BiggerPockets Real Estate Podcast - How to Buy Your First, Second, or Third Rental Property!

Starting point is 00:00:00 Welcome to the Bigger Pockets podcast. I'm your host, Dave Meyer. Today, we're taking a small detour from your regularly scheduled podcast programming to bring you a webinar I recently recorded about rental property investing. In the webinar, I break down some really tactical step-by-step tips on how to become a rental property investor. Yes, even in today's market. It's great information if you have no deals yet or if you're looking to scale. So I'm very excited to have you all listen to this more tactical and practical guide than what we usually bring you in the podcast. I think you're really going to like it. Hi, everyone, and welcome to the Bigger Pockets webinar. I'm Dave Meyer. You may not know this, but Bigger Pockets, in addition to having a great podcast that you're listening to,

Starting point is 00:00:46 also puts out other types of real estate education. And one of the most popular things that we offer is a weekly webinar. If you haven't checked these out already, you can go to biggerpockets.com and find one. But we're actually going to replay one of our most popular and impactful webinars here on the podcast today. The topic of this webinar is how to get your first,

Starting point is 00:01:12 second, or third deal. So you might be wondering why one, two, or three deals. That seems like somewhat of an arbitrary number, right? Well, it sort of is, but it isn't. The whole purpose of this webinar is to show you that it's not about getting one deal or two deals. It's about getting momentum. And that momentum learning the processes, obtaining the tools, building your network, that's the sort of momentum that's going to allow you not just to get one, two, or three deals,

Starting point is 00:01:41 but to scale to whatever size you are dreaming of. So that's the plan for today's podcast episode. Let's jump right in. So as we just said, today's presentation is about how to buy your first, second, or third. rental property. And I just want to take a minute to thank you all for coming and joining this webinar. I know you could be spending a lot of your time any other way, but taking the time and committing to learning more about real estate and diving deep on topics just like this is really what sets people apart in terms of wanting to be real estate, entrepreneurs and real estate investors,

Starting point is 00:02:14 and those who actually do it. So congratulations on taking this first step. I want to start today's presentation with two questions for you. The first, is why do so many people want to invest in real estate but never actually pull the trigger? The second question is why do so many people buy one deal, but then never scale up beyond that? And today, those are two of the main questions that we're going to address and what you're going to learn over the course of this episode. And make sure to stick around to the end of this presentation because I do have a special offer. For those of you who want help securing your future in real estate investing by using the right tools, building the right team, and getting

Starting point is 00:02:56 the right education. If you want to go pro, make sure to use the code first pod 24 F-I-R-S-T, P-O-D-2-4. That's going to get you 20% off pro plus all the other benefits that were given away on today's episode for listening here on the podcast. But more on that later. First, let me introduce myself. My name is Dave Meyer. If you've never heard me on this podcast before, I've been a real estate investor for 14 years now, and I do work at Bigger Pockets full time as the vice president of market intelligence, which means I get to do all sorts of cool stuff like studying the housing market. I also host the On the Market podcast. I've written two books, real estate by the numbers, and start with strategy. And most importantly, just like you, I was once a newbie to real estate.

Starting point is 00:03:43 So I understand where you all are coming from. This is not something that was so long ago for me that I can't relate to you. You know, I struggled a lot in the beginning of my investing career, but I've learned how to take some of the risk, how to take some of the hassle out of real estate investing over 14 years, and I'm excited to share that all with you. And I am pleased to say, before we jump into that, that because I figured out the right processes and the right tools and really stuck with it for a long time, I have accomplished my goals.

Starting point is 00:04:13 I live in Europe right now with my wife. We get to travel all the time. I am financially free. I get to spend my time as I want. But remember, this didn't happen overnight. I started from scratch just like everyone else. And frankly, I didn't have a resource like bigger pockets. It did exist, but I just didn't know about it for the first six years of investing.

Starting point is 00:04:33 I was just fumbling around trying to figure it out. And I did okay. But obviously, there was a lot of wasted effort that I didn't need to contribute to my portfolio if I had just had bigger pockets. So with the introduction out of the way, let's talk about today's agenda. First thing first, we're going to talk about how you can secure your financial future with a forward-thinking approach called the stack method. Next up, we're going to reveal the three roadblocks that investors face. These are common to new investors, but also existing investors.

Starting point is 00:05:04 And we're going to talk about them because acknowledging the roadblocks allows you to figure out ways to overcome them and start to build that momentum. And third, I'm going to give you a live demonstration of tools and resources. I will explain them to you. obviously this is an audio format, so I will explain the tools to you. But these are tools that I use personally to find properties, to analyze deals. And I really think that they can help you out. If you're listening to this podcast, you're probably thinking and already know that real estate investing can really improve your life.

Starting point is 00:05:35 Maybe you're thinking about the steady cash flow that rolls in month after month, or the tax advantages that allow you to keep your hard-earned money, or the equity that you can build your future around. All of those things are great. Cash flow is amazing, so tax advantages. All of it's great. But most people I know get into real estate, not for tax benefits or equity per se. They want those financial gains in order to obtain something else.

Starting point is 00:06:01 Like maybe it's generational wealth and to sort of change your family tree. Or maybe you just want the security of knowing that you have additional income streams on top of your job. Or maybe you're like me and you're pursuing financial independence, which to me means you get to what you want, with whom you want, whenever you want. Whatever those goals are, whatever you are doing this for, why you're listening to this, why you invest in real estate, know that it is possible through real estate investing. And it doesn't have to be this sort of far off goal. It's probably going to take time. But the way that you pursue these goals in real estate is just

Starting point is 00:06:36 one at a time. You just look at the next deal and not get too worried about all the things you have to do after that next deal. And if over the course of your investing career, you sort of lose focus or you're struggling for motivation, think about what it would feel like to be financially free. Like, what would you do with that freedom? How would you spend your time? What sort of things that you dream about would it unlock? Because although, like I said, cash flow, tax advantages, these are great. My guess is that if you're like me, the motivation actually comes from something different. Like for me, it's always been a lot about traveling or spending more time with my friends and family. So when I get stuck in my investing career, those are the

Starting point is 00:07:16 the things I think about, not about my cash flow or anything like that. So keep that in mind as you build your portfolio. I think it's going to help you over time. Now, I know that you may have some reservations about getting started on your journey. Like for most people, a lot of people think that they don't have enough money. But the truth is that you can take actionable steps right now to build your savings and connect with the right people for funding. We'll talk about that a little bit later. And then another common thing I hear is that you're afraid of losing everything or losing money on a particular deal. But the truth is that actually choosing the right deals is really just a matter of following this sort of simple analysis framework and repeatedly running the numbers, getting good

Starting point is 00:07:56 at that, and honestly looking at enough deals to find a good one. We'll talk a lot about that today. Or maybe you already have a couple properties, but you're just feeling stuck. You don't know what your next move should be. And maybe like your goal of financial independence feels really far away. But in reality, if you can build momentive and make every deal a little bit better and just get a little bit better yourself on every deal, you can absolutely reach that goal. And just remember, guys, as I share what I've learned here, I understand how you feel because I have the same reservations. Like no one starts in real estate investing feeling super confident and like they know everything. Everyone starts in the same place. And what you're doing to educate yourself is really the most important step.

Starting point is 00:08:39 For me, what ultimately got me from sort of fumbling around to scaling to where I am today is three things. First, I figured out the right tools. These are tools that other investors were already using. I just didn't even know they existed. The second one is getting the right education and not just sort of poking around the internet, but following a system and going to reliable sources for knowledge. And lastly, I learned that real estate is really a relationship business and I found the right people. And I did that mostly in part to bigger pockets.

Starting point is 00:09:09 as I told you guys a little bit about earlier, I didn't know Bigger Pockets existed. But if you want to find great tools, education, and people, most of the time, just go to Bigger Pockets. We probably have a tool, a resource for you. So definitely don't do what I did, which is try and go it alone. Use Bigger Pockets. There are so many amazing resources there for you.

Starting point is 00:09:29 Don't just take it for me. I mean, there are so many other people who have had similar experiences, just like finding Bigger Pockets and boom starting to scale. I found this guy, Jason Vilelli, in the forums recently. He was just one of, honestly, dozens of these types of stories that were recently posted, but Jason was able to replace his six-figure income with passive real estate income in just three and a half years. And Jason's not special. I don't know Jason, but I don't think he's special because I know I'm not special. I think what we've both realized

Starting point is 00:10:00 that sort of helped us is that it doesn't take many properties to achieve financial freedom. It really just takes the right ones and building the right momentum. And again, that's what we're going to talk about today, getting the right knowledge, tools, and network. But guys, before we jump in, this is going to take work. Real estate is not a get-rich-quick scheme. You're going to have to put in effort. You're going to have to put in time. But if you are willing to do that, I am very confident that you can succeed in real estate

Starting point is 00:10:29 investing and pursue the financial goals that you have with ease. All right. Let's dive in. First things first. We're going to talk about the stack. The stack is predicated on this idea. that the first few deals, maybe it's your first, second, third deal, like the title of this webinar, are important, but perhaps not in the way that you think. I think a lot of new investors

Starting point is 00:10:48 think that they need to hit home runs or grand slams on their first few deals. But the reality is the first few deals are honestly just about learning and building momentum. You know, your first deal, hopefully it goes great. But if you can walk away from your first deal, knowing having a great agent, having a great team, and learning something about how to scale your portfolio, that's what's important. And the stack is this idea that each time you buy a deal, you should maybe get a little bigger and you'll be a little bit better as an investor. So imagine in your first year you buy a single family home. For most people who are starting from a relatively strong financial position, this is not that difficult. You can put as little as three and a half percent

Starting point is 00:11:32 down and you can go out and buy a single family home. For a lot of small multi-families you can actually put 5% down depending on the loan you're getting for. But the idea is get that first deal and learn as much as you can. Then the following year, you're going to be a little bit more knowledgeable. You're going to have a better network. You're going to have built out your tools to the point where maybe you can go buy two deals or a duplex. Let's just assume you started with a single family in year one. Then in year two, you go to a duplex.

Starting point is 00:12:00 You learn what you can. You get better. And then in year three, you buy a quadplex. Buying one unit is honestly not all that different from two units is not all that different from four units. Once you've gotten a few reps, you've practiced a little bit as an investor. So this is not that hard. And then maybe in year four, you buy eight units or year five, you buy 16 units. The number of units is not important here.

Starting point is 00:12:22 What I'm talking about is building momentum through the stack in that every time you just try and get better. And that will emboldened you and enable you to get a little bit bigger each and every time. All right. So that's the idea of the stack. let's move on next to our roadblocks that investors face. Because hopefully you understand how the stack works. Pretty simple concept here. But the three things that I constantly hear from people is why they can't pursue this is

Starting point is 00:12:47 number one, deals. Number two is dollars. Number three is direction. We call these the three Ds. We're going to go after each one of them here. We're going to address them and we're going to talk about how you can overcome these roadblocks. All right. So let's jump into deals.

Starting point is 00:13:00 And there are plenty of good ways that you can go about finding deals. Number one is relationships, like maybe you know a real estate agent or a wholesaler or another investor in town who can introduce you to deals. There's also this other sort of suite of ways to find deals that is called direct marketing. This is basically going out and trying to find properties that you want to buy, even if they're not listed for sale. Then you contact the owner of that property and make them an offer and see if they'd be willing to sell at a mutually agreeable price.

Starting point is 00:13:32 And you can do this in a couple of different ways. could do something called driving for dollars, you can do something called direct mail letters, or you can just cold called sellers. And I've personally actually bought deals this way, and they can reveal great deals. Some of the best deals are found this way. But they are time consuming, and sometimes they can actually be expensive. That doesn't mean they're bad. If you have the time and want to put in the effort to this, absolutely consider direct mail. But for those of you who want an easier and less time consuming, frankly, way to find deals. It's simple. Just work with an investor-friendly real estate agent. And I know that might sound overly simple, but it really works. This is

Starting point is 00:14:12 how I found most of my deals. It's how I found the deal I bought already this year. And it's how I recommend to most beginners how they find their first deals. Now, you can't just use any agent. That's not the point here. You have to work with an investor-friendly agent. And if you're wondering what differentiates an investor-friendly agent, here are a couple things to look for. Number one, they need to think like an investor. You as an investor are thinking about cash flow, appreciation, generating the best possible return. If your agent is not thinking about deals the same way, you're not working with the right agent.

Starting point is 00:14:44 Number two, they are local market experts. When I work with my investor-friendly agents, they know everything about rent, about demand, about what's going on with the city, regulations, everything that I need to know because I'm an out-of-state investor, they help me with. And then third, and maybe even most importantly, they have a strong boots on the ground network to introduce you to contractors or property managers or those type of people who are going to help you maintain and build your portfolio. So this is what I recommend.

Starting point is 00:15:14 And if you're on board and wondering, how do I find an investment-friendly agent? Well, those are one of the tools that we have for you at BiggerPockets. It's completely free. Just go to BiggerPockets.com slash agent. put in a little bit of information, criteria about yourself, and you'll get matched for free with an investor-friendly agent. It really is, I believe, the simplest way to get great deals. Now, no matter how you get deals, whether off-market deals, relationships, or working with an investor-friendly agent, you need to know something that not every single property that someone

Starting point is 00:15:48 sends you is going to be a good deal. And that's really important, right? Because whether you're driving for dollars or you're looking for an agent, they're going to send you a lot of, they're not deals, they're leads, right? They're going to be sending you leads or prospects for you to consider. But you at the investor need to be able to figure out which of these leads are actually deals. And the way that you do this is through deal analysis. And I know for people who maybe have never done something like this before, maybe weren't a big fan of math in high school, deal analysis may sound intimidating, but it really doesn't need to be. At bigger pockets, we have a tool. called the Bigger Pockets rental property calculator that can help you analyze deals in just a matter of minutes.

Starting point is 00:16:29 And I'm actually going to just walk you through how simple this is right now. For this example, I found a property on Bigger Pockets in Memphis, Tennessee. It is a three-bed, one-bath property. And it is listed for sale at $122,000. So what I'm going to do with this listing is go to Bigger Pockets. And if you want to follow along, you can. if you're at home or anything, go on biggerpockets.com. There's a little thing in the top nav, navigation, it says tools, and then just go to rental

Starting point is 00:16:59 property. First thing I'm going to do is just put in the address of the property, and Bigger Pockets is going to pull some information on this property, like taxes and rent estimates. They're going to do that automatically for you. Then I'm going to upload some photos of the property, because personally, I like to do that. I'm more of a visual person. It's easier for me to remember things, which deals I'm talking about. which deals I'm negotiating on visually than remembering the address. And so I'll put that in.

Starting point is 00:17:27 After property info, we move to step two of deal analysis. And there's actually only five. So I should tell you guys. It's one is property info. We've already done that. Two is purchase information. Three is loan details. Then we're going to do rental income and then expenses. And once you've put that all in, BiggerPockets is essentially going to tell you what kind of returns you could expect on this deal. So for purchase price here, I'm going to put in $122,000 because for right now, we're going to assume we buy it for the listing price. I don't know if we can get a better deal. That we'll get to that in just a minute. Then for purchase, closing costs, we're going to put in $5,000. And I've just done enough deals to know this, but while you're using the calculators, obviously you can't see this right now, there are these little

Starting point is 00:18:07 gray help buttons that will tell you rules of thumb that you can use. So if you've never analyzed a deal before and you're like, what the heck are closing costs, you can just click on this little thing and it will tell you that on average it's 1 to 2%, but if you're unsure, just use 1.5% as a rule of thumb. Now, before you actually close on a deal, you're going to want to update your analysis with actual numbers. But like I was saying, the goal here is to be able to do a lot of these relatively quickly.

Starting point is 00:18:33 And so for most deals, just using this kind of rule of thumb will work for your first analysis, but you obviously need to go deeper before you actually buy anything. So that's it for purchase price. Then we're going to move on already on step three for loan detail. It asks questions like your down payment, which I'm going to put as 25% because I am an investor. And for most deals I buy, I put 25% down. And I'm going to use an interest rate of 7%, which is what I've been quoted recently.

Starting point is 00:19:01 And then for my loan term, I'm going to put 30 years. That is basically the most common length of a mortgage is a 30-year fixed rate mortgage. And so I'm going to assume that I'm going to do that there. Now come step four, which is rental income. Now, a lot of people get tripped up on this because they don't know what they're going to rent this property for, and that makes sense. But Bigger Pockets, again, has a great tool for you. There is a rent estimator. Again, if you're following along, you can just go to the tools, go to top navigation.

Starting point is 00:19:29 There's something called a rent estimator. Go in there, and Bigger Pockets will tell you that it is estimates that rents here would be $1,195. Now, not all properties are going to have great estimates. and one of the things I love about this rent estimator tool is that it's going to tell you. Like if it doesn't have good comps to go off of, it will just say medium confidence or low confidence, in which case you should probably talk to another local investor or talk to a property manager or something like this. But for this property, it actually says very high, so I feel pretty confident using this estimate of just under $1,200 for rent.

Starting point is 00:20:07 Okay, so we're already onto our last step, which are expenses. Bigger Pockets has already automatically, use property records, public records, to pull in property taxes, which are $1,224. And insurance on this property is going to be $900 a year. I just Googled that before I started this presentation. So if you are buying in a place you're not familiar with, Google gives pretty good accurate estimates, just using the average, just like I typed in average home insurance, single-family home Memphis. And what I found is about $900. After we do that, we're going to move on to variable expenses, which are things like repairs and maintenance, which I'm going to put at 6% here.

Starting point is 00:20:48 Vacancy, which I put at 8%, because that equals to about one month of vacancy, and capital expenditures, which I'm going to put at 7%. Now, I just want to explain some of these things here. First, we went from what are called fixed expenses, like property taxes and insurance, where you pretty much know what you're paying, at least for the given year, into something called variable expenses, which are things you don't know. So you're basically using what we recommend is using a percentage of your income and sort of setting it away for when those things inevitably come up. You're going to have repairs. You're unfortunately going to have vacancy. You try and minimize them, but you should be preparing for them. So I put 6% down for repairs and maintenance,

Starting point is 00:21:29 vacancy, 8%, and then lastly 7% for capital expenditures. If you've never heard of that, it's kind of like repairs and maintenance, but it's for bigger things, like a roof, or adding value, like if you wanted to add another bedroom or finish out your basement. The IRS actually treats those types of things as investments and they treat them definitely for your taxes. So you have to keep your repairs and maintenance and capital expenditure is different, which is one thing that the calculators here make super easy for you. Next, we have management fees, which me as an out-of-state investor, I typically pay about 8%, so I'll write that there.

Starting point is 00:22:03 The last thing we need to do is utilities. But because this is a single-family home, I'm actually going to live. leave these blank because I just let tenants when I rent a single family home I just let the tenants pay their own utilities I don't even get involved at that so I put zero for electricity gas water and sewer actually usually pay garbage it's like 20 bucks a month so I'm going to just put that in there and then I'm going to hit finish analysis I'm obviously talking a lot but if I wasn't trying to explain this I probably could have run this deal in like two or three minutes and you're probably not able to do that if you've never done it before but I promise if you do like 10 of these you're

Starting point is 00:22:35 going to get to that level of speed so now that I could see I can see that this deal is cash flow positive, but not very cash flow positive. So what I'm seeing is this would generate $43 a month in cash flow. So it's more than break-even, but not a super inspiring amount of cash flow. That's good for a 1.5% cash on cash return. Now, like I said, not every deal we analyze is going to be a winner. And this one, at least as it is with the assumptions I put in right now, I wouldn't personally buy. I think 1.5% cash on cash return is too low. For me, I target, you know, three or four percent minimum depending on the area. You know, if it's in a really good area that's likely to appreciate, I will consider cash

Starting point is 00:23:18 on cash return maybe 3%. If it's not in a good area and I'm investing for cash flow, I probably want six or seven percent. So that's really up to you, your personal preferences. That's how I think about it. But one of the cool things about this calculator is that now you can go in and change your assumptions because maybe given this deal, I am not comfortable. offering full price, which was $122,000. But I can just use this little slider here and move this down to $115,000. And that would get me to a 2.7% cash on cash return. Okay, not bad. What about

Starting point is 00:23:54 110? What if I could get it for 110? Now it's at 4% cash on cash return and it's something I'm a little bit more interested in. Maybe I can get the seller to buy down my interest rate from 7% to let's say 6.5%. Now, we're talking. We're talking more about a five, five and a half cash on cash return, which is something that in most cases I would buy. I've actually never bought in Memphis. So I don't know if this is a great deal. I'm just trying to give you this example because one of the things that I think a lot of new investors don't understand is that you don't just find deals. You kind of have to make them. Like you shouldn't just take what is listed for you. Sometimes you have to. But on a deal like this,

Starting point is 00:24:34 I wouldn't offer the full asking price. It wouldn't work for me. But now because I have to, have this calculator and tool, I can say what would work for me is I need to buy this for 110,000, and I need a rate buy down of three quarters of a percent, right? And I don't know if the seller's going to take that. Maybe they will. Great. Maybe they won't. But if you do this five or 10 times, you're probably going to find a seller who is willing to negotiate and work with you. And that's why these calculators are so cool is because you can actually use them to create the right deal. There's all sorts of other information like your total equity gain, what how much profit you would make when you're sold. But before we jump back into our next hurdle to overcome, I just want to say that there's this button on bigger pockets here where you can share this calculator report.

Starting point is 00:25:20 And it's helpful for a couple of reasons. First, you can use it to, you know, get a spouse on board with a property or maybe a partner. But the things that I think it's really useful for is one, presenting it to a lender, which we're going to talk about. or two, you can actually even present it to a seller. Like if a seller thinks that you're trying to take advantage of them, be like, listen, I need a 5% cash on cash return in order to compensate for the risk of buying this property and in order to compensate for all the effort I'm going to put into it. And at your current price, like, it's only a 1.5% cash on cash return.

Starting point is 00:25:52 It's not good enough for me. So this 110 deal isn't pulled out of thin air. It's what I'm offering because this is what gets me to what I need to build my portfolio. So don't sleep on that feature here of the calculator. So hopefully you can see now our first roadblock of deals is really not that hard. You just need to find a source of leads, which can be, again, either relationships, doing direct marketing, or working with an investor-friendly agent. And then once you get leads, then it's time to analyze those properties and find the ones that are good for you.

Starting point is 00:26:26 And with that, we can move on to our second roadblock, which is dollars. And dollars is really just another term for financing. How are you going to pay for your property and its operations? Now, the easiest, most common way is to go to a bank or a credit union to get a traditional mortgage. You can also do a partnership with either someone who's going to bring equity to that deal or maybe even a private money lender. You can use tactics like seller financing or burr to be more efficient and not have to put

Starting point is 00:26:56 as much money down. These are all great ways to finance a deal. But before you get into actually the specifics of picking a type of funding, I want to share with you a really important principle just about finding funding in the first place that is super important to remember. It's that funding deals gets so much easier once you already have the right property and have analyzed that deal, right? Because if you don't have a good deal, it's going to be very hard for any lending source or partner to evaluate. whether or not they should give you money. Just think about this for a second. Like, imagine I'm a bank.

Starting point is 00:27:36 We can call it Dave Bank. And if you came to Dave Bank and you said, hey, Dave Bank, I would like to buy some real estate. Would you lend to me? I would say, well, maybe, but what are you buying? And if you didn't know what you were buying, how would I, as the bank, evaluate your creditworthiness or your risk or your ability to pay back the mortgage?

Starting point is 00:27:57 I would have no information. But if you had first found a deal, and then analyze that deal and maybe came with a calculator report and said, hey, Dave Bank, I want to buy this property in Memphis. I have it under contract for $110,000. It was listed for $122. I've analyzed this deal really well. I've taken all of the expenses into account.

Starting point is 00:28:18 And it's going to generate a 5.5% cash on cash return. So there's pretty little risk that I'm going to be unable to pay my mortgage back. At that point, me as the bank, is going to be. much more interested in discussing a loan with you. And this works for any type of funding source, whether you're looking for a partner or going to a credit unit, a private money lender, even a seller financing deal. If you show them that you've analyzed it and you really understand the deal, they're going to be much more willing to work with you. So with that principle in mind, you're probably wondering, okay, I get it. Now that I can analyze deals, I'm ready to go have

Starting point is 00:28:56 these conversations with lenders. Where do I meet one? Well, we have a lot. We have a another tool for you at Bigger Pockets. It's called the Lender Finder. And again, it is a free tool to connect you with investor-friendly lenders. He just put in information about what you're looking for in terms of loan products, how much you want to put down, the area that you're investing in, and you get matched with a great lender really, really quickly. So that's how you should be thinking about funding.

Starting point is 00:29:22 First, you find the right deal. You analyze it and then start conversations with multiple lenders. You should shop around a little bit and see what you qualify. for and what type of loan products are out there. I see so many investors just get stuck at the stage and they ask me questions like, will I qualify for a mortgage? And like me as Dave Meyer, like, I can't answer that question. Only a lender can answer that question.

Starting point is 00:29:46 So go connect with an investor friendly lender. They're going to teach you so much about what you can qualify for and what you can buy and it's entirely free. So this is a really good resource that everyone should be working with. So that's the second day. We talked about deals. We talked about dollars. And now it's time to move on to direction.

Starting point is 00:30:03 I want to start this section with a quote from Yogi Berra, the Yankees catcher, the great. I'm a Yankees fan. Sorry about that. I know most people hate the Yankees, but I am. So I'm using a Yogi Berra quote. He said, if you don't know where you are going, you'll end up someplace else. And I think that's super important because having a direction and sort of starting with the end in mind is really important to real estate investors. You need to think hard about where you want to go and then find the direction.

Starting point is 00:30:31 right tools and support to get you there. And I think direction really falls into sort of three ish categories. So the first one is education. And this is sort of the first step because you can't find direction until you've understand sort of the broad universe of real estate investing. Like if you've only heard of one type of deal like short-term rentals, it's hard for you to find focus because you're going to be curious about all those other types of deals. So you should educate yourself about what possibilities are out there for real estate investors. And obviously by listening to this podcast, listening to this presentation, you are doing that already. And I encourage you to keep doing that.

Starting point is 00:31:12 Once you've done that, that's when you move on to step two of direction, which is focus. This is where you pick the strategy that is going to best support your long-term goal. For a lot of people, it's long-term rentals. And I know that might sound boring, but it is the most popular way of real estate investing for a reason. It's the thing that I invest the majority of my time and money into. If you want to do something else, that's great, but you should at least for your first three deals, which is, again, what we're talking about in this presentation, pick one and just try and get good at it. That's the whole concept of the stack, right, is to get better for each deal. And that doesn't mean you can't

Starting point is 00:31:49 branch out later, but I think for your first few deals, focusing on one strategy is going to be really helpful to you. And then the third step of direction is process. So once you've figured out that you want to do, let's just for the purposes of this presentation, we'll say that you want to do long-term rentals, then you need to repeat the same process over and over again. Again, this is how you build momentum by finding the right deals, by analyzing the deals, bringing them to lenders, and then hopefully closing on deals that are good or above average in your area, getting them stabilized up and running and then repeat that process again. And this is what really gets you beyond that first deal, beyond that second deal, is if you can create the repeatable process, then it's not that hard,

Starting point is 00:32:32 right? You're like, I've already done this. I bought a property last year. I can do it again. Or I've bought a property the last three years. I can buy a fourth one. You know, once you have focus and process, things get a lot easier for you. So that's how you find direction. And just to recap what we've talked about today so far is first and foremost, the stack, which is the idea that you should be trying to build momentum with your first few deals. Next, we talked about some of the common roadblocks that investors face and how to get around them. As a reminder, these are deals, dollars, and direction. Hopefully, after listening to this presentation, you have a good idea of how to get around them. But still, I know that for a lot

Starting point is 00:33:09 of people who are getting started, real estate investing can feel risky. It can feel like you're jumping off a cliff. But reality is, and investors know this, people who have done deals know this, It's not some extreme sport. You're not going base jumping. You're hiking. You're going on a well-worn path, and you're probably hiking with friends because real estate is a really nice community. Even though there's money at stake, I've found in my 14 years in this industry, that

Starting point is 00:33:35 most people just want to help other investors achieve similar to success to what they have. And honestly, that's what we are all about at Bigger Pockets. We build tools to help real estate investors on their journey towards whatever their financial goals are. And this isn't just something that we say. This is something that we do. And it's something that we've been doing for a long time. We've helped thousands, if not tens of thousands of investors, including myself, find financial freedom. And I hope that at this point in the presentation that you want to be one of those people. So let me ask you something. I'm going to ask you actually, I have two questions. First is, are you right now feeling committed to buying your first,

Starting point is 00:34:17 your second or your third deal in the next 12 months? The second question is, are you prepared to follow and execute a daily plan to reach your full potential? Because those are the two things that really separate people who want to be real estate investors to those who actually buy deals and those who actually go on to scale. And remember at the beginning of the presentation, I asked you two other questions, which is, why do so many people want to do this but never do it? Well, it's really about commitment and following a process. It's not complicated, as I hope you see throughout the course of this presentation. It's really about whether or not you're willing to put in that time. If you answered yes to these two questions, let's take a minute to talk about how you can make this year, this month,

Starting point is 00:35:01 a time of change for you. Real estate investing, it works. And at bigger pockets, we are here to help it work for you. And again, that's why we've created incredible tools to help you get there faster and with less pain. And the way that we do that is with a product we have called the Bigger Pockets Pro. Pro is a one-stop shop to help you start, scale, and manage your entire portfolio. And if you're wondering, hey, that's too good to be true, how could one subscription get me everything I need to be a real estate investor? Let me explain it to you briefly. First and foremost, Pro offers you the best deal analysis tools in the business. And as I told you, that is hugely important to being a successful investor. Deal analysis, if you don't know me, is kind of my thing. I wrote in

Starting point is 00:35:44 entire book about it. But I actually use these calculators and tools when I am screening and running deals. I also use the rent estimator. I've used it probably four times this weekend. And you can use the exact same tools if you go pro. You also get access to the best education. This comes in the form of access to some of the best investors in the world like Henry Washington or Ashley Care through our real estate investing boot camps. You also get access to exclusive live webinars and videos from our team of experts. Next, you also get our entire landlord command center, which is sort of everything that you need to run your business.

Starting point is 00:36:23 Like we talked a lot today about acquiring deals, but it's equally as important to manage your deals well, and pro has everything you need. If you need property management software, well, we have rent ready, one of the best property managers in the business. We have that for you for free. Everyone else pays $240 a year for something like that.

Starting point is 00:36:40 Do you want portfolio monitor? and accounting software, well, you get that for free from Stessa, too, as a Bigger Pockets Pro. Or do you want a lease, a rent addendum, a pet waiver, or any of the other legal documents that you need to be a successful landlord? Well, we have those for all 50 states, and you get those for free as a part of Pro. You also get to join our exclusive community forums as pro members and build a bigger network. Our data shows that pro members get three times as many connections on the bigger pockets forums than regular members do.

Starting point is 00:37:15 And as we've talked about, real estate is a relationship business. So just as a summary, you get great analysis, you get expert education, you get to supercharge your network, and you have a landlord command center all at your disposal. And one just added benefit. Now, I'm not a CPA, but ask your CPA. But for most people, pro is actually taxed. which is great. Now pro I have personally seen work for so many people. I've worked here for eight years. So I've literally seen tens of thousands of people do this. But take it from Aaron C who said that there's no way I can analyze the volume of properties I do without being a pro member. Now think about that for a

Starting point is 00:37:53 minute because we've talked about how important it is no matter how good your deal flow is to analyze a lot of properties and pro makes that possible. And Beth says that Bigger Pockets Pro has been the foundation of her real estate investing endeavor. I love hearing that. I have some other examples here from people have said it's just such a small cost for so much value. So you're probably wondering what is the cost and what is the value. Now, if you added up all the things I've talked about, all the individual components of pro, it would actually cost over $5,000. And that is worth it. If you found a deal that just a single deal that would pay for itself over time. But $5,000, let's be honest, is a big investment. And at Bigger Pockets, that's not what we're about. Our mission is to make

Starting point is 00:38:36 real estate investing accessible to everyone. So we make all of the amazing tools of pro available for a reasonable price, which means that normally you can pay $39 a month, which comes out to $468 a year, which is an incredible deal for everything that you get. But as I mentioned earlier, at the top of this presentation, I do have a special offer for you. And the deal is, instead of paying $468, if you go pro annual, you will pay just a special offer for you. $390. And I'm going to give you 20% off that, bringing the cost of pro down to just $312 for you. That's $156 in savings over the average price. But I did mention we are feeling generous and we want to give you an even better offer today. And so I have three bonuses for you on top of

Starting point is 00:39:28 everything that we've already talked about. First is the show me the money starter pack, which is valued at $470 all by itself. So this is worth. the cost of pro. And what it comes with is a nine-hour workshop on no and low money down investing, which is so incredibly valuable. You also get worksheets to build a bulletproof wealth plan and an e-book that is six steps to eliminating debt and repairing credit. The next bonus is the demystifying the housing market bundle. I made a lot of this content for you guys. It comes with my 24 state of real estate investing report, a video on how to build scenario plans, and a to investing in a changing economy.

Starting point is 00:40:09 This is worth well over $500 if you bought this by itself. Lastly, is the ACE Your Analysis Toolkit, and I love this one because I get to give you my book for free. It's called Real Estate by the Numbers. I wrote it with another amazing investor, Jay Scott, and it will teach you everything you need to know to feel very confident when you're analyzing deals. You'll learn every single formula,

Starting point is 00:40:31 every metric that you need to know. You'll also get extra spreadsheets and tutorials on deal, analysis. This by itself is worth $229, but if you go pro today, you will get that for free. And I just want to also call out that you can try bigger pockets for a month. And if you don't like it, you can get 100% refund. We really want just people who are taking action, the people who are committed to financial freedom and are going out there and buying real estate deals to go pro. So if you try it out and it's not for you, we'll give you 100% of your money back. No questions asked within 30 days. So just to round out what we've talked about here today,

Starting point is 00:41:09 if you want to go pro, make sure to use the code first pod 24 F-I-R-S-T, P-O-D-2-4. That's going to get you 20% off pro plus all the other benefits that were given away on today's episode for listening here on the podcast. All right, everyone, that's what I got for you today. I hope you learned something from this presentation and see that being a real estate investor, even though it can feel far away to achieving financial freedom. It's really about getting momentum for your first few deals. And if you can build a system of finding lead flow through an investor-friendly agent, you learn to analyze deals well. You show good deals to lenders and then you build process and education, I assure you, you have an excellent chance of achieving all of your dreams through

Starting point is 00:41:59 real estate investing. Thanks again for listening, everyone. I'm Dave Meyer for Bigger Pockets. do want to connect with me or have any questions for me. You can always find me on biggerpockets.com. Thanks again for listening and I'll see you around the community.

BiggerPockets Real Estate Podcast - How to Buy Your First, Second, or Third Rental Property!

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