BiggerPockets Real Estate Podcast - 732: Seeing Greene: Side Hustles, Syndications, & Escaping a W2 with Real Estate

Starting point is 00:00:00 This is the Bigger Pockets Podcast Show 732. I don't want you to ever compromise on excellence. I do want you to think about where excellence is being applied within the goals of your life. You can continue to do the work yourself and run a great business and get a lot of dopamine. But as you recognize, if you want to scale, if you want to build wealth bigger, you need to be excellent at different things. And this is the struggle many of us get into once we get good at something. We don't want to let it go.

Starting point is 00:00:30 What's going on, everyone? This is David Green, your host of the Bigger Pockets Real Estate podcast. Here today with a Seeing Green episode. If you've never been to one of these, they're pretty cool. We bring in listeners just like you to ask questions, sometimes verbal and sometimes on video, about struggles they're having with real estate knowledge they want to gain or what they can do to make more money as a whole. And I'm passionate about helping y'all make some more money. So let's get into it.

Starting point is 00:00:54 Today's show is fantastic. We had really, really good questions. We talk about picking a market and the order of operations, like what should you look for when choosing a market? We talk about when it's better to pursue equity and turn it into cash flow and when it's better to just start with cash flow. We talk about insecurities, when they show up, why they show up, and how to deal with them for different parts of real estate. And we talk about how to make a burr work in this market or an individual market where it just doesn't seem like they're making sense. So we get into some brilliant advice from me if I do say so myself. If you've been a Burr investor and you're being frustrated, you might like where we go with this one.

Starting point is 00:01:32 I want to thank you guys so much for being here. I know you're going to like this episode. I'm excited to get into it. Real estate investors, the April 15th tax deadline is coming fast. If you own rental property and haven't done a cost segregation study yet, you could be handing thousands of dollars to the IRS that you don't have to. These studies let you write off as much as 25% of your building and generate huge tax deductions. Costsegregation.com is an honest.

Starting point is 00:01:58 online self-guided software that makes cost segregation fast and affordable. So it finally makes sense for smaller rental properties purchased for as low as $100,000. With pricing under $500 and an average savings of over $25,000, it's just a no-brainer. What's more, audit support is included by the number one cost segregation company in the U.S., but you must complete it before the tax deadline. 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. You've upgraded how to buy properties, but did your insurance get the memo?

Starting point is 00:02:36 When investors start scaling, insurance can't be an afterthought. Most policies were designed for a single property, not multiple rentals, LLC ownership, short-term stays, or properties mid-rehab. That's where blind spots can creep in. NREG works exclusively with real estate investors. They understand portfolios, how risk compounds as you grow and why insurance should protect your upside, not just a checkbox. One uncovered claim can undo years of progress. Before your next acquisition, review your insurance. Talk to NREG and get

Starting point is 00:03:02 investor-specific coverage from specialists who actually understand real estate at NRE.com slash B-P pod. That's N-R-E-I-G.com slash B-P pod. Most investors spend more time chasing deals than reviewing their insurance. But a quick coverage check can be fast, easy, and one of these smartest ways to protect and even improve your property's cash flow. As the months get colder, frozen pipes, icy walkways, and seasonal wear and tear can increase the likelihood of claims. And traditional insurance companies aren't always built to handle these claims quickly or smoothly. That's why more real estate investors are turning to steadily. They focus exclusively on landlords, whether it's a single-family rental, a burr-builder's risk policy, or midterm holiday

Starting point is 00:03:47 guests. You get fast quotes, flexible coverage, and protection for property damage, liability, and even loss of rental income. Now is the perfect time to review your rates and coverage. Get a quote in minutes at biggerpockets.com slash landlord insurance. Steadily, landlord insurance designed for the modern investor. Before we get to our first question, today's quick tip is BiggerPockets is a website, not just a podcast. And on this website, there are many things that you can do, one of which is how the website was started. We call it the forums. You go to the forums and you will find more investors than you could possibly imagine

Starting point is 00:04:23 asking really good questions that you've probably thought of yourself. You also can ask questions of your own and you'll probably be amazed at how many members jump in and answer them and this is all for free. Highly recommend you getting a membership set up with Bigger Pockets and checking out the forums because there's so much you can do. Calculators, networking, finding real estate agents, learning more about me. You can look up my profile on Bigger Pockets and send me. me a message. All right, hope that happens. And let's get to our first question. Hey, David,

Starting point is 00:04:51 thank you for taking my question and appreciate what you do for the bigger pocket communities with the C and Green. So my question is, what real estate side business should I start based on my background, my strengths, and the current market? I just bought my first duplex in the Raleigh-Durham area as a house hack living in one side. And I'm currently working as a roadway design engineer, and I'm also in United States Air Force Reserve as an aircraft mechanic. I was considering doing home inspections, as I think I have a skill set that would be worked towards attention to detail as well as following standards. But I'm curious about what you would recommend in this market with you having multiple businesses in the real estate industry. Appreciate you.

Starting point is 00:05:38 Hey there, Jonathan. That's a pretty cool question. I appreciate you asking that. I would probably like to have a little more info on what your skill set is. You mentioned your aircraft mechanic. So obviously you have mechanical aptitude. I do think a home inspector would be something you could pick up pretty quick. That's a cool side hustle. I don't know what's super lucrative. So if that's something you enjoy doing and you're just looking to make a little extra coin, I do think that's actually a great idea. It might have been one of the things that I would have recommended. You may also, it sounds like you're a pretty intelligent guy. It may be worth looking into architecture. maybe becoming an architect or some form of like engineering within real estate if you were designing

Starting point is 00:06:18 plans for homes. I know one problem that I'm having right now is submitting plans to the city and they're frequently saying you need to have an architect draw this up. You need to have an architect draw this up and it's very hard to find architects. So I think there is a need for that, especially if you were able to do it remotely, if you could find a person that you could send to the site of different states and have that person go take measurements for you and then bring it back, put that into a software and draw that up. Not sure if that's something that you have experience with, but that could be a pretty cool side hustle also. And then if you're also good at being a handyman, I think that there's money to be made

Starting point is 00:06:53 in being a handyman. Every investor I know is always looking for someone that can show up and fix things. The people that manage properties are always looking for someone they can show up and fix things. Most of the time, we don't want to pay a licensed contractor to go and type. in a pipe or fix a door that's hanging wrong or repair some dry rot or even put down flooring. So if that's something that you're skilled at and you're, you very well likely could be from the job that you have right now, I think that that is another opportunity you could get into. But yeah, you mentioned you're a roadway engineer.

Starting point is 00:07:26 I think that if you could look into real estate engineering, that would end up much more lucrative for you than just becoming a home inspector, although being a home inspector might still have some value if you really like real estate. I think it's a cool thing to pursue. But I think if you're looking for a new career, becoming an engineer within real estate would probably be more fulfilling and you'd make more money. Thank you for this question, Jonathan. Be sure you follow up and let us know what you ended up deciding. This is cool stuff. All right, our next question comes from Allen in Indianapolis. Alan says, I understand that most people get into real estate investing as a way to build wealth and get out of the rat race. I have a lot of liquidity available and I want to find a better place

Starting point is 00:08:04 to invest it. I don't qualify as an accredited investor, but I'm fast approaching those qualifications. My high earning W2 will make it difficult at this point in time to replace it with REI, so I want to get some direction on what is a good place to get started. I have over $400,000 in a 401k that can be rolled into an SDIRA. I also have about 30K in cash and expecting another 40 to 50k and performance bonus coming. If I can grow efficiently, I would entertain the idea of leaving the W2 in the future. Where should a mid-career high-earning W-2 person with liquidity get started?

Starting point is 00:08:37 started in real estate. All right. This is cool. We got a little puzzle to put together here. Thank you very much, Alan. First off, with the way the economy is looking, I would not be in a huge rush to get out of your W-2 job. We don't know what the economy is going to do, but it very well could get worse before it gets better. And so one of the things I learned when I was a police officer working overtime in the last recession, not only was I able to stay employed during a recession, but I was able to make more money than other people. So making more money than other people is always going to be great. But it's extra great in a recession when everybody else is making less because you have access to opportunities and deals that other people don't. So I really like the

Starting point is 00:09:18 idea of keeping a high earning W2 when we're going into a bad economy. I'm more open to the idea of leaving it and starting a business or quitting and getting full time into real estate, whatever that might be, when the economy is doing amazing because you catch some of those tailwinds that are going to kind of propel you forward. As far as what are some ways that someone with good money could get into real estate investing if you wanted to quit your job, it would depend on what your skill set is. I'm very big and not saying real estate itself will sustain you, but what do you do within real estate? Are you incredibly analytically sound? Are you someone that could start a fund and you could start looking for commercial or multifamily property to buy? Do you have a really strong

Starting point is 00:10:02 a construction background. Could you literally start a business in construction doing rehabs of properties? I really think you and other people need to look at what is your skill set? What are you good at? And then ask, how would that work within real estate as opposed to saying, I want to quit my job and I want to replace it with real estate? If you have a lot of money, you could consider private lending, but you probably wouldn't have to quit your job just to do that. You could do that while working the job. But again, you don't want to get into it if you're not good at analysis, if you're not good at underwriting, if you can't look at the risk associated with private lending and make sure it's something that you want to take on. The other obvious answer could be home flipping

Starting point is 00:10:42 or wholesaling. So if you're good at sales and that's why you're making so much money, which is a possibility because you mentioned a performance bonus that's often associated with sales, you could start a business of sending out letters, making phone calls, getting the word out, getting motivated sellers, putting properties in contract and either flipping them, holding them or assigning the contract to other people as a wholesaler. So congratulations on the position you're in a financial strength. That's awesome. I think you've got some opportunities that should be coming in the future. If you can write us back again or send us a video and let us know what your skills are and I will dive deeper into the advice I give you on what different positions

Starting point is 00:11:20 you could take to get out of your W-2 job. Oh, one last thing I'll say. Not everybody gets into real estate investing as a way to get out of the rat race. Okay. Like I got out of a rat race, I'm in a different race right now. I'm not working as a law enforcement officer. Now I'm working as a business owner, but I'm still working. And I don't know that real estate investing is intended to get you to never work, especially because you often need to get approved for loans based off income that you have. And because things go wrong.

Starting point is 00:11:46 You have problems. Things break that you weren't expecting. You get vacancies that you weren't expecting. Unexpected expenses pop up all the time. It actually works better when you're still making income. I look at real estate investing more as a way to grow wealth that you've already created and to prepare for retirement, not to immediately replace income that you're currently making.

Starting point is 00:12:06 Like some people do. I'm just saying my perspective is a little bit different, and today we are seeing green, so I'm going to give you the green perspective. Our next video clip comes from Ryan Spearman in New Zealand. Hey, David, thanks for taking my question. Thanks for all the education over the years. It's been amazing.

Starting point is 00:12:21 I live and invest in New Zealand on the other side of the world from you guys. I've got a portfolio of small multifamily properties, which I'm looking to expand upon. I want to try and increase my cash flow so I'm looking to invest in the States. I'm in a unique position of not being tied to anywhere so I can invest anywhere which takes me to my question. You have always sold the idea of starting first by finding the market that suits you working your way down finding a team and then finding the property. What I want to know is how do I find the market how do I do that research I'd love a systematic approach to look at all

Starting point is 00:13:02 the markets and figure out which one suits me best before I drill down and find myself a team and then find myself a deal to get some more larger multi-families and exchange some of the equity I've built up for slightly more cash flow any information or advice I'd love to hear it I listen to it all and like I say really helped me and my family and our journey towards financial freedom. Thanks. See you. All right, Ryan, another great question. You guys are crushing it today asking really good questions. So it looks like I see my book Long Distance Real Estate Investing. I think it's right there behind your left ear. You have some other books on yourself that I have too, extreme ownership,

Starting point is 00:13:45 the millionaire real estate investor, some Cal Newport works there. So good they can't ignore he's one of my favorites. So well done. All right, let's talk about choosing a market because that's what your question is here. The first thing that I advise everyone to do that I do myself is I look into the strengths of different markets. So if someone said, should I invest in Miami or Dallas or the Bay Area, California, each of those markets has a strategy that will work good in that market. The thing that I want you to start with is just asking what am I looking for. Now you mentioned something else that's worth highlighting that you've built up equity. now you're looking to exchange that for cash flow.

Starting point is 00:14:26 My opinion, that is generally a superior approach to building cash flow than just focusing a cash flow right away. And I'm actually writing a book right now, and I'm giving an example about this. It'll be called Pillars, I believe. And in that book, I talk about how there's one example of a person that chased after a Midwest turnkey property and they make $600 a month. So that turns into $7,200 a year. And it's a 12% return.

Starting point is 00:14:49 They're really excited. The other person goes and buys a property in, South Florida, and he sees above average growth, and he does a value add on the property, and he gets it below market value, and he uses a lot of different strategies, builds up about $350,000 worth of equity, exchanges that for only a 6% return, even if he can't get the 12% return, and still makes three times as much as the person that chased cash flow in the beginning. The goal is definitely cash flow, but the order of operations can be different, and you have more control over building equity than you do over actually building cash flow, because

Starting point is 00:15:24 Cash flow only increases when rents go up, and we don't control that. So good on you for getting to this point where you've got that equity and you're looking to invest it. You're probably going to be looking for either a cash flow heavy market with a lot of opportunities for cash flow or maybe you're looking for another equity run. You're going to invest that money into a market that gets more cashful than you have now, but still has a lot of growth. And what I'm getting at here is every market has their own strengths.

Starting point is 00:15:49 If you're going to go invest in South Florida right now, you're probably going to see continued growth over time and continued rent growth, but you might not be crushing it in year one on the cash flow. Conversely, if you want to go invest into the Midwest, there's probably a lot of places where you can still get cash flow, but you're probably not going to see nearly as much growth. That's one thing to look at. Is this market more likely to experience very solid cash flow in the beginning or above average growth over the long term? And if the answer is neither one, probably not a market to invest in. Another thing that you want to look at is how much competition is in this market. So you want to go by properties in Malibu, California. They're probably

Starting point is 00:16:26 guaranteed to do well over a period of time. But you're going to be fighting with a lot of other people to get those properties. It's very difficult. On the other side, you can go invest into Indiana where there's tons of properties everywhere and it's super easy to get them and they're not very expensive, but they don't have as much upside potential. So you want to be looking at competition within a market. Am I okay with a lot of competition if the upside is better or do I want to avoid competition and just have an easier way to enter into that market. What you're telling me is you're pretty experienced at investing. Okay, so I would be looking for markets that were a hybrid market. Dave Meyer and I talked about this on an episode we recently released on our state of the market podcast. Dave defines

Starting point is 00:17:07 hybrid markets as markets that will cash flow, but are also likely to have higher growth than normal. Denver, Colorado was one example of that. When you're looking to pick a market, the first question that I think you should be asking is where are people moving to? Where are the populations going and where are they leaving? Okay. So San Francisco was red hot. There was a point in my career a couple years ago. You couldn't get somebody a property in San Francisco. It was impossible. Couldn't happen. Well, COVID came. Everything shut down in San Francisco. People started leaving San Francisco. And all of the demand that was an SF moved into the East Bay. At that point, it was very easy to get anything you wanted in San Francisco, but it became almost impossible to get any of these bigger single

Starting point is 00:17:52 family homes in the East Bay where everybody wanted to move to. Same is true of New York. New York had red hot real estate for a very long time. It's been struggling since COVID. Political decisions, the weather, and then the overall value that that location offers have decreased because there's not as many people that want to live there. There's not as many thriving businesses and a lot of the Wall Street opportunities that drove people to New York in the first place have moved where? South Florida. That's why that market's exploding and it's becoming harder and harder to buy real estate. So if you wanted to get ahead and buy in these markets that were going to go up before they went up, you got to look at where people are moving and then you got to look into why.

Starting point is 00:18:32 So it's not so much as like doing research and just trying to find the website that's going to predict where things are going to go. It's more looking at the news overall. Did you know that Hollywood has been slowly moving into Atlanta, Georgia for the last eight, nine years. You're seeing a ton of movie production that moves there. I believe that the entourage was filmed in Atlanta. All that stuff used to be done in Hollywood. Not the case anymore. If you knew that, you would not have been surprised that Atlanta real estate prices

Starting point is 00:19:01 soared. And if you're paying attention in the last five to six years, they soared. Atlanta became every investor's dream. Everybody was putting money into there. And many cities have had their runs, Memphis, Tennessee. see how to run for a long time that everybody was buying there. Birmingham, Alabama was the flavor of the month for a little bit. We also had happened with Austin, Seattle, San Francisco. They had huge runs. Now they're cooling off. Phoenix and Las Vegas have their ups and downs too.

Starting point is 00:19:28 So what I want you to do is to start pay attention to where are people moving in the states. What states are they leaving? What states are they going to? Once you identify where people are headed, ask yourself, what is the strength of that market? How do you make money there? Is this a long-term buy-and-hold for rent increases? Is this a long-term buy-and-hold for the value of the asset increasing? Is this an area that has a lot of homes that I can add value to? Is there a big discrepancy in the sale prices? Do an ugly home sell for $600,000, but a gorgeous home sells for a million,

Starting point is 00:20:01 where you can go in there, do some construction, and add a lot of value to the property. Or is every house somewhere between $120,000 and $140,000? That would be much harder to add value to, but it might be easier to find more cash flow. Last, ask yourself what type of people are moving here. Just because humans are moving there doesn't mean it's automatically good. You're hoping that humans are moving there to experience higher wages. If industry is moving into an area that pays more than other areas around it, you could be sure that rents will eventually increase. So if you're looking for cash flow right away, you're going to look for a different market than if you're looking for cash flow over the

Starting point is 00:20:37 next five years. In general, my strategy is always to delay gratification. If I have a an opportunity between a place that will pay pretty good right now or a place that will pay really good in the future, I always push it down the road and I take that gain in the future. And I've never regretted. I've made much more money in my real estate that I made less money on the first couple years, but did way better on later than the people that took the opposite approach, which was like the hair in the tortoise in the hair where they got cash flow right out the gate in year one, but then they stayed there forever and eventually that tortoise passed them up. So hopefully this advice helps you to pick some different markets. I'd love to see you continue to delay gratification

Starting point is 00:21:16 as well. Buy into areas with the population moving into, buy into areas with rising wage growth and start licking at real estate from a deeper overall level as opposed to just an individual property that you're running through a calculator a hundred times in a row hoping that you end up striking gold. It usually doesn't work like that. Thank you very much for your question. Ryan. Loved it. There are two kinds of real estate investors, those who have reviewed their insurance and those who think that they have. Most don't realize their coverage wasn't built for how they actually invest. Vacancy periods, rehabs, short-term rentals, or LLC-held properties.

Starting point is 00:21:48 These gaps surface only when filing claims. That's why investors work with NREG. They specialize exclusively in real estate investors, understanding portfolios, risk at scale, and cash flow protection. One claim can erase years of returns. If you own a rental property, don't assume you're covered. Have NREG review your insurance with someone who gets investing at NREG.com slash BPOD.

Starting point is 00:22:07 That's N-R-E-I-G.com. Most investors spend more time chasing deals than reviewing their insurance. But a quick coverage check can be fast, easy, and one of these smartest ways to protect and even improve your property's cash flow. As the months get colder, frozen pipes, icy walkways, and seasonal wear and tear can increase the likelihood of claims. And traditional insurance companies aren't always built to handle these claims quickly or smoothly. That's why more real estate investors are turning to steadily. They focus, exclusively on landlords, whether it's a single-family rental, a burr-builder's risk policy,

Starting point is 00:22:44 or mid-term holiday guests. You get fast quotes, flexible coverage, and protection for property damage, liability, and even loss of rental income. Now is the perfect time to review your rates and coverage. Get a quote in minutes at biggerpockets.com slash landlord insurance. Steadily, landlord insurance designed for the modern investor. Tax season reminder for all the real estate investors listening. If you own rental properties, short-term rentals, commercial buildings, basically anything that's not your primary residence, you need to know about cost segregation. It's an IRS compliance strategy that lets you accelerate depreciation on your properties, which means you're paying less in taxes this year and keeping more cash in your pocket

Starting point is 00:23:26 for your next deal. Cost segregation guys is the go-to firm, having done over 12,000 of these studies with 500 million in total depreciation identified. Head to costsegregation guys.com slash BP to get a free proposal and see your potential tax savings. All right, rental property investors, listen up. Our friends at Dominion Financial already have some of the best DSCR rates in the industry. Now they're the fastest, too. They just launched 10-day DSCR closing. That's right, 10 days.

Starting point is 00:23:57 And they're still the only lender with the DSCR price beat guarantee. That means faster closing, the best terms, zero guesswork. That's Dominion Financial. Check them out at BiggerPockets.com. slash dominion. Again, that's biggerpockets.com slash dominion. At this part of the show, I would like to go over some comments from previous shows. We pull off YouTube. Now, if you do me a favor, pull us up on YouTube yourself, and like, comment, and subscribe to this show so other people can find out more about it. I want your comments because I want to read one on a future show. So if you could do me a favor and pull us up on

Starting point is 00:24:31 YouTube, you'll find Bigger Pockets has a lot more to offer than just the podcast. There's lots of other podcast and there's lots of videos that we air on bigger pockets YouTube, many of them from yours truly that you won't hear on the podcast. Our first comment comes from Veronica O, right out of episode 714. Hi David, you are so good at explaining complicated things. It would be nice to have a full episode on micro and macro economics explaining the correlation between the prime rate, stocks and bonds, unemployment, recession, inflation, and its effect on the real estate market. That would be fun. I will take a note there that maybe we should put another episode together that talks about those kinds of things and how they affect the market as a whole because Veronica, you're

Starting point is 00:25:12 pretty smart. Everyone looks for the individual property they think is going to make them rich. It's much more about understanding the bigger factors that determine whether real estate goes up or down as a sound financial strategy. Kimberly Smith says, David is my favorite. I'm buying my first duplex next month reading his burr book on the daily thank you for that kim and i'm glad i'm your favorite it's pretty cool congrats on that duplex i will keep an eye out for you to see how it went from episode 690 tj says i always look forward to seeing green episodes i like the format of having different personalities answering questions this is a great episode i learned a lot thanks well thank you t j for that comment derrick and melinda dekens say the bar has been raised in this video

Starting point is 00:25:57 I want to hear more commentary from special guest star Batman. That's kind of funny. All right, you guys got to go check out episode 690 to see what Derek and Melinda are talking about there. You will not regret it. And our last comment comes from episode 690. Respect you, David, for still going strong on the podcast. I've been listening for four years now. Well, I didn't realize it had been four years, but I did just have a birthday yesterday.

Starting point is 00:26:26 and I am getting older. That is for sure. So thank you very much for acknowledging that and for the respect that you're showing me. I'm thrilled to be a part of bigger pockets ever since Brandon Turner first brought me on and I vowed to never, ever, ever let him regret that decision. I've done my best and I'm glad to hear that you guys like it. So thank you for that. We love and we appreciate the engagement. All of you give on our YouTube comments. So please go in there and leave another comment. Tell us what you like. Tell us what you don't like. Say something funny. I thought that Batman reference was really good. And tell us what you want to see more of on the shows, and we will make those shows for you. Our next video clip going back to our questions comes from Wade Culesa in South Dakota. Hey, David, Wade Colesa here from Sioux Falls, South Dakota. I am a contractor here in my local market. I own a few properties and looking to expand this next year. My biggest question is, as a contractor, I love doing the work. I like getting my hands dirty.

Starting point is 00:27:21 I love seeing new projects being accomplished and that kind of thing. But I know that in order to scale that I kind of have to get past that mindset and hand those things off to other people. Do you have any advice for me as to how do I change my mindset or get past that feeling of giving up control more or less to other people to do some of those lighter construction tasks in order to scale and grow my business? Again, construction is my passion. I love the accomplishment and the feeling I get from flipping a different property and making it better for people to rent. But I need to get over that home. I just need some advice. I appreciate all you do.

Starting point is 00:28:05 Thanks. Wade, thank you for your transparency there. My goodness, I can tell you I struggle with the same thing. All right, we're going to pull back the sleeves. We're going to get to brass tax. I'm about to get real, everybody. So buckle your seatbelt. This problem you're experiencing, Wade, is never going to.

Starting point is 00:28:20 to go away. If I understand you correctly, you are a person who's passionate about doing things the right way. And we need that in contractors. Like you see the different ways a contractor can solve something. There's always corners that can be cut, easy roads that can be taken, things that can be skipped that maybe for the first couple of years won't show up, but will absolutely cause problems later for the person whose home that is. And you have a passion against seeing that happen. You probably had a really good mentor that trained you in the right way. And you get that feeling of a job well done, which becomes addicting. It's literally releasing dopamine in your brain. Now, in the role of home contractor, this is a blessing. This is why you're good at what you do. I already know you have

Starting point is 00:29:04 a thriving business. You're buying rental properties. People know you do good work because you've got this value system in place that makes sure you do good work. You're now experiencing the problem where your value system is getting in your way, as crazy as that is. I don't want you to ever compromise on excellence. I do want you to think about where excellence is being applied within the goals of your life. You can continue to do the work yourself and run a great business and get a lot of dopamine. But as you recognize, if you want to scale, if you want to build wealth bigger, you need to be excellent at different things. And this is the struggle many of us get into once we get good at something. We don't want to let it go. You raise the little baby. It's finally great and it's time for it to go off

Starting point is 00:29:51 to school and you don't want to let go. This is normal, but it's something you're going to have to deal with. I can see your problem clearly. You're in a small bubble of excellence within construction and you've got a bigger bubble over here of excellence within real estate investing and you know you need to leverage off some of the work that you are doing so you can spend more time in this other bubble. The problem is you know the people you're going to let do the work are not going to do it as good as you and your conscience is screaming at you that that can't happen. The only ways that I know to overcome that have to do with stepping back and seeing a big picture, if you're giving people lesser jobs to do, and I wish I knew more about construction to give you better examples with this, right? Like, let's assume that maybe

Starting point is 00:30:34 the siting on a home is not as important as the framing of a home. I hope I'm not wrong in every contractor out there screaming. It's the other way around. Please just give me some grace here, for the purpose of this assumption, you want to make sure your best guys are doing the framing and your new guys are doing the siting. If mistakes are going to be made, you want it to be on the stuff that's not as important. And as those mistakes get made, your job as the business owner is to increase the standard that you expect from every person so that they do not continue to make mistakes. Like, it's going to happen. You just don't want to see the same mistakes continue to happen. So there are strategic things you can do, like putting your new people on the less important

Starting point is 00:31:11 jobs with the goal not being a job as good as you would do it, the goal being a job better than they did it before. That's what you're trying to do. When you become a business owner, this is a position I'm at, you stop doing the work and you start putting the same energy towards creating the standard. You have to hold them all to the standard. And you got to know they're not going to hit it. They're going to fail just like at one point you fail. They're going to fail maybe more than you did because they don't have your level of drive ambition or talent. but you still have to keep pushing that standard higher and making them rise to it. Now, as you see that maybe they don't do it as good as you, but they did it better than they

Starting point is 00:31:49 did before, you will notice progress and that will help break the chains of your enslavement to doing the job yourself. When you see their progress, it will help a lot. That's half of it, okay? The other half is getting over into this other bubble that we talked about that has to do with getting excellent at real estate investing. And in that bubble, you will start to realize excellence within construction. is not really relevant. I don't do any construction and I still built up a really big portfolio

Starting point is 00:32:16 of stuff myself. When you get deeper into investing in real estate, the dopamine connection, the emotional relationship you have with the work you're doing in construction, hands-on yourself will be weakened as you replace it with dopamine that comes from doing a good job within being an investor, negotiating deals, closing on deals, finding the better deals, coming up with the plan for the property, improving upon the results you thought, outperforming what you thought was going to happen will start to feel good. And it will make it much easier to let go of the bad feelings of seeing the work not getting done. Okay, if you wait for other people to do the job as good as you, it's never going to happen. You're never going to get out of that bubble of being a contractor.

Starting point is 00:33:00 I think that you recognize that. So don't make them do it as good as you. Make them do it better than they were before. And at the same time, it will be easier to relate to those people screwing up when you step over into this other bubble because guess what? You're screwing up. You don't know how that bubble goes. I talk about the three dimensions of leadership. The first one is learn. You've learned how to be a good contractor. And now you have to step aside because you went from zero to 100. You're at 100. You have to step out of that. The new guy is starting closer to zero. He's not as good as you. And that's where the struggle is because you have to let go of doing the job. yourself. Now you're in leverage. You're in the second dimension. You're going up instead of left to right. And in the

Starting point is 00:33:40 leverage, you're starting off close to zero also. You suck at that. Or maybe you're stepping out of learn and into learn in a new category, which is actually real estate investing. And it will help a lot how humbled you get. When you make mistakes, you will have more patience and show more grace to the other people that are showing mistakes. It will make you connect with them better and it will make this journey much easier to do than you're imagining right now. Your problem is you're trying to step from 100% skill level into a new area of 0% skill level at the same time that you're trusting your work to people that also have low skill levels. When you are doing something new with a low skill level and you're supervising people with low skill levels, it will be much less frustrating

Starting point is 00:34:20 than when you're operating as a black belt trying to work with a bunch of white belts. Thank you for the question. Keep us apprised of how this goes and my thoughts are with you and your success in this endeavor. All right. Our next question comes from Kali in Missouri. How can I make the Burr method work in my area? My husband and I have been looking to use the money from our first flip to purchase one or two more homes that we want to Burr. The problem is that within our area, red values are too low for us to cash flow after we refi. Most of the homes we analyze seem to negative cash flow. How can we make this work? Do we need to look to different areas? Great question. And I haven't talked about burr in a while so I'm glad that you asked it.

Starting point is 00:34:58 All right, your problem is weird as this sounds, is not a burr problem. It's an area problem. I think that your subconscious had diagnosed this for you. One of the first things you should look at when doing a burr is, as acknowledging it's going to be a buy and hold cash flowing property, which means before you look at how much of my capital can I get back out, how do I add value to it? You have to look at, do the rent support the price at the end? Now, if you're operating in a market that doesn't.

Starting point is 00:35:26 support the cash flow, it doesn't work to look for a burr because you wouldn't be looking for a long-term traditional buy and hold rental there. If it's nowhere near the 1% rule and you know that that area doesn't cash flow for that type of asset class, it's even harder to make it cash flow on a burr. Okay, so right off the bat, if you're operating in an area that's like not good cash flow but known for equity growth, the burr method is not the best place to work there. I don't do it very often in the high growth areas. In fact, I only do it in high growth. growth areas. If I'm doing something unique, I'm adding a lot of units to the property, I'm transitioning the property out of a long-term rental into a mid or a short-term rental that's

Starting point is 00:36:04 going to make more income. You got to do something creative here. Okay, that's the first thing I would say. So yes, you look for a different area. You start with an area that I call in the Burbank a target-rich environment. You want an area that has a lot of homes that are close to the 1% rule. That does not mean they have to be the 1% rule. Please, everybody, calm down. I know that nothing's hitting that right now. what about 0.7 or 0.8, right? That's close enough that you can actually look at the deals. When you find the area that does have them work, or you find the asset within the area,

Starting point is 00:36:33 maybe triplexes work, maybe short-term rentals work, but not long-term rentals, whatever it is. You find the pattern of what properties will cash in that area. Then you only look at those properties as potential birds. You don't even bother looking at stuff that's like right out the gate ready to go. And you don't bother looking at fixed-reper properties if you know they're not going to cash flow in that area after you buy them.

Starting point is 00:36:54 So before you worry about the rehab and the value out of a burr, you worry about the end result, you start with the end in mind. So yes, you start with the area, you find the area, you find the asset class within the area, then you start individually analyzing

Starting point is 00:37:07 the individual properties to see which ones could work as a burr. You're asking the right questions there, Collie. Congrats on that and good luck in finding your next deal. And our next question comes from Casey Christensen in Utah.

Starting point is 00:37:19 Casey says, Hi, David, thank you for the awesome content. you put out each week, it's motivational and uplifting. I currently own three duplexes. I had four and I just sold one that I closed on last week. Currently have the funds held at a qualified intermediary with the intent of doing a 1031 exchange. However, I have recently been thinking about not doing a 1031 and instead using the money to get into a syndication or coaching mentorship program. My tax bill would be about 10 grand if I didn't do the exchange. I started buying about two years

Starting point is 00:37:47 ago and I've realized that building a portfolio this way will get me to the point where I can leave my is going to be a long and arduous road. Side note, this is not coming from Casey. That's what a lot of people realize and that's what I talk about all the time. You're probably only going to hear that here. I've always wanted to get into the syndication route, but I felt I had to go smaller first. Do you feel it be a mistake to take the tax hit and invest in a mentorship program? I've also hesitated to go to the coaching route because of an insecurity that I will fail in the program,

Starting point is 00:38:14 watch out and find myself worse off for having thrown 20 to 40,000 at a program that got me nowhere. Do you also have suggestions on how to deal with said insecurity? Thank you again for all you do. Wow, Casey, this is really good. All right, let's break it up into little pieces. First piece. I don't think paying $10,000 in taxes at the end of the world. I might not do a $10.31 to save $10,000

Starting point is 00:38:34 just because they can be stressful. Okay, so if you're worried about the $10,000, I don't know that I would say you have to do a $10.301 to save $10,000 in taxes. You might put the money into a bad deal that you lose more than $10,000, so it doesn't actually help you. 1031s are not. foolproof. Now about the coaching program, I don't know that that's the best use of your money either. And about your insecurity, that's a third issue that we'll talk about next. So here's the thing

Starting point is 00:39:00 with coaching programs. They can be good, but I think people look at them the wrong way. How do I want to say this? Like I'm trying to be sensitive because I know a lot of people that run coaching programs. Some of them are good. Some of them are not. But even good ones that don't know if it matters. Let's say that I have a personal training program. Okay. You've been watching me. you're like, oh, David's starting to look a little better. He's hitting the weights. I wonder what he's doing. And I'm like, hey, I'll show you what I'm doing.

Starting point is 00:39:25 I'll show you what I'm eating. I'll show you what my workout is. I will even check out with you once a week to see how it's going. People sign up for programs because they want the result. They want the body or they want the weight loss or they want the improved gains and whatever they're trying to lift, right? But the program is not a guarantee of the result. This is where it gets tricky.

Starting point is 00:39:47 It's a guarantee that they will give you the information. And I guess it's not a guarantee because they might be bad. But if it's a good coaching program, all that it can guarantee is the information. Okay. I can tell you what I'm lifting. I can tell you what I'm eating. I can check in with you every week. But I can't make you go to the gym.

Starting point is 00:40:03 And when you go to the gym, I can't make you lift hard. And if you think you're lifting hard, I can't convince you that you actually could be lifting harder. Okay. I'm going to stick with this weightlifting analogy because I think it's working out here. I'm a little bit older now. so working out is harder. But I still recognize there's a difference between going to the gym and getting through my workout and going to the gym and giving it everything I have, right?

Starting point is 00:40:29 Like I finally got to the point where I can start lifting heavy again. And what I've noticed is that like it's freaking hard. Okay. Like to get through my set of six or eight or whatever I'm trying to do, I'm focusing. Like I'm really focused. Sometimes I'm praying. God help me get through this because it is so hard. I don't know that I can.

Starting point is 00:40:47 That is the only way. that I've guaranteed that I will get stronger. It's that level of effort. Now, it's not complicated. Like, you grab a weight and you move it from here to here, only moving these muscles. But just because it's not complicated doesn't mean it's easy. It's still difficult, okay? Coaching programs are the same way.

Starting point is 00:41:04 Paying $20,000 or $40,000 for a coaching program could do amazing if you're going to go in the gym and work out incredibly difficult, or maybe you already have a baseline and working out, you're just trying to get back into it. Maybe you already have a pretty good understanding of real estate and you just need a little bit of information to get you over the hump, then you might earn a lot more money than that coaching program is going to cost. However, if you join the program thinking that you're going to get information that's going to make you wealthy, it's like signing up for a fitness program thinking that information is going to make you fit. It's not. The information is a guideline.

Starting point is 00:41:37 Your effort is going to make you fit. And then other genetic factors and other things you have going on. Now, you might start a fitness program and be in terrible shape. You'll eventually get fit, but it will take you longer. Same as you have a coaching program. You might take you a lot longer to figure out the stuff that some of the other students learn quicker. That is how life works. But I want to caution anybody against starting a coaching program because they're wanting a result. You're not buying a result. You're buying the information. And the result will be determined on what you do with that information. Now, the last piece of it has to do with your insecurity. And I'm hoping that my answer to the second piece also answered your questions about the third. Insecurity is an interesting thing,

Starting point is 00:42:15 isn't it? We all don't like it, but it definitely serves a purpose. When we're feeling insecure, it's our subconscious telling us something. You might have the feeling inside that you're not ready to take action that they're going to tell you to do. And so the insecurity is just your subconscious saying, don't sign up for this because you're not going to do it. If you know you hate lifting and you know you don't like sweating and you know you're not like really, really hungry to get in better shape, it's dumb to sign up for a personal trainer. It's going to teach you to lift weights. if what you really love is running, but you're trying to get bigger and put on bulk, so you sign up for a personal trainer, but you're not going to listen to them, you're going to feel insecure about that. It's not going to sound like a good idea. Don't do it. If you know that the only thing you're going to do is run, then run and just let go of the expectation that you need to get bulkier. And if you know that you don't like working out, but you're still committed doing it, okay, that would be a reason that you should sign up for the personal trainer. I want you to be honest with yourself about why you're insecure about this. it's you could easily throw 20 to 40,000 dollars at a program and it will get you nowhere.

Starting point is 00:43:20 If you're not good at the stuff they're teaching you, you don't pick up the skills, you don't have the opportunities, you don't have the money, you're not driven. It's not going to help. So that's my advice. You had three questions there, gave you all three of those. I want you to really do some deep thinking. And for everyone else who's listening to this, who's in a similar position, please remember that. Information does not get you a result.

Starting point is 00:43:41 Actions get your results. All right, everybody. that little motivational line from me will wrap up our show. I don't really get to answer questions like that very after. That was pretty cool. You guys have some great question. I got to say, from when I started seeing Green to now, the questions are consistently getting better and you deserve all the credit from that in the BiggerPockets community. If you would like to be featured on the show, I'd love for you to be. Please go to BiggerPockets.com slash David and ask your question. Now, if you're someone that I know, even cooler, freaking show up in this thing when I'm

Starting point is 00:44:10 recording the episode, I'd love to see that. So if we've met it, at a conference or you're a friend of mine. I'd love to have you go to biggerpox.com slash David and submit your question. And even if not, if you've ever been driving in your car and thinking, why don't they ever ask about this? Or why does no one ever talk about that? This is your chance to get it talked about.

Starting point is 00:44:27 Thank you so much for paying attention. If you would, please give us a five-star review on Apple Podcast, Spotify, Stitcher, wherever it is that you listen to your podcast. It means a lot and it helps us out a ton. I would really appreciate that. And if you like to follow me, you could do so at social media.

Starting point is 00:44:43 at David Green 24. I do live YouTube's every Friday night where you can come and ask questions. Those are YouTube.com slash at David Green 24. That's our show for today. Please send us some more questions. We'd love to do another one. If you have a minute,

Starting point is 00:44:58 listen to another BiggerPockets video. And if not, I'll see you on the next one. Don't forget, in the meantime, you can go to BiggerPock's.com and check out the forums where people are asking questions all the time where you get to learn for free. See you guys.

Starting point is 00:45:31 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 Calicoke 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,

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BiggerPockets Real Estate Podcast - 732: Seeing Greene: Side Hustles, Syndications, & Escaping a W2 with Real Estate

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