BiggerPockets Real Estate Podcast - 40: 40 Quick Tips for Buying Your First (or Next) Investment Property

Episode Date: October 17, 2013

Today’s episode of the BiggerPockets Podcast is a little different than normal – in a great way. To celebrate the 40th episode of the Podcast, Brandon and Josh spend an hour sharing their top forty tips for buying your first – or next – investment property. These tips range from marketing to working with agents to investing with a full time job and a whole lot more. Whether you are brand new or are an experienced investor, a flipper, wholesaler, or buy and hold investor – these tips are going to help you build your business and close more deals, faster. Read the transcript for episode 40 with Josh & Brandon here. In This Show, We Cover: Working with investor friendly agents Finding and lining up financing The 50%, 70%, 1%, and 2% rules Tips for inspecting property Finding deals that are “off market” Direct mail tips and tricks Negotiation Tips Hiring property management Investing in real estate with a full time job and a whole lot more! Special Thanks to This Week’s Sponsor We just want to give a special shout-out to our very first sponsor ever here on the BiggerPockets Podcast – MemphisInvest.com. The team at MemphisInvest continues to provide incredible value to our community, so definitely take a minute to check them out if you are interested in turnkey rental property. Visit them at Blog.MemphisInvest.com/BP Links Mentioned in the Show: BP Radio Podcast 001: Building a Successful House Flipping Business and Losing Millions with Marty Boardman BP Podcast 011 : The Ultimate Beginner’s Podcast For Real Estate Investors BP Podcast 006: Investing While Holding a Full Time Job with Arthur Garcia  BP Podcast 037: Full Time Income, Part Time Lifestyle Real Estate Investing with Aaron Mazzrillo BP Podcast 026: Building a Scalable Real Estate Business and Tenant Management Tips with Chris Clothier The Real Estate Agent’s Ultimate Guide to Working with Investors – shortcode? [Video] How I Quickly Analyze an Investment Property The BiggerPockets Analysis and Reporting tools The 50% Rule: How to Quickly Analyze a Multifamily Investment Property [Video] Driving for Dollars Bible YoureTheManNowDog.com Property Management Interview Questionnaire  BiggerPockets Deal Analysis Forum Hard Money Lender Directory MemphisInvest.com EchoSign Why YOU Should Organize a Local BiggerPockets Real Estate Meetup 8 Tips for Having a Local BP Meetup Books Mentioned in the Show No Time To Think: The Menace of Media Speed and the 24-hour News Cycle  by Howard Rosenberg and Charles S. Feldman The Four Hour Workweek by Tim Ferriss The E-Myth Revisited by Michael Gerber Tweetable Topics When dealing with home sellers, look for motivation and equity. (Tweet This!) When analyzing property, don’t let emotion cloud your judgement. (Tweet This!) You can build your reputation by being ‘that guy’ who brings everyone together. (Tweet This!) Find investment niches and strategies that fit your lifestyle. (Tweet This!) Create systems for your business so you are not the bottleneck in your business. (Tweet This!) Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast. Show 40. 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, everybody? This is Josh Dork and host of the Bigger Pockets podcast here with,

Brandon Turner as always. What's up, Brandon? What's up, Josh? Things are good. I'm doing well. I know you asked. I know you asked. I always do, don't I? Today is the Over the Hill podcast though, so it's more important than you or I. It is, it is. And, you know, I'm getting close to being over the hill. Approaching 40 and, uh, I'm approaching the hill, but you're, you're approaching the foothills, my friend. You are a young, uh, young guy who, who's got a lonely.

ways to go. Long ways. Yes. Yes. Yes. Anyway, so this is our 40th episode. And we've done, we've done some amazing shows, man. I mean, our first show with Marty Bordman was especially exciting, you know, kicking the thing off. And then we did the ultimate beginner show, which was just you and I. I think our most popular show so far was probably Arthur Garcia's show about, what was it, working a full-time job. And I think we're actually going to cover that again today as well. We are. We are. And then I think what, Aaron Mazurillo's was probably a second most popular show that we've done. But yeah, you know, we want to thank, first of all, everybody who's been a guest

on our show so far. We really appreciate the time and energy you guys have put in. And we appreciate everybody for listening. The show's going great. And, you know, we're continuing to get lots of great ratings, reviews, things like that on iTunes. If you haven't yet done so already, please do jump on iTunes and share your feedback. And do jump on the show notes afterwards at biggerpockets.com slash show 40. And if you've got any questions, comments, thoughts or anything like that, interact with us. But today's show, as you may have deduced, is a little different because we actually don't have a guest today. Today, instead, we are going to, in honor of this being our 40th show, we're going to talk about 40.

quick tips for buying your first or next deal. But don't worry, we're not going to be singing. Quick tip. Every time. Don't worry. No. So why don't we just jump into this? Because 40 tips is going to take some time, so we're really going to need to speed through

it. Since we can't go into incredible detail, we do really encourage you guys to jump into the comments on those show notes. And we'll be there engaging in those conversations. Also, if you're an experienced investor, we really want to encourage you to jump into the show notes and leave your own quick tips for others as well. This way, those listening to the show in the future can go to the show notes and find much more than the 40 tips that we've already mentioned. Cool. What if I told you you could forget everything you know about investment

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Yeah, when you're gone, your place is basically on unpaid leave. It's sitting there in the dark thinking, I could be contributing right now. Your side room wants a side hustle. Even your Wi-Fi is like, we could be networking. You're on vacation, spending money like it's a sport,

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

it can manage reservations and keep things running smoothly so you don't have to check your phone between beach days. That means less stress and more time enjoying your trip. You can relax, knowing guests are taken care of, and your place is in good hands. You travel, your house works. Everyone wins. If you're ready to host but could use some help,

find a co-host at Airbnb.com slash host. Most investors spend more time chasing deals than reviewing their insurance. But a quick coverage check can be fast, easy, and one of these smartest ways to protect and even improve your property's cash flow. As the months get colder, frozen pipes, icy walkways, and seasonal wear and tear can increase the likelihood of claims. And traditional insurance companies aren't always built to handle these claims quickly or smoothly. That's why more real estate investors are turning to

steadily. They focus exclusively on landlords, whether it's a single-family rental, a burr-builders risk policy, or midterm holiday guests. You get fast quotes, flexible coverage, and protection for property damage, liability, and even loss of rental income. Now is the perfect time to review your rates and coverage. Get a quote in minutes at biggerpockets.com slash landlord insurance. Steadily, landlord insurance designed for the modern investor. All right, well, that sounds good. Should we get going? Yeah, let's do it, man. Enough, enough chitty check. All right. So get your papers and pencils out. Here we go. Papers. Paper. Pencil. No books. I think paper is the plural of paper, isn't it?

Papers. I don't know, is it? Papers refers to like a, no, yeah, it's paper is plural of paper. All right, fine. Well, thank you for publicly correcting and humiliating you. That's okay. That's what I like to do. It's fun. All right, good deal. All right, let's start this off. Number one, tip. is to look at a lot of properties because you don't actually know how good a deal is until you analyze a whole bunch of them.

I mean, I'm a firm believer in this that you know the whole like look at 100, offer on 10 and buy one rule, a lot of people say. I like that rule because, yeah, if you don't look at a whole bunch of properties

and you just go and buy the first one you look at, there's a good chance you're going to scare something up. Yeah, yeah. And that'll give you the experience to better understand what the numbers really mean. That is true.

Yeah, yeah, for sure. Cool. Tip number two, find a good agent. So there's over a million agents in the United States, real estate agents, of course, but only a small percentage know anything about real estate investments. That's no disparagement on the others, but most agents really don't go and put in the time to understand real estate investing. Ideally, it's good to find somebody who understands how to work with investors and maybe owns some rental property of their own. So when you're hunting for agents, you want to ask them that, you know, find out, hey, have you, have you worked with investors? You know, how do you do that?

You know, what's your process? Do you own your own rental properties? You know, what's your criteria? Things like that to get a feel for their understanding. So I definitely want to look for a good investor-friendly agent that said really quickly, if you know other agents who are not investor-friendly yet, but you think would be amazing at it, definitely want to have them check out our agents guide, which is this guide that Brandon and I collaborated on. And it is the ultimate guide for agents working with real estate investors, something like that title.

Yeah. And you can go to that at biggerpockets.com slash agent guide. We'll also have a link in the show notes. So that's tip number two. All right, quick number tip, quick tip, quip. I just made up the word quip. Quip number three is to line up your financing early. If you start looking at properties and you can't actually buy a property, you're going to be wasting a lot of people's time, including that agent that you just got. So this is a thing that I've stumbled on several times in my career. So definitely get your financing lined up today, whether it's a traditional loan cash portfolio

lender, private money, whatever, just figure it out and do it. Nice. Nice. All right. Tip number four. how to find good lenders. I'll tell you one way not to do it is just to go posting on the forums that you're looking for alone. Don't post on our forums.

Don't post on Craigslist. Don't just post it anywhere. Instead, get to know other local investors in your area and find out who they're using. If you're looking for hard money, of course, be sure to check out the BiggerPockets hard money lender directory at biggerpockets.com slash hard money lenders. For the web's largest collection of hard money lenders, I think we now have over 300 there. And so definitely check that out. If you're looking for traditional or portfolio loans, one of the best ways to find them is simply by picking up the phone and making a ton of calls. I remember in show number six, BiggerPockets.com slash show six. Arthur Garcia talked about

how he found his portfolio lender by picking up the phone book and making a ton of calls. So definitely don't be afraid to start those lending conversations today. even if you aren't quite ready to go ahead and buy. Yeah, I agree. All right. Before we go too far in the show, let's take a second and let everyone know this is show 40 again, reminder. So if you want to go to the show notes, biggerpockets.com slash show 40. Nice, nice.

And before we go on, guys, today's special not only because we're celebrating our 40th episode, but also because we're introducing our first sponsor of the show, which is, you know, it's kind of a big deal, I think. Now, before you guys start freaking out over having a sponsor, I just want to let you guys all know that the show takes a lot of time and energy. Yes, as Brandon chuckles in the background over all the hours he spends editing and scheduling and everything else. Yeah, I just come here to talk, really. You do a little more than that. Okay, all right.

So, yeah, listen. And with the sponsor thing, we're not going to have sponsors that we don't know or believe in. You know, our idea is let's get companies and folks who are part of our community, who we trust and who we know and like and who are doing things that we think are a good fit for you. And things that will bring value to the community. Yeah. Yeah. And bring those guys on board. So let me give our first sponsor just a quick shout out for being so awesome in supporting this episode.

chances are you know the company already and you've actually seen them interacting on the site on a daily basis on our blog, on a Bigger Pockets blog, on the forums. And these guys were also sponsors of the Bigger Pockets Summit last year. So, Memphisinvest.com

is a family-owned turnkey real estate company with offices in Memphis, Tennessee, in Dallas, Texas. They were named Small Business of the Year by the Memphis Business Journal and is one of America's fastest-grown companies by Inc Magazine in 2013. If you're interested in passive investments or even learning how to buy real estate in solid

cash flow cities, contact Memphisinvest.com for a free consultation. They have nearly a quarter of a billion dollars in real estate value under management comprised of 2,000 properties for 800 plus investors. If you guys want to check out more about Memphis Invest, go to blog. com slash BP. Cool. And we actually did interview Chris Clothea here on the show a couple months ago. I think it was episode 26.

So it was an awesome episode. Yeah, yeah, definitely. And Chris is a good friend of mine as well. And I know I'm kind of honored to have him as a sponsor. This decision didn't come lightly to bring sponsors on. And they've been great to work with. So we'll have a link in the show notes as well. And again, it's blog.

commenfiz.com slash BP. Cool. Let's move on. All right. Tip number five is to learn to do the math right because honestly the math is not very hard but it does take practice. If you guys know me, you know I'm always harping on this. If you want to see a really detailed analysis of how I analyze a property, I'm going to put a link in the show notes also to a post I wrote called how I quickly

analyze an investment property. So again, speaking of math, let's go to tip number six. Tip number six is the bigger pockets analysis tool. It's not really a tip, but it's kind of a feature. The tip is go there. That is the tip. The tip is go there. Yeah, go there. All right, so go check out the Bigger Pock's Analysis tool. We've got a flipping calc out today, and the buy-and-hold calculator is very soon to be on its way for delivery.

Not only do these calculators help you analyze a deal in its entirety. They also try to show you how the numbers were calculated. So you can get to it by going to BiggerPock.com slash calc. But keep in mind, anyone who's a BiggerPockets member could go test those things out a few times. But if you want to use them on a continual basis and be able to print out PDF reports to give to lenders, partners, or others, you do need to be a pro or pro basic member. And you can upgrade to those accounts at BiggerPockets.com slash pro. Cool. All right.

So let's talk some more about that math. Number seven, the 70% rule. I'm sure you've heard of it before. Basically, that means this is something that flea. or wholesalers might use. Basically, you take your after repair value, what the thing's worth when it's all fixed up, and multiply that times 0.7 and then subtract out the repairs. So take 70% of the ARV and subtract out your repairs.

And that's a good general way to kind of estimate how much you should offer. It's not a end-all be-all number, but it's a good estimate. Nice, nice. All right. Tip number eight, if you're a buy-and-hold investor or are trying to analyze a buy-and-hold deal, make sure you're using the 50% rule to make sure this property, cash flows. So the 50% rule basically says 50% of your income is going to go out in non-mortgage expenses. In other words, if you've got a thousand bucks in rent, you're talking about

$500 in expenses. So if your mortgage were $400, you can estimate about $100 a month in cash flow. We're going to have links in the show notes to some good 50% rule articles and videos. The 50% rule is just that. It's it's a it's a, it's, it's, it's, it's, it's, it's, it's, it's, It's a rule to, you know, it's kind of a safety net to help folks find cash flow properties. Yeah. And when I started out, I did not know about the 50% rule. And I honestly, like, screwed up and I bought some properties that I probably shouldn't have because they, even though they seem like they cash flow, they really don't because there's all those expenses you don't expect. So anyway, yeah.

And I think the key there is really just having an understanding of what all the expenses are that come into play with a rental property. things like capital capax and vacancy rates and things like that, stuff that most new investors and agents who don't have the experience, they usually ignore. So learn it. All right, the next one is the 1% rule or the 2% rule. You guys probably have heard these numbers. There's a lot of arguments about it. So basically what it means is the percentage of monthly income compared to the total purchase price. So before you get too confused, what that means is if property sells, for $100,000, the 1% rule says it should rent for $1,000 a month or the 2% rule says that should rent for $2,000 a month. Does that make sense? Am I saying that good, Josh?

You're saying that good? All right. So the 1% rule is 1% of the purchase price per month. So in a lot of areas, honestly, the 2% rule is completely impossible to find. And people complain about that. And even 1% is impossible in some areas. And some people say, well, you shouldn't pay attention to that. But I don't know. Honestly, for me, like, which one, 1%, 2%, how much you should pay. It's up to debate and where you live. But anything I've ever bought in my life that fit the 1% rule only is not a good cash flowing property for me.

Those are the ones that I regret and say, yeah, they don't give me any income because it seems like they should, but they really don't. So I personally stick to the 2% or as close as I can get to it. But I'm a cash flow guy. So that's what I do. I agree. I'm a 2% guy as well. And in fact, there are some markets if you listen to our podcast with

Don, Anastasi, she's up in Milwaukee, and she goes for 3% deals, which are pretty sexy. Yeah. I have to say, I am getting my first 3% deal right now. I should close in about two weeks. Nice. Yeah. I'm pumped. All right.

That's great. All right. That brings us to number 10, right? Number 10 is make sure cash flows. Don't buy negative cash flowing properties unless you're Uber rich and have another agenda with the property. even then, frankly, I don't know. I mean, I think if you're betting on appreciation, you're gambling.

So, you know, I don't know. As a buy-and-hold investor, personally, I see no reason to buy a property that is not cash-flowing. I know a lot of people do it. They explain why they do it. It makes sense to them, and it just doesn't work for me. So anyway, make sure if you buy a cash flow, a rental property that is trying to bring income in, that a cash flows.

Yeah, good. All right, number 11 is to use Craigslist to get rent comps to see what other properties are renting for. So people often wonder, you know, is this property going to rent for 500 or 600 or 700 or 700? Well, Craigslist is really, I think, at least in my area, like the best way to do that. I mean, some people say use Zillow, but in my area, Zillow isn't as accurate as Craigslist. Because Craigslist is so current. It's like updated every day. So, and they do have a map feature too.

So you can actually look at a map and see all the properties for rent in a certain area. you get a really good idea of how much possible rent is. There you have it. Good stuff. Good stuff. All right. Number 12, don't use the pro forma numbers given out by the selling agent. Oftentimes you'll find that selling agents tend to, yeah, I'd say what?

Inflate the numbers just a little bit, just a little bit. Yeah. So verify and definitely double, maybe triple check the information being provided to you. Yeah. I find that a lot with rental properties. They'll say, you know, it'll be a triplex for sale. And they'll say each of these units will rent for 8.50 a month. And I know for a fact.

I mean, I know, but they will rent for 850. Yeah, like, I'm getting like 450. They all rented for 4. 4, but they will rent for 850. Yeah, yeah, that's what. You really got to watch those numbers because agents, again, they don't know a lot of times what a place will rent for. They just pull out a number out of somewhere.

And yeah, all right, moving on. This is not so 40, the bag on agent chair. I love agents. I do. I just, yeah. All right. Number 13. When running your numbers, be conservative.

Do not let emotions cloud your judgment. Like, for example, well, you know, I don't think repairs will be that much since the house looks nice. Or I don't need a budget for vacancy because then, you know, units are easy to rent here. Yeah, yeah, that's the ticket. Yeah, it's easy. So anyway, budget conservatively. And again, that's what makes a 50% rule so important because a 50% rule helps you budget conservatively. Yep, absolutely.

All right. Well, speaking of budgeting, Brandon. Brandon. Brandon, budget, budget, branded. Another nickname. There's go, yeah. All right, so let's talk about budgeting for repairs. If you are brand new at this, I definitely recommend always doubling your repair budget and doubling your timeline and see then if it makes sense, particularly on these rehab properties.

I know we've covered that in a bunch of our other shows. And, you know, especially as new guys, it's really hard to get it right. It's really, really hard to get it right. And, you know, if you're safe and you double the budget, you know, the odds of you screwing up that bad are lower. So it is like, and people wonder like they think I'm kind of kidding. When I always say that on the forums is double your budget. They think I'm kind of joking. But I'm really not like double your budget.

And if you still can make a profit, you're probably okay going forward. So all right. Probably. Yeah. Number 15. If you are getting bids from contractors, get at least three of them. and then do your due diligence on the contractor because honestly a contractor can make or break a deal and they're one of the most important people on your team so actually quick interesting story this

morning actually i got up at 6 a m and had to go work at one of my rental properties because my contractor dropped the ball and never finished and the tenants are moving in this they moved in this morning and there was like a couple minor things i got to move the fridge from the left hand to the right hand side and anyway yeah he never showed up he just stopped calling i yeah it was my fault i paid him before he was done with the last power of work. I know. That should be a tip too. It's not in here,

but don't pay your contractor until they're 100% done. Not 99.9. Anyway, yeah, terrible. Yeah, that's why you were late for work. That's why I was late for work. All right. Well, tip 16. When getting started,

you'll be shocked at how much some contractors charge. Speaking of contractors, of course, in my mind, there's three categories of contractors. You've got the low-end cheap guys who are, usually working under the table. Then there's the expensive guys who are, they're like the finished carpenterers who charge 500 bucks to screw in a light bulb and another $500 to put the flashing above the light bulb. Because they're just, you know, they're used to working with rich homeowners and things like

that. You probably are not looking for either of those guys. Who you want really are the middle guys. These are the guys who do very good work at, at, a fair price, but it's not always easy to find them. So let's go to tip number 17 here. Yeah, 17 is the next one for an idea on how exactly to find these these mid-level, really high-quality guys. All right. So this was from the episode that we interviewed Jay Scott on. And he said to go to Home Depot at like 6 in the morning and find out who's there getting materials, you know,

kind of get business cards, strike up a conversation, talk with these guys. Those are the ones that are getting up early and actually doing the work. He said that's a really good way and I love that idea. Or just ask other real estate investors. You know, it's true that some investors might try to hold on to their contractors and not share them, you know, stingy. Brandon. I tell everyone. Yeah.

That's why you don't have any good contracts. That's probably why, yeah. Use this guy. He's great. Yes, he's awesome. Where is he? Why isn't he answering, Michael? But listen, so most investors love to give out referrals because they want to help out and it makes them look good.

So reach out to other investors and see if they've got recommendations. And that is tip number 18. That was. So number 19 is if you are brand new at this, do not skip your professional inspection before buying a property. I mean, even if you're not new, even if you're experienced, I don't recommend skipping it. But, you know, especially if you're new, make sure you pay the money. it's like usually three or four hundred dollars to get a good professional inspection and uh yeah definitely do it nice nice tip number 20 we're halfway there huh tip number 20 is uh is when you've got that

inspection go with the inspector actually go and and be there and be present for the for the physical inspection follow him around like like brandon like a lost little puppy and and and ask a million questions uh these guys listen these guys and we actually had, we had an inspector. We did. Oh, it was appraiser. Oh, it was an appraiser. Yeah, you know, close enough.

Wow, wah. We haven't had an inspector. But anyway, follow your inspector around. Those guys have a crazy amount of knowledge. And since you're paying them anyways, you might as well get to know the property you're about to buy. And you're definitely going to pick up some tips and tricks to help you out on future investments.

So show up and be there. Definitely. All right. So the rest of these tips for the, the second latter half of this show are kind of in category. So the first category we're going to talk about is off-market properties and kind of marketing. So we already talked about the agent thing. So let's talk about off-market.

So tip number 21, driving for dollars. This is going to be a really, really good way to get started if you do not have a lot of money for marketing. It basically means get in your car and drive. And find some neighborhoods or communities that you want to focus on, and the price ranges you're interested and just drive around and look for vacant. lots or vacant, I mean, vacant property or whatever. And there's actually a few really, really good articles on the blog that all linked to in the show notes that give kind of a step-by-step detail on what to do when driving for dollars. So yeah, those will be in the show notes at biggerpockets.com

slash show 40. Yeah, I actually think that's probably probably one of the most important jobs a new investor can possibly do. I know the first time I bought a property. I didn't know what driving for dollars was. I literally just got in a car. I was like, hey, I need to find a property. this is the area that makes sense. And I went up and down every single block, you know, got to know the properties, the pricing,

you know, features, things like that. And, and, you know, by the time it was all set and done, and it took a good number of days to do that.

I had such a great understanding of the area. I could tell you, you know, if somebody was overpriced or underpriced, you know, I could tell you rent rates. I knew everything. Yeah.

Now today it's even better with the smartphones we have. And you can take a picture of a house and it'll tell you all the information about it with, a couple apps. So anyway, cool stuff. Yes. Yeah, we didn't have smartphones when I was doing this. You're right. No, you had like the rock and the stone wall. I think it was. You can't see, but I'm eyeballing him right now. He is eyeballing me. Let's go on to number 22. Number 22, if you've got some money for marketing, one of the most popular strategies out there

and effective strategies is direct mail. Direct mail is the process of sending out letters or postcards to a huge number of people, hoping that a small percentage will respond. Typically, you do want to target those folks to specific criteria. Say you're targeting folks in probate or divorce or things like that. The most common type of direct mail is either postcards or yellow letters. And usually they have a very simple, I want to buy your house for cash message on them. Yellow letters are very popular. We've got dozens, hundreds, if not thousands of conversations on the site about them, lots of great articles. So just search direct mail on bigger pockets and you'll get a ton of great tips. So direct mail, check it out. Cool. All right,

number 23, the secret to direct mail. This is a tip is repetition. You've heard every, pretty much every guest we've had that uses direct mail, they say the same thing as is contact people over and over and over again. Aaron Masrillo said on, I think we'll show 38 that, yeah, that the letter on their table, the day that they decide to sell is who they're going to sell to. And so, you know, don't be a one and done mailer. Unless, of course, it makes sense for your niche. Like last week was Seth Williams. He does that with land, but it makes more sense for him.

Yeah. And there is an art also to this. And we have covered that in previous shows, knowing when an event's going to happen. And, you know, making sure that you send direct mail in the lead up to that event, like a foreclosure or things like that. So definitely pay attention to that. Did you know your house gets bored when you leave? I can't actually prove that, but it probably misses out on the action, the footsteps, the late night fridge raids. Yeah, when you're gone, your place is basically on unpaid leave. It's sitting there in the dark thinking,

I could be contributing right now. Your side room wants a side hustle. Even your Wi-Fi is like, we could be networking. You're on vacation, spending money like it's a sport while your staircase at home is fully capable of sending your income upwards. Here's the twist. You can go on a trip and actually earn money. Airbnb makes that possible with the co-host network. If you're away for a while or have a secondary property, you can hire a vetted local co-host with real hosting experience to handle it all. A co-host can handle guest communications, it can manage reservations, things running smoothly, so you don't have to check your phone between beach days. That means less stress and more time enjoying your trip. You can relax, knowing guests are taking care of,

and your place is in good hands. You travel, your house works. Everyone wins. If you're ready to host but could use some help, find a co-host at Airbnb.com slash host. If you want a short-term rental, here's something worth knowing. Not all landlord policies are built for your type of property. And with holiday bookings, chilly weather, and higher guest turnover, having the right coverage is more important than ever. Steadily offers insurance designed specifically for short-term rentals, covering property damage, liability, lost rental income, and even unexpected issues like bedbugs. Steadily works exclusively with real estate investors, so they understand the details that make short-term rentals unique and they build coverage to match it. A quick review of your rates and

coverage every year can help you protect your property and your cash flow. Get a quote in minutes at biggerpockets.com slash landlord insurance. Steadily, rental property insurance for the modern investor. If you think property management is expensive, try mismanaging a vacancy or an eviction or a maintenance issue that turns into a five-figure problem because no one caught it early. That's expensive. A good property manager isn't overhead. Their protection against small mistakes turning into big losses.

And that matters more than ever in this economy. That's why I like Mind. Unlike other property managers, Mind manages your property like an investment. they obsessively measure the things that matter for your bottom line. Things like occupancy, delinquency, and net promoter score, and they have the results to prove it. Go to mine.co slash show me to see how mine performs and get your first month free, which is much cheaper than learning the hard way. Another tip about direct marketing for tip number 24 is if you're sending to a really large list, either spread out your letters throughout the month so you aren't flooded with calls all at one time, or use a voicemail service like Google, voice so that all the calls are sent to voicemail and you could do some pre-screening and call people

back on your own time. If you think about it, right, you can do the math, right? I send X number of letters. I'm going to get X number of responses. And some people might say, oh, okay, well, I want to do 10 times that many deals. So I'm going to send out 10 times as many postcards. But if you don't have the infrastructure, you're going to get flooded. And you're not going to be able to get back to people in time.

You're going to be on the phone constantly. and until you build that team out, you know, most of those leaves are going to go to waste. So, you know, start small and kind of work your way up. Yep, perfect. All right. Another good phone tip comes from the episode number show 21 with Jerry Puckett. And he mentioned when somebody calls and doesn't leave a message, text them back. If it just, you know, you don't pick up and they don't leave a message.

Yeah, I thought that was an awesome idea. It just kind of makes it so you're not bothering them if they really don't want to talk to you, but it still leaves the door open. It's a good tip except some people like me think it's creepy. Maybe, but, you know, what are they going to do? Yell at you. Maybe. Or something.

Yeah. You should. You should. No, it's, yeah, I think it's a great tip. I personally, if somebody texts me that I don't know, I just don't respond. Yeah, but you would just call them anyway, so, you know. Whatever. You want to argue about it?

Jeez, man. Yeah, let's do it. All right, tip 26, when dealing with. direct mail, look for motivation and equity. If someone has motivation but no equity, there isn't a whole lot you can do for them other than maybe a short sale. If they've got equity, lots of equity, but no motivation, there probably isn't much you can do. What you want to do is you want to focus on those who have both equity and motivation. Remember, as a real estate investor, your job is to help people solve problems. And if they don't have problems, then there's no motivation. If they've

got problems, they're motivated, and then you could step in and help them resolve that. So you want to find somebody who's got both of those things happening, and that'll help you get the deal. All right. Number 27 and 28 are a little bit in a category of themselves. It's kind of about networking. So number 27, get some business cards and just start handing them out. Don't stress about it.

Just go order some from Staples, if you don't have any, or VistaPrince or moo.com, whoever. And then go to like Ria's Chamber of Commerce Medians or anywhere where, you know, professional people get together and start handing them out. Courthouse steps. Courthouse steps. Yes, that's right. Hand them out, give them out, let people know who you are, that you're the guy, you're the man. You're the guy.

You're the man now, dog. You're the man now, dog. There we go. That was Sean Connery, right? That was Sean Connery. Nice. Yeah, go to you're the mannowdog.com, people. It makes, it'll make you laugh.

Anyway, number 28. Yeah, why don't you do it since you paired them all together? All right. All right. So consider starting your own local real estate club or meetup. I'm not talking about a guru pitch fest. I'm talking about an actual, like, networking event. And you don't have to be like a seasoned professional to do it together, you know,

like-minded people together. And you can actually build your reputation quite a bit just by being that guy who brings people together. It's like the connector. Everyone likes the connector. So yeah, start a meetup. Everyone likes the connector. Is that a song? I don't know.

Oh, okay. I didn't even know that. And along those lines, you can also use bigger pockets to do that. And I know that Brandon's actually put together a couple articles on that topic, how to use bigger pockets to set up your own local BP meetup of folks. And hopefully we'll link to those in the show notes as well. That we will. Yes, yes.

All right. So why don't we move on from marketing and talk about what happens when dealing with sellers, otherwise known as the negotiation. Negotiation. That was creepy. I try. Tip 29. Brandon, good tip.

Ready? Shut up and listen. That's nice. That's nice. All right. So shut up and listen, guys. Seriously, a seller is going to tell you a lot of things. So before you start talking, negotiating, and try to make things happen, just literally sit back and listen.

What's the reason they're selling? Use words like, tell me more to go deeper into the issues. They may act. like the price is their number one concern. But in reality, if you're paying attention, it might be that they're monthly budget or losing their job or one of a million other things is really what's troubling them.

And if you actually listen and don't have to talk on top of them, you'll know what's going on and you'll be at their pain point where you could come in and help them. So that's tip 29. Oh, I'm sorry. Were you talking? I wasn't paying attention.

All right, tip number 30. Tip number 31 is this? Yeah, yeah. I'm paying attention. All right, tip number 30, try to think creatively when talking with sellers. Because a lot of times people think they're 100% firm on price, and they might be more flexible in other areas like terms or monthly payment or maybe you could structure the deal a little bit differently.

For example, if, let's say they don't have a lot of equity, maybe you could do a lease option. You know, that's a, that's a, you know, decent option for people who don't have equity, a least option or short sale. So, anyway, be creative. There you go. Be creative. Tip 31 is closely related to creativity. And that's to focus on speed.

Not the drug. You're funny, man. You're getting funnier. All right, look at me. All right. So in today's world, guys, people are used to having things like right now. now. There's no time to think, which, by the way, is a great book if you want to know anything about the changing speed of the media landscape that we're in today by Charles Feldman and Howard

Rosenberg. Fantastic book. And I was actually a researcher on the book, which is why I bring it up. Nice. How about that? No time to think. So use that to your advantage. It may seem crazy, but people may be willing to sell for tens of thousands of dollars less if you can close. your deal next week instead of next month. So get out there and make it happen for sure. Nice. Nice. Brandon is actually holding up the book at no time to think right now, which is pretty cool. I didn't know you had it. Yeah, you recommended it once. I bought it. I never read it yet. That's awesome. It's kind of like, what's that book that you recommended to me? Oh, all of them.

Yeah, all of them. You started four-hour work week, though. I did. I'm on page like 28. Nice. I've been on 28 for about a week and a half. So. Nice. Good job. Well, you know, sometime in all your extra downtime, you can read. All right. Next one. Number 32. Do not be afraid of the word no. The truth is a lot of deals simply aren't going to work out. So don't try to force one. It's far better, far better to buy one great deal than 100 crappy deals. So focus on the great deal that you know you can profit from instead of the 100 deals that you have to force. So be patient. No means no, folks. No beans no. That's right. All right. Let's move on to the next topic.

And that's tips for investing while holding a full-time job. Both Brendan and I work full-time and probably more. So we certainly understand that this can be tough. So why don't we move to tip 33? Tip 33 is evaluate what kind of investing will fit your current lifestyle. If you're working, say, 80 hours a week, my guess is flipping houses is probably not going to be an ideal solution for you. That's why it's not working.

I get it. Yeah. There you go. So yeah, listen, find you're fired. Find investment pitches and strategies that fit with your job. And since Brandon's fired, I'll move on to 34. No, just kidding. So, no, seriously, like, you know, a lot of new investors don't realize this, but it really

is important. Like flipping houses is a job. You can't flip, especially starting out until you've built systems and processes. You can't do it on the side. You really can't. I mean, there's just so much required. So, you know, think about all these things when you're deciding on the strategy and the niche that you're going to be focusing on. Yeah.

I know it's easy to get like the, you know, the shiny object syndrome when listening to the Bigger Pockets podcast. It's like, I want to do that and oh, I want to do that. I want to do that. But, yeah. You're not if I were you already? Why are you still here? I'm staying. All right.

Number 34. No means no, Brandon. Number 34. You've got to have a business mindset or you will go crazy. Trust me. You need to develop systems to handle your business so that you are not a bottleneck within your business. So that's basically the idea if you guys have read the E-Mith or the four-hour work week. It's that you got to turn your business.

business into a machine that runs smoothly with or without your direct involvement. So it doesn't mean you're going to never work at it. And I think a lot of people misunderstand things like the E-Mith or for our work week. They think that you're trying to get out of work, but it's not about getting out of work as much as it is getting out of being a clog in that work. So anyway, a good example of that having a maintenance guy you can call. I mean, you might be handymany, but if you are out of town and you can't fix a leak and you don't have anybody to call, you're going to stress out and have a problem and you're going

have a bad day and can't go on vacation and whatever else. So anyway, systems, good things. Nice. Nice. And that leads us to our next quick tip, which is don't be afraid of property management. You guys want to, you want to plan for it. When we talked earlier about the 50% rule, we talked about all the expenses that come into play when you're buying a rental property, investment property. But property management is something that you need to plan for even if you're not actually paying a property manager per se. So when you're just starting out, it's easy to say, well, I'll just manage myself so I don't need to budget for it. It's really, it's a huge mistake because there might be a time when you are forced to use that property management, but if you don't

budget for it, you're probably not going to be able to afford it. So even if you're going to manage your own property, make sure to do the math as if you're going to hire it out. I think a safe bet is to factor in about 12% for property management just in case. So definitely budget for that number. It's really going to be key because, you know what, if you're doing the job, you're spending your time working. So, you know, you need to be compensated for that time as well somehow. And that's how it kind of all works out.

And nobody told me that when I was starting. Like I didn't have the Bigger Pockets podcast to hear that. And so I didn't all my first houses, I never budgeted for property management. And now, if I'm going to add it on, all of a sudden it doesn't make, you know, it makes my cash flow supposedly properties no longer cash flow good properties. Yeah. Yeah. So anyway, I wish I had known that when I started. But now I can know that based on experience and tell everyone else. There you go.

All right. Number 36. Speaking of property management, if you do hire property management, don't settle for a mediocre one. find a great property manager because, I mean, these people are in charge of your collective financial destinies. So, yeah, find somebody who actually does an amazing job, gets units rented, obeys the laws, follows everything. I mean, it'll save you a ton of time and a ton of money in the end.

Yeah. And we've got a lot of articles on that topic on the Bigger Pockets blog. We also have an interview worksheet, which I put together years ago after suffering through some horrible hells caused by terrible property management. And so what I did was I compiled a property management interview worksheet. And we'll link to that in the show notes as well. Check it out, print it out, do what you want with it. But make sure to ask all those questions when you're hitting up property managers. So you've got something in writing. And you know you can compare them evenly across the board. Yeah. Good, good tip.

Yeah, there you go. All right, tip 37. Another tip for those of you who are working a job and looking to buy an investment property is to set your criteria extremely tight and don't waste your time on properties that don't meet those requirements. Realize that you do have a limit on the amount of time that you've got in your life. Your free time is certainly limited because you're working a job. So focus on your specific niche and criteria and do not deviate.

It's really easy to do. So, you know, focus on that. Do not deviate. You could probably actually even set up automatic alerts with your real estate agents once you've created those criteria. For example, say you want small multifamily properties between two and four units that are under $200,000 in a specific location. This way, you're not looking at that fiveplex that just came on the market or the single family home that popped up. You know, you might miss potentially some good deals, but when you're working a full-time job, that's, that's, that's, something that's going to come with the territory. Yeah.

Focus, focus, focus, and go from there. And that kind of comes back to that tip we had earlier about not forcing a deal. Like when you're working a full-time job, you can't always take the time to try to, you know, try to be super creative and force every property into a deal. I mean, if it works, it works. If not, you know, if not move on. All right. Number 38.

Finally, find an agent that is good with online signatures. But seriously, this saves a ton of time. When my agent started sending me all these documents to sign, and I could just take my iPhone out and sign them right there. That was like life-changing. An offer became like a two-hour event down to like a two-minute event. So totally changed my investing life. Nice.

Yeah. And who do you use, by the way? Because I use Echo Sign for online signatures. Who do you use? Oh, who does that company? I don't remember, actually. But I don't like them as much as I Echo Sign. I've used Echo Sign too.

But my agent doesn't use Echo Sign. and so I use this subpar one. Nice, nice. But it's dark. Yeah, there you go. All right. So we've got two final tips for you guys. 39.

It's a really, really, really, really easy to get overwhelmed. On this show, in particular, we're talking about 40 different tips, but you don't need to master each and every one of them. Just, you know, sit back, relax, take a deep breath, and know that you actually don't need. to know everything. I think that paralysis by analysis thing comes up from people who just think they have to have the answer to everything before they jump into something. Start by taking baby steps, but start. Don't wait, don't deviate, just get it going. Start today. Like right now,

do it. Do it now. Like stop listening to the show and go do something. Now, don't stop listening. The show is about over. So when it ends, you know, go out and follow at least one of these tips. Maybe it means calling up a real estate brokerage, local brokerage, to find a good investor-friendly agent. Maybe it means calling back that motivated seller you've been putting off because you're scared to hop on the phone. Maybe it means getting in your car, driving around your target neighborhood driving for dollars. Whatever it is, just go do it. Just one. Just do it.

Baby step. Make it happen. Do it, Brandon. Do it. All right. Our last tip for the day is, okay, it's a little self-serving, but it's important, nonetheless, but it's definitely jumping to the BP forums with your deals. Like, honestly, if you have a deal that you think, hey, this might be a good option,

like take it to the forums. You don't, if you're worried about somebody, you know, stealing your deal, which you shouldn't be. But if you are, you know, don't put the address down. But, you know, say, you know, here's what I'm thinking. Here's what the rent will be. Here's what the price is. What do you guys think? It's really, really, really helpful to jump in, especially if you're new.

But to jump in and talk to other people who might also be in the same boat as you or those who are super seasoned and they know what they're doing and they can help you walk through it. And there's so many guys that, like, I mean, I'm grateful for who have helped me over the years to look at deals from kind of another angle and tell me if I'm on the right track or not. Yeah. Yeah. And guys like John Holdman and Will Bernard and Jay Scott, you know, a lot of these folks will, you know, they'll write a whole diatribe about, you know, what on earth, you know, you're doing. right, what you're doing wrong. And I think Brandon explain, it's free. There's literally no cost to you. So, you know, go to the analysis forum, put down the deal, and ask for help. Are these numbers good? Are they bad? What should I do? What can I do differently? And get it out there. So that's a,

great tip. And we will, of course, link to the analysis forum in our show notes as well at pickerpockets.com slash show 40. Oh. Yeah. So that was 40 tips. Not bad. Not bad. Not bad.

It's been about an hour since we started recording, given all the cuts that we'll probably have to make to this day. It'll be a little shorter. But listen, hopefully you guys can take those 40 tips and apply them to your life this week. Make it happen, right? As always, we do want to thank you guys for supporting us for the past 40 shows. it's uh i don't know i think of it as as an honor to get to hang out with with you guys each and every week and and talk about real estate and yeah more importantly really just get to make

fun of brandon for a good hour hour and a half so that's that's a lot of fun yeah everyone loves that yeah uh no but seriously thank you guys for everything for being part of uh our bigger pockets community and uh and uh you know it this isn't a tip and and this is kind of off book but we've got 13,000 plus listeners now on the podcast. And if you guys get value from this community and you're not engaging and you're not connecting on our site on a regular basis, it doesn't have to be every day, doesn't have to be every hour, although that would be great. But, you know, get involved, really. Get involved. Jump in. You may think, hey, I have nothing to say. But, you know, if you set up alerts, you know, for local discussions, for topics that are of interest to you, like multifamily or, you know, lease option, whatever it is, whatever is interesting to you, you're going to find out that there's a ton of awesome stuff happening.

There's a ton of people on the site who are connecting and sharing great ideas and they're doing it. And it costs you absolutely nothing. You don't have to spend a lot of money to learn. You don't have to spend a lot of money to build your network. you just have to interact, you know, take a couple minutes and introduce yourself, you know, welcome other members in your area, you know, get involved in debates, discussions, conversations, help people, give them tips. You know, you actually learn by teaching many times. And I think that's a great thing that happens daily on our site. So give it a go. If you haven't yet jumped in on the site and or if you've jumped in with one post and haven't done anymore, you know, give it a try. You know,

you'll find that it's, it's really a warm and friendly environment and a great place to hang out. It is. Yeah, I mean, I've been on there now for what, like five,

six, seven years, who knows forever. And I'm continually, I mean, I'm asking questions all the time. Like, I'm not just,

you know, the get made fun of on the podcast guy. Like, I actually, like, I'm in there asking questions a lot because I'm learning a ton as I grow on my investing. So anyway,

please, you know, jump in. And also, if you guys appreciate the site in the community, you know, pay it forward. Tell other people about bigger pockets. You know, there's like, what, 27 million investors in America or something like that we figured out, like in that survey we did. But not all of them are on BP.

And, you know, they don't all have to be on there, but it'd be cool to have, you know, a bunch of them. Yeah. Well, you know, it's not just self-serving because the more of this interaction that happens in the site, the better it is for you. So you're building your brand, you're building your name. People are getting to know you and recognize you. And so engaging is definitely going to help you. By the way, that study was done.

That was a Bigger Pockets Memphis Invest study. Yeah, we did it in coordination with Memphis Invest. And Memphis Invest is, of course, the sponsor of today's show, who we want to thank once again for being our sponsor. So definitely make sure to check those guys out at blog. mepvest.com slash BP. All right, guys. So, you know, again, beyond the usual following us on Facebook and Twitter and all the other social media channels, which we hope you do, and the interacting on the site.

You know, Brandon did say spread the word. I can't tell you how cool it is to watch the site grow. Next week is going to be the ninth birthday of Bigger Pockets. So, yeah, next Tuesday. And I don't know, you know, we're at 140,000 members. I remember the first member. I remember the fifth, the tenth. I don't remember the 138,000, 33rd.

But, you know, it's really special to see this thing grow. And I've really, really enjoyed being a part of so many people's lives and watching so many people benefit from this community. And, you know, if you're on the site, if you're an investor and you get value from it, just tell your friends, you know, tell you. your agent and tell your title company and tell your lender and and and uh, appraiser and everyone else to, to come on board. You know, if you do that, you're, you're going to bring them value. They're going to, they're going to, they're going to learn more.

They're going to derive value. They might get more clients and customers and business as a result. And, you know, we'll take this thing from, you know, the, the 140,000 members to 200,000, 500,000 and more. And the more people we have, the more information there is from the collective, right? And for all you Star Trek fans, you know, there is power in the board. There is power in the collective mindset. So come in, get your folks in, and let's hang out and learn and do business together. So show 40.

Thank you. Thanks for listening. Thanks for engaging. jump on the show notes, biggerpockets.com slash show 40. And it's it for me. What do you think, B? How do we do?

We did. All right, guys. This is Josh Dorkin, 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

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Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calico content. And editing is by Exodus Media. If you'd like to learn more about real estate investing or To sign up for our free newsletter, please visit www.w.com.

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