BiggerPockets Real Estate Podcast - 602: Why The “Right Way” to Buy Rentals is Wrong

Episode Date: April 28, 2022

If you want to invest in real estate, you’re probably taking a safe, slow approach to building a rental property portfolio. As a real estate rookie, people tell you that the safest way to invest is to get good at one thing while keeping a distance from doing deals outside your comfort zone. While this type of advice isn’t wrong for everyone, it may miss the mark for some. Investors like Marjorie Patton have found ways to dramatically diversify themselves in the world of real estate, without their losing shirts. Marjorie is the head of sales for a financial technology firm by day and a real estate investor, house hacker, flipper, and private money lender by night. With some rather unexpected renovation costs on her first property (and with no safety reserve), Marjorie was forced to learn real estate investing on the fly. Fast forward to today, Marjorie has a seven-door portfolio in the expensive Denver, Colorado area. She’s grown quickly and has seen healthy profits, but has no need to quit her W2. Instead, she’s going to creatively parlay any deal that comes across her desk so she can build wealth while continuing to work somewhere she loves. In This Episode We Cover: Why diversifying in real estate isn’t such a bad idea, plus how to prepare to do different deals Using the concepts you know in everyday life to build a real estate portfolio  The benefits of being “scared” when doing deals and building confidence through mistakes When the right time to quit your W2 is and why you don’t have to succumb to the “financial freedom” pressures Flipping homes, lending private money, and investing in deals with partners House hacking an expensive property while keeping your cost of living low And So Much More! Links from the Show: BiggerPockets Website BiggerPockets Bookstore BiggerPockets On The Market Podcast BiggerPockets Youtube Channel BiggerPockets Podcast #467: #1 NYT Bestselling Author Adam Grant on the Need to “Think Again” Ebay MLS (Multiple Listing Service) Mike Tyson's Official Website Steve Jobs' Wikipedia Page Steve Wozniak's Wikipedia Page Malcolm Gladwell's Official Website Warby Parker Website Rocky Mountain Women Invest Meetup Airbnb Redfin HBO’s Billions Mark Ferguson's Wikipedia Page Rob’s TikTok Profile Rob’s Instagram Rob’s Youtube Channel Rob's Twitter David’s Instagram David’s Tiktok Profile David's Business Website Connect with Marjorie: Marjorie's Instagram Denver Women Investor Meetup Instagram Check the full show notes here: https://www.biggerpockets.com/blog/real-estate-602 Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets Podcast Show 602. Don't second guess yourself in terms of the things that you know. You know a lot more than you think you do, and you don't necessarily need to be, have gotten one deal under contract or anything like that. You are smart people, people out there that try and read and listen and take the advice of other people who are smart and read. And I think that there's, it's endless in terms of what you can do. I shouldn't say with very little knowledge, but if you feel like you can pick apart those parts of your experience where you can apply them to different deals.

What's going on, everyone? My name is David Green, and I'm the host of the Bigger Pockets Real Estate podcast. This is your first time listening. This is where you go if you want to build wealth through real estate and you want to make less mistakes, make faster progress, and do it in a smarter way. We help you to find financial freedom through real estate by interviewing different guests that have done it themselves, as well as, industry experts who give specific knowledge on elements of real estate investing that will help make you money. We're basically real estate nerds. BiggerPockets is a company that is committed to helping others just like you build wealth through real estate. You can also visit our website where you can

look at forums where tons of questions are asked and answered, ask your own question, get an answer there. Check out our incredible blog or go to biggerpockets.com slash store where there are lots of books written on different topics of real estate, several of them written by yours truly. I'm joined today by my co-host, Mr. Rob Abbas Solo, where we have an amazing show interviewing Marge Patton, who does a really good job of sharing how she invests in a hot market like Denver, but does it with all kinds of different deals, flips, multifamily, single family, short-term rentals, long-term rentals. She really looks at every deal individually and decides what she's going to do with it, and I think you're going to love today's show. Rob, what were some of

your favorite parts. I like this one a lot, man. We had a very kind of a bit of a sidebar. I didn't intend for it to be, but then we got into the sidebar of quitting your job. If you have a W-2, a full-time job and you're looking to become a full-time real estate investor, when is that a right decision? I think all three of us brought pretty different viewpoints, but we were all on the same page because at the end of the day, when it comes to quitting your job, you know, there's no right or wrong. There's just what's right for you. We also talk. We talked a lot about being scared to take on new projects, kind of just jumping into these deals and pulling from past experiences to guide your strategy to help you be successful from a deal.

So even though you haven't necessarily tackled a niche or an asset class, we still have experience and we're smarter than we think we are. And, you know, a little compliment to you. I really liked your take on art versus science in this episode. Yeah. So you're going to have to listen to this one in order to hear that. And additionally, we had a little bit of fun. Now, we're trying to keep the shows a little bit shorter in length.

So we actually took out some editing and threw it on the very end of the show. So make sure you listen all the way to the end and then keep listening for our insight onto some non-real estate related topics. All right, today's quick tip is, if you like following what's going on in the news, you like a deeper analysis into specific questions regarding real estate, like what's happening with interest rates, what the supply is doing, how our relationship with China is affecting the market here, check out the new Bigger Pockets podcast on the market. On the market was sort of a spin-off from the bigger news show that we do here on the

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what you thought was boring, and how you would like things to be different. We read those and we do our very best to incorporate that into the way the show is produced. Marge, welcome to the Bigger Box podcast. How are you? I'm doing well. Thank you. Yeah, so we've had a lot of fun before we actually hit the record button here.

I think our guests are in for a really cool show. Can you give us a brief background of what your portfolio looks like now? And then after that, tell us a little about yourself. Yeah. So we, we as in my partner and I'm primarily invest in Denver, Colorado. We have about seven doors. So certainly not little, but certainly not a lot, a lot of work to do. And we do kind of a combination.

And I think that's a lot about what I'd want to talk about today, too, which is we kind of invest in a little bit of everything. It's, uh, I like to think it's a mile wide and an inch deep. It's an inch seems too small. But, um, uh, yeah, short term, long term. Um, we do, uh, we've done, uh, private lending. We've done 1031s. We've done out of state. So we've, we've kind of tried it all. It's a little bit of a mixed bag for us and we really enjoy it. Um, and then a little bit about me. Um, so I am, uh, ahead of sales for for a global financial technology firm. I've been in financial technology for decades, it feels like,

but a very long time. And I've enjoyed it. I really enjoy the sales aspect of it all in terms of getting to know clients. Negotiation gets me excited. It hipes me up. I do love to negotiate, which is why real estate actually is a really good fit for me. But I also come from a background of parents who have, dabbled in real estate as well. My mother and her grandfather, actually, as an immigrant,

came through, started doing private mortgages, which she did a little bit of herself as well. And then my dad is pretty bullish and really enjoys Triple Net. We have spirited conversations about residential versus commercial. We don't really agree for different reasons, but the conversation is always my favorite. And then, yeah, I don't know if I mentioned this, but I'm actually right outside of Denver, Colorado. So I've been able to go into the bigger pockets headquarters and Denver. And I also... You've been to the Mecca. I've made pilgrimage to the Mecca. That's right. That explains the glow coming off of you right now. Exactly. It's also my podcast light, but I'll take that too. But yeah, and so I've gotten to meet all the awesome people

of Bigger Pockets. And hopefully I'll get to the point where I can tell you guys a little bit about to the the women's investor group that we started, which is why we started working with breaker pockets a lot. So I 100% want to make sure we talk about the triple net versus residential debate. I own both. And I've had, since I bought my first triple net property, a different perspective regarding when those properties make more sense, what type of person they make more sense for. My dad is exactly that person you're talking about.

He's like perfect for a triple net. Yeah. And that's one of the things I wanted to highlight is out of this conversation, one of the things that I would like for the audience to receive from it would just be an understanding that there isn't a right or wrong way to do it, but there is a right or wrong way for you to do it. And understanding the strengths and weaknesses, pros and cons, what type of strategy works for a property is a huge part of finding success financially. Like I like analogies and I, basketball is one that I go to a lot because I played a lot of basketball. And there are definitely

teams where a specific player will thrive and look really good and other teams where they own, right? And property, your portfolio is like your team. And so you're trying to create it with synergistic qualities that work around the strengths and weaknesses of your coaching staff and the other properties that you have. So I want to get into that. But before I do, I just kind of wanted to highlight one of the things that I really like about your story and my understanding of your investing career is you are the type who looks at every deal that comes your way, sort of picks it up, looks at it from every single angle and says like, how could I use this versus, nope, doesn't work, throw it off to the side and move on to the next thing.

There's a level of creativity, ingenuity, and maybe even vision. I'm sort of romanticizing this, but I think you know what I'm saying, right? A lot of the time we teach new people, nope, just look for a duplex. We try to simplify it as much as possible. And I do think for the very beginning investor, they can be overwhelmed by all of the different options. But once you start to get the fundamentals down, you can start to broaden your horizon and look at what opportunity comes your way. And that's kind of how I do mine.

Like deals across my desk and I think would I want to buy it? If so, what would I do with it? If not, would it work for someone else? If not, could I list it? Like, there's all these different ways that we can help somebody and then help ourselves. And the best investors take advantage of the opportunity that comes to them, which isn't always going to fit in the same niche. So I kind of wanted to ask you, how did you get to that point where you took this approach

of looking at all of these different opportunities and deciding how to use them versus just the whole pick it up, look at it, doesn't match what I want, throw it away, and repeat that 700 times. Yeah, great question. I tend to feel like if you can use a lot of your experience, not only even if you have a W-2 job or something that you were passionate about or did before you started to pick up real estate investing, but I feel like patterns are created, right? And patterns compound, right? So, for instance, in my job right now, I negotiate contracts. I'm not a lawyer, but I negotiate alongside the lawyers at my company. So I negotiate contracts.

That makes it really easy for me, for instance, to feel comfortable with maybe a long-term rental, understanding kind of who the person is, doing the background checks, even though we don't do that with clients, but understanding kind of what goes into a contract and making sure that I understand all of those pieces. And maybe that makes me a better person to be able to analyze kind of a, a test. tenant and things like that. Also, my job I negotiate, which I mentioned. I love the negotiation, right? From an early age, I love to negotiate. I love the buy and sell. And with that, that has allowed me to figure out what's meaningful to people, right? When I am interested in a deal, I want to buy a house, I want to buy some sort of property. I really try to figure out

what's attractive to that person. I'm happy to get into a little bit more, actually, with a deal that we just did recently, right? I think that really kind of shined through in terms of how we tried to negotiate that, because as some of you know, maybe a lot out there who invest in Denver, it is a terribly difficult market right now. It's crazy. But I like to take a lot of the things that have influenced me that I've learned not only through my job, but just through life in general. And then the other thing I said was kind of compounding those experiences, right? taking those and trying them, but then learning from those experiences, right? We did a rehab on a long-term rental and an opportunity for a flip came up. Well, we already did rehab. We set a budget.

We found a team. We knew how many months we had to do it. We knew the type of kind of rehab and updates we were looking for. We knew how much rent we were going to get for it. So we took that lesson and applied it to the flip. And so I think that's kind of the example I'm giving is that you can really take these concepts. You don't have to take them from real estate. There's so many concepts that you understand inherently as a human being and a smart person that you can bring into these. And then once you start doing those, you'll notice patterns of types of investing that you're doing that you can kind of parlay into other types of investing. We did a private loan not too long ago. Everyone's kind of familiar with the process of underwriting unless you pay cash and good, good for you. If you can pay cash for anything, ever everything, awesome for you. But we know. But we know.

need loans. And so we've gotten many loans before. And we know all the types of collateral that we need to deliver to an underwriter, you know, to satisfy their terms and things like that, right? So can you take those applied, that applied knowledge and then parlay that into a private loan, which we did recently, which was really successful. And it was, it actually was twofold where we earned a little bit of money and we were able to get someone into a duplex that they really wanted and pay cash. And she's a friend of mine, too. So that made it that much sweeter. But yeah, I would say that in general, you know, don't second guess yourself in terms of the things that you know. You know a lot more than you think you do. And you don't necessarily need to be,

have gotten one deal under contract or anything like that. You are smart people, people out there that try and read and listen and take the advice of other people who are. smart and read. And I think that there's, it's endless in terms of what you can do. I shouldn't say with very little knowledge, but if you feel like you can pick apart those parts of your experience where you can apply them to different deals. So this is one of the reasons I try to break the mindset of what is the right way to do it. Like that, the, how do I want to describe that? It's sort of like the engineer mindset needs a blueprint to operate off of. If they don't have a full set of complete blueprints. They don't know how to start building. And that makes

sense in certain things in life. Maybe like once you've acquired a property, there could be a right way to manage that apartment complex. But to get the property or to structure the deal is much more art than science. And what I really like about what you're saying is every one of us has experiences we can draw from from other things we've done in life, skills we've built from other things we've done in life. And real estate is not 100% independent of that. The things that we are good at from other parts of life will work within real estate investing and you sort of have to give yourself freedom to believe in yourself. That's what I hear you saying is don't assume you don't know anything. There are some things that you know how to do. And the art part of real estate is what makes it fun

because it's not an algorithm that you just follow mindlessly. I think the people that look at it that way are trying to remove a risk. They're trying to remove failure. They're trying to remove personal responsibility for how you put the thing together. And they find comfort in this understanding that there's a right way to do it. But there's not. There's a right result you can get. There's laws that have to be followed. There are principles and guidelines that we follow because we find they make it easier. But what I sort of wanted to get out of you is what other experiences did you have in life that you applied to your real estate investing that helped you get seven units in the Denver area, which is a very difficult market to be investing in,

that others might not realize they could be doing too. Yeah. Here's just kind of like an anecdotal story of how I started as kind of like someone who really enjoyed, like entrepreneurial, had an entrepreneurial spirit, had a very much a passion for the buy and sell. It just always kind of fascinated me. I, in the 2000 election, which I'm probably giving up my age a little bit here,

but I was just before, it was just before I could vote. and in Palm Beach County, which is obviously in Florida, they had this kind of snafu where they did these things called butterfly ballots. And it was really tricky for people to understand. So there's a lot of people that voted for, I think it was Pat Buchanan, who was, I think, the libertarian. I don't forget who it was on that sheet. And so they misvoted. And that is a piece of voter history. So somehow I had read something that was the internet was all the rage. And I had read something where you could actually sell on eBay your sample ballots, right?

Everyone gets a sample ballot before they actually go to the polls. And so I asked my mother and father, I said, can I have both of your, they both got one? So I said, can I have both of your sample ballots? And they said, sure, what do you want them for? I was like, don't worry about that. And so I put them on eBay, and they, I got $40 for one and $50 for another. My mom was like, that's awesome. High five.

My dad charged me a little bit of interest on that. He wanted his cut of it. Just, you know, he wanted to teach me about taxes and things like that. But that's kind of the start that I had in terms of really just having the courage to just try things, right? Just kind of get in there and try it. And I was hooked after that, right? And some of I feel like what, you know, I've been able to do and with my partner as well is really get excited about deals, right? You know, do the research.

Get into those. And I will say there is a little bit of mitigation on my end because I still do have my W2 job, right? That is very important to me. And I feel like I can take on more risk and try those things, you know, things that I don't know about and things that I have a little bit of research, but I haven't tried it yet. You know, I keep that job because of that. And not only that, but I like the diversification. So I really try to figure out a way that I can use kind of all of my themes that I have learned, even that example of just kind of buying and selling, right? Where it's like, you didn't even think about that, but all of a sudden,

you kind of hear something or you see something or someone tells you something. And then you want to go a little bit deeper into that. And you want to do that research and gain that knowledge. You don't have to, I always, people say analysis paralysis so much. And granted, people should do analysis. But I think it's so much more of, you know, trust in yourself, get those initial concepts together, and then go for it. You know, take that experience that you had in the past. Take those things that you've learned. And, you know, it certainly helps because I look on the MLS pretty much all day, every day is my favorite website, even though I have favorites in terms of mobile apps. But, you know, I'm constantly looking at things.

Anything that crosses my desk, you know, it's not a no. It's really just an understanding of, you know, what does that look like? What would that look like to us? What would that look like to me? How does that mirror a deal that I've done in the past? Is it something that I'm knowledgeable for, or I'm knowledgeable? on and then trying to figure out kind of how am I going to use all of my different strategies and all of my knowledge to kind of go after that. So that's the right deal for me.

So let's hop into that a little bit because you talk about sort of jumping into something that might scare you. I kind of feel like at the very beginning of your real estate journey, every deal should scare you, you know, for the first four or five years, everything should scare you because everything should still be pretty new. So can you give us an example of what kind of deals you jumped from and, you know, kind of what was your, your confidence level going into them. Like, let's start with your very first one. Maybe just walk us through, like, how the progression of your portfolio evolved in the first

three or four properties. Yeah, I would love to. So I feel like I, I don't know how many people have gone into it this way, but we went into it very much like, here is the price of the home. Here is our loan. Here's what PITI looks like on a monthly basis. Here's what I can get in rent. Awesome.

We are killing it. We are going to make money. This is just the start of our empire. So we had no idea really what we were doing. But I felt as though, you know, when you look historically and you look at really kind of these investments that are more fundamental investments, especially, you know, in the history of our economy, you know, I look at downturns and I look at upturns. Is that a word upturns? I look at the ups and the downs. Let's put it that way. It is now.

It is now. It is now. But I felt very confident because when I looked at, you know, the history of housing prices and things like that, you know, obviously this was after 2008 and 2009, but we were already back on an upswing. And when I look at the markets and things like that, I had a lot of faith in order to do this because, A, even though I didn't calculate for reserves and things like that, which is a pretty massive mistake, honestly, because we had a main line break right after that. we had to like replace the main line. So we didn't have reserves for that. We learned our lesson pretty quickly after that. But I just felt like my partner and I were both came from backgrounds and families where they had done real estate and that, you know, they'd done it a long time ago. And it was 2008 and 2009. Now they're still doing it. So I think we had a little bit of,

you know, some some mentors, if you will, in our past or people that we could kind of mirror ourselves off of that we're never afraid to really invest in real estate because it is that really good tangible asset with tons of exit strategies, which we've learned a lot about over the past few years. But we started with that single family home as a long-term rental. And we didn't do it right, right? If looking retroactively, we didn't do it right. But the reason that we felt so comfortable is because, A, I had a really good partner to do that with. And B, we had a very similar background as to kind of what our thoughts were going into it. So that offset some of the risk for me is having someone else be 50-50 in that with me. But also I had, you know, historically,

I'd had people in my life that had invested pretty heavily in real estate. And sure, they had taken some punches and bruises here and there. But ultimately, you know, their portfolio and their, the accumulation of wealth had been, you know, cumulatively it had been up. And so I just really wasn't afraid. I couldn't imagine that getting into this piece of real estate would really, maybe I was too optimistic, but I couldn't imagine that it would really, you know, go to a place where I would be in big trouble and then could I sell it? And, okay, even if it takes a 20% hit, okay, that's what I, my loan to value was 80%. You know, it would, I was not really afraid because I felt like I had a lot of barriers around that and a lot of kind of historically a lot of confidence that this would just be

a good investment. And even if it wasn't, okay, that's all right. I have a W-2 job. I can take on that risk. I sell it immediately. There's a lot of ways to get out of those investments, especially your first ones, if it really goes poorly. So I just felt like it wasn't actually a huge risk when you really looked at it, you know, holistically. Sure. So, you know, kind of now that you've learned the lesson of the reserves on your first deal. How much do you typically keep in reserves? Like, what did you actually learn tactically from from that mistake that, you know, you called it one of your first big mistakes? How has that sort of set up the procedure for managing reserves and any new investment that you do now? Yeah. We had zero reserves, like nothing. We didn't think anything was going to go wrong with

the 1960s house. Like, how could we've been wrong? What could go wrong? What could go wrong? And so once that, once the main, we had to replace the main line, which that's a whole other story about a guy we hired. And then he ran off with some of our deposit. We had to hire someone else. So we got like all the lessons in the first one, really. We got them all out of the way. So it was actually kind of a blessing in disguise when you think about it retroactively. But when it was at that point, we were kind of like, well, crap, like we kind of messed this up. But, but let's keep going. We still knew, you know, underneath it all that it was a good deal. But now, you know, when we look get properties and whatnot.

You know, a lot of what we did on that first one, I never thought about it, but we did a lot of work to that first one. There was actually a lot of people say, you know, just buy a place where you only need to update the aesthetics. When we actually bought it, we were kind of just like, okay, we just have money. We know we're going to update it. But a lot of what we needed to update it was the utilities, like the functionality of the house.

So we updated hot water heater. We updated a furnace. We updated, Denver has things called swamp coolers, which are kind of synonymous with air conditioners. We updated a lot of those things. So in retrospect, I kind of in the beginning was like, wow, I spent a lot of my money on things that people are not going to increase the price I get for rent. And I was kind of upset about that. But then when I think back about it, it's like, well, my reserves actually could be lower because I've really fixed a lot of the like core things that, you know, typically, you know, an operating cost would have to take care of, right? you know, something that I would have to have a reserve for because we know that plumbing is an

issue. We know the electrical is an issue. And we updated a lot of that. So I feel like what that taught us was we still try to look for houses now where a lot of those utilities are better so that we don't have to have as much in reserves. But we play with it, right? We kind of put our percentages of reserves based on how much attention that we've given to the utilities versus just the aesthetics of the house. So that's not really a number per se, but I think that that's how we kind of think about it. We now also do, we have found someone we really like for every mainline water inspection, right? Because in Arvada, which is where we, in Arvada, Colorado, which is where we have that single family, we learned that every single pipe that was built in that kind of age

range of home is clay. And that is, I don't know who came up with that, but that's a terrible idea. So that's a big one that we kind of keep a little bit for that every single time, even if it hasn't been replaced yet. And sometimes we just say no to a house when it's that old and it hasn't been replaced because that's about a $7,000 to $10,000 fix. So that'll wipe you out for a long time. Oh, yeah. That could definitely crush returns there for a year, you know. So you've talked about mitigating risk. You now have learned a little bit more around, yeah, what kind of reserves you want or what kind of properties you're buying or not buying.

you're partnering up with somebody, it's 50-50, so that kind of mitigates that particular risk. And then you also have your W-2 job that is also kind of bringing in the cash flow. So I actually wanted to get into that a little bit and talk about what's your plan? Like as a W-2 person, especially in your industry, obviously, I'm sure it's a lucrative industry, but are you looking to, you know, seven properties starts to get to that point, especially if you have, you know, short-term rentals and everything like that, where you might start considering heavying up more on the real estate side and siphoning on. your W-2, what do you want?

Like, what do you plan to do here in the next few years? It's a good question, Rob, and I feel like it kind of changes probably every quarter, six months, year. You know, my partner and I like to sit down every year and kind of go over, like, what was our plan at the beginning? And then what did it actually, what was it actually, like, how did it end up? And then what's our plan for next year? And I can tell you my favorite quote is that Mike Tyson quote where he says,

everyone goes into it with a plan to get punched in the mouth. And I swear, that's kind of happened to us many different times. and it's not as aggressive as being punched in the mouth. It just, we just start to think something else or we want to go after something else. So my ideal kind of is that I really still like, you know, working in a W-2 environment. I also like the fact that my company has a 401K match. I love the fact that I am diversifying a lot of my income and a lot of my investments through my current W-2 job.

But a big reason why I got into real estate was that there was a part of that that was missing that I wanted more control over. And there was a part of that that just excited me at the same time, which is, you can see across our portfolio. There's a lot of diversification in our portfolio as well. When I think about it kind of long term, you know, I think of it as kind of a slow role. You know, I think I'm very unlike a lot of people that I listen to on this podcast because they are about finding financial freedom, you know, somewhat as fast as possible.

I don't quite feel that way. I feel like I get a lot out of my current job and what I understand and what I learn. and I can apply that to being better at real real estate investing. So from my perspective, I agree with you. We keep kind of saying that to one another where, okay, we keep getting all these properties, like how are we going to continue to really figure out how to not only manage them on a day-to-day basis, but manage, you know, the bookkeeping of them, manage kind of, you know, figuring out, you know, when we have to do all the due diligence around, you know, getting our accountant to do our taxes and things like that.

So I see it more as kind of like one of those weighted scales, right? So right now a lot of my time is very much focused on W2 and here's real estate because I want to put all of my focus that's needed into W2. I don't want to shortchange that my company who's really treated me very well. And then I want to kind of just, I think you see it, like slowly kind of, you know, transition that into potentially more real estate. So I don't know how long that'll take and I feel like our goals change pretty often. but I don't feel the need to, you know, 10 properties and then I'm out the door. You know, it doesn't feel that way to me. It's much more of a, if anything, I think I would take a lesser job.

And some of the things that I thought about are, you know, going into real estate technology because that's an industry that is incredibly interesting to me and deserves a lot of disruption if you ask me. So, yeah, I think it's not necessarily a specific number. It's more of a feel, right? When is this getting to the point where I'm just so much. much more interested in real estate. We have so much more going on. I can do so much more. And then making that shift. And I don't know that that shift is going to be cold turkey.

I think that shift is going to be more so, you know, cutting down a little bit more so that I can continue to mitigate that risk a little bit more with that W2. But I don't have to mitigate it as much. Totally. Yeah. I mean, I don't think it should ever be cold turkey personally. I mean, I always tell people, not that I'm ever offering advice on this subject to somebody. I mean, I think when it comes to quitting your W-2, your full-time job, there is no right or wrong. There's just what's right for you and what feels right for you. But for me, that moment came when I was working full-time job and I was also investing in properties and I was launching my YouTube channel.

And I couldn't possibly do anything more. Like I couldn't possibly invest in more real estate or make any more content until I gave something up and that was going to be my W-2 job. And for me, I probably honestly waited a little too long because I was, I called my, my bosses up on a Zoom and I was like started crying immediately. And they're like, oh, no, what's wrong? And I was like, it's nothing. It's just I'm quitting. You know, and they're like, are you going to be okay financially?

Like, are you okay? Because I was like a mess. And I was like, yeah, I make so much more money doing the other stuff. And they were like, what are you crying about? And I was like, I don't know. Health care. And so for me. at that moment. It really was. It was the health care. It was like the $2,000 expense of healthcare was

truly holding me back from ever scaling up my real estate business or my content creation business or anything like that. So I'm kind of curious, Dave. I mean, you've sort of left behind a W-2 job. What was, you know, what was that moment for you? Like, what do you recommend for people? Because obviously in this housing market, we're having a lot of highs right now and a lot of success in the real estate world. So how would you navigate that? Well, you two both hit it on the head when you said it's different for everyone. So my personality was I'm more conservative. So I worked that job as long as I could until my turning point was literally I had a listing and I couldn't get it on the MLS for two days in a row because I was too busy at work. And then I was getting held over so I

couldn't get off work and do it when I got home. And I just realized like in my gut, I'm not doing right by the client. I need to quit the job and focus on real estate. But there's also the people who don't have to quit their job, but want to quit their job. And that's probably where I would want to put some advice right now. In a market that we tend to make decisions when we're investing in real estate or in a lot of things that are opposite of what you see happening. So like if you're in a jih Tzu match and someone's pushing you, you want to pull them. You don't want to push against them. You get tired. So when the market's hot, we tend to pull, like pull back. Don't buy as much. Be more conservative, have stricter rules that you're going to be.

be investing by when there's a down market, we want to be more aggressive. Like, do what you got to do, borrow some more money. We're doing things that are traditionally riskier, but because you're at the bottom of the market, that risk is mitigated by cheaper prices and rising values. The market we're in right now, we don't know if we're in the bottom or the top. That's what is so confusing is prices are higher than they have ever been, but every indication says they're going to keep increasing. So that traditional way of looking at it is got a lot of people just arguing right now. There's people that say you need to be buying. It's going to run.

And there's people that are saying you be a fool to do that. You're at the top. You need to hold back. So my response to that is to say, I can't tell which one of those is going to happen. I can't predict the future. I tend to be in the camp of I think we're going to keep printing money and we're going to keep driving up asset prices. And so buying in the better cities, the better areas and the better properties is going

to make you a winner, but I don't know that. So where I pull back would be, this is not the time to go live a life of luxury because you got some cash flow coming in from properties. This is not the time to quit your job out of luxury as opposed to necessity. What you two are describing is like I, Rob, you said, I couldn't work anymore. I was losing opportunity. I had to quit. And Marge, you're saying, I'm not at that point yet, so I don't see that happening. I think that's the wise advice. When we don't know what direction the real estate market is going to take, I want additional streams of income that are completely unrelated to real estate. So if we are at the top, I'm okay.

I have money coming in. And if we're at the bottom, I just lost a little bit of time and effort, but I didn't actually lose money. So my advice to people is if you're thinking about quitting your job, if it's because you can make more money doing something else, that's okay. Make sure that platform is going to be solid. And the bottom's not going to drop out from underneath you because that is a possibility.

And if you don't have to quit your job, don't. Then I know that that's different than what every single other real estate investing and influencer tells you. They're all trying to convince you, quit your job and let me be the one to help you do it, right? I'm way more into supplement your job, okay? Like, fortify your financial position, build a fortress around your job with rental properties and with flipping properties and with additional sources of income. Don't look at it like, do I have to do one or the other?

And with what we've seen changing in the pandemic, so many people are allowed to work from home, you do have more flexibility in many cases than ever before to make additional income to do a side hustle. So that would be my two cents. Like until I know what's happening with our crazy market, I'm saying get a job and not only have a job, but build a skill set within that job. So you're solid. If they're going to make layoffs, it's not going to be you. And if your company does go under, you can get another job that makes more money or even try to make more money with you. in your job. So I don't have the crystal ball, but that doesn't mean I'm not doing anything. So I'm in that same boat. I'm still buying a lot of rental properties. I'm still buying a lot of

real estate, but I'm still working. I'm still earning money through these other businesses because I don't know what's going to happen. I think just having one stream of income is risky, right? You know, and that's for me, I try to have as many streams of income as possible, preferably a lot of different streams of income from real estate from different asset classes, which Marge, that's kind of what you talked about. I mean, you have a mixture of long-term rental, short-term rental. So, yeah, I mean, I think that's the only way to really mitigate risk is just to give yourself more options.

Because for me at that time, it was actually kind of risky, just for me personally, to keep my job because it was actually costing me money on my other businesses. And that was the turning point for me. But I agree. I don't think, I think you should be really busting at the seams and, like, spread pretty thin with your 9-to-5 job and the other stuff you're doing.

before you ever quit. I don't think it should be like, yeah, yeah, I think I don't want to do this. I don't want to work a W-2. I want to just go all in on real estate. Well, you still need the money. You still need to pay the bills. I think it's a tough call for a lot of people. But yeah, I mean, obviously it's case by case. Yeah. And I, I mean, if you look at some of the largest founders of some of the biggest companies in the world, I mean, they all held their jobs, right? Like, I mean, Steve Jobs. Like, what was it, Steve Wozniak? I mean, they all kind of kept their jobs before they really went off and like put themselves 100% into these large companies and I don't know Malcolm glad well I I mean a lot of people read him I really enjoy all his books and then the originals he you know he didn't

invest in Warby Parker when they came to him because he was like well they're still holding on to their jobs they're not going in full steam that which means they're not dedicated to this and he lost out on probably millions of dollars worth of um profit on his investment so I don't know I think it's I think it's really just how you look at it and I thought you guys described it perfectly right It's to each their own eye beholder do what's right for you. It does not mean you need to, I listen to a lot of the podcasts or listen to a lot of the podcasts, read a lot of the forums and people are like, you know, how can I do this immediately? And, you know, for those people, that might be right.

But I think there's a lot of people that almost look at it like, should I leave because everyone else wants to leave? Like, that's the key to a happy life. And I think you have to figure that out for yourself. Did you know your house gets bored when you leave? I can't actually prove that, but it probably misses out on the action. the footsteps, the late night fridge raids. Yeah, when you're gone, your place is basically on unpaid leave. It's sitting there in the dark thinking, I could be contributing right now. Your side

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Yeah. I mean, I hate to say that it's unscientific, but it's probably slightly unscientific. I mean, I do a lot of it through word of mouth. And I can talk a little bit about this, too, but, you know, about three years ago, especially when I was getting interested in real estate, and I didn't really know really necessarily what to do and where to go to get the information. I hadn't even found bigger pockets yet. And I've looked on meetup, which I think a lot of people do, to see if there was some real estate group and there wasn't one. And so I created one. It's called Rocky Mountain Women Invest.

It's local to Denver. We started with like 30 members. Now we're up to over 300. So I'm pretty proud of that. But I will say a lot of the things that I start to get interested in is listening to to speakers that come in and hearing about different people talk about things. We had a meet up last night and a woman was telling me, yeah, I buy land in Fort Collins. I buy land.

And I put like yurts and domes on it. And one of the, and she said one of the most highly searched things on Google search engine is unique Airbnbs. And she does really well. And, you know, I just think it's very unscientific how it comes to me. But then I get a little bit more scientific in terms of doing my research. So I don't, I mean, the ideas for things like that are they come and it's about talking to a lot of people. And we have speakers that it's so much about just hearing a sound clip or a soundbite of someone that's doing something different and saying, oh, that's kind of interesting. Would that be something I'd be interested in? Let me look a little bit more

into that. And sometimes people come up to me and they ask me questions where I'm not really, you know, can't confidently answer them. And we'd never done a private loan before, but a friend of mine was like, I want to, I want to buy this duplex and it's going to, I'm only going to buy it if I really have cash to buy it with. And we said, okay, let's start looking at it. So I don't know that we try super hard. Like, I'm not sitting over at my computer saying, you know, I, I'm, this is what I should be doing. Like, I need to go for that. And I think it's more so, I pick up on a lot of it from podcasts and talking to people and certainly the investor meetup and things like that. It's, it's how it comes to me is very unscientific. And, and, but how I

research them and things like that, I think is, is where, is where the effort really needs to come in to feel comfortable to actually move forward. Yeah. So do you think you could really just clarify here when you said that you were the private lender? Give us the nuts and bolts of this. Were you actually lending out of your pocket to a friend? to fund their deal? Correct. Yeah, definitely. So she had a duplex in Tampa, Florida. She actually owned the duplex right next door to it. She had found out that they were potentially ready to sell it, and she was hoping it wouldn't go on the market. And then once it did, her strategy needed to change. So they had some offers, and she knew that she was not going to get unless she had cash.

So she came to my partner and I, and she said, would you, I need, I need, you know, she had some other source of income too, but she couldn't get that person to give her the full source. So she needed another partner to kind of fill in the rest. And she said, I don't need it for that long. It's only a few months. And actually, the one I'm talking about is my co-lead at the investor meetup. So I knew her very well, felt very comfortable. And she said, I need X amount. I only need it for X amount of time. And here's the percentage that I'm willing to give, which is pretty standard. We were not planning to do any, we were not planning to do another investment in the short term. Like, sure, having money is great if you need to jump on something, but I was really, I really wanted to,

I really wanted to try private lending, and I really wanted her to get this property. So she asked us for a certain amount. We agreed on a rate. We used, my partner's father's is a retired lawyer, so that's helpful. So he helped us kind of make sure that we drafted up a good contract. And then I was able to really understand it to and help out and work alongside him because I had negotiated contracts before, but it gave me all the education as to all the things that he was thinking about that I just had never thought about. And she was able to get that property. And then she just paid us back with interest a couple weeks ago, actually. So she only held the money for maybe three months. And she he locked the property. So she was able to get, you know, that loan essentially

to cover the amount and then pay us back. So it worked out really well. And we did a bunch of just understanding she's super organized. She did all of her due diligence. We reviewed all of it just like we would when someone kind of comes, an underwriter comes to us and asks a bunch of questions. Maybe not that in depth. But we understood she already had a property right next door. She knew very well the value of the property, which made me feel very comfortable. We had my partner's dad help us with the legal agreement. So that's not only saved us money, but we got an education around that.

And then I just trusted her in general because I'd worked with her for two years now. So I knew what she was doing. I knew the type of investing that she did. and all the signs, like all the bright lights of like, should you do this, should you not do it, were all pointed to yes. And she had shown us all the opportunity that she would have with the HELOC and all the numbers and things like that, that she would have no problem getting that loan to pay us back. So it all worked out and all signs pointed to yes.

And we pulled the trigger and it worked out really well. So if I wanted to go out and lend money to somebody, let's say, David, what are some of the things that we actually need to do? like, is it as simple as a promissory note and just assigning, is it simple interest, compounding interest? Like, how do mechanics of something like that come together? Yeah. Again, ours was not super scientific. We agreed on a rate. That was what she felt that she could pay, and she knew how long she would need that loan for. I think some people might not have done the, because is it worth giving, you know, it was about $100,000 and is it worth giving

$100,000 for X amount of time with that percentage? And I think some people, people might not think the, you know, the juice isn't worth the squeeze, kind of, right? So they might not do it. So we agreed on that. And I think that was kind of the biggest, right, which was to us, you know, is it worth the opportunity cost of some deal came in? And I'm not sure necessarily that I have a yes or no feeling around that. But we looked at what the property was. We looked at how she already had her property right next door valued. So we knew what the value of that was. And when we went to do the loan or want to do the kind of contract for it, there were a couple different ways that you could do it, right? Something that stands up in court that says you kind of have a lien on

this property. So we, you know, we would have to get paid essentially, or there's also the other opportunity where we could have actually had her sign over X amount percent of that property should she default. So there was different opportunities to do that. I felt very comfortable with having something written that basically said, we have a lien on the property because you you owe us this money. So we would essentially be able to bring that to court should anything have gone wrong and say, we own X percent of that property because we paid for it and we're entitled to that. So I don't know if that's enough of the specifics per se, but it was, but it was, you know, we locked it up pretty confidently and a lot of that reason is because we had my partner's

dad who had negotiated contracts like this in the past. And so we learned about it. But but overall, more than anything, and I hate to say this, because, like, trust is very important, but obviously, like, in the letter of the law, it's not important, right? Like, just having, like, a trust and a hope and a wish is, like, not really anything, but we felt like we had enough information in that, in that contract, which there are many good lawyers to work with that can put together a contract like that for you. We've had some speak at the Rocky Mountain Women invest. So I think you should always have a contract. in a locked tight contract and agree on, you know, how long it's going to take this person to pay you back.

And then what happens when they don't pay you back after that amount of time? Agree on a rate. What happens if they don't pay you that rate? Do you want them to pay you monthly? Do you want them to pay you all at the end? These are all the types of stipulations that you need to review with this person, you know, if you're going to loan them money. And again, like, trust that person, right?

Like, get to know that person. Aside from just putting the numbers together, like, I don't know. I don't know that I would blindly loan to someone I didn't really know. I'm just, that's not my main business. And if I do it again, it will definitely have to be with someone who can provide me all those numbers and that I know them because it just, it feels better to me. Sure. So I guess what you're saying is don't just lend your money out to strangers, which, you know,

I think it's a pretty good, a pretty good tip. I think that might be our quick tip for today's podcast. But obviously when you're putting together these promissory notes and these, these contracts, they have to go on some kind of fancy stationary. So I'm kind of curious. Do you have any tips for using fancy stationaries whenever you're curating some of these contracts? I have never used stationary except for one specific time.

And it was to ask someone to sell me their house off market. So no, everything was digital for that contract. But if that's your lead into this flip conversation, that is a perfect lead in. It sure is. Because it's, yeah, I have stationary. I'm pretty sure that was from. college that was given to me by an aunt or something like that. And I've never used it,

but I've always kept it because I was like, it's really someday this will come in handy. And that was, I think, a big reason how I got an off-market property, actually. So yeah, tell us about this deal. Yeah, so this deal was in the best location possible. And when I say it was in the best location possible, it was in the best location because it was across the street from us. So it was across the street from our primary residence. And we actually didn't really know these neighbors very well. But another neighbor who I was very friendly with had said that this couple was moving out of state. They were retiring. They were moving out of state. And I said, wow,

do you think they might want to sell their house to me? And she said, I don't know, go ahead and ask. So I was outside getting the mail, doing something, and I saw her, her name was Wendy, you know, going to start walking the dogs. And I walked up to her and I said, I hear you're leaving us. And she said, yep, we're flying the coop, we're going to retire in northern Idaho. And I said, wow, you know, are you guys going to list your house soon? And she said, yeah, I think so. We haven't really decided what to do with that. And I said, well, listen, we have a couple rental properties in the area. You know, we're familiar with buying and selling real estate. And we would love to make you a really competitive offer to sell. And I said, we have a friend of ours who's an

agent. And so you would actually have to pay no commission because she would come in and partner with us. and so we'd save you on that. You wouldn't have to go and get your house in a good state for sale because they had three dogs. So I know that I know that they did not want to have to shuttle these dogs in and out, you know, to do showings and things like that. I realized, too, in talking with her, that she also really didn't want to do a lot of work to the house. And the house did need some work. They did a good job keeping it up, but they hadn't made any aesthetic updates. They hadn't really done any large-scale updates that probably might have needed some deferred maintenance that needed to be done.

And I said, think of us. You know, let me know what you think. If you want to talk with your husband, you know, we're certainly willing. And there's no time frame for us. So you guys can be as kind of, we can be as flexible as you guys need to be. And she said, thanks. So I went back into the house and kind of didn't think anything more about it, right? This is a, you know, I'm going to shoot my shot and see what happens.

But I did want to memorialize the conversation. So I took that really pretty purple stationary. I'm not. I don't like pink and purple. purple. It's not my color. But I took that pretty purple stationary and I wrote a very nice note on it just to memorialize our conversation and say, Wendy, we would love to do all these things. Here are the things that I think would be really beneficial to you. Let me know if that works for you guys. Got the mail. She had waived one time when I was, you know, driving away and said,

we got your mail. Like, thanks, blah, blah. And still thought nothing of it. And a month later, she caught me as I was doing something outside and said, I think we want to go with you guys. And I, this is after we had just finished stabilizing another long-term rental. So we were exhausted. We were very tired. And so I called my partner on the phone. I said, hey. So good news question mark?

We got another property. And she was like, I thought we promised ourselves that we were going to take a little bit of a break. And I was like, nope, let's do good of a deal. Let's do it. So anyway, it was a flip across the street. So we did get a 30-year mortgage for it, so we knew we were going to have some carrying costs. But I think the kind of magical thing about this was that we brought in an investor, a friend of ours, who's actually an agent, because I do not have my real estate license and it was my partner.

So a big opportunity for getting this under contract, I think, was that the seller did not have to use, they didn't have to have representation. So our agent, our friend, our investor, acted as a transacting broker. So she was doing, she was representing the seller and she was representing the buyer. And I think the nice part about this whole thing was that we actually hugged after the, after we got to the contracting table. They were so happy. I think in a lot of ways you think that you're taking advantage of people.

They were so happy that we were doing this for them. They were so happy because they were building a house in Northern Idaho. We were giving them cash immediately. We did a rent back for her because she had a little bit of a retirement party that she was going to. So I feel like both sides really got something really good. of this. And I think a lot of times people feel like, oh, you got a house off market. You must have tricked them or you've done something or you offered them something and that wasn't right. No, this was fantastic. Both sides were equally happy about this. So in terms of the numbers,

which I'm looking at right now, but in terms of the number, so we paid $460 for the flip and we felt like that was actually pretty good. We thought we could actually spend all the way up to probably about $500 or a little over $500 and still kind of make the money that we want to do. to make. Aside from kind of the acquisition cost in terms of rehab, cost and carrying cost, we paid about 95,000 combined. And then we wanted to list. So that was, that was kind of, we got ourselves into kind of like the 550 range. We had assumed that we wanted to make about 100K. So we were going to list it at about 650, if I'm just creating simple math. And because the market just exploded, you know, while we were doing this, we already thought we would do well because

we saw some of the comps, but we ended up listing for 645 and we sold it for 741. So like I said earlier, where that Denver is a hot market, Denver is a hot market. But to some of the stuff that we were talking about earlier, this is where I just couldn't say no to this deal. We had never done a flip before, but you just knew inherently by knowing different things about the deals you had done previously. We had talked to so many renters that were going to rent some of our properties and telling us kind of like what the rentals look like, what the sale, how they had to rent because they

couldn't buy a house. So we kind of, we kind of ingested all that knowledge, you know, somewhat ominously in terms of, you know, we just knew it was a good deal because we had, we had been in this space, we had seen what the numbers were doing, we were at friends that had told us what was going on. Rocky Mountain Women Invest speakers had also told us. So it was just kind of through osmosis that we had understood that when we looked at this deal and we looked at all the numbers, We were like, yeah, and we already had a crew to do the rehab. So, and we have a fantastic crew. I mean, our contractor is like, it's like our older brother.

He's amazing. And it just ended up really, really well. We kind of nailed it. And I'm so happy that we went forward with the deal. Congratulations. Well, I think it's a very rare circumstance where you want to hug the opposite party at the end of, at the end of a transaction. I'm waiting for that day where I want to hug the opposite side of that.

Because it's always, it's always a little tense there at the end. So that sounds like a really good deal. Congratulations. So what was the exact profit on that after you listed it and you said it went for 741? Yeah. So splitting it three ways across the three of us, it was about everyone got about 55,000 each. So in terms of return on investment, it was about 75%. Really nice. Congratulations. So then obviously you took your 55,000 and bought a nice car. Or do you mean that we put that money into the house that we just closed on this week? week because we're gluttons for punishment and we can't stop. We're just kind of real estate junkies. I don't know how much punishment that is making $55,000 three ways. Oh, man, I hate making $55,000. Yeah, you know, I was just really tired from the last deal and I didn't know if I wanted to.

I, you know, I just gritted my teeth. It's real estate's horrible. So here's the other problem where in the beginning of the story I said it was the best possible location. It's actually the worst possible location too because now you have neighbors that know that you were the ones that kind of did this work because all your other neighbors saw it. So I don't feel any, I don't feel badly. We did a really good job on that house, but I think it was somewhat serendipitous that we got this other place and we're actually moving into it. Well, you made those neighbors a lot of money is what you did. Their houses are all worth quite a bit more after that. That's right. We had some realtors on the street that have been looking and I just, I was like looking across the street through the window.

We had some other neighbors kind of looking through it. And I was like, we must have done something well. They're so curious. So they were very happy. All right. So you're clearly good at making money on deals. We want to hear about another deal that you've done. We're going to move into the next segment of our show, the deal deep dive.

All right, Marge, in this segment of the show, we are going to dive deep into one particular deal you've done. Rob and I will alternate asking you questions and you can fire right back at us. Question number one, what kind of property are we going to do? to be talking about? We are talking about a multifamily property. It is a triplex. Question number two. How did you find it? So like I said, we are, we can't stop ourselves from looking on the MLS. I'm on Redfin all of the time. I think that they have the best mobile app experience, actually. So, you know, when I have a little bit of a break or I'm waiting for someone to join a Zoom, I am constantly looking on the MLS to see what's going on. If not for a property, to see what other

houses look like and what the price is and things like that. I'm just ultimately curious about every single house that gets listed. And so we saw this one. It probably was on the market for, I think, less than an hour when it listed. And I shot it over to my partner immediately. And I was like, this is really interesting. Please look at this. And so they came into my office and they said, what are we going to do? This is interesting. How much was it? The price was, it was listed at 1.4 million. Okay. And then how much did you buy it for? So this is, I'm very prideful of how we got this deal because we actually decided to go into it. We just directly called the seller's agent. And we introduced ourselves and said what our intent was.

We're investors in the area. This is a really interesting property. We want to live here. And what's your comfort level in terms of being a transacting broker? Come to learn a out. He is a commercial broker. He is not a residential agent. So I think in general, he was actually, he works with the guy that owns this who owns a lot of commercial real estate. I don't know if I can say this, but it's actually an NHL player that we're buying this property from. It actually used to be part of the Colorado Avalanche. But I guess it's all public records. So it doesn't matter. But so we started talking with him and kind of presenting ourselves in a way that we thought that he would be very interested. And when we started to talk with him more and more and ask questions, the place was

fully furnished. The seller didn't want to deal with furnishings. The seller was out of state. This guy was having, this guy being the seller's agent was going to have to do everything, right? He was going to have to work on the staging. He was going to have to get the mobile notary. He was going to have to do everything. And we said, we'll do all that for you. You don't have to worry about the furniture. You don't have to do any of that stuff. The other thing I think he was pretty nervous about was that this was a very kind of funky property in the sense that it's surrounded by a lot of single family homes, you know, kind of in that price range. And I think he wanted someone to take it on that kind of understood that type of real estate and that wasn't afraid to

take on something along those lines. Because I think when people think about paying $1.4 million, they want an amazing, you know, single family home. And this was not, this was not the same thing. So we really present ourselves as someone who really understood what he was asking for. We would do everything, you know, and then we would not bring a buyer's agent so that he could figure out with his client. He could save his client some money. He could also negotiate his commission with his client because they have a long-term relationship. So he could come out looking really well, too. And then he could really have more control over the deal as well. That sounds basically how you negotiated it. How did you fund it? So we funded it through a majority of the profit that we made

off of the flip. And then we had done a, we had done a cash out refi on our primary residence. You know, one of the speakers that I listened to at the Rocky Mountain Women Invest had said to me once, you know, when you have equity in your home, you're not earning equity on your equity. You're earning that because you bought the house to begin with. And that house itself is earning the equity. But if you took that money out, you'd still be earning the same amount on that house. So you're essentially just having money sit there and do nothing for you. So we understand. ended up taking money out of our primary residence. And so we used a combination of that and a combination of the profit, you know, from the flip.

And that was what we were able to use as a down payment. But it was a residential loan. So we did 20% off of that. And we offered through talking with this agent who did accept being the transacting broker and talked to the client and they were all comfortable. We talked with him and said, what is going to get this deal done? so that no one else goes and sees it because when I called, I kind of was pushy and I was like, just let us see it. I know it's not staged or clean. Just let us see it. Like, we don't care.

We don't care at all. Please just don't. And he didn't have any appointment still Saturday. We made an offer with an expiration of Friday night. So we made an offer of 1.5. So we went 100K over because we were like, we're done with us. Like we know how hot the market is. We know what the opportunity is for this property. We're just going to go for it. So we were out Friday night, got a text from the agent said, you got yourself a deal. So no one else even saw this property. It was just, it was ours. They took it off the market immediately. And how did you fund this deal? So we, we funded them through a 30 year fixed mortgage. And we put 20% down because it was a, it was a residential property because we would be living in it. So we didn't have to pay the extra 25, or the extra

5% that you would with, you know, more of a standard loan on an investment property, which would allow us to kind of outfit this property in a way that we were okay living in a multifamily because we haven't lived in one before. And I'm curious, how did you find whatever lender you ended up using? So the lender we used is actually a woman that had spoken at the investor meetup who I invited to speak and she's fantastic. I've actually used her for almost all of our deals. And, you know, I know that people shop around for a lot of different rates and whatnot, but because a majority of our income and debt and things like that are in-referred. real estate. I really feel comfortable with her because she's very creative in terms of how she can get

the underwriter to understand, you know, what our assets are, that rentals are not necessarily debt, but they're assets. And so she does a really good job of helping us and being creative to get, you know, not only good rates, but also get us under contract. So it was a lender that I had, we had worked with, I think, on, I think she's done all of our rental properties at this point. Awesome. And what did you do with it? Flip, Burr? rental, all of the above? I would say it's still pending, but we will be moving out of our primary residence in Arvada.

This house is in Denver. So we're moving out of our primary residence. We will be occupying. So it's a three unit in the sense that there is an ADU, a brand new ADU in the backyard, so an accessory dwelling unit in the backyard. We will be living in that. And then there is a front house to this on the same property that has an upstairs unit and a downstairs unit. So like the theme of this entire podcast, we're going to try our hands at

something new again. This is our first multifamily, but it's also going to be our first short-term rental. So we're going to short-term rent the Airbnb wall or short-term rent the basement unit while we're there. So we're trying another one. And the nice part about this deal, too, is that in terms of what we were paying for our mortgage on our primary residence, to get into this house, obviously more money down. But to get into this house, it doesn't really increase our. mortgage at all. So we're going to be able to offset quite a bit of the cost of this with renting out the front unit upstairs and downstairs. And then get ourselves an education on Airbnb as well, because that's the next thing that I really want to kind of learn more about. I wonder if there's

anyone that could help you with that. Something I want to highlight about what you mentioned is you bought a much more expensive house, but your payment did not go up. And I like to bring this up because a lot of people associate higher price with more risk. And it's like this leap of faith you have to take in many cases higher price equals less risk. You get into better neighborhoods. You get better tenants, especially when interest rates were lower. And now you've got several units that you can be renting out.

So you've diversified income streams. It's much, it's less risky than when you're buying at a lower price point in a worse neighborhood or a worse property. So that can be tricky when you're kind of making your way through real estate and you're getting into bigger and bigger deals. They feel scarier, but that doesn't mean that they are. And you also answered the question about what was the outcome. So last question will be, what lessons did you learn from this deal?

I learned, I think, how to communicate with my partner and encourage them to live in a multifamily deal with me because, you know, there's some no-noes that we have in our relationship, which is I'm not going to live in an eight-unit apartment complex. that is not, you know, Craig Kirillop always says, you know, the more money you make based on the more uncomfortable you are and we're not okay with all of that uncomfortability. So I feel like we found the perfect property to figure out how we both could live in this and feel good and have it be a good investment, but also a comfortable space for us to live in. So I feel like that was kind of a milestone in our relationship, which is trying to figure out, you know, like what is our limit or what can we do from a, you know, utilizing or leveraging our own ability to live in these properties that we, that we want to invest in. So I think that was a win. And I, that doesn't seem

like much, but actually, like, I think with people who, you know, our spouses and things like that are have partners, it's, it's actually like, you know, good to kind of figure out that kind of common ground of where you can be. And then I think in terms of that outcome, I'm excited to kind of learn something new. You know, I've talked with a lot of people that do Airbnb, but we've never done it ourselves. And I feel like this is a, I feel as though it's a somewhat less risky way of getting into that, being that you're right there. And which could be a good thing, could be a bad thing. But I think while we live there, it's great. And we can always, our exit strategy can always be, well, just, we could rent the whole thing. We could rent long term upstairs and downstairs. So

lots of different exit strategies. And I think it's just another notch in our education, process to to help us continue to, you know, want to invest in different types of opportunities, but also different types of real estate investments. For sure. Well, for the record, I do think that being there is definitely the least risky way to do it. Like, if you're there, you can pretty much handle any situation instantly, whereas if you start investing a little bit farther out, you know, you got to depend on your team more than on yourself.

So I think you're doing it right. All right. That will bring us to the last section of the show. what is the world famous famous for in this segment of the show we are going to ask you the same four questions we ask every guest every episode question number one what is your favorite real estate related book real estate related um i'm i'm currently reading um brandon turner's multifamily millionaire which um i think it's you know people like to have these obscure ones and things like that

but that one is just so like dead on just really easy to understand I, you know, multifamily, I think some people, it's intimidating, but the concepts that he uses in there, it's like I can hear Brandon talking to me and narrating this book because it's like so in Brandon Turner speak. But he makes it so incredibly simple that I feel like he's just beating me over the head with these concepts. And like, if I can't get them, then I don't think anyone can get them, hopefully. I don't consider myself such an amazingly smart person. But like, I think it's so well done and it breaks it down so easily that, you know, it's a two-part book. This one's the smaller multi-family and then there's another, you know, instance of it. So I don't know if I would say

it's my favorite, but that's what I'm reading right now. I tend to read books that are not necessarily as much real estate related. So that's what I'm reading right now. I'm enjoying it. And if you want to learn about multifamily, I feel like that is a really like good, concise, easy to, easy to pick up and easy to read book. Awesome. Okay. Question number two, favorite business book. Okay. This is the one that I was excited for. But this is, you know, Everyone has those turning point books in their lives. My turning point book, and it actually was one that I heard another guest on the podcast talk about, which is I got it for networking, honestly.

And it ended up being conceptually so much of what I live my life by. But the book is Give and Take by Adam Grant, which I'm sure other people have talked about in this podcast. But I just think the good of it is just so amazing. And a lot of what it talks about is really around. You know, that giving, it makes you so successful in so many areas of your life, right? Business, relationships, networking, everything. And it's really kind of what I think about when I do any deal, whether that's in real estate or in my W-2 job or in my relationship or in a friendship. And just, you know, it's amazing to me, like, if you are a kind person that gives back,

you will ultimately be successful. There's so many ways that that can kind of infiltrate your life. So I highly recommend. I don't even know if it's so much business, but it's just such a good book. And the person that I got that from was he was like a master networker. And that's what he, that's what he thought that book was really good and helped him. And I would say yes in networking, but every single area of your life. So I really highly recommend it. And I think it makes me a very much a better negotiator. It's, you know, giving back to the community with Rocky Mountain Women Invest, but I highly, highly recommend. Yeah, we interviewed Adam Grant on our podcast, episode 467. if anyone was curious to learn more about.

Oh, Adam, you can check him out where Brandon and I interviewed him. And I also recently think he made a cameo on the HBO series Billions. I'm pretty sure I saw him on there. It is a really quick scene. But if anybody out there has any access to the production team of billions, let them know that Rob and I would be a very good asset to bring in for a real estate-related role. All right, back to you're regularly scheduled. We are willing to be standards also, just, you know, if you're just looking for that.

Rob, you can probably play my butt double, I suppose. You mean, do a couple months of squats, make sure I look good. But yeah, I can see that. We'll negotiate off camera. Question number three, outside of taking on, you know, really crazy real estate projects that scare you and that you're willing to take on head first. No, that's not take on head on. There we go.

What are some of your hobbies? I love sports. I'm a highly competitive person, which makes me, a really good fit for a sales role. But also, I'm a big car enthusiast. It was kind of how my dad and I bonded, I think, a lot as a kid. So there's a really, there's a guy I follow who invests in Northern Colorado, Mark Ferguson, if you guys have heard of him. And he does, he's a 95%.

Talks about his Lamborghini every now and then, doesn't it? Just a moderate amount. Just a moderate amount. But I like his, I like his theory on it because I think it aligns well with mine, which is, you know, he's also open to alternative investments, which you could, you know, it is classified that real estate investing is an alternative investment, but cars are also real estate or also alternative investments. So I try to, though, just like him, find cars that are unique enough that they appreciate and value because it's a little bit of a bad habit in terms of opportunity cost, you know,

sinking money into that versus real estate. So I try to keep it at a point where my partner and I both agree that like it'll hold its value or appreciate and I don't go and sink something into a car that's just going to just tank right off the lot or something along those lines. So you can find me definitely at some at some car meetups because I do love that. All right. Last question for me. In your opinion, what sets apart successful investors from those who give up, fail or never get started? I think I think looking at every deal. I think I think know your bounds, but anything that fits in your bounds, always say, yes, I'm at least going to review this. You know, try something new. You know, don't, from my perspective, I think, once you get dead set, you know, in doing something,

you kind of have blinders on to other opportunities that might come up. You know, I think it's great to get very specialized, but, but don't be, don't, I guess, you know, negate the opportunity to listen to a new deal or someone's experience or something like that. And then go research it for yourself. Try it. There's so many different ways and so many different people that can help you figure that out and don't be afraid to take on the risk. Well said. Well, final here, not a question, but Marge earlier you were telling us you had 300 followers on Instagram and we got to pump up those numbers. So can you tell us a little bit more about where people can find out more about you or where they can follow you on the socials. Yeah, David and I were talking about those. I have

a terrible Instagram name, but if you want to follow me, my sometimes post there, it's my Instagram is the Marge Patton, so T-H-E, terrible. But I am much more active on our Rocky Mountain Women Invest Instagram. So it is just like it sounds, Rocky Mountain Women Invest, except the mountain is spelled M-T-N. And you guys should absolutely come if you are in the Denver area or if you're just going to be here sometime. If you are a female or a woman looking to get more, find a community, network with people, listen to really good speakers. We're trying to grow this thing, and it's just one of my favorite things. So I'm always happy to talk and certainly talk about this podcast.

You can tell me if it actually was helpful or not helpful whatsoever. So I totally welcome it. But, yeah, look forward to that. That's awesome. Did you say that your Instagram handle is the, like, T-H-E? Oh, yes. Embarrassingly, yes. Very proper.

I love it. David, I think we just figured out the solution to your TikTok problem. The David Greene. Because you do call me server. So it sort of fits with the sir thing. Yeah. Yeah. This is good.

Increase thy pockets or something like. I can see a way that we could work this in there. Increase thy pocket size. Thy David Green. And we can keep the 24 if you want. I'm relatively certain there aren't 23 people that. No, but we should change it to like one score and four more or something like that. Isn't it a score 20 from the old Abraham Lincoln for four or four?

score 20 years. I don't actually know how much of score. I think that is correct. I just don't know what it means. I'll be totally honest. I'll be vulnerable just for all of us. Well, you're doing it at a moment of ridiculousness. So good on you. Rob, if people want to find out more about you, where can they do so? They can always find me on the YouTube's. If you're looking to learn how to build tiny houses, Airbnb businesses, unique spaces, real estate investing and everything in between. You can always find me at Rob Built, R-O-B-U-I-L-T, Instagram on Rob-Bilt, TikTok, Rob-Bilt-O, and yeah, that's it for me. I mean, you can follow me on Twitter, too, if you want, Rob-Bilt channel, but the first three are more important.

Yeah, I forget, I have a Twitter a lot of the time. I need to be better about that. I just hired a social media company to help run my pages, so I need to remind them. Well, this is going to be the turning point where we get you to go viral in the Twitter sphere. So what are your handles? I heard a MMA, he's actually a former Olympic wrestler, Henry Sohudo, was trash talking someone else and he said, you couldn't pin a tweet. And I thought that that was very funny and also reminded me that Twitter is still around. So my handles are David Green 24, as Rob likes to say, there were 23 that came before me.

And I was able to snag the 24 spot. And then we're trying to figure out what my name's going to be on TikTok because everybody else. I think TikTok is the most visited website in the world, more than Google, right? It's true, especially now that you're dancing on there. Well, you think that I could have something to do with that? I'll take the credit for it. It seems impossible that something could have more visits than Google. That is one of like the feats of the world, I would say that you should put up there, like the most impressive accomplishments anyone has ever accomplished.

To have anything more than Google seems like it would have to be up there. So, yeah, that TikTok thing. I'm also afraid to get on it, though. Like, Brandon has warned me numerous times how addicting it is. So I just won't look at it. It's like Medusa. Like, as long as I just don't make eye contact, I think I'll be okay. So I've hired other people to go post stuff on there.

I hang out with some friends every Wednesday night. And at the end of the night, one friend always broadcasts his TikToks, like what he's liked. And it's always just crazy stuff. And then I always like look at mine. And it's always like entrepreneur, real estate, tiny house related. I'm like, all right, good. I haven't fallen for it yet. You're dancing with the devil and the pale moonlight. I got to tell you, Rob. All right. If anybody would like to invest with Rob and I, we are still raising money for a deal that we are doing.

You can go to invest with David Green.com or you can just shoot us a DM, credit investors only at this time. But if you're looking to make some money and you're just nervous about this market, you don't want to try to figure it out yourself. This is a great alternative, Marge. I want to thank you for being on the show and being such a good and compelling storyteller. This was a very good time. Is there anything you'd like to leave our audience with before we get out of here? Yeah, come see us at Rocky Mountain Women Invest. Thank you guys so much for having me on the show. All right.

This is David Green for Rob Dancing with the Devil and the Pale Moonlight Abasolo. Signing off. What was the name of that guy that was on the cover of all the romance novels? Oh, Fabio. Fabio. You could be a Fabio. I don't think I could pull that out. You are, man.

You've got this like very, very like dos Eki's most interesting man in the world. presence. You've got the hair for it. That's right. Well, maybe I'll change my channel to Fabio built. Well, yeah, it's just Rob is so flat. It doesn't do you justice as just my opinion. Hey, you know what? Your opinion is valid. We're all entitled to our opinions. Yes, and you're entitled to change your name to something that fits whenever you fit. Hey, you can call me Fabio anytime you want. By the way, welcome to the Bigger Pockets. Marge, welcome to the Bigger Pockets podcast. How are you? 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.

Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calico content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.biggerpockets.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own.

Investment in any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. Bigger Pocket's LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.