BRRRR Investing Just Got Easier

this is the Bigger Pockets podcast show 669. get yourself around other people that are committed their goals and it doesn't have to be real estate get yourself around other people that are committed to staying in the gym get yourself around other people that are committed to eating healthier foods get yourself around other people that are committed to having better marriages or being better parents or managing their wealth better the first thing that you can do is when you start telling other people good job for what you did it will sort of Silence the need you have inside yourself to hear it I don't know why it works like this but it's almost equivalent of if you're really hungry but you give someone else food your hunger can go away what's going on everyone this is David Green your host of the Bigger Pockets real estate podcast here today with a seeing Green episode if you're new to Bigger Pockets you're gonna love it this is a place where the best Real Estate Investors in the world come to learn how to invest in real estate and build big wealth and if this is your first time hearing a scene Green episode you're in for a treat in these shows we take questions directly from our community areas that they're stuck in advice that they need hurdles are having a hard time overcoming or they've got a bunch of different options they don't know which is the best one to take and I do my best to give them advice from my perspective as the person who's seeing Green in today's show we've got some really good stuff we get into a very good conversation about the timeline you should give a property manager to turn a property around as well as what you should look for if you're gonna switch to a new property manager we talk about what the IRS considers a real estate professional and how you can take advantage of all the tax benefits that come from that designation and we get into if real estate syndications are as beneficial as they may seem all that and more in today's show but before we get to our first question today's quick tip is this episode is dropping right when bpcon 2022 is starting so what are you doing to get out there and make connections or Foster the relationships that will take your business to the next level do you have a game plan to go demonstrate value to a potential mentor and get someone personally invested in your success have you evaluated what skills and talents you're bringing to the table spend some time today to make your next event conference or coffee meeting that much more impactful so that you can supercharge the speed that you get through your learning curve and get into making big money and having big success soon alright let's get to our first question hey David thanks so much for taking the time to review my question my question has to do with the Burr strategy given how hard it could be these days to lock down a contractor given how far on Advanced contractors tend to be booked how do you balance the process of sourcing the right property to Burr with the process of ensuring that a reliable contractor will be available to perform the rehab process shortly after the property is closed on the last thing you want to do is have to soak expenses to hold the property while you wait weeks or even months for the contractor to start the job thanks so much again for taking the time to spot in my question really appreciate all the great content you're putting out there all right thank you Colin some pretty good questions that you're asking there let's start with where we are in today's market with the interest rate hike we've had we've seen a decrease in demand and not every Market's the same but in many markets across the country we're actually seeing a Slowdown so I'm having an easier time finding contractors right now that I have had in recent past because there's not as many transactions happening so a contractor's talents are in less of a state of demand which means it's easier to find contractors to do deals that's one thing to keep in mind there's also contractors out there that are busy and then there's others that are actually looking for work so I would say double down on the amount of people that you asked for referrals from different contractors that can do work then you get the fact there's different kinds of contractors there's some contractors that just communicate with you look really fancy and professional spend a bunch of money on SEO so that you find their company when you're Googling them and they sub out all the work to completely different companies so they might go to a plumbing company and say I've got a job what are you going to charge and the plumber says 20 grand and the contractor tax Plumbing as 30 grand on to the bid and they make a ten thousand dollar spread because they found the plumber you've got other contractors and these are the types that I tend to prefer that have a plumber on in their company or a person that can do plumbing work that comes and does it and so you're not paying as much as if they contracted to a completely different company there's also the fact that in today's market when houses are not flying out the shelves in every single market across the country like they have been that you can get a longer escrow period if you put the house in contract in the S and the contractor says well I can't start for another three weeks you can go back to that seller and say hey uh can we close three weeks later can we delay escrow can I maybe close in a week and a half later and you only have to soak the cost of a week and a half instead of the full three weeks so you've got something there and then another thing that I'll do because I have a couple Birds going on right now and and I got a property contract today as we're making this episode and that's going to be a burr now part of that property can be rented out as is and another part of the property needs to be renovated so in that case I'm going to rent out the property as is as soon as I close as a short-term rental and when the contractor can start the work that's when I'll shut down renting it out while he takes about 30 days to complete the renovations and I get it back on the market so not every property has this problem where you can't do anything with it until it can be renovated now if you're doing kitchen bathroom remodeling in a single unit property yeah you're going to be soaking those costs so what I would do is I would look at building that into your offer so if you know it's going to be enough other three weeks before you can get to the job and you're going to spend three thousand dollars a month on mortgage maybe see if you can get the house for nine thousand dollars less or get nine thousand dollars credited back to you from the seller to cover those expenses look for some creative ways that you can get the seller to pay for some of those expenses that you're going to have if they won't delay the escrow but in any regard I'm finding that right now is an easier time to burn than what I've seen in the last eight years all right our next question comes from Jake in Pennsylvania at The Good Old Pa our real estate syndications as beneficial as they seem would you recommend them for a beginner investor or should I focus more on multi-family rentals to start out okay let's dig into this I don't know that a syndication will ever be as beneficial as it seems because how it seems is usually going to be the syndicator paying for some kind of sponsored ad on social media or selling you at some kind of a conference to say invest in my fund invest in my syndication because they want your money so I've never looked at it as a if they're as beneficial as they seem I've looked at them as are they as beneficial as buying a house for myself and I have invested in syndications primarily with uh my other my partner Andrew Cushman he and I buy apartment buildings together and we've structured something like that but I also spend more of my money on Residential Properties that I own myself not in syndication so sometimes I'll invest in a syndication because I'm having a hard time getting a loan sometimes I'll invest in a syndication because there's not that many good deals out there sometimes I'll invest in a syndication because I'm really busy and I don't have time to manage a burr a rehab getting a property up and off the ground and running so I'll just give my money into a syndication and get it back in you know a couple years I've done that a few times there's different reasons why I might want to in general I would say most people are probably going to be better off investing it themselves and here's why when you start off buying your own properties you're not only getting the return on your money but you're gaining knowledge you will learn so much more buying a deal and making mistakes and getting better than you will handing your money to a syndicator who's going to go buy a deal make mistakes and get better off of your money I'd rather see you Jake house hacking if you don't have a property at all house hack I've said it before I will say it again everyone listening should be house hacking one house every year every single year for at least the next 10 years you should be getting a primary residence and probably longer because you can often get primary residences after you have 10 properties if that's all you did in your whole career you would be very wealthy at the end of your career if you just bought a house of your house hacking putting five percent down or three and a half percent down sometimes now anything you buy in addition to that you should weigh is it better to buy the rental and put 20 down or is it better to put that money into a syndication if you're going to focus on multi-family rentals you're probably talking small multi-family that's going to be two to four units just make sure you're doing that in an area that is uh not crime ridden not full of problems from problematic tenants and is an area where you're seeing population growth one of the benefits of a syndication if this indicator is good is they're more likely to have done their homework on the area that they're investing in because they have a lot of money going into it so if the person's good they avoid buying into bad areas which you as a new investor can easily wander into and if you look at most problems in real estate it comes from someone that bought in the wrong area so it all depends on your goals how you're going to vet the performance if you're trying to maximize your Capital how much time you have to put into it there's active and there's passive and there's a scale in between and you kind of have to ask yourself how much you're willing to do you also have to be an accredited investor in most indications which you may not be in which case it becomes a very easy answer you should be buying your own properties but if you're looking at small multi-family and you can buy it on your own and man house hack is just staring you in the face just buy a Triplex or a fourplex every single year don't make this complicated get the best one that you can live in one unit rent out the rest then buy another one next year and rent out the one that you were living in right now and you'll end up accumulating rental properties for five to ten percent down instead of 20 to 25 percent down and your Capital will go much further hi David my name is Paul Charbonneau and I live in the Dallas Fort Worth area and I invest in Pittsburgh Pennsylvania uh my partner and I started this about two and a half years ago and over that time we have purchased 20 single family houses and um we used private Equity to purchase those and right now we're working on our first refinance uh and if we refinance 10 of them or half of them that will pay off the note and we will own the other 10 uh scot-free so so far so good everything seems to be working according to plan but my question to you comes from a tax perspective so I work full-time W-2 job and uh right now I can only take the tax loss for the passive income it cannot offset any of my W-2 income uh the way I'm reading it and the only way to get past that hurdle is to become a real estate professional and I was looking up what that entails and you can correct me if I'm wrong but I think it says more than 50 percent of the personal services you perform in all businesses during the year must be performed in a real estate business you materially participate in so that would tell me uh that maybe if I worked at a title company I'm in real estate but that's not anything that I have a personal stake in so I think that doesn't qualify but I would like clarification on that and then the other uh thing it says that you have to spend at least 750 hours in the calendar year in uh Real Estate Services or businesses and I think I qualify on that aspect um I I could easily do real estate all day so the question uh that I have is can I reduce my hours at my W-2 job and let's say I go part-time to a thousand hours a year at that point if I work a thousand and one hours on real estate do I qualify as a real estate professional under the IRS guidelines and then the second part of that question is going to be how do they look at the number of hours that you worked does scouring Zillow count um talking to my property management group I assume that talks or that works what about talking to my realtor all of those conversation emails what constitutes as working 750 hours uh look forward to hearing your your answer thank you hey there Paul thank you for this first off you're asking the right questions I love that you're saying how do I do this not am I doing this or can I do this or I can't do this you're asking the right question you're also asking in the right Forum thank you very much for posting this on scene green if you guys would like to also ask a question just go to biggerpockets.com David you can ask a question just like Paul now Paul I do need to preface this by saying this is not legal advice I am not a CPA and so I don't know exactly what the law is now I can understand the law as you read it and that is my understanding of what you said very similar to a 1031 I know most of the main stipulations rules and regulations where you get tripped up with legal matters is in case law now in many cases in the law if you guys have never heard of the phrase case law before you have a hard and fast rule such as you have to perform 750 hours a year doing uh real estate related activities or you have to spend more than 50 percent of your time on something that would you be materially affected by something along those lines however it's sometimes there's ambiguity in what would be materially affected or what would be considered real estate related activities that's where case law comes into effect now case law is when judges look at a specific case and set a precedent saying hey in this case we found that this work did not constitute real estate related activity or this case it did so your question about Zillow is a great question would that count we would have to ask a CPA who knows the case law on that specific situation has there been a person that claimed to the IRS I'm a real estate professional because I looked at Zillow for houses as part of the acquisition part of my business and if so how did the Court rule in that specific case that then determines precedent or what we call case law now coming from law enforcement I had to study this laboriously I was constantly learning case law when it came to use of force evidence rules when it came to uh the Fourth Amendment which is really big in law enforcement search and seizure you know if if we find evidence of a crime on someone there's certain times where it's admissible in court there's other times where it's not in admissible court and you had to learn the case slot to know how to make your case stick that's the same in the situation that you're in here so I'm gonna tell you that you should run this by a CPA before anything that I tell you is something that you go put into practice what I can tell you is what I would do if I was in your situation so part of why I am an entrepreneur now instead of just working the W-2 job is because everything that I do is real estate related I have a real estate sales team the David Green Team I have a real estate loan company the one brokerage I do real estate investing myself I'm now raising money and helping invest it for other people that's green capital I write books about real estate I make podcasts about real estate I make YouTube videos about real estate I write books about real estate right like all of this stuff is real estate related so that it's not hard for me to qualify as a full-time real estate professional so I save in taxes in a big big way you could do the same thing the question is is your W-2 job holding you back and this is the case for so many people Paul I think you're this prototypical awesome example of a Bigger Pockets member you love real estate you bleed real estate you eat and breathe it you can't get enough of it you listen to all the podcasts you love to talk about it at barbecues you're the guy that all the your friends come up to you because you have all the real estate answers and they're fascinated by it but yet you still have a foot or maybe a foot and a half in the corporate W-2 world that stops you from being the full-time professional I don't think working at a title company would qualify because that's still your W-2 job however what if you started a title company hired one even part-time person to work in that title company started talking to Realtors or other investors and saying hey when you buy a house let me do your title work this is the offer I can give you this is the service I can give you this is the price that I can give you that's better than other people bring me your business even if that business isn't making you money hand over fist what if the hours that you put into running it start to qualify you as a full-time real estate professional now again I don't know the case law on this so I cannot come out and tell you this is all you got to do just go do this I'm not a full-time uh professional I'm not a CPA I would have to run this by my CPA to ask but these are the kind of questions that I ask if I'm acquiring properties if I'm refinancing properties if I'm doing X or Y in business would that qualify when they tell me this would or this wouldn't now I know what direction to put most of my time in and the question becomes how do I make that profitable what most people do is they say what's profitable how do I go do that well you often paint yourself into a corner where now you're not a full-time real estate professional I don't think you need to jump completely out of your W-2 job but I do think you can start a side business or a couple and start moving in that direction and as those companies become more profitable you can start to take more weight off of the W-2 foot and put it onto the foot that's in the 1099 World until eventually you can jump in all the way thank you for asking such a great question I'm glad that our listeners got to hear a little bit about how that works if you're listening to this and you love real estate and you don't love your W-2 job you've got more options than just completely quit your job and go full time into investing or be stuck in a job you hate forever and never get out of it there's a whole spectrum of stuff that you can do and I'm a really good example of someone who lives inside that Spectrum I've got tons of different revenue streams where I make money through real estate because there's so many different ways that you can do it and I'd like to see more of you doing the same thing so if you're not happy with your W-2 job but you're also wouldn't be happy being a complete risk-filled full-time investor find a job that is somewhere in the middle like an escrow officer a title officer a loan officer a loan processor a real estate agent a buyer's agent a showing assistant a real estate Administrative Assistant a contractor a handyman a CPA a bookkeeper I could go on but there's a lot of different people that work within this industry that serve it where you could start to dip your toe and get involved so you could be closer to real estate but not completely dependent on rental income to pay your bills Paul let me know if there's anything I didn't answer in your question please submit a follow-up question if that's the case and also I would encourage you to post this on the forums on Bigger Pockets so other people can weigh in alright thank you everyone for your question so far we would not be able to do this show without you and in fact my love and appreciation for you and those that have submitted their questions to biggerpockets.com David has reminded me that I needed to turn the light light green of everything I do with Bigger Pockets by far I have the hardest time remembering to change the light from green to blue so if you're watching this on YouTube no it did not just skip to another video I just remembered to turn the light on but hopefully this different Ambiance sort of captures your attention and keeps you interested as my monotone baritone calming voice may be putting you to sleep so you can get more out of this real estate Cornucopia of information that we put together for you all right in this segment of the show I like to read some of the comments that we've gotten off of our YouTube channel on previous episodes a lot of these are funny or nice or sometimes or even mean and that's fun to share too so as you listen to these please leave a comment for me on YouTube let me know what you liked what you didn't like some insightful information that you got out of this or just something clever and humorous that I can read on the next show because it's always better when we can spice the information up with a little bit of flavor and funny first comes from r i will unsubscribe if you ever get rid of the seeing green episodes these are the best ever I love that I get to read comments about me that are always positive and I'm sure as you guys are listening to this you're thinking that like does David just pick the nicest stuff about himself well you'll never know unless you go to YouTube and read the comments for yourself and leave one for me R I don't know who you are but I do know that that was a very nice thing to say so I will try to make sure that you never unsubscribe and we will continue to make seeing green episodes and hopefully make you a lot of money the next comes from pewmeister whose name alone has already got me chuckling a little bit awesome episode as usual David also I ordered your book I'm currently in law enforcement I've gotten into investing I've developed such a passion for Real Estate I'm starting the courses to get my realtor license this week thanks for all the value that you have brought to the Bigger Pockets Community there's something about people getting out of law enforcement and into real estate right now I'm definitely seeing a trend I might have been the first person to take the Oregon Trail and now everyone's following me I'm not sure what it is about these two professions that end up going hand in hand my buddy Daniel Del Rio told me there was some movie and I think Harrison Ford played like a detective a homicide detective that was also a realtor on the side so he'd be on his phone putting deals together when he was at the crime scene and there was definitely more than one moment where I was doing something very very similar and so if anyone knows the name of that movie please go into the comments on YouTube and post it so that we can get a feel for what it is about Harrison's Ford character that is drying so many Bigger Pockets members into taking a similar path the Nega Comet comes from Uli muli we are on a roll with the names today this was great any idea for you for new content would be to review other people's advice to see what you agree and would improve oh I gotta say I like this you start having me review other people's advice and I get to critique it and maybe disagree with it and maybe offer a um alternative opinion and you might start seeing a little bit of beef popping up in the real estate Community um I'm okay with that I think that'd be kind of fun if we brought some people in and we had me give commentary on what I thought about their advice I made reaction videos to people like Patrick but David his guy I respect a lot but he made a video on um how you can't really trust your realtor because usually your realtor is working with the other realtor more than they're working for you and I made a reaction video that kind of described like that happens less than one percent of the time that we even know the realtor that we're dealing with on the other side that happens in the ultra high-end luxury Community where a handful of Realtors will sell 20 million dollar houses and they all know each other but to the general person the realtor you're working with probably sells three houses a year and they're working with someone that sells six houses a year they never cross paths but I like it that's what I'm getting at I like this idea so if you would like ulimuli you can help us by going to biggerpockets.com David giving advice that you've received about a question you have and asking me what I think about it maybe we can start the trend there and our last comment comes from Gerald Smith I wish I knew of you years ago I'm 75. great advice well dang thank you Gerald uh I really appreciate that it's not every day that you hear a 75 year old tell you that you're giving good advice so I will take that to heart and you made my day thank you for that we love it and we appreciate your engagement so please keep it up like comment and subscribe on YouTube and also if you're listening on your podcast app whichever one it is take some time to give us a rating and an honest review we want to get better and stay relevant so drop us a line all right let's get to another video question hey David this is Hugh boy I'm from Augusta Georgia and I just want to say I really enjoyed your format here I'm always looking forward to it seeing Green episode so uh Kudos on that very good job um so about me I am a full-time real estate investor now um and I currently own about 20-30 doors here in Georgia and because I'm a full-time real estate investor I don't have a high taxable income on paper due to write off and depreciation so for all of my Residential Properties one two four units I always use a dscr lender to finance all my properties um so that's my wheelhouse but recently I purchased a seven unit apartment and I know that my lender will not refinance it I bought it with private money lender but my the SEO letter would not refinance it because it's not residential it would be commercial since it's more than five units so my question for you is how do I go about refinance this property with a commercial loan or or some other option when I don't have a high taxable income uh what would my option be in that case and this property would cash flow really nice because a system rough number the total income will be 5500 bucks per month and we currently only owe about 400 000 on it for the private money lender and we also bought it at a very good discount I think we're gonna be at about 65 to 70 arv after we fix it up so the worst can happen we can always sell it if we cannot refinance it but I'm curious to see uh what is your experience with refinance a multi-family which you don't have any taxable income so I appreciate it thank you have a good day well first off hugh I'm sorry to hear you got stuck there if you were using my team we would have told you not to buy a commercial property to try to use a residential dscr loan maybe next time you can talk with your lender before you close on the property if you're gonna even if you're gonna refinance it I'd give that advice to everyone don't buy the property or do the thing and then run to the professional and say help I screwed up what do I do go to them before you close right when you've got a contractor who's going to do the work run it by the agent and say what would the arv be when we're finished with this or when the property's in escrow ask the person you're going to refinance it what would you need to know about me that's what I do I don't ever walk into it and just hope that the person at the end of the day is going to be able to bail me out I want to tell them about what I'm doing and oftentimes they'll say well it's not going to work this way but it would work that way and I have time to make the adjustment while it's an escrow so that's a little quick tip for everyone out there now there is some good news here what I hear you saying is you bought a commercial property that cash flows are very strong by commercial terms that has a very solid loan to value ratio I don't see why you can't just get a commercial loan on this commercial property I might be missing something because you're saying that your DTI isn't that solid your debt to income ratio but it usually doesn't need to be on a commercial loan they're probably not even going to look at that much like we don't look at them on dscr loans so I'm just not sure why you wouldn't be able to refinance this into a commercial loan and maybe even pull out more of the equity than you put in kind of like a commercial bird like those work too I'm racking my brain trying to think about why you wouldn't be able to do that because I'm wondering maybe you just didn't think about it because you don't get the 30-year fixed rate that could be the case you're probably going to be looking at a 5-1-arm a seven one arm maybe a 10-1 arm that's just how commercial properties work double side note this is why dscr loans are so amazing and why we do so many of them because you don't get the adjustable terms with the commercial underwriting you get the residential 30-year fixed rate terms with the commercial underwritings it's really The Best of Both Worlds and this is why I'm buying so many properties right now specifically with this product because I don't know how long it's going to last at a certain point lenders will pull this off the market the only thing I can think about is you don't like that adjustable rate but if you're if you're going to sell the house now why not refinance it into an adjustable rate mortgage with a fixed rate for five seven or ten years and sell it at the end of that period of time unless you think the prices are going to go down over the next 10 years that's kind of hard for me to see a scenario like that happening with the inflation rate that we have right now um man this would be a great one for us to have you back on with a coaching call so I could dive deeper but yeah I would just say find a commercial lender and refinance it that way you can reach out to us we're happy to do it for you or you could talk to loan officer that you have already and see if he has a connection with the commercial lender just Finance it that way and move on to the next property thanks you all right our next question comes from John nunster John is from Thousand Oaks and has a rental property here in California Thousand Oaks is in Southern California if you guys didn't know that has one home and is looking to burn East Texas there's so many Californians that are all looking to invest out of state it's almost ironic that I wrote a book called long distance real estate investing as a Californian who at one point had to do the same thing David I feel like we are Kindred Spirits I'm currently employed as a deputy sheriff I'm also a blue belt in Jiu Jitsu all right let me just stop you right there John I'm a not only am I white belt man I'm like a clear belt I haven't gone to class in over three months I've been traveling buying properties and super busy with a 1031. so let me not give this a fake impression that I'm a Jujitsu Master but thank you because I am interested in it I just haven't put enough time into it to say I'm good yet I'm currently trying to build a portfolio to replace my current W-2 income and I'm really feeling a calling towards building a team of Law Enforcement Officers as private money lenders to buy real estate and become financially free do you have any tips on this okay I'm gonna answer the first part of your question then get to the second you need to look up Brian Burke Brian Burke was a staple on the Bigger Pockets platform when I first started getting into it almost 10 years ago now and he was a law enforcement officer I believe in the Santa Rosa area I don't remember which Police Department it doesn't really matter but he left to become a full-time syndicator I I believe he runs Praxis capital and he's a very good investor and more importantly a Good Guy Brian's a person I look up to as a mentor he's someone that I go to and say hey tell me what you think about this or what do you think I should do different I really really respect Brian and I've never heard a bad thing said about him by anybody on the platform so if you guys are hearing Brian's name for the first time give him a call and say that David Green said he's an awesome dude you want to follow him and also search for a blogs he's written or any books that he's written on the BP platform he's a great template of how you can do it all right getting to the rest of your question maybe you get this all the time but I feel like you would be an amazing guy to grab a beer with and rack your brain for an hour or so all right I do get that all the time let me just address this right now for one I don't drink I never have it's not like I'm an alcoholic or I have a conviction against and I just don't think it's a very good idea and I have enough vices in my life like food for one which I'm which is a struggle for many of us all the time right but I don't need to add more vices by getting into drinking so for all the people that have offered me a drink or said to go grab a beer just know I was not rejecting you I was just rejecting that offer because I don't drink and thank you for that as far as racking my brain this is the best place to do it that's why we do these seeing green episodes so that everybody can rack my brain all at one time and this now begs the question what the heck does rack someone's brain mean you hear this a lot it doesn't make any logical sense does anyone know where this phrase rack your brain comes from now I'm worried more about that than I am the question let's get back on the topic here I have been an avid follower of BiggerPockets for several months now and even read your book on out of state investing oh funny I mentioned that earlier I'm currently reading Brandon's book on creative financing and I'd like to know if you have any tips for me and my question is do you ever meet with the people one-on-one to chat about real estate and Mentor a newbie great question here this is actually something I get asked all the time probably several times a day maybe more I'll get a DM or an email or someone saying hey will you be my mentor so let's take a minute to kind of break this apart first off Bigger Pockets itself functions as the best Mentor you could ever have sure you already know that because you know a lot about me you know that I like Jiu Jitsu you know that I'm former law enforcement so clearly you're already listening to Bigger Pockets and anyone hearing this advice you're in the same boat otherwise you're going to be hearing it just keep in mind that Bigger Pockets was formed to be that Mentor you never had to give you a place to go ask questions like the forums to be we write books so that you could go read them so that you wouldn't have to talk to another human being because all their information is put into their book this podcast was meant to feel like you're part of a conversation between a real estate investor and another real estate investor and you get to be the fly on the wall and listen to what they say seeing green particularly is something where you can come in to ask questions just like this so this is already a form of mentorship now there's another form of mentorship that goes deeper that's really more like an apprenticeship an apprenticeship is a situation where someone experienced a knowledgeable in a skill passes down their knowledge and their skills to someone else to develop that person so that they can then go make money now in my opinion an apprenticeship is the best way under God's green earth no pun intended for seeing green to learn anything if you get up like that's what Jiu Jitsu is right you get this instructor who knows a lot that walks you through the techniques and tells you to move your foot here move your hips this way grab here instead of there grab with this part of your hand and not that there's all these details that they have learned over years and years and years of doing that's how martial arts are passed down it's done through the apprenticeship model now the apprenticeship model made sense when the person teaching The Apprentice was going to get something out of it because the Apprentice was then going to work for them now you may have already understood this John but I think a lot of people don't and that's why I'm I'm sort of getting into this at a deeper level in today's world you're not going to learn the martial art from the black belt so you can then go teach in the school most people are not interested in working for the person that they're teaching so instead of compensating them with their labor in the future they compensate them with money right now this is why I pay 150 bucks a month to belong to the Jiu Jitsu gym this is why people may pay for uh courses where someone's going to teach them hey here is how you do what I do in the real estate space now Bigger Pockets is this amazing Paradise of Awesomeness because very few things here cost money this is why we do it we're giving free information because we have such a big reach that the company can still afford to keep the lights on just by the sheer volume of people that are there the ads that they sell stuff like that but if you're approaching someone and wanting to be a mentor that you don't know it's very rare that someone's gonna say yeah I was hoping that I could take some time away from managing all the stuff I already have going on to teach a different person that I don't know and so the odds of of you getting a mentor from that approach probably aren't that great what I would recommend what I do with the successful people I know do is they are more clever than that so for instance I'm going to be in Scottsdale hosting Retreats where I'm teaching the people how to invest in real estate that's a great way to get to know me better if you go to bpcon and you see me sitting down somewhere and you come sit down and hang out in the conversation that's a great way to get to know me better if you have a friend of a friend and you end up like there's a couple guys that literally join my Jujitsu gym just because they were like if I'm rolling with the guy I have to be able to ask him questions like that literally happens is they will come to me and try to talk about real estate in class now I'm not saying I want a bunch of stalkers okay that actually can become problematic I'm giving you examples of how you can use your creative abilities to build a relationship with someone rather than just emailing them and saying will you be my mentor and probably not getting a response another way that I've seen that people can do really well is they will go make friends with the people that are in my company that I rely on all right so guys like Kyle Reinke who's my Chief Operating Officer or Christian batchelder who runs the one brokerage with me uh Krista Keller my assistant these people contact me every day and play a very big role in my life if you make yourself valuable to them and one of them is like dude this person's been super helpful they sent us this thing they gave us this connection they provided us with this resource that I wouldn't have been able to get this thing done without them you make my friends like you you're gonna make me like you so if you really really want a mentor you need to think about how you can get in their world when we interviewed Alex hormozzi he said he spent I don't remember what it was it was more than a hundred thousand dollars to talk to Grant Cardone on the phone for like an hour and he did that several times now he didn't just get the information that Grant Cardone gave him Alex got a relationship with Grant Cardone that turned into a friendship I've seen people do this with other people like Ed mylett well they will pay a lot of money to get coaching from that person but in the process of coaching they develop a relationship which turns into the mentorship that isn't the apprenticeship model so just this word Mentor is sort of like it's used very Ambiguously and I'm trying to become more specific you've got a apprenticeship and then you've got a relationship and each of them have different paths to get there so if that's what you're looking for from me or from someone else that's in this space you're gonna have to think how do you set yourself apart from other people I appreciate the offer to get me a beer but I pre that beer would cost me so much money if I had to take time away from the other stuff that's going on it wouldn't make a ton of sense now you show up at bpcon you donate money to a charity that I really like you become friends with someone that I know you know you end up at an event that I'm at and something comes up now you're in a position where you can start to develop that relationship that I know so many people here are looking for this is how I got ahead as I joined gold bundens and I met a lot of the people you guys have heard on the podcast I met David Osborne and Tim Rhode and Pat hyben I met Andrew Cushman I Met Hill Elrod who wrote The Miracle morning and wrote the endorsement for long distance real estate investing which we mentioned here and a whole lot more people that I haven't mentioned but I didn't go up to them and say can you teach me everything I joined the group they were in I sat next to them I went and rode snowmobiles with them and went wakeboarding with them and jet skiing with them and listen to their problems and try to help them through it and we developed a relationship through that bonding process so hope that that helps um I see that you're in Thousand Oaks so I have a team in in Southern California if you would reach out to them that would be a great way to get the ball rolling with getting deeper into my world thanks for the question all right for those of you who have also been dying to know our producer for the show Eric has done the heavy lifting and has found the meaning to Rack your brain which I am now going to share with you the meaning is to think very hard to find an answer if you rack your brain you strain mentally to recall or to understand something the rack was a medieval torture device where the victim was tied to the rack by his arms and legs which were then practically torn from their bodies it's not surprising therefore that rack soon became a verb meaning to cause pain the word was used whenever something or someone was under particular stress and a huge variety of things were said to be racked the first recorded use of this being specifically applied to brains is in William beverages sermons circus 1680 they racked their brains they Hazard their lives for it where else are you gonna get this much real estate information this much direct advice on finding a mentor and this much historical knowledge on the meaning of phrases like rack your brain than Bigger Pockets that alone should get us a like and a subscribe from you on YouTube and your favorite podcast app alright our next question comes from Nathan Nye like Bill Nye the Science Guy hi this is Nathan from Michigan not an investor yet but hoping to change that soon after listening to the podcast for around six months can't say enough how much I appreciate BP truly life-changing anyways very curious how you all at Bigger Pockets navigate the topic of validation many people including myself at times thrive on someone else telling them good job but whenever I find myself locked in this mindset the tie to someone else's opinion feels unhealthy and almost takes control of my process that said I find it hard to tell myself you did it even with tasks or projects in my daily work how do you tell yourself I'm doing very well I'm proud of this even if others are leagues ahead how does this one conversation play out when millions are watching like on the podcast or even when you just know you know about an event happening would love to hear how you think about this topic thank you Nathan wow we are going deep here this is a great question and I'm not even quite sure how I'm going to answer this I should start off by saying you're not the only person that feels this and I appreciate you having the courage to say it most of our listeners be included will struggle with wanting validation um in fact I was just thinking about this the other day because there's a trait in people that will irritate me it's usually like some form of pride when people think that they're better than other people when they act like they're better than me uh in general when anyone acts prideful it sort of gets under my skin and almost every prideful person is insecure so what I was thinking about is what I want when I see pride what I typically want to do is try to Humble that person but the process of trying to Humble somebody usually will hit on their insecurity and make their pain even worse this is the problem with insecurity which shows up in Pride but it also shows up in the need for validation now we're all created and designed to need this when we're little kids we need our parents to say good job it's like a wiring that we have inside us at least this is how I look at it that is made by either intelligent design or evolutionary biology however you tend to look at it to keep you alive if your parent doesn't tell you good job you don't know what to do and you won't do the right things and then you'll end up dying in the same way that when your parents says you have to look both ways before you cross the street and if you don't do it they yell at you or they spank you they're telling you you did not do it a good job and because that is painful to lose their approval you're more likely to remember to look both ways before you cross the street and not be dead the same thing if you eat your vegetables and they tell you very good job they are training you to do a healthy thing that is hard and against your willpower sorry against your nature I should say against your will not your willpower that will serve you well in life so that they can keep you alive so this need for validation is tied to your desire to stay alive and that's why it's so powerful you can't just get away get around it the key is you got to put yourself around the right people so that they're giving you the right feedback and not leading you down the wrong path as well as to put yourself in a position where you're not completely dependent on it because now we're not little kids and so now this can become a pain sometimes when someone tells me a good job for something I'll spend more time doing it when it's not in alignment with my goals other time I will be making a progress with my goals but I'm not hearing good jobs so this is difficult here's a few things I can tell you right off the bat that will help you get yourself around other people that are committed to their goals and it doesn't have to be real estate get yourself around other people that are committed to staying in the gym get yourself around other people that are committed to eating healthier foods get yourself around other people that are committed to having better marriages or being better parents or managing their wealth better the first thing that you can do is when you start telling other people good job for what you did it will sort of Silence the need you have inside yourself to hear it I don't know why it works like this but it's almost the equivalent of if you're really hungry but you give someone else food your hunger can go away and that will help the other thing is they're more likely to feed you if they're being fed this is just a philosophy I have in life don't go around trying to find someone to be your friend go around looking for someone to be a friend too don't go around saying why Won't Anyone love me where do I find someone to love me how do I make someone love me go around and say how can I find someone to love how do I meet other people's needs because the people that meet everyone else's needs the people that are a friend to others the people that love others by the law of reciprocity will have that turned back to them to me that's what faith is it's knowing if you do the right thing that your needs will be met rather than manipulating a situation to try to get your needs met by doing the wrong thing it's trusting that if you do the right thing that things are going to work out for you and then having eyes to see where it did so when it comes to being locked in this mindset that you talk about the tide is someone else's opinion that feels unhealthy and almost takes control of my process one really helpful way you can get yourself out of that is to go look at what other people are needing what other people are craving how many talented people do you know that are working a job they hate because they don't have the confidence to get out of it how many really awesome people do you know that are stuck in an unhealthy relationship that won't leave it because there's not anyone telling them that they can do better how many people do you know that are not happy with their weight but they're just too insecure or shy to go running that you can say hey why don't I start walking with you every morning then let's start running together then let's go to the gym together how many people do you know that are suffering from the same thing that you are suffering from right now Nathan that you can be that person too that you're looking for for someone to be to you now I don't know exactly how that's going to work out for you I just know that it will if you focus on putting other people's needs first and validating them in the way that they need people will turn around and do it back to you and the universe or God or whatever you believe in tends to smile on that and push blessings your way I know this was not the Tactical advice that you were probably looking for but I really hope that you would start taking some actions out of Faith here and then either DM or email me and let me know if you've seen a positive impact from this advice all right we have time for one more question hey David Seth Stevens with Silverback investments in Cape Girardeau Missouri Missouri we own a 12 unit apartment building for about a year at this point it's third party managed we've been able to raise rents but overall the the building doesn't really seem to be doing a lot better than when we first purchased it so my questions are how long should you give a property manager to turn a property around and what are some determining factors in deciding to switch property management companies thanks for taking questions Stephen love it this is a great question all right let's dive into this first question I don't think the right way to approach it is how much time should I give them to turn it around I like to take almost every problem I have like what you have and turn it into the flow chart like is it yes or no if this than that right so the first question I would ask at the very top is is this something that can be turned around if the answer is no switching property management companies isn't going to help you if the answer is yes now you ask the question how long should I give them to turn it around as well as what progress am I seeing that they're making and then when it comes to the progress now I'd ask the question of like well why are they not making progress I kind of worked my way down that flow chart if it's a 12 unit property and it's not in a great area it might not be the property manager's fault okay now just think about your Phil Jackson you're the best coach that the NBA has ever seen I don't know who the best coach is that's debatable let's just say you're very good coach and you're given the worst players in the league to play with all of your knowledge all of your skills with people all of your handling your personalities all of your brilliant play calling is worthless if the guy on the floor can't dribble the ball without turning it over or your players can't shoot and they can't score what I've found is that the people that perform at the highest levels have to be surrounded by Talent it does not matter how good you are at anything if you're not surrounded by Talent now your property manager in this case that's called the talent that might be your actual asset how nice the units look what kind of area it's in are there other people that are moving into the area companies that are driving up wages and making so people can pay higher rents or is there a ton of competition and no one really wants to live in this apartment complex it might not be the coach's fault the team isn't winning now if you're doing everything right and it's an amazing unit and it's everybody wants to live there and you're getting tons of applications and they're just mismanaging it yeah you need to get another company and need to do it right now there's no more time to give them to turn it around my guess is you're probably not thinking about if you were in their situation could you do anything different so before you assume is the property management company always start with yourself kind of an asset did we give them what could we be expecting him to do there are certain problems that I think anyone just with pure effort and having a good intention can fix for instance if they're having plumbers come out to fix trivial issues and charging a thousand dollars when they could be calling a handyman to pay a hundred they're being lazy get rid of them if it's the expenses are just completely out of control that's usually something that the property management has some control over they're being lazy get rid of them if everyone that's applying to live there is willing to pay 8.95 and you want to bump the rents up to 1200 and no one's willing to pay it there's not much you can do if tenants are constantly breaking their leases and it's not just one or two it's all the time well that may be that they're choosing the wrong tenants but it also maybe they don't have much tenants to choose from right most of the time if they have a lot of high qualified tenants they're going to pick the ones that are less likely to break the lease so you'd have to ask some questions I'd be asking when we have a vacancy how many people apply for it I would be saying how much competition do we have from other units in the area and they should know that if they don't even know what their competition is that's not a good sign you might want to move on from them and then the last piece of advice I'd give you is before you go find another company because I kind of feel like you're moving that direction anyways you're just looking for some reason not to at this point is ask the company what they would do different than what you're getting right now okay so let's say that you had a house for sale and it wasn't selling you had a listing that was the very same scenario you've got you've got an apartment complex it's not renting for enough if you came to me as your real estate agent and said David my house isn't selling what would you do to sell it I would tell you I would be straightforward and there's a very good chance that it wouldn't be that The house's fault it'd be your fault a lot of people list their house too high they save on not wanting to spend for marketing they uh let the house smell bad they don't want to have to move their stuff out of it so they've got outdated furniture or they've got moving boxes they've got stuff that stops the house from showing well they're not key they're not wanting to actually like keep the grass cut or keep it in good condition and if you came to me and said David why is my house not selling and what would you do different I'd tell you what you don't want to hear I'd give you the truth and I would also say I'm not going to drop my commission to make this work for you you're going to have to put the work into getting your house sold because my job is to get it sold and this is what it's going to take I want a property management company that would say the same thing to me okay here's the problem you haven't spent the money on the units that you need to you're not marketing it in the right places the units are not in very good shape it the lighting is really poor and the tenants are going to feel scared coming here at night they should have objective information readily available to tell you of what they would do different if they go well I don't know let's just get in here and see what we got we'll figure it out that's not the person to hire you want them to have a plan going in where they can write out to you specifically this is what we need to do different these are the 10 steps we're going to take if you hire us if they didn't have a plan in place I wouldn't switch to that company thank you for the question there though I'm really sorry this is what you're going through I love it as you struggle with this once you figure out what it was you needed to change if you would go in the forums uh quote the number to this show and tell people hey this was my problem and here's what I figured out how to solve it all right thank you again everyone for taking the time to send us questions this is a wrap to this episode of the singing green podcast as always if you like these shows is please go to YouTube and leave us a comment letting us know what you like about it why you like it and what you want to see more of as well as leave us a review to let us know that you love the show if you'd like to spin a question please go to biggerpockets.com David where you can do so there and lastly if you've got some more time please consider checking out another BiggerPockets podcast we've got more seeing green we've got more traditional real estate podcasts we've got a whole library of information on BiggerPockets YouTube channel we've got the state of the market podcast the rookie podcast the money show the business show the investor podcast and probably more that I'm not remembering because there's so many out there so check out all of the Bigger Pockets podcast and find the one that resonates with you the most thank you very much for your attention and the time that we spent together I will catch you on another one [Music] thank you

Channel: BiggerPockets

Views: 63,690

Keywords: brrrr investing, brrrr method, brrrr strategy, brrrr real estate, buy rehab rent refinance repeat, buy rehab rent refinance repeat strategy, brrr method, brrr strategy, buy rehab rent, buy rehab rent refinance, real estate investing, real estate market, housing market, invest in real estate, fix and flip, home flipping, flipping houses, rental property, investment property, income property, financial freedom, financial independence, invest, biggerpockets, seeing greene

Id: Yny5kXLIb98

Length: 54min 20sec (3260 seconds)

Published: Sun Oct 02 2022