BiggerPockets Real Estate Podcast - 832: Deal Deep Dive: 2 Real Deals in 2023 That’ll Build Your Retirement Nest Egg

Episode Date: October 17, 2023

Want to speed up your retirement savings so you can retire even faster? With the right out-of-state rental properties, you can have consistent cash flow coming in every month, along with tens of thousands, if not hundreds of thousands, in equity from properties you bought this year! Today, we’re talking to two investors building their retirement nest eggs with long-distance real estate investing. Even better, the deals they’ll share were bought THIS year in today’s impossible housing market. First, we’ll talk to Keith, who lives in pricey California. He knew he couldn’t invest nearby but wanted to start building his passive income empire. With the help of Indianapolis agent Peter Stewart, Keith was able to lock down a medium-term rental that now cash flows $700 per month! Keith and Peter get into all the details, from how much the house cost to how they got it close to $30,000 under asking price, and the almost-perfect BRRRR (buy, rehab, rent, refinance, repeat) they did. Next, we’ll talk to Dave, who sold off all his rental properties in the last crash. Now, with retirement inching closer, he wants to build a legacy for his two boys. Dave worked with Oklahoma’s own Dahlia Khalaf on finding a long-term rental in a market with PLENTY of demand—so much demand that Dave had seventy-five interested applicants the weekend he posted this home for rent! If you want to find deals like Keith and Dave did in TODAY’s housing market, tune in! In This Episode We Cover: Retiring with rental properties and how to start building your nest egg today Out-of-state real estate investing and landlording at a distance when your home market is too pricey Building your “buy box” so you know exactly what rental properties to look for How to get WAY more cash flow out of the same rental with the “medium-term rental” model Using the BRRRR (buy, rehab, rent, refinance, repeat) method to pay close to nothing for rental properties  Why overbidding isn’t always a bad thing (and how it can make you money!) And So Much More! Links from the Show Find an Agent Find a Lender 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 Davids's BiggerPockets Profile David's Instagram Subscribe to David’s YouTube Channel Rob's BiggerPockets Profile Rob's Instagram Rob's TikTok Rob's Twitter Rob's YouTube Grab David’s Book on Long-Distance Investing, BRRRR, and More Analyze Rentals in Minutes with the BiggerPockets Rental Property Calculator Hear How to Get YOUR Offer Accepted in This Housing Market Connect with Dave: Dave's BiggerPockets Profile Connect with Dahlia: Dahlia's BiggerPockets Profile ASN Website ASN Facebook Connect with Keith: Keith's BiggerPockets Profile Keith's Instagram Keith's Facebook Connect with Peter: Peter's BiggerPockets Profile Peter's Facebook Peter's Instagram Click here to listen to the full episode: https://www.biggerpockets.com/blog/real-estate-832 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [e-mail]. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 832. My motivation now is twofold. One is to, you know, I'm looking more at retirement soon for my day job. So to have that passive income. And then two was to provide a legacy for my two boys. I'm an older guy, right? So I'm 47. I've got a wife.

I've got a kid. My goals were basically like, hey, I want to set something up. You know, cash flow wasn't the number one thing for me because I'm looking 10, 15 years down the line when we want to tire. So getting into this deal was basically like, hey, let me see that I can do this. Let me see that I can make this happen and then let me repeat it. What's going on? Everyone is David Green, your host of the Bigger Pockets Real Estate podcast, the biggest, the best, the baddest real estate podcast in the world every week bringing you the stories, how-toos, and the answers that you need to be successful and make smart decisions in this current ever-changing real estate market.

Today's show, my co-host, Rob Alba Solo and I will be interviewing agents and their clients who have found deals that work in today's market. Both of these investors live in markets different than where they're investing. So they're using long-distance real estate investing principles to help put these deals together. And we're going to be explaining what they found, how they found them, and how they put it together. Rob, what should investors be on the lookout for in today's shows to help them with their business? Honestly, they should be looking at their relationship with the realtor and being honest and asking themselves, is my realtor this good? Is my realtor asking these types of questions. And is my realtor well-versed in F-S-M? And if you don't know what that means,

and you're going to want to stick around until the very end because we get into it with one of our realtors on the show. That's a great point. And if you're interested in seeing what a good realtor looks like, check out episode 826, where we did a show where we took a realtor and a loan officer that both work with me and interview them to say, how do you two work together to get clients into contract in a very difficult market? Now, before we bring in today's guests, I just want to remind everyone that both investors were starting later in life. These are not 21-year-olds that already have a portfolio of 40 properties like you typically see in the thumbnails. These were people that have just lived their life, save some money, and they're getting started investing at a later stage yet.

They were able to use their experience, their knowledge, their networking, and the resources that they had to find really good deals. And I'd love to see more of you do the same. And just a reminder before today's show, today's quick tip. Remember that Bigger Pockets has an agent finder that you can use to take your first step into a new market. Find your real estate agent who can help you calculate cash flow and find the best neighborhoods for your strategy instead of talking about granite countertops and cute backyards. Go to Biggerpockets.com slash agent finder to match with an investor-friendly agent now. It's fast. It's free.

And it's easy. That's BiggerPockes.com slash agent finder. You can even find me there. All right. Let's get to our first guest. We all joke that rentals are passive. but if you're spending nights matching receipts or guessing what a property earned last month, that's not passive at all. Baselaine fixes that part of landlording, the financial chaos.

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Fast, simple, reliable. That's Dominion Financial. Check them out at biggerpockets.com slash dominion. That's biggerpockets.com slash dominion. 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.

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15th. Keith and Peter, welcome to the show. Dave and Dahlia, nice to have you as well. Excellent. Thank you. Hey, thanks for having us. Thanks, someone. God be here. Doing great. Excited to be here. All right, Keith, let's kick things off with you. Tell us what were your goals with this deal and how long have you been investing for? I was looking for just a long-term rental property. My goals for this deal was basically, I was looking for a long-term rental. That was basically it. I had been investing, honestly, I didn't buy my first deal until February of this year. But I'd been looking at real estate and meeting with people for about a year and a half total now.

But yeah, I wanted to get in. I live in Los Angeles, so I wanted to get into a market that was a little more affordable for me. And I had met through a real estate meetup. some guys who were investing in Indianapolis and that one of the partners lived there. And so I got to know them. They started talking to me about, you know, what you can do in Indianapolis versus Los Angeles. And it was all very interesting. So when... Very cool, man. Yeah. When I... And what do you do for a living now? I own a medical transportation company. So I've done that for about the last decade.

it's given me an opportunity. I built it to a point where I now have enough free time and capital that I wanted to do something else with my money than just put it in the stock market. Okay. And so you were saving money. You have a pretty good business on your belt. You start going to real estate meetups and kind of getting involved with the community. So you buy your first deal this last February. Congratulations on actually getting into your first deal. What were your goals. Like, did you set goals getting into real estate or were you sort of like, I'm just going to figure it out? No, I mean, my goals were, I'm, I'm an older guy, right? So I'm 47. I've got a wife, I've got a kid. My goals were basically like, hey, I want to set something up for us,

you know, for our future, something that's going to appreciate and value, something where we could possibly cash flow. It wasn't, you know, cash flow wasn't the number one thing for me, because I'm looking 10, 15 years down the line when we want to retire. So getting into this deal was basically like, hey, let me see that I can do this. Let me see that I can make this happen. And then let me repeat it. So tell me like now that you've sort of been in this real estate side of things and actually getting your feet wet, what do you think is more important for your personal situation? Is it cash flow? Is it appreciation? Is it a beautiful balance of both? Depends. If you ask my wife, she wants the cash flow so she can retire.

For me, I, you know, for me, it's like right now, especially because I'm, I bird this deal. If you can cash flow 100 or $200 a month, I think you're doing great as long as you're in an area where you know the appreciation is going to be there. So for me, I'm looking 10, 15 years down the line. I'm looking at an appreciation more than I am cash flow right now. Very cool. And so for everyone at home that doesn't know, just a refresher, a burr is basically a buy, rehab, rent, refinance. If you do that all well, well enough, you're able to, in theory, pull out most, if not all of your cash. Our friend David here is the king of that. So very, very cool that you're

able to pull this off. Can you tell us a little bit about what your buy box was when you started looking into this deal? Yeah. So my buy box started out as a three, two. I want, you know, at least 1,200 square feet, you know, 5,000 square foot lots, something along those lines. But what, you know, Peter kind of kind of had to inform me about what's in Indianapolis, you know, two ones, three ones, four ones are what you're going to find a lot of, like a three two or a two or a two, they're less common than having a one bath, which, you know, coming from California, it's just really different. It's, you know, it's very rare that you find houses out here that only have one bath with four. bedrooms, but out there it's common. So I adjusted down to a two one after after having a

conversation with Peter. Sure. Yeah, that's always the bummer things. When I feel like I find a really, really good deal, there's always just one bathroom. David, I know that you're a big proponent of if there's extra square footage and you can convert it into a bedroom, let's get that bedroom in there. Did you have a philosophy on ever adding bathrooms to your burs? Always. I think you should always look at real estate from, I call them real estate goggles, like when you put these lenses on and you see what a property should be, not what it is. And it's hard to describe it. It's kind of a philosophy. People like things explain in a framework and I don't know that I can give them a blueprint. But it's like, why is this bedroom so huge? I could put four beds in here.

This should be two smaller bedrooms or why is there one bathroom and that's it. We could put another bathroom over there. So I thought it was funny, Rob, I caught your subtlety when you said, every time I find a great deal, there's always ironically happens to be something missing from it. Right? Like, that's why it's there if anybody missed that. So looking at real estate in today's market where we say you've got to make a deal, not just find a deal, is about seeing a property and saying this is what it could be, this is what it should be, this is the highest and best use of this property.

And then asking yourself, how cheaply and how productively could I add a bedroom, add a space, add square footage, manipulate the square footage, move the walls around, do something to make this property perform better. Yeah, but add on that too. So you're right, the addition part of it's big, but there's also a reverse strategy to go down, especially in the bedroom count, not in bath count, of course, but in Indies especially, we see a lot of four-bed, one-bath homes like Keith mentioned, but they're small. You're talking these little closet-style bedroom, you know, eight by eight. And so it actually makes more sense

to take that 1,500 square foot house and turn it into a 3-2, create a master-bath, or, you know, a master suite with an on-sweet bath, walking closet, kind of modernize it. So, you know, that can be a value of play. It seems like you're taking it down or not. You're actually adding value by dropping down and making rooms more spacious. Yeah, that's a really interesting technique. So, so, So, Keith, when you were looking at this deal, you're obviously looking at the configurations of it. Were there any other particular criteria that you were evaluating? I mean, in terms of the house itself, again, I went down to a three one, the square footage of it. Oddly enough, it's a 960 square feet, but that is the same size as the four-bedroom one bath that I bought.

Wait, sorry, you went down to a 3-1 or a 2-1? A 2-1. A 2-1. This deal is a 2-1. Okay, cool, cool, cool. But, I mean, as far as what I was looking for in terms of the deal was, you know, would it pencil as a long-term rental? Well, the ability to always kind of lean back on that LTR strategy just in case to cover the bases. And then, you know, appreciation was a big part of it. In 10 years, even if I'm, you know, breaking even, I'm going to have that equity that I can borrow against you, so whatever you might do with the double road. Yeah, that's exactly right.

Peter. Peter was instrumental in giving me the direction of where I should be looking to buy these. properties for appreciation. So that was the other caveat that I wanted with this with this property. Even if it didn't cash flow now, that it would appreciate. Yeah. So obviously, you know, having an investor-friendly agent is super pivotal in your first deal. How else was Peter able to help shift your mindset or your POV on this deal? Again, he got me, you know, thinking more about getting down into a two-one house instead of, you know, a three-two that I was looking at. instrumental in helping me look at the areas that I needed to be looking at to get that

to get that kind of deal and also run the comps and ARVs in these areas to make sure that you know we were investing right and we're going to move on to the individual details of this deal but I want to ask before we do just to clarify the reason that you went from looking at four bedroom houses to two is because even though the four bedrooms look good in theory in practice, it's hard to find a tenant for them or they appraised for less because of functional obsolescence. The bedrooms are too small. Is that right?

Yes. That was one of the things I was saying earlier was that my four bedroom one bath house that I bought is the exact same square footage as the two bedroom one bath house I bought. So, yeah, it's really hard to make those words. So the tenants just go look at the house and say, nope, I don't want it. It looks like a prison cell. That's not going to work. Yeah.

Yeah. But in the MLS, it shows us four bedrooms. The reason I'm bringing this up is that's an example, but there are so many examples of things that agents know about a specific market that your buyer, especially long distance, cannot understand. The individual dynamics, the things that don't show up on a spreadsheet. And I notice a lot of people show up and they're told to tell their agent, here's what I want, go find it. Versus asking what is working in this market. What strategies work here? What do tenants look for?

Which neighborhoods are appreciating? What do you see other people having success with and then asking, can I adopt that strategy within the, you'll have a much smoother ride if you take that approach. Okay. So first, first and foremost, what kind of property is it? This is a single family house, two bedroom, one bath, 960 square feet. Okay. And Pete, I'm going to toss this one over to you. How are you guys able to find this deal? So, Rob, this was an MLS deal. Kind of, you know, nothing glamorous about it. But the interesting thing was that it had been on the market for a really long time, $211. days, if I remember correctly. And so it got an overlooked. It actually been under contract once

before as well. So, yeah, once Keith and I kind of honed in the criteria, we've settled on a few neighborhoods to focus on, this one came up. Actually, sorry, we saw it because it had been sitting there for a while, but I set up the search form. So, of course, email them all the available properties in that neighborhood. And that one kind of caught his eyes. So we did some digging on it. Do we get into kind of specifics of what we did in terms of numbers there? Yeah, well, yeah, sure. Why don't you tell us how much it was? So listed for $149,000 originally, so $150,000. They dropped the price over time to $145.

We got it under contract for Keith at $130. Nice. Ended up negotiating a $9,000 price reduction during inspection. So ultimately he closed for $1,000 in April this year. Very cool. Okay. So that's a relatively big drop in price there, Keith. Were there any special tricks of the trade that you did to negotiate the price?

That was all, Peter. I mean, obviously, FD, have your inspections done and all of that. But yeah, it was, I think we kind of lucked out with the person that was selling the place too, not really knowing what they were doing. But, but yeah, no, I left that all up to Peter as far as negotiating the prices and what would, what would work and what wouldn't. Yeah, so tell us about that, Peter. What did you do? How were creates a seller and get, I mean, effectively $30,000 off the price tag? Oh, yeah, close.

Yeah. So what I really did here was dig into the listing itself and get all the information I could on the property so we could leverage it, you know, and strengthen our position. So what I mean by that, so number one, been on the market forever. It had fallen out a contract before. It had fallen out because it had a foundation, a couple issues going on, and the buyer was spooked and they bailed. There was a contractor estimate on it.

So we got that in advance. And there's also agent owned. So the agent was also the seller of this property. So I knew it was going to be dealing directly with the person who could make those decisions. And as Keith mentioned, it didn't quite seem like they maybe knew what they were doing too well. You know, responses were slow. They didn't have utilities on for inspection. Just some kind of easy blunders that they made.

But nonetheless, she took all that information knowing they'd been holding it forever. They couldn't sell it. They were owning a foundation problems. And we leveraged that to get the price down as much as possible. and they made a crucial error here in the fact that that agent owner did not pre-negotiate the foundation problem. So they already knew it was there. They had a bid. They gave it to us, told us about it.

Then they failed to get that negotiated up front. They allowed us to just keep the normal inspection contingency in place, go in there, do our inspections, and then renegotiated, even though this was a previously disclosed item. And so that was their error. That is a big error. And what you're getting at there, Peter, for those that are not real estate agents, might not catch this. When you know there's an issue with the house, you're better off as a seller to negotiate it when you have the leverage, which is before you go into contract.

There are no ways out of a contract for a seller. There are many ways out for a buyer. So the general rule to understand is when it's your listing, you have all the power until you go into escrow because you can sell to other people. When you're in escrow, the situation can never get better for you, but it can get worse. They can lower the price. They can ask for repairs. They can delay the process.

there's a lot of things that can happen. So when you know you have issues, before you go into contracts, say, hey, we have these foundation issues. Here they are. Don't just hope that they're not going to find them. They're absolutely going to come up, especially if you know it, and try to negotiate what credit they're going to get for that rather than waiting until you're in escrow. And now you're two to three weeks in and they're coming back.

They're going to get more if you did it the other way. Great point there, Peter. And I think Keith, you mentioned that the listing agent wasn't very good. That's another thing to look for. Like I purposely target properties that have agents that are. not very good because it's a great way that you can save money. And the funny thing is, a lot of the people to hire these agents brag to their friends that they only paid 1% or only pay 2% on the listing commission. And then they proceed to lose like 10% on the negotiation side. That's a frequent

error. Have you seen that too, Rob? Yeah. Yeah, got to love it. Got to love it. Well, okay. Well, yeah. I mean, congrats. Congrats on the price reduction. Keith. Tell us a little bit about how you funded the deal? So this deal I came in cash and then I ended up refinancing out into a I refinanced out on a non-conventional loan with a local credit union on a 5-5 arm. So five years it doesn't reset. It's not like a 5-1 where it resets every year. The interest rate adjusts. The only thing that they will do since they are a small credit union is that if the rates drop more than half a percent, they will bring your rate down for a couple. I mean, for a nominal fee, it was like a couple months worth of interest or something to bring the rate down. But on a 5-5 arm, it won't readjust for up.

It won't readjust up for five years. So a 5-5-R means the first five years you're locked in. After that, it can only adjust every five years, as opposed to what we normally hear is a 5-1, which, means you're locked in for five years, then every year it can adjust. Oh, interesting. Okay. Yeah. That's an interesting note. So why did you choose that route, Keith? Was it just because it was a lower interest rate? It was a lower interest rate. Also, I, you know, based on where interest rates are now, five years being locked in, if it penciled as a long term now, I knew that hopefully over five years, rents would go up, my cash flow would go up. And then if I needed to, or I,

if rates come down enough and I want to refi out into like a 30 year, the penalty for refying out of that 5-5 arm was really, really low. So for me, it didn't make any sense to take a higher rate now if I didn't need to. Totally. Yeah, that makes sense. And what did you end up doing with this property? I actually turned it into a midterm rental. It would cash, it wouldn't it would break even as a long-term rental. I put it up on like Furnish Finder and Zillow and even Airbnb at 30 days.

And now I'm actually cash flowing pretty good on this property. So I'm keeping it right now as a midterm. If anything ever changed or I needed to, I could turn it back into a long-term rental and make it work. It would still work, but right now it's where,

working just fine as a midterm. Okay, so yeah, we usually call that, well, the term that I coined was the Burrster. And then we actually just came up with the barometer last week on the pod, which is a Burr into a midterm rental. Can you tell us the cash flow difference between the long-term rental and the mid-term rental? Like what would you make on a long-term rental versus what's your cash flowing on the mid-term rental? So I would basically break even on a long-term rental.

And right now I'm cash-flowing about $700. a month as a midterm. Yeah, so great for me, especially where I thought I was going to be breaking even, you know. But yeah, I'm coming out. Yeah, about $700 a month. Rob, you want me to break down the numbers for you? Yeah, but I was going to ask, yeah, well, can you tell us a little bit about the actual budget and everything on the Burr?

So Keith bought this for $1,000. He had about $35,000 in renovations on it, so all in about $155. and it was appraised for 203. So after the refi, he left about $2,500 in the deal. And he spent about $12,000 furnishing the property. So round up a little bit, about $15K in the deal. Total PITI was a little over $1,400. And obviously, you got some utility expenses, some landscaping, et cetera.

So $2,200 on the medium-term rental. So as he said, about $700 a month cash flow. So that's, you know, I got to do the math exactly in my head, about 55% or so cash on cash return right there. there. And had he long-term rental that, as he said, it was just about breaking even. We estimated the long-term rent to be in the $1,500 to $1,600 range. So, you know, a difference of $6,700 when he switched over the medium term per month. Yeah. And some people, yeah, they get kind of caught up on leaving money in the deal. But if you would think about it, I mean, the, if you were

going to buy this property conventionally with like an investor loan, for example, you would have to put 20% down. So even at the, what was it, $150,000, I'd say? Yeah, 121. Okay, great. 20% of that is going to be, yeah, 20,000. Yeah, so you'd have to pay more. More money in the deal. Exactly. So, you know, you put a little bit more sweat equity in this deal to make it happen, but you effectively have a much higher return as a result. So very, very cool. Did you feel pretty good about the ARV walking into this? Like, did you know, did you have a, were you able to comp it out pretty closely to that ARV? Yeah, absolutely. We had estimated about 200 grand. So, I mean, it nearly hit the nail on the head of the 203 valuation. Very cool. Okay. And just for anyone at home, ARV is the after repair values. That is what the house is worth after you fixed it up. Now, Keith, I know you mentioned that you put it on Furnish Finder and you turned it into a midterm rental. Did Furnish Finder actually turn out to work out and get you your leads and get your place booked or are you using other platforms as well? No, it actually, I mean, when I put it on Furnish Finder, I also put it on Airbnb and I put it on Zillow. And Zillow was the first place I got. My renter. who's in there now, who's been in there the whole time. He's actually a guy doing construction work in Indianapolis, and so he needed a place to stay, and he's been there for the last couple of months,

and it's been great, but it was from Zillow, actually. That's great. All right. So what lessons did you learn from this deal? Keith, we'll start with you, and then, Peter, I'll ask you. Especially if you're investing out of your own market. You really need to find somebody who knows the market well, who can guide you onto where to buy, how to buy, what's going to work, what's not going to work.

Also, with this deal, there was a, you know, people usually run when they hear foundation issues because it scares them, right? They don't know. They can get pretty costly. But if you know you can factor that into the deal that you're going to make, then, you know, don't be scared of things that sound that scary. Sometimes they're not. Sometimes you can get a great deal.

Peter? So I have four main takeaways from this deal. So number one, I think the most important one, is that there's still deals to be had in today's market. I mean, Keith bought this in April this year. And he just refinance out a few months ago. This is a very recent deal in today's market with today's rates. He made it work. And I think it's a big takeaway because all I hear is, oh, there's no cash flow, there's

no money to be made. The market's dead. I know you guys hear that every single day as well. And it's just not true. He's a real world example of it. actually working out. And number two, use all information available to leverage your position. Don't be afraid to dig into the details a bit more and use whatever you find to your advantage. Three, Keith already mentioned, you take advantage of factors that may scare off other buyers.

Buyers hate the F word. They hate the S word and they hate the M word. So foundation structural mold, those three things. You see panic going to people's faces when they hear that. In reality, most of these situations are fixable and not always as costly as people anticipate. Now, with foundations, yes, I mean, I've seen $100,000 bids on repair and there are some ones that you need to run from, but this was under $10,000. And again, Keith factored those numbers into the deal from the get-go. So there's nothing to be afraid of. And it's fixed. Everything's just fine. So all those other buyers missed out on this deal because they couldn't look past that F word. And then four, don't be able to be afraid to pivot on your strategy. Keith,

originally went into it. I'm looking for a three-bed, two-bath and a long-term rental. He ended up with a two-one, medium-term rental. Go figure, you know. But as he got into it, he kept his mind open. We looked at the opportunities as they presented themselves. And again, he pivoted accordingly and it ended up really working out for him in the end. Awesome.

Rob, what about you? What are some takeaways you took from this one? Yeah, you know, I was just reflecting, Peter. It is really nice that you know your stuff, the F, the S, the M-word. I believe those were the three. And it's funny because when I was getting into real estate, I remember I had to sign, an addendum that was like the lead paint addendum, you know, the one that's staying over all houses. And I was like, oh my gosh, am I going to die if I step inside the house? And I called

my realtor. And, you know, she kind of explained it to me and kind of talked me down the ledge. Because I was ready to walk away. I was like, wait a minute, there's lead paint in here. And I think most of the time it's right. Like having a realtor that has been through that journey has been very helpful, especially, you know, when it comes to foundations, I agree. That's a very scary thing. For me, luckily, in most of the cases, I would say in the last five foundation issues I've had, they've all cost between $1,500 to $3,500 to fix. So it always, most of the time ends up being a lot less stressful, but it does, you know, it is, it does pay to have a realtor that has experience doing it. So, yeah, it's nice. You guys both did good work. Congratulations on this deal.

This is awesome. Thank you. Thank you. Absolutely. I would second it. Whenever you hear something that scares you, turn your fear into a number because math is not scary. I remember that's advice I gave on the first ever podcast I did when I hosted with Brandon. And I said the same thing. We were talking about lead-based paint. I don't care if it's lead-based paint. I don't think poison. Think, well, what would it cost to fix that?

Same thing happens with asbestos. People hear that word. They freak out termites. They freak out foundation. They freak out cloud on title. Turn it into a dollar. Work the dollar number into the deal. See if this app works for the seller.

You could take something very scary. and turn it into something very approachable. So thank you guys. That's a... I've always found with asbestos, its best does not ask questions. That's always been my... It's best to leave it alone.

Rob, do you know how they name Worcestershire sauce? Worcestershire sauce? Yeah, how? Some guy that took his dentures out was asking Worcestershire sauce. All right. Peter, Keith, congrats on the deal. Thanks for being back on the show.

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Head to costsegregationguys.com slash BP to get a free proposal and see your potential tax savings. All right, Dave, let's start with you. Yep. What's your background in real estate invest? So I initially started real estate investing back in the early 2000s. I had purchased about six out-of-state properties, two in Texas, two in Kansas, two in Kansas City, Missouri, and two in Vancouver, Washington. And kind of had bad timing, a little bit of some bad experience with a couple of property management companies, and I got out around the housing crash in 2008. I was able to salvage some deals to get out.

and so then I just, that's where I started. And then I just been sitting on the sidelines the last few years, kind of needing, I guess, another push to get back in and finally got it last year. And then ended up purchasing a couple of properties this year. What was that push? Honestly, it was you. I found a podcast that you, the bigger pockets podcast on YouTube, watch a couple videos. joined the website, became a member, and then quickly purchased your book, Long Distance Real Estate

Investing, and spent a lot of Saturday and Sunday mornings reading that out in the porch. And a lot of things you had to say resonated with me and got me off my butt and the rest of history, I guess. What was there? Was there a specific moment in that? Was it like you finished the book and you're like, I'm ready to do this? Was it just, yeah, being part of the bigger pockets forums and getting back into the community? What was that shift?

Was it like a conversation you had? I'm always curious to hear how our members are able to kind of get to that point where they take action and get back in the game or get into the game at all. Well, I knew I wanted to get back in, but I did have a lot of reservations because of some of the issues I had with my prior experiences investing out of state. And so a lot of, you know, back then it was a lot different than it is now with, and David mentions it a lot in his book with technology is such a plus right now. So that, you know, being able to, you know, keep, keep, you know, up to date. Or actually, a lot of it was really just being able to do their initial research with finding properties, being able to look in different areas around the country, not just in my area. So using the bigger pockets, rental calculator was a big tool for me. But then, you know, throughout the book, I guess it was just the little things here and there with push, you know, letting us know there's technology here to help us, how to build a team.

And so I just decided to take a chance and sent an email to Dahlia through the Bigger Pockets website. Very cool, man. Well, thank you for that. So tell us, you end up getting back into it. You find your fire again. What were your goals getting back into real estate? Did they differ too much from when you got into real estate to begin with? Quite a bit different now. I'm a few years older now. I have two sons are 15 and 16. So I think my motivation now is twofold. One is to, was to, you know, I'm looking more at retirement soon from my day job. So to have that passive income. And then two, was to provide a legacy for my two boys. I love that, man. So, all right, let's start.

Let's hear about this property a little bit. Tell us, tell us about the property. What kind of property is it? It's a single family home, three-bedroom two bath. It's built in 1983. It's in the outskirts of Tulsa, Oklahoma. One story needed some work. I think the seller had been in there a while, and it definitely needed some updates.

So I went in there and did some updates. but pretty simple. Yeah, cool. And so this property showed up and did you take it to Dahlia? How did you even come across it to begin with? Actually, it was the opposite. Through Zillow, I had been looking at properties in that area. And when I contacted Dahlia through Bigger Pockets website,

I actually came to her with a property. And she had told me, you know, that's, I think it had some structural damage, I think, or some problems initially. Yeah, there was something going on with it. I remember, I was like, I can get you a better property in that same price point in a better location. And she did. That sort of supports the point we just made in with the previous guests where we talked about going to your agent and saying, this is what I want, go get it. Is not as beneficial as saying, tell me about your market.

Where are there opportunities? Because, Dave, there's no way you could have known that there was a better neighborhood where you'd get better tenants and better rent and have a better experience for the same price without having that boots on the ground expertise that your agent brought. You're absolutely right. So, Dahlia, from your position, right, you're a real estate agent and people come to you and they say, tell me about this house. It's like always, I get the screenshot. What about this one? Like, that's our favorite as an agent because we don't know what you're asking.

What about it, right? Or they just send you the link. You don't even ask. Yeah, just here. That's funny. That's exactly right. When you get that kind of information, what goes through your head that many clients would never know a realtor's thinking?

Well, I mean, I'm always very transparent with my clients. So when they send me a property, I'm going to tell you. tell them exactly what I think, just like what I told Dave. So if somebody sends me a property, I'm going to quickly pull disclosures, let them know anything that's going on with the property. I'm going to tell you if I think it's worth what they're asking. I'm going to tell you, I think this one's going to go quick. You know, all those things that are going to affect me telling you, like, yes, I think this is a property to pursue or, and that's going to be a question for the buyer as well. If that's, you know, if that.

That's, you know, if there's any repairs, for instance, that come up on the disclosures, that may be something that's a deal breaker for them. And the property that you found him, where did you find that one? That one was in Broken Arrow. I found it on MLS. I think it was maybe a week after he had first reached out to me about that other property. And I told him, you know what? I can find you something better. I think a week later, this one came up. And I told him, hey, I think this could be a good one. It's priced well. It's going to go quick. I knew he was a cash buyer, which is always, you know, if you can use cash, it's always to your advantage.

So I was like, let's get in there and make an offer. All right. And then how much did you make the offer for on this house? So I believe they were asking, do you remember, Dave, exactly how much they were asking? I think it was 150, 155. We came in maybe 6K over. It was 149 and we offered, yeah, 155. I believe. And why did you choose to go over asking on this one? Because I knew it was going to go over.

The tough thing is how much can we go over? It's always like the lottery, I feel like. How much can I get over and get this property? But I don't want to go over too much. I want to spend the least amount of money possible. What you're describing is the dilemma that everyone has in a hot market. In California, this is a common issue, right? So the house is listed for 800,000. It's got 20 different offers. You know, it's going over the 800, but nobody wants to pay 900 if they could have paid 875. Exactly. So you always end up in this odd, well, I want to go. I don't want to lose it, but I don't want to go too much.

And it creates this paralysis that will probably knock out 75% of buyers. And that's where having an agent that's experienced, like sometimes I can just get the listing agent to say, if you write this offer, we'll accept it right now. And at least then the buyer knows, I could choose yes or no. It removes that, throw your name in a hat and hope type of a thing. Was it a situation similar to that for you? So what I always do is I always feel the agent out. And, you know, technically we're not supposed to disclose price, correct?

But I like to do a few little fun tricks. And I like to put a number out there and say, hey, is this number competitive? And a lot of times I'll get a yes or no. Is that a Tulsa thing that you're not supposed to disclose price, what your buyer would pay? It could be an Oklahoma real estate thing. I don't know about the other state laws, but we are not supposed to disclose price of offers, unless the seller tells us that we can, and that just really never happens. Yeah.

I always just go with the blink twice, you know, if this is a competitive offer, that would be accepted. Yeah, that's a, I mean, yeah, it could get tricky when you're going that route. And every state has their own law, so I can't speak to all of it. But I know in general, agents can have a discussion about would this work with without saying my buyer would pay this. That's the way I always try to frame it. I usually say, hey, my client's going to listen to whatever I tell them. So let's see if you and I can make this thing work and then we'll go back to our clients

and we'll propose what we came up with. That alone, if you get an agent that will do that, it puts you in the top 1, 2% of chances of getting that house. It's because most agents should email off an offer and say, I hope we get it. Literally, like you said, the lottery, just pick numbers. So it sounds like your experience recognized. You know, I think six grand over asking would make it so that the seller would jump on our offer without having to pay 30 grand over asking.

And that was just a result of you knowing the market, right? Yes. And Dave, how did you feel when that first got brought up? Hey, I think we should go six grand over when most investors are asking the question of, well, how much under can I get it for? You know, at that point, I had a lot of confidence in Dalia. She had been really transparent with me and how the market in that area is performing. And she had told me, the crazy thing is she told me this is what I think we should offer.

and this is what I think they'll come back at, and she was spot on. So I think I had to answer your question, I had a lot of confidence with Dalia before. She made the offer. And two, I was hungry enough where I didn't want to lose a deal over $5,000 or $6,000. I commend you, man. And I'm not here as an agent telling everyone just pay a million dollars for every house, okay? But let me just bring up the other side of this. In 2015, 2016, I saw a lot of people walk away from $500,000.

thousand dollars homes because they needed to pay five ten and they all brag they didn't want to overpay and now these houses are worth 800 900,000 dollars. We see this a lot when you're in real estate for the long term that you can step over dollars to pinch pennies and that's all. I'm just asking people to have a mature view, not getting sucked into the details and the ego of feeling like you won because sometimes paying less than asking price is a viable option like with our last guess. Sometimes you win paying over. It's what the property is worth and what it produces, not what it's listed for. So, Dahlia, you then had to go in and negotiate this. In addition to having to pay a little bit over asking, was there anything else that you recognized when you felt out the agent that

made you think this was a good opportunity? I just knew that price point and that location was very hard to come by. And that was earlier this year. And now at this time of year, it's really non-existent. So I'm sure he's already gained some equity on that property. But as far as being able to secure the deal, I think we did as is. And I think we did quick close because I know those are always the things that these type of sellers are looking for. Yeah. Just really quick, out of curiosity, Dave, you brought a property to Dahlia. Dahlia is like, I'm going to find you a better deal.

Obviously for you, I'm sure you were ready to take action. You probably were a little impatient because you're like, dang it, it's going to take so long to get it. So how long did it actually take to get to this new property under contract? You know, I looked at that number this morning and we were under under a week. Oh, nice. Okay. Wow. Super fast. Okay. How did you fund it? Pay cash for that property. Okay. And what did you end up doing with it? I've got a long-term rental renter in there now. Actually, before I got a renter in there, we did some rehab work about roughly about $17,000 worth of rehab work. Okay, so was it a total

Burr or was it just a remodel that you paid for out of pocket? A remodel I paid for out of pocket. Okay. What was the $17,000 of repair, get you a lot? What did you actually do with that budget? Living in California and seen prices for materials in Oklahoma and labor in Oklahoma, I felt like I didn't pay a lot at all. I know that feeling.

Every time I travel and I get to get gas and it's like in the threes. You're like, it's like free. Yeah, it's a crazy feeling. So we did new, we tore out all the flooring, put in new flooring, new appliances, new windows, paint, water heater, did some work in the garage. So not a full-on remodel, but definitely sprucing it up and getting it up market ready, basically. Exactly. And what was the outcome with it? Once you got it all ready to go, you rent it out long-term basis, give it some numbers.

The crazy thing was, so I ended up using a property management company that Dahlia had referred to me. And so we went in on a Friday, I think, and listed it on, you know, on the MLS for rent. I heard back from the property manager on Monday that we had 75 interested parties and 25 physical applications in her hand. So we had a buyer, we had a renter in there by within like 10 days or so. less than that, actually. That's crazy, man. That's a lot. So, Dave, it sounds like having cash actually put you in the driver's seat for this deal. It gave you a big advantage. Do you mind sharing where that cash came from and what gave you that advantage? About seven or eight years ago, my wife and I decided to purchase some land in northern Idaho. We purchased 44 acres in a spot that

we had felt would, you know, we wanted to retire, build a home on that property. and the uh fortunately the the price of real estate and especially land in that area just has skyrocketed so i got contacted by a realtor uh early last year um wanting that land and he uh he didn't give up until he got it so we ended up selling that land and uh and then just about that time i was uh reading uh robert kiosaki again and and i the you know the liability versus asset and I thought, wow, you know, we need more assets and real estate's the perfect asset. So would you say that the choice to delay the gratification of having a dream house or a dream car or a dream yacht or all the things that you tend to see on social media actually led to

you being a position where you could invest that money, make it grow and then maybe someday this property could buy some of those things for you? Yeah, exactly. That's exactly what happened. Yeah, that is a principle that we believe here at Bigger Pockets. And I'd love to see that highlighted. It's that delayed gratification. If you set yourself upright, it's not this or that. You could have this and that. It's all about timing. So, Dahlia, any takeaways from this deal that you'd like to share with our audience that

maybe they should consider when they're reaching out to talk to a new agent? So I feel like the biggest things are first making sure that you're ready financially. So if that's going to be you using financing, get prequalified right away. If it's cash, we need proof of funds, all those things. are important. I can't submit offers without it. And, you know, sometimes these deals come up and there's a sense of urgency and you can potentially miss out if you're not ready and don't have your, you know, your ducks lined up, I guess you could say. That's one of the biggest things. Just knowing the market that you want to be in, researching it a little bit, and then really finding a great

agent that has the resources that are going to be imperative for investing out of state. Boots on the ground is the most important thing, really, when you're investing out of state. Now, it can be very frustrating to find those people, to find the agent, to find a contractor, to find the property manager into a smaller degree to find your loan officer or your lending source. But once you find them, you can scale a lot faster. Dave, I understand you bought more than one property with Dahlia. Is that correct? That's correct. Ended up buying a second property about two and a half months after purchasing that first property.

Cool. That's fast. It's not always a linear process. It's kind of like you walk around trying to find the well and you keep digging and digging and digging and there's no water. But then when you finally find it, you have all this water and your wealth grows exponentially. Definitely. And I think, you know, having Dalia, you know, in your book, you mentioned a lot about setting up your network and it's hard to do when you're investing out of state. But luckily, I, you know, I found Dalia and she had a network already in place and she brought me into that network.

And that's made all the difference. And that's why that second property went so smooth as well. Awesome. Well, Dave, if people want to reach out and talk to you more, where can they find you? I'll give you my company website. It's a DRD insurance agency. I've got my email on there. Yeah, if anyone has any questions or anything, please reach out to me.

All right. And Dahlia, how about you? You can always find me on bigger pockets on the agent finder. You can also find me on Facebook at ASN Realty Group. You can also email me at ASN Realty Group at gmail.com. If people want to find you on there, how do they find you on the agent finder? Yeah, just go to the Tulsa Market and look for Dahlia Caliph, and I'm going to pop up on there. Before you go, where can people find out more about you, Keith?

I mean, I'm on Facebook, you know, just Keith L-L-L-L-E-R-R-R-T or on Instagram, K-L-L-L-E-R-E-R-R-T. But that's basically it. All right, go give Keith a follow. And Peter, how about you? Oh, you can find me right on the bigger pocket agent finder. And if you have any troubles with that, I'm right at Peter Stewart Realty.com. And Stewart is S-E-W-A-R-T. Great.

So the agent finder, if they type in Peter Stewart, that we'll let it'll find you? Peter Stewart, Indianapolis, I should pop right up. Perfect. That's how I found him. Okay, awesome. Rob, how about you? Where can people find you? You can find me over on YouTube topical.

I just released a video called how I self-manage my properties without living in the same city. And I talk about not the core four, David, but the Airbnb Avengers, which is like my version of the core four for short term rental. So go check that out. It's the only thing I'm going to plug. What about you? If people want to see your chiseled new body, which platform is the best to find it? Instagram, Instagram where I do. silly dances and silly reels. That's where they'll get the body shot, not just the face.

I do want to clarify, I don't want, you know, I don't want people to get to be pecan and be like, expecting me to be ripped. I'm just slimming down, but we still have some padding that we're working on. That might be why I'm doing this subconsciously. I'm like, look, if I can create such a high expectation for Rob, they'll be disappointed. And then when they see me when they're not disappointed, that by proxy looks like I kind of equals it out. I overwhelmed their expectations and exceeded them. This is psychological warfare, folks. You're learning more than just real estate. here at Bigger Pocket. Lovable and huggable.

That's all that really matters for me. That's what I'm going for. There you go. You can find me at David Green 24 on your favorite social media. Instagram is where I'm most active or David Green24.com to see all that I have going on and how I can help people. Well, thanks you too. Love hearing about these deals.

Love hearing that people are still finding ways to buy real estate. It makes sense even in an impossible market. So we hope to see you here again. I hope to keep buying property, Dave. And Dahlia, keep crushing it. And Dahlia, also, if you haven't checked on my real estate agent books, I'd love if you would and then let me know what you think. Oh, I have checked out your books. I love all the Bigger Pockets books. Oh, all of them. We got a real true fan here. Well, that's great to hear. Thanks for that, Dahlia.

All right, I'll let you guys get out of here. This is David Green for Rob, lovable and hugable, Abasolo. Signing up. 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. episodes come out Monday, Wednesday, and Friday. On the host, an executive producer of the show, Dave Meyer, the show is produced by Ian K, copywriting is by Calico content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.com. The content of this podcast is for informational purposes only.

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