Watch This If You Want to Buy a Rental Property in 2026

[00:00] If you want to buy a rental property in

[00:01] 2026, watch this video. Real estate is

[00:04] arguably one of the best ways to build

[00:06] wealth and financial freedom. And one of

[00:08] the best investment vehicles for new

[00:10] investors is rental properties. And you

[00:12] don't have to be some huge investor

[00:13] buying large multifamilies or big

[00:15] apartment complexes. Rental property

[00:17] investing is the average person's way to

[00:19] build wealth. Whether you want to make

[00:21] $50,000 a year or $500,000 a year, you

[00:24] can do this. How do I know this? Because

[00:27] I did it just 7 years ago. I owned no

[00:30] assets. And now I own a portfolio of

[00:31] over 100 rental properties. But here's

[00:34] the problem. Most people have no idea

[00:36] where to start. So that's why we've come

[00:38] up with seven steps that you can use to

[00:40] help you find your first property in

[00:43] 2026. Let's do this. This is exactly how

[00:45] you go step by step from owning no

[00:48] rentals to your first one.

[00:54] What's going on everybody? Welcome to

[00:56] the Bigger Pockets podcast. I am Henry

[00:58] Washington and I used to have a

[01:00] corporate W2, but now I own over a 100

[01:03] cash flowing rental properties and that

[01:05] allows me to invest in real estate

[01:06] full-time.

[01:07] >> And I'm Dave Meyer and I still work

[01:09] full-time.

[01:12] >> Well, I have a good job. I am the head

[01:14] of real estate investing at Bigger

[01:16] Pockets and I've been investing in

[01:17] rental properties for more than 15

[01:19] years. We obviously have different

[01:20] approaches to real estate investing, but

[01:22] maybe we should just take a minute and

[01:24] talk about why we are doing this and why

[01:26] our audience is probably sitting at home

[01:28] thinking, "Yeah, maybe I should do this.

[01:30] Maybe real estate." But like why what

[01:32] are the two or three reasons you think

[01:34] honestly I think most Americans should

[01:36] be considering investing in real estate?

[01:38] What are the reason top reasons for you?

[01:39] >> I think what most Americans are facing

[01:41] now is that the typical American dream

[01:45] doesn't necessarily work anymore. It's

[01:47] very very hard to have one job that pays

[01:50] you enough to be able to afford a

[01:53] comfortable life. I think you can afford

[01:56] a life of some kind, but most people

[01:59] typically want more. They want to be

[02:01] able to take more vacations. They want

[02:02] to be able to spend more time with their

[02:04] family. And with how much life costs,

[02:06] groceries cost, gas cost, mortgages

[02:09] cost, I think Americans find themselves

[02:11] in a position where they need a way to

[02:13] generate some more income on top of

[02:15] their day job. And that's the position I

[02:18] found myself in. And that was seven

[02:20] years ago.

[02:21] >> Yeah, it's gotten a lot of it's gotten

[02:23] harder.

[02:23] >> I mean, I call me a skeptic, but I just

[02:26] don't trust anyone else to take my

[02:29] retirement or my financial future

[02:31] seriously. Like, I don't think the

[02:32] government's coming to help me. I don't

[02:34] necessarily think any employer is going

[02:36] to be around for me for the entirety of

[02:38] my career. I have a great job, but I

[02:39] don't not going to work for one company

[02:41] for 45 years. You know, like you have to

[02:44] I in my opinion since I graduated

[02:46] college, I've always thought like how do

[02:48] I do something entrepreneurial? Yeah.

[02:49] >> So that I can take some control over my

[02:53] own financial future. And to me, real

[02:55] estate's the best thing to do. Like

[02:57] there are plenty of other ways you can

[02:58] use entrepreneurship, but like I'm not

[03:00] that creative. I'm not gonna go like

[03:02] start some business that's going to

[03:04] change the world. I don't know how to

[03:05] make an AI company, but I could run a

[03:07] real estate business. Like, I could do

[03:08] it. So could pretty much anyone.

[03:11] >> Absolutely. And it's it's there's there

[03:12] for me there's just safety in real

[03:14] estate. And so being able to own

[03:17] something that's a physical asset that

[03:19] literally everyone needs. There's

[03:21] comfort in that.

[03:22] >> Yeah, absolutely. And this is possible.

[03:25] I, you know, I always cite this stat.

[03:27] It's a stat I made up, but it is why

[03:29] it's why that's why I cite it so often

[03:32] because the creator is just so smart.

[03:34] No, I did the math because I think that

[03:38] a lot of people love the idea of

[03:39] financial freedom, but it feels so far

[03:42] away. And I did the math and basically

[03:44] no matter where you're starting from, if

[03:46] you just buy regular onmarket deals, you

[03:49] have to buy good deals, but if you buy

[03:50] regular onmarket deals, you can get what

[03:53] we're talking about financial

[03:54] independence in 8 to 12 years. And if

[03:56] you hustle like Henry hustles, you could

[03:58] probably do it in 5 to seven. And so

[04:00] that's what's so cool and inspiring

[04:02] about real estate investing is even

[04:03] though

[04:04] >> things have gotten more expensive. Even

[04:06] though mortgage rates are higher than

[04:07] they were eight years ago, buying

[04:09] onmarket average deals, if you just

[04:11] dedicate yourself to learning this crap,

[04:14] you can do it in under a decade, right?

[04:16] >> Compare that to 45 years the average

[04:18] career that someone works in a corporate

[04:20] job. Like they're not even comparable.

[04:22] So that's why I'm in real estate. It

[04:23] sounds like we're the same reason. So

[04:24] let's move on. Let's talk about how to

[04:26] actually do it. We're going to walk you

[04:28] through our seven steps to going from

[04:30] where you are today, maybe not knowing

[04:31] that much about real estate, never

[04:32] having bought something before, to how

[04:34] do you actually go out and buy that

[04:36] first deal. What's step number one?

[04:38] >> Step number one is to have some goals.

[04:42] >> Yeah.

[04:42] >> Look, people say it all the time. You

[04:43] got to know where you're going to

[04:44] understand what you want to do. But I

[04:45] think in real estate, you get this

[04:47] excitement when you learn about it

[04:49] because you feel and see how powerful it

[04:51] is and you start to see other people

[04:52] doing it. And a lot of us who are action

[04:55] takers just kind of go right and then we

[04:58] figure it out later.

[05:00] >> But in this business, understanding

[05:02] exactly how much money are you trying to

[05:04] make and at what time frame are you

[05:06] trying to make it in will really help

[05:08] set some guard rails for you so that you

[05:11] don't spend a lot of time wasting time

[05:15] doing things that aren't valuable to

[05:16] you.

[05:17] >> There's so many different tools you can

[05:18] use, right? like there's there's

[05:20] long-term rentals, there's flipping,

[05:21] there's all these different things. If

[05:23] you don't take a moment to figure out

[05:26] where you want to go, you can very

[05:28] easily choose the wrong tool. And that's

[05:30] not necessarily, you know, a mistake

[05:32] that you can't come back from, but it

[05:34] does waste a lot of time.

[05:36] >> There's an analogy I used in my book

[05:38] where, you know, if someone walked up to

[05:40] you and said like, "What's the best

[05:42] car?"

[05:43] >> What would you answer?

[05:44] >> I don't know. What do you want to do

[05:45] with it?

[05:46] >> Exactly. Like, right. Are you trying to

[05:47] race? cuz maybe you go buy a a supercar.

[05:51] >> Are you trying to build something? Maybe

[05:52] you want a truck. Do you have a family?

[05:54] Maybe it's a minivan.

[05:56] >> But unless you know what you're trying

[05:57] to accomplish, what you're trying to do,

[05:59] you might pick the wrong tool. And I

[06:01] know it is fun to go out there and start

[06:03] daydreaming. I got

[06:06] I do it too. But I really recommend

[06:09] everyone take a minute and set a goal.

[06:11] That can mean a lot of different things.

[06:13] And so for for you, what's

[06:15] >> what does a good goal look like? What

[06:17] are the kind of things you should be

[06:18] thinking through?

[06:18] >> Yeah, I think there needs to be some

[06:20] level of tangibility, right? And that's

[06:22] why I said it the way I said it earlier.

[06:24] How much money are you trying to make

[06:26] and in what time frame? Because your

[06:28] goals are going to dictate the strategy

[06:31] that you use because you could have an

[06:33] aggressive goal of making $200,000 in

[06:37] the next 90 days.

[06:39] >> Yep.

[06:39] >> Well, that's not going to be with rental

[06:41] properties, right? Like your goals will

[06:43] help to dictate your strategy. So, put

[06:44] some tangible goals behind it. We're all

[06:46] doing this for money of some kind. Some

[06:48] of us need money now. Some of us need

[06:50] money later. Some of us need money now

[06:52] and later. Right. Right. But but but

[06:56] everybody's in a different financial

[06:57] place, right? And everybody has a

[06:58] different financial problem to solve.

[07:01] And so be tangible with it. What's the

[07:03] amount of money that you're looking to

[07:04] make in what time frame are you needing

[07:06] to make it in? That's the easiest way to

[07:08] start planning your goals.

[07:10] >> So what's yours?

[07:10] >> Yeah. So, my goals for uh money each

[07:14] year is I want to generate somewhere

[07:16] between $600,000 and a million dollars

[07:18] in net profits from flips that I want to

[07:21] use to help pay off current assets.

[07:22] >> That's a lot.

[07:23] >> Y

[07:23] >> that's pretty good. And that's just you

[07:25] or with a partner? That's just straight

[07:26] up. Wow, that's incredible.

[07:28] >> And but do you have a goal with your

[07:30] your rental properties? Like you you use

[07:32] that money to put back into your rental

[07:34] properties. Do you have like a a number

[07:36] of unit goal or cash flow goal long

[07:38] term? The number of unit goal is more

[07:42] measuring stick. The cash flow goal also

[07:45] is. So right now I think we generate

[07:48] somewhere around 30 or $40,000 a month

[07:50] in cash flow, but I don't live off of it

[07:53] and I don't plan to live off of it. What

[07:56] the goal is is to pay off onethird of my

[08:00] portfolio over the next 10 years. And if

[08:02] I can pay off onethird of my portfolio

[08:04] over the next 10 years, I'm going to

[08:06] take a look at how much net cash flow

[08:08] that gets me. And then I'll decide if I

[08:11] need to pay off more or if I'm

[08:12] comfortable. Like, can I live off of

[08:14] this amount of money for the rest of my

[08:16] life? Because one of the things people

[08:19] don't talk about with real estate is

[08:21] it's all an active business. Some

[08:23] strategies more active than others. If

[08:25] you want it to be more passive, you got

[08:26] to get some unleveraged properties cuz

[08:28] unleveraged properties are going to pay

[08:29] you better than leveraged properties.

[08:31] And if I have more unlevered properties,

[08:33] then I don't have to flip as many

[08:35] houses. And because flipping houses is

[08:37] all of the active

[08:38] >> Yeah. Exactly. And this is a perfect

[08:39] goal. Like your real goal is to own

[08:42] unlevered properties. You're using

[08:44] flipping as a strategy to get there

[08:46] quickly. And this is exactly why you

[08:49] need to set your goals first. Because if

[08:51] you just said, "Hey, I want to flip that

[08:54] you might make a ton of money." It

[08:55] sounds like you do make a ton of money,

[08:56] but like it's not, you know, you're

[08:58] doing that with a different goal in

[09:00] mind. And so you have to cater and

[09:02] adjust your flipping strategy to pursue

[09:05] that bigger goal. And I think that's a

[09:07] really important thing that's sort of

[09:08] like keeping you on track.

[09:09] >> And also let you know how much of it you

[09:12] have to do.

[09:12] >> Right. Exactly. Like you can scale it

[09:14] down in the future.

[09:15] >> Like do I need to do five flips or do I

[09:16] need to do 25 flips? That's going to

[09:18] depend on the amount of money you want

[09:19] to make and what market you're in

[09:21] >> because as we saw recently, somebody in

[09:25] a market is flipping one house and

[09:27] making what I make dang near in a year

[09:29] doing 10 to 15 It's crazy. Yeah,

[09:31] absolutely.

[09:32] >> So, yes, those are my goals. Everybody's

[09:34] goals are going to be a little

[09:35] different, but after goals, in my

[09:38] opinion, comes strategy. So, I know you

[09:42] literally wrote a book about strategy.

[09:44] So, how do you feel about that?

[09:45] >> Well, I I think that's right. And I I

[09:47] think that honestly this is all

[09:48] strategy. I think goals are important

[09:50] part of your strategy, but I think when

[09:52] we in real estate when we call talk

[09:53] about quote unquote strategy, we're

[09:55] talking about like the types of deals

[09:56] that you want to do.

[09:57] >> And I do think that's the appropriate

[09:59] 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