BiggerPockets Real Estate Podcast - 468: You Asked, Brandon and David Answered: Real Estate Q&A (Part 1)

Episode Date: May 13, 2021

Last time we did a live Q&A, fans from all over came on to ask questions to Brandon and David. Now we’re back, answering the questions that BiggerPockets Real Estate Podcast fans have on their minds. We’ll go over a handful of questions, all from different investors in different parts of their real estate journey. Questions include: How can investors offload their unwanted properties to charities? How do I stop analysis paralysis even after so much research? Is it a good idea to buy in an area with a falling population? What metrics should I look for when scaling my portfolio? What’s the best niche to build wealth fastest? Plus other commonly asked questions Thanks again to our guests Nicole, Michael, Ryan, Owen, and Emily for throwing their great questions at Brandon and David! In This Episode We Cover: The biggest regret that most real estate investors have Scaling to bigger and better deals (with higher unit counts) Finding a mentor who can push you to accomplish BIG deals Using other people’s money to build your real estate portfolio The best niches for newbie investors to start out in And SO much more! Links from the Show BiggerPockets Forums BiggerPockets Pro Membership BiggerPockets Youtube Channel Restoring Eden BiggerPockets Podcast 414: 1300 Units in Real Estate Development at 30 years old with Evan Holladay Petey Pablo - Raise Up (Official Video) Open Door Capital 3 Reasons Multifamily Rentals Might Be the Perfect Investment with Paul Moore Evan Holladay's Instagram Charity Water BiggerPockets Pro Membership Getting Started with Real Estate Investing: An Interview with My Real Estate Mentor Check the full show notes here: http://biggerpockets.com/show468 Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show number 4668. If you're conservative in your numbers and you're investing for cash flow, it's not the world's worst thing to have an area that's not drastically climbing in value because people always need a place to rent. So if you've got millions of people in the area and you've got millions of properties for rent, you only got to be like the top 10, you know, the top 80% to never have a vacancy. 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 Real Estate podcast, which is the show you're listening to right now, here with my co-host, Mr. David, the former cop,

Now the wise man green. That's kind of a lame, lame nickname for you, but we're going with it. I bet you'll do better on the next episode. I better do better on the next episode. I got to think of these things ahead of time. I even asked for audience help for nicknames. And then I got a bunch of suggestions and then I don't know where they are. So I need to talk with my assistant and figure out where she put those because I had some good ones in there.

So anyway, do anything fun lately? Buy any property? I bought the big one. That one tap me out. I'm back to saving up money again. And so I typically turn my focus towards helping other people buy houses once that happens. I heard Grant Cardone say one time, I'm always broke because I'm always buying real estate. And that was one piece of advice.

I thought that Grant gave that was pretty good. That is a good way of looking at that, David. I mean, like, yeah, the more properties you buy now, the more Lamborghinis you can have later anyway. And really, I think it's just a selfless thing. I think you just want to spend all your time and effort helping the bigger pockets audience. You're a good man, David. David, good man, green. That's so much better than wise man.

You sound like a cave man. David Wise man. David Good, man. Wise guy. I'm a wise guy. Yeah. Well, we talk about identity on the podcast today. And honestly, to be completely candid, when you're the host of a podcast, this influential,

it affects your identity. And I think that there's a lot of truth to. There's pressure to keep buying properties and keep learning more and keep sharing with people what I learned through, what I did so we can help people avoid making mistakes and get them excited about buying real estate. So there actually is probably some truth. to that. But that's not a bad habit to have. You know, and also speaking of today's show, which, by the way, everybody, today's show is a Q&A episode. So we're, we're going to bring in,

it's actually two parts. We're doing today and then we're doing also releasing an episode on Sunday with the second half. So we're talking to, I think, eight, is it 10, eight, eight or 10 people asking questions. And there are some really good questions in here. I mean, things like, if they could go back and start over again, what would, you know, me and David do? Is it, when's it okay to pursue multiple different real estate strategies at once? should you invest in areas with declining populations? How do I raise more money? And we talk about like the ABCD framework.

So make sure you listen for that. Common mistakes that new investors make on a regular basis and a lot more. So you're going to hear those questions and more over the next two episodes. Today's, which is episode 468 and 469. But speaking of the question on today's show, we talk about identity, of course. We also talk a little bit about like building a team and like outsourcing and getting all that stuff done. And I know, David, you've been doing a lot of that hiring lately. Are you still hiring?

You're still doing all that stuff? still building teams? 100%. Yeah. So a lot of my time has been spent. Right now I'm looking to hire like an admin or director of operations, someone who loves real estate, but they necessarily don't want to be in sales, but they want to help organize all the chaos of what I have going out.

This is one of the cool things about what we do is there's lots of ways to make money in real estate other than just owning a rental property. There's tons of it. So yeah, I have people that are, I'm reaching out to trying to find someone that lives near me in Northern California that wants to come work and help sort of organize the chaos that create by pushing the ball forward all the time. Cool, man. That's awesome. Well, I guess let's get on with today's show. And before we get too deep into this, let's get

to today's quick tip. Today's quick tip is actually something that came up on the episode that's going to air. I'm not sure if it's the questions on this episode or the next episode, but the question we dove into was about like time management. And I made the statement, everyone should take a quick two minutes right now if you're not driving, two minutes, pull up your phone calendar if you use a calendar on your phone and block off a two hour block next week for you time for thinking time for planning time where no phone no whatever grab a notebook go out to nature whatever and just think plan takes a time or go go to massage something where you like you won't be distracted with your phone and just like take some like thinking deep time so that's

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and get a $100 Amazon gift card. That's bill.com slash bigger pockets. All right. Now, let's get on with today's show. Like we said, today is a call-in show. So we've got call-in guests that are going to ask some questions. You're going to hear a little bit about them. And they're going to ask a question and we're going to just talk about it on the show. So I hope you guys enjoy this episode. One last thing. If you like this format, please go into the Bigger Pockets YouTube channel and leave in the comments that you would like more of this or that you would like more of the interview style. The same goes for the page. So on BiggerPockets.com, every podcast has its own webpage. If you can go there and leave comments, we read those and we will make more content based on what the people would like. Yeah, you get that going to BiggerPockets.com.com slash show and then whatever the number is. So today would be BiggerPockets.com.com slash show 4, 4,6, 8. And with that, let's get into today. show. Nicole, welcome to the show. Thanks for coming on. Hi, guys. It's great to be here. I wanted to just kind of start out by saying that I'm going to be asking my question on behalf of restoring Eden.

So just to give you guys a little bit of context on who we are. So restoring Eden is a non-profit that was started by a group of investors, myself included. And we really wanted to just turn traditional giving on its head by using buy and hold real estate to, um, to, revolutionize funding in the fight against human trafficking. And so my questions really kind of plays into that whole thing. I personally am just an investor on the side with my husband in order to be able to stay home with my family. Okay. Yeah, very cool. Yeah. So tell us, what do you want to know? Or what can we talk through? Sure. So my question was really inspired by an episode you did just a like a few weeks ago with Evan Holliday. And he was really discussing how to leverage tax credits. And I just

thought that was super interesting because as a nonprofit, you know, one of the things that sets us apart from most buyers is that we can offer sellers a tax advantage. And so we kind of wanted to understand if you guys have any experience with sellers that are interested in really maybe magnifying the freedom that they've experienced through real estate by, you know, offloading any distressed properties or even selling at a discounted rate to like receive a huge tax advantage. Nicole, it sounds like you have a little bit of experience seeing this. Can you share with us how you've seen tax credits play out both for your business and maybe with other investors, you know, to their advantage? Sure. I mean, I've, you know, have you ever seen advertisements for,

you know, donate your car or donate your truck? And then those go to a nonprofit. But the unique thing in our case is really we're trying to create, you guys are always talking about those little oil wells and how properties are these oil wells. So we want to like imagine just like having this oil well that's fighting human trafficking around the world. And so the reality is a lot of these nonprofits, these anti-trafficking nonprofits, they're just struggling with these monthly donations. And so we want to come in there and bring that sustainability that we've experienced through real estate and just cash flow, you know, to free more people around. around the world. And I think it really kind of plays into that whole mindset that you were talking about.

Like often we give monthly donations because that's the way everybody's been doing it forever, instead of seeing it as a true investment into the future. And really when you are giving, you're investing into the future. And a lot of these like men and women who are in trafficking, it like blows their mind when they even realize that there is a possibility for freedom. And so just mindset shifts all around. Yeah, so the idea being, I'm an older investor, let me, it doesn't matter, I guess, I'm just an investor, and I've got some property, maybe I'm a homeowner, I got this property, whatever it is. And if I donate it to this cause, you have, what, 50 something? 501 C-3, yep, certify.

Perfect. So I can donate the property to that, just like a car, and get a big old tax write-off tax credit for doing so. And so specifically, are you wondering, like, I mean, is your, you're, you? Is your thought like how to attract more of those people, how to how to sell that, how to, how to get the word out on that? Like, what's your biggest, like, issue there? Sure. I mean, we kind of feel like everybody would want to be involved in this, but we're trying to, like, pinpoint the people that really have. I mean, I remember Paul Moore

was on your show previously and he had a heart for anti-trafficking causes. And I know even Evan Holliday, you know, I follow his Instagram post and whatever. He's always talking about, like, wanting to partner with nonprofits and whatnot. So, I mean, we're trying our best to kind of network, you know, however we can, but, you know, what would you recommend on, you know, even getting in contact with those that maybe have that same vision or even just, I mean, the tax write-off itself, honestly, like, just for sake of an example, like, say you have like a $100,000 property and you're going to sell it for $50,000 because it's distressed. If you have a comparable home that's going for $100,000, if you sold it to us for $50, you could write off the whole $100,000.

So, I mean, there's like a benefit there. So I'm guessing that's a need that some people have. I'm just trying to connect to those people. Yeah. Yeah, that makes perfect sense. A couple of thoughts. David, you want to start? You want me to jump in.

First thing I would think is your target audience you're looking for is probably a full-time real estate professional because I'm guessing that they would have more tax advantages to receiving the credit on donating real estate. If somebody's working a W-2 job, definitely they should check with their CPA to make sure if they take a loss selling real estate to your fund or your group, that that would transfer over to the income they're making. But that's the type of person that I would be focusing on finding as a business owner who's doing well that can take a loss by donating some real estate against some of the profits that they're making in their business. So that

becomes a win-win. Another thing I'd be looking for is people who have real estate that they don't love owning. So you're solving their problem by taking it off their hands. They're just not managing it well. These could be people that inherited property that never wanted it or went into a deal with somebody else. And then that that person was supposed to be the operator. And then the partnership dissolved and they got left with the property. They don't really want to own. I think that's another person that could be a win-win for what you're trying to do. Yeah, a couple of thoughts I'll throw at you. And none of this is too, I don't know anything about the organization. So you might be doing all these things, but just I'll throw out some ideas. First of all, almost every most nonprofits I know

and most people who run nonprofits are terrible at business because they're super passionate about their thing and they're terrible at running a business about it. That's why most nonprofits fail. I see it over and over and over and over and over is people struggle with that. So the fact that you are a business person already gives you a leg up. And so when I say like, like the skills, like, if I was talking with a nonprofit person last night and like, what's your funnel look like? What's your marketing look like? What's all that? And just no answers. Just the cause was the main issue. So for anybody listening to this, once I have a nonprofit, I would study business, study marketing, study all that stuff.

Secondly, I see a lot of nonprofits that I've gotten into real estate, and they're all terrible at managing properties because they want to be really nice. And a lot of churches try to do it. And I've never heard of a church successfully invested in real estate. Maybe it's out there. I just never hear about it. Usually the case is a church will buy a bunch of stuff or ministry or some non-profit will buy a bunch of properties and then lose it all because they're too nice.

And that sounds mean, you know, but like, anyway, knowing how to manage the business side, all that stuff's super important. When it comes to finding the people, how to find those sellers, I mean, I would literally look at it exactly like a funnel, like a wholesaler would or a flipper would, right? Whether it's, I'm going to send out direct mail letters. I mean, that's a powerful direct mail letter, whether it's driving people to a webinar. I think webinars are one of the greatest sales tools in the history of mankind. So you get people to a webinar. If you can get influencers involved, right?

So you get the spokesman. Like, oh, yeah, this is like, you know, I mean, you know, ASPCA, that what it is, like the lady singing in the arms of whatever, like the. Angel's song, you know, that's really sad and there's puppies crying. Yes, the animals. Yeah, you know, the puppy, yeah, Sarah McLaughlin. Yeah, exactly. So like the puppy, like, why is she, because she's a spokesman. So everyone goes, oh, I love this song. Oh, I love puppies. Oh, look at how sad that puppy is. I should give money to this. It's a gigantic funnel, right? A hundred million people see that commercial. A million people call 50,000 of them donate money every month or whatever. And the same thing would be true for the nonprofit here is if you send

out 100,000 letters to people saying, hey, donate your house for a tax credit. And out of them, 2% of people call you back. And out of them, 10% of people actually do the deal. It's just a numbers game. So what would be interesting is to have kind of a two-sided part of your business. I think like Charity Water does this, where they raise money, like they have a group of people who fund the operation. So that way all the money goes towards the other things. So if you raise money from like a small number investors and they fund the direct mail, then all the, like, then it's okay. Because the problem with direct mail is it costs a lot of money.

The problem with TV commercials cost a lot of money. So if you can get somebody funding the marketing side, you're better off than, I mean, then you have the funds to be able to do the mass reach. So that's my very limited work with like that kind of stuff with nonprofits and marketing. I love it. I love it. My husband's always talking about charity water. So yeah, we're right on the same thing.

Yeah. Have you read that guy's book, Thirst, I think it's called? We didn't, but we saw the TED Talk. think that he had. Yeah. Yeah, I want to get that guy in the podcast, actually, like, that book was phenomenal. It's about how he started Charity Water and going from a crazy, whatever. But that guy is a genius marketing guy and business guy. Like, the best, the best nonprofits, the best companies out there giving money away to people were usually former business owners that got into it. I mean, because Charity is really, I mean,

a pretty fantastic, it sounds horrible, right? But it's a fantastic business model if you were making money because it's like subscription revenue, right? Like, bigger pockets has of pro membership. They give the money every single month. In that way, most charities that are monthly, they're just, they're a great business model and it's an easy sell. If you're good at business. So people are going to business. Now, your model where you're buying houses and the cashful producers like to help those things, I love that. That's fantastic. As long as you're treating it like a business and buying the right properties. And yeah, that's super cool. Oh, no, I just wanted to, you know, invite you guys to on a service trip. I know you mentioned in

your vision statement for Open Door Capital that you really wanted your team to be able to go on these service trips. So open invite for the both of you guys if you want to join us. I love that. Let's definitely talk more about that because that's something, yeah, it's on the vivid vision. It's on the wall and it's one of the only things we haven't accomplished yet due to COVID. We didn't go on a service project. So yeah, that's awesome. Well, cool. And yeah, the other thing is just go on podcasts. Go on as many podcasts as you can. I mean, I'm sure you know that, but things like this, like that reach hundreds of thousands of people. It's like such a different world today, right? Like back in the day, you had to like call people and like,

It was like, you go and have like, you rent out a ballroom at the hotel and you get 40 people to show up. And that stuff's cool. But in a day where you can like sit at home like in your like pajamas and do a call. Not that you're in your pajamas, but you can do a pajama call and reach hundreds of thousands of people. It's just such a, it's such a powerful medium that we have today. And the best podcast are stories, right? The best people love stories. And so when you bring stories from the work that you're doing into podcasts,

It's just, it's a powerful combination and touches people. So yeah. Definitely. I mean, I don't know how much time we have, but one of the things that inspired us particularly was from an organization called Cheer Love. And the woman, she was a hairstylist. She basically like left everything because she was like, well, you know, this is all that I know how to do.

I'm going to do it. And I'm going to teach people a trade and bring them out of trafficking. And, you know, she just had that mindset to be like, do whatever is needed to get it done. And now, you know, she's releasing like 30 women and 30 women and 30, men every semester from trafficking by teaching them a trade. And so yeah, we just really, we thought, well, we know real estate. Why can't we just like do the same thing with real estate? So there's there's a really good book out there by Chip and Dan Heath. It's called Switch. S-W-I-T-C-H. Have you read that one? It's really, it's like, yeah, it's like how people make decisions.

Oh, my husband saying yes, he has. Okay, good, good, good. It's like how people make decisions, how they change their mind about stuff. And it's, it's interesting. They make this point that it, Every person is like two characters, a rider and an elephant. The elephant is like the emotional side of our minds, and then the rider, the person who sits on the elephant, and the rider is like the logical side. And we think that the logical side of our minds are the ones making decisions, but in reality, it's the elephant that's driving everything.

We can direct it a little bit, but not very much. And so the whole thing is about how do you convince people to do stuff? How do you convince yourself to do stuff? How do you get other people? And the key is aligning the rider and the elephant together, and that's where the whole story thing comes in. So if you want to do anything, you want to raise money for your own real estate deal,

for a charity, for anything, get that alignment of the rider and the elephant together. And that's how you get people. Because here's the sad thing. There's so much pain and hurt in this world, right? So why would people, like, what happens is like, I could donate to your charity. I could donate to that one or this one or that one. And there's millions of problems in the world. And so what do we all do? We just shut down. We just don't do anything. So we don't donate money to anything or we don't help anything. So trying to get the rider in the elephant. So read that book too. It's fantastic. Definitely. Thanks for having me on, guys. Thank you for coming on and good luck and I'm sure we'll be talking more.

All right, Michael, what's up, man? Welcome to this show. Oh, man. I'm glad to be here, my man. I've been watching, I've been watching y'all show for about two years, maybe, two, three years. That's awesome. Well, tell us about yourself. What's your story?

Where are you at? What do you do? You know, I've crunched the numbers on a potential property and, you know, based on the location, based on the projected rent. You know, I'm looking at the projected rent. I'm looking at, of course, my monthly payment. So, you know, my net income, I crunched the numbers on a few properties and I find, like one property performs positive, a thousand net profit compared to the others. I've crunched all the numbers and I've also accounted for vacancy, you know, and financially

it makes sense. Financially, it makes sense based on those metrics. But like, let's say it's in an area that people might potentially move out of in a few years. Like California. Exactly. Exactly. So should you still invest there? Yeah, should you still invest there?

And how much weight do you put on? That's a good question. Yeah. How much weight do you put on like the area? You know, I mean, I mean, like, like I said, like, for example, I'm thinking of investing in Santa Corita. That's the area in California that I've been looking at. And let's say across the numbers, everything looks good. But then, like, I have no idea if people are going to move out in the next few years. And I don't even know how to really find that out because you can't really

test the market, you know, like how much weight do you put and how do you guys find that out? Yeah, good question. So a couple thoughts. One, you can find out pretty, you can find out population trends pretty easily by a quick Google search. So are people moving here? I would not look at the current, It's like people fleeing California because of COVID. Personally, I mean, I'd love to know David's thoughts on this too. But like, I don't look at that as a long-term 20-year problem. I think California's beautiful weather. I think it's there is a lot of people coming up from the south that like California is

going to be fine long term. I'm not worried about that. I think right now in lockdown, people are like, I don't, you know, screw this blue government. I'm going to, you know, red state. Yeah. That's a temporary issue, I think. So I would look at the area in there. Is it a crime-ridden area?

Is it a drug-ridden area? is the population trends going down over the last 10 years, 20 years? If so, that would make me nervous. I bet you that's not the case, though. But if it is, then look at it. How much is it dropping? I mean, like, you don't want to buy a declining population area. But at the same time, like, if you're conservative in your numbers and you're investing

for cash flow, it's not the world's worst thing to have an area that's not drastically climbing in value because people always need a place to rent. So if you've got millions of people in the area and you got millions of properties for rent, you only got to be like the top 10, you know, the top 80% to never have a vacancy. You know, a lot of people worry, well, what if tenants leave me, lower your rent? Like, there's so many people looking for rent all the time and their life is changing, looking for places to rent and so many other people looking to, you know, rent a property. As long as you're like better than the average, as long as you've got a fairly good price,

you're never going to have a problem renting a property. That's my general two cents. David, anything you want to close with on that? The number one Achilles heel, in my mind that makes real estate investing not work. Like every single problem is accounted for comparatively easy compared to any other business. The one you can't fix is if you got nobody that will rent your house. It's owning a rental property is owning a business with one source of income. And that's rent.

So for anybody that invested in like Detroit at the wrong time, there was nothing you could do to fix that outside of some incredibly clever marketing campaign that convinced people to go visit Detroit that didn't want to before. So this is something to look into. Yes, are people leaving? When it comes to California specifically, don't buy the hype. In fact, don't buy the hype with anything. You can read an article that says millions fleeing California as draconian measures take effect.

Then you can read another article that says not enough supply for California homebuyers. Both can be true. I'm selling houses here all the time, and I promise you, like, we're not having a hard time finding a buyer. It's the opposite. It's buyers are getting frustrated that they can't get a deal. So look into the numbers and look into what's making it happen, like Brandon said. I have a very hard time seeing California with the weather that we have and the diversity of fun things to do, whether it's a beach or snowboarding or a desert or the big cities. There's so much this place can offer. People are always going to want to live here.

To add some data on that. Like everyone keeps talking about people fleeing California, which is true. A lot of people are leaving California. But the little known fact is California is not declining in population. They're just not growing as fast as they were before. Like it's like this article here. It's like why California's population boom has Washington Post has stalled. It's like they have only, they only added 21,000 new residents in July or something. It's like they're still growing. People are still moving there.

So again, but it's misleading, right? So both are true. People are leaving California and we don't have a population problem. It'd be the same as if the market was appreciating by 10% a year and the market's cooled and it's only appreciating by 3% a year. That doesn't mean your house is losing value. It doesn't mean you have to worry. So anytime you're getting news like this, I'm very skeptical. I look into it a lot deeper.

I don't just read the headlines. I think that's good advice for people in general. Yeah, no, that literally helps me out so much. I really appreciate that. The last note I'd say is this. And then we'll let you go is as you're analyzing the numbers, just really, yeah, dig into those numbers. Like, it's hard to cash flow in California. If you're fine property that's cash flow in $1,000 a month, just make sure that you're not missing anything in there.

Like, they very well could. I don't know. There are rentals in California. Just make sure you really dig it. and trust a good real estate agent who understands investing, talk to some other real estate investors who are doing it in the area because you don't know what you don't know when you're getting started. And so get those holes filled by people that are around you.

You're going to do awesome. Reach out to us, Michael. I'll be happy to have me and my team look at these deals and tell you what you might be missing. That's why we're here, right? That's why we're on the bigger podcast podcast all the time to help people avoid the wrong deals and help them find the right one. So if you go to my Instagram and just hit contact, you can get my email there. Thanks a lot, man.

Appreciate your time and best to luck to you. Let's make sure we follow up. All right. Next, we got Ryan the Lion. Another North Carolina. That's right. Welcome, Ryan. Yeah, excited to be here.

Can I ask you a question of somebody from North Carolina? Sure. How often do people that are not in North Carolina sing that PD Pablo song to you? Not as much as when I was, you know, 10 years ago. I bet you that was a big deal, yeah. It's been a long time since I've heard that. I have a thing about people from some states that, like, everybody that's not in California calls it Cali. I've lived here my whole life, but none of us have ever said Cali one time.

So there's all these like little nuances, I feel like for every state that people that don't live there think about that state. Like Oregon. I always called it Oregon growing up in Florida. Oregon. Yeah. Anyway, all right. Rahina, welcome to the show, man. What's your question? What can do for you? Yeah, no, it's a huge honor. So I give you kind of my background, I started listening to you guys, you know, years ago. I think every podcast religiously and started buying small multifamily doing Burrs, things like that. And that kind of over the last four or five years, I'm in the Asheville area. It's been, you know, great market, everything. So kind of my question, you guys have taught me a lot about mindset, I think, just been a good influence on the mindset side of things. And my

question is related to that. We just closed a partner and I on a 22 unit building. So it's the first time, you know, I've got 14 prior to that, all like two, three, four units. So we closed on 22, just got the massive key ring that I got to take to my property manager. But yeah, I just sent her a picture. I feel like we interviewed a property manager one time. I can't remember who it was. I think it's the one Ryan Murdoch worked for. Does that sound familiar, Brandon?

And in the background, it was just keys everywhere in the entire office. He's like the keymaker from the Matrix. That's what Brian looks like. The biggest thing, and I mean, I wrote my question before we closed, we just closed yesterday. but is really as I'm you know this is kind of almost 10 times what I've done in the past so it's really is kind of starting to scale and I've kind of watched you guys you know just listening to podcast progress you know do the same thing I guess I've been looking back over my portfolio and just saying okay where do I where do I need to be comfortable and you talked earlier about scaling fast I think

with one of the last guys you know do you have certain metrics as you're watching your portfolio or deciding to move forward on it on something you know what metrics are you looking at to make sure you're comfortable as you start to scale. I was looking at what's the equity in my portfolio, what's my cash flow? What are you guys watching and tracking on your personal portfolios to make sure you're on track, if that makes sense, you're not taking too much risk. I probably tend to play too much defense like David was saying earlier. And I'm trying to make sure how much of it is mindset versus not taking too much risk with what I'm doing.

obviously cash flow is a huge number right we want to make sure our properties are producing let me i'll talk from a personal real estate not necessarily opened our capital quite yet so personally you know i buy properties for myself like i want to make sure above all that they're stable and what that means is that they're you know they don't take a lot of work from me there the rehab's been done all that stuff has been finished before i want to move on and busy myself with something else either that or there's somebody just handling it i'm not having to worry about it. So there's somebody else building that bridge. It's almost like every rental property you buy is a bridge you're building. So you've got to build this bridge or build this machine.

And if you stop in the middle of it to go build another machine, we'll use machine analogy better than bridge here. If you're building this machine, if you stop before the machine's done, you go build another machine. Now you've got a half-built machine, another half-built machine. And they're working, but not very well. So we want to make sure the machine is well built. It's functioning. It's pumping out oil out of the ground before we really shift focus on to something else. So again, that would I mean, it's cash flow. I mean, I like when I buy a property, I like to project. I want to at least a 10 to 12% return, like cash on cash return. But, you know, those are just projections. And the actual, like, once you buy the property, it is what it is.

So stabilization is the biggest thing for me there? And do I have like the systems down? Is it, is it taking more than 10 minutes per month of time for me? If it is, that means I don't know the system's good enough because I want my system to be so good that all my properties take no more than five or 10 minutes of work. David, what do you think? So I'm looking at your question And what I think you're asking here, Ryan, is how do I make sure that if I scale big, I'm still safe? What metrics do I need to consider to know that I didn't outkick my coverage? Okay. And I know you're looking at probably like how much equity should I have in every property, how much cash flow per door should I have. Here's why I don't like those metrics for everybody who's

listening here. When you are in a situation where you could get in trouble, it's usually not because everything was going swimmingly. Something shifted in the economy. Okay, that's what makes real estate change. When the economy shifts, whatever equity you had, you have no control over. It's going to go down and you can't stop it. So the people that say, I'm going to have a ton of equity in my property. So if the market shifts, I'm safe. Dude, your equity just gets eaten up and you can't do anything to stop it. It's kind of unwise to put your safety in something you have no control over. The same is cash flow per door. If you start getting a ton of vacancies, a ton of, like they're occupied but nobody's paying right now economic vacancy you start having things happen

outside of your control your cash flow per door goes down too you can't stop that that's why i don't focus on those metrics and i and i advise people that that's a false sense of security don't trick yourself into thinking you're safe because of that the one thing that i can do that no one can take for me that the market can't take that i have no control over is how much cash i have in the bank my reserves are under my control. I choose what I spend. And I choose how much money I can go make too. And people may think that, well, I can't just make as much money as I want. Yeah, you can. You may be afraid to leave that cubicle that you got because that feels safe. But that's why you're not making more money. You could go start a business. You could go flip homes. There's things you could do to make more

money. So I would advise you, Ryan, if you're worried, which is a good thing to be, put more reserves away. That's my answer. It's like the Christopher Walkin Saturday Night Live skit. I need more Cal Bell. Right? That's my answer to every single real estate problem is have more reserves. There's almost, I've consistently tried to figure out a problem that can't be solved by having more reserves. And I just haven't been able to come across it. So I just bought a property that my mortgage payment is going to be about $85,000 a month. Okay. That makes your butt pucker when you realize what if, what if I have some vacancies with this thing? That's a big dent, you know, you're getting, you're getting hurt really bad. the what if scenarios come up really big. Well, I can't stop whatever's going to happen from

happening that would cause that problem, but I can make sure I have enough money in reserves to weather that storm. The other thing I did is I went to the bank and I specifically said, if a catastrophic event outside of my control happens, how are we going to handle this? Are you guys going to foreclose on me in the first month? And they said, God, no, we don't want it. If you can't manage it, you're better at this than we are. We'll give you some time. We'll let you make interest-only payments. We'll tax something on in arrears. Right. Like, they don't want to take that property back either. And so I realized at that minute, all of my fears were a little bit bigger than they needed to be. And so those two things, I think, are two really good steps to take.

So what is your reserve target, David? It depends on how much money you have coming in versus going out, and it depends on the property. It's not so much a percentage, okay? It's enough money that I feel like if it was vacant for a long time and capital expenditures hit and I had to go renovate it, I just wouldn't worry. And I don't need to have that much. at all times, okay? But in general, I like to know that I have that much money coming in. So this sounds weird to people, but my goals in a business owner and making income at my job and starting new companies is centered around supporting my real estate investing. It's literally my fear that I want to buy more deals, but I need to have more reserves that drives me to go

get out of my comfort zone and start new businesses and become a top producing agent and start a mortgage company and buy the other and flip houses and do the other things I'm doing. doing like go through the headache of hiring people and training people to run these companies because I just want to know I have so much money coming in that these things are going to be fine if something goes wrong and I think that's healthy to be fair I think most people would get more out of themselves if instead of saying I don't want to do that that's scary they said what would have to change about me to make that not scary no I'm the same way I I build a lot of businesses and I've got a lot of income streams coming in and I write books

and I do these mastermind things out here and it's all for the same reason David just said, I want to make sure that no matter what happens in real estate, I'm going to be fine as I scale. If you want a general number, I've got like 20 of my own personal rental units, like out in Grace Harbor, Washington. I like to have 100 grand sitting around just so that if anything goes wrong, I'm covered. Like, that's a couple roofs. That's a couple, you know, all my properties go vacant for a few months. I'd be fine. For open door capital, I want to have a few million dollars in our reserves. Like, I'm like, because again, if something goes wrong, but, you know, that's a $50 million dollar sitting around. You know, the number the bank gives, which is what,

six months principal interest, tax insurance payment, pity payments for each property. I think that's a good rule of thumb, but I think that scales down the more that you have, right? Because not all of your property is going to go empty all at the exact same time. So I'd say if you're over 10 units, I'd probably personally drop that in half. Instead, I'd want three months worth of payment for all of them. If you want a solid number, that's generally what I rely on. But yeah, like David said, it's almost more of a feeling, right? It's like, I feel safe.

It has to be. And everybody wants the number. somebody asked at the house hack meetup last night what percentage are you putting towards capex and i was like this is for a single family home like there is no way i can give you a number on that you can buy a single family home that has a roof with five years of life left versus 25 yards that's a huge difference in what you're setting aside david i do have in the book that brian murray now are coming out with the books the multifamily i actually put together a thing called a cat like a capx algorithm which is kind of cool we'll explain it more in the future episodes but i basically take it doesn't again doesn't work for

single family homes very well but i basically take like the age of the property the condition like this, this, this, and then you plug in the little formula in it. Hopefully it shoots out a fairly more accurate number than just winging it. A little plug there for the future book that comes out in a few months. But it's going to be good.

Yeah, anyway. So, Ryan, my advice would be live beneath your means, make as much money as you can, save at a very fast rate, and then keep a decent amount in reserves. If you ever get to the point where you stop saving money every month, like you're not working anymore,

increase your reserves. If you get to the point where the money's rolling in and you're doing great with whatever your businesses are, you can roll with less reserves. But there's always a trade-off, okay? What people get in trouble with is when they say, I don't want the trade-off. I want big money, and I don't want to have to work for it,

and I don't want to have to go to work every day, and I don't want to live beneath my means. Now you're getting into the point where you're just hoping nothing goes wrong because you've eliminated all of the ways that you can save yourself as something does. Yeah. No, I appreciate that. And I actually went full-time as an agent last year, quit my W-2, and was able to step out, which I think a lot of it came from the mindset, you know, listening

to you guys. So I really appreciate everything you guys do. I appreciate you. Yeah, I keep crushing it. Now that you're an agent, you need to read my book sold and you need to reach out to me on Instagram so we can stay in touch because I make money the same way that you do. So hopefully I can help you there. Yeah, I appreciate that. I'll do that. It's on my list. Have you not read sold? I hadn't read it yet. It's on my list, though.

So here you are talking to me in person on the podcast and you haven't read my book. That's got to be so embarrassing for you. I'm glad I'm not you right now. Since I've went into this job, you know, I've been working like 80 hours a week. So my, my book intake has went down from, from what it was. So I got to, I got to step it up. Fair enough. Just as, don't tell me you've read Brandon's books. That will crush my soul. I feel like, I've been too busy reading the book on rental property investing. I read those before your book came out. I'll say that. All right. All right. Well, Ryan, appreciate you. Thank you for coming on today. Yeah, thanks. Appreciate it.

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and they have the results to prove it. Go to mine.co slash show me to see how mine performs and get your first month free, which is much cheaper than learning the hard way. Tax season reminder for all the real estate investors listening. If you own rental property, short-term rentals, commercial buildings, basically anything that's not your primary residence, you need to know about cost segregation. It's an IRS compliance strategy that lets you accelerate

depreciation on your properties, which means you're paying less in taxes this year and keeping more cash in your pocket for your next deal. Cost segregation guys is the go-to firm, having done over 12,000 of these studies with 500 million in total depreciation identified. Head to Cost Segregation guys.com slash BP to get a free proposal and see your potential tax savings. Welcome to the show. What can we answer for you? Awesome. Thanks guys for having me on today. And I want to start out by saying bigger pockets changed my life. And I used to be a commercial real estate financial analyst and was doing the bank job for a long time. That's when I started to listen to the podcast, driving to work every

day and learning about financial freedom and having a scalable income and lifestyle and ended up marrying my college sweetheart. We got married a month after getting married. I left the bank job and went into real estate full time. So now I'm a broker and investor. And basically, we've done a couple of small multifamily deals on the central coast of California. And first deal, I didn't even have two years income yet, but I didn't take no for any. an answer. So I found an off-market property and got the owner to carry the loan, and we bought a triplex. And then second deal was a house hack, and that was from Set for Life. Scott Trench's book just totally inspired us to house hack. And we lived in one unit, rented the other units out,

lived rent-free, and saved up enough capital to buy our next property, which is a townhome. So one of the projects we're doing right now is putting an accessory dwelling unit on the triplex to turn it into a fourth unit. And then we now basically have two small multifamily properties. And my question for you guys is, given everything you know with your years of experience, doing the different niches in real estate, which niche would you focus on in order to build wealth faster? Which niche? Knowing what we know now, if we were to suddenly, like, lose everything and start over, would that be kind of the question? Or if we didn't know what we know now, like starting what would we have done? Both. Basically, with all your experiences, where do you think that you could maximize your wealth building potential? First thing, this is going to sound more simple than everyone thinks. I would find the nicest area at the highest amount I could be pre-approved for and afford safely. and house hack a house in that area every year.

Okay, so, Owen, you're in the Central Coast. What's like one of the nicest neighborhoods or the nicest areas around you? Like San Luis Obispo. Okay, I'd find something like on the water, if I could, like with an ocean view or in a great area of San Luis Obispo, I would buy the maximum house that I could afford,

and I would target a house that I could split into three to four different units and buy it and rent them out. And I wouldn't even ask myself if it cash flows. Cool, if it cash flows. If it doesn't, wouldn't stop me. And I would hold that sucker for five to 10 years and repeat that process with another really expensive property every single year. And then I would wait and see what happened. If it holds still, cool. I have a property that's paying itself off in a great area with great tenants. If it appreciates, awesome. I have options. I can sell it in 1031. I might not have to 1031 if

I live there. I can get access to the equity and I can use that money to invest into something else. I can probably take the money that I saved in not having to pay rent and use that to buy the house the second year and let the first house buy the second. As simple as this sounds, it's wildly powerful buying in the best areas and not having to pay the full brunt of that expensive mortgage. That was awesome. So, Brandon, do you want to add to that? What I would probably do, I mean, the obvious answer that I lead towards is follow the fire,

right? We stay at all the time. I'm follow the fire. What sparks interest in you? I know some people are just like, they think that self-storage is the coolest thing since sliced spread. And other people are like mobile home parks are amazing. I think apartments are great. I want to do single family houses and buy 20 of them. So like whatever that fire that in your belly that says like, oh, that's amazing and you like, you like reading about it. That's obviously the thing I would follow

that niche. That said, if I just, if I could pick at random, so I'll even go with this. I would pick the niche that the mentor that I find can, is amazing at. And what I mean by that is like, and I get not like, will you be my mentor going around knocking on people's doors, asking them awkward questions. But as you're networking, as you're connecting with people, and you find that dude who's like, oh yeah, I've been building apartment complexes for the last 20 years, I would do whatever I could to get in their world and then learn how to build apartment complexes, because that's how you jump from a level one to a level 50 in like a nine month period. Like all of a sudden, you're like, you go out and build apartment complexes a few years later and just skip a whole lot

of drama of the small deals and just start with there. So I would find, if I wanted to scale very quickly, I would network like crazy, build really solid relationships with older investors who are just killing it and do whatever it took to get in their world and to work for them. I'd be their assistant. I'd bring them their coffee. I would do anything. And I would be the best person they've ever met at those things because I know I'm going to turn out exactly like them. When I was getting started, I met Kyle. Kyle was my mentor and he owned like a couple dozen rental units in Grace Harbor, Washington where I was. And I did everything from crawling her houses to paint, to manage his properties, to show units, to deal with tenant calls, everything. I did everything for him. And I was

really good at it. And because of that, he taught me everything I needed to know to get exactly where he was. And so within a few years, I had, I actually surpassed him a number of units. Now, had I, there's nothing wrong with what I did there, but had I chosen a mentor who had 50 apartment complexes under their belt, I'd probably be in the same amount of time at a very different spot. That's such good advice. Well, thank you. So that's what I'd lean towards this movie. I go with the niche that your mentor is in. That gives me a lot of clarity. And I guess, so I'm at that smaller multifamily portfolio wanting to scale to that larger multifamily portfolio. And so how do you find that person that would help you scale to that next level? I mean, as this COVID stuff kind of clears up,

and we're able to go to more conferences, I think conferences are a great way to do it. getting in front of people, when you're new and you're young, it is hard to make a dent and an impact on people who are more experienced and more outgoing. So I'm going to throw this question at David. David, there's a new person. His name's Owen. He's got a little bit of real estate experience at this point. And he comes to you and says, I want you to teach me everything you know about being a top, you know, whatever, top real estate agent or top real estate investor, whatever that thing is. What makes you, David, say, yeah, let me take you under my wing. let me teach you everything, let me show you.

What would it take Owen to be able to do that for you? And then I'll answer as well. This is a loaded question because there's a lot of emotions behind it. If I don't take Owen on, Owen can internalize that and think I'm a bad person. I'm worthless. He didn't want me. If I do take Owen on and I teach Owen what I know and Owen goes, thanks mentor. Now I'm going to go do it on my own.

I'm going to be upset about that because I poured into him. So the ideal mentor apprentice relationship is a long. long-term thing. And I think that's where a lot of the apprentices who are reaching out get it wrong. They're saying, hey, I'll work for free. Like, that's what I'm giving you is free work. But that isn't any use to us when you don't know how to help us. So what I tell people when they ask me to be a mentor is I say, hey, thanks so much for asking. I mentor the people that are on my team. Okay. And that's because those are the people I have the relationship with. And the more I teach them, the more it benefits them, but the more it also benefits me. So now we

have a symbiotic relationship. The second the relationship is not symbiotic, it's not going to last. So that's why some mentors charge money, is they say, well, in order for me to make it worth it to mentor you, you're going to have to pay me. Now, the problem for that is the apprentice can feel like they're not getting value out of it. When the mentor is giving them information for free, the mentor can feel that way. So it's actually a trickier thing to handle than we're making it sound. Like the whole mentor situation is incredibly valuable. And so it should be treated like it's incredibly valuable. It shouldn't be looked at like, oh, it's a casual thing. Okay. In this case, Evans coming to me saying, what was your example? Brandon? How do you sell houses?

Sure. Let's say he wanted to become a top real estate agent because I know you're a top real estate agent. So what would make you want to take him under your wing? Right off the bat, that helps because Owen's asking for to help me with something that I want help with. So there's already some chemistry right there. I need people to help. If I'm a top producing real estate agent, but I just like to work solo, I'm the wrong mentor to have. There's no reason for me to help you. So what Owen should do in that scenario is he should get to know me to the point where he knows what I want to make a career working under David. Do I believe David can grow me and give me more opportunity than I could get on my own? And is he going to grow a world big enough for me to live in?

Then Owen has to make the commitment. I want to commit to David. I'm going to work for him and I'm going to be loyal. So any investment he makes in me, I'm going to keep. The analogy I'll give when you go to someone and say, teach me and then you're going to leave is like, I'm a renter and I'm then going to fix up a house that belongs to somebody else. I'm not going to spend a ton of money to fix that house up when I'm going to move out and the owner of the house is going to keep it. So that's where it would start. And we probably just need to have a normal relationship where I get to know, would Evan represent me well? Would he help me with what I'm doing? And Evan's getting to know what I want to do this long term. If so, it's up to the mentor to give the apprentice the

direction. Here's what you're going to do. Here's what I'm going to teach. you. Here's what your path looks like. Then the apprentice can make up their mind if that's the road that they want to take. But what I notice is that the long-term relationship gets left out of this. It's, hey, I want to flip houses. That guy knows how to flip houses. Teach me how to flip houses so that I can go flip houses on my own. You've already started this thing off by saying, hey, I'm in town for the next three months. Do you want to be my girlfriend? I'm going to be leaving in three months and taken off, right? It's very hard for a quality person to be interested in a relationship like that. Yeah, that's really good. And just to pick it back on what

David said about, you know, the bringing value. Like, so I asked him from the, you roll as an agent standpoint, let's say from the investor standpoint, let's say you wanted to get into, you know, mobile home parks, which is what we're buying or self storage we're going to play with this year and large apartment complexes. So what would, what would it take for like you to like get into that into my world? I mean, it's pretty, it's pretty simple. I say it pretty much every week. I put it on my Instagram.

I'm looking for mobile home parks with 100 units or greater anywhere in the U.S. I have city sewer and water. Like, it's very clear what I want. And if you brought me a $7 million mobile home park. It was 190 units. It was exactly what we wanted. And you brought that to me? Like, would I not jump on a phone call with you?

Would I not help you? And you were like, hey, man, you know, I know I just brought you that multimillion dollar real estate deal. Can I ask you a question about this fourplex I'm trying to buy? Like, that's the easiest way to get me on a phone call is when we bought a deal because you brought it to me. And it's pretty like, and again, like, I'm not going to teach you and nothing you directly, but anybody, I'm not going to say this is how you go and find that deal. I mean, I've written five books on the topic and there's a million other ones out there. how you find properties, but I want to see somebody do some, like, bring, like, value. And it's not a coffee.

It's not a steak. It's a, like, they brought. And I'm not saying that's the only one. I don't sound like a jerk like I won't talk to people. I talk to people constantly for other reasons. But that's a good way to guarantee your way into someone's world is you bring them exactly what they need. Now Brandon sees Owen can be effective in healthy me.

So I will be effective in molding them. When you say, hey, can I get you a coffee or can I get you a steak or can I come work for free? we don't know if that's going to be something that works for either of us. It might be a terrible fit. Like Seven Habits of Highly Effective People, the book talks about beginning with the end in mind. What do you guys see as your end game and how do you plan on passing down? What you guys have built up to your family and future generations? I don't want to pass anything down to my kids other than knowledge. Maybe they'll get a little bit, but like I don't want to pass. I mean, I'll be, unless something drastic in the world changes, I'll be very, very, very wealthy. by the time I die, just off just normal percentage increases

for the next 30 years of my life, I should be worth hundreds of millions of dollars, if not more. I don't want them to have that because that's like life changing in a bad way money. So what I wanna pass down is knowledge and education and I wanna pass down mentorship and all that. So that's the biggest legacy I can think of passing down to them.

And so end in mind, if that's the goal, then that starts when Rosie's four years old, five years old. Like, let me tell you what real estate is, like we're just driving around where do we talk about real estate. Right now she says she wants to be a builder when she grows up. A builder, doctor, snorkeler, but, you know, a builder, it's in there. And so that starts now because I know that the end game is that. The end in mind thing, I think that people, maybe not.

I don't know Covey very well. And I've only read the book briefly a long, long time ago. But I don't think that beginning with the end in mind is what a lot of people think it is. And what I mean by that is, I think having an idea of where you're headed is important. That's why I love the vision stuff. and so like we were going to buy $50 million of real estate so we did that that was great we began with the end in mind but i don't think it's like hey 30 years down the road i'm going to be worth 35 million dollars and this is how i'm going to get there there's just too many variables in life

that change constantly and families change and the dynamics change and interest change so i think that works on a short a short timeline like two three four years but uh a lot longer than that then i just look at more of the intangibles of the legacy so that's where i'm going with that anything you want to add on that david yeah i don't have kids right now. So I don't know that I would be passing anything on to them. If I did, 100% what Brandon said. I think that one of the reasons that America is having some challenges is the last generation didn't teach their kids how to be resilient and tough and resourceful like they had to be. They handed their kids things. And then to be fair, we criticize millennials

a lot. It's not millennials' fault that nobody told them like why these values are important. So I would not want to make that mistake. What I'm thinking about as far as my end game is to develop people that I'm in a long-term relationship with. This agent, this loan officer, this partner is with me for the next 40 years. And I want to build their life up to be what they want it to be. I want them to see what it's like to build a work from Hawaii and manage a team. I want to help develop excellence in them so they are so good at what they do that they can do it from anywhere and they can do it without a ton of work. They shouldn't be working 80 hours a week to make good money. You can do it in 20 hours a week if you've actually delegated and shared

responsibility and built your own team. So what I would like is to build this. to the point that the people who trusted me that said, David, I'm going to ride or die with you, are now so successful that they can live the life with me where they have plenty of money to put into investing. And that's really how the company is structured to sort of develop leaders within it, who over time can take that responsibility on themselves and then enjoy the fruits as well. Thank you guys so much. I'm a student of bigger pockets. I love everything you produced. I've read your books. And I'm a huge fan. So please keep up the good work and spread in the knowledge. Well, thanks, man. Appreciate you. Go crush it. You guys.

got this. There you are. How are you? I'm good. I recognize your name because you did that, you did a clip that I played before webinars. That was like testimonials. Yeah, I got to play for you. You're on it every, almost every single week. Oh, cool. Welcome to the show. What, what question can we ask or dig into or discuss with you? Well, just to give a background, I am a mom of three. I'm married. My husband has a W-2 job. And I just moved to my tiny hometown down last April from Louisville, Kentucky. So went from 600,000 to about 3,000 in my city. And in that time, we have partnered with my best friends on a mobile home park in town. And then I bought a six-unit with my solo 401K. And then we just partnered with my in-laws on a lakefront resort. So really

excited, kind of diverse portfolio. I really want to keep scaling with the rental properties. That's but I really love doing. I'm kind of the deal finder in all of these, and I love that. That's what I'm good at doing. I want to continue using other people's money. And also, you know, I get joy out of helping others kind of come along

and get out of their situation as well. But I want to know how I can scale as fast as possible to kind of get my husband out of the W2 job with using other people's money. And I don't mean like hard money. I mean, I have lots of friends that are like, oh, that's awesome. We'd love to do something like that too.

But it's, I'm wondering how to get there faster. Yeah, all right. I'll start. So if you want to scale faster, you need to raise, you know, and you're going to need to raise money for it. Like, why do people invest with somebody else? Why do they choose to invest? It's because, A, they're aware of the person, right?

Like, they know that you're doing real estate. B, this is not, yeah, they're aware. I should put like an ABC to this. They're aware. I was going to say number three is they're capable, right? So if I want to make this an ABC, I'm making a framework right here. A, they're able, they're aware. In other words, yeah, it's benefiting them

because they get a good return better than they get elsewhere. They're aware of the situation and they're capable of actually investing. They have the money. And, I don't know, is there a D here? Maybe you've delivered a pitch to them. So, like, they can have all the first three things,

but if you never actually go for the sale, you never close it, you're going to struggle there. So anyway, so Michael Blanc has a really good suggestion that I've always loved is even before you have the deal is to put together a sample pitch deck of like this is the type, a deal we're going after. I've always loved that. People are our funny creatures, right? Like, we all crave good design and clarity so much. And so, I mean, this is like one of the things I say on

the webinars all the time. One of the reasons that Bigger Pockets calculators are helpful is, yeah, I mean, the calculators are great. They help you run the numbers. But what I think the most valuable part is, is it gives you like a PDF with charts and graphs and color. And when you show that to somebody, they're like, oh, wow, yeah, you know what you're doing. Like, don't even read it. They don't even know what they're talking about. But, like, Humans crave that clarity. And so, like, putting time and effort into putting together a sample pitch deck or a sample PDF of this is the type of deal we're going to be doing.

And then they're aware of it because you talk about it on your Instagram, your Facebook, whatever, you are attending events, you're talking to people constantly, you're going on podcasts. I mean, you got enough experience. You can start, you know, going on different podcasts, talking about what you're doing. All those things add up to being able to scale quicker. Building your audience, I mean, this is why I spend so much time, not the only reason, but I spent a lot of time and effort and money growing my Instagram because we've raised

$35 million in the last 12 months and it's all come from Instagram, almost entirely. Right? Like, it's insane. And it's because I once had somebody say this. They said, they invested in my fund because of the way I talk about my wife. And that was one of the most like profound impactful statements I've ever heard. And I'm not patting myself on the back here. But what that means is they're not investing in my deals.

They're investing in me. But how do they know me? They know me because of my social media presence, because of my podcast, because of that stuff. And you can tell character, when I invest in other people's deals, I don't even look at their documents. Like, I don't even read like the PPM and all that, the executive summary. I don't even read it. Like, do I trust the person or not? Like, if David came to me and said, hey, I got an amazing deal, I want you to put some money.

Actually, you did the other day, David. You're like, hey, you know, we're going to go into this thing together. I think we should go in more. I think we should invest more. I was like, okay. Like, it was like, no question. Like, David was just like, we should do this. We're going to do this together.

I'm like, okay. Like, so anyway, that's my thought. David, what do you want to say on that one? On raising money, scaling. I would say the first thing is understanding what matters to the people you're raising money from. So a lot of people make the mistake of trying to tell them the great return they're going to get before it's safe. That's one mistake. Another would be, like I raise money, but it's for a very specific person.

I'm looking for someone who wants safety over a huge return. So when I borrow money from someone, I'm not giving away equity in the deal so that if the deal goes bad, they're not going to lose. I don't fall under all the SEC guidelines because this isn't an equity anymore. I'm just, it's like a, it's debt. I'm borrowing debt and I'm paying you. And regardless of how the investment performs, you're getting your money. And so I make it convenient for them. Rather than getting a check every quarter like most syndicators do, I literally just have them set up to get money wired every single month because that's how most of us are used to living our lives.

We make a monthly mortgage payment. We make a monthly car payment, credit card. payment. So you get your money from me every single month. The mistake I think others make raising money is they give the same pitch to everybody. Right. So I tell people right away, like, if you get a younger person who wants to grow their big portfolio, I'm like, I'm not the guy to invest with. You're not going to get a good enough return. If you're trying to take over the world, you got to go do the work and get the deal. I'm looking for people that have already taken over the world. They've got a bunch of money. They want somewhere safe to invest it. And they want a very predictable result.

And they trust me, like what Brandon said. So kind of identify your target audience. If you're going to be offering a big chunk of the deal, you can go after people that maybe have less money to put into it, but they want to grow it bigger. If you're going to be offering them more security, sort of like I do, you're looking for people that have money sitting in the bank that aren't doing anything with it. So, David, did you say you're doing more of like a note? You're not doing syndication where you have to follow SEC guidelines? That's correct.

Okay. Because that's one of the things I didn't want to, like I don't feel comfortable going into yet, big syndication, not that I wouldn't ever do it. And so that was kind of a thing for me. But I also don't want to give up 50% of the equity in every property I have either. A couple of thoughts real quick, just to challenge you on that thought. The idea of going into syndication scared me for years and years and years and years. And then I did it.

And it was so painfully easy. I like hit myself like for not like not doing it earlier. Like it's literally like talk to an attorney and they're like, we'll take care of everything for you. You just go lay on the beach. We'll take care of it. And then they take care of it. And it's scary because it's like it's stuff we haven't done. It's out there.

But like you literally like read a book or two. You have a good attorney that gets recommended from somebody else who's doing this stuff. And it's way easier than you think. Now actually having the connections to raise the money, I think that's a whole lot harder. So if the scary part is having to go out there and meet people and connect and you're not sure if you have that network yet, I mean, that's a different issue. But the actual like putting out of the syndication is remarkably easier than I ever thought it would be. so yeah yeah it's not it's not bad at all it's really like it's pretty basic stuff and it's all almost boilerplate like the attorneys are just like print out the same document they prepared for 50

other people and they make sure you don't screw up too much they tell you the general stuff and the great part is it's all like all the fees and stuff are kind of wrapped into the the raising of the deal so you go to a syndication and you get yourself like an acquisition fee of a couple percent well that pays for the attorney so even better it's like you're not even paying anything Like, it's basically free, and it's part of just the business that you own. So, I just encourage you is don't be afraid of syndication. If you, I mean, you got a good personality. I think you could raise money and you've got experience.

One more note I'll add on that. I was hanging out with a guy last night. I won't say his name, but he was a former host for many years of the Bigger Pockets podcast. And we went to dinner together. And he was telling me about a real estate deal that he just, that he put a bunch of money into a syndication. And I asked him why he put money into the syndication. what stood out.

And he said it was for a hotel. It was for a fund for buying hotels. And the guy running the hotel fund, his name is Josh. So Josh is the guy in charge of the fund. So I asked my friend, whom coincidentally is also named Josh, why he invested in this other guy, Josh's fund. And he said, because he is known to be the single best hotel operator there is. He's so good at managing hotel, his couple hotels that he has already, that I trust him

to manage a whole bunch more, which is why I put a bunch of money into his fund. And I just thought it was like, the point I'm making is he was impressed by just how good he was. So I would look at like, what can you become so good at? Now, you just bought a resort. Can you become so good at the resort thing? But what you might run into difficulty is you've got some of this type of property, some of this, you got a nice diversified portfolio. But are you the, like, what are you the best at? What can you just get your reps in and just get so good at it? In fact, the guy I was hanging out with my friend Josh says he says you really should exit as soon as you can from your first fund like sell those properties just so you can like build that reputation more of you don't

just raise money you also make you know you actually deliver on the end and I'm like yeah you're 100% right we should like we should get out sooner so I can build that reputation of I close so because I'm I'm the best at that thing so anyway this little advice serves be be the best so I will I will try thank you I really appreciate it appreciate you coming on thank you so much all right now was our show for today. Remember, this was just part one of a two-part episode series. Can we call it a series? It's two episodes of series. We're going to call it a series. I don't know. It's a, it's a sequel. It comes on Sunday. So if you're listening to this episode in the future, of course, you can listen to the next episode right now. Go there right now. If not, you can do it

later. So anyway, check it out and go listen to that episode. Anything you want to close with David before we let them all go? Just a reminder to please let us know if you like this format. I think it's really cool. It gives people an opportunity to ask Brandon and I make specific questions of how to help them as opposed to telling their story. So I just want to know what do the people want? You guys want more like this? Or do you want more of the traditional style and we'll make what you like? Yeah, let us know. Very cool. With that said, let's get out of here. You want to close shop? This is David Green for Brandon Sage Advice Turner. Signing off.

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