BiggerPockets Real Estate Podcast - 708: Future Millionaires: The 90-Day Mentorship to Grow Your Real Estate Portfolio

Episode Date: January 1, 2023

There’s a big difference between a real estate portfolio and having a few rental properties. Casual real estate investors can slowly start stacking one or two units a year and eventually end up with financial freedom, but often with stress and headaches that match their cash flow. Other investors, like David Greene and Rob Abasolo, take a more goal-oriented approach, building millions of dollars of wealth in under a decade with a portfolio that is self-sustaining, not self-defeating. Our goal here at BiggerPockets is to help YOU find financial freedom by following the same steps as investors like David and Rob. In the same spirit, David and Rob have decided to sit down with three mentees and give them one-on-one coaching to get them to their ultimate goals. These mentees are all at different stages of their investing journey, focusing on different strategies with different properties. First, we talk to Philip, a school teacher who dreams of building out glampsites and campsites, all while developing cash-flowing retreat centers. Secondly, we talk to Wendy, an investor stuck in the “turnkey trap” who wants to escape her job and the low cash flow of “easy” investing. Lastly, we talk to Danny, a multifamily investor who wants to scale faster to regain his time. All of these mentees have the same goal: financial freedom. If you’re trying to find your way out of the rat race and into the wealth-building realm of real estate, these are the episodes for you. We’ll continuously be checking in on our guests, giving them action items, and helping them work through any roadblocks that come their way. So stick around for the journey; you might hit financial freedom faster! In This Episode We Cover: Investing in glamping, camping, and retreat centers and why developing may be a costly move How to find a real estate agent/broker who can source your PERFECT property (even if it’s VERY niche) The “turnkey trap” and why easier investing often leads to lower returns Why working in real estate as you build your portfolio is a cheat code for investors  House hacking, rental arbitrage, and creative ways to rent your properties for more How to scale from small to large multifamily investing and how to find your own mentor And So Much More! Links from the Show Find an Investor-Friendly Real Estate Agent BiggerPockets Youtube Channel BiggerPockets Forums BiggerPockets Pro Membership BiggerPockets Bookstore BiggerPockets Bootcamps BiggerPockets Podcast BiggerPockets Merch Listen to All Your Favorite BiggerPockets Podcasts in One Place Learn About Real Estate, The Housing Market, and Money Management with The BiggerPockets Podcasts Get More Deals Done with The BiggerPockets Investing Tools Find a BiggerPockets Real Estate Meetup in Your Area David's BiggerPockets Profile David's Instagram David’s YouTube Channel Rob's YouTube Rob's Instagram Rob's TikTok Rob's Twitter Rob's BiggerPockets Profile Hear Our Interview with the Discount Lots Founders How to Plan for (and CRUSH) Your 2023 Goals Book Mentioned in the Show Long Distance Real Estate by David Greene Click here to check the full show notes: https://www.biggerpockets.com/blog/real-estate-708 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Check out our sponsor page! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets Podcast Show 708. I think something to consider so far is typically when we're looking at real estate investing, we're mostly looking at the value of the property itself or maybe the area that it's in. This isn't going to be the most accurate way for you to approach it. You're mostly just looking at revenue. This is almost like buying a business because if you're looking at having glamping or your just like the improvements on the property aren't going to be as big of a piece of the puzzle. so I'm just kind of reminding Rob and I that as we're giving you advice, we need to keep this in mind that you're not going to have some of the traditional safety nets of the business didn't work that well, but the real estate did.

The land improved in price, right? What's going on, everyone? This is David Green, your host of the Bigger Pockets podcast here today with my lovely, beautiful, and talented co-host, Rob Havasolo. Bet you weren't expected that, but it's still true. Today we have a unique show that I think you guys are going to love. If you are at BPCon 22 in San Diego, we announced that we were going to be having a contest where we were going to select several people to be mentored by both Rob and I in accomplishing their real estate goals. Well, today is the day. It is the first episode where we're going to be introducing you to the winners that were selected, getting to know them better and helping figure out the progress they should be making.

In today's show, we get into their goals, the plans and the actions they should be taking in that order, which is ways that Rob and I. help determine what our most important next step should be. And this was a lot of fun. Rob, what did you think about today's show? Oh, it was great. You know, they all remind me of a young me. You know what I mean? No, I'm just kidding. They're all probably older and more accomplished than me. But it's really great. I think it's really nice to go back to the drawing board for some people. And what's really nice is I wish I had this. I wish I had someone teaching me all this stuff when I was younger because I just didn't really know there's so much information out there. And I think one of the things that we were able to accomplish with our three new mentees is we're just kind

of like helping them cut through the information and really help fine tune what direction they should be going in. Sometimes I think personally in real estate, it's not necessarily about like researching and knowing all the information. Most of the time, you probably know all the information that you need to know, but you need to really start slicing through the that information and figure out what information you actually need to execute quickly. Too much information sometimes leads to analysis paralysis. So I'm excited to hop into their journey, ask questions, poke holes in their plans, and push them along to hopefully become, what you kind of dubbed at the end of the episode, future millionaires if they're not already.

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Make it happen with PropStream. For today's quick dip, I'd like to remind you, ask yourself the question, what can you get done in the next 90 days? It is so incredibly important that you start the year off on a good track, building momentum and building habits that will sustain you for the entire year. This is why we do our goal setting episode, because it's important that you sit down and write out your goals. Once you've got your goals, you need to come up with the plan that you're going to use to achieve them

and then focus on taking the action that is needed. We're here to help you with that. So throughout the year, we're going to be going back to these people and asking questions to keep you on the same path. What can you get done in the next? 90 days to set the right habits in place. Rob, you're smiling at me. Why are you smiling like that?

Because I was just thinking, what if every time you gave the quick tip in your Batman voice, you just gave a tip about like watching Batman movies? You're like, watch out specifically for this scene. There's this Easter egg here. And then we just never address like why you always give Batman tips. You just had that thought running through your head the whole quick tip. That was a lot better than what I said, wouldn't it?

Well, it's like that, I was talking about, you remember that thumbnail where they switched our hair or whatever? And I was saying, like, it'd be very funny if we switched the thumbnail to actually be that. But we never addressed it. We never talked about it. That's just the thumbnail of bigger pockets. And no one knew why. No one knows why. Yeah, the thing would be funny.

That would be very funny. So your Batman Quick Tip would be in the scene with Bruce Wayne and Catwoman, there's a part where she disappears on him and he says, so that's how that feels. Ask yourself, in what way are you needing a taste of the medicine that you give other people so you can have a deeper understanding of why you are the way you are?

Backman, quick tip here is that Christopher Nolan directed Batman and if you want more of this amazing catalog yet also directed Interstellar. Interstellar. Be sure to check that out on demand. Are you inter-serious right now? All right, let's get to today's first mentee.

Philip Hernandez, met you for the first time a couple days ago. And now we are here in person, diving into your plans to build a real estate empire. How are you today? I'm feeling good. Thank you so much for this opportunity. I'm stoked. Yeah, for sure, man. Your background looks fantastic, by the way. It looks right out of a Pinterest page. I wish I could take credit for this. This is my fiance's where she has therapy. She's a therapist. It feels very therapeutic. I feel very at ease now. Well, awesome. Well, so to recap, Philip, I'm really excited to jump into your story here. You're from California. You own properties in L.A. and Cleveland.

You're looking into getting into multifamily and maybe glampside opportunities. And then if I remember correctly, you also raised about $200,000 towards your next real estate investments a la Amy Mejuri's mastermind, which is really great. And you're also a high school teacher of Español. Yes, sir. Yeah, that's, yeah, that's. Yeah. that's a good overview. And also, if I remember correctly, whenever David asked you, how committed you were on a scale of zero to 10, 10 being like, you're going to knock on doors to get into that next deal. You put yourself at a 9.78 and you said, I may actually be willing to go knock on doors if I have to. Yeah. I mean, yeah, I'm super committed. Yeah, I've been teaching for 14 years and

I've been feeling like it's been such an incredible opportunity to teach, but that I'm ready to transition out of teaching. And that's super terrifying. And even just telling that to my fiance and my friends and family was something I never thought I'd say. But I'm ready to do what I have to do to be in control of my life, really. Yeah, excited for you, man. Well, we're going to jump into what we're calling your GPA, actually, which is relevant to the fact that you're a teacher here, but it's your goal, your plan in action. Okay? So if you were explaining your goal for the next 90 days to your students, what would you say your goal is? Yeah. So my goal is to close on a property for a retreat center. So that's something that I've been, my fiance and I, we've been looking at

properties for the last six months. We had some property under contract. We had land under contract. we got so far as having 500K and soft commitments for building out the land and doing glamping village and retreat center. And yeah, I just learned some things about the land that we had under contract that was like, okay, this is not the right land. And we've been looking for other properties since then. We have a property that were in negotiations for right now, 20 acres in a couple hours outside of L.A.

and yeah, that's something that I know that, yeah, I'm fired up to keep working on and to make a reality. Cool, cool. All right. So I want to refine the goal just a little bit here because I know you said you want to start like a retreat center. Yeah. You also mentioned a glamping village.

So just so I'm clear, your retreat center is going to be a glamping village, correct? Yeah. So we, so I've had a lot of time in meditation communities and different communities doing like retreats like week-long retreats and that has been a huge positive thing for my own life and progression and it's something that I like I remember a year ago look looking for like right before actually right before COVID started I was like okay I want to sit on silent retreat I'm super stoked on this and I could not find anywhere in within eight hours of LA that was not booked out three months in advance.

And it just sort of lit a fire in to me that this is something that there's a business model that will support it and it's something that will benefit people. And yeah, I'm really a space where people could come and we could support teachers of meditation that want to rent that space. We could support people that want to come for a week-long stay. That's definitely something that is a priority for us. Awesome. And so that I'm just really kind of zeroing in here, do you have an idea or a goal for an amount of units that you want to launch with? Like in your ideal mind, phase one, let's focus on phase one of

this. How many units or what does that actual retreat village look like? Yeah. So phase one is something that could host a group of at least 20 people, at least 20 people for, yeah, for a, for a week week, you know, with the vision of building out enough facilities for up to 30 people and maybe for one day, two day events for something more like maybe even more people that are not necessarily staying on the property. They're not all staying on the property, but that we have like a space for yoga retreat or meditation retreat that can, yeah, can support facilitators and support teachers that want to hold these kind of, yeah, offerings. So 20 or so, would this be like 10 tents, for example,

that can host two people per tent? Would that fill your goal? Yeah. So I've had a couple mentors in the space that have retreat centers, and they've done it in different ways. And it's really, we've had to adapt as we've looked at different pieces of land. So the land that we had under contract first was in Central California. and it was a really nice weather and we were looking at, you know, like a glamp, like a

glamping tent, you know, and I, and I have some folks that are, have similar properties where they're doing similar work with glamping tents, essentially. And that's what we were looking at. Lately, we've been looking at places that are higher elevation. So places that are colder, really. And so maybe a glamping tent's not going to, not going to cut it. And we're even thinking, like, okay, what is potentially a tiny home or a yurt need to look like that will be comfortable for someone, yeah, to stay. It doesn't need to be the most fancy thing, but we don't want people to be uncomfortable and freezing. It's a good point. I think something to consider so far is typically when we're looking at real estate investing, we're mostly looking at the value of the

property itself or maybe the area that it's in. This isn't going to be the most accurate way for you to approach it. You're mostly looking at the value. just looking at revenue. This is almost like buying a business because if you're looking at at having glamping or yurts, like the improvements on the property aren't going to be as big of a piece of the puzzle. So I'm just kind of reminding Rob and I that as we're giving you advice, we need to keep this in mind that you're not going to have some of the traditional safety nets of the business didn't work that well, but the real estate did well. The land improved in price, right? So considering we have a good understanding what your goal is, tell us about your plan for how

you're going to make this happen. Yeah. So I have agents in a couple different markets that have been looking for me and I've been underwriting properties. And yeah, like I said, we we have an offer out on a property with 20 acres right now that is pretty well set up for a lot of the first stages of putting it out. But really, I've just been having agents send me stuff and I've been underwriting it. I think one of the big challenges for me has been, you know, I did a lot of like boot camps and education and mentorship actually with multifamily people. Like I've been working with Andrew Cushman actually to, yeah, really to vet multifamily deals because that that was where my focus was for almost like a year, even though I wasn't able to to close on anything.

that I really feel like I got a lot of skills with the underwriting those kind of properties. Transferring those skills into underwriting these properties has been a little bit of a challenge, like exactly like knowing how to do that and okay, what is the expected return that I want to be able to offer investors and what are some of the pitfalls that I, yeah, might be seeing. That's definitely been a challenge for me. Yeah, if I was going to say the other challenge has been a little bit like the deal flow, I was very close to like, okay, maybe I need to start off market just like a campaign, like a direct to seller campaign in Ohio or some of these places that are really nice and

there's acreage and it sort of hits a lot of the boxes for how close it is to LA for us. But I was also, I've never done a direct mail campaign. I haven't done a ton. I've done some direct to seller stuff, but I haven't done a ton. So I was like, okay, am I just going to waste like $4,000 on a direct mail campaign when I don't really know what I'm going to do with a lot of the properties if they don't fit my criteria? Okay.

Well, let me ask you this. I mean, have you considered, because as much as I love the idea of taking raw land and transforming it into this vision, as someone who has done it. this and is doing this now, about 99% of the time, that actually ends up being a lot harder than if you could just find an existing campsite or RV park or anything that's in that wheelhouse and converting it into what you want. So have you considered just the notion of taking a campsite that might be a little more dilapidated and investing money into rehabbing it to be a little bit closer to your vision? Yeah, I'm totally about that. Really,

I would say the problem has been the deal flow. Like, I haven't been able. You know, I'm just not seeing stuff that's a built-out campsite that's within two hours of LA that fits our criteria as far as like what our purchase prices, what our numbers are. And, yeah, but maybe I just don't know where to look in the right way. Like, maybe I'm just not looking in the right way. Yeah. I think one of the hard parts is that you're in L.A. and you're trying to stick close to L.A. in a area that is notoriously one of the most expensive real estate markets in the country.

So I wanted to just ask you, why are you married to the two hour away from L.A. location versus executing this somewhere else in California or in maybe neighboring states? Yeah, I think ultimately the goal is not just to have one site or one place, but I am. very cognizant of the fact that like I have never managed or yeah I I don't have the little details of the operations for running a site like this so jumping into I'm going to outsource all of the operations I'm going to outsource all the management or that I even know the numbers that I need to put in my underwriting to do that responsibly I'm not so confident in that and I feel like having the, I do have a very strong community in Los Angeles that is able to support. And some people that are even running centers like this, offerings like this that are down to support within

the distance of LA. Didn't you just interview someone on the podcast that sells lots or that they have some kind of business model around exactly this wheelhouse? Yes, we did. And that's exactly what I was thinking of. on the same wavelength there, Robbie. So, Philip, there's a website, I believe it's Discountlots.com where we interviewed the two founders. And what they do is they put together wholesaling campaigns like what you were talking about. They talk to the owners of land. They buy the land from them at discounted prices. Then they resell it to other people at discounted prices, but you're allowed to pay for it with monthly payments. You don't have to come up with the full amount right off the bat. So there's like a small down payment and then you make a monthly payment to

them and you buy it as like an installment contract, but you have the right to use it while you're paying it off. So you could probably go to that website, talk to those guys, and see what they have available throughout California. And if the land is cheap enough, a lot of these deals will probably pencil out because you're not having to come out of pocket with nearly as much. And you might not even have to raise the money from the investors. You might just be able to have a small down payment that goes right to them. Now that you don't have a significant portion of either equity or debt that you're going to be paying to other people, a higher percentage of these deals should work. Yeah, and actually, if you guys want to go and catch that episode, David, you really

masterfully interviewed these guys on the power of this business model. It was really cool. So that's episode 704. Go check that out to learn everything. I think you guys are going to be really inspired by that one. I remember thinking, oh, man, if I was in that interview, I was going to ask so many questions that probably took us so many rabbit holes. But, uh, Philip, I had one recommendation. I actually wanted to throw your way. Yeah. Um, so. So there are realtors that specialize in every type of asset class, right? So there are realtors that will specialize in single-family acquisitions. There are realtors that specialize in multifamily.

And I actually didn't realize this until a couple of months ago. But there are also realtors that specialize in campgrounds. Someone brought me a deal for a $4 million campground in Salasaw. And they gave me the information of the realtor slash broker that was working that deal. And I struck up a conversation with this realtor and she was really, really, really nice. And turns out that she's so good at campground sales and she used to actually manage campgrounds that she is, I want to say, like, either the official or the unofficial realtor for like a lot of the KOA campsites in the country. And so whenever a deal comes available, they just send it her way. And a lot of times it may never even hit the market because she's got like a list of people that she just sends it out to.

So what I was going to say is you should try to see if you can find a realtor that might specialize in campgrounds or an RV parks. There's something in this world that might be able to feed you some of these deal flows because a lot of this isn't necessarily what you know. It's who you know, right. So if you can connect with the right realtor, they might be able to feed you some of these leads that you're, you know, that you're not able to find on your own. Yeah, I think that's great advice. I mean, this has been finding the, like, realtor that knows a lot about land development has been really challenging. We've had some really great help from a realtor in Central California. But it was also, she was learning.

She's learning with us, you know, and yeah, that was a little, that became a little challenging when some of the land development stuff came up. All right. So now we're going to move into you taking action, based on what we've said so far and what you've been thinking all kind of coming together. What's your most important next step and what's the timeline that you'd like to have it done by? Yeah, definitely going to Discount Lots.com. That seems pretty easy.

I can just Google search that and having a conversation with them. And yeah, I guess where do I find the realtors that specialize in the campgrounds? Well, I think, you know, an important next step on that is you call different realtors that you would find different pieces of land or let's say you could even go to LoopNet, for example, and find a campground. You would find the broker or the agent that is listing that property and ask for a contact. Or you can take the advice that David gave me one time when I was looking for a short-term realtor in Arizona. David told me to call the top brokerage in the city and ask for the top dog that knows everything about short-term rentals. And so I called and I was like,

you listen here. Bob, David Green told me to ask for the top dog. So they actually gave me the contact of the realtor that we ended up using, who was super knowledgeable in short-term rentals in Scottsdale. That was super valuable for us in that process. So I think you might be able to do the same thing, call a broker and really hammer them for a contact that actually knows that world. And you might have to make phone call after phone call after phone call, but eventually I think you'll make a little bit of progress there. Cool. Thank you. I would also listen to episode 704 and get the names of the gentleman, find them on social media, and actually say, I'm looking for something like this, do you have anything in your pipeline or can you look for something for it? This is what I could

pay or this is what I'm hoping it would do. They might have some properties they've come across that they didn't actually put into contract, but if they know that there's, and buyer for it, they can go back to those people and say, look, we can pay you this much money for the land. And if you like the price, you might be able to get something that's not in their current inventory. Yeah. And fun fact about them, they were actually some of my Glamp camp students, my program on Glamping. So you might even just be able to pick their brain. You might be able to say, hey, I talked to Rob and David. They said to reach out to you. I know that you're in the glamping space and you sell land. Here's a situation I'm with. Do you have any contacts that

might make this a much easier journey for me? And you can, you can, you can, you can, sort of use this conversation right here to maybe strike up a relationship and propel you even further right obviously that's not going to be sustainable for every single one of you but in this particular instance that's a really great example of using your network to basically make your your your daily goals like happen sounds good i'm yeah i'm down all right any last questions for us fill it. In the back of my mind with all of this stuff is, you know, I am doing a bunch of other things also at the same time with, you know, I've got a couple of rehabs in Cleveland right

now. I just raised money for someone else's deal. What would you guys say as far as like how to focus my energy, how to choose what not to do as far as? given that I do have a very aggressive timeline for, yeah, for being in control of my financial freedom. I would say that you want to stagger, you want to stagger all of your different projects in a way that actually allow you to maintain some level of cash flow because I tell you what, as someone in the space of doing the glamping retreats and everything, that's not something

that's going to make you money for, I'm going to say two years. You're going to be two years out before of the cash flow actually hits. And so I know that you had an aggressive goal of quitting your nine to five job eventually and doing this full time. So that means that you still have to have other projects, other things in the fire, other irons in the fire that can actually produce you income to sustain you while you build towards this larger, more intangible goal. The Glamp site's more intangible right now because it's not actually built. But if you have a couple of flips going, you've already raised money, those are tangible things that you can continue to execute on. And I wouldn't leave those behind because those are going to be your bread and butter, your money makers,

until you actually achieve that larger goal, if that makes sense. So I would just really focus on what you're good at and what you've proven success at and use that to sort of fuel this labor of love that will eventually turn into a cash flow machine for you in two years, if that makes sense. That's great advice. Thank you. All right. Thank you very much, Philip. We'll be in touch. Yeah. And just as a larger tip for everyone at home, I do want to say, like, there are so many like-minded people everywhere that want exactly what you want. You just have to find them, right? I think a very easy way to do that. You can go to the bigger pockets forums, for example, and you could, if you're trying to build a glamp site, or if you're trying to get into a multifamily

property, or if you want to learn about partnerships, you can go and ask that question. You can go onto the forum, say, hey, here's what I'm dealing with. I'm in this city. I'm trying to achieve this goal. Is there anyone here that can connect with me, hop on the phone, meet up for coffee. I'd love to learn from you. or you can just ask for it in the forum. You'd be very, very surprised at the amount of people that will reach out and support you and your goals. So find out a way to get in the room with other like-minded people. You can do that by getting into the bigger pockets forums.

You can do that by hosting a meetup. There are so many ways you can do it. But if you're trying to figure it out on your own, it's going to be a lot harder and a lot less inspiring than hearing someone that's been successful at it. All right. So before we let you go, Philip, I wanted to leave you with a little bit of homework that you can bring to the table the next time we meet. Is that cool? I'm down. All right. So I just gave you the idea about the brokerages. So I want you to contact five brokerages and ask them for someone that

specializes in land acquisition slash bigger, bigger properties such as RV parks, mobile home parks, campgrounds. Five brokerages that can do that. David, you got anything on your end? Yeah. When you call those brokerages, They're likely to say, I don't know or no one here does that. Ask to speak with a team leader, a manager, a broker, like someone of prominence there. They may have different names, but you could just ask, like, well, who runs this place? So that's Tom or that's Mary. And when you talk to her, say, Mary, I'm trying to find a realtor that specializes in campgrounds.

What advice would you have for me of how I could find them? A big mistake people make is they call, they ask the question, they get the no, they give up. Or they just say, okay. Like, it's Rob asking someone when he calls, hey, I'm looking for the top realtor in town, and I want to do short-term rentals. And Rob says, do you have short-term rentals? No, I don't really have any. I mean, I can help you if you want, but that guy over there, he's the expert in it,

which led to Rob being connected with the right agent. So I don't want you to stop it, no. Okay, after they say, no, you say, okay, well, what would you do if you were in my position? That forces people to actually think about how to solve your problem, not just check the box to get you off of the phone and move on to the next thing in their life. Yeah. Also, I want to put, I want to say to put yourself out there in three different ways. I want you to ask for help three different ways, all right?

One way, I want you to do it on social media, make a post on Instagram, on stories, on Facebook, wherever you're, to ask for people, hey, do you know any campsite owners that I could connect with? Is there anyone in your network? go to the Bigger Pockets Forum and post, hey, you know, I'm looking to get into this. What are good resources for finding campsite owners in California or something like that? And then find a third way to put yourself out there and ask for help. Because, you know, researching is one thing, but actually asking for help tends to attract people that want to help you.

So find three creative ways to ask for help outside of the brokerage. Great advice. And let's see. I think that's pretty much it. on my end. I mean, I also would say, I don't know, David, maybe you agree or disagree on this one. There are wholesalers that do this kind of thing. So could you find a way to get connected with wholesalers that are actually dealing some of these campsite grounds, some of these campsites or mobile home parks or anything like that? I get emails for this stuff every single day.

I would Google that to try to find them and let that lead you down the rabbit trail of Facebook groups and different landing pages and try to find. you can actually get a person's contact. Boom. Because there's a lot of people, Philip, that if you say, I want this and they know what you would pay for it, that will reverse engineer how they would go find you what you're looking for. And they have the skills, the resources, the tools, the experience to go find it.

You trying to do it on your own is going to be a very sloppy, slow process that's going to take you away from a lot of the other things you were saying that you have going on. Yeah. Just remember, putting yourself out there is what creates the opportunity to arise, right? If you take Amy Majore's advice, every time you meet someone, when they say, what do you do? If you say, I help people get double-digit returns through real estate, right? I don't remember the exact 13-second power pitch, but by you saying that, you open up the gate for them to say, oh, tell me more. No one's going to know to ask you more questions about your campsite developments or anything like that unless you put yourself out there.

So always be willing to make yourself uncomfortable. Sounds good. All right. Thank you, Philip. Thanks, guys. All right, next up we have Wendy St. Clair. Wendy, you live in Long Beach, but you also live in Colorado part of the time. You kind of bounce around like me.

You work in high-tech marketing, which is cool because that tells us right off the bat that you have some experience with solving problems and understanding complex situations. You're not going to be looking for the easy answer and everything. You currently have nine single-family rental properties and you're ready to branch out of the turnkey model, which is very exciting. So thank you for that. In order to help craft your goals, help us understand where are you stuck right now and where are you trying to get to? Great. Thanks, David. So excited to be here with you guys. Yeah. So like you said, I live right now in California. I have nine properties that are turnkey rentals primarily. One of them is a nice home that I used to actually live in that I have lots of equity in right now. It's not a turnkey rental. But the others, my goal initially was to do that and then also do my high tech.

marketing, but as I learned more and more about the business, and I really love real estate and become super passionate about it, I'd like to find a way to get out of making money doing high-tech marketing and somehow find a way to turn my passion for real estate into something that is more permanent. So initially I looked at Burr model. I've looked at some flips, and I've been considering all different sorts of things, but I keep kind of going back to the training wheels, if you will, of turnkey. because it is safe and it is easy,

but it's not really giving me the dollars that I would like to have to eventually retire with. It is a long game. And so I keep doing the turnkeys and staying in my business because it's safe. But my goals really are to retire in the next three or four years. And when I retire, I'd like to have a certain amount of dollars

that are making me some passive income. And I think that to get there, I need to use the equity that I have left and maybe find ways to raise more money to build my sort of little mini empire of whether it's long-term rentals, midterm rentals, et cetera. I'm guessing the reason you got into turnkeys, you said they're safe, but it's not just safe, they're convenient. Doesn't take away time that you're putting towards work and the other things that you've got. Is this something where we still have to work around the commitments that you have to your marketing? I have quit twice. And I've gone back every time because it's like the blankie that you can't get rid of.

And I don't want to keep going back. And while I appreciate the employer that I have today, I would much rather spend my 45 hours a week building my own business and, you know, finding ways to see the fruits of my own labor with my own business. And I'm not afraid of the hard work. I'm not afraid of being a project manager. I'm not afraid of doing all the things. I just haven't found the right path. And so part of my goal was, and really why I started, was interested in this mentor programish, is to find a way to network more effectively with people, find someone that I could saddle up next to,

be a big help to them in their business and learn and just have someone to bounce more ideas off of. I think one of the biggest fears I have is that I'm just doing this all by myself. I'm divorced now. When I was married, we did some things. but it's just a different world when all the decisions are on you. And I always fear that I'm not making the right choice. Yeah, I understand that. I mean, you have nine properties.

So we know that you at least have the ability to get to nine, which is a lot of people work their whole life to get to nine. So this is like the good news. I think I want to understand a little bit more about are you willing or are you able to put more work into those nine units to make them cash flow more? Or are we trying to just leave those as is and then get into new stuff? They are all fairly new to me and they were all renovated when I purchased them. So I think they've got about a two to three year window where they've just got to sit and earn a little bit of equity.

And they're not in particularly fabulous neighborhoods for the most part. Three of them are in southern or in Indiana, northern Indiana. Four of them are in Baltimore that are brand new to me. and two of them, those aren't even rented yet. So I've got the property managers just getting those going. The one that I have is kind of my crown jewel is my home in Colorado that I used to live in. And so one of the things I'm actually thinking about is moving back into that house next year and maybe using that as a house hack.

It's a 3,500 square foot house. I've got a finished basement. I've got two or three bedrooms downstairs, another two or three upstairs. So I could do a short term, not short term, but probably a midterm rental with that and save myself a lot of money and kind of use that to then build more equity to, you know, branch off and buy some more multifamily. I guess I'm interested mostly in multifamily moving forward. No more dodgy neighborhood, single family homes in turnkey neighborhoods. Yeah. And from a, I guess, like ability standpoint or like a capital standpoint, Do you have capital? Like what are you working with to actually get to that next property? Or is that the difficult part right now? Well, if I had to scrounge it together today, I probably have $50,000 right now.

And that's it that I could invest in something additional. There is some equity in those, the other properties. But the main equity is in my house in Colorado, which I think I owe $230,000 on. It's worth $800 today. So that money is just sitting. there. And so that's one of the other reasons I thought about moving back into that and finding a way to get a HELOC on that property. I'm in at 3% interest or something on that loan. So I don't really want to exchange the loan, but maybe a HELOC would be a good idea. Okay. Good to know. Well, Dave, unless you have any other questions about the goals, I think we could get into the plan here and maybe start kind of putting together some steps. The only question I have about your goal, it seems like you

don't hate your job. So what is it that's appealing about get, do you hate it? Is that why you're like, I just don't want to do this anymore? Well, in the unlikely event that someone from my company might be listening to this podcast, no, I don't hate my job. But if I had the opportunity to work in real estate in some other fashion, and oh, by the way, I almost did get my realtors license. I went back and and forth and back and forth. But I don't want to be that person on Sundays cooking, making cookies in it. So that was my question, because there's ways to make money in real estate. stay other than being an investor. In fact, being an investor is a very, very difficult way to do this full time. It was less difficult 10 years ago, definitely less 20, 30 years ago because you didn't have competition.

There's so much more competition over these assets we're trying to get. You have to wait a lot longer before they start performing the way that they used to perform. It used to be if you could just talk somebody into putting 20% down on a house, getting double digit returns was fairly simple right out the gate. That is not the case anymore. So if you being a realtor is not the only way, but have you looked into buying more rental property, but supplementing that income by doing something else that works in real estate, an escrow officer, a title officer, a real estate agent, an owner of a real estate brokerage, a real estate broker themselves, a loan officer, a marketing person, starting a turnkey company and selling house to other people.

Like there's a lot more options than just buying real estate. Is it that you're in love with buying it or are you open to some other ways that you could work in the field of real estate and make income? I'm open to it. I just haven't found it yet. And Realtor was the natural one that came to me. And I thought, no, I don't really want to do that. I did. I actually applied at a couple of software companies last year. Like, I love real estate and I want to get into real estate. And I got close to some of them there, but it just wasn't the right fit for whatever reason. And I keep guiding back into marketing because it's what I've done for 25 years. And so people say, oh, well, you know, marketing, well, let's just do this again.

And so I just keep getting stuck and hired in those same roles. But do me a favor. When you say marketing, tell me what you do for a living without using the word marketing. I am a writer. I write content. I do lead generation. I do website design limited. I'm sort of a jack of all trades.

But most recently, I do a lot of artificial intelligence positioning and messaging for software products. Okay. So you're helping sell more software. Eventually the AI will, you'll make it so good that they actually do replace you. Yeah. Eventually. Thank you, Rob, for making the AI joke that everybody makes every single time this thing comes up.

But she's actually doing it. The reason I'm asking Wendy is I can tell just from talking to you, you're very intelligent, you're going to be good at whatever you do. It doesn't make sense to be good at buying turnkey properties. There's better stuff out there for you. If you're in a position like that, you have a lot of responsibility. people depend on you to create sales. Most W-2 workers statistically,

they're there to serve something someone else has already done. So someone built an entire system and they just have to be there to greet someone at the door and get them to a table or something like that. That's not hard and those people really struggle and they move out of that world

into an entrepreneurial world. It's like they've never done exercise and they're thrown into climbing a mountain or working a CrossFit workout. You've been exercising incredibly intensely for years. You're going to be good. Okay. So I would strongly urge you to consider becoming a real estate agent, becoming a loan officer, something that you can take these marketing skills and market yourself, starting a property management company. Like you've got a very, very good skill set that

you can use to raise money, advertise your own company, right? You don't have to sell other people's software. You could be managing short-term rentals or managing long-term rentals or like, excuse me, working as a loan officer, helping other people to invest in real estate, and you've got this pedigree of properties you own yourself, what worked, but didn't work well. I definitely want you to keep that open as we work through this process with you and not just assume it's, okay, I've got 50 grand, how can I replace my income? That would be incredibly difficult to do. If you look at it like, I want to invest, but I want that to be icing on the cake, I'm okay, working a different type of a job as long as I'm working for me and it's in real estate.

man, you'll have a lot of options that you can really enjoy. Yeah. Yeah, that's a solid advice. I mean, Wendy, you've got a great persona. You got a great voice. Your skills are very, you don't, people very much underestimate the power of writing. And it certainly underestimate the power of lead generation. If you're good at lead generation, imagine if you were generating leads for yourself

over and over and over again instead of somebody else, right? If you could generate multiple leads for yourself as a loan officer, as a real estate agent, you can make a lot of money doing that. So maybe that that's a really good point, David. I think a lot of people sleep on the skills, like they want to just quit their nine to five job that they've been so good at for the past like 10, 15, 20 years. They don't really think about the fact that they're really good at it. So what if they just did that? But for themselves, there's a lot of money there to be made, I think. I wouldn't mind the property management aspect at all. I mean, I do manage some of my own properties and I have managed my properties before. it's hard to do it remotely, easier now than it ever was before.

And I think what has stopped me from even getting my real estate licenses, I haven't been able to commit to a certain state. Am I going to stay in California? Am I going to go to Florida? Am I going to go to Colorado? And that maybe has been a barrier for me to do some of that. Well, we should talk about you being a loan officer because the one broker does loans all throughout the country all over the place. And a lot of them do work remotely. So if you're good with numbers, if you're good with, I don't want to say being convinced,

but you have to be passionate. That's the thing. A lot of loan officers, they get very dry. They just give people information. They don't understand that people don't make decisions off of just information. They make decisions off of, does the person I'm talking to really believe in what they're saying? And I can tell you don't have a problem with that. At your job, when you step in there, you grab the wheel and you take that car where it needs to go.

You have a vision. You understand what you're doing. That's a rare skill to have. I'm constantly looking to hire people that approach things that way. Most people I am here. Tell me where to go. Tell me where to do. Every single small business owner listening to this is like face palming right now.

Yes, that's what my problem is. The companies need more people like you. So we call that intrapreneurship where you take your skills and you work within like a business somebody else has formed rather than trying to build something from the ground up completely from scratch. And you're clearly, what's the word, passionate about real estate. And that's what I want more people in our industry to be. There's too many agents that are not passionate about doing a good job that don't understand what investors are even looking at. There's too many loan officers that are not passionate about putting together the system in a way that maximizes the effectiveness for the client or anticipates things that might go wrong. They just react to whatever pops up.

So the industry definitely needs more people doing what you're doing. And the cool thing is, is if you could make good money in those things, it makes it easier to now buy more real estate. When you quit your job to be a full-time investor, it's so hard because you're, you can make good money in those things. you have to live off the money that real estate's making, but then you don't want to buy more of it because you're afraid of like, what if things go wrong and you have less money to invest into more of it? So what happens is by default, when people live off their income, they end up out of fear sliding into these $50,000 houses where it's very difficult. You end up in the bad neighborhood. You end up with the, you call it the dodgy type of a property that the turnkey companies provide, right?

Yeah. When you've got stable income and some other source, you can play the long game and you start catering more towards the best locations, the best areas, the best properties. You're like, well, if it takes two or three years to get to, you know, the cash flow I'm looking for, I'd rather have that with tenants I love than try to get it right out the gate and end up just banging my head against the brick wall, which is, I'm sure, what you got going on with the plan you have right now. Yes.

Those certain key properties give you this, they give you this impression that is very elusive about progress. I got another one. I close on another deal. You do all this work. And then you get this house that's worth like $900 more than you paid for it, five years down the road. And the rents are going up five bucks a month every time there's a lease renewal. And you're like this. There's no way. This is what everyone's talk about when they're talking about

passive income. I've got nine of these things and it's still not working. You could probably sell all nine of those by one short term rental that you manage yourself and you'd make more money and have a better time than letting somebody else manage nine of them. So those are the ideas that I want you to be considering here because you're not afraid of work. And like Rob would tell you, when you've got a short term rental, you're marketing it. You got to think of it. You got to think about it like that. You're trying to get guests to come back again. You're thinking about how well it performs, how efficient the whole thing is, you're anticipating proms, all the stuff you're doing in your current job. You get a couple of those, much better situation for you. Yeah.

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Go to costsegregation.com and use code tax deadline to get 10% off your first report. Don't overpay the IRS. Head to costsegregation.com before April 15th. So how do I go about finding what are the right opportunities for me? Someone had said to me once I went to visit one of my turnkey guys. And he said, you know, you should get into syndication. And I said, what, like Grant Cardone? I don't know that I want to be the next Grant Cardone.

They said, no. So I was like, well, maybe I look into whatever that really would look like or what that means, but I don't even understand it. So I'm trying to find things that I would be good at doing and for the life of me. I need that book that what color is your parachute for real estate people. Yeah, that's fair. I mean, you know, you do have to remember because I remember my wife and I were, we used to work out together back in the day when we first got married.

And I remember like, we went to the gym and I was like, all right, let's go. She was like, I was like, let's go lift these dumbbells over here, do curls or something. And then I remember she was like, well, I don't want to do that. I don't want to be a bodybuilder. I don't want to look like a bodybuilder. And I was like, well, you have to do that like 2,000 times over the course of like five years for that to happen. I love this analogy. It's a slow process. So everyone's afraid if they touch the weight, they're going to wake up the next day, looking like the incredible Hulk. And then you have these people that are like completely utterly committed and focused. And they care about nothing else

other than eating insane amounts of protein and lifting the heaviest weights they can. And they still can't look anything close to that. That's a perfect example of where we get afraid of like, I don't want to have so much success so quick that I'm not happy. It doesn't usually work out. Yeah, you're dabbling and you're really kind of exploring each phase and you're seeing what you like about it, right? So, you know, a very actionable step is go find three creators in each segment

or each category or niche that you're trying to get into and just go down a rabbit hole and binge the content, right? So if you are interested in, well, let's say syndication, go find three people on YouTube that do syndications full time and watch it and see, does this interest me? If you're interested in being like a loan officer, go to YouTube, type in loan officer and just see what loan officer creators there are out there that will tell you the harsh realities and the good realities of being a loan officer. And then if you're interested in becoming a property manager, go type in like property management

realities on YouTube, whatever. And you're probably going to get a list of people that kind of talk you through it. And then look at the good, look at the bad, and weigh that against which one you actually want to dive into a little bit. Another one we talked about was being a realtor. Instagram. There are so many realtors out there that put out content that teach you how to be a realtor. They talk about the good stuff, the bad stuff. They all do it through reals. Just go binge the content and say, is this a life that I actually want? Or, hey, is this exciting. And then once you sort of find which one of those excite you the most, then start clicking into that, right, and doing more and more and more. That's usually how I do.

I mean, this is the really good and the bad thing about YouTube University is that it always teaches you the really highs and the really lows. That in-between stuff is hard to find. And the only way you can do it is by really just looking at watching a lot of raw-built content. I'm just kidding. A lot of content on YouTube. Let's shift a little bit back into picking what kind of investments you want to do. Okay, so let's assume you've got another job, you're making money, you've built your 50 grand up into 125, and now you're trying to figure out where do I want to invest? First question I want to ask you, how did you end up falling into this turnkey purgatory? What was appealing to you about that niche? It started with a phone call to

one of the providers, and the person that I was talking to on the phone probably did a good job of saying, look, we've got providers all over the country and they do a good job and, you know, you can put your 20% down and you can make this percentage back. And I mean, I've done all my research on the numbers. And they don't, I'm not upside down on them right now, but it's maybe one to $200 a month per door is what I'm bringing in after all is said and done. And some of them have a $3,000 eviction and some of them have a $3,000. tree that was 1800. That's what I mean by purgatory. You can't ever get out of it. You're just on this treadmill. So this year, I sold a house in California that I had bought for 400,000 and I sold it for 700,000. And this was going to be my exit out of Turnkey. And so I went to Savannah because I was very

highly interested in Savannah. And I felt like I had my big girl panties on. And I had a realtor. And we went and we toured Savannah and we looked at all these properties. And I started making bids. I made offers on three or four or five different houses. There were duplexes. There was a duplex. There was a quad. I was so excited. I was going to make it.

I was going to get out of turnkey. And I was going through a 1031 exchange and all happened very fast, right? So I make these offers on these houses in Savannah. And I come back and they do the inspection. And it turns out that what I thought was a duplex wasn't even a duplex. It was a single family house that some guy had the heating and air conditioning wasn't separate. there was no separate things. They weren't quads. They were in single family neighborhoods,

but they weren't zoned as duplexes or quads. And so in the end, the value wasn't going to come back to me in a quad or duplex way. And the foundations were upside down. So that's when I realized I've gotten over my skis. So it felt safer to go back to Turnkey. I hear you. Yeah. And I had 45 days. And so next thing, you know, I owned four houses in Baltimore. Now I'm like, I did not want to buy four houses in Baltimore. That makes total sense. That is the 1031 backdoor trap that has sucked many of us into a similar situation. Okay. So now you're not in that position.

You can take your time. You can figure out what your next step is. So as far as your most important next step to determine, you got to kind of like a dual headed approach here. On one hand, what type of industry do you want to get into to work in? And on the other hand, what type of assets do you want to buy? I'd like you to give me a most important next step for both of those directions. Okay.

So if I were to pick an industry that I work in, it would probably that I could still make money. Best case scenario, it is location independent. And I'm not saying I want to go live in Portugal. I'm saying I cannot decide if I want to spend my time in California or Colorado or Florida or Atlanta today. So that's why realtor has always been out. It's because I need it to be sort of available. What was the second part of the question?

I'm sorry. Which, how do you want to figure out what type of assets you want to be learning more about in pursuing? What type of assets? I think I would like to do more multifamily. Small multi-family is fine. Actually, up to 10 is probably fine for me, if that's what you're referring to. I did have a 10plex at one point in time when I was married. We were able to manage that pretty effectively.

And then house hacking is a possibility for me. So I need you to tell me what you're going to do when we get off this call to go look into if you think your first step should be house hacking. If you want to get right into a duplex. I love if you say, say house hacking is a possibility because that 50K is now a pretty solid number. You're not facing a lot of challenges. You don't have to put the HELOC on the house. You're not forced to move to Colorado. So if that resonates with you, I want you to come back and say, I'm going to figure out what

neighborhood I'm going to invest in. I'm going to figure out how many bedrooms it has to have. I'm going to figure out if I'm going to do a multifamily or a single family. I need you to be looking into those questions and get a little bit of clarity on what type of asset you're open to house hacking. Okay. Well, initially, the house hacking thought was the house in Colorado, I could house hack that. Use it as an excuse to move back in and get a he lock on it. But because right now, so I'm literally sitting sitting on $600,000 in equity. I'm probably never going to sell that place.

But I've got a very solid tenant in there. And I make a few hundred bucks on it every month. But it's not, I feel like that equity is just sitting there. Yeah. Your return on equity is not very strong. So you could do that, but you're going to get this equity out. You still got to go spend it on something. Is that where you're going, Rob?

Well, I was going to ask, why do you have to? move in to get the equity. Those, those aren't connected. Because it's hard to get a helock on an investment property. Yeah. That's why. It's much easier to get it on a primary residence. But you bought it as a primary residence, no? Yeah, but I think I, a quick claim or warranty deed it to my LLC a few years back. Even if you didn't, the bank would check to make sure you live there, they'd want to see some kind of utility statement or something. Okay. But I guess what I'm saying, Wendy, even if you can pull 600 grand out of it or 400 grand out of it, you have to invest that into something else. So I need you to have some clarity on what you're,

going to go invest into so that we can narrow down what those options look like and come up with a nice clear target. Okay. And as far as what industry you want to work in, you said you wanted to be location independent. Top two things that come to my mind would be property management and being a loan officer. Definitely. Yeah.

Yeah, realtor would be out. The other thing I would want to just maybe toss out there, Wendy, I don't know if you've done this yet, but maybe just like run the numbers on some of your properties to see if they work better as short-term rentals or medium-term rentals. Or I was actually just talking about this on a previous episode with David, what I call reverse arbitrage, which is basically you rent out your house to someone who wants to host on Airbnb. And if market rate is, let's say, $2,000, you charge them a premium, $2,500 for them to have the ability to list it on Airbnb. So that gets you out of having to actually do any of the stuff involved with Airbnb, but you

actually make more money on the cash flow. I don't think any of my Indiana ones would be good ones for that, but maybe Baltimore, but it's a sketchy neighborhood sometimes. But I will look into that. It's a good idea. Okay. So we'll just leave you here with some homework, Wendy. Homework is run numbers as short-term rentals, medium-term rentals, maybe contact a couple of medical agency or medical staffing agencies, see if they have clients that they're looking to place, you know, what their, what stipends they might provide for those clients if they were going to place them in. your home as a medium-term rental. And then second piece of the homework on top of that is to just

go down the content rabbit hole of the three creators in, let's say, property management and what was the other one? Oh, and like being a loan officer and do a little bit of research to see if any of those lifestyles would fit you. And Wendy, I'll even send you a calculator that might help you comp out your properties just to see how it all lines up, right? Awesome. That's great. Thanks. Okay. Third up, his name is Danny Zabata. And I wanted to just run us through the background here. So software engineer by day, he's a dad, owns small multifamilies in the Sacramento area, two duplexes, a four and a sixplex. And he's just looking for that next bigger step. Did I encapsulate all of that correctly, Danny?

That was pretty good, except it's actually Zapata. So a slight correction there. Zapata. Yes, sir. Like Emiliano Zapata. Exactly. Yeah, I was in high school. One of my history teachers used to call me shoes, which, you know, luckily didn't stick past that. All right. So we got Danny Shoes here on the Bigger Pockets podcast. So let's jump into your goals here, man. Can you tell us what your why is? Yeah. So, you know, for me, my biggest why is time. As the late great Tony Stark once said, no amount of money ever bought a second of time. But I disagree. with that because I feel like if you have that money and you have that life set up where you're not an employee, you're on the other side of the cash flow quadrant where you're a business owner,

you're an investor, then time is all your own. And that's for me, that's the most important thing. You know, I've had a lot of loss over the last few years and, you know, just really, really impressed on me how important time is. I have an 11-year-old daughter and, you know, I absolutely want to spend more time with her, my friends and family, you know, doing good for the community. And, you know, I want to, I want to be there and just kind of be able to free up and make it my choice what I do at my time. That's pretty awesome. Okay.

So if you had all your time back, what do you think you'd spend it doing? Do you know that yet? Yeah. I mean, primarily is family, you know, kind of spending time with family. I've gotten, you know, over the pandemic, I've gotten really good satisfaction, gratification from charitable, doing. charitable giving and I feel like that's something that really, you know, feels good to me and something that I want to continue. I work, you know, I work in high tech and I have, you know,

there's a real estate investor group and I really get a lot of joy of bringing folks along with me. Like, and when they, you know, when they see what I'm doing, I kind of document my journey there. They come to me and say, hey, how can I help? You know, can I get your opinion on these things? And I really, really enjoy doing that kind of stuff and bringing people along with me and making them successful. Yeah. Are you the kind of person that like, because I find, you know, this is the ultimate entrepreneurial conundrum and it comes down to what kind of entrepreneur you are. But the more successful I become and the more I hit my goals towards getting my quote-unquote time back,

the more that happened, the less time I actually give myself because I'm like, oh, it's working. I'm just going to keep doing this over and over and over again. How do you feel like you fall on that spectrum? Do you feel like if you were actually successful with all of you? of this stuff. Are you the kind of person that would actually disconnect and go spend that time with your family? Or would that always be a struggle being split between family and business? I'm just curious here. Yeah, no, it's a great point. At first, I feel like that would be a great problem to have and to even have that choice, I think would be amazing. So getting there. But, you know, yeah, I'm fairly driven. You know, I've worked at startups and, you know, I really like the high

tech world. So it's not something that I need to jump right out of immediately, but I want it to be my choice. I think with time, you know, I feel like I can carve out some time. I've got enough hobbies in the back burner over the years that I've touched upon and different things that I can find ways to fill it and be fulfilled. All right. What about the stuff you're, because we always look at time. I think everyone is aware of time they're spending on something. I don't think we look enough at energy. This is something that as I've gotten a little bit, older, I think about a lot. I was just having a long talk with my best friend CEO, Kyle Rankie, about we don't ever feel like we're working if it's fun stuff. If it feels light, if you're

excited, if you're passionate about it, it's not work, right? So no one cares about what they're spending time on when they love what they're doing. It's time spent doing crap we hate that we're actually trying to get rid of, right? So what are the elements of real estate investing so far that you are interested in, that you have fun doing? If you could do that for the majority of your day, you'd be happy and excited. Yeah, great question. For me, I, you know, when I started, I spent a lot of time driving around Sacramento, kind of looking at properties and looking at the potential.

I thought that was really cool. I've listened to you a lot, David, over the years and thinking about how you can take one property, which may not work for most people, and you can transform it by adding rooms or changing, moving walls and doing really interesting creative stuff. So for me, I think that's probably the most fun of it. I do, you know, all of my projects have been value add. So kind of from buying stuff that's beaten down to, you know, bringing it up and repositioning it as something successful, I think it's really satisfying. But I think if I had to narrow it down, I think it'd be that portion of it.

So small multifamily or residential single family that is converted into multifamily use are the kind of things that you would have the most fun doing. Yeah, even just transforming anything, like making it, you know, more than what it was intended to be. So as far as a plan for how you're going to get there, tell us what you've thought of so far. Yeah, so I'll give you a little background first. My last project was a sixplex that I bought in Sacramento in 2020. It was an 1890 building, full gut remodel. It turned out to be, you know, on paper, it was amazing deal. I have two other partners.

We were going to cash flow. It was going to be done in nine months and perfect. So as it turned out, it turned into a two-year project, which I'm just finally repositioning now. And it was a slog. And I recognize that I probably got some burnout from that. And my team got some, you know, gotten burned out from that. So for me, I think my plan would be, you know, as a software engineer, we had these things called retrospectives where we kind of do a few months of work and then we look back on it and say,

hey, how was, how did that go? Or there are the things that we should start, stop, stop, continue. And for me, I think the first step now that I've kind of out of that project, I've had a chance to go to BPCon and kind of reset my head, got into this amazing program with YouTube. I think now I think it's the right time to go and kind of take all the lessons learned, do a retrospective on that project. and make sure that we don't repeat the same mistakes as I look to scale larger. So I see a lot of value in scaling larger, and I think I want to take what I learned and apply it. And so I think the first thing would be to kind of get that re-sync that retrospective.

I already recognize there are a couple of parts of my team where they're not as good as they should be, in particular the contractor who we won't be using again for a large project. And I want to make sure that, you know, referencing your book, your long distance book, the core four, I want to make sure they're solid plus a few other players around that. Cool. And just, I might have missed this. What that project, you said you had a little bit of burnout. Is it done yet?

Is it sold? Is it being rented? Where is that project currently? Yeah. So we just filled the last unit, the sixth unit of that. So we refinanced, but did not get all our money out. But, you know, we've got enough out that we feel okay and we're good to hold it for a couple years before rethinking about, you know, kind of pulling more money out. So it's kind of, it's a fairly

steady state right now. Okay. And then is it cash flowing? Is it, I know you didn't get your money back out. No. Okay, cool. No, not at all. But it's, it's right there flat, basically. Oh, okay. Okay, cool, cool, cool. And that'll be after you rent out the last, or you said you just filled a six unit in it. Okay, cool. Okay, nice. So what's, what exactly are we working with to get started with here. Do you have capital to put towards your next project? Are we having to be pretty scrappy here? What is the actual financial state of Danny Shoes himself? Oh, man, I can't believe that stuck. So for me, I, you know, I have a, I live in Redwood City. I have this house here. We've remodeled it, pulled out some equity, but not all, you know, we've left it largely intact.

I have a helock that I've been using for all my investing. So I kind of use that to do the cash offers when I'm acquiring and rehabbing things. But as you're scaling, you know, I recognize that you can't do that all alone and, you know, gets very expensive, which is why I brought in another money partner. For this next project, I envision it being well beyond, you know, what cash I have. I have, you know, I have cash. I have raised money. I've had folks, you know, because I talk about what I do, a real estate, you know, to everybody

I meet, you know, there's been a lot of interest over the years. Hey, let me know about this project. or what your next thing is, and I've actually been able to get some private money that way. So the way I envision it is, you know, if conceivably when this project, this large project, I think the acquisition cost is going to be a little different versus where I had just done a cash offer, I think it would probably be financed because it's just going to be too much. But funding the rehab part of it shouldn't be an issue. So that's kind of how roughly how I'm looking to split it.

Okay. Cool, cool, cool. So we have access to capital. The question now is, it sounds like you've learned some valuable lessons from your last flip or your last kind of renovation burr. Is that what you want to do again? Is that like, is that what we're feeling? Or are you interested in other avenues in real estate as well?

Yeah. I mean, Rob, you know, listening to you on the podcast and your short-term rentals, and it's super interesting. But I'm trying my best to not get the shiny object syndrome. especially coming out of BPCon, where you've got the midterms, you've got the short terms, you've got all these things coming at you. So for me, I think the value would be to take what I learned and keep applying it to a bigger and bigger projects.

So I'm pretty good on getting something bigger in the same area to kind of leverage everything that I've done so far. Okay. So what would that look like? Are we talking like, can you give us like a purchase price, a unit price, like a budget to kind of nick away at here? Well, at that scale, you know, over, you know, I'm looking at commercial size. So over that, and as I've learned with this last project, you know, that turns into commercial lending and the property basically dictates the lending for you.

So I am good with going, you know, double, triple, quadruple, the size that I've done. I'm not quite the 10x, 10x comfortable yet. But I think taking, you know, taking almost Brandon Turner's kind of domino effect, you know, and a half times bigger. So I want to at least have my next project be, you know, over 10 units. I'm comfortable with 20 units. You know, as long as the numbers work, you know, I haven't thought too much about per door price or that kind of stuff. But this is stuff that I like to plan out and kind of make sure that after everything's repositioned, that it turns into something that's, you know, worth my time and all the time and effort that I'd be doing.

Cool. All right. So we know that we want to do something bigger than you've done. minimum of 10 units is sort of like what you're looking at. We have not looked at budgetary things quite yet, but we're at least know what we want. We want to stay focused on multifamily and even though short-term rentals and mid-term rentals are attractive, you want to be like good at the thing that you're good at, right? At least for now. That's good. You know, that's very, uh, very like, I'm very envious of that. That discipline, I don't have that. When I see something cool, I'm like, I'm going to try it. And I probably would have scaled a, uh, that's very, uh, very, very, like, I'm very envious of that. I'm a lot faster if I just stuck with the same thing. But that's really good. So you've realized this early on.

I think, David, if you're cool with it, I think we could probably move into the action size here and start discussing like the most important next steps, maybe align here on a timeline of how fast you're looking to execute and maybe give you something a little bit more tangible to work on before we send you out into the world. Sounds awesome. Yeah. So do you have anything planned for actions that you were thinking about taking yourself? So for me, I actually, I was just talking to my wife about this earlier. I think I'm going to make a trip to Sacramento this weekend and reconnect with my broker or my agent.

I'd like some little bit of advice around that because I have an agent who's a great guy. He's been in the area for 30 years, but he's really largely a single family. And I brought all the knowledge and kind of digging into bigger pockets and reading all the books. I'm the one that kind of pushed it along in terms of this is the multi-

family that works. He's he's really good at relationships and kind of, you know, fostering those with people and getting the deal done, but he doesn't have the experience around the multifamily that I do. So would you suggest that I continue to educate and kind of, you know, work, keep, keep building on that foundation that I built there, or should I look at it fresh and kind of look at someone who has that multifamily larger scale experience out the gate? Are you talking about, sorry, Did you like the person that you're partnering up with like the the private money or like the the capital that you're raising? This is the agent. Oh, it's the agent.

Yeah. I used to be more flexible on working with agents that may not be exactly in your wheelhouse or at the exact same level of your education. I think right now in this economy, it behooves us to be extra conservative and lean into the people that know more than you. And it's actually really refreshing when realtors do know more than you. at least can squabble with you, if you will, and the expertise that you bring to the table. Yep, I would agree. I don't know that you're going to find that in multifamily real estate, though.

In general, you don't have buyers agents in that space. You have majority of it as listing agents, and they're expecting you to understand how to come in. They're not looking to walk you through the deal as much as they're looking to vet you to make sure that you're the one that they want to sell to. So it's going to be tough for you if you're trying to find it from a real estate agent. I like the idea of continuing your education by learning from being in a group with someone, especially if it's like reasonably priced where you can learn from someone who owns a lot of multifamily. Because they're not just going to teach you the fundamentals, like how you analyze it or how do you use the calculator.

They're going to say this is why I like to buy these type of properties in this area and this is why. You're going to learn a lot of their experience that they had. What went wrong? I bet if someone came to you and said, I want to buy this sixplex. The advice you would give them would be very different because you went through all the work of this one and then it didn't cash for like you thought, right? So you'd see angles now you didn't see in the beginning. That's the benefit of having a mentor or a person that you're learning from in a space that understands it because they've been doing it. If you're buying four plexes, duplexes, triplexes, of course, you can get a buyer's agent there.

Those are considered to be single family still, even though they're multi-unit. And you can have someone that's having your back. So I think Rob's advice would apply to two through four units. But if you're going to be getting into something bigger than that in the commercial space, you're going to absolutely need to have some kind of a mentor that can help you anticipate things you might not be seeing. Okay. That's good advice. Thank you.

All right. Anything you want to ask us, Danny? So, you know, I've been listening to you and reading your books for a while. The biggest, I've gone through a few contractors already, which is, you know, super common problem. I've read some tips around going to Home Depot at 6 a.m. and kind of finding that person. You famously say, you know, rock stars no rock stars. So, you know, kind of connect through there.

Any other angles I should be thinking about around that? As far as how to get yourself around the right people? Yeah, the contractors in particular. Well, it's easier to get a contractor now than it has been in the past. They're not as busy because the market's going down. And so you're probably more likely. to get referrals from other investors about the people that they enjoy. Like, we're very protective of them.

When the market's hot, it's hard to get them. But now that there's not as much stuff going on, people are going to be more likely to share who their contractor is that they really enjoyed. And that contractor is going to be more likely to give you prices to make a lot more sense. They're probably not going to start at that. So when they give you the bid, I'd be more aggressive at getting them to come down on the price for certain things because no one's going to start at low. But they'd be willing to go low that they're not, they wouldn't have been in the last

couple years. And so I would just try be getting around older investors that own more assets and that enjoy teaching and sharing stuff. They're the ones that are going to actually want to help versus the younger people who are in acquisition mode and see you as competition. They might actually probably give you bad advice to slow you down.

Yeah, I think that's a general tip for everyone out there is for the most part, yeah, people have been very close to the chat. I certainly have been very close to the chest with my vendor list. But since I'm not doing as much, I do genuinely want my vendors. vendors to win. And so I'm definitely a lot more open to sharing that kind of stuff with people in my network and stuff like that. So if there's anyone listening to this right now and you're looking for a contractor and you've asked someone before, I think if you go back and you ask them

now, you might have a better chance of them actually imparting their vendor list. And if you're going to do that, offer some kind of value back to them, right? Like no one likes to be the person that's always asking for advice but never giving something back. Say, hey, can you share a contractor with me? Also, hey, what can I help you with? Do you need something? I have my own list of people that I'd love to share with you as well. That way it's not quite so one-sided. I think the one-sided stuff is where people tend to get burnt out

and the whole sharing resources world. Yeah. I haven't made any connections in Sacramento around experienced investors. A lot of folks are really new and are actually reaching out to me. I do know some very experienced people in Southern California, button and that's kind of a different market. So I'm going to have to get a little more aggressive about finding these folks. Yeah, yeah. And I mean, honestly, my most important, one of the most important ways that I've actually found my contractors is through my realtors, right? So if you have

options on who your realtor can be and you're trying to narrow down which realtor you want to use, ask them for, like, ask them who's on their dream team. Hey, do you have a contractor or a plumber or a tile guy or whatever? Do you have a contractor? Do you have a contractor? Do you have a contractor? have any of these people that I can use for this project. And if you're interviewing four realtors, for example, chances are one of them will probably have the resources you need. So that's always been how I found my vendors, but that's just something to keep in mind as you start going down the rabbit hole of like which realtor you want to work with, because the firsthand recommendation is worth its weight in gold. All right, Danny, so we're going to send you off with a little

bit of homework here. All right. So I think it sounds like contractors are going to be a need for you, right? So find three investors in your market that you might know or get in contact with and ask if they have a contract referral, three people, interview the different realtors that you're talking to as well, and ask them if they have a contractor. And then here's a little bit more of a tangible. You're going to have to work on this. Go find a neighborhood that is always just like getting remodeled, one of the most prosperous neighborhoods that's just totally, totally being revitalized and drive around for 30 minutes and look for those giant dumpsters in front of the house where the house is being remodeled and then walk inside and ask to talk to the contractor

for that property. I've also found a lot of my contractors that way. Actually, some of the best vendors I've ever worked for have been by walking to a house where there's a giant dumpster. I'm like, can I talk to the contractor getting their info in actually having them quote out a job for me? All right. So it's going to be three different ways. Three investors in your network, a realtor actually boots on the ground at a construction site. That is awesome. I've never heard the dumpster technique before. Thank you.

Yeah. It helps if you know Spanish, but if you don't, it's okay. It usually still works. I know a little bit. All right. My homework for you is I want you to get my email. We can get it after we get done here. Or if you go to my Instagram page and you look at contact, it's in there.

Email me. I'm going to connect you with Johnny, one of the agents on my team. We've had him on the podcast before. he's done a couple others. He's a real estate investor and one of my top agents, very good at looking at things creatively just like you do. You guys are probably going to have a four-hour conversation, but please don't have a four-hour conversation because I keep Johnny really busy. And I'm going to have him giving you some creative ideas of where you can find properties, how you can add value to them. I think when you're done talking to Johnny, your questions are going to be, how do I raise

enough money to go do what I want to do with some Bay Area properties because he's in a similar area to you. He lives in San Jose. He helps a lot with the South Bay stuff that I have as well as other areas too, but you'll really enjoy that. And then I want you to look at what worked with Rob's homework and ask yourself how you could apply that to other things. So I heard you say, ooh, I never thought about doing something like that. Okay. Try to teach your brain to look for that same opportunity in other scenarios. That is how you find a contractor. Would that work for finding a real estate agent that knows the area well? Well, would that work for a subcontractor, not a general contractor?

Because sometimes you can save a lot of money if you go right to the people that do the drywall or they do the flooring or they can do the exterior or the paint or whatever it is. You go to a general contractor. They're going to charge a lot more than if you could just find a very skilled handyman that can do a little bit of everything. And then you just avoid projects that need electrical work or extensive plumbing or any of the stuff that becomes very expensive. Awesome. Thank you. I appreciate the connection. Absolutely.

All right, Danny. Go forth and prosper, my friend. Well, do. All right, that was our first ever call with our coaching mentees who were selected after the announcement that we made at BPConn 22 in San Diego. That's pretty fun. Rob, what are you thinking? That's good.

We got three candidates with very, or not candidates, mentees. I guess they were candidates. Now they're officially under our wing here. But they all have very different, I don't know, battles or things that they're going through. so I'm excited to work with it. So we had Philip. He wants to develop like a glamping retreat, a retreat center. He's currently a high school teacher, wants to quit and make a real estate his full-time job.

We have Wendy. She's currently in marketing. And she's looking to just, you know, figure out how she can dive more into real estate and get out of turnkey and trying to find out what path can lead her towards, I guess, more financial freedom in the real estate space. And then we have Danny, Danny Shoes, as he self-dubbed himself. who is already relatively experienced. He has a couple of multifamily properties,

but he's looking to go bigger, better, and he's wanting to scale up into something that's just bigger than he's ever done before. And he's really at that phase where I think a lot of investors and a lot of people at home are listening right now that we can all relate to where we're like, oh, I've done it here.

I've done it on a small scale. I'm really good at it. Now I've got to go bigger and I'm scared to do it. I think that's where he's at. I think we're going to help him be able to do that too. So it should be fun. should be a fun couple of months. Yes, and everybody's going to get to learn on the journey.

So even if you were not chosen as a mentee or you didn't even know that there was a contest going on, you're still going to win because we all get to follow along with what everybody's going through. These first episodes are not very tactical. It's like in the initial stages when you're first meeting with a client who wants to buy a home, as a real estate agent, let's say. This is very common. We don't even show you what houses are out there, at least if you're good, you don't. We ask what your goals are.

We ask what your fears are. We ask how much capital you have to work with. We get a feel for your life to know how much big of a project can you really take on or what would work best for you. What would be exciting? It's only after you get that why, that understanding of where they're trying to go that you actually start to put together a plan of how to get there. And then every one of these check-ins will get more and more detailed and eventually more and more direct about the tactical approaches to what do I do when this or that happens. So it's not very often that people get to see the chicken when it's first coming out of the egg. But we got a bunch of chickens who are just poking their beaks through today.

Yeah. Yeah. I think everybody's just so antsy always to say like, oh, I got to get started. How do I get into the first house? And it's like there's a lot of strategy and philosophy that goes into actually doing that. So patience is actually the most important skill you need when you're first starting out because you need to be able to like, you know, patiently think through your strategy before going all in. Yep. Absolutely.

Well, great job, as always, Rob. I'm glad to have you here with me on these. I'm excited to see what advice you give, these fine folks as we lead them to future millionaire status. Actually, some of them could be millionaires right now. We didn't ask that, but suppose it doesn't matter. It just matters if they get to the goal that they have. All right, I'll get us out of here. This is David Green for Rob.

Will you be my mentor, Abas Solo? Signing off. I'll always be your mentor, baby. 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.

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