BiggerPockets Real Estate Podcast - 446: Pivoting the Goal and Swapping Doors for Cashflow with Kyle and Lauren Clugston

Episode Date: February 25, 2021

Have you ever had analysis paralysis? Maybe you have it right now and that’s why you’re listening to this episode! Kyle and Lauren Clugston would call that “productive procrastination”, and the only way to get out of it is to move forward! They should know, it took them over 3 years before they made their first move in real estate investing!  In college Lauren stumbled upon Brandon’s old blog about real estate investing. As she read, she gained more confidence in the craft, and knew that real estate was what she wanted to do with her money. She then started trying to convince her partner, Kyle, that real estate investing was the way to go. As someone without an investing background, Kyle was hesitant, but took a leap of faith which paid off! Now they're BRRRR-ing their way through New Jersey, with single family and multifamily properties throughout the state. Lauren and Kyle had to learn a lot before they became the real estate success stories they are now. Things like doing inspections, estimating rehab costs, getting financing, setting up systems and procedures, and getting legal documents prepared were at one point a great challenge to Lauren and Kyle. Now, they’ve got them down! Lauren and Kyle lay out everything they wish their former selves had known, and go through the things that early real estate investors should worry about, and the things they definitely shouldn’t lose sleep over. This advice could save months, weeks, or hours off of your deal analyses and might be just the thing you need to get out of analysis paralysis!  In This Episode We Cover: Why house hacking is such a great strategy for new investors Focusing on the right metrics, whether it be cashflow or units Defining your specific roles as partners and investors  The importance of weekly meetings with your team Setting up your real estate to run like a business, not just a hobby How to put together an “invest with us” packet for private lenders And SO much more! Links from the Show BiggerPockets Forums Grant Cardone BiggerPockets Youtube Channel Brandon's Old Blog BiggerPockets Webinars BiggerPockets Rehab Estimator Calculator BiggerPockets Podcast 398: 22 BRRRR Properties in Under 10 Hours Per Week with Tarl Yarber Bathroom Example (file) Check the full show notes here: http://biggerpockets.com/show446 Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 446. We were reading so many books and just when do you know enough to get some skin in the game? You know, I would say it was probably three years close to before we actually made our first move. We overcame it really by just structuring it and reverse engineering. We want to get a house. So what do you have to do to get a house? 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 in Boy? It's Brandon Turner, host of the Bigger Pockets podcast here in the C-Shed, not Sheeshed, C-Shed with my buddy David Green. David, man, how you been? It's been a whole like, I don't know, 10 minutes since we talked. Yes, it has. And I've been in Hawaii for a while now. So I'm slowly acclimating to Ivan life. I'm having a great time. Yeah, very cool.

Well, I drove by your upcoming condo the other day that you're buying here in Maui that looks super sweet. I know you got a couple of them you're pursuing. But yeah, it's cool stuff. And I just got one under contract. Well, we talked about it a little bit on the show today, but just got a condo. I was getting the fever. Like, you started buying all this stuff in Maui. And I'm like, oh, man, I want a vacation rental in Maui.

So isn't that a great example, though, of how it works when you get around other people. Yeah, who are doing cool stuff. I'm almost positive you would not have bought that condo if I was not talking about it. And I wouldn't have bought the two condos I'm buying if you wouldn't have been like you need to get out here to Hawaii and get a break. It's getting around the right people absolutely makes things happen. That leads us to today's quick tip. Quick tip today is get around some people who are doing a little bit more than you. I'm not saying you have to go and hang out with like Grant Cardone or David Green here.

But I'm just saying like get around people who are doing like who are like a year or two ahead of you right now and find a way to get around them. I know there's COVID stuff going on. So if it has to be digital, make it digital. But the point being get around some people on a regular basis. in your area. Preferably, I mean, just go find a landlord

who's, like, been doing cool stuff and just take them out to lunch or whatever you got to do. But dark it around people who are just awesome. You can find those people by going to biggerpockets.com.

We've got over 2 million members. In fact, we just crossed the 2 million mark recently. There are a lot of people that are on bigger pockets that are in your area. So connect with them, learn from them,

grow with them, and just provide value to them. So, that said, let's get into today's show. So today's show is a lot of fun. We interview a couple that you may have seen because they're on the Bigger Pockets

YouTube channel a lot. They have a big Instagram account. Lauren and Kyle Clugston, I hope I'm saying their last name correctly. They are awesome and they invest in mostly Burr properties. They do a lot of the buy rehab, rent refinance, repeat. We'll talk about that later today. And they really go into detail of how they got started. I mean, they're up to like 10 properties or 10 units or something like that now. And they're talking about how they got from just nothing. Kind of the book that actually most people have not read, but I wrote a long time ago and didn't, like it was before my BP days. I wrote a book.

They talk about that, how that kind of got them into the game. They talk about something called the dash line agreement. I want you guys to listen for that term. The dash line agreement. Really, really good stuff. We go in depth on how to estimate rehab costs. All four of us share our opinion on estimating rehab costs for a project. So you're going to learn a few different ways to do that.

We talk about overcoming analysis paralysis. And Lauren gives a really good acronym grip, GRIP. So listen for that. If you're somebody that maybe is struggling with analysis paralysis to get started or to take things to the new level. that is a great segment there. So listen for all that and more. 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 and keep things running smoothly so you don't have to check your phone between beaches. 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. A lot of property managers think their job is answering tenant emails and coordinating repairs. That's not the job. The job of a property manager is protecting and growing your operating income and earning your trust while they do it.

That comes down to three numbers, occupancy, delinquency, and net promoter score. If those numbers slip, your income slips, and your trust slips too. And most PMs don't hold themselves to performance standards. They focus on activity, not outcomes. Mind is different. They obsess over the metrics that actually grow your cash flow. Go to mind.co slash show me to see how mine performs and get a month of management for free. because if you're going to hire a property manager,

hire one that manages your investment like an investment. Managing properties can feel like a full-on circus. You're juggling vendors, tracking payments, chasing approvals across multiple properties, and maybe a few HOAs, all while trying to keep tenants happy and owners confident. One delay can throw everything off, and suddenly your day is all clean up, no progress.

That's why hundreds of property managers rely on bill to streamline their finance. Bill for property management lets you add all your properties, assign permissions, pay bills, and receive payments quickly and efficiently, without the usual bottlenecks. It syncs with platforms like QuickBooks, Zero, NetSuite, and Sage intact, so your accounting stays aligned. You can automate bulk payments across properties and HOAs, choose flexible payment methods like Same Day ACH, International Wires, Card, or Check, and set custom roles in approval policies. There's even a dedicated bill inbox.

for each property to keep everything organized. Ready to simplify your workflow, book your free demo at bill.com slash bigger pockets, and get a $100 Amazon gift card. That's bill.com slash bigger pockets. With that said, time to get into the show. Just a quick shout out to Kyle and Lauren, who's on our show today.

They actually are going to be doing a lot more for the Bigger Pockets YouTube channel. But here's a cool thing. And we're going to announce this more later, but I'm just giving you guys a little tease right now. The Bigger Pockets YouTube channel is changing a little bit, Right now, every video goes on the YouTube channel, YouTube.com slash BiggerPockets. We're actually making some subchannels or different channels so you can follow different things.

So there's going to be a rookie channel just for people getting started. They're going to be a heavy contributor to that channel. You know, David and I might even have a channel of our own. I don't know. We'll see. So stay tuned for that. All right. With that said, let's get to today's show with Lauren and Kyle Klugston.

All right. Lauren, Kyle, welcome to the Bigger Pockets podcast. How you guys doing? So good. Thank you so much for having us. Yes. We're so excited to be here with you. Good.

Me too, because I hear that you're called the Chip and Joanna Gaines of the Jersey Shore. Is that what this is? Somebody told me that. I should call you that. That's what we're going to learn today. That's how you became the Chip and Joanna of the Jersey.

Is that where you guys are at, Jersey? We are in Jersey. We're across the state from the Jersey Shore. So, and those are some pretty big shoes of Phil. Chip and Joanna. I don't know. Yeah,

we're just fist pumping while we're demoing and rehabbing. It's a good combo. We're demo and rehabing. and we're not just mama. Okay. Okay, good. So let's get into your story. We're going to rewind back.

I know people may have seen your videos. I know all over Instagram. I know I follow you guys there and all over YouTube and doing stuff for bigger pockets. But let's hear the beginning story. First of all, where'd you guys meet? I'm going to start with that one. We met in college. I believe Kyle was neighbors with one of my friends back in my freshman, his sophomore year.

So a little blurry back in a day. But we met back then and I have stuck it out since. That's awesome. And how did you, how did you? you discover real estate? Was that individually or together? And who led the charge on that? I definitely led the charge. Yeah, we were getting ready to graduate. And I didn't even know. She was researching this stuff in the secret for like the last two or three years prior to 2011. She actually dropped on the table, Brandon, your ebook, seven years and seven figures wealth.

And I don't come from an investment family. My parents don't invest or anything like that. So I don't really know anything about whether it be stocks, real estate. So that was an eye opener. for me to read. That's awesome. And I was hooked ever since. That's awesome. So for those who don't know what that is, before Bigger Pockets,

I had a little blog, they called Real Estate Your 20s.com. It's still there. I think I haven't updated it in eight years. But anyway, I wrote a little ebook to you guys give away there. It was called Seven Years and Thugger Well.

And then I shifted it over now on Bigger Pockets webinars. I give it out on almost every Bigger Pockets webinar that I host. I actually went and looked at the other day and it's actually funny. I need to update it because I didn't realize how horrible the numbers were

compared to where they are today. What I mean by that is like, It was like, just buy a fourplex for $100,000. If you buy a fourplex for $100,000, and I'm like, you can't even buy. Like, even in a bad neighborhood, you could barely buy like, yeah, anyway, I need to update those numbers to 20, 21 levels. But, you know, as a side note, though, that's a testament to how much inflation we've had. Yeah, over the last eight years. Yeah, properties have doubled over just eight year period.

Yeah, that's totally true. There's so many lessons from that, though, aside from the numbers that we took away and we look at now. And it's like, you know, we implement so many of just little. investor lessons aside from running numbers and things like that. Yeah. Well, that's cool, man. That's cool. All right. So you get inspired by this little book, I guess, and what happened from there? From there, we decided, well, we should probably move in together. We graduated college, lived with our parents for a little bit. And at first, I had some decent savings. grew up. My family was like, it's smart to be frugal and save your money and pay yourself first. So I had this nice chunk of

change. And at first, I was like, oh, if we could buy a house and cash, that'd be awesome. We wouldn't have this mortgage payment. It'd be genius. And then obviously we read your ebook. And we were so used to kind of living for free staying with our parents. I was like, I wish we could just keep doing that. And so house hacking became the solution to that answer or to that problem. And we had a little bit of analysis paralysis and not going to lie. We knew house hacking was the thing for us. And it took us a solid year of researching and just pushing through the fear to actually make it happen. And we house hacked, renovated it, got that first rent check, and we've been hooked ever since.

That's cool. All right. So what was that? Where was that first deal at? Was that out in New Jersey? It was South Jersey, yeah, just outside of Philadelphia. Okay. So tell us about it.

What was the thing? So, I mean, the benefit of the area and how we zoned in on it kind of was it had a nice central walking main street downtown with a lot of restaurants, but the taxes were low. And kind of cost to entry was lower in the South Jersey area. So that's why we ended up honing in on there. And it just ended up being one of the only, I think, I think two multifamilies that we toured that we ended up buying. So why make the decision to get out of multifamily after you bought your first couple?

Good question. So after we bought the first one, we realized, well, no, we didn't realize. We were looking for the next multi. We had a unit count goal. And all we could think about was the unit count and how many doors. And obviously buying twoplexes, triplexes and fourplexes is the quickest way to do that. And we were just having trouble finding that. I think you guys made house hacking trendy and it was becoming a little difficult.

So we were really frustrated and everyone always told you like put the blinders on and just focus on the one thing, focus on the goal. And that wasn't serving us well at the time. So just out of like boredom sitting on the couch, Netflix and Zillowing, we decided to just switch the parameter from multifamily to single family. And we found this like really awesome little pocket of the working class area with really affordable single family homes, low taxes, but weirdly high rent. And we went to go see this place and the numbers just made sense. And so we kind of figured, why are we forcing ourselves to do multifamily when the single family cash was just as good as our duplex does? So that's how we got into single family. It opened up a huge mindset shift on instead of doors, cash flow.

And it was an eye opener to how well this place cash flowed and how little renovation compared to our duplex. It needed. So, yeah, that was huge. Yeah, that makes sense. It's brings up a really good point too of like you hear people on a podcast like well like multi-family should do that or somebody said you should wholesale you should flip and or whatever you know like house hacking is the way to go the birth strategy is the best thing you can do and everyone's got this thing but what's cool is how everything is like unique to a certain area so like something works in every area but everything doesn't work in every area and so you guys just discovered that if you just listen to blanket advice you're gonna you're gonna you're gonna struggle but if you're like hey this area is unique

this has something different here this kind of works here it's just kind of cool that like you figure that out and I think people listen to this need to realize that Like, again, not every strategy works in every area, but ask you stuff what works in this area. And you guys found a little pocket. And those pockets are all over the U.S. where it's like, oh, this is weird. Like lower taxes here by higher rent or lower this, higher that, or this. Really good school district.

Yet the prices are half of it is over in this neighborhood, even though it's the same school district or whatever, right? That's just the value of learning your market. So where do you guys invest today? I mean, what's your portfolio look like today kind of overall? And then where do you do all your stuff at? We're still in South Jersey. We have a mix of single family homes and small multies. so we're under contract right now will bring us to 10 units. And we strategically are kind of investing

in a more working class area where the single families are, where perfect burs are possible. And that gives us high cash flow and a little bit of appreciation. Property management takes a little bit more effort, though. And then we invest in another area that's only 25 minutes away, but it's a lot nicer, definitely better chance for appreciation. Tenants are a breeze. We still cash flow, but just not as good. And so we feel like we have the working class area that gets us that monthly profit and then we have the other area which really builds our long-term wealth. Yeah, one of the things I find, and this is not a hard and fast rule, but a general guideline is your multifamily properties typically cash flow well, but they usually require more work,

more effort and give you more headaches. And a lot of it deals with zoning rules, right? Like in California where I am, the areas that are zoned for multifamily is where they stick every multifamily property. They're not sparsed around all the single family homes. So you get no pride of ownership. It's all tenants living in that area, which usually means the single family homes appreciate more. Have you found something similar in your experience that the houses that you bought that were single family, but in better neighborhoods have gained value faster than the multis? So we actually do the opposite. Our multi-families are in the nicer areas and our single families in the working class area. And the reason why we think that works is because in the nicer areas,

there's more demand for like one bedrooms and working class professionals who are commuting into the city. So we get a lot of people R.H who have decent professional jobs. And then in the working class area, single family homes because it's more families, they can't afford to buy their own homes so they're renting. And then what's your portfolio look like at this point as far as how many singles and how many multis? We have a triplex, two duplexes and three single families. That's awesome. That's super good. All right. So I want to go into some details things that I know you guys are good at. And I want to start with this question of how much work do you guys do yourself versus is how much do you hire out?

So up until this new property, we've done all of the work, aside from licensed, so electrical plumbing, HVAC, but we still manage those subs. So whether we're swinging the hammer or managing that sub, we're doing all of it.

So with our next burr, we will have 100% outsourced everything, hopefully. Yeah, and we've been slowly doing it. Like, we realize that maintenance calls are probably not the best use of our time. So we started working with a maintenance company, which has been great. Now I just send an email and consider it done. So we're slowly trying to pull ourselves away. But it's still our baby. We're still excited about it. And we're still in the

growth phase. So Kyle Lang LVP is actually time decent well spent because he could bang it out in a day instead of paying a guy a couple thousand dollars for it. So yeah. Yeah. It's interesting. Like whenever we get most people get started exactly where you are. I got started exactly where you are where it's like I did my wife and I did all of our own work in the beginning or at least most of it. Anything that we could do we would tackle. Because at the time, yeah, that was my, Like I felt anyway, that was my highest and best use. Now, today I realized that maybe finding deals would have maybe helped me. You know, I could have probably found a deal $20,000 less.

And then that $20,000 would have covered somebody else to do the work. And I could have been watching TV. But like, I didn't have anything to bring to the table, but my, my labor. And so, like, that was my leverage point that I used. And there's a, I think sometimes on the show here, because, especially because David and I are beyond that, like, we're not doing our own work anymore. I think people might feel like that, like doing that is wrong or inferior. like doing your own work, DIY and thing is inferior and everything. I just want to make clear.

Like, it's definitely not. It's just like it's a choice. Do you want to do that? Is that a good leverage point for you or not? Where we get at it is like, is making sure people are asking that question and not just defaulting to it. I'm curious what, how do you guys divide up what work to you do? Do you both actively do everything? Or do you like, I'm the demo person and I'm the, you know, floor person.

How do you divide that up? I was going to say that definitely came with DIYing it because Lauren handles all the management and I handle all the project management. So we would step on each other all the time, and it would lead to little arguments. And we read the book traction, and that was a huge game changer for us also, started treating it like a business and dividing those responsibilities. And it's something Lauren coined the dashed line. What do you call it?

Agreement, the dashed line agreement. So basically what was happening is we decided we need to stay in our own lanes. And that works for a while. Kyle, you're going to do all construction. I'm going to do property management. But then we started realizing that there were times where our jobs overlapped. And because we were so black and white, like, nope, that's your job and this is my job. It created another area of friction because now we weren't being flexible.

And so the way we kind of were talking about it is if it's like a double yellow line, you guys are going in opposite directions. That's no good. First off, you need to make sure you're driving in the same direction. But then there's the solid white line. And that's you're both going in the same direction, but you're both staying in your lane and there's no option to go in any other lane. What we realize what is both efficient and that works for us and make sure balls don't get

dropped is kind of like the dash line. And that is we're both traveling in the same direction. We're both in our own lane, but we are allowed to come into each other's lane as long as the key, as long as you signal and let the other person know that you're coming into their lane. You do your task. And then more importantly, you signal that you're leaving the lane. So, I mean, it really just comes down to communication. And an example of that is like property management. I'd get a maintenance call and I would want to call one of our subs to go do it. Well, technically that sub has the relationship with Kyle and not me. So it started getting a little blurry and then was I pulling a sub away from a renovation job to go do a maintenance call?

And that's where the weekly meetings really helped as well, scheduling out. So she knew where I was at with subs that we have. And I knew when they were tied up with her on maintenance calls. That's smart, the whole like letting people know, because I found a lot of the drama that me and Heather would have if we had any like disagreements or arguments, it was because I wasn't signaling to get into her lane. So that's such a good analogy because I just like, I just push my way in. Or then I wouldn't let her know that I'm leaving the lane. So then just things get drop. So that's really, really good advice for that. I know you want to say them. Yeah, it's just once again, this is coming down to business principles being applied into the world of real estate investing.

That's what we're talking about. It's recognizing we have to have weekly meetings to talk about where we are. So each person understands what lane they're in and where that lane's going. We have to show respect to our business partners if I want to borrow a person you're using or if I want to change the plan. That's a great analogy of signal to let me know you're coming in and then signal to let him know you're going back out. respect it when you show them respect. Hey, I can I borrow this person or, hey, I can see a problem coming up. Let's talk about what we're going to do rather than the last minute, hey, I grab the guy off your job site and that screws up everything they've been working on. I mean, frankly, just thinking about being a relationship like you guys have and being business partner seems like

that's high risk, high reward. It could go great or it could go terrible. Exactly. I mean, and that was something that we were coming up on was that our business conversations were spreading out throughout the entire week. Instead of just Monday, we talk business. And the rest of the week is husband and wife, Kyle Marne. So on that note then, you mentioned traction, that you read the book traction. Yeah, you said it changed your business. How so? I'm wondering if I can get into some specifics there. Like, how is your, how do you currently run your business? Because most people don't get into traction and like that level until much later. And I love the fact that you guys are in it now. Like, what I mean by that is like, it's like I got like, I didn't start traction and EOS the model until I had

six or five employees and millions of dollars coming in. Like, I mean, it wasn't until that level, but I wish I would have started when I was at your level. So what, what do you do? What does that look like? And how has that helped? Yeah, it's advanced, but it's applicable, I think, to investors, whether you're just starting off or whether you have as much time brand on as you, specifically just at weekly meetings, something as simple as that to take away. But God, Lord. Yeah, when we first started reading it, we were kind of like, business focus. There's nothing about real estate in here. And so it took us a minute to implement it and how it can reflect on what we're doing. And I think the biggest mindset

shift is that we aren't real estate investors. We're business owners. And real estate investing just happens to be a part of that. And so like Kyle said, we did weekly meetings. We started doing KPIs and we did the whole organizational chart. So what do we want our business to look like in three to five years? Who are those people? Who's responsible for them? And how can we slowly get there? So right now, yeah, we don't seem to have this super big structure. But I think knowing that we know what the structure is going to look like. And we have that mindset in place now is going to help us grow and really develop into that EOS system. That is a great point that getting the foundation sort of settled on how you're going to do it allows you to scale. I think it affects your subconscious

quite a bit when you're when you know if we go bigger, it'll be okay versus your subconscious knowing if we go bigger, the whole thing's going to collapse on us. You'll hold yourself back. I know one thing that stops a lot of people from getting into real estate investing is that they don't understand how to estimate rehabs when they're buying a property. Usually it's their first property, but I think even after you've got one, if you see it could be a good fixer-upper or a good deal, and you just have zero idea of how to tell how much it's going to cost to fix it up. You guys are doing a lot of your own work. Can you walk us through what your process is when you first walk a property to figure out how much you need to budget for the remodel? Yeah, so we at first were just walking it with a

paper and pen and it just wasn't the most useful system and very easily you miss things, you miscalculate, and we're only talking about 1,300 square foot homes, three-bed one bath. You expand that to a 2,500 square foot home, and a $3,000 to $5,000 miss is now a $10,000 to $15,000 miss. So Lauren actually developed an air table program, which we have all the prices for material because we use the same material over and over again and our labor costs. So we just go right in and punch whether that property needs it. And it's given us a calculation while we walk the property So by the time we leave, we already know what's going to cost to renovate the place. Do you mind walking us through what some of those would be?

When you're looking at flooring, when you're looking at a roof, when you're looking at plumbing, how do you sort of eyeball it so that people who don't have your background in construction or rehabs can feel somewhat confident that this is a property they should pursue or they should walk away from? Yeah. So when we first walk up to the house, I mean, looking at the roof, is there green hue? A lot of our roofs in the area that we invest are they're flat tar roofs. So you can gauge a lot by just looking at the soffit, whether it's got water damage or not. And then we just assume it needs a roof repair.

We just budget for a roof repair. Then as we go in, we try to save what we can and not just demo everything. What can we keep? So linear foot of cabinetry, things like that, we just pull measurements and kind of we know, like I said, when we leave. Yeah, but if you don't have construction experience or rehab experience, I think the best thing is to have a contractor walk with you. And I know that's a hard relationship to build. Like, hey, at some point in the future, I might buy a property, will you come and quote me?

But I would say, one, definitely pay for their time. Once you get that first estimate, as long as they itemize it, and again, this might cost you, then you could kind of take those itemizations and you could really calculate any rehab moving forward, at least for what you see for the most part. So like, if you get an estimate and the guy's going to charge you $3 for laying new LVP and that includes material and labor, well, then you know, anytime moving forward, you're just going to pull a measurement and you got that. So I think if you have no experience, unfortunately, you kind of just got to bite the bullet and take that upfront cost of hiring a contractor and paying them to do a quote, even if they're not going to do the work just so you can get that itemized breakdown.

This is such a good point that you bring up here. I want to make this clear because it's about it's about more than real estate, but it will apply it to real estate right now. And I'm going to use an analogy like I tend to do of like going to the gym, right? So the first time you go to the gym, you have no idea what any of those, that equipment does. There's 500 things of equipment there and you have no idea. But if you go there and you learn one of those things and you get kind of good at it, like, and how do you learn it? You ask the people standing around.

You have, you pay for a personal trainer to go walk you through the first dozen equipment things. You watch some other people do it. You maybe watch a YouTube video on it. Like, I'll pull up my YouTube like at the gym. If there's a machine, I don't know what it does. Or even if it is, I know it is. I want to learn that.

I want to make sure I'm doing the proper form, right? So those are all things that I do. And then once I know that thing, this is what you were saying is like, once you know that, you've got it from that on out. So what I think people that are new to real estate, especially they get into it. They're like, well, I don't know how to estimate rehab costs. There's all these complicated things. Oh, I guess I better just sit down and watch some TV instead.

Rather than realizing, like, if you just add that, like, you figure out, okay, I don't know how to estimate flooring. How am I going to figure that out? Well, I bet you a Google search or talking to a contractor, paying a contractor, you'll figure that out. And then you'll never need to figure that out again. And unlike the gym where there's 500 different machines there, like, in reality, there's probably like 50 things on a rental property or a burr or rehab that you, like,

need to learn. There's like the plumbing. You need to figure out how that plumbing is estimated and electrical. And it's not terribly complicated. Maybe in 50s even probably generous. It's probably more like I think there's 18 categories that Jay Scott has in the book on estimating rehab costs. So like it's not a horribly complicated thing.

My encouragement for people listening to this is just like it is going to be difficult in the beginning. Most things are. But the more you do them and the more you practice and when you ask the question, how do I do it? You'll figure it out and then never have to do it again. David, I'm going to fire this question over to you is how do you from a distance, especially estimate rehab costs?

Like, what do you relying on there? Yeah, I sort of got better at this from helping our clients that we're buying houses for because they have these same questions. We find a deal. They say, that's great. And we say, hey, here's the vision for how we're going to fix it up. This is what it'll be worth. We put together all the things that we're telling the people on bigger pockets.

This is what you should look at. But they still have the question of how do we know what it costs? So what we do now is we take a video of the inside of the property and we set it to our contractor and we'll say, okay, to do the flooring, to do the roof, to remodel the kitchen, give me a ballpark of what it would cost, make it a little more expensive than you actually think it's going to be so that they don't get caught off guard. And then a lot of times the sellers will have inspection reports that we can also send what would it cost to fix this electrical problem? When they don't have inspection reports, you usually have to wait until you get

your own. But oftentimes contractors have done this so many times they can tell you if you need new electrical, if we have to reroute plumbing, it'll be about this much. So I just started applying that same strategy to my own deals. So now when I'm looking at properties, I'll ask the sellers, do you have any inspection reports? Do you have a report from when you bought the house? If they bought it two years ago or something, then there's a good chance that they still have something. And I have them send me the video, which I send to my contractor. Now, he's going to give me California prices, usually if it's somewhere else, it'll be less. But shoot, if it'll work for California prices,

it'll work if it's going to be less. What about you? What have you figured out to solve this problem? Yeah. So like you, I do a video, like I'll do a video walkthrough. In fact, I was over in Oahu the other island in Hawaii. I live on Maui, but I was on Oahu I was two weeks ago. And my wife was here. And then a deal came on the market. And I wanted to go look at it right away,

but I was on Oahu for a couple of days and I couldn't get back. And so my wife went and she just walked around with a camera. So this is what we typically do in this. And it showed how it worked really well is we just record a camera, walking around the place, recording everything. And then I usually just go home and I get on either a spreadsheet or like Bigger Pockets actually has a rehab estimator calculator, which we designed to work exactly like this.

It divides everything in the categories. So I'm like, Okay, check one. Roof. Well, it's a condo. Don't have to worry about that, right? Landscaping. Oh, it's a condo.

Don't have to worry about that. Oh, Florian. And it'll just say, okay, Florian. How many square foot is this property? Oh, it's, I don't know, 900 square feet. Okay, well, if I figured $3 a square foot, which is you could get by Googling that anywhere between, I don't know, two and four, two and five, depending on the level you want to do. But I'm like, okay, three bucks a square foot.

It's like, I don't know, we'll call it $3,000 for flooring. Boom. Now I'm done with Florian, and I'm like, I can move on. Like, that's good enough. And then when I came back from a while, because I did that whole thing, I estimated the rehab cost, came back, and then went and looked at the property in person.

We just got it under contract. When looked at it, and like I was exactly right on, even though I'd never seen the thing, just because the video got me just by doing categories. There was nothing surprising there. Anyway, so that's how I do it. I get a video,

then I sit down and I put into categories and then just ask the question, Florian. How much is the flooring going to be here? If I don't know, I ask the question, how do I figure that out? So anything you guys want to add on to that one, Kyle or Lauren?

Yes, just to take away from walking the properties. local meetup. We had a member, we were in the middle of a rehab, and he asked us if he could come walk the property with us. And he was just getting into, it was going to be his first property. He was going to go put an offer in on. And he took a lot away from how we were going about renovating, how we came up with our numbers, because he was going to be investing in the same market that we were doing our property in. Yeah, that's smart. 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.

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vetted locals who already have experience hosting on Airbnb. A co-host can handle all the details like messaging guests, creating your host space, and managing reservations. So everything runs smoothly. It's a practical way to earn a little extra money, maybe even some cash toward your next trip. Plus, you get to share your place with someone traveling to your area while you're off making memories somewhere else. Your home might be worth more than you think. Find out how much at Airbnb.com slash host. So let's shift gears a little bit from the rehab side and go backward in the funnel a little bit. How are you even finding these properties in the first place? It's been a mix. We've done the MLS, we've done direct mail and wholesalers. So it's kind of

just been we're putting leads out everywhere and seeing what works. Okay. So you're filling your funnel, kind of run it through it, say what works. So let's let's have in the direct mail. What's worked with you with direct mail marketing? Because that's something that's it's a little more complicated strategy, but, you know, it's a good off-market thing. Yeah. So we're doing this, what I call like a DIY approach. So we're doing super targeted, super niche. We're only sending out about 30 letters at a time, but we're driving for dollars.

We are pulling expired listings, which has worked out super well for us. But we just like really narrowed down our criteria. So I know how I kind of said before that you don't want to have your blinders on. But now that we know what works, especially in this market for Burr's, we are like super focused. We know we want three bed, one bath, over a thousand square feet, preferably under 1,300. needs a certain amount of renovation. And so we're really targeting those owners.

And granted, this might be a little bit beginners luck, but our very first direct mail campaign, I think we sent out 47 letters, and we got a deal from it. So we're still doing that, but we just try to be like super hyper-focused. We include a picture of ourselves in the letter. We talk about how we love the community.

Like, we don't want to be the we buy houses people. We want to be Lauren and Kyle, your friends from down the street who are going to help you solve your problem. That makes sense. You know, I was going to say, you may have gotten lucky on that, but really what you did is you're taking the rifle

approach, right, like instead of like the shotgun approach. So like you're like, I'm going to target these specific properties and you get very, very specific on how you're going to do that. And yeah, you can get a way higher conversion rate when that's what you do. Same with driving for dollars. I mean, if you go download a list of like every property for sale in my or every property in my area that's absentee and then you mail all of them, that's like the you're going to mail 10,000 people and you're going to get like 12 phone calls maybe because everyone's doing that and it's just a very, and it's not that it doesn't work. It can work. But you're taking a very different approach. And I, it's kind of the approach we take as well.

I got an open door capital with the mobile home parks. And we pick specific ones and then we go after them hard with really good like info, not just a crappy postcard necessarily, but we will write a letter or we'll send them a gift or we'll, we'll do something creative to try to get it. So yeah, the rifle approach definitely can work, especially if you're new and you don't have a $5,000 a month budget for direct mail. Yeah, then you got to compensate by doing a really, really good job on picking the people you want to go after. And that so anyone out of there? No, I wanted to get a little bit of clarity from you guys.

You mentioned the Burr strategy. Can you tell me a little bit about what that means and then how you guys execute that strategy yourselves? So Burr means buy, renovate, rent, refinance, and repeat, hopefully at the end. And our very first Burr deal happens where a wholesaler contacted us and we were able to get the soft market deal. And because we were able to DIY that one ourselves with renovations, we were able to save money and make it work. Now we're moving forward and we're like, we don't want to DIY the renovations.

We want it to be like a true burr. So our focus is now. But what we learned from that first property is that when we got the appraisal report, the appraisal shows you exactly what items the appraiser's looking at when they're coming for the after repair value. So now we have this, almost like the contractors quote that you paid for once and now you could use moving forward. And we kind of just like work backwards and reverse engineer the appraisal report. So we know that an enclosed front porch adds $2,000. We know an end unit of a verse. home adds $3,000. We know that a fenced-in-yard doesn't have to be vinyl.

It could be chain link adds $1,000. So now we take that, that thing we paid for once, and we use that for all of our future burs to do our renovations. We know should we do central air, should we do salesill appliances. So that's been super helpful for us and is making our burs more efficient. That's smart. I don't think I've ever actually heard that tip before is by looking at the appraisal

report, figure out what the appraiser. Yeah, that's really good. You have me wondering how you could get appraiser reports from other. houses in the area. Like if you looked it up and you saw who the realtor was, can you ask them if they would talk to their client, if you gave them 100 bucks, if they'd send you over the appraisal from their property, you could put together a really good picture for a neighborhood and what properties are worth. A thousand percent. At our local meetup, we all invest in the same area. We are very open about being friends with our competition because we don't view it that way.

We don't have enough money to buy the entire neighborhoods. We'd rather be friends with them. And I don't know if this is kosher, but we all share our appraisal report. and we know, oh, so-and-so got screwed a little bit on his duplex. Okay, we're noticing that single families are appraising a little bit more. Okay, maybe we'll shift our focus and focus on that. Yeah, that's really, really, really smart. I like that a lot. All right.

So you're, I love that. The Burr strategy is something to David, I mean, David, you wrote a book called Burr by Rehab Rent and Refinance Repeat, so people can check that out, of course. And what's cool, too, is when you talked about, maybe it was beginner's luck with that first direct mail that you did and you got a deal. One thing I'll make the point is that the reason we all like Burr so much is because it's like flipping houses, right? but instead of selling them, you're going to keep the property.

Because of that, we can pay more than house flippers. We can pay more than wholesalers. We can pay more than what a lot of people can do. But the retail buyers, they don't want to touch those because they're usually nasty properties. So we're in this really cool spot where you can pay more than everyone else. And therefore, some of the strategies that maybe are really competitive and hard for the flippers and the wholesalers, the burr investors can swoop in there.

So I'm sure, like, a lot of flippers probably just hate the bur people because, like, we can just simply pay more. Like I don't really like this condo I'm buying right now is it's kind of a bur. I don't know if I'll actually end up refinancing it. I might keep the money in there. But like it needs a little bit of work to make it nicer. But like we're negotiations and I'll say we're like they were asking. I think it was like 800 and I offered them like 740.

And we went back and forth and like the guy just did not want to come down much. We ended up settled at like 785. But like honestly, I hope these guys not listen to this. But I don't really care. Like this sounds stupid. But like if I paid 750 or 770 or 775 because there's, 30 years from now, it just does not matter. I don't care that I paid 785 versus 780.

So like the realtor was like, oh man, they just won't, they won't do that final $5,000 drop. Do you want to walk? I'm like, well, of course I don't want to walk over like a half a percent. Like, come on. Like it just doesn't matter. And it's that mentality. Now obviously I'm not going to buy overpay that I'm going to lose money on a cash flow.

Like it's good at cash flow for me. But long term, that's what's fun about the birth strategy. You guys agree? 1000%. That's cool. So again, it's different strategies. learning different things, doing a better job of the direct mail or the reach-out. Actually, one more story on that note.

There's a house. I may have started telling the story once on another episode. I can't remember, but there's a house in my neighborhood that I really wanted. Like, I'm driven by it a hundred times. I started mailing the person just with like a, like, one of the driving apps and like, send him, send him some postcards and stuff. And I just got to put like half effort into it. And because it was one of many houses we've been mailing in, in Maui.

And my partner and I. And so I didn't put a lot of effort. Like, it was a very generic, like, letter and postcard. I didn't do, like, what you guys are doing, right? And, like, I didn't get, like, the guy never called me, nothing. And then the other day I'm talking to my buddy Tarrell, Tarle the Arbor, who's been on the podcast a couple times. And he's a really good, like, he's a good investor.

And he's like, yeah, you know that house near? Because he lives up here too now. And he's like, hey, you know that house over there? He's like, yeah, I'm getting under contract. And I was like, I've been mailing that guy for like six months. He's like, oh, yeah, I just, like, found his phone number and skip traced him. And then I found somebody that knew him, a neighbor. something like that and asked for an introduction so it was a warm intro and then I talked to the guy

and I hit it off we talked for like a half hour and then ended up getting it and I'm like he did what I wasn't willing to do right like he put in the work he did the rifle approach on a property he knew he wanted and I was just shotgunning stuff out there and anyway so it just shows like again if you're new if you're in a competitive market put in the hustle put in the time needed to get those things and then if you're going to burr it you can pay more than everyone else and it all the stuff still works even in a super competitive market when you're smart like that so anyway good job Taral for kicking my butt on that one. Though Taral might wholesale it to me.

We don't know. We'll see. All right. So let's move on and talk about funding. How are you guys affording to buy these properties? The first couple we started with our own savings. We moved on to using private money, which was one of our burrs. And that was luckily a family member, but we still set up the terms just like we would

be using a private lender because we do want to eventually use outside private lenders. And that was essentially a perfect burr. We had no money left in that deal when we were done. Using private money has been a really good experience for us because we definitely started out as like, oh man, got to go ask my parents to help us fund this deal. And now our mindset definitely turned into, no, we're providing an investment opportunity for people. And we feel like we have a better foundation to grow that private money aspect moving forward. And it all has been happening with like in the last six to 10 months with COVID. Unfortunately, there's a lot of bad things that have been happening.

But it's really allowed us to really sit down and start treating this thing like a business. And so that growth has been happening in all areas of investing for us. And it's just really cool to see. We're super excited about 2021. So this is an interesting topic. As you broached this idea of private lending to whoever you're going to borrow from, how do you typically initiate that conversation? If it's a family member, it would be a different approach and if it's somebody else.

But what we have been doing is trying to really like legitimize ourselves. So we created an invest with us package, which is basically a downloadable PDF that introduce people to us a little bit, what we've been doing, gives a full break job of our entire portfolio, what's the value, what are rents, what you know, what's going on. And then we share a vision of where we want to go. And then we invite people to be a part of that vision with us. Then we also give them a sample deal. We got this from Matt Faircloth's book. I definitely did not make this up, but get a sample deal, which looks just like a deal that you're hoping to do in the future and let them know, hey, if I brought you a deal that looks just like this, would you invest

with us. And what questions do you have? Do you need to bring this over to your spouse? You guys can marinate on a little bit. Try to get all those conversations out of the way so that when a deal does come, you can just rock and roll and move forward. So having all this kind of like documents has been helpful for us. This is so incredibly important, like this idea of what you're saying. I want everyone to like listen very carefully what you guys just said. Rewind this. Listen again. It's like when you approach a private lender or really almost, I mean, you can even expand this beyond real estate, But like if you approach a private lender and you're like, yeah, you know, I do real estate or I kind of want to. And I'm thinking about it.

Anything you ever want to do with me? You know, let me know. Cool. Like it just shows you are just not professional. It doesn't exude confidence. They're just like, okay, well, this is just, you know, whatever. And it's going to be really, really difficult. But treat it like a business.

Like we keep saying today. Like put together, like you said, what did you call it? The in. Invest with us. Invest with us. Yeah. Love, love, love, love that. And it explains that here's why you should do it.

And even if you're brand new, like, find it. Find a reason why people should invest with you and create an invest with us packet. Like it's, you just find your way to make yourself look professional and good because everyone understands this concept. How you do anything is how you do everything. I was talking with a buddy the other day about that he has, he's got a cleaning business. So he cleans houses for people. And he doesn't have a website or business cards.

Now, you know, business cards, whatever. You know, you can take him or leave them. But at least like they show like you're professional. Like you have something. So when he's talking to people about his business, they're just like, well, yeah, I clean houses. Oh, cool. You know, like, work how to learn more. But, well, there's nowhere really to learn more.

It's just this is what it is. Like, ah, I just put together like something simple. Even like a one page piece of paper that you're like, this is whatever home cleaning. And here's what we offer and here's what we charge. And here's four testimonials at how good we work. And here's our guarantee. And like, all of a sudden people are like, oh, it's a thing. And they'll invest or they'll buy or they'll work with a thing.

But people don't want to work with somebody just, you know, throwing things in the air. So. And something that we didn't do strategically, but has worked really well. for us is having an Instagram account, we started putting stuff on Instagram just because, like, hey, we're doing this thing and I want to document it and not blow up my personal feed. My friends don't care as much. So we started it and it became a visual resume that we didn't know we had. So we had a private lender reach out to us and he invited us out to me and we're so prepared.

We got our iPad. We got our invest with us packet. We got everything. We're so excited. We're going to share all the numbers. We're going to show them all the pictures. And he was like, oh, no, I've seen the stuff you guys do on Instagram. I'm like, I know you're good.

This is more just like a sanity check. Okay, so you have someone who's interested. You've given them the invest with us package. They say, yeah, I think I would do this. What are the actual forms or documentation that you need to solidify this? So it's safe for them. It's safe for you. And everybody understands what the terms of the deal are.

There are two major things. One is the promissory note, which spells out the terms. And basically, you're personally guaranteeing the loan. And then the other thing is filing documents with the county. And we'll just have a lawyer do that. So I can't dive deep into like what actual. forms there. But that's an example of I could spend a lot of time figuring out that process, or I can just pay somebody to do it for me and make sure they do it correctly. So in the scaling

traction mindset, I was like, let's just hire a lawyer. So what are you guys approximately, what are you paying the lawyer to do this for you? So I believe the first time she drafted up the documents for us and it was like 500 bucks and now we kind of just reuse them. Okay. So you paid 500 bucks for paperwork that you can use every single time. Yeah. Yeah. And that, I know. And people are like they're they want to save money on that like like yeah yeah that's it's such a good point that like it doesn't cost I think people are afraid of lawyers one they I think they are afraid it's going to be $30,000 that's exactly why yeah yeah because that's what everyone thinks is yeah I can't afford a lawyer yeah what do lawyers cost I don't know but I know I can't afford one and this came

in a play too when we were doing off market deal so the first time we ever did an off market deal I don't know how to close an off market deal like our agent had always done that for us and so we reached out to a lawyer and she's like well I could do it two ways I could either draft documents and then you do everything else. Or I can kind of like hold your hand through that process. Like I'll work with the title company. I'll order the appraisal and the survey or whatever. And so the first time I was like, I want the handholding. But what I did is during the handholding, we took notes. We're like, okay, she emailed the title company on this day. She sent this document to this person. And basically it created an SOP of what she was doing. And now we just use her to draft

the documents and I do the process myself. You know, this reminds me of your gym analogy. your first time in the gym, you don't know how the machines work, so you just won't go, but you pay your personal trainer to show you how to use them. And at a certain point, you say, okay, I don't really need the personal trainer. I can do it. This is the same thing we're talking about. What I want to highlight is that I think when most people consider, I'm going to go to the gym, what's it costs.

Well, this is your membership. This is what you're going to pay for supplements. And this is your personal trainer fee. And you assume it will always be that expensive. Yeah. Or people assume I'm always going to have to pay a lawyer. But like Lauren just said, no, you pay for that the first one or two times because you want the hand holding, but once you've shown me how all the stuff works, it's not scary anymore.

Now I can kind of do it on my own. I think we talk ourselves out of it is what I'm getting out of, assuming it's always going to be this expensive every single time we do it. Yeah, that's a really good point. Also, it goes to like the LLC question. I mean, how many times you get, you and I get these questions? Like, do I need an LLC to invest in real estate? Do I have to have an LLC? And everyone got this question. And the answer is like, yes, no, maybe, I don't know. Like, and then we say, we'll talk to a lawyer. And then people just never will. And the funny thing it's just like with the with the dollar amount thing like if you had to get a phone call and this is why I tell people if you're really concerned about the LLC thing okay get on a 30 minute phone call

with an attorney with an attorney and a CPA at the same time three-way call you're going to pay 150 bucks for half hour with an attorney 150 bucks for that CPA okay so $300 for 30 minutes of really smart people telling you exactly what to do together and they can they can bounce back and forth so in the words you can answer that entire question for 300 bucks like specifically for you in your situation, you can learn exactly whether or not you should have an LLC or not in a 30-minute conversation for $300. And some people have been sitting on the sidelines of real estate thinking, well, I just can't get into it now for the last six months or a year because I don't know the answer to that

question and I don't know what to do. And it's like, in reality, it's pretty simple. Like, just go get that answer to that question and then do it. So the real question is, is it the money of the attorney and is that what everyone's afraid of? Or is that just the excuse that they're using because fear is causing them not to take action? They don't want to admit that they're just afraid. So instead they say, well, I don't know the LLC thing.

And that's where I would want people to really dig into their souls and ask like what really is stopping me from moving forward today. Well, let's ask you to that. Did you guys even care about opening an LLC or did you just jump in there and start buying properties? We asked that question, just like you said, Brandon, I mean, hundreds of times that we're still asking it. What's the correct answer? And we just started buying in our names. I mean, we just have a nice umbrella policy for asset protection. And that's where we sit down.

We're still kind of continuing to buy in our names. And we try to stay educated throughout. So right now we're really focusing on being an offensive protector. So LLC is protecting once you get sued. But what are the things we could do to just prevent us from getting sued in the beginning? So those are the things that we're really focusing on, good contracts, working with licensed professionals, making sure we have everything really squared away. And as we're growing, yes, we realize an LLC is going to be part of our strategy moving forward.

but if we waited to answer the LLC question, listen, we were already in analysis paralysis. I didn't need to go research LLCs now. So we're like, let's just find our personal name. You could always change it later. Yes. This is also a great point that you mentioned. Rather than trying to find the right answer for when I'm sued, how do I avoid just ever getting sued?

Such a smarter way to approach it. And this comes up a lot for me when people, like I own California property and I represent people. And California is notoriously not a landlord-friendly state. So it scares a lot of people. They're like, I don't want to buy in California. If it goes to court, I'm going to lose. And I've never, well, yes, the very first sales I ever bought, I went to court because I did

everything wrong. I didn't vet a tenant. I just grabbed them through them in there for someone off Craigslist. Literally didn't call a reference, didn't check their credit, nothing. Since then, I hired a property manager. My entire time of investing in real estate, never, ever, ever have I needed to even have these landlord-friendly or tenant-friendly laws come into play. because I buy in B and A class areas,

I have property management, scout the tenants, and I rent to people that have something to lose. They don't want their credit hammered. They don't want to have like an eviction on their record. They would be embarrassed if they did something like that. So these laws that are meant to protect landlords never come into play. And that's something I've realized is if you're choosing where you're going to invest based on the worst case scenario and where you're safest than that,

you're probably doing it wrong. You're better off to avoid ever getting in a situation where, where that would happen. And I think that this is just a great thing to point out that you're taking the right approach. How do I make sure I never get in that situation? Most of the questions that people ask Brandon and I that are tough to answer have to do with like the equivalent of, okay, somebody's got my back.

They've sunk in a rear naked choke. I've got three seconds to figure this out. How do I get out of this? Right? It's good. Another jihisisu. Yeah, we're doing a lot of those. But this, the point is you've screwed up 12 times before you got to that point.

Let's go back to that and try to avoid doing it. So the next question I want to ask you guys, when you've got the private money, you have an investor, you've found the deal, you drove for dollars, you've got a seller who's willing to put it under contract. What can someone expect as far as the timing and the logistical things that have to happen once all of the ink is dried and you've got a contract? So it depends for us at least who's responsible for the certificate of occupancy, but it can be as quick as 24 hours and it can be as long as 30 days.

and that we really kind of leave up to the seller. If it's their primary residence, do they need time to move out? If they're an absentee landlord, do they want it off their books immediately? We're really just here trying to solve their problem as best as possible. For us, 20 days has been the sweet spot for everyone to kind of get their ducks in the row and make sure everyone's happy. So what's happening during those 20 days? If you want an inspection, you're getting an inspection.

We'll sometimes waive those to get a cheaper price. The title company is doing the title report to make sure there's no liens. we have to communicate with the lender or excuse me, the private lender to make sure that they have the proper instructions how to wire money either to the closing table or to us. So it really just kind of is a lot of logistics. And a lot of that can be done in less than five days, but 20 days has been what it's been for us. Yeah, that's cool. I mean, I usually do like the whole like, well, I can close in 10 days. And I would tell people with that.

And then I found that, especially in Hawaii, you can't close in 10 days in Hawaii. It's like like this. They don't move that faster. No. This is like, like, well, I can get you an inspection. in a couple weeks from now. You know, it's just everything works very, very slow here. So now I even like the condo that I just got under contract for,

I'm going to do a vacation rental thing with it. I'm going to, like I gave myself 60 days to close just because of how much problems I've had in the past with just how slow some people move. And that's just, you know, you know your area and do it as fast as you can. But if you need more time, take more time, I'd rather not be stressed right now.

Now what about the private money, the money itself? This is something that a lot of new investors don't understand. Like, does a private lender just put all the cash in a dollar, bag and then throw it on your front porch and you guys go and drop that off at the seller's house. Like, obviously not, but walk us through like, where does the flow of money go in that process? Usually goes to an escrow account. So they'll wire it to the closing table. And then you can take it out of there for renovation.

So it never actually comes into your personal pocket, which is nice. And then it keeps it super clean. And then if you're going to be doing a delayed financing, which is like the new trendy thing that everyone's doing, you want that money to be documented at the closing table because then when you go to refinance, there's documentation of that. So then you could pull out that money plus the renovation. you cost. Yeah, why don't you explain delayed financing for those who don't know what that is? I love that this is Lauren's Lane and it's not my lane. He's not blankering. He's not coming in.

So delayed financing is very similar to just cash out refinancing, but you can do it sooner than the six-month seasoning period that most banks want. And the reason is that you can't pull out any additional money than you actually put in. So at the closing table, on the final documents, you're going to put the purchase price. You're going to put the estimate. You're going to put the estimate made rehab costs and any additional costs, maybe like interest or closing fees. And you're only going to be able to refinance the amount of money that's sitting on that closing statement. You're only going to be able to refinance what's on that closing statement. So some banks will be able to refinance the day you finish renovations or maybe the day you

place a tenant and then you'll get all that money back. And so the major difference is really just timing, delayed finance and you could do sooner and you can't take out additional where a conventional cash out refinance usually has a four to six month, maybe nine months, period, but if you do a great job, you can pull out additional cash if that equity is sitting there. Yeah. So this is something that I'm going to pick your brain on, see if you know the answer to this. I'm using you as my own personal. I'm going to pick your brain here. All right. So this condo that I got under contract right now, like I said, 785. I think it's where I'm at on it. It needs $35,000 of work. My plan is, now this is going to get a little bit like legal reasons, like, you know,

can I do this with a 1031? I'm not sure. But let's avoid that for now. So if I were to buy this property and then on the closing, they buy it for all cash. Let's say I just paid 100% cash for this property. Can I use delayed financing so that way I can then basically when I refinance it, you know, or finance it here a month from now once the repairs are done, I can get back the money I put into repairs because like right now like I can,

I can put the down payment down, but the repairs I have to come out of pocket with and I'm just going to invest that in the deal forever. So delayed financing is a way for me to get my repairs back right. If I do it right on the closing. statement. Is that right? Correct. And as long as the ARV is there and, you know, it's 75 or 80% of the ARV. Yeah. Yeah, interesting. I think I might. I had to look into that. I mean, yeah, again, the thing that might throw a wrench in that is because the down payment's coming from a 1031.

I wonder how that would work. I use half my own cash, half 1031, and then refinance the whole thing. I don't know. I'll figure that out later, but it's an interesting one. All right. So let's move over to one last topic before we kind of begin to wrap things up. And I want to talk, you mentioned the word analysis paralysis. I want to know, like, what is analysis paralysis and how did you guys overcome that to get your first deals to start building momentum and to get to where you are today? We were reading so many books and just when do you know enough to get some skin in the game? I would say it was probably three years close to before we actually made our first move. We overcame it really by just structuring it and reverse engineering. Lauren could kind of break it down,

but we want to get a house. So what do you have to do to get a house? Go for it, Laurie. Well, because it was so scary. Like buying a house is a huge overwhelming task. because there are so many steps and you just kind of don't know where to start. And we were just stuck in it. And it was to the point where I was like, we either need to do this or move on because, you know, we took the advice. We were calling ourselves investors before we even had a property because you got to be it before you could be it.

I was like, we're just lying now and we're wasting a lot of time reading. And so we kind of broke it down like how I said reverse engineer. And it was like, what is the one task I have to do right now to get me to the next task? Because I was so worried about, but then what about this later on, but I wasn't even doing the first step. of like the LLC analogy or example you're giving before. You won't even buy your first deal because you don't know the answer to what's going to happen when you get sued 10 years from now. So, I mean, we kind of like came up with a little acronyms called grip, but it's basically,

you really need to like get a grip on yourself. So the first one's goal. So you got a set of goal. Maybe it's buying your first property. Maybe it's switching to a new asset class. The next one was R and it's reverse engineer. So just starting with the end in mind, work backwards and break all the steps down into something as simple as possible. and then I identify the first step. What is that first thing you need to do? And then P, perform. Do not even look at step number two until the first step is done.

And what we realize is that, like, you started doing productive procrastination. Well, I'm just going to listen to Brandon and David one more time. And, like, I'll have more information and I'll totally be ready. But if you guys are talking about 1031 exchanges and I'm still working on my first properties, that really productive for me. Obviously, everyone should keep listening to this podcast all the time. but take one thing from whatever you're doing and then go implement it and make sure that you're only focusing on that first task. So don't be reading about LLCs if you don't plan on starting one yet.

And there's so many problems that you come across in the middle of these deals that you didn't read about and you only learn just by experience of them. And then it's that documentation that's going to help you on your next property to either avoid that problem or you're going to know the answer to it. Yeah, that's such a good point is that you'll figure out as you go. I like to use the analogy of driving through fog, right? You drive through fog and you can't see the deer in the road a road end, a bridge out. You don't know if there is one or does the road end? Does it bridge out? You don't know any of that stuff. But if you pull over to the side of the road, you're never going to get anywhere. So it's best just to just keep driving. Maybe slow down a little

bit if you need to, but like just keep driving through the fog. Don't pull over. And as long as you just keep taking little babysat forward, there's always a zone of clarity around you. Like when you really stop and think about it, you can always figure out the next step. You can't always figure out the 10th next step because it's too far away. So just keep moving forward. Keep asking what is that next thing I got to do and you'll figure it out. All right. Let's move on then to almost the last section of the show. I do have one more question actually before we get to the famous four. I'm wondering what our audience can do to bring value to you guys right now. What are you looking for in your real estate business right now? And you're looking for deals. You're looking for

something else. Like what do you need? Definitely looking for deals. Definitely looking for private money. I mean, really our immediate need right now is we are doing a lot of video content. Like we get an editor. If you guys want to trade editing time for some real estate knowledge, We'll make that happen. Like coaching or something. Here to get inundated. But it's smart, right? Trade what you got and make it happen.

Help somebody else. And yeah, yeah, having a video editor changed my life. I got a guy named MJ. He's amazing. Yeah. Amazing. Yeah. You should get that.

It's awesome. All right. Let's move on then to the last segment of the show. It's time for our famous four. This is the part of the show where we ask the same four questions to every guest. Every week. We're going to fire him at you right now. Question number one.

What is your favorite? real estate related book. I mean, we used it before, and I don't want to keep sucking up, but seven years to seven figure wealth was game changing for us. That paired with bridge. That port out, which I know everyone says, was like really what got us to invest. And people always ask us, you know, how do you convince your spouse or how do you get your partner on board?

And kind of I spent so much time researching real estate investing. How am I supposed to convey? This is somebody who hasn't read a single blog. And just slapping that ebook down was the answer. I don't read. convincing a guy that doesn't read books and then having that be the first real estate book, yeah, it was game-changing. That's cool, man.

Yeah, well, if anybody else wants to copy that, just show up to any of the bigger pockets webinars that I teach every week. I give it away every week there. And that's awesome. I don't think anybody's ever said that on the show before. So thank you. Very cool. Yeah.

All right. All right. What is your favorite business book? We would have subtraction, but we've talked about that enough. Right now I'm reading the e-math, and that kind of just really ties into traction and focusing on, like, I forget how they break it down, but you don't want to be the person that's like working in the business. You want to be the person working on it.

And that's been really huge for us. We're fine right now putting all this work in, but it's still fun. And I obviously hope real estate's going to stay being fun for us, but we also need to have the future in mind. And like when we have kids and we have more responsibilities, it's just not going to be feasible for us. So the E-Ment's been really fun to read.

Yeah, I feel like the E-Mith is like the emotional or the spiritual side of traction. You know, like traction's like, here's exactly how you do it. And the E-Mith is like, I believe it. Like, I get it now. So, yeah, amazing, amazing book. All right. Next question.

What about your hobbies? Oh, man, anything to do with on the beach? We love surfing, fishing. We're huge beach people, so. Yeah, we got scuba certified last summer and it's been a little difficult to do that with COVID. But yeah, anything involves in the water, boating. We'd just like to be outside.

That's awesome. All right. Last question for me. What do you think separates successful real estate investors from those who give up, fail, or never get started? You alluded to this earlier in the conversation, but I really think it's just the fear of doing something that's uncomfortable. We have so many people reach out to us and they say, hey, like, what's the best first step?

And we promote house hacking just because we feel like it's a really great way to tiptoe in a real estate investing. And it's like, well, I'm married and I have kids. Okay. Well, there's other ways you get house hack. Like the house for under contract on right now, it's a side-by-side duplex and each side has five bedrooms. Could you and your family live there?

Probably. So I think it's just wanting the goal. enough more than fearing the worst case scenario. You know, and like with analysis processes, there's so much decision and indecision, it's easy for you to stay stuck and not do anything. So just got to push you to the fear. And I think that's really the big difference. There you go.

Anything you want to add on that, Kyle? Yeah, just, uh, you come up to a roadblock and instead of just turn around and going home, you know, find a solution to that roadblock. This has been phenomenal. I guess, uh, I'll leave it to you, David. Last question of the day. Where can people find out more about you? Definitely Instagram.

We're big there. if you DM us, we promise we'll answer. And we just launched our own YouTube channel. So if you guys want to follow along with us as we're investing in growing our portfolio, we'd love to have you with us. All right. Very cool. And what's that? What's the Instagram handle? Rentals to wealth. Ooh, good cuts. Rentals to wealth. Rentals to wealth. All right. Go follow them right now. Yeah, right now. I'm talking to you guys listening right now. Go follow David while you're at it. David, you need more followers. You got to catch up. I'm, I look really bad compared to Brandon. It's pretty embarrassing. That's not sure. Your account looks awesome.

David Green 24, rentals to wealth, and I'm, of course, Beardy Brandon. And I'll let David, you take us out of here. Thank you guys so much today for joining us. This has been a long time coming, and I am just super glad to know you guys. You guys. Thank you for having us. Dude, thank you for having us, really. Great job, guys.

This is David Green for Brandon writing books that are changing real estate Turner. Signing off. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate. estate investing without all the hype, you're in the right place. Be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online. Thank you all for listening to the Bigger Pockets Real Estate podcast.

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