BiggerPockets Real Estate Podcast - 376: 12 Real Estate Rockstars Reveal Their #1 Tip for Surviving (and Thriving) through a Downturn

Episode Date: April 2, 2020

Strength in numbers! When you finish this episode, you'll have 12+ action items that could help you withstand the coming economic slump... and perhaps even accelerate your path to financial freedom. Each investor featured today gives you their top piece of advice for handling an economic downturn: from mindset, to leadership, to specific strategies you can begin to put in place TODAY. Don't miss this one, and be sure to subscribe to the BiggerPockets Real Estate Podcast for more hard-won wisdom on how to lead your business through the coronavirus crisis and beyond. In This Episode We Cover: Why now is the time to write a 10-year vision for yourself Serving others first, even when our impulse is self-protection Cutting overhead to preserve cash Finding creative ways to rent out property Collecting payments up-front, for a discount Working with lenders if you're having shortfalls with rent Investing as a group to hedge risk Controlling your emotions when the market is volatile Why you should be building a team NOW The importance of picking up the phone to nurture relationships And SO much more! Links from the Show BiggerPockets Forums BiggerPockets Magazine BiggerPockets Conference GoBundance BiggerPockets Podcast 226: From “D-Student” to $400,000 in Annual Rental Property Cash Flow with David Osborn $13M in Equity from One Deal & Cash Flowing Despite Being Comatose with AJ Osborne BiggerPockets Webinar BiggerPockets Podcast 362: Big Goals? Here’s How to Get Your Spouse or Partner on Board with Jay and Wendy Papasan BiggerPockets Bookstore BiggerPockets Podcast 113: Becoming a Millionaire Real Estate Investor Using The One Thing with Jay Papasan Kirkland Signature Protein Bars BiggerPockets Money Podcast 100: From Financial Disaster to Real Estate Master with Brandon Turner Jason Drees Coaching BiggerPockets Podcast 162: How to Pay Less to the IRS with Amanda Han, CPA BiggerPockets Radio Podcast 003: Getting Started in Real Estate and Raising Money with Brian Burke AppSumo BiggerPockets Podcast 213: Investing in Real Estate Without Being a Landlord with Noah Kagan BiggerPockets Podcast 201: Flipping 100+ “Zombie” Houses with Justin Stamper BiggerPockets Business Podcast Landlordology Cozy.co Are Your Tenants Unable To Pay Rent Due To Coronavirus? Here's What To Do! BiggerPockets Youtube Channel 876: What Makes a CEO with BiggerPockets CEO, Scott Trench ScottSilverRealty BiggerPockets Podcast 325: From Major Business Failure to Buying 20 Houses a Month With Aaron Amuchastegui Check the full show notes here: http://biggerpockets.com/show376 Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast, show 376. If you're in this business for the long run, this whole time period that's going on right now is just a bump in the road. You're going to look back on the situation and you're either going to look back and say, hey, I overcame this and I achieved or I crumbled and I failed. Which one is it going to be? That's up to you. 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. Stay tuned and be sure to join the millions of others

who have benefited from biggerpockets.com. Your home for real estate investing online. Hey everybody. What's going on? It's Brandon Turner, host of the Bigger Pockets podcast here with David Green. What's up, man? You completely blanked on what clever thing to say about me right there, didn't you? No, I didn't, I didn't blank on the clever. I was last time you made fun of me for always bestowing upon you. The temporary co-host thing that you always do. So I decided to remove host all together, or co-host all together and just give you the honor of being David Green.

David, don't give us to it green. That's what you tell me. That's pretty much it. How do you been? Well, staying at home, getting work done, kind of fight our way through this issue, talking about a lot of real estate.

I love this kind of stuff because it forces us to dig deeper and look at stuff at a deeper level and I'm all about that. I like to understand the why of how things work, not just the what. So in a sick way, I kind of like the change that we have going on. All right. Well, yeah, I'm a big believer in like that trauma forces change, right? So in terms of like, yeah, you have a heart attack and you start eating healthier or you know, you get diagnosed with a disease and then all of a sudden you realize what's important in your life. And so you spend more time with family. So trauma forces change. And I think this is a giant heart attack for America.

Yeah. And I think if you look at it like that, is this a massive opportunity for growth. for the country and for all of us individually. I think it's not, it's not going to be as bad as I think some people think it is in terms of that. Wise words. It sucks if people get sick and die. That's going to be horrible.

But yeah, you know what? It reminds you of 9-11, right? At 9-11, all of the party politics stopped, all the division stopped, everybody rallied together. You kind of see a lot of that. I mean, other than everybody being mad at other people for buying the toilet paper. Absent that, if we're all getting along really, really good. So there is good to come out of it.

I like that wisdom. And on that topic, we actually have a show today full of wisdom. We do have a show full of wisdom. So today we're talking with a number of different investors and just financial smart people who are going to share with us their best tip for surviving and thriving in an economic meltdown. And so basically I just asked a bunch of people that I look up to and trust and value their opinion on what they would suggest for our audience today. And so we're going to go through a lot of them.

And then David and I will offer some commentary. And I believe next week we'll probably be back to the normal interview format here on the podcast. But we just want to make sure that we're covering the stuff as it's hitting right now. So with that said, let's get to today's quick tip. All right, quick tip. Pick up a copy or order your copy of the brand new Bigger Pockets Wealth magazine. That's right. A real magazine like floppy and sparkly and shiny and all that magazine like In Your Hand magazine.

That Bigger Pockets is launch right now. We're very excited about this. We've got some really cool stuff in there, including a feature called BP Insights. It's full of data, like a deep dive into data about the best cash flow markets with low vacancy and high income in 2020. Like the first issue has a ton about recession, resistant investing. There's a profile of a bunch of different investors, including Joe Asamoa, who is one of my favorite podcast guests we've ever had on, talking about how he's in Section 8 at this time.

It's a really smart idea. You can find that and you can get your subscription at, BiggerPockets.com slash magazine. It's like 30 bucks for a six-issue subscription over the course of a year, so it's super reasonable. Pick up a copy again of yours at BiggerPockets.com slash magazine. Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress?

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They've partnered with BiggerPockets for over a decade, helping thousands invest smarter. If you want to do the same, visit BiggerPockets.com slash retirement to learn more. Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress. Here's a better question. What if you could buy brand new construction homes, 10% below market value,

in the best markets across the country, without making real estate your second job? That's exactly what rent-to-retirement does. They're a full-service, turnkey investment company, handling everything for you. In some cases, investors get 50 to 75% of our down payment back at closing, plus interest rates as low as 3.75%. They've partnered with bigger pockets for over a decade,

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this podcast. That's Indeed.com slash rookie. Terms and conditions apply. Hiring Indeed is all you need. And now, David, let's get into this thing. You ready? Oh yeah. I'm ready. All right. First clip of today is going to be our good buddy. He was a keynote speaker last year at the BPCon. David Osborne. He is the operating partner Keller Williams, author of Wealth Can't Wait, co-founder of Gobundance, the tribe of healthy, wealthy, generous men, which both David and I are part of. And just all around, like one of the smartest, coolest guys I've ever met.

So with that, David Osborne. Write yourself a 10-year vision. Right at the top of the page, it's 2030. My last 10 years have been amazing. My wife and I are getting on better than ever. My health and fitness is incredible. My kids are all doing amazing. My daughter's in college, whatever.

Then get into business. You say 10 years ago today, we had this crisis, this coronavirus, the entire economy came to a halt. And I'm so proud of the way I led and the character I developed and the man I became through that time period. I made great decisions. I cut overhead quickly. I preserved cash. And then I took full advantage of the recovery. And because it was such a deep, sharp crash, the recovery was long and lasting. And there was a lot of money to be made. And that's what really made my fortune and helped me get to a whole new level. And you remember the worst thing about a boom is that every day you're in a boom, you're one day

closer to a crash. Every day you're in a crash, you're one day closer to a boom. And the great thing about right now is we're in a crash. So we're going to ride this thing out and then we're going to ride a big boom into the future. We'll be twice the people, twice the business people we are, twice the men we are, or women, stronger fathers, stronger husbands or wives, whatever. And we're going to do all that. And the reason it's valuable to write about your future from today is it puts perspective on it. In 10 years, you won't remember the pain and fear that we're living through today. You'll just remember the abundance that came from it. So good luck. write your 10-year vision. Awesome. Yeah. All right. So I really, basically the way this format of

this show is going to be is we're going to listen to a clip like that. And then we're going to talk about it a little bit, David and I. I sort of start with just saying like, I had a performance coach tell me this this week as well. He said, looking back, do you want to remember this time is something that changed you for the positive or something that you just like squandered your time and you lived in fear? And so that's kind of what I think David is getting at here is like, look, like 10 years from now, like again, we're not going to remember all the highs and lows and like every little daily mundane, like I'm locked in my house. But are we going to look back and say,

that was the moment where my life shifted a little bit. You know, it's the whole analogy of a plane taking off. If you just like get one degree off, like 2,000 miles later, there are hundreds of miles off course because just one degree change. So I look at that now. I like the idea of writing that vision of this is where we're at right now.

It's 2030. And this is what my business is like. And it all started back in 2020 because of that crisis. What do you think? What I like was just talk about how cycles are normal. And this is, I mean, that's a really good point. We need to point out to people. Part of my irritation with every time we start to get into a downturn and everyone panics

and screams, well, what's the government going to do is there's this presupposition that you should never have a downturn. But that's not a healthy way to live life. If all you did is work out and you never rested, would you get anywhere? If all you did was work and you never vacation or vice versa, you vacation and never worked, would you get anywhere? Life is meant to go up and down. It's totally normal to have a time where a business goes great.

Then there's a change. things go bad as we adjust and we learn how to operate under the new normal and then we come back. I mean, if you really just think about the last bubbles we had, the last crisis was a lending crisis. We were making loans on real estate and other things in a very stupid way. And we had to pay a price. We had to change. We came back. The dot-com bubble.

There was a lot of people that were throwing money into websites and those people made a lot of cash. Then making websites became kind of easy and it wasn't really a big deal anymore. That whole bubble crashed. We wrote it down. We learned. we came back with a new thing, we came back up. It's okay to go through these cycles. It's okay to go through them in your personal life, in your own business life, the economy

in general. Don't let yourself start feeling like a victim because we entered into a market cycle that doesn't look like it's as good. Like Dave said, every day that you're in a boom, you're one day closer to a bust. Yeah. Yeah, that's an interesting way looking at it. This is like when the collapse happens, if it does. I mean, maybe real estate is not going to tank like I did last time.

Maybe it will. We have no idea. But we're definitely, the world is going to look very different among from now, two months from now, six months from now. So, and chances are things will look, there'll be a lot of opportunity, I guess. You know, like, how many, like, businesses. Like, you've ever seen those memes, like, I don't know, memes, but like social sharing things of like how many massive businesses came out of recessions, like most of them.

Like, billionaires were made during recessions and business. And it's not like, hey, we're going to go take advantage of the situation. But in a way, it's like, yeah, we're going to rise to the occasion and we're going to use this moment because now we're starting from the ground up and we can build again. How many times you hear people, new investors complaining, well, yeah, it's not easy to find deals anymore. It's not 2007 or eight anymore. Guess what? It is 2008 now.

Like, we're likely going to be back there. Maybe not, again, maybe not as bad, but maybe worse. We don't know. But gear up. You know, this next video that we're about to listen to is a really good example of somebody who went through a downturn in his life to say the least and came out of it much better. Yeah. Yeah, AJ Osborne.

He's good buddy of mine. And he is, he owns a million square foot in self-stor. He was on our episode number 286 of the Bigger Pockets podcast. He's the one, if you guys remember back, his story was where he like woke up one day in a coma or I don't know if you could say woke up in a coma, but his body was basically shut down. But he was awake the whole time and his body was on fire for like months. And he was awake during the, it was just a crazy story.

Then he couldn't walk for the longest time. His immune system was attacking him. That's what it was. Yeah, that's what it was. Yeah, it was just like the worst. But because he had all this cash flow coming in from rental properties, he survived it, he thrived, he got through it. So like from a personal.

he's got quite the example of overcoming the diversity. So we're going to hear from AJ now. The way that you survive and thrive in economic downturns is by putting other people first. Let me explain. We all, of course, know cash is king, and you want to get rid of bad debt, cut expenses, increased cash flows.

But for every entrepreneur and real estate investor, what people need during an economic downturn is solutions. And lots of times solutions to hard emotional problems. It's a time of turmoil in a time that people need someone to step up and lead the way. And this offers very unique opportunities to those that can put others before themselves, for those that can carry the burden, and for those that will step up to the plate. This was a way that we expanded our portfolio massively and had a lot of wonderful opportunity when working with banks, business owners, and developers as they were trying to solve problems

to their real estate crisis that they had in 08. Every crisis is the same. You need to solve complex problems. And by forgetting about yourself and putting other people's first, people remember that. And it really does come back. And most of the time, it comes back tenfold. Yeah, so good. So what stands out to me here is this idea of complex problems where the economy and the world is changing right now.

We're seeing it in a massive ways. For example, like, David, have you thought about like how many employees now all of a sudden realize they can do their entire job from home? Like that they can now, right? Like, and all of then businesses are like, wait, why are we renting that giant office space that's costing us $40,000 a month when all of our employees actually did just as well working from home? What about other people that's going to shift things? That never used Amazon because they weren't comfortable with the internet, maybe the older demographics. And now they're like, oh, it's that easy to order toilet paper? I'll totally use Amazon.

And now when we come out of this thing, they're not going back to a grocery store. story as much. Yeah. Yeah, it's fascinating. And the idea of like the meal delivery stuff, the grubhubs, the like those kind of things that like this is a shift in our society that is being forced upon us. And I think that thinking that these are problems that people are going to have, like what do you do with these giant office buildings if they're not going to be there? That's an opportunity maybe for, you know, you to step in and lead the way to solve these complex problems. Somebody brought up a great point on the webinar. I did the Bigger Pockets webinar last night. And somebody said, you know, a lot of the, the sickness is being spread in these retirement

communities, what do you call them? Like nursing homes, basically? Because everyone's living so close together. Who's going to want to send their parents to a nursing home after this? Just knowing that, like, disease is part of our life now. And officially as like, you know, like, this may not be the last one we face. So maybe that's a complex problem that we're going to solve. Like, who can solve that problem of like, how do we take care of our elderly, like the dramatic amount of elderly people coming out without shoving people into a giant crowd of the space that diseases spreads rampantly. Complex problem. What I liked about what he said had to do with the fact that you need to focus on putting others

first when you're in a scary time. Because you see a lot of the opposite. Your animal instincts will tell you self-preserved by all of the food, by all the toilet paper, by everything you can get and don't worry about other people. And it's in times like this, you have to be extra careful that you don't let your fear turn you into the kind of person that you don't want to be. Like what David Osborne was saying, when he said, we should come out as better husbands,

better fathers, better business people. Be very aware of the fact your own emotions will be trying to get you to self-preserve because that's always the first instinct we have. But we're human beings who aren't animals. We can override that if we choose to and continue to look for other people and how to help them. Yeah.

Yeah, so good. All right, well, let's move on to the next one. So next we got our buddy Tarle Yarber. So Tarle is a regular contributor on the Bigger Pocket's YouTube page. as well as on our Facebook lives, on Bigger Pockets Facebook Live. He runs a big conference out in the Pacific Northwest. He's a flipper.

He's a rental owner. He does Burr. He runs a big meetup. He's just a super great guy. If you guys don't know Tarle, you should know Tarrell. But with that, let's hear from Tarrell and his advice for surviving and or thriving in the economic meltdown. Emotion kills in this business.

It has killed us before this crisis, and it will definitely kill us during this crisis. So if you have something that's happening in your business that you feel is out of your control, please stop and think for a second and think about what can you control in this situation. And when something's happening to make you react, think, make a plan. And when you make that plan, do the math of the plan, mitigate the risk and measure that risk, and then execute that plan. It's no different than when we invest in real estate every single day. It's no different now and no different in the future.

We measure it and mitigate risk. So last thing I want to leave you guys with is that if you're in this business for the long run, this whole time period that's going on right now is just a bump in the road. you're going to look back on the situation and you're either going to look back and say, hey, I overcame this and I achieved or I crumbled and I failed. Which one is it going to be?

That's up to you. One last thought. Brandon, I love you. Please be my best friend forever. You're going to help me get through this, right? Please save me. Tarle. It's a funny dude.

All right, a couple of things come to mind real quick. I've been watching a lot of Frozen 2 lately. You watch Frozen 2 yet, David? You know, I actually did. Okay. We've been watching so much of it. And there's a scene in there where the snowman, Olaf, is getting, like, icicles shoved in his head by a bunch of little kids. And he says, he's like, this is called controlling, uh, controlling what you can control when you feel out of control or something like that.

Anyway, that's basically what Taral is saying here. There are a lot of things out of control right now. So, like, focusing like, like, Olaf on what you can control. Like, here's what, you know, I can't control whether or not my tenants are going to pay rent necessarily. But I can control the letter that I sent them a week beforehand to remind them that, rent is, you know, still got to be paid. And if they can't pay it, you know, we can, you know, let's have a conversation, keep in contact. So again, those are things I can do rather than just complaining about what I can't control. What do you think? My favorite thing, as he said, is,

is isolate the risk and mitigate that risk. That is, man, when you can come to peace with the fact that you cannot get away from risk in life, you'll do so much better. It's always there. We just don't always see it. There's been, you know, right now, do I want to buy? Our price is going to go down more. The risk is, they might go down more. If I buy right now, are the tenants going to stop paying rent? That's a risk. Let's say prices drop to 50% of where they are. If you buy now, you're taking a risk because what if they don't go back up?

If you buy when they're really high, you're taking a risk because what if I bought at the top of the market? You never get away from risk. Like running away and hiding from it, just make sure that you never get anything done. You have to learn to flow with it. Like, if there wasn't risk, there wouldn't be opportunity. They go hand in hand. They have, what's the opposite of an inverse relationship? What's the fancy word for that?

Exverse. I think I totally asked the wrong person that question. That's very funny. They have a symbiotic relationship. I don't know. When one goes up, the other goes up too. So if you're looking for opportunity by nature, you are also playing around with risk and you have to be okay with it. And he made a really good point. We don't have to hide from risk. We plan for it. We put a contingency in place. We know if X happens, I do Y. If A happens, I do B. And we move forward. Yeah. So good. Yeah. Last thing I'll point out before we move on that he mentioned was controlling your emotions, right? like emotion kills, I think is what he said.

Let's just take and realize like when bad things happen like this, like you could just start reacting off like the caveman brain in you. It's like, you know, run, cries, be scared. But I just want to encourage everyone just to like take a step back and just breathe. Like, this is fine. We're going to figure this out. This is what we do. This is how we're going to get through it.

And we're going to solve these complex problems to bring back AJ's thoughts. So yeah, don't let emotion kill you. Take a step back. Move forward. All right. Time to bring in our. next, I guess, guest here today. We kind of divided today's show, by the way, and kind of like, I think three, it's three,

four chunks, four chunks. The first one is a lot about mindset stuff. Now we're going to move into some financial advice from some folks. And so the first guest, it's actually a husband and wife team here. We're going to bring in. You guys know who they are. It's Jay and Wendy Papazan. You want to talk about Jay and Wendy?

Because you're the one that first introduced me to Jay. No, I didn't actually. You introduced me to Jay. Yeah. No way. But I really like him. It's because I was a Keller Williams guy and Jay. of Keller Williams guys.

I know, I think you introduced me the concept. I think you introduced me the concept of Jay. I mean, like, who he was. Because you said he was like a big deal in Keller Williams. And then I read the one thing. So that's what I like. I like, you just create a category if you introduced me to the concept of something. Man, I could be responsible for a lot of introductions from that perspective.

Yeah, I introduce you the concept of JPEP. He's that big of a deal. And he actually has his own concept. He does have his own concept. So tell us about Jay. Jay's awesome, man. I really like this guy. He's becoming a friend.

I got to meet him with Brandon for the first time in Austin, Texas, where he lives. Jay is basically Gary Keller's, like, number one man. He's his right-hand man. He's at all of the big events that Gary does. He's the co-author of all the books that Keller Williams publishes. They're right behind Bigger Pockets for the top publishing company in real estate. I like how you had. They're right behind.

But they're great, right? That just shows we're even greater. I gave us a compliment without. And let's be honest, they've actually sold, I think, way more copies of their books than we ever have a bar. track it, right? Currently, we said ahead of them on Amazon in this very brief moment of time. But yeah. Actually, right now we don't. Really? Now, shift. Yeah, their book shift is ahead of us. I thought the screenshot you sent me showed I was one, you or two, and shift was three. It changed.

It changed. You didn't have to say that. All right. Well, we compete with Keller Williams to be the top publishing company in real estate. But the reality is Jay's like a hundred times better author than me and probably 50 times better than Brandon. He's a super good author. He writes incredibly good books. I'm always afraid. Which one? The one thing is like the book. I brag about almost more than anything else. He wrote the one thing with Gary Keller and it's phenomenal. When I was on the podcast for the first time, I told people my favorite book was Millionaire Real Estate Agent, just because it's so well-written.

It's just an incredibly well-written book. And he also wrote Millionaire Real Estate Investor and a lot of the other books that Keller Williams does. His wife, Wendy, runs a really hugely successful real estate team out of Texas with a couple expansion teams. And they're just really good people. I mean, he's a straight shooter. He always, he keeps the most important thing, the most important thing.

He gives terrific advice. He's a very solid guy. It's very hard to meet Jay and not have a lot of respect for him. So every time he talks, I get really quiet. I listen. Yeah, agreed. Well, let's hear from Jay and Wendy, which, by the way, they were actually on episode number. 113 was the first time that Jay was on the podcast.

But then Wendy and Jay together were on the podcast recently. They were on together on episode 362. All right, with that, let's hear from Jay and Wendy. I think Wendy's first. Our tip today is. to cut expenses immediately. And the way that you guys are going to do that is you're going to print out three months of your credit card statements and three months of your bank statements, and you're going to do the hard work of going through them line by line.

That's right. You're going to categorize it in four ways. There's mission critical expenses, right? This is stuff that you can't live without. There's stuff that you'd really, really like to keep, right? So you're going to hold on to that until you have to. And there's stuff that you absolutely can cut, and you're also going to find a bunch of stuff. It's like, what the heck is this? And that stuff gets cut immediately. Yep. And you're going to do all that in the next 48 hours, right? You're going to do it in the next 48 hours.

Don't forget, Koso is always fishing critical. Now, that's a good tip. Koso is mission critical. Brendan, what's your Koso? What's like you can't live without it? Oh, man. Food-wise or anything wise. Yeah.

Any kind of perishable good. I'm going to go with Kirkland signature. Cookie dough. protein bars. So there's these protein bars from Kirkland's thing like from Costco that are cookie dough and they are probably the best thing in the world in terms of perishable food. So don't, don't run out Costco ever. Interesting. What about you? I was hoping you wouldn't ask me that because I don't have enough time to think of anything that would actually be mission critical. Like I just can't do without it. Well, you think about it while we're talking about Wendy and Jay. So their advice cut out expenses. This is so smart because how many times like over time like our bank accounts like there's. so many subscription revenue things in the world today, right? Like, there's so many things that you add on to your, like, life that you don't use anymore,

like gym memberships or random, like, software programs that you bought years ago, especially if you're an investor or an agent or your business person. You probably have a lot in your account. In fact, I wrote a blog post recently, actually, like, recently, like two years ago. But like, it basically said I found like $100,000 hidden in my bank account. And the point I made was when I went to my bank account and I did exactly what Wendy and Jay said is like printed out my statement went line by line through each item. And I found like $180 or something like that worth of stuff that I didn't need. So I canceled it. But if you take

180 times an 8% return over the next like 30 years, it was like a couple hundred grand. And so I make that that point. So yeah, definitely check it out. Yeah, you can find more about, I guess, I was going to say more of like that story and my story with money because I had a funny money story. On the BiggerPockets Money Podcast, I would show 100. So just go to biggerpockets.com such Money Show 100 as soon as you're done listening to this episode and you can hear my crazy horrible money life but uh green what do you think cutting expenses yeah i hate it i don't it's not that i hate cutting expenses i hate taking the time to actually go look at what i've even doing i think guys like brand and i we we just despise having to slow down from making

money to go look at what we're making but it's i mean every single time you do it you're like what's why are we spending money on that or yep are we getting anything for this that always comes up all the time. So I hired a guy and he kind of helps runs my finances now Tanner. And Tanner, because I know that I don't do that enough, he looks at it. And he gets in front of me and says, why are we spending money on this? Or what's the purpose of that? And it helps me make sure I'm actually like deducting it as an expense.

It's another thing that if we're just being honest, I oftentimes forget to deduct things from an expense. So what I love about doing this is that when you're looking at, see, most of us make decisions based on emotions. I've talked about that before. But what we're talking about is information. So it gets confusing like, okay, I'm looking at all these numbers. How do I know what to do? When you see the big expenses that shouldn't be there, it feels like a punch to your gut. And it makes it very easy to get rid of them.

When you're not looking at it, it's very easy to just keep paying it. That's why it's easier to spend money on a credit card than with cash, because you feel it when it's cash coming out of your wallet. When it's a credit card, there's no emotion tied to it. So true. So true. David, what's your thought on though? I'm curious because it's tough because on one hand, we want to cut expenses from our life. But let's just say like one of your, like your expenses are income to somebody else. And during a time like this, like how do you balance that?

Like I want to help support other businesses. But at the same time, I'm going to cut expenses so that way like my own life can survive. Like where do you balance that? That's really, really good. I heard somebody one time that talked about how economics professors that are trying to help companies decide how to sell products develop this like made up concept called a utal. And a utal is a unit of measurement that they would use to determine how much satisfaction

somebody gets from something. So what they would say is, okay, how big should we make a Snickers bar? Well, the average size of a bite of a human is this big. And the first bite, they'll get 10 utals of satisfaction. They'll love it. The Snickers bar tastes so good. Well, your second bites may be like six and a half utals of satisfaction. And the third's maybe four and a half.

And at a certain point, it's not really worth the calories that you're taking in to keep eating. So what they would try to do is make a bar only as big enough as they needed to to maximize how many utals of satisfaction a human being would. Like they're actually doing studies. That's hilarious to me of like, okay, take a bite and write down out of one to ten. How much, how good was that bite? But that concept applies to the question that you're asking right now. You should not be spending money on something that doesn't bring you a large return on joy

or a return on excitement or make you pumped up to want to go do something more to help your business. So like I fly out there to visit you in Hawaii and that's an expense. But every time I go, I come back and I do more than what I did when I left. That is an investment, even though it's a vacation. There's other things that you do, like stopping to buy, like going out to eat when you don't even really want to eat that bad or you're not that hunger or you have food at home that is a stupid expense.

It just doesn't make sense. And I would say the same is probably true in the business. I'm happy to spend things on people in my business when they are supporting me and they're bringing me back deals. They're bringing me referrals. They're helping me grow. I will continue to spend on those people all the time. If you're someone who's only been taking and not giving, that's where I'm probably going to make my cuts the first.

Yeah. Yeah, that's good. I'll throw one more thought out there too is cut and expenses super important. I'm actually going to do exactly what Wendy suggests. And actually, let's make this a challenge. Let's make this a community-wide challenge right now. Do my favor, guys. Will you leave a comment below the video on YouTube of this episode or in the comments at biggerpockets.com.

Show 376. Let us know how much money you cut from your budget or from, from your expenses on a monthly basis. And let's see who can cut the most amount of money from their expenses. So I'm actually going to do this. I'm going to go find out this. I'm going to download my bank statement and go through it, just like they said.

But here's one I want to caution people is don't cut stuff that's actually going to make you less money. It's easy to want to go like, oh, I'm going to go cut that thing because it's cost me $100 a month. But you forget, like, that is actually bringing, for example, I pay a performance coach. Now this is not like a guru, like, you know, real estate guru kind of guy. But I pay a performance coach.

every other week we have a conversation. He holds me accountable to all my goals, my plans, whatever. And I've had massive success the last couple of years largely because of this. His name's Jason. He's awesome. Jason Jreeze. But, and I know David, you do the same thing. In times of fear, I might say, well, that's a lot of money every month I'm paying.

I mean, hundreds of dollars a month. I'm going to cut that. But that would be stupid for me to cut that because that's what actually generates a lot of my revenue is those questions that he asked and those encouragement. So be careful on to cut things without thinking through. Am I actually making more because of this or doing better? Yeah, that's great. So look at the return that it's giving you.

Don't just look at the expense. I know when I look at the David Green team's, my Keller Williams real estate team's expenses, oftentimes there's a lot of marketing expenses. And like the first thing you want to do is cut those out. But those are the professional pictures and editing that we get done that drives people to the house that helps us to sell up for more money. I could cut that out, but it would hurt my client so much. Word would get around that we're not selling houses for more than other people

and it would hurt the business. So that's the point I was trying to make. I think you made it better. is cut the stuff that isn't helping you first. If it is helping you, don't just look at what you're saving by cutting it. Look at what you could be losing by cutting it. There we go.

So speaking of experts, our next guest commentator here is Amanda Hahn. Amanda wrote the book on tax strategies for the savvy real estate investor and the advanced version, which is out right now. You can get a biggerpockets.com slash store. So Amanda is actually my personal CPA as well.

She's the one that does all my taxes every year. So I decided to reach out and ask what would she recommend? So as some of you might already know, the IRS recently extended both the tax filing and payment deadline from April 15th to July 15th. So we can take our time to capture all of our legitimate tax deductions and there's not a reason to rush to get the taxes filed by April 15th. Of course, if you're expecting a refund, maybe consider filing soon to get that money back into your pocket. You know, now that we have this rare opportunity to take time off from work and stay

home to practice social distancing. Now is a great time maybe to take control of your finances. You know, contact your tax advisor, find ways to maximize your tax savings and also do some proactive planning ahead for 2020 and beyond, right? So read a good book about investing or money raising or tax savings and don't let this time off go to waste. All right. Stay safe, everyone.

I love this tip because like how many times have you ever said, David, because I know I've done it too, is like I don't really have time to like dig into like, because I'm so. busy. I don't have that dig into like tax strategies and all that. I just kind of want somebody to tell me what to do. But that's like just like like so not extreme ownership. Like like I should like take ownership of my own finances a little bit. And especially when it comes to taxes. So like I'm not saying not to be a CPA. But I should know more than I probably do. Right. I don't have that excuse right now. I can't say oh, I don't have time. I can't have this meme online about like, you know, all the things in life I said I didn't have time for. I now realize I had nothing to do with time because we're still not doing them. Like I'm still not doing my laundry even though I have all the time in the world to do it. So. So. So like this is such a great opportunity to really brush up on those skills. What I thought when she was talking was it kind of came clear to me. The reason that we don't look at our finances or look at our budget very closely when the economy is really good is because we're busy making money. That's offense. We're scoring points, right?

Well, now there's not a lot of points to score. There's not as much opportunity. Things have slowed down. Why wouldn't you shift your attention to defense? It doesn't mean do nothing. It just means do what you can do. Now is where we should be cleaning things up and improving our systems. I know we're doing a lot of work on our database.

So getting that organized, putting plans together so it's easier to stay in touch with past clients, assigning new people on my team jobs that they can be doing to help stay in touch with people, hiring new administrators. It's all like kind of defense-oriented stuff so that when we do come out of this little recession or pause or whatever you want to call it, we're primed to make more progress faster. Very good advice for Amanda. Very good. All right.

Well, our next guest today is Brian Burke. So Brian Burke is the CEO of Praxis Capital. He's a syndicator with over $200 million of real estate assets under management, author of an upcoming book on investing in syndications for bigger pockets, which you'll hear about in the future. And Brian Burke is just a super good guy. He's been on the podcast now, I think, like, three times. I really look up to him a lot.

Let's hear what Brian Burke has to say about this crazy time. Before you can thrive in this crisis, you first have to survive it. So first remember, you and your tenants are all in this together. got to be able to work with people and keep as many residents as you can in order to survive through this market. It's going to be a challenging time for everyone, but you've got to do what you can to work with your tenants. But your lenders might even be working with you. There was just something that came out today saying that the agency lenders on multifamily property are going to be doing loan forbearance agreements for a period of time for multifamily owners who are willing

to delay evictions from their residents. are affected by the COVID-19 virus situation. So be sure to stay in touch with your lender, stay in touch with your residents, and you can make it through to the other side. Once you make it through, then you can thrive and take advantage of all that the market's going to offer down the future. All right.

So, like I said, Brian Burke is a massively successful real estate investor with a lot of tenants. And he's got kind of the same concerns that I think a lot of us do landlords, is what happens if our tenants just don't pay rent. So like you said, we have to survive first before we can thrive. And so the first thing is how do we like hold in our cash and how do we make sure that the tenants still pay rent? Can we work with them?

How many can we keep? Talk to your banks. Like get that forbearance going. I think it's all really, really good advice. The forbearance thing is super interesting to me. And we're keeping a close eye on that going forward. Can we spread out of loans? I know there's a bill going through the Senate and the House right now that has some provisions on there.

If you have like a Fannie Mae Freddie Mac loan like on a single family or a small multi, which most people that are in real estate do, that are going to allow for some forbearance. options there. So definitely keep an eye on that stuff. You guys, like, this is our job as real estate investors. This is when we have to go to work sometimes. And knowing what changes are coming is a big part of that. What do you think, Green? Yeah, I think forbearance is incredibly smart on behalf of lenders. I was just having a talk with somebody yesterday. And he was talking about all the corporate debt and how he's expecting massive companies to just get completely shut down because they can't make their payments. And I was saying to him, if you were a lender and you didn't get your

payment for two months or something, would you want to take over an incredibly complex organism like a huge company because they didn't pay you? Would you want to like foreclose on that company and take it over? Probably not. You don't even know what to do with that thing. You're going to work with them. Maybe you impose penalties because they miss their payment. You get some kind of a win somewhere. They're not just going to want to take the whole thing. And it's very similar to lenders right now. They don't want to foreclose on a house that someone just bought a year ago unless they put like 50% down. Most people don't do that. They put down somewhere between 3 and 10 percent, the average number of people that are buying a house to live in.

Lenders don't want to take those back right now. They're going to give you some time to make those payments. So I think forbearance is very smart. It's one of the reasons I don't think we're going to see an incredible, incredible buying opportunities just because of this virus. I do think that time will come. I don't think it's going to be, you know, like just flying off the shelves, everything on clearance like people thought. But this is better. It's smart.

Like there's some flexibility. It's not just you make your payment or you don't. There's a little bit of wiggle room in there. Yeah, very good. People love to call real estate passive income, which is interesting because most of the investors I know are very busy. Busy finding deals, busy managing teams, busy worrying they pick the wrong market.

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passive income, which is interesting because most of the investors I know are very busy. Busy finding deals, busy managing teams, busy worrying they picked the wrong market. Rent to retirement flips that model. They help investors buy turnkey new construction homes, often 10% below market value in top rental markets across the country. Their local teams handle the build, the property management, and the details, so you don't have to. In some cases, investors even receive 50 to 75% of their down payment back at closing, and there are interest rates as low as 3.75%. They've been trusted partners with BiggerPockets for over a decade, and if you want to learn more, visit Biggerpockets.com slash retirement.

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Again, that's biggerpockets.com slash dominion. All right, well, next we're going to bring in Noah Kagan. So Noah is the founder of App Sumo. Now is just sumo.com. He was an early employee at Facebook at Mint, digital marketer, real estate investor. Super great guy. He was on episode, I don't even remember, Noah Keg and Bigger Pockets, episode 213 of the Bigger Pockets podcast. Noah is just one of my favorite people in the world and very, very good at business, both real estate and business.

So let's hear what he's got to say. What is up, you gorgeous Bigger Pockets members? This is the time that you guys have all been waiting for. We've been sitting on the sidelines, waiting for real estate to be an opportunity. And I want to talk about how to survive and thrive. So I've been talking about how to become recession-proof, recession-proof your business. I'm going to give you four things that you should go do instantly. Number one, make a plan.

Once I started making a plan for myself and for our company at absumo.com, I felt much better and I felt more control of everything going on. We have two ways we've done our plans. For our company, we've done a 35 plan, which means we've assumed our revenue is going to go down 30%, and we want a minimum 5% net income. And so we made those changes immediately, even though business hasn't really slowed down at all for us. It's actually gone up because more people are working from home, and so they need more help

and need more tools. So make a plan for your business and take action. Second thing we've done personally is I've moved to a 70-30 cash to equity's position so that I don't really have to worry about the market and I have cash to do the things that I want to do. Number two, be aggressive and defensive. So what can you cut? What subscriptions, what SaaS subscriptions? Go buy a map, Sumo. And where can you actually go aggressive? There's a lot more ways that you can actually go out there and there's a lot of opportunities more than ever, especially now with uncertainty. I don't want things to get more calm. I don't want things to

slow down. I want the virus to go away, but the uncertainty is where the opportunity is. Number three, be quiet. So there's too many opinions. There's people like me. There's all these pundits. who the hell knows, just go for a walk, come home, write down your plan. This is your Bible. This is your Torah. This is your Quran. And go follow this for yourself and you'll feel a whole lot better. That's definitely one thing. But here's four things that you can do to be creative and swift and making money during real estate, in my opinion. Number one, how can you get creative in renting your place out? Can you rent it out for short-term offices, packing, distribution, video shoots? If people are doing more things online, maybe they can use it for that. Number two, make

crazy low offers. The weird thing in real estate, it doesn't cost you to make any, offers. So I've been going out and being like, there's a lot for sale that's a million dollars nearby where I live. And my buddy's like, let's just offer $8.50. And I was like, well, why don't we just offer $700? Like, everyone is starting to panic. Like the fear hasn't fully gotten to peak, but it'll happen in the next week or two as everything slows down as everything closes down. So make crazy offers. Number three, I actually got nervous about making that offer and putting up $700,000 in cash right now. I want to be cash strong so I can take whatever opportunities are coming out there. So I'm hedging it by getting in groups. So if you're thinking about some real estate,

you're a little nervous about it because you're not sure if it's still even overvalued or start getting undervalued. Get in a group of four, five, ten people use bigger pockets to find a person, and that's a chance to hedge your risk. And number four, get your renters to prepay you. So if you have any renters and any of your properties, go to them and say 30% off, pay me for the year, then you don't have to worry about your rent. You don't have to worry about your place.

And I don't have to worry about any of the money coming in or out. So those are four things you can do real estate right now. The opportunity is in the chaos. You guys got this. All right. So that was Noah Kagan. I like this guy because he's super like actionable. but like, do this, do this, do this.

So a couple of it thoughts. Number one, he said, get creative and renting your place out. I think that's fantastic. A good example that we were talking with Justin Stamper recently on the podcast. And then I also did like an Instagram live with him. And he talked about how he's renting out his place to traveling nurses right now. Because he had a bunch of Airbnbs. He couldn't rent them out.

So he just went over the traveling nurses and got them all rented out. And so it's just very smart thinking how can they get creative on that? So I think that's awesome. And then, of course, making low offers. Like, there's really no downside to trying it right now. And people like, especially like now they're getting nervous. Like, well, I got to get my money out quick. I get the same before it gets worse.

Maybe now is a good time to do that. It doesn't hurt you. What do you think, David? Well, first off, I think I'm the only guy in the world that doesn't know Noah Kagan. Isn't he considered like the top networker in the entire universe? Like, you just knows everyone. Yeah, you kind of know him through me, though. So he's, you know, maybe I'm the networker then.

I know the, I was introduced to the concept of Noah Kagan through you, but not actually Noah yet. There you go. Here's what I'm liking about what he's talking about. Well, first off, everybody who hears this advice, it doesn't work. in every single market. If you're in my market in the Bay Area and you write a low offer, it probably won't matter. We're still getting multiple offers on houses even with people that can't see them because we were so hot that even though we're cooling, we're not actually cold.

Okay. The thing I like about the low offer, even if it's early, which it probably is right now, is just don't make it insulting because you're not expecting them to take your offer. What you're opening is a line of communication with that person so that as their fear grows, you're aware of it and you know when they are ready to sell. So don't walk into this, like, I'm going to write one offer, swing my axe one time and knock down that tree. Sometimes that works. Most of the time it's not going to work. You write your offer.

You tell them why you want to buy your house. You don't do it in an insulting way. You keep the line of communication open and you check in with them every week. And when they start to get really scared and you're the person who's right in front of them, that's when you're going to go into contract. Yeah. And when we talk about don't insult to them, it's not even just never the amount. It can be also just the way you do it.

You're going to just throw in a cold offer and don't say anything. Like that's rude. But if you include, yeah, it kind of rude. especially if it's a low offer. But if you go in there with a letter or a story or get your agent to butter them up ahead of time or you have that conversation and you find out what they're looking for, where they're at, what they're trying to do with the money. Like now you have context to be able to offer a lower amount.

So there's a little bit there. And I also really like his advice about investing as a group. I don't think that's a bad idea at all right now. I mean, if you got, you're like, well, I only got 15 grand, nothing I can do in this market. But there's a thousand other people that are listening to this right now who've got 15 grand and not sure what to do with it. You get four of those together to go buy something.

Who cares if you're splitting it four ways? You only got 15 grand invested in it. And like you're going to get, you're going to learn more than like you'll ever make, you know, like the point is to learn, not necessarily to make a killing off of it. So it's a great time to start,

you know, getting your feelings out that way. There you go. Cool. All right. Next, let's hear from our friend Brittany Arneson, who was show 320 of the Bigger Pockets podcast.

She and I had a competition to who could get to 100,000 followers and Instagram first. She won. She completely dominated. And Britt is super, super cool. So let's hear from her on what she recommends at this crazy time. Hi, everybody, Britt here.

So got the van all packed up. Ready to go do some self-isolated renovation. And I've been thinking this might be a time where you have to be extra, extra budget conscious. And this is how we've been able to make our renovation the nicest in our area, which in turn gives us the best tenants and saved us a ton of money in the process. So coming up here in these tough times, you might have to start thinking about doing things DIY. You're going to have these skills forever. It's fun. If you could get into it, maybe it's something you need to consider. Very cool. Yeah. So this is one of those things that early on in my career. I did a lot of my own work. And sometimes I say that you, you know, like, I wish I wouldn't

have done so much of my own work. But in reality, the great part about being able to know how to do stuff is that when crap hits the fan, you can go down and start doing your own work. Like, for example, you can start doing your own labor potentially. You could start doing your own rehab if you had to in a tough time. You could do your own management if you had to in a tough time. So one of the cool things about just owning real estate is that there's a lot of steps down that you could take as needed. If your cash gets really tight, especially if you're a brand new investor right now and you're struggling, but you own some properties. Yeah, maybe it's time to take it in and just start dealing with it yourself. I don't know. What do you think, David? I know most of your properties

are out of state. So obviously you're not going to go in. We can hammer, but... Yeah, but I started in-state, and DIY wasn't what was right for me because I had a full-time job as a police officer. But let's talk about the concept, because everyone's different. There's some people that like doing it. There's some people that don't. There's some people that can do it.

There's some people that can't. Some people are just not physically able to do their own work, but they're just not capable of it. They're sick or they have injury, handicap, anything like that. I was talking to the same person I was sending about yesterday. I was talking about corporate debt falling. And we talked about what I learned when I became a real estate agent that has nothing to do with selling houses.

And really, this is where I learned how to read a profit and loss statement, how I learned how to put a marketing plan together, how I learned how to influence people through sales, how I learned how I learned how to build a team, how I learned how to be a leader, how I learned to use a CRM. All of these skills that had nothing to do with selling houses, I learned because I did it. And there's a lot of value in that. So if you're a DIY person, don't look at it just from the perspective of, well, is it cheaper or more expensive? I mean, that's one factor, the financial impact. Would it be cheaper for me to hire someone or cheaper for me to do it? also look at it from what could I learn from doing this? If you have really low confidence and doing this gives you confidence and it was a good idea

that you did it, if it forces your brain to work in different ways and solve problems differently than you did before and you can apply that to whatever you go to in life next, well, then it would make sense that you do it. I don't think it's a bad idea like that Brandon puts together his stools. I mean, I like to tease him about how he does his own stuff because I think that's funny. But Brandon likes doing it. He gets satisfaction from me. He gets to go to Heather and he gets to say, look, I did this for you, gets to feel like.

a strong caveman that brings home like a pelt. You know, like I just, this deer pelt to give to my wife. But I have learned to look at the world from, if I do this myself, A, is it a good business decision, but B, is it a good personal decision? Will it help me in other ways? Good stuff, man. All right. Well, I'm going to go put together a stool.

All right. Next, Jay Scott, author of the book on Flipping House, is host of the Bigger Pockets business podcast and all around super smart guy. Let's hear what Jay's got to say. Hey, everybody. Jay Scott here. Looking for one great tip on what you can be doing right now to prepare for the potential upcoming recession. This is what you should be doing.

You should be putting together a fantastic team. One of the biggest difficulties during a downturn is that there are so many opportunities, there are so many potential things that you could be capitalizing on that generally speaking, you're not going to have enough time and energy to do it yourself. So find other people that can help contribute capital to the team. Find people that can contribute time, energy and expertise to the team. Find people that are willing to work with you so that when these great opportunities come along, you don't have to pick and choose one or two or three of them. You can do a whole bunch of them because you have a team around you that provides you the capital, the time,

the effort, and the expertise to get it all done. So start now putting together that team. So when the opportunity start to arise, you can jump on them right away. Yeah, so good. Yeah, this is the time. If you're sitting at home especially, you should be on, like, you know, obviously spend time with your family, do that kind of stuff, but like spend time every day on the phone with people with other investors, finding out what they're good at, what do they like doing? What do they get excitement from?

Like, what's their thing? So you can start putting together these pieces of like, hey, what if we just did this together? I mean, this is like the biggest reason that our, you know, open door capital, my mobile home park fund just took off so huge in the last year is because I had like five or six people that are just like rock stars at what they do. And we all just came together. We're like the Avengers and like we're able to like, you know, defeat Thanos and such.

I'm not the analogy guy, David. Give me an analogy. I like it, dude. I mean, you're making progress. You brought up super gross. All right. Thanks, man. Avengers worked.

I mean, you kind of struggled with what the bad guy would be because you're not really defeating anyone. You're raising money. But like, hey, you were really close. I thought that one was pretty good. Thanks, man. That was like a B plus effort right there. All right.

I love Jay's advice because it's the same thing that I'm doing. It's harder to find clients to sell houses to, and it's harder to find listings to sell because everyone's wanting to wait and see. So I just shifted and now I'm looking for talent. I'm actively trying to find who would be a good person on my real estate team, who would be a good loan officer or even learning how to do those jobs that I could bring in, bring into my team and get them trained with this downtime so that when things open up again, they're ready to go. Too many people wait for the opportunity to start preparing for it. It's like waiting for the Olympics before you start working out.

You've got four years of time before it's going to start. If you don't take advantage of that time, you're going to lose when the Olympics come. This is a ceasefire. This is a pause. This is an opportunity for all of us to be sharpening our axe. And then when the flood gate's open, we're going to go out there and start hacking away again. Yeah. Very well put.

That was an A minus effort right there. Well, I have to keep my job, right? You're always telling me in the intro that I might be replaced, though. There's a lot of pressure on me. Make these analogies good. You got to. I'll find somebody who do a better analogy than you then. Let's out.

All right, our next guest today is Lucas Hall, founder of Landlordology, head of industry relations at Cozy. Lucas is a wicked smart landlord. It understands a lot of the landlord stuff. And he's got some advice for us. If you're a landlord, listen up. Here we go.

If you're like me, you probably have tenants from all walks of life, some of which are in the hospitality and service industry. And some things you can do to help them help you would be one, give them a little more time to pay rent. So most mortgages aren't officially late until the 15th of the month. Maybe you could give them the full 15 days. They would certainly appreciate it and it would increase your chances of actually getting paid.

Another thing you can do is give them weekly payments instead of monthly payments. Instead of having a huge chunk called rent, do every month, maybe for the next couple of months, tell them they can pay weekly. And maybe they'll be able to pay the smaller, more digestible chunks. And lastly, you could actually credit them the money temporarily. For example, you could say, hey, for the next two months, you only have to pay half rent. and we'll make it up later. A worst case scenario,

you take it out of their security deposit at the end of the lease. So good luck to you. Keep that cash flow going and I'll see you on the other side. Yeah, that's smart. Yeah, like right now, like you got to,

like as landlords, we've got to make sure the cash flow stays up somehow or that we're going to make it through this because like, like, you know, what's the thing you always say, David, about like cash flow is a defensive thing.

Like it's designed to help us. Yeah. So we don't lose our properties. Yeah. So if you lose your property, then it's all over, right? So if you have to, I'm not saying that all landlords need to go and just tell other tenants no rent anymore because we still have bills to pay.

Even like they, you know, I put a video out last week on bigger pockets that it's over 100,000 views now about how I'm going to get like what happens if my tenants can't pay rent. And it's sparked a massive debate so much that we had to turn off the comments in the YouTube because there were so many like angry tenants that were like greedy landlords, you should all be just waving all rent completely until this thing is blown over. And the point I make in that video and then the three follow up videos I've now made since then. is like landlords like can't like if we lose our property then tent you're going to lose your home anyway eventually like we have to still pay bills the water stills to be paid the garbage is to be paid the taxes insurance all that and uh so anyway i like Lucas's suggestions here I mean he's got some good ideas like the weekly thing is really interesting to me because of uh unemployment that the big changes are making an unemployment right now like a lot of our tenants that were out of work are going to be

making like money again but they're going to be getting checks weekly like a lot of times in terms of unemployment. So if you can shift over to that, that might be a good way to help our tenant, but not actually losing your rent. Interesting. What I liked about it was the breaking it into smaller chunks. Because I think from a psychological perspective, if you're a tenant and your rent is $1,400 a month and you know that you can't pay $1,400 a month, that doesn't mean that you couldn't pay $900 a month. But most tenants are not going to think, well, I'll just pay $900. If I can't pay it, I can't pay all of it. And they don't send you anything. But from the landlord's perspective, you might be happy to get $900 right now and you can figure out

to 500 later, maybe even trade labor or something like that. So if you take the responsibility to tell the tenant ahead of time, look, I'm going to decrease your rent by this much for the next couple of months. And then I'm going to split it into weekly payments. So now they're only having to pay, you know, $250 a week or something. And that seems more manageable. You can get something coming in and then figure out the difference rather than get nothing coming in. And now you feel like, well, my only option is eviction. Yeah. Yeah, we're, um, we're doing something similar. What we're going to do in our local business,

at least out in Washington, and we're doing a version of it in our mobile home park business, it's not that if they can't pay rent, if they call and say they can't pay rent, this is not what we do. If you want to know more details, check out that video on YouTube. Just on YouTube.com slash bigger pockets.

And it's like what to do when tenants can't pay rent. But what we're going to do is when they don't pay rent, we're going to first ask, okay, what can you pay? So just like you said, David. And then like if they can pay, hey, if they rent's $1,000, well, I could pay $400. Okay, great. Let's do that.

And then the remainder, whatever they can't pay, we're going to divide up over 10 months starting in July. So July through, I think it's the following May or June or whatever the 10 months is. They will pay like 10, basically 10% of the rent extra for those 10 months. So at the end of the year, like a year from now, I will have full rent coming in. But they can basically take the next two months off if they absolutely have to. And we're going to make them fill out a form that says like here's why they can't pay. Because I don't want tenants just going, well, you know, I didn't lose my job or anything.

I'm fine. I just don't want to pay rent because, you know, the economy's, you know, or the world's going crazy. is going to be part of the craziness. So we'll make them apply for it, so to speak, just to add a barrier of entry there. But yeah, that's how we're kind of handling at this point. And then with unemployment kicking in, that should help quite a bit as well.

So there we go. Thank you, Lucas. And now on to Aaron Amuchaseggi. Boom, said his last name right, I think, the first time. Is that right? First time you've ever said it right. Yeah, and that's extra. I'm extra proud of you because last names are your Thanos.

You struggle with last name. names. I do. Aaron is a good friend of both David and I. He is just a wicked smart expert on buying foreclosures. He was on guest on episode 325. He's one of the owners of Roddies, which is a big foreclosure service down in Texas, 200 plus units, like just like all around, like one of the smartest real estate investors I know. So with that, let's hear from Aaron to see what he suggests at this time. I can give you one piece of advice on how to survive and thrive during this economic downturn, it would be this all in one sentence, don't waste the crisis. Back in 2013, my company had major, major changes, a bunch of people to enter the market. We lost a bunch of

cash. Investors lost money. Houses lost money. We were stuck with a bunch of things that we had to deal with. And what I mean when I say, don't waste the crisis is you're going to have to have a bunch of uncomfortable conversation with people sometimes for the first time. You could be telling the bank, hey, I'm not able to make that mortgage payment right now. You could be telling an investor, hey, instead of making money on this one, we're going to lose money, or instead of making as much money as we did, we're going to make a little bit less. And so when you're having those difficult conversations anyway, you're already telling them something that's a complete bummer. And so take that opportunity to renegotiate the future.

You say, hey, sorry, we lost money on this. And actually, for the near future, I think it's going to be the same. So now the split needs to be this, this, or this. Or, hey, I'm going to miss this mortgage payment and I actually need a reduction in rate. There's a whole bunch of things you guys can be doing right now. You can go renegotiate lease rates with landlords if you have an office somewhere. You could go have the tough conversations with employees. Maybe you need to lay some off. Maybe you need to change the rates with people. Maybe you need to change how much you're paying your contractors, how much you're paying your painters. This is a great time to go out there and say, hey, there's really bad news. We're going to have to do a bunch of things to survive here. And here's

the changes we're going to make. Don't waste the crisis. If you're going to have to have a hard conversation anyway. If you're going to have to give somebody bad news, do it now, do it quicker. If you're going to lay somebody off, do it right away so you can get out there and set yourself up for success in the future. Yeah, this is hard. I mean, it's good advice, but we are going to have hard conversations. I know a lot of Eurocent investors I've been talking with have already begun laying people off. I mean, there's somebody we just saw in the GoBundance group that laid off their entire staff. It is a difficult time right now, but we have to do those things. So You know, Aaron's advice here is like, look, like, use this opportunity to like, you know, ask yourself, like, how can we make this better long term?

Like, if you're going to rip the bandit off and have to do something, at least rip the bandit off and make it last, like make that stuff last. So if you have to renegotiate stuff, if you have to lower salaries or lay people off, you know, make it count. This is the time to do that. It's hard. But, you know, that's what we got to do. Yeah, it's really wise that you run at the problem, not a way. If you avoid it, if you just say, oh, my God, it's getting bad and you let that paralyze you and you sit at home. you don't talk to anyone and then you just stop writing checks and you make them call you and say

where's my money and you go uh well uh the thing is that there's new money right that's terrible yeah you want to be like aaron and proactively say look we got to figure out a way to make this work i'm giving you some control over your own fate if you don't want to work for me anymore you can find somebody else if you want to work with me this is what i can pay you and this is why everybody likes to feel like they get a say and what happens if you just try to impose your will on someone you're going to work for me at this price or you're fired. They hate that. When you give them an opportunity to choose if they want to partner in it with you,

they're going to like it. That's why your idea, Brandon, for how you're going to split up the rent payments with your tenants, you're giving them this impression or actually the ability to play a part in their own financial well-being. They get to choose, am I going to choose eviction or am I going to choose to work with him? So I really like that idea. We all hate doing it. We never like to have difficult conversations.

it's very easy to put them off. But man, every single time that I just shut up and I go do it and I rip off the bandaid, I'm like, that was never as bad as what I was afraid it was going to be. The other thing that I want to point out is that Aaron hosts a podcast called Real Estate Rockstars, and he interviewed Scott Trench on episode 876. He actually interviewed Scott on what makes a good CEO. So Aaron's a smart guy. He talks to smart people for a living and he interviews them like Scott Trench.

And I think when he gives advice, I always listen to it because of what he does into the scale, he does it at. Yeah, really good. Yeah, one thing that comes to mind, too, with this idea of like, if you have to lay people off, maybe a way to, like, I mean, laying people off isn't even necessarily the worst thing in the world right now in terms of unemployment kicking in so much. So maybe there is options there. Also, if you're a business owner, there are, there are loans and grants coming down from the government here in the next couple weeks that are going to help us. So make sure you take advantage of those. But what I was going to go with that is like, maybe you have an employee that you've been like, it's time to let them go.

But maybe this is the time the conversation of instead of letting them go entirely, maybe it's time to renegotiate. into a commission based or a profit sharing base where like give them the option to step up now because maybe they weren't that great before or maybe you were concerned about them. Maybe now would say instead of laying them off, it's, hey, we're going to, I'm still going to keep you on, but you know, you're going to have to bring deals. You're going to make 10% of whatever I make on a flip or you're going to make, you know, a $10,000 finder's fee if you find me a rental property or, you know, whatever. Maybe it's a time to do that.

And that'd be a way to shift and to make the change for the future better long term because you're not just thinking right now. So with that, let's get over. to our last conversation today with Ms. Carroll Scott, managing broker of Scott Silver Realty and co-host of the Bigger Pockets Business Podcast. Carol is, of course, married to Jay Scott, and Carol is just one of my favorite people ever. I know I say that about a number of people today, but these are all my favorite people. So Carol is just a wicked, smart, genius real estate investor, a real estate agent, broker, had a staging company, no it was all about business,

It's all about so much stuff. So with that, let's hear from Carol. So, and first of all, hug your spouse, your partner, your significant other, and go hug your kids. Why? Because I really want you to feel the power and the importance of that human connection. That's what we're all craving right now, right? We're told we can't be out there.

We can't be social. We can't do those things we're accustomed to doing. So really understand the power of connecting in person. and then go pick up the phone. Okay, I'm not talking about sitting a bunch of emails. I'm not talking about a bunch of Facebook posts. Truly connect with people. So pick up the phone.

Call other people in your family that are far away. Call business associates. Call random leads you've had here and there. Not to ask for business leads, not to ask for advice, not to give advice, just to simply ask, how are you doing? How are you coping? Is there any way I can help? And why is this important? Because again, establishing that human connection, especially in a time of need, is so massively powerful.

People will remember that. And when it's time to go back to business as usual or to adapt your business, however it's necessary, people are going to remember that you cared enough to pick up the phone, to reach out, to show genuine concern and to lend a listening ear. So that's my advice. I hope it helps. Now, stop listening to this video. Go pick up the phone and call somebody. That's awesome. Yeah, that's such a great point to end on is that, you know, right now we are self-isolating. We're all like self-distancing.

And I think people will really respect down the road, especially like remembering that you were there for them in that time, that you call them, that you touch base with them. So, yeah, I think, I'm in. I think her advice is an amazing idea right now. I'm kind of thinking through right now, like, who should I pick up the phone and call right now and just have those, like, meaningful conversations with. Especially if you're a salesperson, this is all that my team and I are doing right now. We're on the phone of people constantly. And it's the same thing we said earlier where, why don't you talk to that person more often? Well, I'm just getting too busy. There's too much going off life. Well, now you don't have that excuse, right? So if you can't invest in real estate or you can't invest in your job, invest in your relationships, this is when you should be talking to people and checking in on them and letting them know you're thinking.

of them and she made a point that was really wise that they'll remember this more than when you saw them at the birthday party when everybody else was there too, right? That you checked, that you checked in when they were most fearful, they were most scared, they were most anxious and you were a calming presence. People appreciate that. That's kind of what I'm doing all day long. I'm calling clients and I'm calling friends and I'm calling people that refer me business and I'm telling them it's okay. The world's not going to end. We're going to be able to adjust to this. We've adjusted everything before. This is actually a normal part of a business cycle. and I hear the relief in people's voices when we're done.

Like I could just feel like all that tension was released and they're like, oh yeah, you're right. The media is playing this up and I'm watching or looking at way too many Facebook posts from people that are not informed and not educated giving an opinion on something that they don't really understand very much. And it just spins us into this turmoil that isn't really based on anything objective. Yeah, that's such a good point. I hadn't really thought about that, but maybe it's time for us to be like maybe we need

to be the hope in other people's lives right now. You know, like, and I'm not saying be false, like, everything's be fine. I'm not like saying, you know, to everyone, this is going to be over next week. And, and, but just like, yeah, giving them a break from the constant stream of bad news that they see on their Facebook and on their, you know, the news outlets when they're watching them. Just as like, hey, here's some really awesome things that are happening right now. And here's something, you know, ways that we're coming together. And being that person in your family is going to, again, pay off long term.

They're going to see you as somebody who's, they want to be around. They want to work with. they want to help and support like for the next decade. So yeah, those relationships pay dividends long term. So build them. All right, man. Well,

that was our last discussion today. So with that, I guess we're going to kind of wrap things up and get out of here. Any final thoughts you want to leave people with today? As they're going on about their day? Yeah, I really just want to emphasize that there's always positive in any situation. And there's oftentimes more positive in times like this.

It doesn't feel that way. But I heard Robert Kiyosaki say on an interview on YouTube last night that the best time to start a business is right after like a crash or in a recession. And everyone universally agreed the best time to do it is when things are really bad. It might not be the best time to own a business that wasn't prepared for this, but to start one with low overhead, that's the best time. You have to have these ups and downs in order to be able to make money in real estate. If it was just a solid linear process, you would never be able to build wealth quicker than in any other way. Even though this is things are different and we're having to have different conversations, that doesn't mean it's bad at all.

There's a lot of people that own real estate that were never meant to be landlords that shouldn't have been doing it and they're going to get out of the business. And there's people that should be landlords. They're going to get into it. There's people that owned a home and they really weren't responsible and shouldn't own a home. And they're going to become tenants. And there's people that are tenants that are going to realize like, hey, I don't like this uncertainty.

I want to go own a home and house hack. There's people that weren't house hacking that are going to realize I should be house hacking. It'd be nice to have a little bit of. extra income, right? We tell our clients all the time, there's a spectrum. On one end of it is comfort and on the other end is profit. You don't get both. I don't want to rent out the rooms in my house. That's okay. You don't have to, but you're not going to make as much money or it's going to be harder to find the right deal. And when things get shaken up like this, all of a sudden not being

comfortable doesn't seem so bad anymore. And it leads you, it makes it easier to make good financial decisions because you're not valuing comfort as much when there's so much uncertainty around you. So that's what I want people to be thinking about is how is this forcing them to look at stuff that they wouldn't have looked at that will help them to make changes for the better that they just weren't going to make when everything was good. Boom. Mike drop. That's good, man. Thank you. Thanks.

Well, with that, guys, thank you for listening to our show today. We appreciate you guys a lot. We're going to all get through this. So thank you for, you know, listening, but then, like, supporting us, you know, like everybody who leaves reviews that leaves comments that shares us on their Facebook for all those things. I just thank you guys very much for supporting bigger pockets and supporting David and I. We appreciate you guys a lot. So thank you. And final note, you know, follow bigger pockets wherever.

If you're not on Facebook and you're not following bigger pockets on Facebook, do so. If you're not following BP on Instagram, make sure you do that. And David is at David Green 24 on Instagram. And I am at Beardie, Brandon, Beard with a Y. With that, David, you want to take us out? Yeah. If you guys like this, if you feel good. If you feel empowered, please share it with somebody else because they probably need a little bit of that.

There's a whole lot of negativity going around when you get a ray of light and we need to spread it around. So please share the podcast if you really liked it with other people. And I can't wait to talk to you guys again. This is David Green for Brandon B Plus Analogy Turner, signing off. 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. Be sure to join the millions of others who have benefited from BiggerPockets.com. Your home for real estate investing online. Do you ever notice how every

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