How to Become a Millionaire Through Real Estate by 26 with Graham Stephan | BP Podcast 316

this is the bigger pockets podcast show 316 you're listening to bigger pockets radio simplifying real estate for investors large and small if you're here looking to learn about real estate investing without all the Heights you're in the right place stay tuned and be sure to join the millions of others who have benefited from bigger pockets calm your home for real estate investing online what's going on everyone this is Brandon today's host of the BiggerPockets podcast here with my buddy David Greene what's up David Green not much man I'm doing really good just did a seminar the other day it's really like a meet-up where I taught people how to invest while working a full-time job and I thought it went really good we had a hundred or so people show up and they got a free education and I got to share what else building secrets with BiggerPockets members I you get to grow your ego while other people learn this is Fanta yeah they're forced to listen to me like they're locked in a room and I get all the attention it's my inner diva gets to come out it's my ariana grande side the very very good seven rings isn't nothing anything anyway so alright so David here actually this kind of leads into a short quick tip for today is if you're not getting out there meeting real-life people in your area I mean if you've got some knowledge go share it somehow right go start a local meetup meet with people one on one become a mentor because that not only helps them and actually help solidify your thoughts and your views and you become a better investor for doing it so do what David's doing go out there meet people or if you're not at that level yet if you're not already experienced then go to them and learn and and meet and connect and all that so very very powerful stuff so that is today's short pretty quick tip that's like a pre quick tip ooh is that a new part there's more there's more where that comes from let's get to today's real tip all right today's quick tip is short and simple BiggerPockets is hiring for two roles so they're gonna be working with me it's gonna be awesome one of them is called a digital membership retention specialist is basically someone who's going to be in charge of making sure our pro members around BiggerPockets all tens of thousands of them are feeling good and getting more and more perks and benefits all the time so if you love our Pro membership or you would love to help people be able to use their pro membership to buy more real estate and find ways to do that and this is Ann in Denver job so if you are in Denver or willing to locate two Denver CO two BiggerPockets that come such jobs because I would love to talk to you about whether or not you can work with me on a regular basis here at BiggerPockets so that is today's quick quick tip and I actually I have a quick tip we'll call it quick table number three for the day I'd remember like back like six months ago everybody listening to this not you today because I know you remember it where I was talking on my buddy Pete one of my good good friends name's Pete he's awesome he runs a company called mission meets Co and they sell like the best beef jerky and meat sticks on the planet anyway so like six months ago I gave a shout out on our podcast and I said people could go to like mission meets Co slash bigger pockets to get some free jerky when they buy something anyway I was talking to Pete the other day and he said yeah go ahead and offer that again so I'm just gonna throw that out there if anybody wants free jerky by some mission meat sticks which are amazing and you get some of the best bacon jerky ever so that's quick tip number three go to mission meats kovash BiggerPockets and then just get like my favorite snack on the planet but anyway when we are rambling too long we get today's show we have an incredible show today we're actually interviewing a top producing real estate agent in the LA area who also invests in real estate so this guy has like a 360 perspective on finding a good agent techniques for how to like communicate with your agents of find deals how he invests himself he kind of sees it from every single angle and this dude became a millionaire at 26 years old through real estate like this is some really really good stuff so I hope you guys are excited to learn from somebody who's already done it and shares exactly how we did and they're gonna learn about the fortune formula ooh yes I think I called up a millionaire formula but anyway well I I'm formulating a future book right here on this podcast today listen for that later on but this is what this is what it looked like to see Beethoven creating like his fifth symphony but I'm watching it happen in person as brand is very rapidly coming up with these ideas there you go that's that's you know it's not often people compare me to Beethoven but I'll take it today all right with that let's get to today's show all right Graham welcome to the BiggerPockets podcast really good to have you thank you so I've been looking forward to this for a while awesome awesome was to be a lot of fun today so okay so we're jump in I know you've got you've got a good thing going over on YouTube i watch your stuff over there you know you seem know what I'm talking about so first of all good job on that that's awesome I'm actually learning a lot from you yeah no way thank you man I'm getting some ideas from your channel too so it's cool to kind of play the back and forth and love it that's how it should be right like I exactly people business always like look at everything is still like I don't know competitive but really like you know if we're all helping you like each other I think it's awesome so I totally agree with that yeah very very cool all right so we want to know more about your not so much YouTube abilities which are pretty awesome social media stuff but we want to know about your real estate investing and I hear you're an agent as well so let's kind of go through your story maybe start the beginning how did you get into a real estate and also where you located and kind of watch the beginning of your journey yeah of course so I'm here in Los Angeles California I grew out here let's see but anyway I grew up here in Los Angeles California and I had really really bad grades in high school I hated school could not get into it whatsoever um I was working part-time doing like I basically do photography for this Marine Aquarium wholesaler and because of that changed my perspective on on earning money because I figured like if I can work there instead of go to school I can make like 50 bucks instead of going to school so for me it was just like a no-brainer well let me just miss school and not do my homework because instead I can go and make money so it was because of that I had really bad grades in high school did not get into college and that left me kind of thinking like I really got to get my stuff together I don't want to be this bum living in a van on Sunset Boulevard not knowing what he's doing and like not making any money and I didn't have you know I wasn't gonna you know go to college or anything like that so I ended up just randomly getting my real estate license and I figured I would convince my parents let me get one year of work experience here and then after one year of working as a real estate agent I can then pre apply to college and maybe like be an investment banker like something fancy like that but I ended up starting in real estates and loving it like everyday for me didn't feel like work it just felt like fun like I can get paid to go and see really cool homes to meet really cool people and somehow this is a career but I'm still planning to go to college and it wasn't until about eight months into it that I sold my first house that was just bit of luck but I was holding open houses every single Sunday and one Sunday eight months in a buyer came in and ended up having me represent on a home in Beverly Hills for like I got that deal for three point six million dollars and then it was literally like a month and a half two months later that I sold another deal for about 1.2 million dollars and after that I'm like convinced there's no way I'm going back to college like this is so much fun I see a career in this and I want to pursue it so I continue doing that and having so much fun with it but I would save every bit of the Commission that I made because I saw how unstable it was and I've seen other agents that would be like six seven months without doing a single deal and they would have to make that last Commission uh you know tide them over until the next deal and it was this unstability that I didn't know where my next deal was gonna come from I didn't know how big that deal was gonna be and I didn't know how long it was gonna take me so I saved everything thinking that like this could be my last deal for like a year um so after about three and a half years of doing that I had you know all of this Commission's saved up and I saved everything like I lived on $5 footlong Subway sandwiches wouldn't spend a dime like the only thing I spent money on was a car I bought like my dream car when I was like I just about to turn nineteen is the Lotus Elise and so I just feel like that's the one thing I wanted and everything else like I was fine with everything else because everything you do most agents do and this is not a bad thing but I know a lot agents will buy a nice car because it actually improves your image to help you actually close more deals in the future it did looking looking back that was not the intention at the time but I started going to car Amit's and that did I made my money back up in the car probably like seven or eight times when I was on the car just by business I meant from Carney's that stuff there's like a hundred people right now that are like see honey listen I get that they're gonna go buy their kirari sales just like everyone has a Lamborghini so anyway so I saved up like three and a half almost four years worth of income working as an agent and I noticed a 2011 like housing prices were so cheap and really what I ended up where I ended up learning up most of my techniques and styles was watching what my clients for doing and so I started seeing my clients like really wealthy Beverly Hills clients that were buying at the time like South Los Angeles they're buying in Riverside and they're buying in San Bernardino and these are people that are worth you know five to ten plus million dollars and they're going and buying these little like you know hundred thousand dollar houses two hundred thousand dollar houses like they have teams that are writing dozens of offers every single day buying anything they can and I'm talking to these people like why are you buying this why are you buying this and you know they were telling me that just it the prices that you get that you're getting right now for the rents like this is the lowest I've ever seen it it just makes sense like you could buy a place for like a hundred thousand dollars and they were getting like eighteen hundred dollars a month for rent they were going in doing little minor renovations and getting a ton of money and this just clicked to me like wait a second so I have all of this money saved up right now that I could be doing the same thing and at the very least that would supplement the money that I make is a real estate agent because at least I would have some consistent income coming in that I can rely on and if that way I don't have the stress if I don't do a deal one month it's no worries because at least I have this rental income coming in so I ended up starting to look and I focused on San Bernardino just run with the Rancho Cucamonga area just a little bit northeast of that and what I would do is every single Saturday Sunday I'd go and I'd start to see all the houses available I print out the big MLS sheet of like 60 homes and I would spend the entire day with a friend going to every single property I could that's on a lockbox and just getting to know the area for about a month of doing that I started writing offers now I was an agent myself so I figured I would just start writing all of the offers that I possibly could on anything that came up and all of these were short sales so this means it the owner had owed more on the property than one it was worth they weren't making the payments and they were trying to get out for the bank basically had that Bank absorbed the loss and approve you know when you buyer to you know to purchase that property so I was finding a lot of these properties that were like three hundred and fifty thousand dollars in two thousand you know five that were selling now for like $90,000 and they were like 2000 square-foot homes and I'm like to read just to rebuild this home is 200 grand like just to build it and you're buying this for like you know fifty five dollars a square foot or something like crazy like that so I'm like the replacement value of this home alone is worth way more so we start writing all of these offers and I would just sit there and anything new that would come on the market write an offer and I would just go down the list and write offers it at prices that I felt made sense I would lowball a lot of them knowing that if I get it accepted it's gonna go to the bank they're gonna take 6 to 12 months to approve or deny it and most of them I knew would come back with their own price anyway so it doesn't really matter what price that I offered as long as it gets accepted because the bank is going to do their own thing so I probably wrote like I don't know 80 offers 80 or 90 I mean it was a lot of offers of those baby 20 got accepted 25 got accepted then of those banks would come back on like 10 of them and say hey you know we want this price we want this price and then of those I ended up buying 3 of them where the bank came back at the right price with the property that I liked in a decent amount of decent timeframe so I ended up buying three homes two were houses and then one was a triplex and all of them I went in I fixed them up very minimal you know fix ups and then rented them out and it was from that that I began making about 3 it was a little bit under three thousand ones like $2,900 a month and it was after that that I'm like all Mike like I was addicted after doing that it's because to me it's like if I could just take all the money as a real estate agent and then funnel it back into rental property that's at least my base and then over time my base is gonna slowly grow and grow and grow and grow and then that way it takes the pressure off everything else so I continued doing that I continued saving up as a real estate agent for another few years I bought a house then in Culver City because they notice Culver City prices I felt were undervalued at the time given everything else that was going around and in Venice and Santa ma and I thought Culver City was like really undervalued so I ended up buying a single-family home in Culver City in 2000 I think it's 2015 or 16 somewhere around there right before the values that Culver City really started to like go up dramatically and I locked in a 30-year loan at three point three seventy-five percent fixed on his house at Culver City fixed up the house that house was now it's it's almost doubled in value since then but then after that one I went and bought a duplex just a little bit east of Culver City and I played in a city called West Adams and I felt at that time West Adams was really undervalued given the prices now in Culver City Sean fixed up the duplex and then when I fixed up them I realized like I'm just gonna move in one of the sides of the duplex to this house Hackett just save money and and that way like I can save even more money to buy more real estate then a year later I found another duplex that the owner the owner just misrepresented it I mean they called this duplex a one bedroom one and a half bathroom it was very clearly to me a two-bedroom so they were basing this off of being a 1-bedroom on the how about they priced it and in line of that and they said it can rent for $2,100 per side as a 1-bedroom I ended up buying this and getting an offer for $2,700 for that same unit just by calling it a two-bedroom because it was very clearly a two-bedroom so I want to unpack that a little bit because like what my favorite strategy I actually wanna go back and go a couple of steps back here but while we're on this topic and then we'll go back so we're in Back to the Future here we're so one of my favorite strategies in all real estate I tell people this a lot is look for like in my case I will look for a two-bedroom house over a thousand or over 1,100 square feet because a lot of times agents do miss represent or they they they they don't think oh that could actually be another bedroom and legally it's not a bedroom it so though I'll find a two bedroom house with 1,800 square feet and it's like I know for a fact that's not a two bedroom house that's a four bedroom house or a three bedroom house or a five bedroom house right so you get way higher rent so it's one of the this treasure I use it's cool that you do the same thing you look for yeah really was like too bad but they said it was one right I've seen that with Studios too one I've seen it from 1 to 2 or 1 to 3 anyway very very cool strategy that's awesome but I want to jump back to the very very first couple things there you said you were doing these short sale offers which shortens those were really popular back then not so much today but they they will come back I mean their market thing right when the market drops really low everyone now a lot people are you know underwater so they go to shore so so let's talk about a permit because even though it's not very popular today to do a short so there are still out there and they're going to come back maybe in the next few years who knows whenever the market drops so can you you said basically what sells when somebody owes more and then what they the property is worth and then you said something about you put in an offer you know maybe six to twelve months later they come back that that delay we had somebody once called at the short sale time machine so you like get a year goes price today yes very true yeah so but what happens in a case this is a common thing question I get from people is what if you get more than one of your offers accepted like that's like when I tell people to make like a fair number of offers like if you want to get more deals accepted you got to make more offers they're like well what happens if I get to accept it and then I can't buy both you know like that happened to you kind of so like well how did you cut percent 100% well the I would say 99 percent of times the bank will come back with a higher price so they'll go through the entire process you wait 8 months and then and say okay we're accepting your offer what we wanted at this slightly higher price which we feel like is now the current market and then it's up to you at that time to say I want it I don't want it and if I was unsure I would just say I want it and then I would do my inspections on the property and once I did my inspections always these short sales had so many issues I found mold I found you know broken pipe sometimes tenants would just trash the home there's a lot that's happened in the 8 months or the 12 months or whatever it is when someone's living there and it's you know they're not making their payments usually they don't have any upkeep so there's always something I didn't encounter that usually the bank would just come back at a higher price and it was up to me to say yes or no eight months down the line and usually what I would do even if they came back at a higher price was coming to the lower price and usually something a little bit of wiggle room there like you know a few thousand bucks or whatever so I was never worried about getting too many offers accepted if anything I just was upset I didn't have more money because there are two deals that I got back then that I just I couldn't do I tried to get money I tried to like get a partner I just I couldn't get these two houses that I knew were like slam-dunk deals and I look back today I'm like ah like if only but what would you tell yourself today knowing what you know now about real estate investing you're in your shoes like let's say somebody else in the exact same shoes I got a couple of deals that are really really good what would you tell them to do in today's market if they get a couple of good deals they just can't find financing for well the thing is back then I was buying these deals cash because I didn't have a credit card I didn't have any credit whatsoever and if I just simply had a credit card I could have financed all of them I could have put even like 30% down 40% down or whatever and financed them but even back then I think I should have made the effort to try to see if I can I don't know if I could have really flipped those contracts but at least bring them to somebody else as an agent I just didn't make the effort at the time because I was really so focused on getting this for myself that I should have looking back pitched it to somewhere own clients and seeing if I can work out some sort of even even if I bring it to them and ask for a small portion of equity of the deal just just to get myself in the door because these were such good deals back then you make some really good points Graham and I want to kind of highlight them and the first one is what you just said you had a one-track mind where you were thinking that does the deal work for me or not and if yes I'll pursue it if no I won't right and we all start off with that and it's actually a positive thing in the beginning to know what you want and know what you don't so that you're not kind of scattered all over the place and you can't make a decision but as you become a more experienced investor more experienced businessperson you start looking at this is a deal but it might not work for me I might not be in the position to capitalize on it but what can I do with it right so if you're a buy and hold investor and you come across a flip in the beginning you just say well I don't flip houses and that's good but as you become more experienced you should say could I flip this house could I use my rehab crew from my buying holds to flip a house if not could I give this to a flipper and wholesale it's person right could I find another investor who wants to get started and just do him a favor and then they're more likely to bring me a favor back so I wanted to highlight that for people that really all you need to do is find a deal and then figure out what to do with that deal and you're gonna make money in some way with real estate and you're acknowledging that right now I think that's really wise point and you said a couple other things too you mentioned that you were writing offers on everything that you were a real estate agent you were doing really good and you didn't go invest in Bitcoin you didn't go invest you know like stock option waters back then I should have invested yeah you were investing in something you didn't know you're investing in something that you were and I'm a real estate agent as well and it boggles my mind how many people sell real estate for a living they know when they get a really good deal they have all the access to run comps and run rents and figure everything out and they still don't invest in real estate it's amazing how many real estate agent be buying deals for themselves and they're not but you props to you because you actually did make that jump and you moved into the other world and you had vision to see that investing was where it's at right like you can make money as an agent that's great but that money gets taxed a lot higher I'm telling you guys like it's a good profession but it's blood money sometimes like you you pay the price to earn that Commission burying your clients emotional burdens and putting out fires and if you're a good agent you're doing the job of both real estate agents people don't realize that because I'm sure god you're always figuring out the other side's problems because you don't make any money if it doesn't close so you've got to and then you didn't just say oh I want to be an investor instead of an agent you knew that you needed to bring investing into it but you focused on making and saving capital through your your main job which for you is selling homes and then amplify that capital through investing and you were telling that story and you gave us a ton of information is really good and I kind of picked out that's what people need to take from this because whether they're a car mechanic or you know like an airline pilot whatever their job is they can do the same thing that you did use those same principles I think that doing it as a real estate agent gives you an advantage though because you see the market you know how real estate works 100% if anything I really feel like that was what gave me the biggest advantage is just doing it basically 24/7 for three and a half years and I can really see the trends of the market and see where people are buying and I figure too if people that are worth like ten million dollars are buying in San Bernardino and all of these big Beverly Hills investors are starting about like they and they've been doing this for decades you know chances are this is something I should really start paying attention to myself absolutely you know and that's there's a synergy there because as you're working with people that have a high net worth and they're buying these homes they could invest in your deals you could hook them up with other people's deals and you just made that person a lot of money and they're more likely to bring you business I think in general people get this really like hey this is my way out of where I am that I don't like I'm gonna buy a bunch of rentals and sometimes it helps to take those blinders off and widen your vision and see there's opportunity all around you that you're missing because you're only looking for one thing agreed totally agree with that cool all right I saw what I move on and go a go see you bought your first property how old were you when you buy that first rental property 21 all right so let's talk about that for a minute because a lot of people listen this show are younger like they are and there's I was actually 21 when I bought my first one till it runs as well David was like 63 and so like yeah we didn't call them rentals back then we called homesteading you're 21 you have any tips for people listening right now who are young they're fired up they want to get new real estate they don't want the the the prescribed life plan that our parents and grandparents followed what do you say to those people about jumping into real estate at the young age I would say probably just getting over the mental hurdle that you can't do it and there was a lot of resistance for me too at 21 to buy a house especially to buy a house cash and I really kind of had this belief that's just like it's not right for a 21 year old to to own a home like it's it's not normal like you can't do that you're too young to do something like that and also I won't lie I mean I'll say that there's a little bit of guilt in that too of knowing that like there were people in like their 40s and 50s who have been saving up their entire lives who still don't own a property and they just can't do it and there's some guilt as like is this fair for someone who's 21 to be like buying this house I think it was a lot of this kind of self-doubt that really got to me a little bit but I just figured I just got to push through it and just and push all of those thoughts aside so for me I mean that was probably the biggest thing is one or like the mental aspect of doing this and also a bit of the awkwardness of all of my tenants were significantly older than me and Here I am as this kid and it's like I'm the landlord and I'm like this 21 year old kid and you know even the 21 I looked probably like I was 16 so it's like here's this little kid who's like I owe rent to every single month that was really in really intimidating for me even to meet these people that were like my tenants I was like dude how do I act dude do I pretend like am i their friend or what do I say what do I do so it was definitely really scary and it was definitely a learning experience but I was so you just got to jump in I mean there's no other way around it to really prepare yourself besides just getting that first-hand experience you know there's there's probably a couple things that you've already learned to work around that like one of them is when you're a landlord managing your own property you never tell people that you're the owner you always tell them you're the property manager right you like then they don't think like who's this 21 year old trying to tell me what to do you're like I'm obviously a kid savant if someone hired me it's what do you want to manage this property you're gonna do everything that I say like I'm sure there's some things you picked up along the way that's a very impressive you did that at such a young age when you look at most 21 year olds now they're actually avoiding anything that would cause anxiety or growth or risk right and they're chasing things that kind of make them feel comfortable what do you say to the 21 year olds that are out there they say yeah that's cool and all but I don't want to save my money I don't want to work for money I want to I want to buy experience not things even if things can be assets that can be worth a lot of money and set you up for your future I think it's worth it here's the thing I mean here's my own personal belief when it comes to this is that you have such a massive advantage in your 20s that you're never gonna have for the rest of your life I really believe that if people take one decade and just really safe for their 20s that what they do in their 20s you can set them up for the rest of their lives because they have the power of really just having this compounded interest working for them since for the very beginning that I think if they just make a very short-term sacrifice and it can still have the experiences and they can still have a great time they can still do everything they want to do but dial it back and make saving a priority they can go so far like I never felt like I have missed out in my 20 I'm gonna be 29 next month and I've never felt like I've missed out on something like if all my friends were going out to like a really fancy dinner let's just say I will order an appetizer instead of an entree I mean is something as simple as that they'd say no avocado avocado toast no you just delay the avocado toast in your 20s but I take it to an extreme so I definitely got like this is probably the terrible terrible thing to say but all my friends went out to a really nice restaurant it's like a really nice restaurant like to the point where usually you would have to wear like a button-down shirt and like dress shoes and stuff like this I didn't want to spend like the $80 to plate but I wanted to go with everyone so I went to subway and I brought in my subways in the restaurant and I just asked for a plate and with everyone else got their food I had the Subway's edge like on my chair I pulled up the subway station I found my plate just so I wouldn't have to spin the ATX I spent like five dollars Sam that's hilarious no avocado so I say that extra layer always but but my point my point is this is that I still had a great time like even even get so I bought a Lotus Elise and that was like my cool sports car so instead of buying like the Lamborghini for like a hundred and seventy grand I bought a Lotus Elise for thirty thirty thousand dollars that didn't lose its value but it was like ninety-five percent the same thing in terms of experience for a fraction of the price so there's a lot of these things that you can do that don't really cost a lot of money where you get basically the entire experience or you can like even now I can travel anywhere in the world for free just with with credit card points and that's something various abilities you can still do all of these things it's just you don't need to spend money necessarily doing them or you can or you can really cut down on that so I really feel like your 20s if you can just do that for for ten years and really build up that nest I just get a few properties into your belt just get some investments that could set you up for the rest of your life so that when you're you know thirty forty fifty you're never gonna have to worry about like oh is this rental property or this wholesale deal and this real estate agent deal because you're already gonna have that that nest it's kind of holding you yeah that's been my philosophy it's such a good time to build that foundation I mean I'm sure we've all seen like the financial advisors who'd be like you know if you save starting at the age twenty-one versus age 31 it's like millions of dollars of difference like oh yeah actually decade it's just it's unbelievable so I'm speaking of be near 20s I want I want to cover a topic real quick that normally I wouldn't bring up to somebody like on a podcast but because you already open the door by having your third most popular video on your YouTube channel with this how I became a millionaire in real estate by 26 minutes so yeah a lot of people have that goal I want to be a millionaire by thirty I wanna be a million whatever I can we like how did you how are you able to do obviously they can go look up the video just you know go to your YouTube channel or just type into Google I mean YouTube how I became a millionaire in real estate by 26 but either way can you walk us through how do you become a millionaire real estate was that all investing an agent investing combined or other things was that looked like I would say it's very much agent and investing combined I achieve things really helped me out a lot because I didn't eighteen when I was eighteen I think I made sixties something thousand the first year seventy thousand the first year at eighteen but most of that was that one deal in Beverly Hills really you know three and a half you know then my income really kind of went to about a hundred stayed between a hundred and hundred and twenty the next few years took me a while to break through that then I think it was like 180 and then like 220 after that so I had a really good income I didn't spend a lot of money I really kept like I was doing the $5 somebody saying like I was making more than all of my friends and they were the ones to spend an $8 that you know $80 in the meal has been you know $5 in subway so saved a lot of that money invested it also I had two things really working my favorite one is investing in 2011/2012 so this properties by then more than doubled if anything I think they more so tripled in value so that was a significant portion but it was also having a relatively high income working as a real estate agent in conjunction with that where I finally I got a million dollar net worth by 26 between those two now if my income was not as high as a real estate agent I wouldn't have been there if I didn't invest in 2011/2012 I would not have been there it would have taken me you know several more years because I sunk like all this equities to start growing rents started coming in a little bit higher and in my income started growing as well the process so let me ask you about that you mentioned how you save money in your 20s the subway footlong instead of the dinner that's really good stuff thick the money you saved on your car that's also a really good idea because you're showing is you don't have to deprive yourself to be successful you have to be smart about the things you chase right but you didn't just save money during your 20s you actually built up a lot of income during that time and I know a lot of people's gut response is gonna be well that must be nice to be a really successful real estate agent you could save that money but tell us about the foundation you built in your 20s that led to you being able to generate a lot of money what did you do during that time when everybody else was going to Burning Man and kind of screwing around and not purposely working on skills that would help them build wealth that put you in the position right now yeah I would say two things so first of all was not going to college and by not going to college first of all I had no student debt that was holding me back and like I didn't come from a wealthy family or anything like that so college would be on me and I was gonna have to take out loans or do something to pay for that school so I didn't I don't want to say waste for years going to college I wouldn't say college is always gonna be a waste but in my situation I didn't spend four years going to college on something that wasn't gonna be helping me and I didn't spend money to do so so going to college for me would have set me back probably at least a decade in terms of net worth at least minimum probably a decade um so it was that secondly I really loved what I did to the point where it never really felt like work and I was I would look forward to like a Monday because it meant that I can go and like kind of get clients and show how is isn't stuff like that like even Sundays I would do open houses but I was like excited for the Monday to really go and work and I just I just enjoyed it so much that like I don't know I didn't have a desire to go to like to Burning Man I didn't have a desire to go to Coachella I just loved what I did so much that that was my idea of fun and like I didn't need to go on vacations to try to escape something because like for me my work was like my vacation like it was just like every day was to me was like I get to hang out with these these clients that I consider friends and see really cool homes and like this is my job and the people that I met in the beginning or even still to this day like I was being I would randomly meet like celebrities holding open houses and in Hollywood and they would just walk in and no joke would like write down their email address and and I could follow up with them later or they would call me on a listing and I would rent them a home like I've had several a list actors and actresses that I've represented that have literally called me on one of my listings and I showed it to him and they were unrepresented and I continued showing them other homes till I sold my place and like that didn't like that's so cool these are experiences that I feel like people would like pay for does the opportunity to do something like that so for me it was just it was fun yeah and I think that is key you know I've been kind of jotting down notes here as you've been talking and and this is something I've been thinking a lot about lately and your your story perfectly symbolizes but we talked about becoming a millionaire like I told it like the way I like formulate things in my head is like I'm gonna write a book on the right side write a book I'm like caught like the millionaire formula right and here's what it is it and you can totally steal this if you want or make a youtube video all right so it's basically here you did right you made a ton of money working hard on stuff you love like almost everybody I know who's really successful I mean I hang out with a fair number of like successful people and they all generally made a ton of money working hard in something that they love I think in order to make a ton of money you have to work hard at something you love generally speaking not I mean obviously there's you know I can hate being a lawyer and still be a lawyer but I mean I think you like David worked super hard at David worked super hard at being a cop he loved being a cop and so he worked super hard at made a ton of money doing it and then that moves on the step two is spend as little money as possible or live responsibly and we talk about I do that right that leaves you with a good amount of extra money and then invest that in assets you understand that grow right it's like that's like this like millionaire formula that I'm putting together in my head here yeah make it a fund of money working on hard on stuff you love spend only a little that money by living responsibly and invest the rest and assets you understand that will grow and if you follow those three things like it doesn't matter you said earlier you were like well you know yeah I was a real estate agent it might not have happened if I wasn't but my guess is you're the type of guy that you you maybe could have started a plumbing business right that and you would have worked if you loved plumbing you maybe it would have started a plumbing business worked super hard it hired a bunch of plumbers grew that business made a bunch of money live cheap and invested the rest in maybe your asset that you understood was mutual funds you'd probably still be a millionaire before you're 30 had you done that within a decade it's like that formula kind of works no matter how you do it so like as much as yeah you did it and you know people that go yeah you got lucky you bought in 2011 okay well what is it what's 2011 today like what is today's 2011 right so anyway I like that kind of think that's so true because I believe every year there's a new opportunity out there like every single year it's like well you got lucky then well you can still get lucky now there are other opportunities that you can get very lucky in the same thing like that the many people that they use that as an excuse for not even doing it that's usually I think about this so much because I remember when I first started buying rentals everybody was saying don't do it it was constant every time you turned on the news Real Estate's in a plunge America's headed to the next like depression lock bat locked at the gates that's the hatch it's gonna go terrible don't buy anything and a lot of people told me that I was stupid for doing this right and right now I think people are gonna look back in 20 or 30 years and say can you believe how easy it was to get money you just stuck your hand out and people were like please take my money and invest it for me right now or or how easy it was to find tenants because there's a lot really didn't want to own a home at this point there are things happening right now that make investing in real estate such an amazing opportunity and we're just focused on a price is are high we're at the top of the market all these things that are negative well when that changes there will be a whole bunch of new negative things that everybody focuses on and I think Graham makes a really good point that there's always an opportunity in something somewhere even if you believe that this is the wrong time to buy that's fine why not go become a real estate agent and sell real estate to people who don't want to be investors right or why don't you go get your mortgage license and do loans there's something in real estate if you really love it that you can do to earn money I think Brandon's pointed the key that successful people are wealthy people needed was that they did something they loved and if you're listening to this podcast and hearing my voice right now you love real estate that's why you're listening to it unless you just love beards and you're here for Brandon's beard but for that for the majority people the oh yeah baby so overwhelming I think it's like half 50/50 for the beard so for the other half of you that love real estate right find something to do with it this is what I always say during the gold rush everybody came to California to make their Millions right those to me are the people who are going to the Guru's and saying here's twenty five thousand dollars teach me how to become a millionaire in real estate and very very few people actually made millions during the gold rush just like people to go to gurus you know who really made money during that time was the merchants that went out there and they sold the shovels and they showed the pigs and they sold the pieces of paper for $100 each so that people could write home to their families right they were around the thing they loved but they weren't the fool that was chasing after the get-rich-quick scheme and there are so many opportunities like that within real estate and the more you know the more chances you'll have to take advantage of that yeah like one of the opportunities that I see right now as a real estate agent for anyone who wants to get in because right now they think it's so competitive and like there's nothing they can really do and the markets saturated and they think no one's buying right now because the prices are high but one of the biggest opportunities right now that many people are not taking advantage of is becoming a real estate agent and representing tenants all the people who say that the market is too high all the people who are saying I'm gonna hold off a few years and see what's gonna happen all of those people are renting instead I have seen several people sell homes and decide to rent for a few years to see what happens the thing is as a real estate agent no one is going after those tenants because they see why would I want to earn a few thousand dollars representing a tenant when I can earn a hundred thousand dollars selling them all well guess what all of those people got represented and that's your chance to get your foot in the door represent them in the short term on a lease and make a few thousand or breakeven and five years from now all of those people come back to you and they buy that's how I built my entire business you're a high percent right every all I want to say probably half of those people ended up using me to buy in the next few years that little time was worth you know one hundred and fifty thousand and that's what the smart business people do right like that's that's why I educate people in real estate and I do seminars and I don't charge for it I give free education because it gives people an opportunity to see oh this guy's actually cares about me he doesn't just want to commission he wants to make me money so then when they do want to sell their house they're gonna go to the person that they trust they already have their relationship with having that long vision is what's gonna help you build wealth and building wealth is what's gonna help you invest in real estate then you're gonna get on the bigger part its podcast and talk about avocado toast and Lotus to leads or make a video that goes completely viral because you became a millionaire e26 and I think that's what brand and I are so passionate about is how we help the people who are listening to this understand what the really successful people that we know do in the way they think because there's a pattern that shows up all the time they say things like what Graham just said quit looking for the quick score help that person by getting them an apartment represent them well save them money five years later then they're gonna let you sell their house you're gonna make twenty thousand dollars on that commission and if you help ten people you just made yourself you know two hundred thousand dollars five years from after you that five times you became a millionaire just by doing something small that you could do now and it works that principle works for anything right building relationships with wholesalers setting up a buyer's list of wholesale properties to building relationships with people the partner on deals are finding off-market deals you know if you take that long game and you do the right thing that stuff will come back to you absolutely I agree yeah that's great all right so let's do before we head on to like the deal deep dive and the fire round and famous for and all that good stuff what about now like you know after the beginning of your business back in 12 it was great we could find deals so are you just like you know resting on your laurels right now and and relaxing are you still looking for deals you still buying stuff like what's your business I would say I would say it's a little bit of both so right now I've kind of enjoyed I just bought my last deal about three and a half months ago and that was the duplex where they misrepresented it and right now is the point where that covers all of my expenses and I'm finally at the point now where I've just been like you know I've been pretty satisfied right now in it and I think I'm in really fortunate position where it's just like I don't need to do any more I'm still looking at deals because I see interest rates still I think very low on a fixed 30-year mortgage so I'm kind of tempted well should I buy something else where I think at least from me in the short term where the next opportunity is I think is more so in development I have one unit where I can renovate it get the tenant out you know maybe make them an offer or something like that to leave renovate the unit with about $60,000 I should be able to make an extra $1100 a month on that so that to me is really I mean that's like a 20 percent return on my money right there yep that you can't get anywhere else there's another unit where I want to build a guest house on the property and AD you but $200,000 on but with that I should be able to rent that out for $1,600 so right there of two hundred and sixty thousand dollar investment right there shouldn't get me about $2,700 a month just between that I have another property another duplex actually where I was thinking it's zoned for four units and it's two units if I can save up another I don't know seven eight years save up something to be able to tear that down and build a brand new four unit on that that to me works out to be almost about a 9% return on my money I love the way you're thinking because like in a guinea different parts of the market work for different things right so you're threatening hey what was working in sales on 11 and 12 is not today but what about this what if I remodeled this what if I did this that's why David and I talked a lot about the birth strategy like buying a nasty property he fixing it up right we have been renting refinancing and repeat right cuz that works in this market a little better than it did and 2000 maybe 11 and 12 and and again you talked about the ad you think so you mentioned ad you which is what hillarie dwelling unit or SS accessory dwelling unit right right having a separate Union that's huge out here in Hawaii where I live in Maui now right like almost everybody has an Adu because like it just makes sense how you build one for a couple hundred grand and you can I'm out here that can rent for like three grand a month for like a two hundred thousand dollar investment that like it's just it's a no-brainer right and so the people who are I mean there's and there's things like you know like another example I don't doesn't apply to everybody but out here there's a special law that says if you have over 5,000 square feet you can basically subdivide your lot and split it into two that's like a thing out here now every area is a different unique thing but the people who are like okay well that that's a tactic I'm gonna figure it out I'm gonna make it work I'm gonna buy one property split it in half build something over here now I got two and it just there's ways to make money in real estate in any market good bad you know normal you know there's ways to make money and I love that you're looking at it is you know how do I do this how do I build this how do I continue to drive forward versus well it doesn't work anymore because not - yeah I just got to think what's gonna give me the safest long-term return compared to everything else out there and where do I feel my money is best utilized and right now from what I see is that and it very well could be in if you know and the next year I find another amazing deal if I find something else it gives me a better return than I'm going for that otherwise I think this is a pretty safe conservative approach another thing on that note that that's really building steam right now but still so small as Opportunity Zones I mean we haven't even done a show on opportunity zones yet but we will but like there's this new part of the the tax code that is really really fascinating but it's just complicated it's hard right so most of us have not even spent the time I need to dive in to learn how it all works but the little I know it's a very powerful strategy for somebody who's willing to invest the time to work and figure out how to make it work so again there's a million ways to do it but anyways see you unthinking that way so alright so we got to get moving on in the show again I love your story you know so I want to get a little bit deeper into one particular deal so about further ado let's head it to the deal all right let's get the deal deep-dive so these questions are about one particular deal that we're gonna go real deep on here with Graham so let me just start by asking you first well you got a property in mind let's do the first one because that was the one I made all the mistakes on ok perfect what kind of property is a like single-family multi-family single-family okay and where was that at San Bernardino ok perfect mmm number two how did you find this deal this was on the MLS and I saw it it was listed at like 1,200 square feet but when I went to see it I realized that wait a second this house is not 1,200 square feet they added on to it significantly and never reported it to public record because they didn't want to pay extra tax on that but it was all done to code perfectly and it was actually a 4-bedroom 1,700 square feet not a three-bedroom 1,200 square feet this is why you want a good real estate agent helping you can you take a second Graham and explain to somebody how it would have been entered into the MLS without that square footage and why somebody might not like what you just mentioned can you go into a little bit more depth for people who are so they can find a deal like this - yes so this was a short sale and the agent had never seen the property before it he was hired by the bank and all he did is he went to the front of the property took a picture with his cell phone there's only one picture and then copied all the information of the property from the public record and of course the public record said it's 1200 square feet 3 bedrooms 2 bathrooms had he seen it he would have figured out wait a second this is our bedroom there's all this extra square footage a huge bonus bonus room you know we're talking like 500 square feet here that's unaccounted for yep you probably got paid 1% for the bank so he didn't care and that's what it's like when you pay 1% - but they also do volume I mean this he's probably doing like a few properties a day by this Bank it's listing listing listing listing has a whole team that did handle it don't have time to go and do this unfortunately so it's up to the buyer then to do their own due diligence that's an opportunity all right how much was that what was it listed at and then so so this was originally I think there's two hundred and fifty five thousand dollars two thousand five it was listed at I think it was sixty-two thousand dollars I offered sixty got it accepted at sixty thousand dollars and then during inspections I negotiated an extra five hundred dollars for repair to Klaus so I bought this house for fifty nine thousand five hundred dollars that was only two hundred and fifty something thousand few years prior yeah tell us a little bit about how you negotiated those that reduction and price for the inspections what was your process like I did a general inspection on the property and basically determined that the lady who lived there was a hoarder and I mean it was just disgusting she had things piled up as tall as I am she had it must have been a few dead animals in there it smell terribly some of the roof needed some fixing there was a concern of maybe some potential water damage it kind of smelled a little bit so I took pictures of that and then I sent everything to the bank and I said listen this is gonna take me you know several thousand dollars more than I expected just to clean it up but I'm ready to close right now cash I'll close you know in a few days if you just give me a five hundred dollar credit that's all I want is five hundred bucks and I think for them it was a small enough number when they figured out let's just get it off the books 500 bucks 500 bucks let's just get it out all right how about funding it how'd you fund it that was bought cash again because I didn't have a credit card I had no credit I tried to get a loan for the bank they said absolutely not I tried to get one of my parents to co-sign they had really bad credit so the bank was like no so I was forced to buy this one cash I love this because you were 21 years old right yeah I was told my entire life credit cards or a mistake huh broke people need credit cards you if you can't buy a cash you can't afford so I grew up with that mentality that it was like a big mistake and I was so adamant like I'm better than everyone else because I pay with cash I pay with a Democrat I just did not understand it yeah I mean it you'd only had your driver's license for a handful of years when you were negotiating that's still like that's just so cool for the people who are out there saying I don't know this is scary I don't want to do it like don't get punked out by a 21 year old who didn't even have a credit card I went out there about his first house that's very exactly I was 22 and I got my first credit card it's like right after this whole mistake got a house before you had a credit card how cool is that yes I did okay next question what did you do with it when she bought it bought it I spent $12,000 fixing this up back then contractor fixing up crews were so hungry for business because their business could Scott annihilated they weren't doing more flips and I was able to get these people I mean they were so eager to work for anything and I was able to get a very good deal and give these people work that we're normally not doing anything into this property so I spent twelve thousand fixing it up with with basically just basic stuff cleaned it up did minor landscaping laminate floors new paint I bought pre-owned appliances to save them money on that what else did I I am a bathroom minor bathroom remodel minor kitchen remodel I'm just talking like countertops paint tile flooring really just basic basic stuff and total that was about twelve thousand dollars to fix it up with it and then I ended up renting it out what it run forward kind of what was the outcome and you mention mistakes or problems like oh so at that time I basically used all of my money that I had every single penny buying that house another house I got and the triplex I mean everything because they all happen around the same time and of course every project goes over budget and I basically got down to the point where I was out of money I had nothing left over and I owed a contractor $2,000 I had nothing like literally nothing and I had you know some deals lined up as a real estate agent but those were coming through I couldn't just not pay a contractor um I ended up going to my grandma and begging her $2,000 it's just to pay the contractor and I told her like when my next real estate deal closes like she'll get all of her money back and I paid her back like like about a month later two months ago whatever it was but anyway so I had to borrow money from my grandma but at this time I was so just like you know this property wasn't being rented out it was empty I'm like what am I going to do I owe money now like I've never owed money in my entire life like this I was so desperate to rent it out that I picked the first tenant that came through and I think at the time I was asking $1,200 a month and I put it up in the same night I got a phone call from someone saying we'll take it I'll move in like tomorrow just let me know how to meet and done deal and I thought this was like my saving grace oh my god like this is part of this could the timing couldn't have been better I'm gonna rent it out is it I am NOT gonna have to worry about this anymore I meet with a guy comes in really clean cuts like a nice button-down shirt and khakis and dress shoes and and his girlfriend's same way like it looks like they came from look like a nice accounting job or like something you know but his credit was shot it was like in the 500s had a few lost and that losses but a few things in collections that he said was from an auto accident he got into and they told him like not to pay something and like he's suing them and he's gonna win because it's like the big Trumpy trucking company and when he wins he's gonna prepay all the rent for that like the next year they had a cash business where they basically said that because they owed money they couldn't put money like in certain accounts he has to do everything and his girlfriend's name on their tax return they didn't claim a lot of this money because they said like they just you know they were like we just don't want to claim it for taxes there's a lot of red flags there oh and they wanted to move it immediately so I asked like what do you want to you know move in immediately well you know the landlord wants to sell the home that they're in now so we gotta get out long story short they lied to me on everything it turns out that he was growing weed and that's what his business was was was growing weed I didn't find this out until he started paying his Lent late later later later than he was a month behind I wanted to refinance the property at the time because by then about a year I had like a decent enough credit score where I could eat at least like refinance it turned out he turned the the garage into a huge grow-op I mean I know its wings they're huge but basically the whole garage was a girl block and that's how he made his money was doing that and not only that but like I found him on Facebook and I couldn't find him on Facebook before but I found him on Facebook and it's just pictures of him with like guns on the table and he like would have you know a few thousand dollars in cash on the table on like posting this picture and he says he's late on rent but meanwhile he is a few things my rent money with a gun you were you were a part of a rap song yeah oh yeah oh and then he had like you know and I love dogs but he had a whole bunch of pitbulls with him as well that he did what are the odds right that's funny I like that he was bragging on Facebook that he was late on rent while hosting yeah okay so there's a couple quick tips here for our listeners one if you are worried about this happening to you which you probably should be go back after this episode and listen so the one that Brandon I just did with Robert Greene where he talks about how to read people how to know if you're being lied to and how to not be taken advantage of and to when you're going to buy a house spend a lot of time looking at the garage we always skip over that the garage is just a garage right that is where you're gonna find out what that house was used for cuz that's where the majority of the bad stuff happens so when I was working as a cop and we would go do raids on these kind of things that always ended up in the garage you'll see like extra electrical wires and outlets put in the garage things hanging from the ceilings like extra light you'll see all the little things that marijuana grow houses needs that happen they all happen in the garage so like that's something you definitely don't want to skip over as I'm sure Graham is now looking at like yeah some of the some of the warning signs were there but he was 21 years old he didn't know and even making all these mistakes you still wanted to be a really really successful real estate investor an agent so what excuse to me I'll have right exactly that was honestly I think the best learning experience ever I ended up evicting the tenant he got very violent basically trashed the house I lost a year's worth of income on that house between the eviction fixing it up in sure want to cover that I didn't want to fight insurance on that but it was the best lesson looking back I mean like this I I think I lost like 12 grand or some $13,000 but looking back like I'm so happy I paid twelve fifty thousand dollars to learn that lesson because that could be a drop in the bucket now for the wrong tenor so like I'm glad I got that out of the way that's the best college education I ever got yeah this is also just good like you know a good lesson that landlording is a skill like I said a lot of Glenn Lodi does not something that any of us are just born and neatly knowing how to do and there's a hundred tips and tricks that will help you like improve your landlord and so you know take it seriously if you're going to manage yourself take it seriously I mean I made the exact same mistakes you did I mean every one of those things you said I'm like smiling and nodding somewhat yeah every one of them I made right and a lot of us do and so if you want to avoid that just like read some books on being a landlord out to other local landlords or if you're not willing to invest the work needed to become a good landlord hire that out and spend spend your time finding the best property manager I agree yeah very wise Brandon that's why they call me the wise old owl yeah a lot of rap songs to see if your tenant or your property shows up in the video good way to that's a good should be a part of Tennessee dreaming it was so it was so funny to see my house in the background of all of his pictures like he would take pictures of him holding a gun to the camera I'm like oh that's my living room that's the that's the stove I bought that was used to save a little bit of money on at least it's in good shape yeah yeah he's smashed he smashed that thing g4u left oh yeah one of our tenants actually is moved out of our property one of my this she's been there for a couple years now her dog chewed through a door Oh big wood solid oh the dog chewed through it like I've never seen that I'm always shocked I shouldn't be shocked but I'm always shocked at the level of destruction a person can have in a house especially with dogs but just don't get it yeah it's it's absurd but anyway anything else you learn on that less anything you want to kind of summarize that deal up and also move on I think we could move on I think it was really just the tenant selection on that deal that was really a big one for me yeah well cool well hey if anybody's interested in learning how I manage my properties my wife and I wrote a book on that the book on managing rental properties it's yellow you can find it Barnes Noble or Amazon or Dever but you know I think it's kind of cool with that let's move over to the world famous fire round it's time for the fire all right let's get to the fire round these are the questions that come direct out of the BiggerPockets forums so they're real-life BiggerPockets members asking these questions we're gonna fire them quickly at you Graham to see what you got to say so number one Matt from East Grand Forks Minnesota says Minnesota I recently purchased my first rental property with no money down and I'm pretty cash broke however I usually actually contribute a good amount a large amount to my 401k I've count every paycheck now I'm considering stopping all my contributions from my 401 K so I can focus on real estate so I can get cash flow what would you do I would probably do the same thing I go very light on my 401 K because I just don't know how much money I'm gonna be making when I'm 60 years old and I don't know what the tax code is gonna be like in the future I put minimal in there just so I can say that I have something in there but overall I'm a little bit worried I I prefer a Roth over that just because I probably gonna make a lot more money and I expect that anyone starting this young is gonna make way more money in the future as they build this up I would I would go for it personally if that would mean I put a little bit in there but I would maybe shift the focus to real estate I'm all for that especially if you know what to do with it with real estate right that's differ than the person who has no clue how to invest that money very true yeah house in if if your company offers you like a hundred percent match I mean that's just free money you might as well get up to the match right like if you could make a hundred percent return immediately on your always take imagine take the match and then take it out of there and find some way to go buy real estate with the money that's in the 401k after it's been matched now you're thinking like like David Brandon okay next question I own a rental in Southern California that has been rented by the same tenant for the past five years the tenant pays on time every month they keep the place in excellent condition and they're super low maintenance I like to Compson it looks like I get about four hundred dollars more per month should I raise the rent just because I can't good question I love that question my answer my immediate answer is no I think we're all different I have not I've only raised the rent on one tenant and now going on almost seven years I still have tenants that have been with me for seven years now that I have not raised the once and usually what I'll do is I keep the rent the exact same when they move out if they move out then I rear nted at current market rates I hate raising the rent because when you have a good tenant hold on to them these are tenants to treat the house like it's their own they pay on time there's no hassle there's no damage and just the cost of turnover if you raise the rent a hundred bucks a month and that gets them that much more incentive to leave it's gonna cost you way more to have the house vacant a month a month and a half to kind of repaint get it prepped up even get a tenant at a higher price I love keeping the tenants that I have and and I've got I consider them almost like family I mean it's just like I got this great community of tenants that just so low maintenance and that's rare to find and you can spend a lot of time finding the sentence what if you find someone it will pay you $1,000 a month more because they want to sublet out your garage as a marijuana grow house well as long as you take a cut of the marijuana there you take some equity in that deal it's not just debt you don't just want more money you need the exercise well what what I like oh you're saying not the marijuana girl house but like like everyone's got a like a different priority right like yeah if your goal in life if your goal gram was to make as much money in the eke out every bit of profit possible then yeah you probably should raise your rent all the time but it's a trade-off right by doing that now you have more turnover you have more hassle yeah more rehab to do when they do turnover so like there's a balancing act that we all have to kind of make that decision for ourselves again if you if you desperately need to get out of a job right now and maybe you are somebody who should be maximizing every penny from your property so that you can you know get out but if you don't need to absolutely do that right now then maybe the the relaxing taking a little easier not having turnover is much better so I just said yeah where are you at in your career and cool all right next one I've been looking into Airbnb I've heard the cash flow can be even much higher what are some things I should know before I jump in and buy some short-term rentals by the way do you have any short-term rentals and then you can answer I do I don't I don't I'll tell you why so one of the things that I see with Airbnb I see a ton of opportunity with Airbnb especially Airbnb arbitrage right now I have a feeling that's gonna be like the next social media marketing trend is going to be you're gonna see a lot of these like 18 year old experts now coming up on YouTube about Airbnb arbitrage now what do you invite to be arbitrage so I'm talking about being able to sublease a house like that she's spent you know $2,000 a month and then you you make six thousand dollars a month on Airbnb any profit the difference I think I think that is going to be a big trend the problem that I see with that is that a lot of people go into it signing one-year lease is first of all thinking that this is going to continue and the golden era of Airbnb is going to be you know forever but what I see happening is that there is so much regulation going on with Airbnb that oftentimes you run into very quick issues like I've seen people sign year-long leases and then a month in all of a sudden the Hollywood Hills clamps down on Airbnb rentals and then now you have to apply for a permit and you're not allowed to rent the home for you know X amount of days unless you've lived there as a primary residence and right there your business is done I'm talking within like you know 30 days your entire business is completely rundown and that's the biggest problem that I see or I see people who will then buy a house and they think well it doesn't make sense to buy this house as a long-term rental it will not cash flow but I put it up on Airbnb I can make a killing what are the chances that Airbnb regulation is going to be the exact same for the next 30 years for you to pay off this property and I've seen people they buy these houses and it works really good for a year and then something happens then all of a sudden well crap can't rent it out on Airbnb anymore it doesn't cash flow I'm stuck with it now I got to sell it for a loss and in Los Angeles the big one that just happened is that you can't use a rent controlled property any rent controlled property for Airbnb and that was the thing that a lot of people were abusing is takings people get these like 1920s rent controlled properties and get around that by renting all of the units short-term on Airbnb and making like three to four times what they would normally make well the problem is that in Los Angeles inventory is is so short to begin with that all of the available achievements were being taken up for Airbnb and I am all for free business by the way but at the same time I think we do have a bit of a moral duty to our city for the you know greater good of everyone and kind of take everyone everything into consideration but Airbnb crackdown on that and realize that too many people are abusing her so thanks for Hawaii right here in San Francisco here in New York City do the same thing like there's a there's a trend and it's not a happy trend for landlords that are doing it it seems to be moving in the opposite and again who knows what's gonna look like I mean this it's gonna shake out somehow I don't think Airbnb is gonna disappear right now so I almost think it's it's we're gonna go from you know one extreme which is basically anyone can rent anything on Airbnb and make a killing so now we're shifting towards the other extreme where they're super strict or we're going in the direction of being super strict I think eventually we go to the super strict Park for a little bit people kind of kind of figure out what's wrong with that and then have a happy medium but I think this process could take five six years to really shake out I all I say this is that if people look at a property and it cash flows with a normal renter but they can make twice the amount with Airbnb I'm all for it absolutely so for the ones that don't I'll give you guys another little quick to appear to stay safe in almost everywhere I've seen with this these rules apply to investment properties but if you own the house yourself it's a completely different game plan they don't have all the restrictions if it's your home that you live in so I don't own it it's your primary residence or you live in it right so what I do in the Bay Area is we help a lot of house hackers and we air B&B the units that they're hacking as opposed to just doing a regular like monthly lease so if you're looking to house a car buy a home Airbnb is a great way to maximize that income but like Graham said you don't want to be dependent on it if you're assuming that's your income stream you could catch yourself in some big trouble if they take away that opportunity grant well all right cool last question of the fire round all right I'm looking for my first deal and found an agent with decades of experience we agreed to work together two weeks ago and today I just found the elusive one in a hundred property with awesome numbers I left a message this morning and hadn't heard back yet as of a p.m. how responsive should my agent be I don't want to burn any bridges but should I look for a backup agent that's a good question wow that's a really really really good question um I would move on with another agent I hate to say it if you but like here's the thing is it when I run that business as a real estate agent I am available 24/7 there should be no reason why you can't reach me for more than the only time you would ever be unable to reach me is if I'm in a meeting my phone is on silent because I need to focus on the meeting or I don't have cell phone service I don't care what if your grandma's in the hospital okay so any event of that I always have a backup like if there's really something like that that happens I always will be able to text something and say you know this this zone so happened I have you know my colleague who's gonna be taking care of you right now or something like that I think if you find a hot property and you can't write an offer on it you need to look out for your best interest at some point if if 24 hours goes by and you don't know where your agent is and you can't write an offer on a property that you can lose I think it makes sense to find another agent to write the offer do you think he's likely to find his next agent that will also respond with an hour like you do it's tough because a lot of agents suck and that's the thing in the business is that people think it's so competitive as a real estate agent but they don't realize that 80% of the agents out there have no clue what they're doing and just don't pick up their phone just if you pick up your phone you're ahead of 80 persons out there you're in the top 20th percentile just by picking up your phone I think that the majority of people when they meet your agent and you have a good vibe and you sign up to work with them right like all of our clients signed by our representation agreements to work with us but what we do is we communicate ahead of time here is how it works right like when I'm recording this podcast I'm not taking your call right however I have three people that will respond to your email take your call that you can talk to because I know I work with clients I'm on appointments I'm doing things I can't answer every single phone call but there is someone that will write you should sit down with your agent and have a plan and if I come across a hot property and you're not answering your phone what do I do I think that would have solved this all from the very beginning because like Graham there's a reason you're a top producing agent you're super good most people get frustrated because they can't find a Graham right so do something with your agents to come up with a game plan for if I get a hot deal I expect you to answer your phone immediately are you gonna and if he says no family time for me with I'm with my daughter I'm not gonna answer my call during these hours that's okay they just need someone that you can talk to they can write an offer for you or answer your questions I completely agree with that yeah awesome all right well let's shift gears one last time and head over to the world-famous famous for all right let's get to the famous for question number one what is your favorite real estate specifically real estate related book I would have to say buy it rent it profit was one of the books that I had read a while ago to just it got it got me thinking about real estate and rental properties and it was that book that really it was so practical for me that was early on my it has a really good name like I wish I had thought about that name okay terrible book and people will still buy it yeah all right what is your favorite business book I like the 4-hour workweek I think you know some people might say it's a little outdated now but that got me thinking about building some sort of scalable business that you can remove yourself from that still ends up making you money and for me that was the book I think I read that when I was 18 they just taught me to think such a different way it's clearly had an impact on you our producer Kevin when you were talking earlier was saying this guy sounds like he's a 4-hour workweek person like you could tell that that's influenced you and the subsequent a hundred percent okay so for the 36 hours of your work week that you're not working because you have a 4-hour workweek and what are the hobbies that you enjoy I would honestly say it's YouTube videos like for me making YouTube videos has become a hobby of mine and I spend way too much time doing it's just the fun of just like planning at a topic the fun of like if there's something trending to be able to give your own opinion on it the fun of just having the creativity of a hundred percent expression that I can say you know reasonably whatever I kind of want to the camera and get my opinion out there and that to me has been so much fun Benson I did I just started one as well David Green real estate on YouTube and I like I like your videos they were really good and Brandon's really good to like I watch Brandon on YouTube and I'm like I already know everything you're saying but I can't stop paying attention communicator but it's a fun balance between giving information but also it's entertaining and there's some channels that I know everything already yeah but they're just entertaining you know like watching a movie that you've already seen but you just keep watching it anyways because it's so good exactly there yeah yeah and in anyway Ram you are a fantastic youtuber so keep it up number four what do you believe is sets apart successful real estate investors from those who give up fail or never get started I think is just having a long-term outlook one of the biggest things that I see especially from you know people on YouTube and when you do YouTube videos you see such a broader audience that you because sometimes you just see the other people that are really successful and you kind of like forming a little bubble on it but I think so many people look for something that's quick and they just jumped like I see too many people jump from one thing to thing to think the thing and it's if they don't get it is immediate result they just move on and real estate is one of those things that you don't often see the results immediately it's something that you'll see the results you'll see the payoff years from now like you could invest in something and just break even for the for the first year or you can spend eight months of your life fixing up a property to get it to the point where you even making any money on it mm-hmm and most people don't have a long-term outlook they just want to know what's gonna make me the most amount of money right now and you see a lot of people twos that just say well why would I invest in real estate to make 10 percent when I can invest in you know Tesla and make 30 percent in a month what's the end I'm you know and they just don't see it they don't have the long-term outlook and they don't ascend how safe it is like when you do this correctly I really feel like it's like it's almost a guaranteed return if you mind them correctly if you buy them conservatively if you know what you're doing you're not gonna see that insane volatility it's not like your rent one month is gonna be up 30% in the next month it's gonna be down to it's relatively stable even in a recession for the most part that use you're gonna see rents for the most part holding pretty pretty steady so I think it's really just having a long-term outlook and everyone that I know who's investing in real estate just thinks about it what's gonna happen 10 20 years from now they're not thinking what what's gonna happen six months from now what's gonna happen a year from now it's 20 years from now is this gonna be a good investment it was those people who wanted to make thirty thousand dollars a month who lost their shirts and oh 506 because they were looking for the quick score they didn't understand the fundamentals what they were getting into they didn't look at the long term thing so I think that's great advice if you take the long-term outlook it's very hard to lose money in real estate but if you take a short term outlook it's very hard to make money in real estate you're going to lose I have a youtube idea for you as well I think you should film yourself going to Subway and buying a footlong like ordering it picking out all the stuff you want like telling people why you chose this mustard over mayonnaise and then taking it to like the most expensive restaurant in LA that you can possibly find and sitting yeah exactly while all your friends are getting these like $200 plates that are conveyed by some like French chef who learned his trade from like for ancestor people right and just like eating your sandwich and blowing everyone away with your business knowledge while they're all munching on you know they're like asparagus and pomegranate seed filet mignon that would be hilarious that's viral yes okay Graham this has been awesome I really appreciate the stuff you've been sharing with us can you tell us more or where people can find out more about you yeah YouTube right just YouTube my name Graham Stefan make sure to of course like and subscribe but I post three times a week Monday Wednesday Friday I've been doing that for over two years now on YouTube and I post everything I know there so that's the best place to finally alright will do this has been awesome thank you so much we'll see you around the community and around YouTube so take care thank you and that was our show with Graham Stefan awesome stuff awesome some I love getting these young dudes on the show that are like you know I'm not even 30 yet and I'm just crushing it and I did all this cool stuff and here's how I explain how I did it and he did exactly he totally delivered yeah super hot guy bought a house before he had a credit card right like what excuse do we have yeah yeah pretty awesome and I love just that mindset he has right of like I mean you definitely see that he doesn't take like oh I can't get it done he's like how do I get it done and he figures it out and the market change is like okay how do I make money now maybe I tried to develop it maybe I tried this maybe I try that he's just figuring it out as he goes and yeah I think that's awesome plus just his ol like obviously he is a good agent for a reason like yeah like we don't really talk a lot about that today and I mean we cried do a whole show just on how he is a good real estate agent but I mean clearly he's good at what he does and so like you know if you listen to us right now and you feel like you're not making enough money ask you know how can you be the gram Stefon of your industry whatever it is you're doing right now like how do you just crush it so you can make a ton of money doing something you love and then put that into you know live cheap and then live you know invest the rest in real estate how can you really good because they say success leaves Clues right so you look at what successful people do and you copy it if you specifically want to do that with being a real estate agent and you're in my area I actually do a free super-secret squirrel mastermind for those who want to become an agent I did once a month everybody gets together in my office and I basically explain this is what it takes to do it this is what you're getting into they kind of give them an idea and then I see like who wants it and who doesn't so if that's the case reach out and I can let you know when the next meetup that we're gonna be having is to talk about that because I think if you love real estate but you're not ready to invest yet you don't have the capital you want to learn more and representing other people buying and selling is a great way to learn really fast there you go I agree I definitely agree all right y'all thank you so much for being a part of our podcast remember if you are loving these shows make sure you leave us ratings reviews and iTunes it helps us you know reach new heights on the charts which also Spurs more people which changed more lives it's all like this nice little circle so thank you so much and David thank you for being awesome I appreciate that man all right this is David green for Brandon the opportunities own Turner signing off you're listening to bigger pockets radio simplifying real estate for investors large and small if you're here looking to learn about real estate investing without all the hype you're in the right place be sure to join the millions of others who have benefited from BiggerPockets calm your home for real estate investing online

Channel: BiggerPockets

Views: 133,244

Rating: 4.8968692 out of 5

Keywords: biggerpockets, real estate, real estate investing, investing, rentals, rental property, investing in real estate, income property, bigger pockets, passive income, graham stephan, graham stephan real estate, how to become a millionaire, how to become a millionaire through, how to become a millionaire through real estate, real estate millionaire, real estate millionaire investor, how i became a millionaire

Id: LtuY0-guyas

Length: 80min 14sec (4814 seconds)

Published: Thu Feb 07 2019