BiggerPockets Real Estate Podcast - 972: 3 Beginner Steps to Find Undervalued Real Estate in ANY Market

Episode Date: June 17, 2024

What sets apart the wealthy from the wannabes when investing? Knowing how to find real estate deals! You’ll be ahead of ninety-nine percent of investors if you know how to find off-market real estate deals and discounted on-market properties. Today, we’re giving you everything you need to know to find real estate deals in your market, no matter your budget, and even if you have zero real estate investing experience. Henry Washington, co-host of On the Market and author of Real Estate Deal Maker, is on to condense his seven years of investing into simple steps YOU can follow to find undervalued real estate. You’ll learn what a great real estate deal is, how to spot one even if you’ve never invested, why buying right is what REALLY makes you rich, three steps to start finding deals today, and the beginner mistake that’ll stop the deals from coming your way. Plus, Henry even shares the hidden on-market deals ANYONE can find (if they’re up to it). If you follow these steps, you’ll have a steady stream of real estate deals flowing your way. But if you don’t, you could waste years of building wealth waiting for the right deal to fall into your lap. So, are you going to take action or make excuses?  In This Episode We Cover How anyone in any real estate market can find undervalued real estate deals The three steps to finding discounted deals and why most people give up too soon Hidden on-market deals that anyone with a real estate agent can find  The biggest beginner mistake you can’t afford to make (it’ll could cost you…) Why you DON’T need a ton of time and money to start finding off-market real estate And So Much More! (00:00) Intro (02:08) What Makes a Great Deal? (06:34) How You Really Make Money (08:10) 3 Steps to Find Deals  (16:21) Biggest Beginner Mistake  (20:37) Learning From the Best  (23:29) Hidden On-Market Deals (29:09) Most People Won’t Do This  (33:02) Beginner Steps to Take (35:26) Grab Henry’s Book Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/real-estate-972 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

Arguably, the most important ingredient to successful real estate investing is finding a property that's below market value. And that's truer now than ever, but also maybe even harder to do these days with high home prices and low supply. So in today's show, we're going to talk with one of BP's own about how he's mastered the art of finding properties that make great deals. Welcome to the Bigger Pockets Real Estate Show. I'm Dave Meyer, and today I am honored to interview as a guest, my good friend, an often host of this show, Henry Washington. Henry, thanks for talking to us today about this. Hey, Dave. I'm so glad to be here, and this is like, I love talking about this. This is, I don't know that I want to talk about anything else ever, so this is great. How did you just, like, all of a sudden

become universally respected as, like, the deal-finding guy? Did you set out to be sort of corner this market? No, it's funny. Like, most people who are considered to be like great deal finders are like, you know, people who like want a wholesale deals and I don't do any wholesaling really like. And I'm excited to learn from you today on this episode. So tell everyone listening what we're going to discuss. Yeah, exactly. Today I'm going to share a lot about the fundamentals of dealmaking. So I want to talk to people about how to make smart deals that can help you hedge against the risks that people associate with being a real estate investor. And this is literally something that any investor can do and get good at. It's not just something for the professional investors. I'd argue that everybody who's

investing needs to be good at this on some level. So even if you're still saving up or on the sidelines phase and you're not quite sure about your ability to identify and make good deals, this is one of the best things that you can do in order to move quickly when you are ready to invest. Awesome. Well, I am super excited to talk about this. Deal finding is not my strength as an investor, and I'm eager to learn from you. So let's jump into it. So, Henry, we're going to talk a lot about finding deals over the course of this conversation and how to land the best possible deal you can find. But I think it makes sense for us to just start by just what, Henry, do you define as a strong deal in the first place? Yeah, I think when you think about the word deal, essentially, when you're talking about buying. anything, when somebody says they got a deal on something, what they're saying is, I bought something for less than what that thing is worth, right? And so a deal in the sense of real estate investment is when you're able to buy a property essentially at a discount. Percentage of discount depends on

your market. So, and it depends on the location. And so real estate is very local. And so what I may consider a deal in my market, meaning, hey, I bought a property at a 30% discount. That could be a great deal in my market. It may not be such a great deal in a market that you're participating in. So it's about understanding what are retail values in your market? And then what percentage of discount do you need to get in order for that property to produce the income goals that you have for your business? I'm sure this concept makes sense to most people, because whether you're buying real estate or anything you want to get as good a deal or discount as possible. So, Henry, why is it so important, particularly in real estate, to buy below market value? Yeah, there's a few reasons why it's

very important in real estate. But I would say probably the two most important reasons is one, it's your best hedge against risk in your real estate business. If you're new, if you're seasoned, it doesn't matter if you buy something at a deep enough discount or you buy something where you have enough equity spread, it protects you against a lot of the factors that can go wrong in real estate, especially when you're new. So when you're new, you're maybe not the best at estimating what a rehab cost and how long it takes, right? But if you buy it a deep enough discount and you screw up on your renovation, you hopefully still have enough cushion of equity in there to help you stay under the retail value when you finish that renovation. If you're buying a property at a discount

and let's say maybe you can't monetize that property in the way that you were looking for, because a lot of people say, I want to buy a house to flip. And then they buy a house to flip. And then they realize, oh, man, I overpaid for it. And then you can't sell it and make the profit that you want. But if you bought it at a deep enough discount, even if you sell it for less than you've planned, you're still at a place where you're going to make some money. So it hedges against a lot of the risk factors that people see in real estate and are scared of. Yeah, I think that's such an important thing for everyone to pay attention to because if you were going out and trying to get, I don't know, a big screen TV. Yeah, of course, like you want a 5% discount. But if you don't get the 5% discount, the worst

thing that happens is to you is you're like, oh, man, someone else got a better deal than me. But in real estate, there's risk. And if you buy it above asking price or at asking price, you're exposing yourself to more risk. And as Henry said, buying deep, buying at that discount price can be one of the best, if not maybe the single best way to mitigate risk in this industry. One of the big fears of investors right now, especially new investors, is they're like, well, what if I buy something and then this market crash that people are, you know, thinking may happen, happens, right? So if you put some actual numbers to that, so let's say as an investor, I understand that I need to buy a property at a minimum.

of a 30% discount. And if you think about a real estate market crash, what would you say, Dave, what percentage drop in home values would you consider a market crash? At least 10%. Right. So if the market crashes and it drops 10%, that's a significant drop. But if you bought at a 30% discount, you've still got a 20% buffer there where you're under the value of that home.

home that you can potentially sell and get out of it or monetize it in some other way. So it is it is literally your best hedge. Yeah, that's a great way to put it and really relevant for today's environment where you know, most most properties, most markets right now properties are going up, but there is still some risk in the market. This is a great way to mitigate it. Now, Henry, I've heard you say this a few times and I'm curious how you would explain its meaning. You've said that you make money when you buy, but not when you sell. What does that mean to you? Yeah, I mean, I think it kind of plays into the conversation we were having about risk.

If I buy something at a deep enough discount, I've pretty much, I hate to use the term guaranteed, but you've pretty much set yourself up for the best possible outcome to be able to monetize that property. One of the reasons or goals for buying at a discount is so that you have options at your disposal when it comes to dispositioning the property. And when you dispositioning the property, that's how you're monetizing your property, right? So just to quickly define what dispositioning or Dispo means, it's just another word for selling off a property that you own. If you buy something at a discount and the plan that you have doesn't work, I can now shift plans. And so that's why I tell people when you're when you're wanting to get into real estate investing,

it doesn't matter which exit strategy that you want to do. If you want to flip or wholesale, if you want to wholesale, if you want to wholesale. if you want an Airbnb or midterm rental, that can be kind of a daunting task to go figure out which one of those strategies is the best strategy for you. When I feel like the best strategy is really to learn what a good deal looks like in the market you want to buy in and then go figure out one of the ways

that you feel the most comfortable with in finding that deal and then do that until you get that deal on the line because then you'll have options for monetizing it. Because the one thing you need for any of those exit strategies to work is a deal where the numbers make sense. All right, so now we all know what a good deal looks like, but how do you actually find one? Is Henry just charmed with good deal energy,

or can anyone do this? We'll break it down right after the break. Okay, we're going to shift gears for a minute to cover something important, especially for new landlords. The shows often talk about getting stuck doing everything ourselves and the cost of sweat equity.

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Fundrise Flagship fund before investing. This and other information can be found in the fund's prospectus at fundrise.com slash flagship. This is a paid advertisement. Welcome back, everyone. we're talking about how to find or make amazing deals. Let's jump back in. Well, I love the idea of optionality and of buying at a discount.

If only it were so easy. So, you know, I'm sitting here thinking, like, yeah, sign me up for all of that. Tell us, like, is this realistic for the average investor to achieve? Like, can anyone just find deals under market value? Absolutely, anyone can find deals under market value. I think the key is to understand. A, what you're looking for and B, how you're going to go look for it. And then the third thing is to trust that process, right?

So if you think about it from that three-step process, you need to understand, A, what you're looking for. And so when you are looking for a real estate deal, what you're really saying is I need to find a property that has equity in it, right? Meaning the balance of the loan has to be less than what that property is worth. And substantially, you're talking at least a 40% equity split here. And the other thing you're looking for is a person who owns that property with equity in it that has a reason to need to sell it at a discount. Right.

Because if someone doesn't need to sell their property at a discount, why would they? And so if someone doesn't have equity and they don't need to sell at a discount, right? And so if someone doesn't have equity and they don't need to sell at a discount, then they don't need an investor to come by their property. They need a real estate agent to help them go get top dollar. Understand what you're looking for. You're looking for equity and motivation, right? And if you have equity and motivation, then you have the formula for being able to potentially get a deal. And so I tell people what you're really looking for is not houses.

What you're really looking for is situations. You need to find a way to find the people who need to sell out a discount. and then figure out a way to either get on the phone with them or have them get on the phone with you. That's essentially what looking for deals is. So once you know what you're looking for, then you have to know how you're going to go look for it. And how you're going to go look for it, I tell people, so if you're going to pick a strategy for finding a deal, there's a ton of them. Right? There's direct mail and cold calls and door knocking and networking and using agents on market, using agents to make offers on deals on the market, using agents to make offers on the market, using agents to,

to help send you pocket listings, right? There's a ton of different ways which you can utilize to find deals. The coolest part about this is they all work. All of these strategies work. And so you need to be able to pick the one that is going to make the most sense for you. You need to pick the strategy that fits your personality and your budget. And when I say your budget, people automatically think money, right? They think, oh, this is going to cost me money.

But the truth about finding deals is they do cost you something. It either costs you time or it costs you money. But you don't get a deal without spending one of those two currencies. And so you need to understand how much of these currencies do I have to put into finding a deal and then match that with the strategy that fits your personality. You got to know who you are. Like door knocking is a phenomenal way to find a deal. Henry ain't going to do it. I'm not knocking on nobody's door, right? Yeah, I don't even like knocking on the doors of people I already know, so there's just no way that I'm going to be doing that. Like, it's an effective strategy, but man, I don't want to do it. It's not who I am. I don't like it. Like, it's not a thing for me. And so door knocking as a strategy clearly doesn't fit my personality. I shouldn't pick it, even though I may have the time or money to fund that strategy, right? So it's about researching the different strategies and then picking the one where you know you have the budget of the resource that

it takes and you know that you are going to actually stick with it because finding deals no matter how you find them is an uncomfortable process. Let's dig into this a little bit. Could we use me as an example? Because you know me pretty well and you know that I, whatever the opposite end of that door knocking strategy is, that's me. I'm on the other end. I live in Europe and I, I, work a full-time job. So like, what's a good approach for someone like me? Right. So if you're Dave Meyer, right? So Dave Meyer spends a lot of time on his day job, right? And then he spends a lot of time enjoying the traveling that he's doing. So in terms of time to allocate to a strategy that's going to produce the results that you're looking for, it's probably not your best

currency. But because you're potentially, you know, not putting your business in the streets, but I would assume that you're what people would consider a high income earner, right? And you may not have a lot of time. So if I'm Dave Meyer, I'm looking into what are the strategies that I can use that are going to reach the most amount of people with the least amount of time spent, right? Because you have the budget to be able to spend money to get marketing for deals done without having to spend your time. Right. So that's, that's an example of what you would do. So I would say Dave needs to look at something like hiring a third party cold calling service is going to call people for you, weed out the bad leads from the good leads, and just send you the good leads. Or using a direct mail with somebody

to answer the phone for you and then field those calls. And they set you up so that you're only talking to the people who we have established are ready to get an offer for their home. Okay. I like it. That made it sound a lot easier than I thought that it would have been. How about someone who's somewhere in the middle? Because it sounds like You're also not at the far end of the spectrum. You're not door knocking. So what are some of your favorite approaches for your own portfolio? Yeah, that's a phenomenal question.

I like to mix what I call high volume and low volume strategy. So I may take something like a third party cold calling service because, again, I don't want to make cold calls. It's not like I don't got it. It ain't in my DNA, right? So I have a third party cold calling service who will call people who, and when you're calling somebody, that means it's a high touch. you're getting in touch with that person or you're trying to get that person on the phone very quickly, and I'll mix that with direct mail, which is a lot slower.

It takes time for mail to actually get out there and get in front of somebody and mail campaigns can be longer. And so I'll mix a mail with a cold call with the same list of people. And because I'm increasing the volume of touches or getting a hold of people quickly, then that can sometimes help increase the speed with which I'll get it to you. Got it. Okay. That makes a lot of sense. So that's a really good combination.

I think do you recommend for people, I guess, who are just getting started focusing on one or like you sort of taking a mixture of approaches? No, I think focusing on one is the best way to go because you're going to have to research these things to understand what, how much of the budget does it take for this strategy to produce results, right? I said step one was knowing what you're looking for. Step two was picking the strategy that you can afford to fund. And step three is trusting the process, right?

And so in order for you to trust the process, that's the coolest thing about real estate investing, by the way, is that we don't have to guess if any of this stuff works. It has been proven over and over, decade after decade, investor after investor has found a way to be successful at mail and cold calls and door knocking and agent outreach and making on market offers. You can find somebody right now in any market that. I don't swear by any one of these strategies, right? So we know it works. We have data, like years and years of data to prove that it works. So all we have to do is do enough research to understand, okay, how much does it cost me to do this strategy? How much does it cost me either in time or money? And then let me look at how much time or money that I have to allocate to it. And then let me look at my personality and see, will I stick to this strategy? And where those two things intersect,

pick that one strategy and just implement it over and over and over. And, over again until it produces the results that you know it will produce. We've got the data. Well, again, you're making it sound easy, but I know that there are a lot of places that people can get hung up. So what are some of the common pitfalls or hurdles that stop people from implementing this approach that you're suggesting? I think the main places where people fail is they don't do that research that we're talking about. They don't go learn okay, I want to do mail. Well, how much mail do I actually need to send in my market for it to work? Or, hey, I want to make on market offers. I don't want to spend money. I want to make on market offers.

But they don't go look into like how much time and effort does it really take for me to implement that strategy before I actually get a deal. They just go or they say, I'll try this. Right. And then they somebody says, well, I'll try and send mail. And then they send like three or four hundred postcards. And they only do it. it for a month and a half and then it doesn't work. And they go, well, that strategy doesn't work. Or they'll say, well, I'm going to make on market offers. And so they go and they look at the properties that are available on the market and they weed it down to maybe one or two and then they make like two offers. And they don't get their offer accepted. And they go, well, this strategy doesn't work. Well, both of those strategies do work. But you did not send nearly enough mail for nearly

long enough for it to produce a result. You did not. And if you're making the offers on market, you did not analyze nearly enough properties and make nearly enough offers for that strategy to actually produce results. So it's just having the Cajonis to continue to spend the money or continue to pour the time into a strategy until it actually gets you the result that you're looking for. That's hard. That's a difficult thing. Yeah, it is. And my statistical brain is just thinking that this is all about probability, right? It's just each of these strategies might not hit in the first 10 times. It might not hit in the first 100 times, but the key is not that the key is to know that ahead of time, right, so that you can say to yourself, hey, I haven't gotten

in the first 20. That's sort of what's to be expected. And I need to stick with my game plan long enough to keep going. It's kind of like an athlete, right? Like someone who shoots three in the NBA. Like you might miss three times in a row, but you keep doing the thing that you know is going to work in the long run. Exactly. Exactly. Can I use you as an example again? Please do. And this is totally unscripted, guys. He had no idea that's going to ask this. If it's going to help me find deals. So you recently bought a duplex and you bought it on the market. Did you not? I did. Yeah. Okay. And it sounds like when you tell the story like, yeah, I just went online and I found a duplex and I found a duplex and I analyzed it and I made an offer and I got it. And yeah, deal, right? But how much time do you think that actually took you from when you decided you wanted to look on the market for a deal to buy versus how many deals did you actually look at and analyze? How many deals did you make offers on before you actually landed this deal? Well, I could actually tell you and I'm sure my real estate agent would tell you how.

how many properties I made him go to it like that. Probably between the last two deals, there was three full Excel workbooks that probably had 20 deals in each of them, so 60 of them maybe. So I don't know exactly what that means in time, but it's definitely an effort every single day. Some days it's five minutes. Some days it's an hour and a half. But probably 50 hours, at least. Yeah, exactly. Exactly. That strategy did land you a deal. Hopefully that's producing you the cash flow that you're looking for, but it cost you something. It cost you time. It cost you relationships. You had to build the relationship with this agent who was in another state putting in these offers for you, writing offers is work. There's time. So you really do have to know and learn on the

front side, like, what's the output I'm going to have to put out? And then have a real conversation with yourself about, am I going to put out this output of time and or money sustainably long enough to get the result that I'm looking for. Yeah, that makes a lot of sense. Well, Henry, I'm, you know, I'm very impressed by you because I've heard about all these strategies for 15 years of investing now. And I've just been too scared or lazy. I don't know what the right word is to really like figure it out.

How did you just sort of jump right into this? Because I think you've been investing for what, like five or six years? Since 2017. It's 2017. So seven years now. So, but you're already so good at this. Like, how did that come about? Yeah, well, it initially came about out of necessity.

Like, I really was in a tough financial spot and needed to figure out a way to, uh, uh, change my financial situation. Uh, but my first deal really taught me a ton about real estate investing in general. And to make an extremely long story short, I found a deal through word of mouth. I happened to walk into a small local bank and that small local. bank banker happened to love the deal I brought them and really kind of walked me through how the financing worked. And I ended up building a relationship with this banker that was going to allow me to finance my deals essentially at 100%. So none of my own money into the deals. And so that

put me in a position where I was like, okay, I now have a way to buy real estate that I don't have to spend any money. And so the only thing stopping me from being able to continue to buy more real estate is my ability to go find deals that I can buy. And so because I was so hyped to be able to leverage this this 100% financing relationship and start to grow my wealth even more, I literally just started to study who are the people in real estate investing who are really good at finding deals. And that research led me to wholesalers. Wholesalers are the people who make a business of finding deals. Now, I never wanted to wholesale. I'm not a wholesaler. I've done hundreds of deals. and maybe only wholesale like five in my entire career, right?

And so it's not like I wanted to go learn how to be a wholesaler. I wanted to go learn how wholesalers were really good at finding deals and then implement those strategies in my business so I could get the deals and then I could monetize them my own way. And so I just studied everything about how to go find good deals. If I found whoever was good at it, I learned what they were doing. I learned what they weren't doing. And then I would implement what I thought would make the most sense for me.

That's a very cool story of just using necessity and just sort of figuring it out. Like you didn't have this grand plan to be the off-market deal master. It just happened because you were trying to figure out a way to make a deal work. And then a second deal work. And then it just snowballs into getting really good at something that's obviously been very successful for you over the last seven years. Absolutely, man. They said necessity is the best teacher. That is 100%.

Okay. we have to take one more quick break, but when we come back, we'll get back into on-market deals and the exact steps Henry uses to find great deals right on the MLS. We'll be right back. The rise of the tech-savvy investors here. You don't need a huge team or tons of overhead to manage rental properties, just the right tools. So I want to tell you about how I use rent-ready to get ahead. For landlords who treat their time like capital and recognize the cost of sweat equity, this tool gives you everything you need to scale. Rent collection, tenant screening, maintenance, accounting so that you're organized come tax season and you can run numbers in preparation

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Ready to simplify your workflow, book your free demo at bill.com slash bigger pockets and get a $100 Amazon gift card. That's bill.com slash bigger pockets. Welcome back to the Bigger Pockets real estate podcast. Let's jump back into it. Let's talk a little bit more about on market deals. We just sort of touched on that.

But I'm curious, like, do you ever do on market deals? Do you have any tips, at least, for people who do want to at least search online, like, attempt to find on market deals? Yeah, absolutely. Absolutely. On market deals is a great deal finding strategy. I think, again, where people fail is they don't actually do it as a strategy. They just make a few offers on on market deals here or there on a few properties that catch their eye. And so the same things apply into what you're looking for.

You're still looking for a person who has equity and motivation, right? You're just now looking on the retail market for those people. And so there's several things you can do. The first thing you want to do is define your buybox, right? Because you're going to be looking online, there's all kinds of properties. There's big houses and small houses and multi-families and singles and land, right? So what's your buy box, right? What kind of property are you looking for?

So if you know, I want, you know, no more than three bed, two bath, single family homes, right? In these neighborhoods, great. Your buy box down. And then work with an agent, if you're not a licensed agent, work with a licensed agent and give them that buy box and say, send me everything that's on the market in this buy box that may have motivation. Right. And so how do they determine if that person may have motivation to sell at a discount? One of the best indicators is days on market, right? What you're assuming there is the longer properties on the market,

then maybe the more motivated that seller is to sell that property for less than what it's listed for. Right. So you can use anything. So learn what the average days on market is in your market and then ask them to send you anything that's been listed longer than the average days on market that fits your buy bucks. And then you can start making offers on those properties. But this is where people break down with this strategy is they do. They get that list, everything longer, on the market longer than let's call it 60 days.

And it gets sent to their inbox. And then what they do is they just start going through and looking for ones that they think might catch their eye. And they may be fine like three or four. And then of those three or four, they'll look at what the person is asking for. And then go, man, this person's asking 300, but I know I could probably only pay like 125. So I won't offer on that one. This person's asking 250. I could probably pay like $1.95.

Maybe I'll make an offer on that one because that's not too far off of what they want. And then this person wants $3.50 and I could probably only pay like $200. They won't take my offer. So I won't offer on that one. Right. And so of those multiple deals, they make like two offers and obviously get those offers rejected. Where this strategy is best is when you take that list that gets sent to you and everything average days on market, analyze every single one.

And don't even look at what they're. asking for for the price. That doesn't matter to you. What matters to you is what you're willing or what you're able to pay for it for it to hit your financial goals. So for every single property on that list, you figure out what's the price I could offer and pay for this property for it to work for me and then have your agent offer on every single one of them. Right. That's an uncomfortable thing to do. Your agent may not want to do it. You may not want to do it. Right. But that's the kind of effort that you've got to put in. That's the volume of offers that you need to make for this strategy to actually produce results for you sustainably.

It's kind of the same concept, right? It's just like committing to a strategy and just knowing that probability-wise, you're not going to hit on the first one and you just need to keep going and keep trying. And I just add a couple of things from my own personal experience here because I do, you know, primarily look by on-market deals. What Henry was just saying, that's going to get you more deals, more accepted offers. is it also just gives you a better sense of the market. Like when you get rejected or accepted on a certain amount of things,

like you can start to triangulate which offers on the market are underpriced or which are severely overpriced and you'll get better at just like doing your own comps just by looking at these things repeatedly, offering on them, getting feedback. It also helps you with your bid strategy if you like talk to the selling agent and learn about what was accepted, even if you lose that offer, you know, you can learn a little bit more to be a bit more competitive in your next round. And that just makes you better each and every time you go out and offer on a property. Absolutely. And days on market is just one indicator too for on market offers. You can also look at keywords, right? So you can have your agent search the listing for certain keywords

and then filter those into a list for you, right? So you're looking for keywords that might indicate motivation, meaning things like cash offer or, you know, seller is motivated, or, you know, fixer-upper, right, indicating that the property has some level of distress, right? So you can literally Google motivated selling keywords, make a list, and then have your agent search in the comments or the description of these listings for these keywords

and filter those over to you as well and use that as a way to analyze and make offers. That's actually, I'm definitely going to start doing some of these things because I feel like I giant kind of do them half-heartedly, but you're motivating me to do them more, in a more structured and disciplined way. Because as, like, if I am picking up one theme of what you're saying, it's just like, just stick with it, right? It's just just keep doing what the thing everyone has done successfully is doing.

Absolutely. So, Henry, we've talked about a lot and you've helped me and I'm sure the rest of the audience understand deal finding a lot better than when, you know, I'm in a whole new place now. But what are some actionable steps that listeners should take, like right now after listening to this episode to go find their next deal? Yeah, absolutely. First things first is go and research the many strategies out there that there are for finding deals. And what you're looking for is you're looking for some information on how much

money and or time it truly takes for this strategy to produce a result. Right. And so there's tons of strategies. And most investors already know like what strategies they think they would do because they've heard about them. Right. And they went, well, that sounds like something I could do. So if direct mail has piqued your interest, well, go. have go listen to podcasts, go listen to bigger pockets episodes of people who are doing this at scale and or just Google it. Listen, how much volume does it take for direct mail to produce a result, right? Make yourself a chart of how long it takes typically for your, for your intended strategy to produce a result and how much time or money it takes for your intended strategy to produce a

result, right? And then if you make a chart of these different strategies and you have that information, you now know exactly how much time or money you need to spend. And then you can look at yourself in your inventory. Okay, how much you need to create a budget, right? This is a budget of your time and your money, right? Be real with yourself. How much money do you realistically have to put towards marketing for a deal every month, right? Or how much time do you realistically have to put towards marketing for a deal every month? And now you can marry the two. You can marry your budget to the strategy that fits. And then put that thing. on autopilot and just do it until it works because we know they all work. And I know that that does

take some khanis like we talked about. So something you can do to kind of take the personal out of it. So let's say you're going to use a strategy that does cost you some money. Right. It's harder. If you're new, right, you probably don't have your business set up in a way that's not tied to your personal funds on some level. Right. So what makes it difficult for people is they go, all right, well, I'm going to spend $1,000, and then next month I need to spend another $1,000, even though I didn't get a deal. And if you're spending that $1,000 out of the same account or transferring money out of the account that you're using to feed your family and pay your bills to pay for that marketing,

then it's a hard pill to swallow to go ahead and pay that money again. So take the personal out of it. Maybe you have access to a line of credit on an investment property or a line of credit or a business credit card that you can use to fund your marketing where it doesn't feel so personal, my very first marketing campaign, Dave, I did this. I said, okay, I've got, I had about $5,000 that I knew I could allocate to marketing. And so I said, that'll get me some marketing for about three months, all right? And it'll, and I, and I done enough research to understand, or actually it was about five months because I was going to send a thousand postcards a month for

five months. And I said, okay, now, based on my research, this should yield me a deal. Okay. So how do I spend $5,000 without feeling like I'm going to put my family in a tough position? So my solve at that point was I went and I found an interest free credit card for 24 months. So I had an introductory, you know, 24 month interest free period. And so I took that $5,000 and it divided it by 24. And I said, okay, that's a $208 payment. So if I fail, my punishment is I have to pay an extra $208 a month until this credit card is paid off. I went and I looked at my budget of my life's expenses and I said, can I absorb a $200 a month

payment in the event that I fail? Can I still pay my bills and live my life? And I did my budget and the answer was absolutely yes. I can afford this payment. I said, okay, if you fail, that's your punishment. Two years of paying $200 a month. Okay, but I didn't have any, it was so much easier to continue to spend the $1,000 each month because it wasn't coming out of my personal bank account. right? I didn't have a lot of emotion tied to it. And so my first mail campaign produced two deals. Those two deals netted me over $30,000. I was able to pay the credit card and then be done with it. And now I had money to continue my marketing that wasn't money in my personal bank account. So that's kind of how you can take some practical steps to pick your strategy and then overcome the fear of actually spending the money

or the time of doing it. There are two things I love. There's a lot I like about this. But one thing that I really love about it is, one, just the psychological element to it, that like it's not just figuring out, you know, these strategies, because like you said, they work. Like, we know that, but there is this sort of mental block that a lot of people face, which you've come up with some clever ways that work for you to sort of get around some of those roadblocks that all of us face mentally. But sort of in the almost exact opposite way, what I love so much about this approach is that this is just a math problem. And as an analyst and someone who loves math, like, I always sort of think of deal analysis as a math problem. Like, that's my favorite

part of being a real estate investor. But what you've talked about here is that finding deals is the same kind of thing. It's a very simple math problem where you know if you put X in and you stick to it long enough, you get Y out. And like that to me, and to really any of investor is exactly what you want, something that's relatively predictable. You don't know which exact deal is going to hit, which exact letter you send is going to hit. But that's the whole deal of probability, right? If you do it long enough, it is going to hit. Probability will win out over time. So thank you for sharing this with me, Henry, because I think it has taught me a lot and really just sort of made me think about it a little bit differently. And I'm sure the same goes for a lot of

our audience. If you learned a ton from this episode like I do and you want to learn more about finding deals and also financing deals how to actually get the money to do these deals, you should absolutely please go check out Henry's new book. It's called Real Estate Dealmaker. You can find it at biggerpockets.com slash deals book. And it is full of great tips and strategies like the ones Henry talked with us about here today. Henry, thanks. Thanks. much for sharing this all with us. We appreciate it. And congrats on the new book. Thank you so much, Dave. I really appreciate it. I always enjoy talking to you, and I'm glad I could be of service to people. Thank you all for listening to the Bigger Pockets Real Estate

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