[0:00] If you want to buy a rental property in
[0:01] 2026, watch this video. Real estate is
[0:04] arguably one of the best ways to build
[0:06] wealth and financial freedom. And one of
[0:08] the best investment vehicles for new
[0:10] investors is rental properties. And you
[0:12] don't have to be some huge investor
[0:13] buying large multifamilies or big
[0:15] apartment complexes. Rental property
[0:17] investing is the average person's way to
[0:19] build wealth. Whether you want to make
[0:21] $50,000 a year or $500,000 a year, you
[0:24] can do this. How do I know this? Because
[0:27] I did it just 7 years ago. I owned no
[0:30] assets. And now I own a portfolio of
[0:31] over 100 rental properties. But here's
[0:34] the problem. Most people have no idea
[0:36] where to start. So that's why we've come
[0:38] up with seven steps that you can use to
[0:40] help you find your first property in
[0:43] 2026. Let's do this. This is exactly how
[0:45] you go step by step from owning no
[0:48] rentals to your first one.
[0:54] What's going on everybody? Welcome to
[0:56] the Bigger Pockets podcast. I am Henry
[0:58] Washington and I used to have a
[1:00] corporate W2, but now I own over a 100
[1:03] cash flowing rental properties and that
[1:05] allows me to invest in real estate
[1:06] full-time.
[1:07] >> And I'm Dave Meyer and I still work
[1:09] full-time.
[1:12] >> Well, I have a good job. I am the head
[1:14] of real estate investing at Bigger
[1:16] Pockets and I've been investing in
[1:17] rental properties for more than 15
[1:19] years. We obviously have different
[1:20] approaches to real estate investing, but
[1:22] maybe we should just take a minute and
[1:24] talk about why we are doing this and why
[1:26] our audience is probably sitting at home
[1:28] thinking, "Yeah, maybe I should do this.
[1:30] Maybe real estate." But like why what
[1:32] are the two or three reasons you think
[1:34] honestly I think most Americans should
[1:36] be considering investing in real estate?
[1:38] What are the reason top reasons for you?
[1:39] >> I think what most Americans are facing
[1:41] now is that the typical American dream
[1:45] doesn't necessarily work anymore. It's
[1:47] very very hard to have one job that pays
[1:50] you enough to be able to afford a
[1:53] comfortable life. I think you can afford
[1:56] a life of some kind, but most people
[1:59] typically want more. They want to be
[2:01] able to take more vacations. They want
[2:02] to be able to spend more time with their
[2:04] family. And with how much life costs,
[2:06] groceries cost, gas cost, mortgages
[2:09] cost, I think Americans find themselves
[2:11] in a position where they need a way to
[2:13] generate some more income on top of
[2:15] their day job. And that's the position I
[2:18] found myself in. And that was seven
[2:20] years ago.
[2:21] >> Yeah, it's gotten a lot of it's gotten
[2:23] harder.
[2:23] >> I mean, I call me a skeptic, but I just
[2:26] don't trust anyone else to take my
[2:29] retirement or my financial future
[2:31] seriously. Like, I don't think the
[2:32] government's coming to help me. I don't
[2:34] necessarily think any employer is going
[2:36] to be around for me for the entirety of
[2:38] my career. I have a great job, but I
[2:39] don't not going to work for one company
[2:41] for 45 years. You know, like you have to
[2:44] I in my opinion since I graduated
[2:46] college, I've always thought like how do
[2:48] I do something entrepreneurial? Yeah.
[2:49] >> So that I can take some control over my
[2:53] own financial future. And to me, real
[2:55] estate's the best thing to do. Like
[2:57] there are plenty of other ways you can
[2:58] use entrepreneurship, but like I'm not
[3:00] that creative. I'm not gonna go like
[3:02] start some business that's going to
[3:04] change the world. I don't know how to
[3:05] make an AI company, but I could run a
[3:07] real estate business. Like, I could do
[3:08] it. So could pretty much anyone.
[3:11] >> Absolutely. And it's it's there's there
[3:12] for me there's just safety in real
[3:14] estate. And so being able to own
[3:17] something that's a physical asset that
[3:19] literally everyone needs. There's
[3:21] comfort in that.
[3:22] >> Yeah, absolutely. And this is possible.
[3:25] I, you know, I always cite this stat.
[3:27] It's a stat I made up, but it is why
[3:29] it's why that's why I cite it so often
[3:32] because the creator is just so smart.
[3:34] No, I did the math because I think that
[3:38] a lot of people love the idea of
[3:39] financial freedom, but it feels so far
[3:42] away. And I did the math and basically
[3:44] no matter where you're starting from, if
[3:46] you just buy regular onmarket deals, you
[3:49] have to buy good deals, but if you buy
[3:50] regular onmarket deals, you can get what
[3:53] we're talking about financial
[3:54] independence in 8 to 12 years. And if
[3:56] you hustle like Henry hustles, you could
[3:58] probably do it in 5 to seven. And so
[4:00] that's what's so cool and inspiring
[4:02] about real estate investing is even
[4:03] though
[4:04] >> things have gotten more expensive. Even
[4:06] though mortgage rates are higher than
[4:07] they were eight years ago, buying
[4:09] onmarket average deals, if you just
[4:11] dedicate yourself to learning this crap,
[4:14] you can do it in under a decade, right?
[4:16] >> Compare that to 45 years the average
[4:18] career that someone works in a corporate
[4:20] job. Like they're not even comparable.
[4:22] So that's why I'm in real estate. It
[4:23] sounds like we're the same reason. So
[4:24] let's move on. Let's talk about how to
[4:26] actually do it. We're going to walk you
[4:28] through our seven steps to going from
[4:30] where you are today, maybe not knowing
[4:31] that much about real estate, never
[4:32] having bought something before, to how
[4:34] do you actually go out and buy that
[4:36] first deal. What's step number one?
[4:38] >> Step number one is to have some goals.
[4:42] >> Yeah.
[4:42] >> Look, people say it all the time. You
[4:43] got to know where you're going to
[4:44] understand what you want to do. But I
[4:45] think in real estate, you get this
[4:47] excitement when you learn about it
[4:49] because you feel and see how powerful it
[4:51] is and you start to see other people
[4:52] doing it. And a lot of us who are action
[4:55] takers just kind of go right and then we
[4:58] figure it out later.
[5:00] >> But in this business, understanding
[5:02] exactly how much money are you trying to
[5:04] make and at what time frame are you
[5:06] trying to make it in will really help
[5:08] set some guard rails for you so that you
[5:11] don't spend a lot of time wasting time
[5:15] doing things that aren't valuable to
[5:16] you.
[5:17] >> There's so many different tools you can
[5:18] use, right? like there's there's
[5:20] long-term rentals, there's flipping,
[5:21] there's all these different things. If
[5:23] you don't take a moment to figure out
[5:26] where you want to go, you can very
[5:28] easily choose the wrong tool. And that's
[5:30] not necessarily, you know, a mistake
[5:32] that you can't come back from, but it
[5:34] does waste a lot of time.
[5:36] >> There's an analogy I used in my book
[5:38] where, you know, if someone walked up to
[5:40] you and said like, "What's the best
[5:42] car?"
[5:43] >> What would you answer?
[5:44] >> I don't know. What do you want to do
[5:45] with it?
[5:46] >> Exactly. Like, right. Are you trying to
[5:47] race? cuz maybe you go buy a a supercar.
[5:51] >> Are you trying to build something? Maybe
[5:52] you want a truck. Do you have a family?
[5:54] Maybe it's a minivan.
[5:56] >> But unless you know what you're trying
[5:57] to accomplish, what you're trying to do,
[5:59] you might pick the wrong tool. And I
[6:01] know it is fun to go out there and start
[6:03] daydreaming. I got
[6:06] I do it too. But I really recommend
[6:09] everyone take a minute and set a goal.
[6:11] That can mean a lot of different things.
[6:13] And so for for you, what's
[6:15] >> what does a good goal look like? What
[6:17] are the kind of things you should be
[6:18] thinking through?
[6:18] >> Yeah, I think there needs to be some
[6:20] level of tangibility, right? And that's
[6:22] why I said it the way I said it earlier.
[6:24] How much money are you trying to make
[6:26] and in what time frame? Because your
[6:28] goals are going to dictate the strategy
[6:31] that you use because you could have an
[6:33] aggressive goal of making $200,000 in
[6:37] the next 90 days.
[6:39] >> Yep.
[6:39] >> Well, that's not going to be with rental
[6:41] properties, right? Like your goals will
[6:43] help to dictate your strategy. So, put
[6:44] some tangible goals behind it. We're all
[6:46] doing this for money of some kind. Some
[6:48] of us need money now. Some of us need
[6:50] money later. Some of us need money now
[6:52] and later. Right. Right. But but but
[6:56] everybody's in a different financial
[6:57] place, right? And everybody has a
[6:58] different financial problem to solve.
[7:01] And so be tangible with it. What's the
[7:03] amount of money that you're looking to
[7:04] make in what time frame are you needing
[7:06] to make it in? That's the easiest way to
[7:08] start planning your goals.
[7:10] >> So what's yours?
[7:10] >> Yeah. So, my goals for uh money each
[7:14] year is I want to generate somewhere
[7:16] between $600,000 and a million dollars
[7:18] in net profits from flips that I want to
[7:21] use to help pay off current assets.
[7:22] >> That's a lot.
[7:23] >> Y
[7:23] >> that's pretty good. And that's just you
[7:25] or with a partner? That's just straight
[7:26] up. Wow, that's incredible.
[7:28] >> And but do you have a goal with your
[7:30] your rental properties? Like you you use
[7:32] that money to put back into your rental
[7:34] properties. Do you have like a a number
[7:36] of unit goal or cash flow goal long
[7:38] term? The number of unit goal is more
[7:42] measuring stick. The cash flow goal also
[7:45] is. So right now I think we generate
[7:48] somewhere around 30 or $40,000 a month
[7:50] in cash flow, but I don't live off of it
[7:53] and I don't plan to live off of it. What
[7:56] the goal is is to pay off onethird of my
[8:00] portfolio over the next 10 years. And if
[8:02] I can pay off onethird of my portfolio
[8:04] over the next 10 years, I'm going to
[8:06] take a look at how much net cash flow
[8:08] that gets me. And then I'll decide if I
[8:11] need to pay off more or if I'm
[8:12] comfortable. Like, can I live off of
[8:14] this amount of money for the rest of my
[8:16] life? Because one of the things people
[8:19] don't talk about with real estate is
[8:21] it's all an active business. Some
[8:23] strategies more active than others. If
[8:25] you want it to be more passive, you got
[8:26] to get some unleveraged properties cuz
[8:28] unleveraged properties are going to pay
[8:29] you better than leveraged properties.
[8:31] And if I have more unlevered properties,
[8:33] then I don't have to flip as many
[8:35] houses. And because flipping houses is
[8:37] all of the active
[8:38] >> Yeah. Exactly. And this is a perfect
[8:39] goal. Like your real goal is to own
[8:42] unlevered properties. You're using
[8:44] flipping as a strategy to get there
[8:46] quickly. And this is exactly why you
[8:49] need to set your goals first. Because if
[8:51] you just said, "Hey, I want to flip that
[8:54] you might make a ton of money." It
[8:55] sounds like you do make a ton of money,
[8:56] but like it's not, you know, you're
[8:58] doing that with a different goal in
[9:00] mind. And so you have to cater and
[9:02] adjust your flipping strategy to pursue
[9:05] that bigger goal. And I think that's a
[9:07] really important thing that's sort of
[9:08] like keeping you on track.
[9:09] >> And also let you know how much of it you
[9:12] have to do.
[9:12] >> Right. Exactly. Like you can scale it
[9:14] down in the future.
[9:15] >> Like do I need to do five flips or do I
[9:16] need to do 25 flips? That's going to
[9:18] depend on the amount of money you want
[9:19] to make and what market you're in
[9:21] >> because as we saw recently, somebody in
[9:25] a market is flipping one house and
[9:27] making what I make dang near in a year
[9:29] doing 10 to 15 It's crazy. Yeah,
[9:31] absolutely.
[9:32] >> So, yes, those are my goals. Everybody's
[9:34] goals are going to be a little
[9:35] different, but after goals, in my
[9:38] opinion, comes strategy. So, I know you
[9:42] literally wrote a book about strategy.
[9:44] So, how do you feel about that?
[9:45] >> Well, I I think that's right. And I I
[9:47] think that honestly this is all
[9:48] strategy. I think goals are important
[9:50] part of your strategy, but I think when
[9:52] we in real estate when we call talk
[9:53] about quote unquote strategy, we're
[9:55] talking about like the types of deals
[9:56] that you want to do.
[9:57] >> And I do think that's the appropriate
[9:59] next step. My goal is pretty similar.
[10:00] Like I want unlevered rental properties
[10:03] to pay for my entire lifestyle and then
[10:05] some within 15 years. And I, you know, I
[10:08] can pay for my lifestyle with real
[10:10] estate now, but I don't. And I have I'm
[10:12] sort of more in a growth mode. So over
[10:14] the next 15 years, I want to transition
[10:16] to more passive. I've been doing that
[10:19] for already for 5 years now. And how do
[10:21] I do that with less and less debt, which
[10:23] to me means less and less risk. So then
[10:25] I work backwards from there. Like what
[10:26] kind of deals do I need to do? Do I need
[10:29] to flip houses? No. You know, like for
[10:31] me, that's not like it's something I
[10:33] might do opportunistically because it's
[10:34] fun and I'm in this industry, but like I
[10:36] don't need to do that. Do I need to do
[10:39] mid-term rentals? No. Do I need to do
[10:41] short-term rentals? No. I could, but to
[10:44] me, given my goal, my strategy first and
[10:47] foremost is how do I buy a great asset
[10:49] at a great location that I'm going to be
[10:51] proud to own for the next 30 years.
[10:53] That's like the number one thing I look
[10:55] at. And then from there, I'm like, "All
[10:57] right, is that a short-term rental? Is
[10:59] that a mid-term rental? Is that a burr?
[11:00] Is that a long term?" You know, like
[11:02] that to me is more of like a management
[11:04] choice. That's like a business plan
[11:07] choice.
[11:08] >> To me, it's like I want something that I
[11:10] can own for a really long time, which is
[11:12] a very different strategy than buying
[11:14] stuff, renovating it, and flipping it.
[11:17] And so, like, that's why we probably
[11:19] have different short-term strategies.
[11:21] But for me, it all starts with that
[11:22] goal. And I sort of like work backwards.
[11:24] And that's why my strategies right now
[11:27] are buying long-term properties.
[11:30] >> Maybe I switch up how I manage those
[11:32] rentals over the next 30 years, but I
[11:34] want the great asset and the great
[11:35] location that I'm going to hold on to
[11:37] for a long time.
[11:38] >> Yeah. And I think that that's a
[11:40] brilliant way to look at it because if
[11:42] you're looking at it from assets you
[11:44] want to hold forever, you may actually
[11:45] do more than one strategy with a
[11:47] particular asset. Sure. Like for
[11:48] example, I have a rental property that
[11:50] was a long-term rental, but in this
[11:53] particular city, in this particular
[11:55] area, midterm rentals do really well.
[11:58] So, I converted it and it's doing
[11:59] excellent right now. Will it do
[12:01] excellent forever as a mid-term rental?
[12:02] Probably not. Totally. We may have to
[12:04] put it back.
[12:05] >> That's what I People sometimes say, "Oh,
[12:07] are you a short-term rental investor?
[12:08] Are you a midterm rental investor?" I'm
[12:09] like, "I'm a buy and hold. I'm buying."
[12:11] >> Yeah. That's what I do. I want to buy
[12:12] stuff for the long term and hold on to
[12:14] it. whatever helps me hold on to it, I
[12:16] will do. Like, you know, whatever is a
[12:19] good business decision at that time, I
[12:21] will do that. That's to me
[12:23] >> the number one thing. And once you have
[12:25] that, once you say like, okay, I'm a buy
[12:27] and hold investor, then you can go out
[12:29] and start picking your markets cuz like
[12:32] I'm in an interesting position, right? I
[12:34] live in Seattle. Yeah.
[12:35] >> Very expensive market. It's not a good
[12:37] buy and hold market. It's not. That's
[12:39] why I invest out of state. I didn't pick
[12:41] the market first. I said, "Here's my
[12:43] goal. Here's my strategy. Now, I got to
[12:46] go find a market that I can successfully
[12:48] do that in, cuz Seattle ain't it."
[12:50] >> Preach.
[12:52] >> Preach. I don't know how many times
[12:53] people ask me, "What's the best market
[12:55] to buy property in?" I'm like, "I have
[12:57] no idea for you."
[12:58] >> Exactly.
[12:58] >> No idea what you want to do, what your
[13:00] goals are. Like, that's truly the way
[13:02] you should be looking at picking
[13:03] markets. And I feel like people pick
[13:05] markets because they think a either
[13:07] it'll be easier to find a deal or more
[13:09] affordable to pay for a deal. But you
[13:12] should really pick your market based on
[13:14] your goals and your strategy in that
[13:15] order.
[13:16] >> In that order I really hands down how
[13:18] >> some people live like you live in a good
[13:20] market where you can kind of do a little
[13:21] bit of everything which is nice but
[13:22] that's not true everywhere especially in
[13:24] expensive markets. So it's very
[13:26] difficult to do it. So if you want to be
[13:28] a buy and hold investor
[13:29] >> you could e you can be creative more
[13:32] creative than I care to be because it
[13:33] takes a lot of work and I have a
[13:35] full-time job. So I'm not going to go
[13:36] out and do student housing for example
[13:38] or like rent by the room. They're just
[13:40] not going to do that. Yeah. It's more
[13:42] work to go find a market. I travel
[13:43] there. I go look at deals. Like I would
[13:45] rather do that because it's just more
[13:47] aligned with my goal. It's more aligned
[13:48] with my strategy of buying great assets
[13:51] and holding on to them. And and that's
[13:52] how I pick that market.
[13:53] >> Perfect. So those are our first two
[13:55] steps. Number one, pick your goal.
[13:57] Number two is strategy and market, which
[13:59] we're kind of combining because I do
[14:00] think it makes sense to do those. Next,
[14:03] we have step three, which I think we
[14:04] might disagree about this one. I think
[14:06] we're going to disagree about which one
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[14:50] We both agree that goals come first,
[14:52] then come strategy/market. What do you
[14:54] do as third?
[14:55] >> Find a deal.
[14:56] >> Find a deal. So, you would just go out I
[14:58] I don't necessarily disagree about that,
[15:00] but I'll offer a counter opinion, but
[15:02] you go first and just share finding a
[15:04] deal. Yeah, I I think finding a deal is
[15:07] the key to being able to make money. I
[15:10] also think finding a deal makes all the
[15:12] other subsequent steps easier to you.
[15:15] Like if you're going to find a
[15:17] contractor, it's hard to talk to
[15:19] contractors about hypothetical deals,
[15:21] right? They don't want to talk to you
[15:22] about it.
[15:22] >> So pointless,
[15:23] >> right? Right. And then also, it's easier
[15:26] to find money for deals the better your
[15:28] deal is.
[15:29] >> And so being able to go out and find a
[15:31] deal. So I guess within making a deal is
[15:34] your third step. Do you like you create
[15:36] a buy box?
[15:37] >> Yes.
[15:37] >> Okay. So yeah, you take that market, you
[15:40] take the strategy and you get how
[15:42] specific on your buy box.
[15:43] >> For me, it's square footage wise. If
[15:45] it's a single family home, I don't want
[15:46] anything over like 2,800 ft². So I want
[15:49] less than 2,800 ft². I want it built
[15:51] after. I think we just changed the buy
[15:52] box filter. Anything built before 1960,
[15:55] we don't want. Now, you could live in a
[15:57] place that's a big city and you only
[15:58] want to buy in little pockets of the
[16:00] area and so you have to know what zip
[16:01] code you want to buy in. You could live
[16:03] in a place where there's tons of old
[16:04] properties and so you don't have a
[16:06] choice. You have to buy something older.
[16:07] So, you have you've got to get real
[16:09] specific depending on your market. I
[16:11] just happen to live in a market where I
[16:12] can have a broad buy box.
[16:13] >> Yeah. I recommend for new people to be
[16:16] as specific as you can.
[16:17] >> Yeah,
[16:17] >> it's can be overwhelming all the options
[16:20] that are out there. And so if you're
[16:22] new, figure out a price point that you
[16:24] can afford that is reasonable.
[16:26] >> Figure out what kind of asset. For me
[16:29] personally, single family, small, multi,
[16:32] I'm like, whatever, whatever the numbers
[16:33] work on. Yeah.
[16:34] >> Trying to figure out what type of
[16:36] condition that you want. Class A, class
[16:38] B, class C, kind of neighborhood. The
[16:40] more specific you can be, the better the
[16:41] decision-m process is going to be.
[16:43] Because if you're new, you can do it.
[16:45] But if you're analyzing a hundred deals,
[16:47] 200 deals, looking at every deal because
[16:49] your buy box is so wide, it can be
[16:50] really overwhelming. And so trying to
[16:53] just be like, "This is what I'm going to
[16:54] do first. I want to, you know, something
[16:56] that's manageable." A 31 that's under
[16:59] this price point. It's got an attached
[17:00] garage. That's my buy box. That's great
[17:03] because you can really hone in and
[17:05] practice your skill set. So I don't
[17:07] disagree that going out and finding a
[17:08] deal makes things better. I do think
[17:12] just for new people, one step you can
[17:14] consider putting before the the deal and
[17:17] the buy box is talking to a lender
[17:19] >> because I see so many new people get
[17:22] stuck at this. They're being like, I
[17:23] can't afford it. I'm like, do you know
[17:25] that? Do you actually know that? because
[17:28] there are 5% down loans, there are VA
[17:30] loans, there are owner occupied loans,
[17:32] there are FHA loans, there are all sorts
[17:35] of things. There are there are
[17:36] government programs, state and city
[17:39] sponsored programs that help you with
[17:40] your down payment or your closing cost.
[17:42] And if you're feeling stuck, please just
[17:45] go talk to a lender. Like, if you feel
[17:47] good about your buy box, go do what
[17:48] Henry said. But if you're feeling stuck,
[17:50] just talk to a lender. They're it's
[17:52] their job to help you understand what
[17:54] you can afford and they will give you a
[17:56] number that you could go put into your
[17:58] buy box that that you could say I can
[18:00] actually afford this. So it's just one
[18:02] thing we don't really disagree but
[18:03] that's something I think you can
[18:04] consider doing first.
[18:05] >> It's interesting because I think we're
[18:06] trying to solve the same problem for
[18:07] people a different way. Like both of us
[18:10] want you to go take the action. Yeah.
[18:12] >> Right. And you're saying going and
[18:13] talking to a lender will like truly let
[18:16] you know what you can go by and stop
[18:18] guessing at it. Yeah. Or making
[18:20] assumptions for people. And what I'm
[18:22] saying is finding a deal will motivate
[18:24] you to go find the money. And so what
[18:26] I'd say to your plan is talk to multiple
[18:29] lenders
[18:30] >> for sure
[18:30] >> because sometimes a lender will tell you
[18:33] no or tell you they can't do something
[18:35] and it's based on their limited
[18:36] information about the products that they
[18:38] offer
[18:39] >> or their bank or their bank. And there's
[18:41] a million other banks out there that
[18:43] have a million other products to offer
[18:45] you. And so talk to multiple banks and
[18:47] get a consensus from them. Uh and that
[18:50] will truly help you understand what you
[18:52] can and can't go do. I
[18:53] >> I am so guilty of this. I have been
[18:56] interested for the last like 6 months or
[18:57] so of buying like a multif family. Not
[18:59] huge, but like 12, 15, 20, something
[19:02] like that.
[19:04] >> But if you listen to my like other buy
[19:06] box shows where I get into detail about
[19:08] what I'm looking to buy, like I really
[19:09] liked fixed rate debt. I don't like
[19:11] commercial loans.
[19:12] >> So, for a little while, I was like, "Oh,
[19:14] I'm not going to buy multif family cuz I
[19:16] need a commercial. Like, I don't want I
[19:18] want an adjustable rate mortgage." And
[19:20] like a couple weeks ago, I was like, I
[19:21] haven't even talked to a lender. There
[19:23] are fixed rate commercials. I know there
[19:25] are. But I just like in my own head was
[19:27] just like, "Oh, I don't want to get a
[19:29] commercial loan." And I was just being
[19:30] lazy. And I was like, "Now, just go call
[19:32] them." I'm like, "Of course there are
[19:34] fix commercial debt. Not that hard to
[19:36] find." I was just being lazy about it.
[19:38] Now, by doing that, I'm like, "Okay, now
[19:40] I can make a buy box because I know
[19:42] what's possible. I know what the rates
[19:43] are going to be. I like I know what the
[19:45] rate premium is going to be because a
[19:46] fixed a fixed rate commercial loan is
[19:48] going to be higher than an adjustable
[19:50] rate. So, I can bake that into my
[19:51] underwriting. And now I feel better
[19:53] about my buy box."
[19:54] >> And if you follow these steps in the
[19:56] order we're giving them to you,
[19:58] >> you will learn so much by talking to
[20:01] lenders because you'll be able to sit
[20:02] down and say, "These are my goals. This
[20:04] is the strategy I'm looking to employ,
[20:07] right? And here's the buy box that I'm
[20:09] looking for for deals. And they may have
[20:12] options for you for loan products that
[20:14] are new or we don't even know exist yet
[20:16] or like you had no clue exist yet. But
[20:18] but these especially like community
[20:20] banks like their job is to help
[20:22] investors in their market figure out how
[20:24] to get deals done with them. And so they
[20:26] may be able to piece together a strategy
[20:28] for you that you didn't know as an
[20:29] option.
[20:30] >> Absolutely.
[20:30] >> If you've got all these things lined out
[20:31] for them.
[20:32] >> All right. So we agree to disagree, but
[20:34] it sounds like we agree essentially.
[20:38] do this in the same week. You can do it
[20:39] all.
[20:40] >> You can get to this.
[20:41] >> Yeah, you need to talk to lenders. You
[20:43] need to find a deal. It's all of this
[20:44] will be of benefit to you, especially if
[20:46] you've done the first two steps like we
[20:48] outlined. And so, moving on to the
[20:50] fourth step, which is to analyze some
[20:53] deals. And uh I don't know if you know
[20:56] this about this guy, but he loves
[20:58] analyzing deals.
[20:59] >> I do it for fun.
[21:00] >> I do, too. I'm I'm deal.
[21:04] It's funny though because like you offer
[21:06] on way more than I do, but like I'll
[21:08] know I'm not going to offer on them and
[21:09] I'll just say
[21:10] >> throw in the numbers anyway.
[21:12] >> But yeah, I think this is this is where
[21:14] you go from research to action, right?
[21:17] Like this is where you're filtering,
[21:18] you're doing your buy box. You come up
[21:20] with these great ideas, but ultimately
[21:22] real estate is really it's just math and
[21:26] execution. And this is the math part
[21:28] where you just say, is this a good deal
[21:29] or not? And I know that sounds
[21:32] intimidating, but it really isn't that
[21:34] hard. It's really doing a little bit of
[21:36] research. The hard part is your
[21:40] assumptions, right? Like that like
[21:42] >> the math, the formulas are super easy,
[21:44] right? It's, you know, you figure out
[21:45] your cash flow and you divide it by how
[21:47] much money you invested. That's a cash
[21:48] on cash return. Like that's easy. But
[21:51] >> your assumptions like how much rent you
[21:53] can collect, the ARV of a property, what
[21:55] your expenses are going to be, that is
[21:57] hard. I I think that's a skill that
[21:59] takes a little bit of time to get good
[22:01] at. I think I've gotten good at it, but
[22:04] how do you how do you get good at that?
[22:06] >> Well, I'd say for people starting out,
[22:08] you you've kind of hit the nail on the
[22:09] head. The two things you need to have a
[22:10] handle on are after repair value,
[22:12] >> which is just what you can sell it for
[22:14] once you've renovated it.
[22:15] >> Once it's fixed up, what will that
[22:16] property trade for? You have to
[22:19] understand what that number is for your
[22:20] assets. But for a new person, that can
[22:22] be very intimidating because the access
[22:25] to the data that you need to accurately
[22:27] get this information is behind the door
[22:30] that only real estate agents have the
[22:32] key for.
[22:33] >> And comping is kind of an
[22:34] >> comp Yeah. And comping without access to
[22:36] that information can be extremely
[22:38] challenging and overwhelming. So, it is
[22:40] a skill that you have to learn. And we
[22:42] don't have time to tell you exactly how
[22:43] to go do all that here, but so typically
[22:46] when you're new, the best way to get
[22:47] that information is to partner up with a
[22:49] real estate agent who can help you run
[22:51] that analysis.
[22:52] >> Uh, so understanding ARVs, that's the
[22:55] most important data point you need to
[22:56] get a grasp on when you're going to be
[22:58] investing. The second data point that's
[23:00] important and hard for new investors is
[23:02] renovation budgets.
[23:04] >> Yes,
[23:04] >> not everybody who is investing in real
[23:06] estate has a construction background. I
[23:08] know I do. I still struggle with
[23:10] >> and this was extremely overwhelming for
[23:12] me when learning to run the numbers.
[23:14] There are several things that you can do
[23:16] to get familiar with it, but it's just
[23:19] something that's going to take time and
[23:20] experience.
[23:21] >> I I think that I'm not good at
[23:23] construction. I've done plenty of it,
[23:25] but some people have a feel for it.
[23:27] They're like, "Oh, you know, like I know
[23:28] how much this is going to cost like
[23:30] Yeah, exactly. It's like, oh, this, you
[23:32] know, like James Standard, our friend,
[23:34] you probably you have a good feel for
[23:36] it. I do not. But I think the best thing
[23:39] I've learned is just to ask other
[23:41] investors. That is the number one
[23:42] easiest thing because yeah, you can go
[23:44] ask a contractor, but they're building
[23:46] in profit and they're going to try and
[23:48] not all of them, but many of them are
[23:49] just trying to maximize their own
[23:50] profit.
[23:51] >> I think talking to another investor like
[23:53] if I go to another market, I'm like,
[23:54] "What does a bathroom cost you?" You
[23:56] know, like what does a kitchen cost you?
[23:57] That is the most valuable thing that you
[23:59] can do to get those assumptions right
[24:01] because
[24:02] >> like Henry said, ARV expenses, those are
[24:05] tough. rent you can usually figure I
[24:07] don't think rent estimates are that hard
[24:09] but if you can nail those two things
[24:11] it's really going to help you a lot in
[24:13] your deal analysis and that's just like
[24:15] why you have a community right like
[24:16] that's why you have wigger pockets
[24:17] that's why you go on and talk to people
[24:19] and BPCON whatever it is like these are
[24:22] the relationships that really help you
[24:24] get around these assumptions because
[24:26] they'll know they've done it
[24:28] >> and I think one pro tip to doing just
[24:30] that is talking to other investors and
[24:32] learning about renovation budgets is ask
[24:34] other seasoned investors if they'll send
[24:37] you bids from contractors that they
[24:39] didn't hire.
[24:40] >> Y
[24:40] >> because you'll learn a ton by reading a
[24:42] bid for a project renovation. You'll
[24:45] learn about what it costs to paint a
[24:46] house of a certain square footage.
[24:48] You'll learn about what it costs to lay
[24:49] flooring in certain rooms of certain
[24:51] types. You'll learn about
[24:52] >> scope of work reading your scope of
[24:54] works. Like just having access to those
[24:56] as data and you can start to build your
[24:58] own spreadsheet based on a cost per
[25:00] square foot model just by looking at
[25:02] other people's bids.
[25:03] >> Yeah. I mean, yesterday Henry and I were
[25:05] tooling around Seattle. We went and
[25:06] someone we were talking to this guy. He
[25:08] was like, "You want me to send you my
[25:09] spec sheet?" We were like, "Yeah,
[25:10] great." So now we can see what he's
[25:12] paying for cabinets, for tile, and for
[25:14] all these different things. And that
[25:16] just helps you orient yourself. And and
[25:18] I think that's really the hard part of
[25:19] deal analysis is people
[25:21] >> hear this word analysis and they think
[25:23] it's like math and you're like, you
[25:24] know, Goodwill hunting up on the board.
[25:26] It's like you just go to Bigger Pockets,
[25:28] just put in the calculator. That part is
[25:29] easy. Like just go use the calculator.
[25:31] But you got to know what to plug in.
[25:32] >> Yeah. He needs to know to plug in.
[25:34] That's the hard part.
[25:35] >> The other hard part, I think, is knowing
[25:37] what's a good deal. Cuz once it spits
[25:38] out a number, is that good or not? Like
[25:40] I think that's another sticking point
[25:42] for a lot of people is like you see
[25:44] like, let me just throw out a number for
[25:45] you. You see 5% cash on cash return.
[25:47] What do you think for a rental property?
[25:49] >> Not a good deal.
[25:50] >> Not a good deal.
[25:51] >> I'd probably take 5%. In the right in
[25:53] the right market,
[25:53] >> in the right market, in the right
[25:54] situation,
[25:55] >> I would take it. Yeah. Exactly. So, I
[25:56] think that's what people struggle with
[25:58] when they're new is like, is this a good
[25:59] deal? So, what do you have like some
[26:01] benchmark returns that you use either
[26:03] for flips or rental properties?
[26:04] >> Yeah, so for flips, I try to keep it
[26:07] super simple. I've talked about this
[26:08] before. I want to net make what I spend
[26:11] on a renovation. That lets me know that
[26:13] my risk and reward is in line,
[26:15] >> right? So, I don't want to do a $200,000
[26:18] renovation and make a $30,000 profit.
[26:21] That's way too much risk and not enough
[26:23] reward. That's a quick and dirty way for
[26:25] me to know if what I'm paying for the
[26:27] property is worth the effort that I'm
[26:28] putting into it. uh from a flip
[26:30] perspective, on the rental property
[26:32] perspective, I still use to this day the
[26:34] Bigger Pockets calculator. And what what
[26:36] I'm trying to get to on my rental
[26:38] properties is I want them to cash flow
[26:43] positive or break even depending on the
[26:46] neighborhood that they're in. So, I'm
[26:48] okay buying a break even property. If
[26:49] it's in an up and cominging area, I'm
[26:51] going to get the appreciation debt
[26:52] payown, tax benefits, but I'm in a
[26:54] different place, I think. But for for
[26:56] most people, like if you can get
[26:58] somewhere between 7 and 10% cash on cash
[27:01] return for a rental property, you're
[27:03] probably doing very well.
[27:05] >> Yeah, that's that's good in in today's
[27:06] market. I agree with you. I
[27:09] >> will take anything down to even like a
[27:11] 3% cash on cash return if it's in a
[27:13] great neighborhood that I know it's
[27:14] going to be growing. Again, my strategy
[27:17] long term. I'm not thinking like this is
[27:19] why your goals are so important because
[27:21] if your money later Yeah, exactly. If my
[27:24] goal was I want to retire in 5 years, I
[27:26] would be only doing 10 12% cash on cash
[27:28] returns deals, no problem.
[27:30] >> I'm like, hey, if I'm buying a property
[27:32] that's in great shape in a great
[27:34] location, the cash flow's probably not
[27:35] going to be amazing this year, but it's
[27:38] still going to be great shape from 10
[27:39] years. Like, it's going to be in a good
[27:41] property, location's still good, the
[27:43] condition of the home is still good, and
[27:46] rents have gone up and my debt is fixed,
[27:48] then I'm getting my cash flow. So, I'm
[27:50] willing to do that. My the way the
[27:52] number I use is I want my total return.
[27:55] So I add up my cash on cash return,
[27:57] >> my appreciation, my amortization, my tax
[28:00] benefits, and any value ad I do. And I
[28:03] want that to be a 15% annualized return.
[28:05] Yeah,
[28:05] >> that's a little less than double what
[28:07] the stock market averagees. And to me,
[28:09] that's worth my time because I don't put
[28:11] as much time into real estate investing
[28:13] as you do, but you know, I still spend
[28:15] 20 hours a month on my real estate
[28:17] portfolio. You know, that's more than
[28:18] stock investing. I want to get paid for
[28:20] that. That's an incredible return at
[28:22] 15%. Just so everyone knows, there's a
[28:24] little rule of thumb here. Your money
[28:25] will double every 5 years.
[28:27] >> For those of you who are still around in
[28:29] this episode, that was your reward for
[28:31] it. That's a phenomenal calculation to
[28:34] be able to run that most anybody can use
[28:37] and do immediately. So, congratulations
[28:40] for sticking around. Thanks. That's why
[28:43] he is the co-host of the Bigger Puckets
[28:45] podcast.
[28:47] >> Yes, it's true. But if you think about
[28:49] this for a minute, my goal is 15 years.
[28:51] >> 15% your money doubles in five years.
[28:54] Then it doubles again. So you're at 4x
[28:56] and then it doubles again. So you're at
[28:58] 8x. So by doing 15% which is very
[29:01] achievable. This is not crazy numbers.
[29:03] This is these are deals that I can do
[29:05] without
[29:06] >> worry, you know, like I can do this
[29:08] >> things that you can find on the market.
[29:10] >> Things on the market.
[29:12] >> I can 8x my money in the next 15 years.
[29:15] Think about that. And it's an
[29:16] unbelievable value proposition. And so
[29:19] that's how I think about it. And the 3%
[29:21] cash on cash return, honestly, it's not
[29:23] because the cash, it's like that just
[29:24] gives me the cushion. I'm very
[29:26] conservative of my expenses, but it
[29:27] gives me even a little more cushion to
[29:29] make sure that like
[29:31] >> I have a bad year, you know, I can pay
[29:32] for these kinds of things without coming
[29:34] out of pocket.
[29:34] >> Yeah. I think that's the thing people
[29:36] need to understand when we're talking
[29:37] about net returns is both you and I
[29:40] underwrite extremely conservatively.
[29:44] extremely like the scenario in which
[29:47] that my properties perform like I
[29:49] underwrite them is probably pretty low.
[29:51] They probably all perform better than I
[29:52] underwrite them.
[29:53] >> Oh, all of mine do. That's my goal.
[29:54] That's why I do that. That's 100%. Yeah.
[29:57] I I someone sent me a deal. I was
[29:58] showing you this the other day in
[29:59] Detroit.
[30:00] >> They did this the the agent sent me
[30:02] really good rent comps, all these
[30:03] things. I was like, "It's going to be
[30:04] 24,400. I'm underwriting." I'm like,
[30:06] "2100?" You know, like I just
[30:08] immediately discount all of it. Yes. Not
[30:10] because they're wrong, but because I
[30:11] want to see the worst case scenario. I
[30:14] want to see the worst case scenario and
[30:16] then it works. I'm like, great. All
[30:18] upside
[30:18] >> 100%.
[30:19] >> Yeah. All right. So, now we've given you
[30:20] some benchmarks and some rules of thumb
[30:22] at how to identify what's a good deal,
[30:24] but then you got to go you got to go get
[30:26] it. I feel like this is an underrated
[30:29] part of real estate investing
[30:31] >> and in the market today is more
[30:33] important than ever. So,
[30:34] >> absolutely
[30:35] >> take us to school. I feel like this is
[30:36] where people are falling short right now
[30:39] because it's not that people don't have
[30:42] enough leads for deals, it's that people
[30:43] aren't making enough offers on the leads
[30:45] that they have. And I think this all
[30:48] like I think this all boils down to
[30:50] psychology. I think people are just
[30:51] scared of rejection and so they don't
[30:53] make enough offers%
[30:55] >> and because we know as investors that
[30:57] our offer especially if you're making
[30:59] offers on onmarket deals that the offer
[31:01] that we need to make for the deal to
[31:03] pencil based on the analysis that we
[31:05] just talked about how you need to run.
[31:07] We know that that offer is going to be
[31:08] substantially less than what people are
[31:10] asking for. They're going to be
[31:11] disappointed. And so we make again we
[31:14] make decisions for other people. We go
[31:15] ah I'm not going to offer on this deal.
[31:17] They want 300,000. I can only offer them
[31:20] 125. So, we go, there's no way they're
[31:22] going to take that. And we don't offer.
[31:24] And what we have to do is get our
[31:26] personal feelings out of the equation.
[31:28] And we have to learn how to make
[31:30] uncomfortable offers. Or, as I like to
[31:32] put it, we have to learn how to make
[31:33] disrespectful offers respectfully.
[31:35] There's a way to make your offer on your
[31:37] property in a way that shouldn't put
[31:40] somebody else off. Now, we can't control
[31:42] how somebody else reacts to our offer,
[31:44] but we can do it in a way where it makes
[31:47] sense. So, like I made 12 offers on
[31:49] onmarket deals last week. Here's how we
[31:51] did it. We did verbal offers. And the
[31:53] verbal was just a text message. And we
[31:55] created a text message script that was
[31:58] kind. And my agent sent this to the
[32:01] agents listing the properties. And it
[32:03] said, "Hey, I have an investor client.
[32:04] He would like to make an offer on 123
[32:06] Main Street. It is going to be lower
[32:09] than what you're expecting, but what we
[32:11] can offer you is we can close it in 7 to
[32:13] 14 days. He won't ask your client to fix
[32:16] a single thing. We'll take it in asis
[32:19] condition and we will make this a very
[32:21] seamless and easy process for you
[32:24] >> and then we say what the number is going
[32:26] to be.
[32:27] >> Out of those 12 people, two of them
[32:29] replied with counter offers and one of
[32:31] them said, "Hey, my client actually owes
[32:33] XYZ on this property, so we couldn't
[32:34] take that offer. Could they come up to
[32:36] this?" I couldn't. So, we said, "No,
[32:37] thank you." The other one was listed for
[32:39] 200. We offered 125. They came back at
[32:42] 150. I said, "Let me go see it." I ended
[32:44] up offering 135 and they took it. Right.
[32:46] Like all from just sending
[32:48] >> Yeah.
[32:48] >> a text message or a verbal offer.
[32:50] >> And most people would have said they're
[32:53] listed at 200. They're not going to take
[32:54] your $125,000 offer. That's not for me
[32:56] to decide.
[32:57] >> We just figured out a way to do it
[32:59] respectfully. I think we just have to
[33:01] get comfortable being a little
[33:03] uncomfortable.
[33:04] >> Absolutely.
[33:04] >> And so if you're new,
[33:06] >> it's a conversation between you and your
[33:08] agent about what's a way that we can do
[33:10] this that makes sense. Right. That
[33:12] worked for my agent. My agent said,
[33:13] "Look, I don't want to write up all
[33:15] those offers to them just get rejected.
[33:16] That's a lot of my time." I said,
[33:18] "That's fair. So, what's a way that we
[33:20] could do it that would take less time?"
[33:21] And that's how we ended up with the text
[33:23] message rule offer.
[33:24] >> Yeah. I think it just goes back to what
[33:25] we always talk about, just having real
[33:27] estate being mutually beneficial. I
[33:29] think some people might say, "Hey,
[33:30] you're you're offering them less, like
[33:33] you're trying to screw them over." But I
[33:35] I don't see it at all that way. When
[33:37] someone lists something on the market,
[33:39] they say, "Here's what works for me."
[33:41] >> Yeah. And by you reacting to that,
[33:42] you're saying, "That doesn't work for
[33:43] me. Here's what would work for me.
[33:46] >> Does that still work for you?" And they
[33:47] have an option to say yes or no. That's
[33:49] the whole point of a market is for
[33:50] people to have these conversations. And
[33:53] so, not on every deal, but on some
[33:55] deals, there's going to be a number that
[33:57] works for both of you, and that's what
[33:58] you're searching for, right? There are
[34:00] sometimes they're going to say no.
[34:02] That's fine. That's okay.
[34:03] >> There's sometimes they're gonna say yes,
[34:05] and that's even better because
[34:06] apparently you've solved you have met
[34:08] their conditions. I I think I told you
[34:10] the other day I was working on one of my
[34:12] first flips. I took an under offer under
[34:14] asking offer still hit my target, you
[34:17] know, like still buy for me. So, it's
[34:19] just up to you to have that conversation
[34:21] and to initiate it.
[34:22] >> It's the seller's decision whether
[34:23] they're willing to take that offer or
[34:24] not. And when you're making offers on
[34:26] the market, the only way to figure out
[34:28] if a seller is willing to take less is
[34:31] to offer less. Like that's you because
[34:33] there's intermediaries in between you
[34:34] and the seller. It's not like where
[34:36] you're making offers offmarket where you
[34:38] have more information and you can you
[34:40] can do that. And if you're making offers
[34:42] offmarket, you still have to be able to
[34:44] do the same thing. You have to be able
[34:46] to make an offer to people at what may
[34:50] be lower than they're expecting. I do
[34:52] this all the time, but I do it very
[34:53] respectfully in offmarket deals. And I
[34:56] have a whole framework for doing that,
[34:57] which we can go into in another episode.
[35:00] But the point I'm trying to make with
[35:02] this step of making offers is you've got
[35:04] to get comfortable with a little
[35:05] uncomfortability and figure out a way to
[35:08] make the offer that makes sense to you
[35:10] and not be so concerned
[35:12] >> with how it might be interpreted by the
[35:15] person receiving the offer because at
[35:16] the end of the day, they don't have to
[35:17] sell you anything. It's a business
[35:19] decision. It's up to them. You're not
[35:21] taking advantage of them. And the same
[35:23] people mad about you making lower offers
[35:26] than what people are asking on the
[35:27] market are the same people that are like
[35:29] lowballing people on Facebook
[35:30] Marketplace for stuff. So like it
[35:32] doesn't matter. No one's saying the
[35:33] same. Like you're you're willing to do
[35:36] it in other areas. You can do it here.
[35:38] >> Yes, you can.
[35:39] >> All right. So we've got the goals, we've
[35:41] got the strategy, we've got the market,
[35:43] we've got the money, we've looked for
[35:46] the deal, we've analyzed it, and now
[35:48] we've made an offer.
[35:50] >> What the heck do you do next? Sign the
[35:51] piece of paper, Chris. Close. Sign the
[35:54] piece of paper, right? I mean, no, you
[35:56] got to close. I'm not gonna get into
[35:58] that here. It's pretty easy. They're
[36:00] gonna sign someone, an escro agent who's
[36:02] going to figure this out for you. You're
[36:03] going to figure out how to close. That's
[36:04] not bad.
[36:05] >> But then, I think your first like 90
[36:07] days are pretty important as a real
[36:09] estate investor. Like, how are you going
[36:11] to maximize and execute your business
[36:13] plan? I think that's really what you
[36:16] need to focus on next. Because when you
[36:17] go out and buy your deal, when you
[36:19] create your buy box, you should have a
[36:20] plan. Like, you don't just buy and then
[36:22] you're like, "What now?" Right? If
[36:24] you're going to do a short-term rental,
[36:25] you got to jump into furnishing that
[36:27] thing right away. You need to figure out
[36:28] your management strategy. You need to
[36:29] put your your property in place. You're
[36:31] going to do a burr. Hopefully, during
[36:33] the closing period, you were already
[36:34] getting bids. You were figuring out your
[36:36] scope of work. Now, it's time for you to
[36:38] go execute. I think this is a time where
[36:40] you don't think about your next deal at
[36:42] all. Yes. At least in the beginning,
[36:43] right? Yeah,
[36:44] >> you do not think about your next deal.
[36:47] Don't think about your taxes. Don't
[36:49] think about I mean honestly I this is
[36:51] bad advice, but like I wouldn't even
[36:53] think about like doing, you know,
[36:54] setting up the perfect systems. I would
[36:56] just say like go and do the most
[36:58] important thing you could possibly do.
[37:00] If you're doing a renovation, nail the
[37:02] renovation if you need to. If you have a
[37:04] stabilized property, screen your tenants
[37:07] well and find a great tenant who's going
[37:08] to be happy in your home. Go do that. to
[37:11] figure out the number one most important
[37:13] thing and do it the second you sign that
[37:14] piece of paper.
[37:15] >> Absolutely. I I I couldn't agree more.
[37:17] Execution and timing is everything when
[37:20] you are operating a real estate business
[37:22] cuz literal time is money because if
[37:25] it's a rental property, the longer it's
[37:26] not rented, the more it's costing you.
[37:28] If it's a flip, the longer you're
[37:29] holding it, the more it's costing you.
[37:31] So, you do you have to figure out what
[37:33] is the immediate next step that I need
[37:35] to do? And you've got to go execute
[37:36] against that step. I would say the thing
[37:38] that I would encourage you to do is to
[37:41] document as much as possible about what
[37:44] you are executing when you're getting
[37:47] started.
[37:48] >> I wish I had
[37:48] >> I wish I had done the same thing because
[37:50] >> because then I just made it up again the
[37:52] next idea
[37:54] >> because you end up repeating things that
[37:56] are that are not beneficial to you.
[37:58] We're all going to end up wasting a lot
[37:59] of time doing things that aren't that
[38:01] important in your first deal. You're
[38:02] going to do things that you hate doing
[38:04] that you're going to wish you had
[38:05] documented so you have a process for
[38:07] bringing in somebody else to do it next
[38:09] time. Just you know how many times I
[38:11] waited until closing day to get
[38:12] insurance on a property and like because
[38:15] I just
[38:15] >> I always forget to transfer the
[38:17] utilities. That's I always forget.
[38:19] >> So if you write these things down the
[38:21] next time you're doing a deal, you'll be
[38:23] able to be a little more proactive and
[38:25] save yourself a lot of time and effort.
[38:27] Like just learn from our mistakes. Just
[38:29] literally every step you do, write it
[38:31] down. And then that way you at least
[38:32] have an order of all the things that you
[38:34] did and you can start to eliminate some
[38:35] of those steps or pre-plan some of those
[38:37] steps.
[38:38] >> Totally. Yeah.
[38:38] >> Yeah. I I think you know executees the
[38:41] right word. I think the other way this
[38:42] word gets used in different contexts in
[38:44] real estate, but the it's just like
[38:45] stabilize. Get in there and like own it,
[38:48] right? Like you you have your bills set
[38:51] up, you have your tenants in place. Like
[38:54] that's what you need to focus on. I feel
[38:55] like when you arrive in a new place on
[38:57] vacation, you like go get your bearings,
[39:00] figure out where you're going to sleep,
[39:01] you put your bag down, you kind of like
[39:03] own the whole, you know, like you feel
[39:04] comfortable, then you can start making
[39:06] decisions. I feel like that's kind of
[39:07] what you need to do in those first 90
[39:09] days is just like get your bearings,
[39:11] check everything out, make sure you feel
[39:13] comfortable, then you can go into the
[39:15] optimization, then you can start doing
[39:16] sort of like the asset management piece
[39:19] of it. But you got to just get in there
[39:21] and take control essentially. Uh, and
[39:24] also I would be figuring out who's going
[39:27] to be on your team for the long term
[39:29] because you're going to start executing
[39:30] and that's not all going to be you.
[39:32] You're going to have contractors, you're
[39:34] going to have uh subcontractors, you're
[39:36] going to have property managers. There's
[39:38] all these people you're going to have to
[39:40] engage with. Like, keep track of who you
[39:43] like working with and who you don't like
[39:44] working with because honing that team in
[39:46] is going to help you be more efficient
[39:48] as you're going forward as well. These
[39:50] are all things that I probably should
[39:52] have did a better job of when I first
[39:53] got started
[39:54] >> because all we're trying to do when you
[39:56] get that first deal done is exactly what
[39:57] we're saying, like keep your head above
[39:58] water. Yeah.
[39:59] >> So, just take some time and document
[40:01] this process and document who you're
[40:03] working with and whether you enjoyed
[40:05] working with them or not cuz it's going
[40:07] to like your team
[40:08] >> is everything as you continue to execute
[40:11] going forward. And the best operators I
[40:13] know have great contractor and business
[40:17] relationships who now basically do all
[40:20] these steps for them without them having
[40:22] to spend a lot of time operating these
[40:24] deals.
[40:24] >> Sure.
[40:25] >> All right, let's move on to step number
[40:27] seven, which is after you've executed,
[40:29] stabilized, gotten that property, you
[40:32] figure out what's next, right? I feel
[40:34] like that's kind of like you take stock
[40:35] of what you did, right? This is where
[40:38] all those notes we just told you to take
[40:40] come in handy because you're going to
[40:42] want to go do more deals, right? That's
[40:44] probably going to be in your goals that
[40:46] you've set up in the beginning, but
[40:48] >> now you've got some experience
[40:50] >> and now you've learned something.
[40:52] >> And what you may have learned could be
[40:54] that you need to relook at your goals.
[40:56] You may hated what you just did. Yes.
[40:59] >> Right. Uh like my goals for when I first
[41:01] got started were far and away different
[41:03] than what they ended up being after I
[41:05] got a few deals under my belt. You're
[41:07] just going to learn a lot about what you
[41:10] planned on executing and what you
[41:11] actually executed against. And you're
[41:13] either going to get better and more
[41:14] efficient at the thing you currently
[41:16] executed against. Or it is okay to go
[41:19] back to your goals and say, "Nope, it's
[41:21] not this. It's that I have to try
[41:23] something different. This is not it
[41:25] didn't turn out like I wanted it to turn
[41:27] out. I didn't enjoy it at all." Right?
[41:29] That is okay. re-evaluate your goals and
[41:32] then decide, do I continue to execute on
[41:35] what I just did and do it better or do I
[41:38] need to start start fresh? And that's
[41:40] okay.
[41:41] >> Yeah. I think whether it's your goals,
[41:42] your strategy, your market that changes,
[41:44] it's okay.
[41:45] >> But figure that at the end. I don't
[41:47] think you should be tinkering in it.
[41:49] Like for me, I did a short-term rental.
[41:51] I didn't really like it to be honest.
[41:52] I'm okay. I would do it again, but it's
[41:54] not like, oh, I'm going to go out and do
[41:55] a lot of those. I do strategies right
[41:57] now. I literally never heard of when I
[42:00] started investing. I I didn't even know
[42:01] it was a thing. You add that in once you
[42:04] sort of take stock, you know, I lend. I
[42:07] never thought I would do something like
[42:08] that. I never thought I had the capacity
[42:10] to do something like that. So, I think
[42:12] it's just really important to say like
[42:13] here's what you're good at. Here's what
[42:15] you like. For me, I like rental
[42:16] properties. I don't mind property
[42:18] management. I like interacting with
[42:20] people. I'm totally fine with that. But
[42:22] I don't like doing offmarket deal
[42:23] finding. It's not something I like
[42:25] doing. So, I'm not going to do it,
[42:26] right? And so, I'll build my portfolio,
[42:28] go into my next one. Think about that.
[42:30] You're probably the opposite. You love
[42:32] dealing, but there's probably
[42:35] that's what you got to do.
[42:36] >> Well, I'm doing this entire process
[42:38] right now, but with new construction,
[42:40] I'm building my first ground up new
[42:41] construction. And right and so, I am
[42:43] literally documenting the entire process
[42:45] >> because if I decide this is something I
[42:48] want to grow and scale and do, I want to
[42:49] get better at it, especially this
[42:51] pre-construction phase, which has been a
[42:52] nightmare for me.
[42:55] at
[42:57] the end
[43:02] of these. Was it fun? Was it profitable?
[43:05] Was it worth all the time and the and
[43:07] the and the effort? These are question.
[43:09] These questions I don't have answers to
[43:10] yet,
[43:11] >> but as part of this exercise, that's
[43:12] exactly what I'm going to do when I'm
[43:13] done.
[43:14] >> All right. Seven steps.
[43:15] >> Seven steps.
[43:16] >> Let's see if I can remember them.
[43:18] >> What do we got? We got goals. Then we
[43:20] had strategy slmarket. Then we had deals
[43:24] slash talking to a lender,
[43:26] >> analysis, offers, execution, and then
[43:30] >> evaluation.
[43:31] >> Evaluation. Y
[43:32] >> that's all it is. I mean, it is a lot of
[43:34] work. It's work. You got to go out and
[43:35] do something. You're not going to No
[43:37] one's going to hand this to you. You got
[43:38] to go absolutely and do it. But these
[43:40] are steps that everyone can follow.
[43:42] That's what I follow in every single
[43:43] deal. It's not like it really even
[43:44] changes. You still just do the same
[43:46] thing even if you've done one of these
[43:47] or you've done a hundred of these.
[43:48] >> Yeah. And it starts to just work on
[43:50] autopilot as you build more systems and
[43:52] a team and have more processes. It gets
[43:55] easier. I know that sounds overwhelming
[43:57] when you first get started, but a lot of
[43:58] this stuff we do in our SL. I mean, I I
[44:01] analyze deals for fun. Like I said, I
[44:03] made 12 offers last week. Yeah. Yeah. Is
[44:05] all of this gets better the more
[44:08] experience that you have. But I think
[44:10] this framework is absolutely a framework
[44:12] that you can follow and land a deal.
[44:15] Well, thank you so much for joining us
[44:16] on the Bigger Pockets podcast. I hope
[44:18] that these steps and this framework is
[44:20] valuable to you. This is truly the
[44:22] things that Dave and I are doing every
[44:24] day in our portfolio. As always, leave
[44:26] us your questions down below or let us
[44:28] know what framework you follow when you
[44:31] are doing deals in your market. We would
[44:33] love to learn more about that. Thank you
[44:35] so much for watching. We'll see you on
[44:36] the next episode.
[44:37] >> Go set your goals.
[44:42] Heat
[44:49] up