BiggerPockets Real Estate Podcast - 30 Units in 7 Years by BRRRRing, Building, Flipping, and Going All-In

Episode Date: October 7, 2024

After a strong case of “mommy guilt” working as an assistant principal, pregnant with her second child, Deba Douglas knew she needed a way out of the rat race. A run-in with Rich Dad Poor Dad prompted her to begin saving so she could start buying rental properties. She called her lender, found a property, and spent her and her husband's entire savings on the down payment. Little did she know that this one decision would set her life’s course in an entirely different direction. Now, just seven years after first looking into real estate investing, Deba has thirty rental properties and doesn’t work at her W2 anymore! How did she do it so fast, especially with kids to care for, bills to pay, and no prior experience in real estate investing? One BAD piece of beginner advice could have thrown her entire investing career off track, but she quickly learned from her mistake and leveled up at light speed! Deba is sharing how she went from real estate investing zero to hero, doing everything from BRRRR (buy, rehab, rent, refinance, repeat) investing, building new construction rental properties, flipping houses, and becoming an agent herself to help other investors. Want to escape the nine-to-five grind and get on the fast track to financial freedom? Do it all like Deba! In This Episode We Cover: The one critical mistake Deba made on her second deal that could have cost her severely The truth about becoming a real estate agent (and why it isn’t as easy as you think) Regular realtors vs. investor-friendly realtors (you CANNOT mix them up!) When it’s time to quit your job and become a full-time real estate investor Why Deba is still buying in a market that is seeing price declines in 2024 The massive benefits of new construction rental properties (and why they make sense in 2024) And So Much More! Links from the Show Join BiggerPockets for FREE Let Us Know What You Thought of the Show! Grab the Book, “Rich Dad Poor Dad” Find an Investor-Friendly Agent in Your Area See Dave at BPCON2024 in Cancun! Do You NEED an "Investor-Friendly" Agent? Connect with Deba Connect with Dave (00:00) Intro (02:00) Chasing Financial Freedom (05:16) First Property, Then BIG Mistake (14:16) Did It Work Out? (15:59) Quitting Her Job (20:53) Investing and Selling Homes (23:06) Deba's Portfolio (24:18) Building New and BRRRRing (26:50) Investing in a Declining Market (33:38) Goals and Best Beginner Investment Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/real-estate-1027 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

Have you ever met someone who, just that kind of person when they see a problem, they just kind of obsess about it and have to find a way to fix it? Well, today's guest is one of those people. She had one of her first deals go badly because of a realtor who just wasn't really on the up and up and gave some pretty terrible advice, to be honest. So what did she do? Well, she doubled down. She kept doing the same strategy that she had tried once and was very successful on her very next deal. And she also became a realtor herself so she could provide more trustworthy services for investors in her area. Today, she leads a team of agents and has more than 30 properties in her portfolio. It's an amazing story. I'm excited to share it with you. What's up, everyone? It's Dave here

with our weekly investor story. And our guest today is Deba Douglas, a realtor and investor in Dallas, who left her assistant principal job six years ago and overcame that early failure and all the anxiety that comes with it to eventually find a niche and start scaling. Deba has a whole bunch of great stories to share, but I'm really excited to talk to her about a couple things. First and foremost, how she just found the confidence to keep trying the burst strategy after her first deal was a pretty big disaster. I'm also curious about how she balanced starting essentially two businesses at the same time because people talk about quitting your job to become an investor or an agent, but those are two different businesses. And when you do them at the same time, that's a lot of work

and a lot of things that you have to be learning and thinking about at the same time. And of course, we're going to talk about how she's still doing deals in Dallas's hyper competitive market today and what advice she would give to anyone getting into real estate in this market. Deba, welcome to the Bigger Pockets podcast. Thank you for being here. This is such an honor. Thank you so much for having me. Oh, it is our honor to have you here.

We love having people who have been part of the Bigger Pockets community for so long coming on the podcast. I'll get into your whole story. But quickly, when did you join sort of the Bigger Pockets community? It was in 2017. my husband and I were just like dabbling into real estate trying to figure out how do we even navigate this world. And we stumbled on bigger pockets and we literally stopped listening to music on our way to work. And we started listening to bigger pockets.

And then late at night when our kids were asleep, we would come back and talk about the podcast that we just listened to. And we would take notes and be like, okay, how can we execute and put this into action? That's so cool. I love, I am smiling ear to ear. That's so cool. I love hearing that. And hopefully it's at a positive. impact on your life. So why did you start dabbling into real estate investing, as you said?

Yes. At the time, I was in education. I was an assistant principal and I had already had one son and I was currently pregnant with my second. And I dealt with a lot of mommy guilt. I dealt with a lot of like, I know this is not freedom. I really wanted more out of my life. I didn't want someone telling me when I could go on vacation, when I could be off of work and just yearning for free. financial freedom and wanting just more out of life. And I spent 16 years in education. And one summer randomly, I stumbled across rich dad, poor dad that was in our office. And it literally shared everything that my heart desired, but I never had it to articulate really what I believed in. And that day, I literally told my husband, we need to change what we're doing. We need to really

make some different lifestyle changes. We need to take some moments and sacrifice because real estate is going to be our vehicle for financial freedom. Yeah. Well, it's a story we've heard before, especially with rich debt poured on it. It definitely strikes a chord with a lot of people and ignites that fire to get into financial freedom. But I found that financial freedom kind of means something different to different people. So what does it mean to you?

Financial freedom to me means early in the morning I'm getting to spend time with my kids and not rushing out the door because I have to go to work and I'm dealing with my commute. Financial freedom means to me morning walks after I drop my kids off. Financial freedom means to me picking what I choose to do throughout my day and not feeling bogged down by just politics and everything else that may happen in my day to day and just enjoying the moment and really being present. And that's what financial freedom truly means to me. Wow. That's a you're painting a beautiful picture. I like what I'm here and there. It's so interesting though, right? Because financial freedom, it's, you know, we talk about it, like it's, because it is, it has something to do with money. But when you think

about the things that you dream about is not a dollar amount. It's about a mindset or a sense of purpose or a sense of freedom or independence that a lot of jobs, corporate jobs, public jobs, like, unfortunately don't really offer. No, at all. Okay. So tell me how you got this beautiful life that you're describing. So in 2017, you're driving to work. You're listed in Bigger Pockets podcast. What did you do with some of the information you learned? Yes. So at that time, we didn't know any other way to jump in, but other to call our lender that we bought our house with. And so let's go buy a investment property. And he was like, sure, let's do it. And so in 2018, we bought our first investment property, which was a duplex, that we bought it for $128,000. And because we were

going to conventional loan, we had to put 25% down because it was a duplex. And we started with that one. And I was like, okay, this is working. But then we're listening to bigger pockets. And people are saying they're buying three, four, five properties in one year. And I'm like, we just put literally our whole savings in this one deal. So how do you scale? And that was like a whole new turning point of like, okay, let's take a deeper dive. Let's really do some research on how you really can navigate. And as we did that, we learned something that I feel like it's like, like dear to my heart, the burr process and the burr strategy. Okay.

And so you had just saved up some money and decided to invest it into this property. And where about in the country is this? Yeah. So this was in Fort Worth, Texas. I'm in Dallas, Texas. So it's about 20 or 30 minutes away from where we lived. And I know it's a totally different market now than it was then. And we'll talk about what you're doing today.

But was it hard to find a deal? It was because we really didn't know what we were doing. We just thought, okay, we're just looking at the numbers. how much is the cash flow, okay, I think it'll make sense, especially if we're putting so much a significant amount down. And we just said, we just need to get in the game, get started, and we'll figure it out as we're going. Yeah, okay. And part of figuring it out as you're going sort of steered you to a burr? Yes, because then I was like, okay, this is how we can scale if we learn the burr method. And so this was when we're writing down the processes,

trying to figure out, okay, who do we use for financing? Who do we use to do our cash-out refinance in the end? And we figured it out and we bought our second property, which was also in Fort Worth, because at that time the market was a little bit better in Fort Worth. And we bought this property for $65,000. And we went with the regular realtor that we found on Zillow, $65,000 for the purchase. The rehab was close to $25,000. Again, at that time, we didn't know anything about hard money lending.

So we went back to our conventional lender. And he was like, sure, you can do it. You just have to put another 10% down. And so we do that. And this is what's the craziest story. Now that I think about, I'm like, oh my gosh, that was like all wrong. So many wrong ways to do this. We bought the property. Right when we're about to close, our lender comes back and says, well, the house is inhabitable. So you can't close on this. And we're like, well, what do we do? And then during that time, I go back to the realtor because again, we still don't. know what we're doing. And she's like, well, let me negotiate with the seller to see if they are willing to allow you to rehab the house. And then you come back and close on the house. And I trusted her. And so I said, okay, I think that makes sense. Let's do this. And so we find a contractor and we put in negotiation for eight weeks to rehab the house, a house that we do not own, that we're just rehabbing. Thank goodness. It all worked out. We were able to rehab the house. It was a two-bedroom, one bath, and we just configured the layout and turned it into a three-bedroom to full bath so that we could get more value and really get to that appraisal value.

So we did that, and we were able to close on it. And then we got tenants in the home, and I think they were paying at the time maybe $1,100. Our mortgage was about $700 a month. So we were getting decent cash flow. We had to wait six months at that time for seasoning to do our cash-out refinance. the realtor was like at the time she said it should appraise for a hundred and twenty five thousand yeah guess what it only appraised for a hundred and three thousand oh okay all right well i think we need to dig into this deal a little bit dumb because i i have a lot of questions so let's let's

rewind the clock so you you did your first deal it went okay then you wanted to get into burr and i should just take a minute and explain to this if you listen to this podcast you probably know But for anyone who's new, Burr is an acronym. It stands for buy, rehab, rent, refinance, and repeat. So it's this process that allows you to buy a rental property and you renovate it and improve the value. This is called forced appreciation or value add investing. Then you rent it out.

You get tenants in place so that you're bringing in some cash flow. And then you refinance it and do a cash out refinance to pull some of the money out. And then you just do that again. And the reason Burr is so popular and is such a great idea is because it allows you to make money in a similar way to doing a flip, but you get to hold on to the asset. And by doing that refinancing piece, you can take some of the money and the appreciation that you've generated and then use it for future deals. And so it sounds like Deba, this is why you were interested in it because it's a great way to scale because if you don't have tons and tons of cash, because most people, people don't have tons and tons of cash, you could sort of recycle your money a little bit into multiple deals.

So that was the idea, right? That was the idea. Okay. Yeah, that was the theory behind it. That's a good idea. That's a great idea. Okay. But what happened was you were looking at a deal that was it was uninhabitable, basically?

Yes. Okay. And so I think just for people who are learning, a lot of times, and it sounds like you learned this the painful way, most conventional lenders, like if you were to just go to your run-of-the-mill lender, they're not going to lend on an uninhabitable property. They want something that is in good living condition so that from their perspective, one, they don't want you losing a lawsuit or anything. But also, they want to know that if worse comes to worse and they foreclose, they have an asset that's valuable that that they could go sell to a homeowner, and they didn't

have that. So who were you working? with as a lender on this deal? I think it was a fairway mortgage at that time because they did most of our lending that we had for our personal home and then that last property. And so we just had a good relationship with them. And how far along were you before you realized that this wasn't going to work with them? We were about a week before we were going to close when they called us and said, hey, the appraiser went out and said that like we cannot lend on something that's not habitable. And I'm like, oh my goodness. Okay. And then you went to your agent for advice. Yes, I did go to my agent. And let's just, I'll put it this way. Knowing what you know now,

what would you have done differently on this deal? I would have definitely gotten more comms from different realtors. And just because I, at that point, at that time, I just thought realtors are all the same. They all went to the same schooling. They all got their licensing and their same. So they all have the same common knowledge. That was definitely a big no for me. And even when, you know, six months in seasoning. We called her and was like, oh my gosh, it did not appraise as what we anticipated. Can you help me? It was complete crickets. She never picked the phone. She never called me back. And in that moment, I learned a valuable lesson that I should never depend on one person's idea or strategy for me to make decisions for my future. And shortly after that, I became a realtor myself because I was like,

I got to do it off. Enough with these other people. Yes. Well, I will just say that. I totally agree there is a big difference between agents and realtors, just like there's a difference in lenders and any business. And if you are working with an agent, you should work with one who knows how to work with real estate investors. We can match you with one for free at biggerpockets.com if you want to check that out. But sorry you had to learn that lesson in the Hardway, Dem. It's not fun. So at that point, they gave you the advice to renovate before owning the property. There are a lot of risks to that, obviously.

Did you think about or did anyone recommend maybe just like using a hard money lender or a different lending source instead so that you could close rather than having to take on that risk? No one. Okay. No one. Yeah. Is that what you would have done now or would you have walked away from the deal? Like what would you have done? What would 2024 Devo would have done with this deal?

I would have definitely used a hard money lender or I would have used my own liquid. cash because we had liquid cash to cover that $65,000 purchase. Oh, because you could have made up the appraisal gap? Yes. Okay, got it. Yeah, that makes sense. So you learned a painful lesson, but did it turn out okay in the long run? Yes, we still own this property to this day. And I think it's a good reason why I have this property still in my portfolio, because it always reminds me to do my due diligence on every property, regardless of how successful I was on my last property, anything could happen. And I'm always telling people, most times because I am a realtor and I specialize in working with investors, I will usually tell them my honest to God truth of I really

would not recommend buying that property. Or I would because of these reasons and give them ample of data to make that decision on their own. Good for you. That's just a sign of prioritizing the long-term relationship, which is really what matters, right? You could, a lot of, you know, I don't want to paint out people to be immoral, but a lot of times as an agent, you're just thinking like, oh, I'm going to sell this person a house, and then I'm not going to hear from them probably for seven to ten years. Maybe they'll move again. But you want to find not just an agent, but all people you work with in your real estate business should be thinking about you as a long-term partner. You don't literally have to have an equity partnership with these people. But like,

if you have an agent who helps you be successful on your first deal, they're going to, the investor is going to use you with your second deal, your third deal. Same thing with your property manager. And it's really just try and suss out if people are trying to make quick cash off you or they really value sort of a long-term business relationship. It will help you so, so much. All right, it's time for a break, but we'll have more of this week's investor story on the other side. Here's why savvy real estate investors are obsessed with bonus depreciation. It lets you take that rental property or commercial building you own and depreciate most

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All right, Debo. So the second deal didn't go exactly as you expected, at least at the time. But you kept going. So what happened for you after that? Yes. So shortly after that, after I started making, you know, a decent passive income, I sat down with my husband and we both decided that one of us is going to have to make a decision and quit our 9 to 5 job to really pursue this because we really wanted to create generational

wealth for our kids. And I was like, me, me, me, because I'm kind of over my job already. So let me, please be the person to do that. And then we started saving because, again, I was an assistant principal. I had a decent income. So to walk away from that income and just depend on being a realtor and getting passive income, that's a huge step backwards. So it took us about a year.

We just kind of cut back on going traveling. excessive spending, we just literally took that sacrifice, which was hard, but we really focused on delayed gratification. And doing so, we decided to October of 2018, I walked away from my assistant principal job in the middle of the year. And I just said, you know what, I'm just going to step out on faith and see what happens. And it was the best decision I could have ever done in my life, the very best decision. That's so great. I'm happy it worked out for you. And I know that is the goal of a lot of people who listen to this podcast is to be able to quit their job and do real estate full-time. I want to just ask you a couple questions, though, about that decision,

because I think a lot of people are wondering how to do the same. So your husband was still working, right? Yes. Because one thing about real estate investing, if you quit your full-time job, like, healthcare is a big question. So, like, were you still able to get health care and some benefits from your husband's employment situation? Yes, I was able to keep the benefits with my husband. Okay, that's, that's really nice. I always think that's like a nice combo is if your husband sounds like has a relatively stable job, you know, it allows you to take some risk, especially when you you have a significant other. If one of you sort of has the, you know, benefits or a stable income that you can rely on, and you still have to make sacrifices, as Deba said. But that allows you to sort of go

out there and spend a year as you did, building up a new business, building up a clientele as an agent. Were you ever scared or nervous about the decision? Oh my gosh, I had so many sleepless nights. I would wake up in the middle of the night like, you don't have a job. You don't have a job. Like, what are you going to do? You've always had a job. Like, what are you going to do?

And being a realtor, it's a beautiful world. People say that you're going to make all this money. But it takes a lot of work to build your clientele. It takes a lot of work to try to convince people that one day I was an educator and now, oh, you want me to sell your house or you want me to show you how to buy. house. And so I literally just utilized social media at the time and I just posted on my journey and I focused on, I'm just going to do rentals. And if I can do rentals, I'm getting, I understand how to talk to people, how to talk to the listing agent, how to just navigate the world of real estate. And that first

year, I didn't know what to do. I just knew to talk to people and love on people. And I sold over 40 houses that first year. Oh my what? Yes. Oh my God. That is incredible. Wow. With the people you knew or How did you find these people? Social media. And it was free advertising. I just posted in random groups and I posted whatever I was doing. If I was on my way to a showing, it may have been a rental showing. I was just on my way to go show a house.

And I even dabbled with the real estate investing. I would go and look at investment properties. And I just brought everyone on my journey of decided to quit my education job and jumped into real estate. And so how my husband and I set everything up was he would, take care of our, you know, monthly bills and any income that I got from real estate, we would use that to reinvest and buy more properties. Well, this story, I feel like, is doubly impressive because you quit your job, but you were basically starting two businesses at the same time.

Like, you were starting a rental property business and a becoming a realtor. How did you allocate your time? You know, was it hard to do both or did you really prioritize becoming a realtor that first year. I really prioritize becoming a realtor and I wake up really, really early in the morning before my kids get up, before the rest of the world is up. And so that was when I would focus on big projects. I still do that to this day. And I really just block out my time and do, I do a really good job with my time management. And I think that's just the same skills that I use as a principal. I just transferred them over to this job. Yeah, I would imagine that being a vice principle. You have to learn a lot about time allocation and being very efficient with your

energy and your attention. Yes. So you spent time being a realtor. It sounds like that went extremely well. Were you doing deals that first year as well? Oh yeah. Within the first three to four months, I was already buying my next investment property. That was a burr. And then while I was doing that, I was also showing houses to get more income and just kind of kept it going. And because it was all real estate and I was so passionate about it, it didn't even feel like work. I enjoyed every aspect of being a realtor and being an investor. Wow, very cool. I love hearing people who find real estate to be so enjoyable and that they're passionate about it because there are a lot of people who get into real estate and recognize what a great investment it is and a great way to make money,

but it's just like it's just a different, you know, it's another job. It might be a more profitable job. It might be a better long-term retirement plan than your other job, but it's just another job. But it sounds like you just genuinely find real estate kind of fun. Yeah, I think it's amazing how you can see something that looks like it's unworthy and you can go in and create new value in the house. And then you create a home for someone new in the neighborhood, for them to move in. I mean, I think it's just an amazing opportunity to be a part of that. Yeah, absolutely. Actually, it's sort of funny how I found my job at Bigger Pockets was because I had been investing for five or so years and I was in grad school for data analytics. And I was like, how are I going to use this new degree

that I'm getting? Because I didn't really have a plan. I sort of did it on a whim. And I was, you know, doing what everyone says? They're like, think about what you're passionate about? And I was thinking, like, what do I do in my spare time? And what I used to do is like, just ride my bike around DeVar just go to open houses that I had no intention of buying just because I found it so fun. And then I was like, oh, I love real estate. This is what I love. And it's honestly, like you said, it makes it not feel like work. If this is something that you're super passionate about, uh, there's so many options within this very broad industry of real estate that you can find something that is profitable, but also, uh, something that you actually

look forward to doing each and every day. Absolutely. So Deba, let's fast forward to Today, what does your portfolio look like and what kind of deals are you doing? Yes, so today I have about 30 rental properties that we self-manage. Some of those rental properties are properties that we built from the ground up that we just kept the best rentals. We also flip about two to three properties a year just to help increase some capital. On the realtor side, I have a real estate team and we specialize with investors because we know how to analyze deals and we know how to do all of that. So it's kind of we just created both

worlds, mesh them together and we're constantly looking for new ways. We also have some rental properties that we've acquired through creative financing, like seller financing and things of that nature. Wow. Very cool. Okay. Well, you mostly burying the last few years to make the most of that capital? Yes, most of those were burrs. And there were back to back to back. All right. So that's what we were talking about earlier where you can just keep recycling that capital and you get the benefits of value add investing, but you get to hold on to the property and you get to buy more properties with the equity that you gain. At what point did you start doing ground up construction? That's a whole other thing. Yeah, it was pretty random. It was actually on a street that my husband

grew up on. And when we would come and visit his mom and I would always wonder like, who owns those lots? And so one day I asked this mom and I was like, do you know the owner of those lots? I had no intentions of building. I didn't even know what I was doing, but I was like, hey, maybe I could buy the lots. And so she connected me to the owner and we were able to negotiate terms and there were two lots right next to each other. And they had homes in the past, but they got demolished. So I was like, okay, I'm sure they have water and utilities.

I did my due diligence with the city and we decided to buy those lots. And a year later, we built one. It was a successful process, and then next year we built another one. Wow, very cool. Congratulations. That's very fun. Thank you. Was it opportunistic, or is that sort of a reaction to market conditions where it's

a little bit harder to find cash flow on existing homes? I think it was a little bit of both. I think I am a executor by just natural, and I'm a risk taker. So I just thought, you know what, there's an opportunity right there. Let's jump on it. Let's see what happens. and we were able to build. I mean, they're pretty much like stock homes.

They were, you know, 12, 1,300 square feet homes, three bedrooms, two bath, but they're renting out for 2,300. Our mortgars are less than 1,700. And, I mean, would they stay rented really in low maintenance because they're brand new? Yeah, that's great. And what about, you know, Burrs? Are you still able to find Burrs that makes sense in today's economic environment? Yes, I will say,

I am able to make them make sense, but that refinance cash out portion of it, it's really diminishing. I mean, I make maybe a thousand, two thousand where a couple years back I was making like 50,000 on those refinances. I see. But ultimately, I will say right now, I love the fact that the prices are low, although interest rates are higher. I know interest rates will change over time. And then at those points, I will go back and do a refinance. So it's just being a little bit more aggressive on the strategy and just knowing where you are in the market right now. We have to take a quick break, but stick around because a little later in the show, Deba is going to share how she's reacting to today's market conditions in the Dallas market.

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Avale. Sign up for free at Avail.co slash bigger pockets. That's A-V-A-I-L-C-O-Sash bigger pockets. Let's jump back in with Deba. I know Texas right now, and we're recording this and sort of towards the end of September, 2024, is actually one of the few states in the country where there are corrections going on.

Have you seen prices decline in your area? I have. I've seen them decline. I feel that sellers are starting to realize that the pricing are declining. I'm starting to see that on the MLS, and I'm starting to see it from off-market wholesaler pricing as well. And how do you feel about that?

Because I think a lot of, especially newer investors, look at price declines and they think, oh, I don't want to invest there. Or some investors are like, oh, that's the great time to buy. So how do you evaluate the risk versus opportunity of investing in a declining market? I think it's an amazing time to buy. And the reason why I think it's an amazing time to buy,

I'm able to buy the value of this property at the lowest point. And I feel what we're going through, especially in the DFW market, is it starting to stabilize. And those years of having overrated pricing, those are starting to diminish. And now we're coming to a stabilization. And if I'm able to acquire as many properties right now, once those interest rates, which we already starting to see, those slowly declining, I just do a refinance and get a lower interest rate. And now my cash flow increases. And I didn't have to do anything. than just continue to buy in this price point. But what about sort of the flip side as a property owner? Does it concern you at all seeing the theoretical value of your property go down? And I say theoretical because, of course, like in any market, you don't actually lose money unless you sell. And no one knows exactly what it would sell for unless you put it on the market. But, you know, I'm sure you're an agent. You see it happening.

You just said you see prices going down. So how does that make you feel about your existing portfolio? It doesn't make me feel either any way because we're keeping our portfolio for the long term. And so it may just not be the right time to sell any of those properties. And we're looking at just the refinance for the interest rates. I'm not really looking at the value because we know year after year keeping a property for longer than 10 years, that value over time will increase. Yeah. I feel the same way.

And this is like a privilege position for people who own existing real estate and who had the cash flower to live off. of, but I find that minor fluctuations and prices in the properties I own, honestly, I don't even think about it. And I think that a lot of people who are just getting into it, they hear about ups and downs and they're like thinking that this is going to have huge impacts on their life. But honestly, unless you are forced to sell during a downside, it really doesn't matter. It's what they call a paper loss. It's like, it's just theoretical. And no one wants to see that. No one wants to buy at a price before a market declines. Those are things you should absolutely try to avoid.

But I encourage people to think about the pros and cons of any type of market. Because as Deba was saying, yes, in theory, some of the values of her properties have gone down. But if you're investing for the long run, the flip side of that is that there might be more opportunities to negotiate with sellers. They might be more willing to drop price. there might be more inventory on the market. So those are flip sides. Of course, the opposite is true. You could be in a market where you have a good chance of immediate appreciation because things are going well, but you're going to have more competition.

Sellers are not going to negotiate. You might have to make an offer without seeing the property or waive your inspection. So there are always tradeoffs with every kind of market, good and bad. It really sort of just depends on your strategy. And that's why I wanted to ask your philosophy about this demo, because it's kind of different for every. investor. Absolutely. And I really think the biggest thing that I had to overcome was just my mindset and realize that, okay, any deal, I'm going to find 10 reasons why I should not buy it. And then I may have other reasons why I should buy it. So it really depending on your strategy of like,

okay, internally, what is my end goal? What am I trying to achieve? And you have to just push through some of the naysayers. You may have to change the group of people that you're hanging around because if you're around people that may not own properties, they're scared and they're like, oh my gosh, don't do it. The market is this and that. But I just tell people, you've got to buy something. Once you buy something, everything changes. The way you view things, the way you approach the value of the property, all of that changes.

You just have to get in the game. I was laughing when you were saying that. I agree with you. It's like I have the, I've never articulated that way, but I have the same mentality. I'm like, I'm going to come up with a thousand reasons why this property is. terrible. And then if I wake up the next day and I'm like, I'm still going to buy it. I just buy it. It's like, as long as you understand the risk, it's, I think, like, there's always risk in every investment. Don't get me wrong. Real estate is true. But I would be okay

with like losing money or having a property not perform as well if I understand the risk ahead of time. If I'm like, hey, that roof might give out in five years and I'll come out of pocket. And then the roof gives out. You're like, okay, I took that fully. informed risk. To me, what scares me is like, what do I not know? And investing in something when you don't fully understand what you're getting yourself into, which is why we have this podcast and people can listen to stories like Deba's to sort of expose yourself to some of the risks, some of the challenges. Today we learned about one with renovating a property you don't own, but there are countless of other examples just like that. Absolutely. And I mean, we still flip, even in this market,

You know, we just have to, we're very conservative on our numbers. One extra thing that I've been noticing is that we kind of stay under affordable housing. So we keep houses that we are flipping the ARV or that after repair value needs to be about 400,000 or less. And one extra tip that I've learning in my flips, I'm adding just a sprinkle of luxury updates and finishouts in them. And that's really helping me get my houses off the market pretty quickly. Oh, okay. very nice even with affordable housing yes even with affordable housing so we're doing we'll do different things like we'll have an island and we'll have the waterfall quartz countertops all the way around the island we're putting mud rooms in the laundry area just adding like a significant small touches that it really doesn't break the bank but it does make that buyer feel like oh this house i could see this in like a 500 600 000 price point i like that because then when the buyer's comparing things side by side, you know, you have an advantage. You have a reason for them to pick you, even if they're

pretty similar in all other respects. Like, it just gives you an extra reason to pick Deba's property. Right. All right. Deba, one last question here before we get out of here. What are your goals going forward? It sounds like you've accomplished quite a lot in the seven years you've been investing. What's next for you? Yes. So I would say my next goal is continue to do the burn. I would like to get to at close to 60 residential homes as rentals. I would like to continue to do flips, maybe go into a higher price point depending on how the market works and continue building. I really enjoy the building process. And I just want to continue to build and continue to support my clients that are learning to become investors. And my team is always excited to work

with new investors. Awesome. Well, it sounds like you really like value add. You know, those are all value add strategies. Burr, flipping. taking something that's not being put to its highest and best use and maximizing it, making the most out of it. I lied to you, though. I said that it wasn't last, that was my last question, but I actually have one more question for you. What would you advise a hypothetical client today? In today's environment, with everything that's going on, interest rates, the economy, if someone was trying to get into real estate in your Dallas-Fort Worth area, like what do you think a good first investment? would be. Yeah, so I would say your first investment would probably be doing the birth strategy, but being very intentional with where you're buying that property. You want to buy properties that you know it's close to the metro area where you'll always have ample of jobs. You want to buy

properties that are low to get into it, just at any point. If you have to turn in and flip it, you have that opportunity to flip it really quick if you go over budget. I would always tell a new client, we have to come in and have multiple exit strategies. Those worlds are just saying, I'm just going to buy something, I'm just going to flip it, or I'm just going to buy something and rent it out. Those days are kind of over right now with this market. So you have to be able to pivot and be very flexible with making your decisions. Very good advice.

And what price point do you think is that sweet spot, at least in your market? Like what do you need to just rough ballpark? What is the acquisition price and how much money would you have to put in for renovation? I will say we need to buy something around 160,000, and it's probably about 1,000 to 1100 square foot home. Maybe it has a one car garage. We can convert that garage. And maybe it's a three bedroom initially. We can convert that garage at a bathroom.

And now we have a four bedroom two bath. I've added value. So I know my value is going to increase. My rent is going to go up if I choose to rent it out. Or even if I choose to sell it, I'm going to have a significant amount of value compared to where I started. And then my ARV should be about 320 or less. Okay, got it. That's excellent advice. Thank you. And how much would that renovation cost, do you think? Just ballpark. About 50 to 55,000. Okay. So you're talking about buying something. You're putting, you know, 30, 40 grand down, doing the renovation. But ideally when you do the burr, you know, you keep some of that down payment in there. Obviously, you have to do that. But you can take some of that money out and do something else with it.

Yes, absolutely. And really think about, you know, talking to different hard money lenders because there are different. hard money lenders that can offer more money where you're not bringing so much cash to the table as well. Right. Well, that's excellent advice. I know it's always helpful to hear your story, of course, but given today the challenges of the economy right now and find a cash flow, I always just want to know what people are doing and recommending themselves. And clearly, you've found a way to make deals work even in a big metro area, a big popular metro area, even in today's interest rate environment. Well, Debra, thank you so much for being here. We really appreciate it. Thank you. It was such an honor to be here.

Oh, it was an honor to have you. And we'll, of course, put your contact information in the show notes and show description below if anyone wants to connect with Deba. Thank you all so much for listening. I'm Dave Meyer for Bigger Pockets for Bigger Pockets Real Estate Podcast. 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 Calico content, and editing is by Exodus Media.

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