BiggerPockets Real Estate Podcast - 391: Your Real Estate Questions Answered, Live! with Brandon, David, and BP Nation

Episode Date: July 16, 2020

Live calls, Dave Ramsey style! In this episode we open up the phone (er, Zoom) lines to take audience questions on everything from "should I flip or hold this deal" to "Coronavirus cost me my job... how can I invest now?" Brandon and David offer also advice on house hacking, Home Equity Lines of Credit (HELOCs), appraisals, and the pros and cons of tapping a retirement account to jumpstart a real estate investing career. We'll be back to our regular programming next week... but let us know what you think of this format. And if you've got 30 seconds to leave us a rating and review in Apple Podcasts, we wouldn't be mad at that either. Links from the Show BiggerPockets Forums BiggerPockets Podcast Redfin Zillow Realtor.com BiggerPockets Podcast 325: From Major Business Failure to Buying 20 Houses a Month With Aaron Amuchastegui Find Real Estate Agent on BiggerPockets BiggerPockets BiggerPockets Podcast 366: 40 Doors in the First 2 Years with Henry Washington Brendon Burchard's Show My Body Tutor The Essential 11 Podcast BiggerPockets Conference Check the full show notes here: https://www.biggerpockets.com/show391 Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 391. This is similar to the Burr method where people think if they don't get out 100% of their money that they didn't do it, right? That's not true. That's like saying if I didn't get a home run, it was a wasted at bat. Doubles, triples, walks, singles, they all are still wins. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the hype, you're in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com.

Your home for real estate investing online. What's going on, everyone? It's Brandon Turner, host of the Bigger Pockets podcast here for a really unique show. It's something we've never done before with my co-host, Mr. David Green. What's up, David? Not much, dude. This was an awesome day. I'm actually pretty pumped up.

I'm hoping that the listeners like it and we can figure out if we should do it again. Yeah, so we decided to pull a Dave Ramsey today and do a call-in show. And so we kind of finagle both using, I used Instagram to drive people to a Zoom thing where we recorded people one at a time coming in, asking questions. And so these questions very well might be things that you guys are dealing with.

Things like, you know, what to be aware of when doing the birth strategy? Should I house hack for my first deal? What do I do if I have 20 grand and no job because of COVID? Those issues and a lot more coming up today. Everything from people just getting started to somebody on the show today. I mean, in his first year,

He's already done like over two dozen different deals. You're going to learn about like what he says as the reason behind that and just a whole lot more. So you guys are going to love today's show. Really, really cool, I think. And then let us know in the show notes. Biggerpockets.com. So show 391.

Do you want to ask questions or you want to get a little more information there? You can and leave comments. So do that. Again, biggerpockets.com slash show 391. And with that, let's get to today's quick tip. Your quick tip is very simple. If you have questions like this, and we didn't get to your question today.

If you have specific real estate questions, if only there was a forum that was free to use and you could ask any question like this, anytime you wanted to, 24-7, and there's thousands of people and they're willing to give answers. There is. It's called BiggerPocketsforums.

So go check them out. BiggerPockets.com slash forums. You can type your question. I know forums are like a weird like 90s thing, but like all it is is like Q&A. It's like you ask questions. You got lots of perspective of different answers. So it definitely changed my life.

It's been a huge impact on me, and I think it will be for yours as well. Bigger Pockets. that comes as forums. That is your quick tip. Here's the thing about traveling. If you buy food at the airport, a burrito, salad, bag of peanuts, you start wondering if you should have opened a savings account for snacks. So wouldn't it be great if you could actually earn money while you're traveling? Well, you can. Airbnb has something called the co-host network. While you're away, you can hire a vetted local co-host

with hosting experience to help take care of things, communicating with guests, preparing your space, managing reservations, everything runs smoothly while you're off making memories. might be worth more than you think. Find out how much at Airbnb.com slash host. Here's the thing about traveling. If you buy food at the airport, a burrito, salad, bag of peanuts, you start wondering if you should have opened a savings account for snacks. So wouldn't it be great if you could actually earn money while you're traveling? Well, you can. Airbnb has something called the co-host network. While you're away, you can hire a vetted local co-host with hosting experience to help take care of things, communicating with guests, preparing your space, managing reservations,

everything runs smoothly while you're off making memories. Your home might be worth more than you think. Find out how much at Airbnb.com slash host. 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, turn-key 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 BiggerPockets for over a decade, helping thousands invest smarter. If you want to do the same, visit Biggerpockets.com slash retirement to learn more.

All right, all right, all right. David Green, you ready to let people listen to our live call-in show? Buckle your seatbelts. This is high-octane, fast-paced. Who's the guy that drag? and Transformers. Michael Bay. Michael Bay-style podcast today. There we go. All right, without further ado. Oh, I just admitted everybody. Oops. Oh, boy. We're bringing, I just hit the admit-everybody button.

And so there are going to be a ton of people here. Right after you said, you won't be on the podcast. You'll just be in the waiting room. You went and brought all of them into the podcast. All right, how about we're going to start with this way. We're going to start with this way. Anybody buy a real estate, anybody in this group who's here right now, anybody buy a real estate deal in the past month?

month or closing on one in the next month. I'm curious. We got Brandon Johnson down at the bottom. Okay. I got a few people. Jared up there. Okay. Let me start because the first name I saw was Brandon. I'm going to try to bring you in Brandon Johnson. What's your story? What have you done recently? So we bought a two-family house from a wholesaler and caught this awesome deal. I live in Cleveland, Ohio. We got it for $30,000. We just renovated it, put tenants in it, rented it out for $1900 a month. And now we have an offer on it for $118,000. And we only put $25,000. thousand dollars into it so wow wow un freaking real that's amazing man that's awesome how'd you find that deal somebody listed it for sale by owner it was the wholesaler that listed for sale by owner on like zillow or

something my partner found it uh we were very persistent about getting that contract from them so yeah i bet how long have you been in real estate for i've been investor for about five year just kind of more passively i work a full-time job still so i travel a lot for work so it's harder but since COVID kind of hit, I've been stuck at home. So my question is with my current deal that I just made, would you have held on to it and took the $1,900 and rent or sold it for 100% profit? All right. So give us the quick update on the property again, what you just did.

So we bought it for $30,000 in May. We put $25,000 into it. So we're about $55 in, all in. And we just got an offer on it yesterday for $118,000. You're all in for 55. You can sell it for just shy at 120, right? Yeah. And then how much would you cash flow if you kept it? It'd be 1900, because there's no mortgage on it, so we paid cash. Taxes are about $100, $1,800 insurance, about $75. I guess you're at $17.25.

Everything's pretty much new in it, so there shouldn't be too much repairs. They can see rate 10%, so $180. I'm still over $1,000 in cash flow. So let's call it when I say like 1,300 conservative number. All right, here's how I do this. I take 1,300. I multiply it by 12. So in a year, you're going to be making 15,600. And again, these are not exact numbers.

So don't worry about that. We're just talking about the principle. I'm going to divide that by how much equity you have in the deal that you would get if you sold it. So we were at all in for, remind me, 55. 55, yeah. Right. Let's say that after you sell it all your fees, you're at, you're going to spend $100 or sorry, 20 grand to be able to get the thing unloaded.

So 55 up to 100 is going to be 45,000. So we divide that yearly cash flow by 45,000, and that's going to give you a 34.6% return on your money. So the question becomes, if I sell it and I take my 45 grand, can I get a 34.6 return percent somewhere else? Probably not. That would lead me towards, hold it, refinance it, get some money out that way because your cash flow is super strong.

When that number that we look at becomes small, like it's a 4% return or something, that's where I say, okay, we should sell it and redeploy that that money to invest somewhere else. Okay. You're also, I didn't even go into the fact that your $45,000 profit on a flip is going to get hit with capital gains taxes. So there's another expense in there I didn't mention to. Brandon, you're going to say something? Well, I was going to say, really, to me, it would just come down to goals. Like if you, if you needed some cash right now and you needed to buy a rental property, you wanted, you wanted the cash, it wouldn't be a bad time to build up your war chest right now, if that's the goal. But if the goal is,

hey, I want passive income to build it up. That would be a pretty darn good. I would probably have bird it instead if the goal was just, you know, building those oil well. So that's what I would do. But yeah. Yeah, I think I was having trouble finding places to cash out refite. So maybe I just didn't put the time in to do it.

So I need to kind of investigate it. It's cashed phone and so strong without even a loan on it that, I mean, your return's really good. So there's, I wouldn't be in a huge rush to cash out refines. Keep it. Make some money, put it aside when you get the opportunity to cash out. That makes it a burr. And then you can avoid capital gains and avoid some of,

that's selling costs and go put in your next deal. Especially if you can't get another one like that. Right. All right. Thank you guys. Yeah, thank you. Yeah, no one of the things where it's like, it doesn't matter. Like you win either way.

It's both good options. So congratulations on that deal, though. Very, very cool. Brandon, thank you for joining us today. And we're going to bring in another, another caller here. Okay. Lionel, welcome to the Bigger Pockets podcast. How you doing, man?

Where are you calling from? I'm calling from Los Angeles. Los Angeles, California. Land of Lincoln. I'm just kidding. Just kidding. That's a reference to the movie. That thing you do is my favorite movie of all time.

But anyway. I love that movie. I love the movie. Questions? What do you got questions for us today? I've had this goal that I've wanted to retire myself doing passive income and retire my wife. We just had our second child. And just from going on the bigger podcast, discussion boards and everything, I ran across some people in Indianapolis.

And just this year, I closed them my first out-of-state deal. which is cash flowing pretty good right now. Thanks. Yeah. And, you know, now I'm at the point where I couldn't believe that that happened. I've got two other deals sitting on the table, so it's moving really fast. And, you know, I just want to ramp it up to the point where I have a good system in play. You know, having issues with the cash out refi as well right now. Maybe because the whole COVID-19 thing, but my direction is cash flow. I want to create as much cash flow, passive income for long-term wealth. And I kind of want to follow you guys as lead. So, you know, what do you recommend for someone like me who's just getting started?

All right. The first question we got to ask is capital. How are you sitting as far as how much capital you have as well as how quickly you can add capital to invest? So funny enough, through you guys as well, I meant a really cool hard money lender and we've created a great relationship. So he's funding most of my deals about 75% and he's doing rehabs as well. So as far as capital, I have an IT company and I do cash flow from my IT company.

about 8 to 10 grand a month. And my expenses aren't even near that. So most of the money I'm just putting aside like a money, you know, market account and stuff like that. And then, you know, using that to invest in real estate. Okay. And how much, how much did you say you have right now? Cash wise.

Yeah. 50,000. Okay. So there's enough that you can cover your 25%, right? Yeah. Now is your goal to build, you said, like passive income so that your wife doesn't have to work? Yeah.

All right. Are you currently renting or owning the house you live in? Owning. Okay. Do you love it and you don't want to live anywhere else or would you be open to moving? I'm open to moving. Okay. First thing you do is you can house at, right? This is every year you can house sack a new house. 10 years later, you'll have 10 properties that you can make as rentals and you're just looking for something that can generate rental income. It can be a duplex, a triplex, a single family house with a basement that you can live in and rents out the rest of it. But the awesome part about house hacking is you get by with only like 5% down, 10% down. You don't have to put a ton of money in.

So you don't even have to burr because you don't need to worry about getting your capital out if you didn't put very many in. And this is especially helpful if you live in an expensive market. So I'm an agent in the Bay Area. We have a lot of people we help do this because their rent might have been $3,500. If we drop that down to coming out of pocket $1,500 to $1,500, that's a significant savings. That's $2,000 or more that they're saving. it's very hard to go generate $2,000 a month of cash flow.

You've got to be a super good investor to do that. You can be a mediocre and moderately successful investor and do really good with house hacking because you're just getting rid of an expense that you already have. So eliminating housing is just the same as cash flow. In fact, it's better because cash flow is going to get taxed. But getting rid of an expense you already have doesn't. So that's the first thing I would say to do

is put some of that money towards getting a place to house hack and live in. and then anything you buy outside of it, that's where you're going to be looking at, you know, the investing strategies we talk about. I think that's awesome. Like, I never even thought about that. That actually makes sense. I mean, we were kind of, our idea was, okay, we're going to live here two years and then find a house that we want to live in a little bit longer.

But I'm very open to that because that's kind of how I got. I actually have a triflex down the street and I bought it FHA, lived in it for a while. And I did Airbnb while we could do it in L.A. Because you can't really do it anymore. And then moved into this. place. So that's a great, I love that strategy. And look for houses that other people are missed. That's the last thing I'll leave you with. Look for a house that has a floor plan that would be conducive to putting up some drywall making two units or something that's already set up

where you can, like something with an ADU. A lot of the stuff that you're looking at, if the description says mother-in-law unit, ADU, they're going to go quick. So what we do on my team is we target the houses that other people aren't describing like that. There's a bonus room that is it being marketed or it has more square footage than what the agent is saying. You want to look for something like that on the MLS. I love that. Now, I do have a quick question about that. You guys just use like Zillow, Redfin, stuff like that to find your deals or because I'm always curious because I get sometimes people send me stuff and, you know, I see it's different from what I'm finding online. You know, where's your kind of go-to source for that? Well, I'm an agent, so I'm using the

MLS. And what I actually do is I have a little cool system set up for our clients where I set up keyword alerts, like what bigger pockets has for words in the confidential remarks that only agency that would lead me to believe this can be a house hack. So anytime something says like unpermitted square footage, bonus room, extra space, addition, I know to look at those houses first. So they pop up on my little house hack list for my clients and then we go look and we see, ooh, they show 1,200 square feet on the tax records, but that's an 1,800 square foot house. The agent didn't market it correctly. We see that they built onto the house. You can easily put up some drywall. all run some plumbing from the kitchen right through it.

You've got another kitchen. And now you've got a whole separate unit that you can be living in or renting out and boom, your house hacking in an expensive market. Okay. Very cool. Well, thank you, Lionel, for joining us today. That's awesome. Thanks, guys.

Let's move on and bring in next one on our list here. And we're just going in order of what they're showing up on my screen. I think we have, was it Justin Bourne is the next one on my screen here? So let's see if we can get you in. You there, Justin? Yeah, I'm here. Pretty awesome to be on the show. Thank you.

All right. What's up, man? So I actually live in Denver. I moved here three years ago. So I actually haven't bought a rental property yet. I have the cash flow to and I've been looking at houses for about three or four months now. And I've been looking into like a pretty specific area and there's only been one house that I really felt like I could have made the numbers work. So do you think I need to maybe stretch my search to be in a different area, maybe more outside of Denver that I could cash flow more or do I just need to be okay with the fact that I'm going to be saving money on rent and then after.

I move out in a year I will cash flow on that property. Yeah. So you want a you want to you want a house hack essentially, right? Absolutely. Yeah. I'm definitely playing on house hacking. Yeah. So I guess that was I mean, David, you all have, I'm sure a lot more thoughts on this.

But if you're saving money, like you don't have to live for free in a house hack. If you're just saving what you would be spending elsewhere, that's a win for me. And then so I was analyzed a house hack two ways, right? Like when I'm living there, what would it be like to live there? And I don't live for free. I live in Maui, Hawaii, right now, right? And I bought a basically a three unit property. I don't cash flow right now.

I spend thousands of dollars a month to live here. And I probably spend about what I would spend if I were to rent this property out, or if I were to rent a property, but I own it. So it's still worth doing it for me. And then once I move out, I also run the numbers as if I'm no longer living here. I would probably break even, maybe make a little bit, maybe make a thousand bucks a month. And so for me, buying a property in Maui, that is worth it as well because I believe in Maui appreciation.

And so I'm willing to play that game. I'm not going to lose money betting on appreciation, but I would play that game a little bit there as well. So yeah, David, what do you think? This is similar to the Burr method where people think if they don't get out 100% of their money that they didn't do it, right? That's not true. That's like saying if I didn't get a home run, it was a wasted at bat. Doubles, triples, walks, singles, they all are still wins. So the first major fallacy with house setting is that you have to live for free. You don't. In fact, areas where people live for free tend to be areas where homes are cheaper. So you can go, your rent would normally be $1,100,000, you can collect $1,500,000, right?

All you're really doing is coming ahead $1,500. Whereas if you go to an inexpensive market like mine, like we just put someone under contract yesterday in San Jose, where he would normally have a mortgage of $5,500. Instead, he's going to be coming out of pocket about $2,000. That's a huge win. He came out ahead $3,500, but he's not living for free. He's still way better off. And if you look at that high-priced home, he's paying off a bigger chunk of the

every year. It's going to appreciate much more every year. When the rents go up next year, instead of coming out of pocket or 2,000 out of pocket, it's going to be 300 less than that or more because the rents are going to go up. So even though he's not technically living for free, his overall wealth building is going to be way better buying in a more expensive market. So that's what I, Denver is one of those markets. You're going to be spending a ton to live somewhere. If you just take out a big chunk of your housing expense, that's a huge win. and instead of looking at what can I get versus what's the ideal perfect scenario, I like to look at what can I get versus what if I do nothing.

If it's better to take action, then go do it. If it's cheaper than you're paying right now, then go do it. And then 10 years later, it's going to look really, really good that you made that move as well as hopefully you do it every year. Absolutely. Okay. And then one other thing. So I was talking to one of my buddies, he's actually gotten a couple of these home runs

that you guys were talking about. And so I guess I was basing like my success on his, which obviously I shouldn't be doing. So his thing that he pointed out to me was having like a couple different exit strategies. So one of the big ones is he was like, you know, if you have like a four or five bedroom house, it's nice to have it in an area or set up to where you could sell it to a family because it gives you that opportunity for that exit strategy. Should I be focused on that exit strategy as much or should I be like, you know what? I feel like I can rent this house out for the next 10 or 15 years and feel comfortable. with that.

What do you think, Brandon? Well, I mean, the whole, we talk a lot about exit strategies, right? You should have a multiple exit strategy. But if you're exit strategy, simply, I'm going to hold it and I'm good for as long as I need to. I always look at that as good enough. Like, I'm like, as long as I'm good holding it forever, I don't have to think like 10 years down the road.

I mean, we don't know what life's going to be like down then. As long as it cash flow is now, that's an exit strategy. I'm, it's like I stop right there. What do you think? I like to look at, I heard an NFL coach one time who had, I don't remember who the quarterback was, but it was a pretty good quarterback, but it wasn't an awesome quarterback and they said, are you going to draft a quarterback? And he's like, I don't know. I have to wait and see what other quarterbacks are out there. If we find one we think is better

than what we got, yes, if we don't, no. It's not a hard and fast. This is my plan. I'm going to go do it. And that's kind of how life works. You may hold, hold, hold. And at a certain point, you realize, man, my rents have not kept up with my appreciation. There's a lot of equity here. Or I got a chance to go sell this house and turn it into three more and they're all going to appreciate. And in which case we would say to sell. So I try to always look at it like a dynamic, constantly evolving thing where you're looking at all your options and you're asking yourself, how do I efficiently deploy my capital? The awesome thing with real estate is if nothing ever comes up and you just hold it forever, you're going to win. It's just, am I going to win or am I going to win even bigger?

And that's the way that I would advise you to go about looking at. Okay. Awesome. Awesome. I really appreciate it, guys. Yeah. Awesome. Thank you. And by the way, how often do you get called like Jason Bourne instead of just Justin Bored? It honestly happens. It honestly happens. happens at least once a week. And it's usually doctors or Dennis. That's funny. Awesome, man. Well, thank you for joining us. And let's bring in, I think, Jay Hill. All right, Jay, are you there? Do you hear me? Yeah, I'm a longtime listener and a first time caller. Matter of fact, you guys have traveled with me across the road many times. My son had been telling me to listen to you.

And I was like, oh, no, I don't want to, blah, blah, blah, whatever. But anyway, I got hooked. All right, good. teach my life. Well, good. Well, thank you. So now I am looking at tax sales and want to know what your thoughts are about those kinds of deals. Sure.

Tax sales. Yeah, tax sales. So I'll start real quick with, I'm not an expert. I've never bought a tax sale before. However, I know some people are really, really good at it. So it's one of those things that I know makes money. I know people are good at it. But you've got to really know what you're doing.

I actually went to a tax sale one time. And this person there, it was like an old grandman. And a young family, like older guy, young family, two kids, maybe 20s. And grandpa was there to buy their grandkids at their house. So they bid on it. They were bidding in. And they got this house at a tax like auction. And then afterwards, you know, they celebrated and they left.

So afterwards, they got a good deal on it. I can remember what it was. 30 grand maybe or something like that. So I went and drove by the property. The house didn't exist anymore. It was tore down. And they didn't know that information when they went there. So grandpa bought their kids a lot and where he thought he bought them an actual house.

So like, like, those are like that I would not just like show up at one just do it. But that's what I know from tax sales is about like that. David, anything you want to it? It's very similar to people that ask me about, hey, how do I buy a foreclosure? Well, if you're trying to buy an REO property, it's just like buying anything else. It's probably on the MLS and the agent's going to be marketing it. If you're trying to buy a true foreclosure, you're saying, I want to go to the courthouse steps and buy a property with cash, which is no title insurance and no home inspection and no contingencies. And I have no idea what I'm actually buying. And so you don't want to go anywhere near that unless you're very, very experienced. Like our buddy Aaron and Muchis Stagie,

he hosts the Real Estate Rockstar's podcast. He does this, but it's all he does. He just goes to auctions. He knows inside it out what he's doing. I'd feel comfortable if Aaron was telling me which one to buy, but a regular person, it sounds on the outside like this is a good way to get a deal, but you're walking into something with like no protection at all. You don't want to, you know, what's a good analogy for that? Like you're drinking out of like a pond water or something. There's no way to know what kind of bacteria you could be ingesting if you don't know what's in there. So I would avoid the tax sales until I had been around that world for a long time. And I knew inside and out, like, if I could describe to someone else, here's all the things

that go wrong, here's all the ways I prevent it. Here's all the people I've talked to that have done this and have told me what to look out for. And you sit, like, you could write a book on tax sales. At that point, I'd be comfortable to go in there and do it. But anything short of that, I would avoid those. So right now, the one that I'm looking at is like literally, it's a duplex that, it's maybe four houses away from my house. And the tenant in there now says she has not paid rent in over two years, I believe.

And she believes that the owner has passed away. So I investigated it and I found that it was on the tax sale, the sheriff's cell list. So even with that kind of background, you think that may be a bad idea? I don't think it's a bad idea. Just more like you just know that there are going to be a complications there. And so I would find somebody who's really good at this stuff and just keep asking, keep asking. Just don't assume it's going to be easy. Assume it's going to be hard.

And then and go out it with that. I think it can be a great way to get deals. Just you have to like really know what you're doing to get in there. I actually bought one about a year and a half ago, but I didn't know it was a tax sale. I bought it from a person who bought it at a tax sale. And then they in turn sold it to me. and I thought it was it's a duplex and I thought it I mean it was in great condition even though I had to go in and put money into it but I realized that I paid substantially more than what they paid at the sheriff's sale yeah and that's because they took risk they were buying something that they weren't they didn't get a lot of the insurance that you got you got a regular contract you had contingencies that you could back out you could take your time they kind of had to go in there and just shoot really quick from the hip and they had to have resources and at their disposal that they could use to make sure that they didn't get burned.

Great. Thank you. Thank you. All right, before we move on, I need to go and fix my screen real quick. Hold on one second, guys. Kevin, do you want to bring someone in while he's doing that, and I'll talk to him? Hi, I'm a first-time caller, long-time listener. I appreciate being called on the show. I am brand new.

I've been in the learning mode. So I'm interested in finding a four-plex. I'm living in one unit. So I don't really see those. I haven't met with a realtor. I don't have access to the MLS. And I'm trying to figure out how do I get into the game doing real estate investing. Yeah, that's a great question.

Dave, you want to start? Yeah, the first thing you're going to do is probably go on bigger pockets, go to network, and then click on real estate agents. And it's going to bring up a list of all the people who have a company profile on bigger pockets that are agents, where you have a much higher likelihood that they work with investors. So that's going to help. I actually did that yesterday because Brandon mentioned it on the webinar. So I sent out a few messages, but no one has responded yet.

So I am going to go back to see if people responded. I didn't sign anyone in Florida. A lot of the companies were Atlanta-based. I don't know if they're actually here. So being patient because it's the first. first one I'm going to do and I don't want to rush. Sure. So when you find that agent, they're going to have you get pre-approved with the lender.

And then that's going to tell you if you're able to get a loan, how much you can get the loan for questions kind of like if I, how much can I get for a fourplex versus a threeplex versus duplex versus a single family home? Once you've got that, you know what price range you're in. You and your realtor can both get on the market and start looking for stuff. Your realtor can go directly on the MLS and send you a list of homes. you can look at that. You can also look at Zillow, Realtor, Redfin, all those kind of websites,

and you can start hunting down fourplexes. And then when you find them, you send them over to the realtor and ask the questions you have about what you want to go see. How do I know if I'm looking at a fourplex or a triplex if I'm on Zillow? Yeah, it'll usually tell you right in the description. It'll say this is a four unit property or a three unit property. It'll tell you in the description almost all the time. But also, once you get a real estate agent, like you don't have to even worry about

anymore. Your agent will be able to do that for you. They'll be able to send you here. And honestly, if you're looking for a fourplex, don't not look at a triplex. Don't not look at a duplex. It could be great deals too. Like small multi in general. So I would, if I were in your shoes, I just tell your agent, find an agent in that town, tell them you're looking for any small multifamily properties. And then, yeah, go that route and make it work. Okay. I'm going to continue listening to you every week because you're opening the faucet for me in learning the market. So I really appreciate it.

All right. Well, thank you. Good to meet you. Yeah, nice to meet you. All right. Next, I'm going to bring in Garrett. Garrett, welcome to the show, man. How are you doing?

Good. How are you? I'm good. I'm good. Where are you calling from? Calling from Connecticut. So I just want to say a huge fan of the show. And thank you guys both for taking the time out of your day to do this with us.

That's pretty cool. Yeah, very cool. Thank you. So what can we answer for you today or discuss? So I have a normal job that I'm a little bit of my, background. Just did the house hack from you guys. Didn't know much about real estate, listened for a while, ended up buying a duplex. So I'm living here for free, essentially. And then we have another duplex, our triplex actually, that was supposed to close yesterday, but a little delay in that, just the whole

pandemic. But, you know, we'll be living there for free, making money on this place about $500 in cash flow after everything. I think a lot of people would be curious if you guys can talk quickly on what your outtake or view on the current market is. I know things are at a pretty high point and we struggle a little bit with finding, quote-unquote, a good deal. So where do you guys see the next year, two years, three years, and kind of an outcast financially for the whole real estate market? I feel like we're at a pretty high point, but is it going to go up, down? Do you guys get some sight onto that?

Yeah, sure. Let me get my crystal ball, real quick. I'm just kidding. There you go. Yeah, obviously we don't know, right? We don't know. But that's it. If I had to take a guess where we're headed,

I think that we're going to see a decline a little bit, 10, 20 percent. I don't think it's going to be like 0708 if I had to guess. I think we might see a little bit of a decline. But there's still a lot of people wanting to buy houses. And that's not in every market. I think David's market's going to continue doing really well because he's in California and tech still doing well. So I think it's market dependent, of course.

But I think we're to say a slight decline. But I think that's just going to create more opportunity. And if we don't see one, then it's okay because I'm just going to keep buying any way right now. It just means we have to get better. We just can't rely on the easy deals. We've got to get better. But David, what do you think?

I think this can be very confusing to measure that because when all things are equal. If prices go up, we're in a good market, and if prices go down, you're in a bad market, it's very easy to tell. I think that with the amount of money that the Fed is creating, prices could stay the same, and that would be the same as a bad market because money's being worth less, and prices could go up, and that can make you think we're in a great economy, but it might actually be the equivalent of a recession. It's very difficult to tell if you're just watching prices themselves. And I was having a talk with someone about how confusing it's going to be to tell, are we in a good market or a bad market? Because the value of money is so different than what it was.

I have a fourplex I bought in Manteca, California in 2013. And when I bought it, 2013 wasn't a bad market. It was kind of just starting to take off again after the recession. It was really hot. When I bought it, rents for $700 a unit. And I just put one on at $1,600 a unit. In seven years, it's more than doubled, right? And that's for every single unit. So when I bought it, it looked like a pretty solid deal. And now it looks like an absolute grand slam. But is that really as good as it's looked, right? Rents have doubled. Does that mean I'm a great investor or is money just worth less?

And we kind of throw it around a lot more. I remember as a kid when we were talking about building wealth, we'd say things like, oh, they're making six figures. They're crushing it. Yeah, that was a huge deal. Six figures was a big thing, right? And I read an article that said, back when I was a kid, six figures met you, your family had two nice cars. You took several vacations a year and you lived in a really nice neighborhood. Now, I mean, every market's different, okay, but where I live, six figures is like, you're comfortable. That's it. You're not rolling in the dough. You're not just like throwing money around. And that's due to inflation. So I like to look at things like how much money do I make per month and then how many months of savings would it take to get

a down payment on a median house in my area? And that way, whatever money I'm making is tied to the price of real estate in my own head so I can get a feel for how much money's really worth because it doesn't have the same inherent value as it did a year ago or two years ago. So I know that doesn't answer your question of whether we're going up or down. I probably made the crystal ball even cloudier. So what I would say is if you don't know, you just make sure that you buy deals that cash flow so that it doesn't matter if they go up or down. And you continue to put yourself in a position of strength from your own personal financial position where you're living beneath your means you have plenty of money set aside. So if it gets bad, you're okay. You'll go buy more.

And if it gets good, you'll have capital to go redeploy. One big thing that we learned in the last couple months. And thank you guys both for the insight was I think we wanted to expand at, we'll say probably a quicker pace than we should have. And throughout the last three or four months, we realized that how important and critical that reserve pile is for things like this and situations like this. So that was a very humbling experience for us to don't forward. That's your point, man. Yeah, this is why we need reserves. for times like this. And if you have,

we all got that gut check when the pandemic first game and no one knew what was going to happen, right? People that had reserves were like, who, I'm glad they're there. And people that didn't were not feeling very good. And I'm the new one, the naive one, right? The innocent one where I thought we could expand

at a very rapid pace. And after all this, it's time to slow down a little bit. And I think some great deals will be around the corner. But in our market here, things are flying like crazy right now, not lasting on the MLS and things like that. So there you go.

I think that's a key. case in a lot of markets where the economies weren't as affected by the shutdown. If the jobs where you live, people kept working, then you're seeing a really hot economy. If you live in a place where they were affected, then you're definitely noticing a slowdown. Like, Brandon gave good advice. It's market by market in your economy space. Thanks, Garrett. Really good question. Thank you. Thank you. Thank you. All right. Next guest, let's bring in Michael. Michael, are you there? Yeah. Welcome to the show. Where are you calling from? I'm in Chesapeake, Virginia, kind of southeast Virginia by Virginia Beach. Okay. Very cool. And you got a good book behind you for

was watching the YouTube version of this. You can see a... While you were waiting to come on, did you put that front and center just so you're a smart guy. I sure did. All right. So I've been an agent for like six years

and part-time investor starting this year. I bought four houses in the last three months. And I think three of those would be really good bird deals. But my concern, not really concerned, but kind of the unknown for me is, have you guys ever had an issue where the tenant in the house

made the appraisal not as good it could have been because the way they care for the house. Yes. All right. So this is something when we were talking in burr investing that I don't think people think about enough. Like if you're going to buy a property, fix it up and rehab it and then rent it out, then it's after it gets rented that your tenants, they're living there.

So if they make the property look like crap, your appraisal could come in really low. So yes, I've not had anybody really destroy my appraisal yet, but it could easily happen if your tenants make a property look bad. Like as much as we all like to think appraisers are like doing a good job. and telling you the actual value of the property. It's a complete lie, right? They could be off by like 10% in either direction. Yes.

Based on how they feel that day or what they ate for breakfast or what the tenant. I've seen, I've seen three guys go out in the same month on the same house and come back about 10% off. Yeah, it's insane. It's just an opinion, which is why I don't put a lot of, you know, so I guess that said, I would always want to, and I, I'm just going to add this in my, like, checklist of things to do is before getting the refinance for the burr, make sure I inspect that property. make sure it looks really, really nice.

And if not, offer to pay for cleaning for whatever I got to do. And you can let the tenant know, look, I need this thing to appraise high. I need you to help me out here. What's going to cost? And I would be willing to pay the tenant to do whatever they need to do to get that going. But yeah, that's definitely a concern. David, anything on that? Yeah.

I hate to be the bear of bad news because no one's going to like hearing this, but I just got to shoot straight with you. This comes up all the time when I'm a realtor. I negotiate houses really high and then they appraised lower. And so I've had to do some soul searching about appraisals in general. Guys, here's the honest-to-gat truth. Appraisals are there to give you a false sense of confidence about what something is, quote, unquote, worth.

Okay. The reason you get three different answers from three different appraisers is that it's a fallacy that they can give you a true indication of value. They're giving you an opinion based on several different things, and that's all that it really is. The reality is a house is worth what somebody will pay for it. People that are buying a house tend to look at what other people sold for their house and say, well, if my neighbor sold this, then I'll pay that, largely an ego thing.

But that's just how the human brain works. It wants some form of, like, context, like, where do I fit in this whole scheme? And that's why we use comparable sales. How those are interpreted, it's completely up to the person. Three appraisers will give you three different answers. The best thing you can do is let go of this dream that you can get a number from an appraiser that will tell you what your house is worth, because it doesn't exist, okay? It's an opinion. Now, that being said, when you understand how it works, you can make it work. your own advantage. So I have a story. It's funny that someone was saying when you're in deep crap. I think you said that, Brandon, because this story involves a lot of crap. I had a listing,

and we sold it for a really high price, and the appraiser came in, it came in low, and I finally got him on the phone, and I'm like, how did you not look at these three comparables? And he was actually irritated. The guy was, like, angry, and he had stepped in a pile of dog crap doing the appraisal in the backyard and was so pissed about it that he was, like, visibly telling me, Like, you didn't, your client didn't even bother picking up the dog crap in his backyard. Like, his house isn't worth as much as that one down the street. And I'm like, what does that have to do with anything that the neighbor's house didn't have a messy yard in my did?

It's worth less. But that's where he came up with those numbers. And so, 100% yes, the condition the house is in will affect the human being that is looking at those numbers. It will affect the perspective they have when they're looking at them. And it will have a real world impact on your deal. All right. So pre-inspected an offer to pay for a cleaning for the tenant.

And we make some cookies. That's exactly right. There's a bigger principle in this. One of the things I tell people, like, when you get an offer, let's say I'm going to send an offer for one of my clients. And I can either write the offer for $500,000 with $20,000 in closing costs or $480,000. It is the exact same thing to the seller. When they open that offer, the first thing every listing agent goes to is they zoom in on

the price and they say, what are you offering for the house? And if you see 480, it feels like a punch in the gut, and everything you see after that is going through this filter of, I'm pissed. This sucks. I don't like it. And when you go talk to your client, that gets conveyed with how you describe that offer. When you see 500 and you go, ooh, it's full ask. And then later on, you see $20,000 in closing cost credit.

She's like, that's not great. But hey, this is a great offer. And then that gets conveyed to the client. So I take advantage of that aspect of human nature that I just accept rather than getting angry about it. And I write my offers in a way that will look really good to the agent who gets it. Give them a really good filter to view the rest of it from. And then call them on the phone and give a really good impression, right? If you just understand that's how human beings work, it makes your job easier when it comes to investing.

Right. Awesome. Thank you, Michael. Thanks, dudes. Yeah, thank you for jumping in today. And we're going to move on and bring in this time. We're going to try Jenna. How's it going, guys?

Hey, Jenna. Hey, guys. You know, it's all right. I'm 35 now, so I feel old. But other than that, we're good. You look great. Thank you. Thank you.

What are you with today? Okay, here's my question. We have been investors for quite a while and we're buying our first, we're under contract on our first 16-un apartment complex. I'm really big on like, you know, passive income, long-term holds. I want to keep them forever. My husband has the same perspective, but his idea with this building is to raise rents, you know, hold it for a couple years, do some capital improvements and sell it in a couple

years. So I'm just wondering, you know, what do you guys think? Ooh, great question. For me, it's going to come down to the good thing is you can change at any point, right? Like, you could change next week. You could change, you know, like, whatever. So that's the good thing is like real estate gives you that ability. If you get a long-term mortgage, you can at any point, you're like, I've had it. We both have her, you know, like, had enough. That said, like, I think it comes a lot down to a return on an equity question. I know, David, you were probably going to go here. Is like, if you hold something forever, you typically start building up massive amounts of equity,

but your cash flow is not growing at the same rate your equity is, which means you're getting a lower return on what you could do, right? So I would just analyze that every single year and just be like, hey, what, like, am I getting the best? Can I sell this, make 400 grand, put that money into something that makes a higher return and double my cash flow? Because now you're shooting both of your guys's needs. You're getting the, you care about the passive income and cash flow,

and he cares more about like getting in getting it fixed up and moving on. The most amount of wealth you're likely going to make on a property or a big chunk of it, is in that first year when you buy a property undervalue and somehow bring it up to a new value. So I like to be able to redo that ever so often. So I just keep jumping. Like instead of like growing wealth this way, you grow by stair stepping. Y'all heard to hear first.

We're making a new thing. It's called the stair step method. And you you stare step it up. I think they admit that in the 80s actually. They might have. No. Okay. So on that, then what would you, you know, if you're analyzing it every year at first up front,

do you, how do you decide? okay, I'm going to do this or that in terms of capital improvements, but maybe not that, because we might not keep it. How would you go about making those decisions? Good question. David, you want to start with that? You're asking, how do we decide which capital improvements to make if we don't know if we're going to keep it or sell it? Yeah, yeah, yeah.

Because you don't want to put money into it and then you're going to sell it. Right. Or some, but maybe not as much as you would. Yes. You probably put, if you don't know if you're going to sell it or not, the only improvements you make would be the kind that would affect the same. price, so mostly cosmetic stuff. You're going to get a little bit more rent and you are going to get more sale.

Once you know I'm going to keep this thing for a long time, that's when I put more money into the roof and maybe upgrading the electrical, the foundation, some of the stuff that makes it a better investment for you, but isn't going to translate as well into the open market. Cool. Spot on. Very cool. Well, Jenna, thank you for joining us today. Next, we're going to bring in...

I'll have a little bit of a little bit of Justin Taylor. Justin, you've been here a little while. Justin, welcome to the podcast. How you doing, man? Where are you calling from? Jonesboro, Arkansas. I've been in Louisiana, my entire life.

I actually moved up here. It's crazy. I moved up here, and I met a wholesaler, and we started a wholesaling company back in August and picked up about 20 flips and wholesale 15 deals, but it's crazy because back in May,

I was graduating with a pre-med degree, but I don't know. Wait, see what? A year ago, you were pre-med, graduating pre-med, then you just decided to start a wholesale company. You've done how many deals since then? We've had 20 flips and 15 wholesale deals since then 20 flips and 15 wholesale deals in the first year

And I've picked up one flip personally in a duplex actually house act in it So it's a and honestly it's that's kind of the whole that's kind of the main reason I was hoping I could speak today Because one of the things that like I got into this was I don't think I've missed a single one of your podcast And I've read probably every book y'all had out there and and it's cool because like there's such an overload of information y'all provide but at the same time it's like I've got that analysis paralysis and it's like where do I begin and the thing I really wanted to speak on was like man the change that got me into it was when I really started focusing internally like what like I feel like your mindset like is what's really going to change you and get you into it because like a lot of that up people get scared and they get

overloaded and it's like man just just learn 70% of it and learn the rest on the way like just stuff like that and I know you you actually spoke on a podcast like that you had mentioned you said man this podcast is going to be a little different i'm not going to speak on real estate we're going to focus a little more mindset i don't remember which one that was but i think that's that's my biggest advice is just from what i've learned is like that mindset like where are you mentally yeah yeah it is so much of a mental game i have a performance coach that he tells me all the time like you're going to expand to the level of which your like mine can allow the expansion you know like if you're if you're mentally there like you'll you'll do it you don't have to know

everything 100 like you said learn as much as you can and then at some point just jump in man man Is that like the best that, like, for those people who are in your shoes a year ago, saying, I'm just starting this thing. Like, what's the, what's like any other final advice? I mean, you'd get people for, you know, getting their first year just launching like you did. And I, uh, I actually wrote down a quote right here. It was like, said, uh, systems help ordinary people achieve greatness. And I think what's so important about that is like your daily routine and your mornings and

your systems throughout the day, for instance, I get up, I get up at 4.30. I go to the gym and I read for about 45 minutes and I start my day by. about 8 o'clock. And it's like, it's a, I mean, you don't have to get up at 4.30. That's just what works for me. And to me, it's just that little bit you put in every day. Like, it's going to be crazy where that leads you to. Like, I was about the last year in my life, I've stuck pretty disciplined of that.

And the guy I'm with made me CEO of his company, and he's running that CEO position. And I don't know. I just feel blessed. And it's cool because a lot of that is started with what I was listening to all your podcast. And I don't know. It's just awesome. That's awesome, man.

Well, thank you for sharing that. Very, very cool. And then I want to point out to everybody else, if you just heard him say that and you realize he's probably making more money than a doctor would be without all the student debt, without the eight years of time yesterday away. In the new book I'm writing for Bigger Pockets, I actually point out this. Most people in America would say, heck yeah, I'd be a doctor if you gave me the shot.

But real estate investors, real estate agents, and real estate people can make much more money than doctors without the lifestyle. The reason is his mindset allows Justin to do that. the thing that none of us want to do. Wholesalers are out there, boots on the ground, facing rejection, getting told no, creatively trying to solve problems, having upset people yell at them in order to find that golden nugget that everybody wants. And that's why they do so good. So what he's saying is absolutely right. The reason Justin can excel and succeed in that world is he has a mindset that allows him to do whatever has to be done. So before people get upset

and say, well, why are wholesale making so much money? Because they're doing what you won't. They're calling the angry people. They're cold calling. They're knocking on doors. They're spending money up front to get leads coming in. They're doing it for six to nine months at a time before they get that opportunity. And if you too get your mindset to the point that you're willing to do whatever it takes, you can have the same success a guy like Justin has.

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shorter period of time. So if you guys got to question, those people who are here right now, if you got a question ready, we'll bring you in, we'll talk about it, but we're going to attempt to get more people fit into the next time. So let's go next. Let's go Justin. I'm going to bring Justin in with the white hat. Justin, welcome to the show.

Yeah. How you doing, man? Hey, good to see you guys. Longtime listener. First time caller. Great. Reading the good books, all that good stuff. Everyone's reading Burr. Everybody keeps talking about Burr. All in on Burr. Hey man, I've got a quick question. My lease, I rent right now currently, and my lease goes up at the end of the year, like in December. And my goal is when my current lease goes up, I either want to house hack with like an FHA loan for a duplex or try or quad or be set on a house to Byrne. My question is, I don't have a ton saved up. I've got like, well, by the end of the year,

you probably have about 15,000 set aside on a savings account. And then I actually had the coronavirus. I'm totally fine, totally good. But that actually allows me to pull out everything from my retirement with no penalty right now if I want to do that. I've got about, well, by the of the year I should have about 15,000 in there. So question one is, should I pull that money out of retirement? And two, any suggestion if I should go house hack or burn? Mm. All right.

So pulling out of retirement, like whether you tax free or your penalty for or not is always a tough, a tough thing. I generally lean toward, I'm okay pulling money out of retirement, but I would prefer not to do it on the first deal. I would rather find a way to do it with the first deal without if possible Because you want to make sure that money you're like because people don't always make a lot of money in their first deal So it kind of stuff now if it's your only way I would still say that's better than not doing anything at all That said like I like retirement accounts because they kind of serve as a

A backup plan sort of speak right like it's there no matter what So that's my my opinion is is I would try to do the first deal without pulling the retirement account Try to find another way to do it again like finding a house hack where you can can put three and a half percent down and not do the pull that money would value my ideal. And yeah, I think I would aim for a house hack before Burr. What do you think, David? Yes, house tag before Burr, simply because it's going to be less risky. And without us having enough time to kind of dive into this during the lightning round,

we'd be really hesitant to tell you to pull money out of retirement, which your first couple deals or first deals often like a loss you're learning. You don't want to use your retirement for your education and real estate. So find some other way to raise that money and see if there's even, and like, you know, government grants that you can use to buy a house act, that'd be much better to get your feet wet with. And once you have a reasonable level of security, then we can say using your time. Okay. Awesome. Thank you, Justin. All right, William Hood. Welcome to the Bigger Pockets podcast. Welcome.

All right. So I'm actually from the same place that Henry Washington's from. He was on your podcast. Talks me long ago. Yeah, he's awesome. I'm 22 years old. Where was that? Remind me. Where's Henriette. Northwest Arkansas. Okay, that's right. That's right. Yeah. I'm 22 years old, and the biggest issue of starting off in real estate was having banks take you serious. So me and my wife, we got married in December. We started an LLC in February, dose straight in, closing on our first deal this month, actually, and got it for 80,000. Praise, you know, probably appraisal come in around 150, 1445. My question is, how can I, after we get this deal done and it goes exactly as planned, I can use that first house the best way to leverage to two more deals.

Are you going to live in the house? Is that for you like primary? No, I'm in my primary house right now. We have we own another house. Yeah. David, you want to start with that? Yeah, I think I was going the same way as Brandon. If you're living in it, you could have taken out of helock on it, got access since you got so much equity and roll that over into that next one.

Do you have enough equity in your primary to do a helock? I think I have $25,000, so probably not. Probably not a ton there. I would probably look at just buying another house hack to get from your primary into something else, which now gives you the ability to cut down your expenses on where you are right now. If you can get another deal like the one you just bound, get into it, and access the equity through a home equity line of credit. That would be an easy way.

The other one would just be you'd have to leverage it a lot more, pull more money out than you put in, like the Burr method. So if you could go get a loan on it for 120 or something like that, you'd probably walk away with $30 to $40,000 to $40,000, which you could use on the next property. Just have to make sure it cash flows if you do that. Yeah, I was going to say basically that same thing is you could just go and, like, if you can get the thing to price for $150 and you can go get 75% loan-to-value loan on it.

You probably even get 80% from a local bank there. Yeah. Like you can pull out $120,000, pay off to $80. Now you've got $40K and just go and use that split in half. You got $20K for two different properties, buy them for $100,000 each, 20% down, there's your two deals. Of course, you got to get the bank to be able to prove it. You got to have the right loan to value, but that's probably the route I would take.

Gotcha. All right. Well, that was my question. Congrats. And you may have a hard time getting banks to take you serious at 22, but they'll always take that debt-to-income ratio serious. So keep living fiscally responsible and you'll be able to keep getting financing. Oh, yeah.

Thanks, guys. Thank you, William. All right. We're going to go next to Jeremy Dubois. Dubois, I don't know, a guy with a better beer than me. Welcome, welcome to the show. Hey, thanks for having me, guys. So my question is actually a little bit different. First of all, I just want to say thank you to you guys for changing my life. I'm now officially financially free. I get to work because I love it and change people's lives. So it's really,

really cool. And that's literally because of two years ago, I started to listen to a podcast. And that happened to be you guys. So congrats. on that or changing many people's lives. The question that I have is not directly real estate related because I'm kind of already at that point. So I'm into a phase now in life where I want to kind of better myself and just be a better human and be more well-rounded. But what podcast do you guys listen to or what do you read as far as living a more well-rounded boy? Brandon's going to give you his life an airplug. Go ahead, Brandon. I hadn't actually thought of that until you said it,

but I do love the book Life and Air. It's like Millionaire, but with the word life. Yep. I listen to, like, for example, Brendan Bouchard has a podcast. He had several different ones over the years. I can't remember what the newest ones called, but it's basically, I think it's called The Brendan Show. So Brendan Breschard is kind of a personal development guru,

kind of like Tony Robbins. So I listen to Brendan a fair amount. The book called The Wealthy Gardner, which is pretty fantastic. MJ DeMarco's Unscripted is really, really good. Yeah, really like there's like those different areas of your life, right? There's like there's like, I think I called it once like the five Fs. It's like your, your family, your finances, your fitness, your faith and you're something else I'm missing in there. So I try to just like always be looking at like the biggest thing for me is it always be like trying to figure out, am I level across all of them?

And like this is one thing to book, the one thing talks a lot about it. Sometimes you go out of whack in one of them, but you just can't let them go out of whack for too long. So I'm just always trying to think like where do I need help? Like right now I have a company I, I've been doing for like. like a year and a half now called My Body Tudor because I felt like I needed to lose some weight. So I focused on that pretty intently. And then it's like I want to build a real estate business stuff. So I focused on a lot of like the bigger real estate stuff.

So that's what I kind of focus on. What about you, David? I got two things. There's a podcast called The Essential 11 by my buddy Matt Bodro. He's involved in the Acton Academy education system that I probably can't describe that here. But it basically is trying to teach kids entrepreneurial skills that will help them succeed in today's environment as opposed to just the, you know, sit in the same chair. raise your hand, answer a question that was designed to help you succeed in the industrial revolution type of an environment. He does a really good podcast where he interviews different people

and asks some questions about how you became a successful entrepreneur and a lot of it has to do with personal development. So that's one thing that I really like. And then I've embraced a philosophy that I've coined myself called the barrel of monkeys. And do you remember those toys with those little red monkeys where they can eat their arms together? I know. So what I'm trying to do in my life is I always have people that are ahead of me where I'm trying to go and I'm looking up to them and that helps me me. No matter how successful I am, I'm seeing people more successful than me. And I'm watching how they do what they do.

And I'm taking pieces of advice and I come underneath their mentorship. And when they give me constructive criticism or even non-constructive criticism, I take it. And then I also make sure there's people beneath me, so to speak, that I'm mentoring to them. I'm helping give them a hand up. And as long as I've got one hand up and one hand down, I never get a big ego because I'm only dealing with people beneath me. And I never get too self-centered to where I'm always taking from other people. I'm taking what I learn and I become a conduit that passes that down to other people. And then you always like, if you think about a pipe that is, it can't generate heat

on its own. But if it's full of hot water all the time, it gets to enjoy the benefit of hot water as the heat transfers to the pipe. So I look at all the things I want in life, whether you call that love, wisdom, success, friendship. And I make sure that I'm a conduit of that for other people. So like Brandon and I are in a group called Go Abundance. Well, a lot of people don't have access to a group like that. So I take those philosophies and I pass them through things like this to people who wouldn't have it. And then I get to experience their joy, their excitement, their success, all the stuff

that I did before. And at the same time, I get access to people that are doing things that I wouldn't have even thought to do. I love, love that answer. Again, it's a David Green analogy. What a surprise. It is. Surprise, surprise.

Thank you guys so much. Well, Jeremy, thank you for joining us today. we're going to bring in next see levan what's up chris good see you guys brandon david thank you so much you too another guy with an epic another epic beard i love it oh yeah i've been working on this for four months then just full-time time working for a little bit now there yeah how can we help you weird scenario i bought uh my first rental property three years ago and one of the objectives was to remove pMI because i bought it conventionally 30 or 15 percent down turns out it appraised 50 000 more than and I thought it would, which was great.

So I saved 30 bucks a month removing PMI. Now I'm in a new quandary, and I'm trying to figure out which would be the most valuable way to refi this thing and pull some of that equity out. And my options, I think, obviously, I could sell it, which I'm not trying to do

because I'm a buy-in-hold investor. I could take a HELOC somehow off the top, which might be a little bit tough because the percentage isn't quite there. And then I could also refinance it in my name again, or refinance it into my commercial LLC bank. So between the last two, refi and my name, cash out refi or a commercial, which would you pick between those two?

So you got some equity in a rental property. You want to pull out some of the equity. So the avenue is what's the best refinance method? There's one you didn't mention that I would definitely look into is you can do a he lock as a first mortgage and just pay off the entire mortgage with all a he lock. So that's something to look into. It's something I've not personally done,

but I know a number of investors who have and have some success. It's typically a small local community bank that will do that. But the benefit is you can go up to 90% of the loan to value with no PMI requires and no closing costs as well. And so that I would now the downside is you may have a adjustable rate mortgage, but usually they cap that like 11% or 12% and they can only go up so much anyway. And so it might not be actually a bad thing to look into that. So I would at least look into that.

And if not, I'd go to the security of a brand new 30 year, 70% you know, LTV refinance, like 70 to 80% you know, LTV refinance and tried to just completely redo the whole loan. But David, what do you think? You always want to look at the cheapest loan you can get first and see if you can, which a HELOC is almost always your cheapest option. Then it would be like a rate in term or a cash out refi over an amortized period of time, like a 30 year fixed rate. And then if that doesn't work an adjustable rate mortgage, and if that doesn't work a portfolio loan, if that doesn't work a commercial loan. So I don't know enough of the specifics of your deal to tell you which one to do, but you should start with

that progression, exactly where Brandon said, and that if you get all the way to the end and the only one you can do is a commercial loan, that's kind of where I am with a lot of my deals, then you just find a way to make that work. But you start with the most efficient, cheap loan you can possibly get and use all those up before you get into the commercial stuff. Okay, cool. I like that approach. I was thinking portfolio, maybe stacking them off. That would be the long-term goal. I don't want to kill my cash flow either. So I appreciate the help. And thank you guys. I've been a long time lurker, listener, and looking forward to the next BP con. I got to see you guys up in Nashville.

Yeah. I really want to do that again. I know. I was really bummed out that they had to postpone this year because of COVID, but we'll make it happen, man. And we'll hang out in person again. Well, thank you, Chris. Appreciate it. Appreciate it.

All right, let's bring in Johnny. All right, Johnny, welcome. Hey, thanks for having me. I'm so excited to be here. Yeah. Where are you at? I am in the western suburbs of Chicago. Okay.

All right. So out there in the Midwest. I'm a Midwestern myself. Midwesterner, what we call that? We'll call it that. Yeah. So what can we help you with? So, I mean, I am a casualty of this whole COVID thing. I lost my job with everything going on. So if you were going to start a ground zero and you had like, let's say 20 grand to invest and wanted to take more of a real estate path, what would you take? And to give you a little background there, I started investing last year. So we own two properties and five doors. So we've got some cash flow coming in from those.

Okay. So you currently don't have a job right now, Johnny, right? because you just lost it, right? No job right now, just using the time to improve the current rental properties that we have and actually, like, renovating our entire house. Just finished with the basement and moving my way up. Yeah, okay. So, you know, there's a couple options here.

I'll throw at you. Number one, it's just kind of based on your personality and what you're interested in. Number one, if you've got some savings right now, the 20 grand is enough to live for a while, probably, if you had to, where I would pursue, because it's going to be hard to get a loan without a job. It's going to be hard to do full-time real estate. So I would either A, find a partner. I tell the story a lot on the podcast about Greg, my partner in Maui, who we flip houses together.

I put the money in. He does the money in. He does hustles like crazy and he's really good at it. You've got experience, which is great. You could probably find people with money to fund your deals, whether you do some flips and then start buying some rentals with the proceeds. And you could start, because you have to have income coming in somehow, right? You can't just live off cash flow right now because you don't have enough cash flow coming in

to live off forever. It's going to take a number of properties to get there. So how you can get money, either option A, start flipping houses with a partner funding your deal. That way you have the security of not having to, because they got the money and the ability to get the mortgages and all that. If you couldn't sell a property, if the market crashes,

you could refinance it because you have this partner who you get a mortgage. And then I would just start flipping houses for money and then using that as my job, so to speak, to be able to get back into normal life and you never have to have a job again. And the alternative is go get yourself a new job as fast, like as quickly as you can and just keep doing what you're already doing with buying rentals, saving money.

but man, right now I think it would be an interesting time to try to find that partner and flip houses to if it, yeah, it's money. I love that you said that as an option. I'm actually closing on a house next week that I partner with somebody on. Nice. You know, we have an option to either flip it or keep it as a rental. And then I have another house that I'm under contract for from a partner that I met for bigger pockets at the end of August. That's awesome.

Yeah, congratulations. Yeah, so you're already on that point. I think you're doing exactly what you should be doing there. But David, what do you think? Yeah, I think that the traditional methods only one. work if you can get financing. A lot of investing in real estate is dependent on getting a loan so that you only have to come up with the down payment. So if that part's gone, you almost have to take a business approach. Okay, well, I'm going to start some kind of real estate enterprise or business with $20,000.

I got to go find partners and I got to play a role in this business to turn that into more money. So that's the road I would take if I was you. Okay. Awesome. One other thing, I'll be traveling for like the month of August. We bought a motor home when I lost my job because we wanted to do some traveling. What areas, you know, across the country would you guys, you know, say to look at investment properties? Oh, I'm going to say for the fun of driving. I was going to say South Dakota. I love it.

But RV into South Dakota is the best thing for rental properties. Man, I mean, like every area works, right? But if it were me, if I was going to go out and look for rentals, I'll go south east America. So Georgia, Carolinas, Florida, you know, that whole, that whole area, Louisiana, even down and maybe in Texas a little bit. That's where I'd focus for me, especially if you're trying to find like a, I don't know, apartment complex or something, like in one big shot. That I like that area a lot. Yep. I agree 100%.

Okay. Cool. Thank you very much. Appreciate you being here. And yeah, go get them. Go get your 10 deals and come on the Bigger Pockets podcast to tell us about it on a whole episode. So go do it. Cool, guys.

All righty. Well, and that was our show. That was fun. That was really fun. Yeah. I want to know what the listeners thought. Where's the best place for them to give us their feet? back.

Probably show notes. And you can go on our Instagrams and you can probably comment there. But yes, it would be nice if we could see it in the show. Did you guys like it? Do you not like it? Did you get something out of it? How often would you like to see this? We're doing everything we can to make this as fun as possible for you.

All right. Well, we'll try to do this again in the future for those, you know, if you've not yet left a rating and review on the Bigger Pockets podcast on iTunes or Stitch or whatever, go leave us a rating and review. It really helps reach more people. And make sure you are not just listening, but you're doing something. So join Bigger Pockets is a free membership to join. And if you want to take it to the next level, we also have a pro membership.

You can also do that and learn more about that on Bigger Pockets. So with that said, thank you so much. I hope you guys have a fantastic day. David Green, you want to take us out of here? Yeah, this is David Green for Brandon Lightning Round Turner. Signing up. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small.

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