BiggerPockets Real Estate Podcast - 450: How Your First Time Home Buying Decision Affects Long-Term Wealth with Scott and Mindy

Episode Date: March 11, 2021

First-time home buyer? At some point, all of us were. How do you make sure you’re getting a great deal, how should you pay for it, and what can you do to make sure it’s a purchase that will help you grow your wealth. In today’s episode, you’ll hear from Scott Trench and Mindy Jensen, hosts of the BiggerPockets Money Show. Their new book, First-Time Home Buyer, shows how to buy your first property in a way that sets you up for long-term success. Most people see their primary home as an investment, but that isn’t usually the truth. Housing is a cost, and like many costs in life, we should try to minimize it when we can. Having a lower housing cost can allow you to invest more of your money, build up safety reserves for repairs, and have the financial bandwidth to live with less stress.  Scott and Mindy debate cash flow vs appreciation, how much you should put down on your home, and what kind of liquidity position you need to be in to find success in your purchase and future endeavors. Even if you’re not looking to build a rental empire, this is a fantastic book for anyone who is looking into buying for the first time. Don’t know about equity, title insurance, or other real estate terms? No problem! First-Time Home Buyer has you covered.  In This Episode We Cover: What will 2021 hold for real estate investors and first-time home buyers Is appreciation or cash flow a better metric to measure How to have a primary residence that sets you up for long term wealth  The 5 steps to finding a great deal on a primary residence  Looking at the market even when you’re not ready to buy What people get wrong when they buy a home And SO much more! Links from the Show BiggerPockets Forums BiggerPockets Money BiggerPockets Money Podcast 165: How ‘Finance Ninja” Daniel J. Mills Started at $30k a Year and Grew a US Rental Empire from Japan Check the full show notes here: http://biggerpockets.com/show450 Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 450. Making this one decision intelligently can either set you up to make investing and growing your portfolio an automatic item that recurs year after year, or it can be an immense anchor that makes it almost impossible to get started, five, six years of savings. So that's the first part. If you haven't bought your first time and you're doing that, that's number one. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the hype, you're in the right place.

Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online. What's going on, everyone? It's Brandon Turner, host of the Bigger Pockets podcast here with my co-host, Mr. David, definitely not a first-time homebuyer, Green. What's up, man? How you doing? That's a nice name. I like it. You're picking up on my game here, and you're not half that. I am. I'm working at it, you know? I like the way. you end every show, so I'm going to start the show as much as I can think about it. But the reason I brought that up today.

That'll happen for one episode. You'll never be thinking again. Yeah, I know. It's too much pressure. It is a lot of pressure to come up with the nicknames. What I need is I need the world who's listening to the show to give me some nickname ideas for David Green. You can put those on my Instagram, DM, slide into my DMs and give me some nicknames for David Green.

My Instagram is Beardy Brandon, so Beard with a Y. Let me know what nicknames you got for David. But that said, today's show is not about nicknames. Today's show is about first-time home buying, but not in the way you might think. So here's the deal. Bigger Pockets has released a new book. It's called First Time Homebuyer. But it's not just geared towards people who are first-time homebuyers.

The idea is really like, what's a beginner's guide to buying real estate? Like, what are all the things? Like, what is title insurance? What is, how does that work? And then even more importantly is how should real estate figure into a person's overall life? Now, this book is written by two people you probably know. Scott Trench, Mindy Jensen. They're both hosts of the Bigger Pockets Money podcast.

They've been on the show before. They've even been guest hosts after Josh departed from the show and we were looking for David. And so they're very familiar with Bigger Pockets in the world. So they, this interview was just phenomenal. We sat down with them and they're so smart. These two guys, like Scott and Mindy are so smart. So today's show is just, we cover a ton of stuff.

But specifically, make sure you listen for Scott's like, short-term, mid-term, and long-term outlook for real estate in general, like the American real estate, really, really powerful stuff there. We talk a lot about how going for more expensive properties may or may not set you up for a strong financial position for life. You'll hear about our kind of debate there, but our discussion over that. Scott goes into five tips for finding a good deal, and that is probably like one of the most important things you're going to hear this year.

Like, this is what you need to do to find good deals in today's market, whether you're first time home buyer or trying to buy a five million unit apartment complex. I don't care. Anything in between. His idea of like calmly acting aggressively is really good. And then it just there's just so much in this interview. You guys are going to love it. So without, I guess, giving away the whole interview, let's get to today. Very simple quick tip today is go pick up a copy of first time home buyer. Whether you want to read it for yourself or you want to buy it as a gift for somebody else, you can get by going to biggerpockes.com.com slash home buyer book. That's home buyer book. And the book launches

on March 8th. And it will be everywhere else, like Audible, Amazon, later in the month, towards the end of the month. But right now, it's only available on BiggerPockets. Again, BiggerPockets.com slash Homebuyerbook. That's it. So that's all I got. This episode's really good because people get a lot

of different perspectives on real estate. I think all four of us really have a unique flavor on the way that we view it. And everyone kind of pitched their flavor in and we had a little bit of a real estate casserole. Yeah, I love it. Real estate casserole with Scott, Mindy, David and Brandon.

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CEO of Bigger Pockets, and of course the wonderful Mindy Jensen, agent, host of the Money podcast and all-around awesome gal. Let's get to it. Scott Trench, Mindy Jensen, welcome back to the Bigger Pockets podcast, each of you, former guest hosts here on the show. Now you're your guest, which is pretty exciting. What's up, guys? How's it going?

Thanks for having us. I'm super excited to be back. I haven't seen you in 100 years. I know. It actually has been a while. COVID put a delay to my regular trips to Denver, but didn't stop David Green here from like travel in the world and hanging out in Mexico. What's up, David?

What's going on, guys? Yeah, I mean, Cabo San Lucas is my first time here and it's pretty awesome. Yeah, sometimes you've got to take a vacation from Maui, I guess, right? I don't like to pat myself on the back. It's been very hard. Oh, the other thing, I think I just realized for the first time in my life, that when people say they're going to Cabo and Cabo San Lucas, is that how you say that? They're the same thing. Is that true?

I think it is. I've never realized that was the same thing. I assume that was two different cities, but I just put that two and two together that that was the same thing. It's like I'm going to New York versus New York City. It's apparently a shortened nickname. Anyway, rather than talking about my intelligence or lack thereof, let's get into the Scott and Mindy. Your guys is the last few years. So for those who do not know you, I want to start with this one.

Scott, obviously, you know, you know, everyone knows Scott Trench, everyone knows Minnie Jensen, but for those who don't, who are you? What's your real estate strategy been? And then I want to move into talking about the market a little bit, but let's start with that. We'll start with Mindy, ladies first. Mindy, who are you? And what do you do in real estate? My name is Mindy Jensen. I do a lot in real estate. I am primarily a live-in flipper, which means I buy a house that is very unattractive. I move into it. I live in it as my primary residence while fixing it up. So I live in a construction zone for two years, and then I sell it and make massive tax-free cash when I sell it. I am also a real estate agent in Colorado, and I am the community manager for Bigger Pockets

and the co-host of the Bigger Pockets Money podcast. With me, as always, is my illustrious co-host, Scott Trench. Thanks, Mindy, for the illuminating intro there. I'm Scott Trench. I'm the CEO of bigger pockets. I'm an investor here in Denver, Colorado. I've got eight units, about 1.6, 1.7 million in assets within that portfolio. And the last couple of years have been a little quiet for me on the acquisition front in my personal portfolio. I have been spending more of that time investing in syndications. And last year, I really set up property management, rehabbed, and tackled a bit of maintenance that I had been deferring, yes, I'm the CEO, and I've been deferring maintenance on a couple of my properties.

And finally took care of that this year. And so I was able to reset them, do a big refinance, take a lot of cash out. And now I'm back into acquisition mode looking for that next deal. That's awesome, guys. Well, speaking of next deal, it's been a crazy last year, obviously with the real estate market, COVID, doing some crazy things. And things that I don't think any of us really necessarily expected. I sure didn't. I was, you know, worry that we were going to see a crash or something happened.

And all of a sudden, instead, it's just like somebody shot a bunch of steroids into the real estate market the last six months. Why do you think real estate has gotten so competitive and I don't even call it hot? I guess it's the best word I can use for it. The real estate market's gotten hot almost everywhere in the country. Why is that? And then I'll ask where do you think it's headed? But let's start with that one. Mindy, why do you think it's gotten so crazy lately?

I think there are a bunch of factors. Of course, COVID. I think a lot of people who were considering selling, but maybe didn't have to sell, has decided that I'm not going to have random people. people traipsing through my house, bringing their COVID into my house, and then I catch it and maybe die. So I think there's a shortage of sales just based on the market or the pandemic itself. I think there are ridiculously low interest rates. Well, I know there are ridiculously low interest rates that are fueling people. Ooh, I can upgrade to a better house.

And we didn't have anybody building houses from 2008 to what, 2012, 13, 14. I mean, in my area, they're just starting to do these massive builds again. And it takes time and there's people that are still moving here, but there's nothing to buy. So prices just keep going up. I just sold a house on Friday for more money than I thought was ever possible. I keep hearing that story over and over. Scott, what do you think? Yeah, I would agree.

I think the first, the biggest lever is going to be interest rates. The payment matters more than the price to most homebuyers and, frankly, most landlords. Like all that like 50% rule, your expenses are not magically changing, you know, in those types of things. based on interest rates. So if your interest rate, if your payment goes down, you can afford to buy, you can pay more for the same property and achieve the same or greater cash flow. So I think that interest rates are the number one biggest lever. And then the second one is going to be the stimulus and just the injection of cash and liquidity into the economy in general. I think that last year, a lot of people weren't spending as much money as they nip, typically would, at least those who would be

potential competitors of yours when buying homes and rental properties. And so people are now in a position to buy with liquidity and low interest rates. So I think fundamentally that that's what's driving that. And then I also think to many's great point, the other factors are all, many of them are also fueling this. There's been an exodus from apartments to single family homes. Single family rents have gone up. Apartment rents have fallen over the last year. Single family housing prices have exploded by significantly more. I think it was like single family rents went up by three, four percent, and prices went up eight, nine percent over the year. I think that's showing a fuel and demand from apartments to single family homes as rentals, but an even greater preference to buy,

I think, fueled by that interest rate shift. So, you know, other things, lack of housing starts, continued population growth, and then inflation and expectation of inflation in general are all, you know, fueling real estate right now. Who knows how long that will continue, but hasn't been a bad year for those who held real estate going into 2020. Well, I was hoping you would know. If you don't know, I mean, come on, CEO of bigger pockets, doesn't know what the future holds for real estate. I don't know, man, I think we're all screwed. No, but really reality, what, what, if you had to guess, what do you see 2021 looking like for real estate? I guess there's two, three set, three buckets. Long term, I believe fundamentally that if I hold real estate and invest consistently, but not

aggressively over the long run, that I'm going to build meaningful wealth in real estate. So that's my fundamental approach. In the short run, I'm, I'm going to build meaningful wealth. In the short run. My guess in 2021 is that we're going to see another year of big growth. You know, I looked at this data set a while back that suggested that, you know, many markets around the country are way overpriced at a 5% interest rate, but way underpriced at a 2.8% interest rate. Again, the payment matters more than the price for many homebuyers. So, you know, for me, that suggests that given the, you know, I don't think the Biden administration is going to not inject. money into the economy and create liquidity for lots of ordinary Americans. So I think that there's a

good chance that we see significant price appreciation in 2021. What will happen over three to five to seven years? Will there be a correction? I mean, if interest rates rise, that could be, that's certainly a huge threat to real estate investors at some point. But that, you know, the Fed seems to be signaling a two, three years of low interest rates. And then you always wonder if and when those interest rates ever rise, if inflation, the real estate investor's friend does not, kick in to a certain degree and keep property prices and rents afloat there. So I think there's a lot of things to worry about there and know your source. I'm the CEO of Bigger Pocket, so I have a bias towards real estate investing.

But that's kind of my take on the current situation. Well, I do think that the market is going to continue to go insane. I had three real estate closings on Friday, which is pretty crazy for me. And I'm showing no signs of stopping. property that comes on the market is instantly under contract in a bidding war. And the people that are losing out now are continuing to make offers down the road. All these people that need a house in February, they can't get it in February, are offering in March, in April, in May, in June. And it's just going to keep pushing out. And you can't build a house in a day,

unless you're on whatever that TV show is where they come and fix all your houses for free. But you can't build a house in a day. So all of these houses are going to take time. And the existing houses aren't being sold unless the people have to move. So, because there's, I mean, that's another thing. They're not able to find a house. I'm not gonna sell a house because I have no place to go. So I just, I don't see 2021 slowing down very much. Maybe at the end of the year,

like December 31st, we might have a bit of a slowdown, but then January comes and like Scott said, there's all these people that have all this money that they were supposed to spend in 2020 and they couldn't go anywhere or do anything so they didn't spend it and it's just burning a hole in their pocket. So they're buying something.

I think there's gonna be a lot of pent up demand for at least the rest of this year. I'm going to throw this to you, David, too, here in a second, because I know you got a lot of insight and then the market, but I've said this from the beginning that I think that real estate is very heavily geared by fear. And do people feel confident in owning real estate or not, right? If everyone was suddenly afraid of owning real estate

because they thought it was going to collapse, like I think we're going to have a massive problem. So as long as consumer confidence in housing and real estate in general is moving up into the right, I think will probably continue this. What happened in just, 2008 largely was, I mean, besides obviously the, there was a lot of foundational things that were wrong. But all of a sudden, everyone got afraid of real estate. And that's why everyone built.

I mean, everyone said real estate was a horrible investment back in 2008. And it really was. They weren't wrong. Everything was completely overpriced. But right now, I think a lot of our fundamentals are still pretty strong. So crazy. All right. So David, what do you think? As far as what the market's going to do, I think there's more variables right now than there ever has been in my lifetime and maybe in the history of real estate. Like Scott was saying interest rates affect home affordability a ton. If rates go from 2.8 to 5.8, what a home would sell for is going to be drastically changed. And then we don't know, is the Fed going to print more money or are they going to stop printing

money? I think that you will actually drive yourself crazy trying to figure this out. Because I ask myself, well, why is there so much demand? Like, people have to be moving from somewhere to go somewhere else. So wouldn't it always be the same? But many made a great point. They're not building more houses. We haven't built houses in a very long time.

It's getting difficult to do that. So I tend to say rather than go crazy trying to anticipate what's going to happen, focus on the things you can control like defense. If you have yourself in a strong financial position personally, you can, you don't have to worry about what the market's going to do. You can give yourself that really long timeline to make sure that you are safe and the market performs like it does over time. And I think that would be a great way to kind of throw that back to Scott and Mindy and ask them what's some advice that they have for people protecting themselves so that they can play the real estate game the long way. You just said it. The financial foundation that you're investing from is the key piece. And like I said, like my strategy is invest consistently, but not aggressively in real estate over a long period of time. What do you mean by that?

That means that I'm not leveraging to the point where I can't sustain the payments. I'm not using up all of my liquid position at any one given moment in time where I'm at the mercy of a bad month or a major rehab or those types of things. I'm investing in what is a very sustainable approach for me with a property or major investment every year or two that I can then sustain over a 20, 30 year period. And I believe that that isn't going to achieve a really strong compound annual growth rate for me over time and allow me to weather the inevitable dips. I'm going to experience a problem or a bad market over the course of a 30 to 50 year investing career. So I am at all times prepared for that downturn with my financial position. And what is that financial position?

I save a ton of money every month. And, you know, it's a, it's a flywheel. So at first you save a few hundred, then you save, you know, 800, 900, then 1,000, then 1,500, then 1,000, then 1,000, and that's a slow compounding of time as you buy a property, add it to your cash flow, keep your expenses low, earn more income from your job, and then slowly compound that. I keep a large reserve that I add to with each additional property purchase. I put down a reasonable down payment and finance with a conservative fixed 30-year mortgage on each one of my properties. And, you know, again, just kind of keep the ball rolling. Each deal has the capacity and is intended to accelerate my financial position,

but no one deal can ruin me either. So I think that's the strength position for me. I think, David, you have a very similar approach with what you do. As far as my investing strategy? Well, as far as your capitalization, I believe you always make sure you have great equity in your property and it's really well stabilized before polling. out the cash and burying again and building the next thing. You make sure you have strong cash flows from your other business lines to support that. And you have a diversified, strong portfolio that you

intend to keep for the very long run. That's exactly right. And that's because I got tired of trying to anticipate all these variables that I never could control when I realized there's two things that caused you to lose money in real estate. You didn't have enough in reserves. So you couldn't weather a storm or a mistake you didn't see coming or you didn't have enough cash flow. More money was going out that was coming in. So if you put a lot of money aside and you make sure more is going out that is coming in, all of the fears and the worry that stop people from taking action sort of just go away. And it's also empowering because we control that. We control what we spend. And to a large degree, we control what we make by the job that we go take or the risk that we go

take or the way that we perform. Now, there's a lot of psychology behind all that, but still, that's within our power. So, yeah, Scott, that's exactly right. And part of what I'm really excited to hear is what advice you guys have for someone who wants to get in this game, who agrees with what we're saying, but they're just afraid of taking that first step or they don't want to take it wrong. Don't take it wrong. I mean, make a, make a, the end. You know what? I think a lot of people and David, I greatly respect you, but I have to disagree. This is not a game. If you are investing in real estate, it isn't a game because a game you can lose and you don't want to lose this game. This is an investment and you need to approach it as a large amount of your money

that you're putting into a property. Even if it isn't your money, it's somebody. money and you need to be able to protect that money. So I could own a whole lot more real estate than I currently do because nothing currently makes sense. It doesn't make financial sense to buy a property that then doesn't cash flow. I can't find anything right now that is cash flowing. So I'm choosing not to jump into this game. I hate, I'm sorry, that's a that's a sore subject for me because so many people say that, oh, I want to get into the real estate game. I'm like, you are going to lose money because you aren't doing it right. And I know you do it right, David, so I'm not saying you, but.

Let's talk about that. What are some of the things that you see people doing wrong when they're trying to get into real estate that we can remedy now? Oh, number one, erase or math? Oh, the numbers don't work. Oh, let me just fudge this little number here. Let me change this number there. Let me, you know, it doesn't quite work, but I know there's going to be appreciation.

How do you know? Scott is talking about appreciation and he's making a very intelligent assumption based on things that he's read. He's not just guessing that there might be appreciation. I mean, it's kind of a safe bet to think that there's going to be appreciation in the Denver market because everybody in their mother is moving here. But that doesn't mean that you can guarantee 10% appreciation if you buy a property in Denver. So look at what you think you can get.

And oh, it's 6 to 8% or what did you say? Is that what you said, Scott, 6 to 8% in Denver? Well, that's what's been historically for the last, you know, 20 years is like 5, 6, 7%. But yeah, with appreciation, you have to make a number of assumptions that we can get into that kind of stuff. And there's two ways, right? There's whatever the market delivers to you, the buy and prey portion of real estate investing. And then there's the portion that you deliver to the market, which is the forced appreciation

component of that. The more you can benefit from both, I think is important. I think it's foolish to buy and pray, but it's also foolish to ignore the fact that, hey, the expectation in Denver for good reason is that prices will appreciate. appreciate and so will rents, and that will have an impact on your P&L that you can't depend on. You can't have, make or break your portfolio, but you also can't ignore. Otherwise, you're going to get squeezed out and potentially miss out on a chance to build wealth. So I think there's lots of components with that.

But I think the fundamental thing is not having a long-term approach, understanding your exit options when you go into any deal, and buying from a position of financial strength every time that you invest in real estate. What I was getting at here was Scott said five to seven. Okay, great. If you are counting on seven, but it's only five, your numbers are going to be screwed up. If historically it has been between five and seven, count on five. If you come back with seven, you just won the game.

But you are making a conservative assumption. And I think there's a lot of people out there making very aggressive assumptions. Oh, well, the market went up 5% last month. It'll continue to do that forever. 2008 says no, it won't. 100% agreed. I would also encourage people as they're thinking about things like appreciation. And you guys know this as well. It's very easy. And this goes to Mindy's Eraser Math thing. It's very easy to choose appreciation periods. And I would even say this about like a lot of areas of life.

But to pick a timeline that makes it look very favorable and be like, wow, this market's really growing, you know, heating up. If you were like, for example, you're like, wow, look at from 2012 to the 2020, the real estate market's done blah, blah, blah. We're like, well, yeah, of course it has because that was like the bottom of the market to the top of the market. And so you'll start noticing this with a lot of like, for example, investment companies, syndications, whatever, is when people are trying to sell you something, they're choosing timelines of which to talk about whatever that thing is. And so it's just something to be aware of is that you're, you're picking more objective data when you're making decisions on like, where are rents going up, where it's the market improving versus like, you know, so I would look at it like, like, like, Scott said 20 years. I think that's a pretty good, 20 years is probably a pretty, you know, long enough to encompass a couple recessions maybe, you know, 20, 30 years. But even that doesn't

say anything with the future. Like Denver could have had a big bump and then it just stops. I don't think it will. Obviously, there's a lot of other things pointing to that. But just in general, just banking on appreciation can be dangerous anyway. And speaking of appreciation, I'm curious, you know, we're going to talk here in a minute about about how, like buying your first house or buying a primary residence because I know you guys just wrote a book on that. Who should rely more on appreciation versus cash flow? I'm curious of your guys' opinions on that, and I'm going to fire that at you as well, David. I want to start with Mindy.

Mindy, appreciation versus cash flow in real estate investors. What's important? Don't diminish one over the other. However, I think, and this is a personal opinion, but I'm right about a lot of things, so I think it's a good one. I think you should invest for cash flow because you can't predict appreciation. And in the Colorado area, in the Denver area, I've lived here since 2012, I have seen it go up, but it could flatten out.

And I just sold a house. I got a lot of appreciation, but I forced that appreciation. I would not have realized so much appreciation if I hadn't forced it. And yes, there would be still appreciation, but nobody could have predicted this ridiculous appreciation that we've had in the past eight years or even in the past eight weeks. I mean, houses are going up ridiculously right now because there's no demand. I'm sorry, there's no supply. There's plenty of demand.

There's no supply. So I think that if you don't invest for cash flow, you are buying yourself a problem. You're buying yourself a job. And there are people in the bigger pockets forums who talk about, oh, well, I bought this house and it doesn't cash flow, but the appreciation is going to be great. You can't know that. You can guess. You can make an intelligent.

assumption, but you can't guess. And I think a lot of people who do that are also aggressively instead of conservatively guessing their their appreciation amount. Yeah, I think it depends on your goals, right? My goal is to sustain, sustainably invest consistently, but not aggressively over a very long period of time. And so within that context of that goal, it makes sense to go after the long, the best average long-term appreciation in both rents and property values that I can find, and then to find as much cash flow as I possibly can to alleviate my risk over that period. I believe that will generate more wealth and more freedom over time than an approach. If my goal were to race towards a spreadsheet model

of financial freedom as aggressively as possible, I would completely have a different approach, and I'd begin investing for cash flow in likely a completely different market and different instead of circumstances. Yeah, I had a buddy one time asked me, and I'm going to fire this at you too, David, in a second, but I had a buddy once asked me, and I think I said this years ago on the podcast, but he said, should I invest in this property in San Diego? And I looked at the numbers, and I'm like, dude, you're going to lose money on this every month.

He's like, yeah, I know, but should I invest in this? And it was like, I don't know, $600,000 single family house that would like guaranteed lose money. The mortgage didn't even get covered by the rent. And now he's a millionaire? He was already earning over a million, several million dollars a year in revenue from a very stable business that was that he owned, that was very stable. And so, like, he's, I was like, yeah, honestly, I don't think that's a bad choice. And I bet today that property is probably worth,

you know, this is probably three years ago. He asked me. That's probably probably worth over a million at this point. And so I told them, yeah, you know, you're one of the few people I would say that, yeah, you could take that gamble. It is a complete gamble. He's making no cash flow. But 10, 20 years down the road, if he bought a property for 600K in a market like that and had no problem holding on to it. It's one of the, all I'm saying is it's one of those few cases in life where it illustrates that it's your position dictates the game that you play, like the way that you play this, to use a phrase that Mindy hates. It's because like I, I shouldn't have done that at that point in my life. Like I needed the cash flow. You may not have been there. David may not

have been there or maybe you are. So listening to people, any of them, I mean, myself included, David, our books, don't matter. Like, you have to like look at this thing with some self-awareness and say, look, where am I at right now in life? And am I eraser mathing my way into getting a deal? Or legitimately, can I afford the extra risk of a deal that doesn't cash flow or doesn't cash flow much? So, David, what do you think? Cash flow appreciation.

How should an investor consider those two in the play between them? I think you made the point that I would make as well. It depends on the person. It depends on, like Scott mentioned, the goals. But also, Mindy's advice is really good here, too, because many people listen to this and hear, well, Brandon and David, buy. $600,000 San Diego properties that don't cash flow. So that's a strategy that works, but they don't have the capital coming in or the reserves that we would have to be in a position to do that.

And that's what I really want to stress. It's not the same formula for everybody. Not every football team plays the same way. There's teams that can take shots down the field that are really big, but they know if we don't get this, we have a really good chance to still pick it up a first down through the running game or whatever else that we're doing. I tend to think that bigger wealth is created through appreciation. However, if you don't last to get that appreciation, it doesn't do anything for you. It's kind of a big shot down the field. So it's not a one size fits all situation. I think that in general for most people's paths, you start off with cash flow because you are not going to lose anything that way. And it is going to get you momentum going. And you will know when it's

the right time to go for some of those bigger plays where maybe for some people, you actually are losing money every month, but it's okay because over the long term. Here's the thing about appreciation that we're not mentioning though it's not like if your house goes up a hundred thousand dollars in three years you just made a hundred thousand dollars you have to sell it if you want to receive that and then there's closing costs that are also associated with that so it's easy to fool yourself into thinking you made big wealth and and like that becomes a game oh look at all my equity that i created it can go away in a second we all saw that happen in 2010 so when you're doing this you actually have to understand what you've got you've got equity that's not the same as cash if you want to turn it into cash

there's going to be some costs associated and those costs are really significant So Scott, Minnie, I want to throw this back to you and ask you guys, where have you found is the sweet spot where it makes sense to sell a property and move on to the next one? Well, I don't think you have to sell the property. I think you, what you're talking about is return on equity, right? That's what we're fundamentally getting to here. And when you let's like, and to put it in the simplest terms, I have a $100,000 house. If the house goes up by, and if I paid cash for the house, I have no debt on it. And the house goes up by 3%.

I have made a 3% return. If I have $20,000 in equity on the house and the house goes up by 3%. I have made a 15%, three times five return on my equity. And you're absolutely right. That will be diminished by closing costs at a reasonably kind of percentage-based like ratio over time as the property appreciates. When does it begin to decline? I mean, it's a bell curve, right?

I get more leverage. When I have more leverage when I have more leverage, right? I'm going to have more debt on the property. And as I pay down that debt and my appreciation boosts, or boost the value of the property, my debt to equity declines. And so as I'm riding that curve down, my return on equity is falling each year on average if things are going well. And I have got a good problem. I've got a lot of wealth and I'm earning a lousy return. And so, again, I can either sell the property in 1031 exchange it or I can refinance the property. Right. And so refinancing the property will allow me to do the same thing and I can deploy that

to buy more more, more properties. So that's exactly what I did. I had this problem. I remodeled my properties. I made them as valuable as I possibly could this last year and got them appraised and then pulled out as much cash as I could with which to make my next investments. If I'd own the properties for a longer period of time, I might have opted differently and sold them or 1031 exchanged them. Reason being is because you begin to lose some of the the advantages of depreciation and accelerated depreciation on certain components of the property, which makes it more advantageous if you own the property for like 15, 20, 25 years to just sell and start it over again rather than cash out refi.

You know, one way to quickly illustrate this is a real life property I have right now. I have a property with $200,000 of equity in it. I've got just sitting there. And that's like after selling like realtor fees and everything. If I were to sell this property, I would clear about $200,000 that I could put into another investment. I'm making about $1,000 a month in cash flow on this property, which is $12,000 a year. So if you were to look at that and say,

okay, I'm making $12,000 a year on a $200,000 of equity or $200,000 investment, it's a 6% return because $12,000 divided by $200,000 equals 6%. I'm basically making 6% of my money right now. Now, if I were to find another, and it's in a market that I do not believe is going to appreciate, it's like, at least not to a great degree. So there's no like hold out for like,

hey, it might go way up in the future. It's just like some, you know, Western Washington, Aberdeen, Washington market. So what I'm going to do is I'm going to sell this property because I'm like, I can do better than 6%. I mean, I could dump my money to open door capital, like my own company and get higher than 6%. So like I'm going to take that and we call it recapitalization or redeploy that I'm going to sell that property and then go to put that money somewhere where I can get maybe a 8% return or a 9% or a 10% return, whatever that return is.

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that you know we wanted to make sure that we covered on today's show you guys wrote a book right and this does this does really i'm going to bring this right back to this topic here in a moment this idea of like the equity that we build and appreciation because you know a lot of people here that are listening to show i would guess half the people here own a house already they already own their primary residence so they might be thinking well i don't really want to talk about buying your first house because you know i've already gone past that so the first thing i want to get out of the way is why should somebody keep listening to this episode as we talk about single family houses and further in your position because of that, why should they listen? Why is it important?

Well, I think that the housing decision is the largest financial decision made in middle class America today and it makes or breaks your ability to build wealth in asset classes like real estate or other after-tax vehicles in a general sense. You know, that the typical American first-time home purchase is putting all or most of their lifetime accumulated liquidity down into the property in the form of the down payment, and assuming a high fixed monthly cash outlay in the form of their mortgage, and assuming the maintenance and CAPEX that associated with maintaining the home. And so making this one decision intelligently can either set you up to make investing and growing your portfolio an automatic item that recurs year after year, or it can be an

immense anchor that makes it almost impossible to get started, five, six years of savings. So that's the first part. If you haven't bought your first time and you're doing that, that's number one. Number two is, you know, in many relationships, one spouse is the eager listener of the Bigger Pockets real estate podcast and the other rolls their eyes and is not very interested. And so perhaps the conversation we're about to have could save you as the spouse that is particularly interested in investing, several hundred thousand dollars. with which you could redeploy in real estate over a few years by making a smarter home purchase decision. And third, if none of that applies to you, maybe it'll help you with your next home

purchase or you can deliver this to somebody who is about to make this decision for themselves and may be able to save them a big chunk of money as well. What's funny is I get this all the time? Like you've been in Maui people on vacation here a lot and then they see me out on the street or whatever I'm at Starbucks and they'll come up. And like half, it will always be a couple, right? Because Maui's a couple destination. And the one couple will be like, hey, hey, Brandon, nice to meet you, blah, blah, we talk for a second. And then they'll always turn to their spouse or their other. And they say, this is that guy that I was telling you about that lives here on Maui that wrote that book.

And every time the reaction is the same. Wow, honey. Great. Good for you. Like, it's completely like, I don't care. This guy's not that interesting. It just looks homeless. And you're like trying to talk to him about real.

Like, we're on vacation. Stop talking about real estate. So anyway, totally, totally a thing. All right. So let's start here. I 100% agree, by the way, yeah. Like, even if you already own a home, this stuff is important because it may change what the next purchase you're going to make.

It may change how you view money in general. And so I want to start with that question is, what are some ways that the primary residence that somebody lives in will long term affect their wealth in life, like 20, 30, 40 years down the road? Like, how does the house? This is the point you guys make over and over in the book. but why does the house make such an impact long term?

Let's start with you, Mindy. I know Scott, you just had a little bit of that answer, but I'm going to go deeper here. It goes back to the things that you harp on over and over on this podcast. You have to buy right. Yeah, jujitsu. And you have to buy right. And that applies to your primary residence as well as any investment you make. If you pay too much for your primary residence, if your mortgage payment is at the

very tippy top of what you can afford, how are you going to save? Where does your extra money go nowhere because you don't have any extra money? Because every dime you have is going to your mortgage payment. And I think that when people are first starting out, oh, I'm going to buy a house, how much can I afford? What is the most amount of money I can part with? And that's not the right question to ask, especially when you're a first-time homebuyer, but when you're a homebuyer of any type. If you want to be able to grow your wealth, you don't want to put all your money in one basket where all it can do is sit there and do nothing for you. To sustainably invest in real estate, you are either going to need to generate a large amount of monthly savings with which you can

use to put the down payment and finance the properties, or you're going to have to run a real estate business where you are creating value in the form of managing rehabs and those types of things, right? The typical real estate investor in this country does not own more than 10 units. 90% of single-family homes, duplexes, triplexes, and quadplexes are owned by investors with 10 or fewer properties, casual investors like myself buying properties over the period of a decade. The folks who here are doing more than that are the exception in this market, not the rule. Let's use this example. I'm a typical American. I'm earning, I'm earning $80,000 a year, Over the last three, four years, I've saved up $40,000.

My lender qualifies me for $400,000 in a mortgage, right? What is my typical purchase? Well, my lease is expiring in two months, therefore I better buy real quick. I fall in love with this property. I put down $40,000. I get an additional $5,000 from Dad to cover the closing costs, and I move into the property and live there happily ever after. My payment has gone from $1,700 a month in rent to $2,000 a month in mortgage,

and I also have, oops, another 300 month to set aside in housing expenses, but I don't do that. I actually just live kind of paycheck to paycheck with, you know, a $3,000 cushion. And so when those emergencies come up, it's always a big financing issue, and I have to reopen my revolving credit line with mom and dad in order to finance those, right? That's not a position from which to sustain a real estate investment. And even if I want to, I'm making very slow progress on a very fixed cost there just by, and it will take me 5, 10, 15 years to build up media. full home equity with which to use and those other types of things. Compare and contrast that to

somebody, same exact position who puts down $15,000 on a $250,000 property. Well, now I've got, I've still got $150,000 in access to credit with which to invest. I've still got $25,000 with which to invest, and I've made a huge change there. Or compare that all the way in the extreme end of the spectrum. And by the way, our book is not about house hacking. It is mentioned. But like, when I did it, I bought a duplex, put down $12,000 and began collecting rent immediately, which increased my income, immediately increased my ability to borrow within a year from that because I have rent on my tax returns. And in a year from then, I'm making that $80,000 a year, but I'm qualifying for a million dollars in financing to buy more property. And I'm able to accumulate more

cash. So the first home purchase makes a huge difference in terms of the amount of liquidity you're going to have available following it and the amount of liquidity you can accumulate on a go-forward basis. And I think it's a central fork in the road for folks to think about and consider when they're going about their wealth building journey. You can always buy the house in the hill, the fantastic beautiful home in Maui after you have assets to pay for it. But you can't, but you shouldn't do it with your first home purchase. All right. So here's all I want to relate this back. I think that's an important point. Like right, people, they max out what they can spend. Like Mindy said, they're asking the wrong question. How much can I afford rather than what's

smart? Like what's the, what's comfortable, I think is what you said, Mindy. But let me relate this back to appreciation. Let's say an average market is going to appreciate five. Let's just say 5% for easy math. A property that's $100,000 is going to now be worth $10,000 next year. Maybe 110 the year after 115. Obviously, there's compounding there, so it'll be a little more. But you buy a $100,000 house because that's like the lowest price that you can get your spouse on board with, right? It's the cheapest property you can find that you're comfortable living in. Keep your payments good so you can invest your money elsewhere. Five years go by. Your $100,000 property is now worth $130,000. Good job. Versus you buy the house for a million

instead. And that million dollars goes up at 5% appreciation. Now you made $50,000 a first year, 50 the next, 50 days. Now you've made a quarter million dollars because you bought a more expensive house because appreciation at percentage-wise gives a way higher amount to the higher dollar. So I guess where I'm getting at with this is how would you balance that? And I know relating or that's, I'm trying to tie this back to the appreciation conversation is like a lot of wealth is built by appreciation and appreciation goes faster with the higher end. So how do you balance those two things? Being smart with your money, but making more.

Housing is an expense and the more you buy, the less wealthy you become. So when you buy the million dollar house, sure, you're getting. proportionally that same amount of appreciation compared to the $100,000 house, but you're also assuming a much higher fixed monthly mortgage payment. You're paying a lot more and you're wrapping up your any equity you have in that 3%, 5% compounding asset, right? You could, if you buy the $100,000 house in the exact same circumstance, you have the option to invest the remaining 900,000 into other real estate assets, which will generate significantly more wealth than the equity that is in your your fancy, spancy home with that. And so, again, housing is an expense,

and you are paying for it in the form of your house. The more you buy, the less wealthy you are with that. So even though you're benefiting from that, the reason people call it an investment is because most people only allocate money into their 401k and then pay down their mortgage. It's by far, by hundreds of thousands of dollars, the largest investment of any kind that they're even conceivably making is this the money that's going into their home equity. It's not an investment. It's a cost and it's less expensive over a long period of time than renting, but it's not a, but the more you buy, the less wealthy you are when it comes to housing. Well, and I think the point isn't should I buy $100,000 or a million dollars. The point is

should I spend every dollar that I have and buy the absolute most that I can, or should I look at the market and make a more intelligent decision that will allow me more room in my current budget and my present day budget and also allow me to invest for the future. A $100,000 property in a million dollar property, like it depends. Do you make $100,000 a year? Or you making $500,000 a year, right? Like those questions, like, again, goes back to know yourself, know your position. Don't strap yourself out because the typical American problem is like as their income goes up,

I mean, a lot of set for life is about this, right? Scott that you wrote, Seth for Life is fantastic book. It's like as the typical American or typical person, it's not even just Americans here, they make more money throughout their life. They just spend more money and they get trapped in the cycle of debt, which just never, like they never get out of. So they never have the extra disposable income to dump into investments. So yeah, the million dollar property does go up at the same percentage wise, let's say,

as a non-million dollar property. Great. Doesn't mean your primary residence has to be that one. I think that's a really solid point. Now, now speaking, you mentioned the word like you can get a much better investment. I want to talk about better investments or just good deals in general. I know a lot of the book is about buying these good deals. How do you find a good deal in your primary residence?

And I'm assuming this applies to all real estate in general, right? Like, how do you, how do you guys recommend finding good deals? I have this five-step process, which I'll ramble on for about two minutes, 30 seconds here. You could just shut me up if I, yeah. All right. So I think there's five things. One is creating that position of strength, right? We've already talked about that.

We don't have to go in more detail to that. The second is a timeline perspective. And this is like the first blindingly obvious mistake that I see a lot of first-time homebuyers make, peers, friends, family. Where it is, is it's, hey, my lease is expiring on July 31st. Therefore, and it's May 1st right now. Therefore, I need to buy a property ASAP because I'm thinking about buying. Great.

So you're going to rush, and again, let's use this example of $40,000 in savings, $80,000 in income. You're going to rush a $400, or $253,000. $400,000 decision in order to meet the artificial constraints of your lease timeline, call your landlord, go month to month, right, and pay the extra $100 because that that will give you so much more power, freedom, flexibility in making that decision purchase. You don't have to create an artificial timeline. Same thing with like the 90-day challenge, Brandon. I know that's a great thing to get motivated with that stuff, but you don't construct the artificial timeline. You simply put yourself in position to buy by the end of that 90 days where you've got your deal

flow and those types of things moving, right? I would add two quick points in knowledge continue on. Number one, this reminds me of the 1031 exchange, right? The 1030 exchange says when you sell a property, you have 45 days. And you guys, for those who have been listening to the show for a long time, have remembered when, like, two years ago or three years ago when I went through that 45 day thing, it was hell. And I ended up buying a property that I should not have bought because I had this

art of, it was a real timeline. I had 45 days to identify a property. And I bought something that ended up being a terrible investment for me because I didn't have the core four, as David teaches. in the market. Now I'm going through another 1031 right now and it's super easy because I have the core for and I'm just buying a condo here in Maui for vacation rental. But the same thing applies is when you're on a timeline, it's hard to make a good decision sometimes. You end up making an emotional decision. At the same time though, and this is I'm curious your thoughts on this.

Parkinson's law says that work expands to fill the time allotted for it. And we all seen this true, right? If you had a month to finish a research paper in high school, it would take you a month to finish that paper. If you had two days, you'd finish it in two days. There's a to almost every area of life. The reason I love putting constraints on things, it's constraints, lead you towards a bias towards action. So how do we reconcile that of like, if I just have, I can buy a house anytime I want to. Now I may never buy a house because there's no reason to buy a house because I'm just, there's no timeline versus I have to do it before my lease ends. Now it's going to force me to actually take action. How do you reconcile

those things, Scott? I don't think it's the right framework for approaching it. I think I'm trying, I'm not as good as David, so maybe he can help me out here with this. But this is, this is going fishing. You're going fishing when you're buying a house. And what are you going to do? Say, I've got two hours to catch a fish, right? That's an impossible starting position from, at least if you buy into the framework I'm about to describe. What's the opposite of buying a fish, David? Or what's the opposite of fishing from a framework analogy, David? You mean something that you actually like have control over because you don't have control over catching a fish? Is that what you're getting into? Yes. Going to the market to buy a fish? Yeah, like that's a goal I can set down for

my day. And if I take two hours to do that, I'm doing something wrong. Yeah, maybe we'll get a better one as time goes on. That was so weak. Oh, well. Yeah, those aren't great. I like that. I like that. I think what you guys are getting at is Scott's trying to protect people from making a bad decision.

And Brandon's trying to protect people from not making a decision. And if we can reconcile those two desires and motives that you guys are working with, we can have the perfect way to describe this. There we go. Yes. He just, yes. Thank you, David. You just saved us.

That was wonderful. Okay. So we... Continue on. So we got, again, five steps. Starting from position of strength. Second is creating a patient timeline where you can go fishing instead of going to the market to buy a fish. And then the third is knowing exactly what you want.

Right. And this, again, very simple, basic things. But a lot of investors are like, oh, I don't really know. I want something that cash flows. I want to get rich, whatever it is. No, I'm buying my first home. What do I want? I want a three bed, two bath, 1950s builder later.

And this part of town, this part of town, or that part of town. I'm looking for a two-car garage, at least, again, at least those two bathrooms because my marriage will dissolve if we only have one bathroom. I'm looking for a yard for the pets and this type of school district and that type of stuff. You should be able to write out a paragraph or two that outlines in crystal clear detail exactly what it is that you want and have you and your spouse on the same page for that. So that's step three. Can I riff on that just for one second? I think this applies perfectly to real estate investors by an investment property as well. is the more clear your criteria is, the more likely you will find that deal, the more specific

you'll be, the more likely you'll take action. So I talk a lot about the crystal clear criteria. And that is really knowing what location you're trying to buy in, like define what neighborhood you're going to buy in, what condition are you willing to accept, what property type do you want, single-family house, multi-duplex, whatever, what price range you're going to buy in? And then what would make it a good deal? I call it profitability. So for anybody, real estate investors or even buying your first house, having that crystal clear criteria, yeah, it just makes help you make way more informed decisions. So I'm super glad you said that, Scott. Absolutely. So that's knowing what you want, right? But then that comes down to defining what a good deal is in your market.

And this, I think, is where people get tripped up because a good deal is the property with the attributes that you want selling at a low price relative to other similar properties or comparables, And so for this, what most people do when they're buying their first home is they'll look at Zillow or Redfin or call up their agent and look at the listings and they'll look at all the active listings. And they'll be like, this is terrible. There are no active. There's only like four active listings. They all stink. They're all either way overpriced or they are, you know, got something weird like an obelisk in the front yard or something.

You know, that's not good. No. Instead, what you do is you don't even look at the active listings. You look at the sold properties and you say, what has. actually transact in the last 90 to 180 days that fits my vision. And one of a couple of possibilities are likely when you first to conduct this exercise. The first is that no properties have sold that meet your criteria. That tells you that you are living in fantasy land, and what you're looking for does not exist. Right. I want the quadplex in Denver that is,

you know, $200,000 each unit rents for $2,000 a piece meets the 4% rule and, you know, will cash flow. But it doesn't exist, right? And is in perfect condition. So that will give you a grounding in reality. Or there's going to be a million properties, which means you need to refine and refine your search. And what I recommend is refining that search until you have five to ten properties in the last 90 days, maybe stretching that out to the last 180 days, that you can say, yeah, barring a crazy problem in inspection, like a foundation, or like finding out that there's a CD establishment right next door or things like that, I would have bought those five deals.

or 10 deals as my home, now I know what a good deal looks like, right? And I can say, okay, great, I can get to my fifth step here. I've defined what I want and what a good deal is, and now I can go fishing. And if five properties have come on the market in the last 180 days, I'm just sort of 10 properties have come on the market in the last 180 days, that means one property on average is coming on the market. That's a good deal in line with what I want every 18 days. So that means once every two and a half a weeks, on average, sometimes it'll be four weeks, sometimes two will come on all at once, I need to be ready to pounce. I need to be able to calmly react aggressively to that deal, right? And so that's where you say, I got my pre-approval in line. My agent and I are on the same page

and we're ready to write an offer. When that deal comes on the market at 2.30, maybe I'm not leaving work right away, but I'm making plans for that. I'm canceling all my evening plans and getting ready to offer on that property in real time. And that, I think, is how the first-time home buyer, or the first-time investor stands the best chance at getting a good deal. Again, you've got to have a number of reasonable deals on the market to have a chance in this because right now, in many parts of the country, it's such a seller's market that you're getting multiple offers, you're getting out-bid. People are bidding on things without waiving inspection deadlines and those types of things. You can't afford to do that as a first-time investor or first-time homebuyer, I think.

So you need to be able to know what a good deal is, act on it, and be willing to lose a few in order to do that. If you only have one property in the last 180 days that was a good deal, you might be fishing for a very, very long time. If you've got five to ten, you've got a reasonable chance. I love this. I think this is some of the best advice we've heard on the podcast ever. And what I mean by that is because it applies to everybody, whether you're buying that first time home or you're just trying to buy a 500 unit apartment complex. Like, does it exist? Like, are you at a position of strength, right?

Like, do you have a good patient timeline for making sure you make a good logical decision, not an emotional one? Like, do you have a clearly defined criteria? Do you know what a good deal is? Like, do you know what a good deal is? Does it exist in your market? Can you point to examples where that has sold recently, the right number of them? And then can you go and pounce that?

I love you said, calmly act aggressive. Is that what you said? I think I love that. Right? Those steps apply to every single person trying to find good deals today. And you're like, I can't find any good deals in my market. Like, ask yourself, which of those five things are you failing at right now? Like, have you actually done those things?

Nope. And the answer might be, hey, there really are no good deals in your market that make any sense. But conduct the exercise and then find out there's zero. And then you're like, okay, great, I can stop wasting my time now and flilling about. I can go pick another market or do something that's more constructive than whining about the lack of deals in my market because I've already answered the question. It's done. There are none that makes sense that I would buy. I'm going to just correct Scott really quickly because he isn't an active agent as I am.

You have to be prepared to lose a lot of deals. And the reason is right now in this market, it's insane. This market, I've never seen a market like this in all of my decades of real estate investing. And it's very difficult to be representing buyers right now. So right now might not be the best time for you to start buying a house. but it's always a good time to know your market and know what the good deals are and see what's out there.

But Scott said that you need to be prepared to lose a few. I think you need to be prepared to lose because who you're competing against is not you. It's not the person who's making a smart decision. We just interviewed a guy who lives in Japan, and even though he lives in Japan and pays taxes in Japan, his real estate in America that is more than 20 years old is depreciated at 25% a year or something like that.

So he's essentially paying, what, zero taxes because he owns real estate in another country. That's your competition in Hawaii, Brandon. They don't care that it makes no money. They don't care that they can't rent it out. They don't care anything. They're taking 25% of that million dollars and writing that off on their taxes,

so they're paying no income tax. It's worth it to them. And then in four years, they'll sell it and go buy something else. And they're supposed to be closing up this loophole. But I'm not suggesting you, move to Japan, I'm suggesting that your competition isn't always somebody who is thinking rationally or working under the same stipulations and guidelines that you are. So make the decisions, make the offers that are intelligent for your circumstances because your only competition is you.

Depending on how big your pool is, right? If your pool is five properties in last 180 days, that's not very many. That's one property every 36 days that's coming on the market, right? you need to up your offer price and offer a firm competitive offer each time. If your pool is there's 50 properties in the last 90 days that you would have bought, you can afford to lose 20 because you're eventually going to get a winner on that, right? And so it's just kind of understanding that that dynamic in your market and reacting rationally to the current circumstances. I just want to say one other thing. If you listen to all the words that are coming out of Scott's mouth, he is not saying, I woke up and I decided.

I decided to buy a house and I got into the game. He's making a lot of smart decisions based on a lot of research that he is choosing to do. He wants to make an informed decision. So this is one of the reasons why I hate that comment, oh, I want to get into the game. It's not a game. And if you play it as a game, you're going to lose a lot of money. It's all one gigantic game to me. It's not 50 or 500 hours of research going into buying your first home.

But it's 15. Yeah. It's more than just waking up. people way overanalyze and spend 100 hours because they don't want to take action, but the majority people don't spend any time. And they just buy it because like, like you said, Scott and Middy, my lease is coming up soon. I better, you know, do, go buy something. So I think there is an appropriate level. And I think the tips you laid out here, Scott, especially those five things that we kind of dug through. So you spend this 15 by reading our book

for five of those hours and then doing the research for the other 10 and you're good to go. Speaking of the book, tell us about the book, what's it called? Where can people get it? Do you mean this book, first-time homebuyer, the complete playbook to avoiding rookie mistakes? It is available wherever books are sold, but on March 8th, you can get it from the Bigger Pockets bookstore. No, I wasn't talking about that book. I was talking about David Green's book sold. I'm just kidding. Oh, you have that too. Wow, look at that. Of course I have that too. This is a good book.

Thank you, David knows a thing or two about real estate. Yeah, that was an amazing book. It was a good book. I actually my brother texted me the other day. Not that we're talking about David's book. I love it. But my brother texted me because he was talking about getting his real estate license. He's got it now. He's trying to get started. I was like, just read David's book.

And he texted me like two days later. He's like, oh my gosh, this was the best thing I have ever read. This changed my life. So anyway, good job, David. And I know I'm going to get those texts as well from my brother when I tell him to read Scott and Mindy's book as well. You guys, should people read this book who are not trying to buy their first house? Yeah, I would say, I mean, you can.

I would certainly say if you're going to like trying to try. to buy rental properties, read the book on rental property investing first. If you're trying to house hack specifically, read the house hacking book. But this, I think, I believe, you know, perhaps somewhat arrogantly, that this is the best book ever constructed on buying your first home in the more traditional sense around that. And if you're thinking about doing that or want to do that, that would be a good place to start. But no, it is not an investing book per se, and probably not the place to start when it comes to investing unless you have not yet made your decision about whether you're going to rent or buy, in which case you should start with this book,

because it will make a huge difference in your ability to sustain investing over the long run. Yeah, it's also one of those books that I would recommend as, like, one of the most important gifts you can ever give anybody who's young or even like anybody who does not yet buy a house. Like, you should grab that book and give it to somebody because like now you're benefiting them hundreds of thousands of dollars, maybe millions of dollars over the course of their life. because of one book, which is awesome. So again, where do they get it at? Biggerpockets.com.com.

slash F-T-HB, first-time homebuyer. BiggerPockest.com slash home buyer book. Both of those will take you to the same spot. All right. With that said, I know, David. Yeah, I just want to ask this one last question. Should agents buy this book to give to people that are considering buying a house? Yes.

Okay. Thank you so much for that question that I'd even ask you to ask me. But part of the reason that I wrote the third section of this book, it's the step-by-step process of buying a house. What is title insurance? Well, I don't know. I've never bought a house before. I guess I'll just do it.

Well, you should know why. And do I need a home inspection? No. Right now in this market, there's a lot of agents. Oh, shut up, Brandon. Right now in this market, there's a lot of agents who are saying you should waive the home inspection and cover the appraisal gap if you want to buy the house. No, I am not advertising or advising any of my clients to waive the home inspection or cover

the appraisal gap. And I still have a 100% success rate right now, finding houses for my clients. And there's reasons behind it. And one of them is making a smart financial decision. And you don't want to go into a house and not know that there's meth in the basement and mold in the attic because you didn't get a home inspection. So, yes, if you are a real estate agent and you want your clients to know everything, have them read this book. And I think that this book will demonstrate a lot of trust. We'll build a lot of trust with your clients if you're an agent because you're talking about how to make a smart, first-time home purchase.

It's not necessarily rushing into the biggest, most expensive property right away. And while that might mean a slightly different commission or might take if you're going fishing rather than going to the store to buy a fish, that might delay the commission to a certain extent. But it also means that you're much more likely to get repeat business if this person is then able to buy investment. of properties or those other types of things. So I think there's a ton of trust to be built with this book and, like Mindy said, a lot of answers to the nuts and bolts of the transaction process. As well, we kind of recommend like, hey, before you go and talk to an agent, you should be able to answer a lot of these basic questions. So you should be getting a client after reading this book who's coming back to you saying, I know exactly what I want, I know what a good deal

looks like. Can you validate those assumptions and let's go fishing rather than somebody who's kind of just like wondering, figuring out what they want to buy or not. You're getting someone who's ready, willing, and able, but on that potentially patient timeline is what we're trying to teach people with the book. I love it, guys. Well, go check it out, everyone, biggerpockets.com. slash, I want to buy the book that Scott and Mindy wrote. Biggerpockets.com slash home buyer book or F-T-HB.

Yeah. Or I want to buy the book that Scott Biddy wrote. Yeah, I want to buy the book that Scott and Minnie wrote. I love it. All right. Well, last segment of the show. Let's get to my favorite part. It's time for the...

Famous for... The Famous Four is a part of the show. We ask every guest every week, the same questions. And I know each of you have answered these before, but they may have changed. So let's go ahead and fire at you again. In fact, I'm going to shift this first question. Normally on the Thursday episodes of the show, we ask favorite real estate-related book. But we all know your favorite real estate-related book is one of David's.

So we're going to skip that one. And I'm going to ask the question that I ask our Sunday guests, which is, is there a habit or trait you are currently trying to develop in your own life? And what is it? Oh, in Box Zero. I'm currently failing miserably, but I'm trying really hard. All right. I just read Atomic Habits recently, which I thought was a great book.

And I'm trying to adopt not the habit, but build the system of maintaining my body like an athlete. I'm like, and that kind of thing. So that's what I'm working on right now is the workout regimen and diet. Number two. What is your favorite business book? Non Bigger Pockets book that I will reference is going to be the psychology of money by Morgan Housel, which I read recently was fantastic. Quick, easy read, very relatable, but very powerful. My favorite book is Superfans by Pat Flynn. It's called Superfans, the easy way to

stand out, grow your tribe, and build a successful business. Pat has quite a few tips on how to build a big audience. I would not be here today for Pat Flynn. I would say that. We would not have the podcast today. We wouldn't have any of this. So thanks, Pat. Scott, Mindy, what are some of your hobbies? I love to road cycle and snowboard in the, well, I love. I love. like to road cycle in the summer, snowboard in the winter, and I'd like to knit all year round. Why have I never received a knitted item from you, Mindy? I'm actually kind of offended right now. I don't have a hat. Do you or do you not live in an area of the world where it's 85 degrees every single day? I'll send you a sweater. I expect you to wear it. 82 in the winter, 88 in the summer.

I expect you to wear that sweater. I'll wear it every day. Scott. I'm a reader. I enjoy video gaming from time to time and I play rugby. What's your game? What's your video game right now? I'm back into Halo, actually. We live in the middle school days. Yeah, I was going to say, what is this? 2003. I've been in the Starcraft lately, so. There you go. 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, Mindy? People who make a plan instead of jumping in with both feet, people who intelligently plan out their business instead of treating their investments like a game. I'll say a system of tracking, writing, you're building your vision, creating goals, backing into them on a monthly, or, you know, five year, three year, one year, quarterly, monthly, weekly, daily cadence and updating them every single day.

I think that's the most powerful thing you can do. Not everyone has to do that, but I think that's one very, very powerful tool that I've used to great effect over the years. All right, guys, that was amazing. Thank you so much. Everyone go check out their book. What's it called again? First time home buyer? Or is it the?

I don't want to... First time home buyer. I kept saying the. The complete playbook. No the. Just first time homeowner. That works. And check it out.

Thank you guys for joining us today. It's been fun. Everyone go listen to Scott Mindy over on the Bigger Pockets Money Podcasts as well. It is a phenomenally good show. And you guys do a good job getting some amazing guests to help people get their financial position better. So thanks, guys. Thanks, Brandon. Awesome to be on the OG show and share all this.

So we appreciate it. Thank you guys. This is David Green for Brandon. Don't hate the player, but hate that he calls it a game. Turner, signing off. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the height, 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. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform.

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