you seen an improvement?

Well, we typically don't take it to eviction. We're very transparent with the tenants when they're coming in, so we go through our policies up front. So they know that we're very, we take our business very seriously. And if they mess around or deviate from what we expect, we are going to go down the eviction route. So luckily, since, you know, when I got started, I did a few evictions in my own, but that was more me learning the business, learning how to screen tenants better. Now that we're a management company, we haven't really had to evict anybody. That's awesome. we're evicting. So I apologize, we did evict two.

Okay. And one, it was where the person bought it with this tenant. So we did not place that tenant. Both of them actually were with tenants that came with the properties and not people that we placed. No kidding. So I've had the same problem. My first eviction was an inherited tenant, kind of a similar situation where, yeah, we bought the property and she was a Section 8 tenant and definitely had the mentality of a Section 8 tenant and was a little crazy. So anyway, so fascinating. So fascinating. Okay, so I can we actually before, you know, normally we start with, you know, let's talk about your first deal and kind of, but I want to kind of go, I don't know, we're kind of getting deep first, but I like that. So I want to talk about the property management side.

You mentioned you have a kind of a property manager company, you manage 80 properties. Now, I've heard that property management companies in the past have told me, I think Clothier said it on his episode, that it's hard to be profitable unless you have like 350 or 400 properties under management. Do you find that you can still do it? You can still have a property management kind of company, with a small number of units? No, I'm going to be subsidizing it until I get to that magic number. What do you mean by that?

So what Chris said is true then? Yeah, that's absolutely true. Okay, that's good to know. So in other words, it's not necessarily profitable, but you're managing your own properties under it, right? My own properties are treated just like every other client is. So my properties are held in LLCs, and those LLCs are just like different clients.

Okay. And so there's absolutely no difference between my properties and somebody else's properties. They all go through the same systems. We have, right now I have seven people on payroll, but I'm doing a lot of different things. I'm not just doing property management. So the payroll is broken up into the brokerage side where I'm going to be bringing on an admin assistant. Like probably tomorrow, that'll be the administrative assistant for all the brokerage side.

And then the girl that I hired, she's been there the longest at this point, besides for everybody that's left. She's kind of cross-training everybody else. that we have an accountant. We have two people on the maintenance slash construction side and two property managers at the moment. So do you, are you doing that? And I ask this again, because I'm kind of in that spot. You know, I've got a bunch of rentals of my own. We manage them ourselves. I don't want to always manage them ourselves, but I don't have any good property manager companies around here and they cost a lot of money. Is that why you're doing it that way right now is to try to save on your own property management costs? Well, I'm not saving. I'm paying the same price that everybody else is

bang. Okay. Okay. So why not just, I mean, so is the goal done just because you want to build a property management business as well? That would have built the best property management business. Okay. Maybe we can make it franchisable. Who knows? Okay. Cool. Yeah, I think that's great. Can we circle it back? Sure. Yeah, because I mean, I think it's interesting, but, you know, let's, you bought that first house. It was in a transitional neighborhood. You get in, you know, and, you know, it's 10 years later or so. It's worth double. What about your first house? You know, you're in a actual dedicated investment deal. What was that? How did you decide to go from just buying a house to buying houses or whatever else it is that you are buying for investment purpose?

Well, I think I kind of knew going into that first deal that that was going to be my path. I was going to try to acquire as much cash-filling property as possible over short a time as possible because I felt like the window was open and we should be, everybody should be taking advantage of it. I just wish I had more money, you know, don't we all, but to do some of the stuff that Grant was talking about with the bigger, you know, I'd love to be doing thousand unit complexes and stuff like that. I think it's wide open for the entire spectrum of real estate. I'm just dealing with what resources I have available and I'm trying to make the best of my resources and then advance in the real estate as, you know,

quickly as possible because I don't know how long this window is going to be open. Yeah. So what was that first property, the first non-primary residence that you picked up? Well, that was one that I was talking about in the transitional neighborhood. We actually bought our house first. And in hindsight, you know, I wouldn't have. And we're still in it. We've been here for a while. We paid $125 for our primary, which doesn't make sense from an investor standpoint, as far as renting it out. If we do leave this house, which we probably will because the school district is bad, we'll keep it and rent it. We'll probably get between $16,000 and $1,800. But on $125,000 purchase, it's marginal rate, maybe 6, 7%, something like that. But it's in a great

area. It's gone up in value. So I'm not bothered by it. So what's the process? As a new guy who's buying properties in not so great neighborhood, you've presumably you've made a mistake or two. You know, you're here talking to the 40,000 listeners we've got or so. And, you know, what would you tell somebody who came up to you and said, hey, you know, I'm thinking about going to buy in this neighborhood that I think's going to turn around? It's kind of rough right now. You have any advice to help me not, you know, screw myself, not get myself into a lot of trouble, how to avoid all the big headaches? What would you tell them? Yeah, I know why you think it's going to turn around. I mean, don't just think it's going to turn around.

You've got to have some facts to back it up. So the neighborhood that we're targeting right now is right next to the number one employer in Rochester. To me, it's a no-brainer. We've got Xerox going out. We've got Kodak going out. We've got all these major players that are exiting the city. I'm not going to buy in an area where they're losing jobs. I want to buy next to the area that has the most jobs.

So, you know, just using common sense is a good thing. And then right by the university, so this is where we're buying. They found a body in the trash can last week on Magnolia Street, which is one of the streets that we buy on. And that's unfortunate, but I believe that together with the University of Rochester Strong Hospital and the city working together, there's definitely a much stronger police presence in that area. And you can tell the university's pumping lots and lots of private capital into development in that neighborhood. So it's not going to happen overnight. It's going to be, I'm saying 20 to 30 years down the road. But when I got into this, I wasn't looking for a quick buck.

I decided early on that the property that I buy is just going to stay in the portfolio. I'll probably never sell it. It'll probably just go into a trust, and the trust will go to the beneficiaries. Gotcha. Gotcha. Now, are your clients or your tenants primarily individuals buying for themselves, or is it students that you're renting to? Who are your tenants at this point?

Well, we just have an incredible marketing campaign, and we take as many leads as we can. We treat it just like real estate. You get a buy-sell lead to broker a property. It's the same as getting a tenant lead. And so we're building CRMs to deal with all these leads, to be able to archive them, to drip them, to call them, to really get the best qualified tenants,

even if we don't have a place for them yet. At least we know when we have that place, we're going to call the best ones. And so we're putting them into our CRM. We're doing all the pre-interview stuff, which is a huge advantage. I don't know if people out there just do a regular application process, but we have a pretty thorough pre-you know, so you do it on the phone. You're not wasting your time showing them the property. You're going through a lot of the stuff that's going to weed the people out ahead of time.

And that's going right into the CRM. Even if we don't have something to place them immediately, we're going to follow up with them later as soon as we have another unit that becomes available. So what you're telling me is you're finding tenants for properties that you may not even have at this point. Exactly. You're putting them in a database. And when something comes up, you can hit those five or ten tenants and say, hey, five or ten guys, you know, here. This is available. Are you still looking?

We know you're awesome. Yeah, move in tomorrow. Yeah, it was more like 100 to 500, you know, because the leads just keep coming in. Yeah. So we just have a system in place for the people that are taking the calls, the property managers, they're doing this live. So when they get the call, they're getting the data that they need to put it into the system. And so every lead that comes in, we archive. That's great.

How long is your turnaround typically on a vacancy? Sorry, Brandon. When we do our screening process, we try to get the people that are going to stay longer. So that's one of the questions that we ask them. Do you move a lot? All those questions to kind of pick at it. Most people don't care. They'll just tell you the answers.

Oh, yeah, I like to move around. Okay, well, that's not good for you if somebody else is going to tell me they're going to stay here for a while. Yeah. So you mentioned two things I want to talk about. First, the marketing. You said you have kind of like an amazing marketing machine that drives in a lot of leads. What do you do for your marketing? I mean, how do you get those leads consistently coming in?

Well, basically, it's through the brokerage leads. So we need lots of buyers and sellers. I've only been licensed agent for two years. and so I don't have a client base, so I'm building a client base. And so we did heavy marketing on Zillow, Trulia, primarily. You guys know Bigger Pockets is amazing for the investor leads. Zillow and Trulia, the beauty about those is people don't care.

They just click. It's a tenant, it's a buyer, it's a seller, they click. So I get tons of tenant leads through my Zillow and Trulia as an agent. And at first I was just like, sorry, I can't help you. And now I'm like, here, call this number. and then Caitlin picks up the phone and she gets all the details. That's a unique idea. I never heard that before.

So how exactly, what's the strategy? I mean, are you just listing yourself in the zip codes and truly on Zillow as an agent and wait for the phone to ring? Phone rings, nonstop. Interesting. So, okay, maybe I can push on that. There are a lot of agents that listen to the show. I mean, would you say Zillow, advertising on Zillow is a no-brainer everyone must do? if you want to be the best agent.

Okay. Not in your area. I mean, it's a marketplace thing, right? You know, like it or hate it, it kills me that all these agents hate Zillow. I mean, I just, I don't understand it. You know, this is where the eyeballs are. This is where people are. So you want to be where the people are, right?

So if you're an agent, you got to be where people are looking for properties to rent and buy and sell and, you know, saying, oh, I'm not going to be on Zillow because they're stealing leads. They're not stealing anything. They're giving leads away. Yeah, it's huge for branding. I mean, I go around and people recognize me. They say, oh, I sell your face on such and such a house. I'm like, excellent, you want to buy it? That's funny. What I mean? Like, let's go. Let's go. What's your name? What's your phone number? What's your email address? Let's get you in the database and let's sell you something. That's awesome. All right. The second thing I wanted to talk to you about the pre-interview. We had a guest, I don't remember who it was, but back a couple months ago talked a lot about the pre-interview. And what I think it was Marcia Maynard from, yeah, right? I printed hers out and I use it. I don't need to reinvent this. Here we go.

Here you go, Caitlin. There it is. I love it. I did the same thing. I said, hey, Heather, my wife, I was like, Heather, were you listening to this part? And she listens to most of these shows anyway. But we write down exactly what she said and then let's just do that. So we started doing the exact same thing.

So maybe, like, do you remember what was all on there? I mean, what are a few things like that you ask? Or is that a question for Caitlin? It's a question for Galen. I mean, we tailor the document. And like, it's kind of like a system where I like to ask them a lot of questions and get feedback. And so all of our documents were constantly editing. Our lease, you know, I'm sure it's the same with you guys. The lease is never done. We were just editing

it yesterday, you know, putting, oh, we need this in the lease. So it's the same with all of our documents. So it's like a living, breathing document. We started with Marcia's as our baseline. And, you know, we added some stuff that we thought was relevant about, you know, like the moving around, et cetera, et cetera. And so we just keep working on it. Yeah. Just a quick tip for people. Quick tip. We started doing that as well. We put everything in Google Drive now or Google Docs. And we keep everything there. And one of the nice things about that is as you edit, like your documents, whatever, Google will keep track of everything that you edit. And it's in the clouds. You can go get it anywhere from any phone and every system. So anyway, there's a little tip for you. Marsha's show, by the way, was 83. So you can listen to that. People, if you're a landlord or want to be, BiggerPockets.com slash show 83, you can get there. And that was filled with some good information. So cool.

All right, moving on. On the marketing side. So you're on these marketplaces. And I know one of the things, you're obviously also on BP. And I remember, I don't know, it was a couple months ago, you had put something up. You're getting like the bulk of your leads now from bigger pockets for your broker's side. And so I was just curious, how is that happening? How are you doing that?

What exactly do you do on bigger pockets to get leads and just interested generally and kind of hearing more about that? And then we'll talk more about kind of your investing side and rentals. Yeah, so I go into bigger pockets. I type in my zip code and I look at all the new people that join and I send them a message immediately. Yeah. That's a secret. And then, you know, you just try to start a conversation with them, see where they're at, what they're looking for, seeing if you can help them. And in the message, you spam them with a lot of like, you know, buy my 997 course and all that, right?

And I'm like the worst at communication. That's the one thing that we're like really trying to focus on this year in the business. So just getting better personal communication, you know, because you're so busy, it's hard to follow up with every single person on a regular basis and give them that personal touch, which is why I have, you know, I'm building out payroll so I can delegate some of that stuff where, you know, they know that my team members are just as important as me. And they're handling some of the back end stuff that needs to be handled. And they can also handle some of the personal communication. Nice. So at the end of the day, I mean, you go to bigger pockets, you go to bigger pockets slash meet. you could enter in the zip code.

You see who's there. Jump in, hey, what's going on? I'm Mark. It's nice to be to you. I see you're in my area. I'm also in Rochester. You dig up a conversation, and then one thing leads to the next,

and suddenly you guys are working together in some way sure you perform. It's just as simple as greeting them and kicking up a conversation without pitching them anything, right? Exactly. I mean, they're looking for somebody that's a professional

that knows what they're doing. And so when I sit down and talk to them, They can tell that I'm not screwing around. You know, I'm investing my time in them to figure out if it's somebody that I want to work with. You know, whether or not they want to work with me or not, you know. I need people that are serious and understand how this business works. The best deals, I can't sell them to every single investor because they're not ready to go. They don't understand that it's like, I need to write this offer right now.

If you're not ready to write the offer, I can't call you. And so I know if it's this kind of client or not. Is it an investor that understands that when a deal presents itself, you have to take advantage of it, or is it the kind of client that says they want to be, I don't know if they want to be more in control of the deal or if they need to see the deal or if they don't understand, you know, I'm market professional. I know the value of the house. So what are you going to tell me?

That's just kind of how it is. I don't know. Yeah. You know, from that kind of branching off that topic, working with an agent, I want to ask you kind of, when you talk to a person and you're trying to decide if you want to work with them like you just mentioned. How do you, how does a new investor encourage you to want to work with them? Good question. I think I made a comment on bigger pockets recently. Basically, if you start talking about creative financing, et cetera, et cetera, just like, that just means that you're

beginning and you just, you have nothing. Ouch. Brandon. Yeah. I mean, well, I mean, if I can find somebody that's going to be creative and do creative financing, I'm not giving it to you. I can't even find that to begin with. Sure. So if they're, if they're like, if they're like, hey, can you hook me up with a private lender who can, you know, get me a zero down loan, then I'll, you know, they want to work with you. It's not something you want to work with at that point. Well, I mean, there's, there's all different ways to look at it. Hard money lenders, if they'll lend this person money, if a hard money will lend it to them? Sure, I don't care. They can get hard money. They can get whatever they want, but I'm not going to run around and call all these sellers and say,

hey, we carry a note. Hey, we carry a note. Hey, we carry a note. And forget it. And I think that's actually really valuable point, too, is that, like, as a creative investor, if somebody's going to do a creative investor, you have to do all the work. I mean, like, creative investing is exceptionally difficult to do. And hopefully, you know, my book, you know, we talk about all the time, hopefully it conveys that this is not easy. This is not fun, like, to say, you know, and it's not fun for an agent. It's not fun for an agent, yep. I mean, even if I, I don't mind creative financing as long as the buyer doesn't have to have creative financing. We'll find you creative financing if we can. Sure, I'll ask the question, but you need to be able to buy something.

If you have to have creative financing, I'm not working with you. Yep. Yeah. I don't think that's, I think that's a great point because, oh, yeah, so many people are just like, I want to get involved in real estate, then they talk to their agent, and then they go and look at 40 houses with their agent. And in the end, they put an offer and then find out they can't actually afford it, and they don't know what they're doing.

It just wastes your time as an agent. Yep. I did that one time, and I'll never do it again. Once, once. One time. I won't say his name either, but if he's listening to this, he knows. Okay. How about this question?

This is something that a friend of mine brought up to this. other day. So he, a friend of mine is a real estate agent. He was showing properties to a guy for the longest time, you know, building a relationship, helping them get better and better with investing. And then at the last minute, the guy went and got us real estate license and just bought it himself. Like, do you fear that? Like your people? This is, this is like the other girl said the other day. It's thick skin, man. You got to have thick skin. I got clients that I know they'll stick a knife in my back the first chance they get. I got to suck it up. It keeps smiling. And said, oh, yeah, let's, they're going behind my back trying to buy for sale by owner, etc.

I got my lender calling me. He's like, I'm going to put you on conference called, don't say a freaking word. I'm like, all right, I'll keep it on you. Listen to the conversation. Oh, yeah, you know, we're going around. Look at this. We're going to do some for sale by owner.

We're going to eat that prequel sent over to us so we can put in some offers. This is after I showed up like, 500 houses. I'm like, oh, my God, let's just close a deal. And then you can move on your way. I'll move on my way. Which makes no sense from a buyer's perspective. Because, you know, you don't get paid from the buyer.

You get paid from the seller. So I don't fully get that. Exactly. I just shake my head. and that is no longer working with me. Yeah. Here's the truth about passive investing. If the strategy isn't right on day one,

the returns won't save it. Multi-family real estate offers structural advantages. Many investors are overlooking, including depreciation that can help offset taxable income while cash flow continues. Bam Capital builds its investment with that reality in mind. They are focused on solid operators, tax efficiency, and long-term performance.

For investors who want real estate exposure without being landlords and who care of, about consistency over hype, this is a smarter way to allocate capital. Learn more at biggerpockets.com slash bam. All right, rental property investors, listen up. Our friends at Dominion Financial already have some of the best DSCR rates in the industry. Now, they're the fastest, too. They just launched 10-day DSCR closing. That's right, 10 days. And they're still the only lender with a DSCR price beat guarantee. That means faster closing, the best terms, zero guesswork. That's Dominion Financial. Check them out at biggerpockets.com slash dominion. Again, that's biggerpockets.com

slash dominion. Wouldn't it be great if your houseplants paid rent while you were out of town? I mean, they've got the whole place to themselves, lots of sunlight, zero responsibilities. But no, they just sit there waiting for someone to spray them with some cool mist like a bunch of leafy loafers. But guess what? Your home actually could be earning you money while you're not there. Airbnb has a great feature called the co-host network, which makes hosting your home so easy. If you live far from your property or are away for extended periods, you can hire a local co-host to take care of the hosting for you. These co-hosts are vetted locals who already have experience hosting on Airbnb. A co-host can handle all the details like messaging guests, creating your host space, and managing reservations.

So everything runs smoothly. It's a practical way to earn a little extra money, maybe even some cash toward your next trip. Plus, you get to share your place with someone traveling to your area while you're off making memories somewhere else. Your home might be worth more than you think. Find out how much at Airbnb.com slash host. So you're a broker, right? You're not just an agent. You get your own brokerage.

How does that help you with your own investing? Well, with the brokerage, I have to have it for the management company. So that's why the brokerage license hangs under Upto-Graph management. All my sales still go through Remax Plus at this point, a Remax franchise. I'll probably move from Remax at some point. Remax is a very expensive company. But I'm just so busy. I haven't dealt with that.

at this point. Sure. So do you recommend other people become a broker or at least an agent or do you think people are better not? If you're going to get into investing, do you recommend that they should get their license? That's a good question. It depends on the individual. I would say it's being a real estate agent is not an easy job.

It means you got to work all the time. You have to answer your phone when it rings. That's the secret. And it's the same for wholesaling and all these other things. I go to the Fria meetings and I talk to people and you'd be amazed at how many people just let stuff go to voicemail and then say they're going to full. follow it follow it up

later. You can't let it go to voicemail. You have to pick up the phone. You have to talk to the people. So if you want to

be on call like a doctor, then go ahead and be a real estate agent. But know that if you don't do that, you're probably not going to do that well. Most people that are

buying houses are, I'm, I converted a lead for Pittsburgh at 1030 at night last night. The lead came in. I'm like, well, I'll give it a call.

I'll see if she answers the phone. She answered the phone. Hit it off. Set up some appointments. $300,000, $3,000, $30 at night I'll tell you what, we're house shopping.

And, you know, I don't think I'll go past 10, but we've called our agent at 930 a night and said, hey, you know, we just found something spectacular. We want to get in there tomorrow morning. You know, let's make it happen. And he answers the phone. He's on it. That's what we want. That's what we want.

If he's not on it, you know, and we have to wait and we don't hear back till noon tomorrow and already, you know, six offers are in. Well, yeah, he's not going to work with us again or anyone else. Right. So being an agent, as soon as you're an agent, you're just going to want more supports. You're going to want the admin. You're going to want other agents. And you're going to want to kind of step back from that because it's just a grueling,

grueling job to have, you know, going all over the place, meeting all these people, all hours, all weekends, you know, et cetera, et cetera. So I'm looking forward to building this out where, you know, I still support my staff, but I'm not the person that's doing the all weekend long showings and all that stuff. I need to have a life. And at this point, I have no life. Yeah, I tend to not, like, personally, I tend to not recommend people get their license. I mean, if they want it, great, I don't think there's anything wrong with it.

But I think a lot of times it's best left in the hands of people who are good at it. Yeah, I mean, you've got to be a professional. You're going to need to learn every single market in your area. It didn't happen overnight. I was lucky that I had some investment experience, so I did do some neighborhoods. I didn't know all the neighborhoods. Now I probably know the majority of all the neighborhoods, at least the ones that I want to sell in. and a lot of ones that I really don't want to sell in either.

Yeah. But some streets, I'm like, no, I'm not, if you want to look at something, find another agent. I'm not taking it to that street. I'm not doing it. Yeah. Interesting. Yeah. Because I'm going to buy all the houses on that street.

You can't see them. I'm going to burn them down. Just kidding. All right, all right. Mark, so rental properties. You know, why do you like rental properties? Why are you buying them? Why do you work in that space?

You know, what is it about rental properties that kind of gets you going? Well, I mean, it's when I first started out, and it's the same now, I'm trying to build something where it'll enable me to do other things so I don't have to keep doing the same thing. I'll be able to do new business ventures because I freed up my time because I've built this source of income where I can pay my bills and then I can go out and I can do something else. Yeah. I love it. I love it too. How many do you have it now at this point?

Do you mind me asking like rental properties of your own? About 50 unitsish. Okay. And are they all single family houses or are they, you know, multifamilies or what do you buy? Well, I think I'm going to start gearing towards apartment buildings like all the smart people are doing, right? I don't know. The guy that we had on last week's show, and I know you haven't heard it yet because we just reported it. But no, we just heard of the last last week for the people listening.

Gotcha, gotcha, gotcha. Yeah, so we talked to a guy Jefferson Lilly who does mobile home parks. And like his whole point of the show was like mobile home parks are better than multifamilies. And like I'm like halfway convinced that he might be completely right on that. So anyway, they very compelling reasons. So anyway, if people haven't checked out that show yet, make sure you do that. And I'll put a link in the show notes. But let's go on.

So we talk about you got, let me actually, that's a big number, 50. And most of those you're saying are probably single family. Probably 70%. Okay. So, how did you, I mean, how do you do that? How do you finance that many properties? Aren't people capped at four? I mean, that's the kind of thing people say is, I can't get more than four.

I'm done. So how did you do it? I've got hard money lenders. I have two hard money lenders that I use working with a commercial bank to take out the hard money, turn it into commercial. So commercial products, once you get past your 10, private funds, and luckily, you know, how I said those values doubled, you can then retap that equity. So there's a lot of opportunities if you're creative. So in other words, you use creative financing. I was going to say the same thing. I love that

you called them out on that shit. I love that you called them out because I was going to say the same thing. You'll do it, but you don't want to take on a client who does it. Interesting. Well, it's not the same kind of creative financing, right? So I'm taking the value out of the increased appraisal value, right? So I bought it 50. It's worth 100. Now I refinance it and they give me 75%. Yep, yeah.

So I'm getting another 25, boom. And then I'm taking that and using it for another commercial product. We've got to bust your chops, man. No, I know. All right. What's your buying criteria? I mean, you know, some people say, hey, I'll buy, you know, I want to buy houses where I get it, walk away with, you know, $100 a door.

or, you know, what's your, what's your criteria? What do you look for in a house? Okay, so it starts with the pro forma. We take 35% off the gross rents. That's 10% vacancy, 10% property management, 10% capital reserve, 5% repair. Then we subtract out the operating costs per property. So if it's a single family home, you don't have to pay water. If it's a multi, you pay water typically. So we back all that out. That gives us our cash flow. We divide by an all cash purchase plus closing costs, plus rehab. And ideally, you will, going to be 10% or higher. That's the benchmark. And that's just the paper. Okay, so now it looks good on paper. Now we're going to go look at the property. Now condition comes into play because you'll

have two houses side by side. One's been a rental for 30 years. One's been in the same family for 30 years. The one that's been in the same family for 30 years is infinitely better than the one that's turned over, you know, 15, 20 sets of tenants. Everything's better. The moldings are better. The walls are better. The floors are better. The ceilings better. The fixtures are better. They might be dated, but they're in much, much better condition. Now, those two houses sell for very similar prices. They might only be a couple thousand dollars apart. But in reality, the value of all that stuff, the nice hardwood floors, the uncracked plaster is a lot. It's a lot of value. So I go for the 10% and then I look for what I call the little old lady houses. And what that means is the family's been in there for a long time.

And it's probably a little old lady that's still there. The rest of the family's gone. Her husband has passed away or the last family members passed away or even it's been multi-generational, where the family has passed the house down within, you know, so their kids got it. And then now they're grandparents. If you can find those houses, in my experience, they're in far better condition than other houses. That's great. Really, really good. Yeah, very interesting. All right. So, you know, for somebody just starting out, do you recommend starting out with rentals or, you know, maybe flipping houses? What path do you think is the best path for a newbie? Or is there one?

Yeah, I think buy and hold is a solid approach because you're going to get an overall picture of the real estate process. And, you know, if you buy correctly and you have a good team of people helping you buy correctly, you're not going to make a mistake. Because over the course of time, you know, even if you pay a little bit too much for a house, it's going to work itself out. As far as the flips go, I think you can get yourself in trouble as a newbie and you should have a little bit more experience because it's difficult to make money on flips, in my opinion. I say actually oftentimes that most people, I think, in my experience, most people lose money on their first flip. I mean, like, that's just kind of, unless they're lucky or they really did their homework and they read the book on flipping houses by Jay Scott. And even then, a lot of people lose money on their first flip. But rental properties are a very forgiving asset class. Just like you said. Yeah. Yeah. You can make some mistakes. As long as you buy it, right? I mean, that's. Well, I mean, even that like, I mean, I got a property right now. I'm underwater. And like by 20 grand. But you know what? Like in 30 years from now, I'm going to be okay. You're looking long term. That's the key, right? You get to assess your criteria.

If you're talking to somebody who's looking, hey, this is a one year, a five year, and they're not looking 30 years, it's not forgiving in one to five. Well, sure, but that's not really, that's kind of flipping. I mean, even in one year is a flip. Five years is a hybrid maybe. And then, you know, buy and hold long term. Most people should expect to be in at least 10 years. I'd say the best deals are the cash deals. So to jump in as a newbie and be able to purchase with all cash. If you can do that, then you have a shot of doing this.

But, you know, the lower end market for flips is very saturated with people trying to do that. So if you're at least in my area, if you're trying to flip something into like 80 to 130 price range, there's a lot of people bidding those properties up and there's really no margin. And I almost think they're either not making money or really not making much money. So then to take it to the next level, you know, if you're buying in, you know, a $300 to $400,000 asset class, then it's a different ballgame. There's more days on markets, longer holding times, et cetera. So you've got to be real careful with how you do your flips.

I'm actually working on one where I'll probably close it this week, and it was a short sale, so I still think that short sales are a great opportunity to get some really good equity. And here the banks got this short sale. They get an appraisal. The appraisal comes in at 240. The agent says, you know, there's issues with this house. There's no way we can sell for anywhere near 240.

they try, they can't sell it, they bring it down to 2.30, they can't sell it. It's a floating slab. The floating slab sinks about an inch right where the furnace is. The furnace is connected to the floor joists, and when it sinks, it opens up a crack in the furnace where all the CO2 is getting emitted into the house. And so, you know, the CO2 alarms going off. The agent is on the phone with the bank freaking out. Like, this house is a mess. It's a mess. We can't do anything with this house. And so they're like, all right, the next $160,000 takes it. I pounded the table. I apologize. So we picked it up for 160. We got our offer in first.

Another offer came in because they were upset that we were so quick to act for 170, but she honored, I don't know how she did it, but we ended up getting it for 160. And we have enough room where we can fix all these things and we're still going to put some money in our pocket. But I would say you have to have a lot of room, especially as you get into the more expensive houses. Because you just don't know if you're going to be on the market for three months. If you're going to be on the market for six months, you don't know. Makes sense. Yeah.

Great. Can I ask you what are your long-term goals? It's kind of like my last question before we move on to the fire round. But what are your long-term goals? I mean, where are you headed? I'd like to build up the portfolio, kind of like Grant is doing. You know, he's got $350 million in real estate. If you do the 10x or whatever, you know, so we need a billion dollars in our portfolio.

Nice. That's not enough. It's not enough. 10 billion, 10 billion. But I would like to get to the point where I could do some development and, you know, kind of make my mark on development as far as how it's designed. Great. Nice. I like that. I like that. I want to head that way too some days. Awesome. Cool. And, and, you know, for me, I'm just going to ask,

on rental properties, you know, that's your bread and butter. So any advice for somebody looking for rental properties, how to go about finding good rentals? I mean, you know, what would your best tip be? Besides the old lady, looking for the old lady houses, that's a great tip. Yeah. I mean, you need to do the work yourself and not count on somebody else to do it for you. I've got a lot of clients that come and, you know, I'm going to try my hardest to help them find a good investment, but I need their help as much as they need my help.

You know, they need to be looking at the things that are coming to market as they're coming to market and bring them to my attention. There's a lot of good deals to be had, and I'm only one person. So it's difficult for me to, you know, okay, so I have, say, 30 investors and they all are on the market all the time for a property. When a good one comes, if it fits a certain person, I'll give them a call. But if you are really serious about locking one in soon, you should be looking at these things yourself and then calling me and saying, what about this one?

And then I can make a comment, well, it's a bad area or whatever it is. But you really need to be involved. And you need to listen to me. So you ask me the question about this piece of real estate. I give you my opinion. And we go from there. I mean, you have to trust your agent. I'm not trying to sell people things that I don't agree with.

Most people that work with me say, you know, Mark is really weird because he points out all the flaws in the house. It's almost like he's trying to convince me not to buy it. And I feel bad sometimes because they end up buying the house. You know, and I'm in there like, oh, look at this, look at that, look at that. They're like, oh, but I really like it. Oh, that's okay. We'll fix it. Don't worry.

This house sucks. Yeah. So I have a lot of fun, just helping people, you know, and being transparent about what I do, which is I just open the door. If it's the house that you want, you're going to buy it. I'm not going to pressure you into it. I'm just going to let you see it. There's like a dozen fantastic tips on what you just said. I love the idea where you're saying people have to do the work themselves.

They rely on their agent and they want to sit back on their couch and get a deal email to them. And it says, you know, hey, Brandon, I got this deal for you. I already wrapped it up, negotiated the contract and everything. And here's the repair list. And here, let's just go buy it. Like that's what people want and that's what they expect. Oh, come on. And it's ridiculous.

You know that's what you're going to get if you sign up for my course today. That is what I will get, you know, automate. My free automated software. I get emails, yeah. You probably do it too, Josh. Like, I mean, from every other week I get an email from somebody saying, hey, there's this software. It says it don't do everything for you and it's fully automated and you'll just have the

properties to buy. It's only $5,000. It's only $5,000. Yeah. And every time that, what do you think of that? I'm like, you've already lost. Is that what you said? Yeah.

Yeah. No, no, but a good example of what you're talking about. No, but a good example of what you're talking about. I mean, like, so Friday afternoon, no, Thursday afternoon, I did a webinar on buying wholesale deals, which people can sign up for my next webinar at biggerpockets.com slash webinar. But so I did a webinar. And for that, I went and searched the MLS and not even the real MLS. I searched like Zillow for all the properties in my area.

And I found one actually near me that I thought looked pretty enticing. So for the webinar, I sat and analyzed with like 700 people this one property. We went over everything I could find on paper about it to see if it was a good wholesale or a flip deal. Then after I was done with that, I called up my real estate agent and said, hey, I just did this webinar on this property. Do you want to go check it out? It actually looks really good. So he's like, sure, no problem. So we set up an appointment for this morning, Monday morning, four hours ago, when looked at it, loved it. I love this house. It's perfect. And all he did was showed up. Now I came home. I'll do the numbers tonight. And maybe I'll put an offer tomorrow. But like he didn't do anything other than let's open up the door because I brought it to him. I did all the legwork needed. I did the analysis. And my agent's going to be there to support me throughout the process. But anyway, if more people did that, like, I think they'd get a lot further along, and they'd learn a ton in the process. Well, and agents, agents wouldn't bitch so much about investors. Yep. Yeah, because investors are a lot of work for agents, I would assume, at least the irritating investors or brand newbie investors are probably kind of tiring.

Would you agree? No, I'd say each investor is unique and they have your own unique personality. I love working with a lot of my clients that are investors absolutely love. Cool. And I hate working with other ones. And those will probably be the ones that I no longer work with in the future. You know, as things progress, but you never know. Or I'll delegate that down to somebody else.

I'll be like, I can't stand working with this. So now all your clients are honest about it. All the clients listen to this show now are going to be like, they get that dear John letter from you later. Take it with me. Amber's going to be working with you from now on. Oh, man. No, everybody likes Amber. Yeah, there you go.

That's awesome. That's awesome. Cool. I think it's time to move on. I think we've got the world famous fire round starting right now. It's time for the fire round. All right. The fire round.

People listening on the podcast can't see this. So when we put this on YouTube, I don't know, every time we do the fire round, we always do like funny like gunshot. It always shoots me with this thing. I always shoot you with like, yeah,

you know, this fake death. Yeah, we're terrible. We're pretty funny. All right. All right. Fire round. Uh, these are questions.

straight from the Bigger Pockets forums. And Mark is in the forums every day. And you can ask questions to guys like Mark and other smart individuals by just going to BiggerPockets.com slash forums. But we're going to fire them at you, Mark, today here. So number one, what are things to consider when selecting the ideal property management company? Insurance. What do you mean? Oh, you got to make sure that your management company has the correct insurance. Interesting. How do you verify that? Do you ask them, do you think? They've got to provide proof of insurance. And what kind of insurance? I mean, like when I say, hey, do you guys have insurance? They say, yeah, we got fire insurance on our building. Like, what do I say? You need general liability, and then you need errors and emissions.

I mean, you don't have to. Why do I as a client care that you as a management company have, you know, insurance? That protects you from me. What does it protect me from as a client? We're sending people over to your property, so. Okay. If they get hurt, you don't want to have to put it on your insurance, right? right? There you have it. Good, good. Good. There you have it. Cool. All right. Is a mixed-use land development

project a positive influence on surrounding property values? Will it affect my rental properties negatively or positively? That's an interesting one. Yeah, it's going to depend on the mixed-use project. You know, if it's how much subsidized housing versus market rate housing. If it's all market rate, then it'll have an incredibly good effect. And if it's mostly subsidized, then it could be bad. Okay. Makes sense. All right, my next question.

I'm starting my first brokerage, my real estate brokerage. The location is perfect. Any advice, any dues or don'ts? I know it's a loaded question and probably you could go on for a while. But what's your advice from somebody who's starting their own real estate brokerage? For the buy-sell side? Sure. Okay, well, if you're starting your own brokerage for the buy-sell side and you're in a market

that's got a lot of branding, you know, like Remax in our area, we have Nothnegle, There's a lot of people that don't really care about anything else other than the fact that you're with a reputable name. So if you're going to be ABC Realtor and nobody's heard of ABC Realtor, it doesn't matter because you don't have that branding. So if you are going to be a broker, make sure you have a really good marketing campaign, make sure you're doing a lot of branding and make sure you have a lot of testimonials. So the people aren't going to be scared about using you and go to like a Nothnagle or a Remax as opposed to going with you. That's a great point. I mean, because I do that, like, I never really thought about it before. When I'm driving by and I see a for-sale sign on a house and it's listed by some brokerage company I've never heard of,

I instantly think negative about that property, about working with that agent. But if it's, you know, got, I don't know, prudential is one of the big ones in my area or Premier or whatever. Like, I'm like, oh, good, I can work with John or I'll be working with, you know, Eric on this one. And so, anyway, I do it naturally just from an investor side too. So, cool. Yeah. Nice. All right.

So submitting competitive offers. If I'm trying to put an offer on a property against other offers that are all cash and I don't have all cash, how do I make my offer as appealing as possible to this seller? Well, there's a lot of different ways to add strength to your offer, especially if you don't have cash. It's really important that you do add as much strength as you possibly can because you're competing against cash. So you would lift the mortgage contingency. And what that's going to do is if you don't get your mortgage, you lose your deposit. and you're also going to have to beef up your deposit. So you might say, you know, I know that I'm going to have to put 20% down on this property,

which is, say, going to be 20 grand. I'm going to make my deposit 20 grand. Now, obviously, don't do this if you think there's a reasonable chance that you won't get your mortgage because you're going to lose that 20 grand. But if you're confident, you're very comfortable with your lender and you know they're going to be able to close this transaction for you and give you the money that you need, then you can remove your mortgage contingency. And that would be the only way to compete with a cash offer.

The other thing that you're probably going to have to do is sweeten the pot a little bit more. Because apples to apples, if it's the same offer, cash versus I've lifted my contingency, they're still going to take cash. Yeah. And it's risky. I mean, it's certainly a risky ploy, huh? Yeah, but if you have the $20,000 deposit, they might take yours because they figure, well, if his mortgage contingency fails, I get 20 grand, and then I can still sell the sucker.

Yeah. So, I mean, it's a lasted. Yeah, you better hope your mortgage doesn't fail. Yeah. Well, I'll let a follow up on that. Yeah, the best approach is to get your offer in before other offers. And that's really the secret and why I've been so successful is I don't screw around. When the thing comes through the listing, everybody sees it.

I'm on the phone immediately with the agent, even before I know what client's going to buy it. And I'm working a relationship with that agent. So they know, and they know that I'm going to close the deal. And so I'm working with that agent. I'm letting them know that I'm bringing them an incredibly strong offer. I don't know what the offer is yet, but I'm just telling them it's going to be a strong offer because I know there's value there and there's going to be other offers. So I start the relationship right away with the other agent.

And believe it or not, a lot of times that is all you need to do. The first person to establish a relationship with the other agent has an upper hand when it comes to closing the deal. So make sure your agent's on the phone with the other agent immediately, telling them that they're going to bring them a strong offer. Yep. Love that. That's great. That's great. And then otherwise, just as a quick follow up, beyond the mortgage contingency, I mean, there's other things like, you know,

getting rid of all the other contingencies theoretically, shorter, quicker closes, stuff like that. Does that work or no? Yeah, I typically don't do home inspections on my own properties. The first couple rentals that I bought, I paid an inspector to go out. And now, as an agent, I've been on a million of these things. I don't personally need them. When I'm looking at a house to buy, I know what to look for. I'm looking for the same things that the inspector looked for.

So I'm good. If my client wants to do that, you know, they have a better shot of getting it than leaving it in. If there's no other offers, then I let them do whatever they want. I'll even let them try to get a discount. The real hot properties, I advise like, okay, there's probably going to be multiple offers. If we attack this now, I think you should attack it strong and get it under contract because in New York State attorney still has the final say. I don't know how it is with you guys, but basically the attorney on either side, the buyer

or the seller, could disapprove the contract, disapprove the contract. And so if another offer comes in that's higher and they've already. already accepted your offer, all they have to do is call the attorney and say, please kill the offer that I accepted. I am now going to take this other offer. And it happens. It happens more so with investment properties than with normal sales. But yeah, and it happens with investors more than it happens with regular people. So I'm working with a client. He comes into town. He's moving to Rochester. I show him a handful of properties, maybe 10 properties will say. We look at one of them. It's a beautiful condition. It's the little old lady house. It's got all the gumwood fireplace, et cetera. It's in a

Fantastic location. We're kind of talking and, you know, he's reviewing all his options. And I'm saying, you know, the one that I really like is this one. And here's why. And I tell him why. And I say, and the other thing is, it's going to sell immediately. So you really need to get your offer in there if you want to have a shot at getting this. And so, you know, a couple hours goes by, he says, you know what?

We've decided we want that property. Write it up. We write it up for full price. I'm pretty sure he still had his inspection contingency in there. Not a big deal. We get the offer in. They accept the offer. They get another offer.

he's not cash. They get a cash offer and it's higher. And the listing agent calls me, he says, you know, unfortunately, we got a higher cash offer. But the seller actually is a man of his word and he's going to stick with your buyer. I'm like, hallelujah. But they did make us remove the mortgage contingency. And luckily, my client was in a position where he was able to remove that contingency and still be able to close it with cash if he had to. So he wasn't risking, you know, losing his deposit or anything like that. So we just waived our mortgage contingency. and he ended up getting the property and the person that tried to snake it from him, you know, ended up upset.

That's fascinating. That is unbelievable. Unbelievable. New York, man. Forget about it. Wow. You know, I've lost some pride in my home state from growing up, man. That's just shady pants.

It's shady. Especially the meaty deals, you know what I mean? Those are always the ones that end up attorney disapproval, you know, because people are greedy. Yeah. Wow. Crazy. Okay, well, good to know. What's a contract?

Yeah. Yeah, what's a contract? Might as well write it on my napkin. Yeah. All right. Moving on to the end of the show, our world famous. Famous for. All right, these questions we ask everyone.

I know you listen to our show, so you know what's coming. Number one, what is your favorite real estate book? Okay, so I was thinking about this, and I already answered it on the first one years ago. And so it's not technically a real estate book, but I'll throw it out there because everybody said all the real estate books already and people want something to read, right? So how about the fountainhead? You guys read that? I have not.

Never have been heard of it. If you listen to Grant Cardone's podcast, that's a book that's read by 50% of the population, not the other 50. What? I did listen to his podcast. It's an Anne Rand book. Oh, okay. Lots of people. Yeah, but it's about architecture and it's about, you know, building beautiful things.

Interesting. That's cool. That's cool. Yeah, it's a thing. You know, there are people like, Anne Rand. Oh, my God. She's horrible. She's a beautiful, right?

Gilbert Godfrey right there. Her use of the English language is just incredible. Yeah. No, that's cool. What about business books? Again, I'm trying to think of things that people haven't read. So recently I read the book called The Frackers, and it's highly recommended. It goes through the story of six very influential people in the hydrofraq industry and kind of goes to the history of it.

It's an incredible book, and it's very business-like. Cool. And I seem to recall, you know, you've got an interest in that space, don't you? Yes. Like a business? Like you actually invest in? I'm trying to remember. We've talked about this.

Okay. So I have my master's degree in color science, which is part of imaging science. And I was working for ITT corp up until I got laid off when they lost a half billion dollar contract to their competitor, which they had for 26 years running. So I got laid off. And I decided to go work for my father, who's down in Pennsylvania, where I grew up about 180 miles away. And when I got there, the hydrophract boom was in full swing. And he had me doing some grunt work, which I didn't really appreciate. But what it did for me was it opened up my eyes to the possibilities of Pennsylvania,

specifically in regards to real estate. So after a couple weeks of inhaling lots of carbon monoxide next to a diesel engine with no exhaust, I came back to Rochester and I started thinking about doing some foreclosures down in that area, which were these little podunk towns. And so I started driving down to these podong towns and going into the sheriff's office, they've got no computers, you've got like a piece of scratch paper with what's getting foreclosed on. And then trying to find these properties.

You know, it's like RR1 Box 178 on 247.9. So you're driving around looking for these things. I located one that had 10 acres and it had a nice house on it. And I went to the option. I did my own title search, made sure that it was good. I bought it from the bank for 150 when the woman who lost it had. paid about two and a quarter. She paid two and a quarter before the hydrofract started, and she was on top of gas. So she had already signed the lease for the mineral rights.

So we would be paid when they started extracting the mineral rights. She just hadn't made any money off of it because they hadn't started extracting it yet. Yeah. So since we bought it, they put a well across the streets. Literally, you can sit on the porch and see the well, the wellheads. There's about 10 wellheads on that pad. It's a very high-producing well, and we get paid royalties for the gas on top of renting out the house for $1,600. And there's no rentals in that area, so I haven't even had to market it. We're there fixing it up, you know, and people just came up, no sign, nothing. Like, what are you guys doing with this house?

Oh, we're fixing it up for rent. Okay, I'll rent it. And my company's going to pay for it. Where do we send the check? Wow. That's great. That's great. Once that happened, I said, I'm not coming back to corporate.

I hate corporate. So I'm now out on my own. Nice. That's a good story. You know, the royalties on mineral rights on the fracking. I'm just curious, like, what is that percentage or, I mean, what does that look like? Is that better than rents? Yeah, it's better than the rents.

But it's going to be based on how much they're actually turning on and off. So as the price of gas fluctuates, they extract more or less based on that price. And so it depends on how much they crack the valve. If they open the valve, I get paid a lot. if they shut the valve down, I don't get paid very much. The gas is going to be there, and they're going to extract it. It's just a matter of when they extract it, I get paid. When they don't extract it, I don't get paid.

Makes sense. In the wintertime, they extract more than in the summertime because prices are higher. But the checks range anywhere from $80 when it's shut off to $1,600 when it's open. Okay. And then our rents rate on the property is $1,600, so that's carrying the $150. It's not like an incredible cash flow, but we know that we're going to be getting this gas money for the next 30 years. That's great. Awesome. Awesome. Cool. All right. What about hobbies? What are you for fun, Mark?

Well, I used, I don't have any hobbies anymore because I'm too busy, but I used to do flameworking. So I got a Herbert Arnold torch. It's about 5,500 degrees Fahrenheit. And I can melt about a 2-inch solid rod of glass and mix all different kinds of glass in with it. Cool. That's awesome. Jewelry for women. Fancy. I've never done that before. Never done that. That's cool. You've never taken a 5,500-degree to torch. to make jewelry for your wife? What kind of husband are you? That's right. You should be ashamed in yourself. I'm ashamed. Frisbee golf also. I love Frisbee golf. Yeah, that's right. I remember that.

I try to get in as much as I can, but it's not a whole lot these days. Right on. Right on. Cool. Cool. All right. My final question of the day. What do you believe sets apart successful real estate investors from those who give up fail or never get started? Well, I mean, it just takes a lot of time and patience and dedication. And you just have to be willing to make the sacrifice of, you know, just get it done. It's almost mind-bott. Every day, I'm just like, how in the world am I going to get this done? And it just keeps getting more complex and more convoluted and crazier. Now I'm like, I'm the HR guy. I'm like, oh, my God, I need to hire an HR guy. I can't stand having seven employees all like bickering with each other. It's like,

dear God, just do your job and stop arguing with each other. You better screen those employees as well as you're screening your tenants, man. Yeah, I know. I think no matter what, managing people is the most difficult. Oh, yeah. Oh, yeah. No, that's great. All right, Mark, final question.

Where can people find out more about you? Do you get a website? Yeah, we're about to launch rochesterinvestment.com. So that's going to be kind of our flagship where we talk about the Rochester investment markets, what we're doing. If you want to link up with us, I think that's, you know, I'm the best agent in Rochester, obviously. Obviously.

My second year, I'm within the top 20%, of all realtors in the greater Rochester area. And I've got my site set on just taking down these arrogant bastards that are those arrogant bastards you have to deal with tomorrow after they've listened to you on the show. They already hate me. I got someone that's blocked. They can't even call me. That's how much I hate them.

Wow. Styrical. So what if you've got a client who wants to buy a deal for? from one of these pricks. We still write the offer. I point out all the flaws. That's funny. I do that for all the properties.

Yeah, I love it. I love it. Awesome, man. Well, Mark, it's been a pleasure, as always. Thank you so much for sharing your knowledge and wisdom with us. And we'll look forward to send you back on bigger pockets. Yeah, I appreciate it, guys. This was awesome.

Awesome. Thanks a lot. Hey, thank you. All right, guys, that was Mark Up to Graph from up in Rochester. I didn't get to, you know, I didn't get to dig in on Rochester too much. I know you didn't. With my Detroit people, I rip a little bit. I see that rush belt as including Rochester.

So I probably should have given him a hard time. But he's kicking butt there, though. That's awesome. 50 units now and growing a larger and larger property management business. So yeah, that's great. Good job, Mark. Yep. So big thanks to Mark.

If you want to learn from Mark, obviously you can check him out on biggerpockets.com as we talked about before. Again, this is show 112 of the Bigger Pockets podcast, and you can check out the show notes at biggerpockets.com slash 112. Otherwise, jump on iTunes. Please, guys, leave us ratings and reviews. They really help. And if you're not already a member of our wonderful community, we certainly encourage you

to jump in, get involved, and participate. Mark's tip about what he does in Bigger Pockets to build business locally is an amazing idea. I recommend everybody to do it. You know, go look up your zip code, see who lives in your zip code, and say, hey, My name is Josh. You can use your name here, of course. Hey, your name. My name is Josh. Yeah, it's good to meet you. I'm a local guy. Welcome to the site. And take the conversation from there. And that's how you build your network. That's how you grow your business. And it's a no-brainer. So our platform is designed just for that.

And as they say, your net worth is in your network. Look at that. All right. Well, that's all I got for you guys. Follow us on Facebook, Twitter, Gplus, LinkedIn. We'll look forward to seeing you chatting with you there. And until next week, I'm Josh Dorkin. Sign in all. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing,

without all the height, you're in the right place. Be sure to join the millions of others who have benefited from BiggerPockets.com. Your home for real estate investing online. 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 Calicoe content, 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. www.com. The content of this podcast is for informational purposes only. All host and 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.