Seeing Greene: Outsourcing, Retiring with Real Estate, & Investing in College - Transcripts

January 15, 2023

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What’s your real estate retirement plan? How should you fund your rentals? And why is today’s housing market so hard to cash flow? These are just some of the questions that regular real estate investors ask themselves. In a high interest rate, low inventory environment like 2023, landlords need to find better deals, use better financing strategies, and look for different ways to profit, to turn their portfolios into passive income-generating machines. Welcome back to a Seeing Greene episode that has questions from all over the nation. Some investors wonder why their cash-on-cash return numbers look so bleak. Others are debating using a HELOC (home equity line of credit) to buy rentals, even as interest rates continue to rise steadily. You'll hear answers to those questions all while David touches on topics around buying for cash flow vs. appreciation, how to buy rental properties while in college, how to find off-market properties, and where to meet private money lenders! Want to ask David a question? If so, submit your question here so David can answer it on the next episode of Seeing Greene. Hop on the BiggerPockets forums and ask other investors their take, or follow David on Instagram to see when he’s going live so you can hop on a live Q&A and get your question answered on the spot!  In This Episode We Cover: Starting a construction company and using this lucrative trade to invest faster Cash-on-cash return and why appreciating markets are crunching down on potential cash flow Single-family vs. multifamily real estate investing and when to favor appreciation over cash flow Using a HELOC to buy rental properties vs. saving up your cash for a down payment Investing while in college and how to get approved for a mortgage even if you don’t have full-time income Where to find off-market real estate deals and reach motivated sellers And So Much More! Links from the Show Find an Investor-Friendly Real Estate Agent BiggerPockets Youtube Channel BiggerPockets Forums BiggerPockets Pro Membership BiggerPockets Bookstore BiggerPockets Bootcamps BiggerPockets Podcast BiggerPockets Merch Listen to All Your Favorite BiggerPockets Podcasts in One Place Learn About Real Estate, The Housing Market, and Money Management with The BiggerPockets Podcasts Get More Deals Done with The BiggerPockets Investing Tools Find a BiggerPockets Real Estate Meetup in Your Area Ask David Your Real Estate Investing Question Amy Mahjoory's Masterclass on Private Lending Part 1 Amy Mahjoory's Masterclass on Private Lending Part 2 Amy Mahjoory's Masterclass on Private Lending Part 3 Amy Mahjoory's Masterclass on Private Lending Part 4 How to Calculate Cash-on-Cash Return Learn More About David’s Full Real Estate Team David's BiggerPockets Profile David's Instagram David’s YouTube Channel Click here to check the full show notes: https://www.biggerpockets.com/blog/real-estate-714 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Check out our sponsor page! See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Transcript

is the Bigger Pockets podcast show, seven, one, four. Most people in college don't look at it like a time to earn money. They look at it like a time to have fun, time to grow. You could do all that stuff and still make money, man. So I would push you towards finding a job where you can earn more and then get your parents or someone else that you know to co-sign with you on a loan to buy a rental property, preferably someone with some experience investing in real estate, they can underwrite that deal and make sure it's gonna work for you. I like that way more than buying a house that somebody else has right now with very likely problematic tenants and having your first experience as a real estate investor be in a scenario like that. What's up, everyone? This is David Green, the host of Seeing Green. Isn't it ironic that we call it Seeing Green but my last name is Seeing Green? Also, like what are the odds that I'd end up hosting a show that has the same name as my last name? Crazy, right? We'd have done this years ago but we couldn't think of a name.

On today's episodes, if you haven't listened to one before, I'm going to take questions and comments from you our listener base and answer them for everyone to hear. This is about wealth building, specifics of real estate, how to start your journey, how to end your journey. We got a little bit of everything and we got a great show for you today.

All right, and a quick word from today's show sponsors. We know you've heard it before, cashflow is getting very hard to find. There's always long distance investing but you may be thinking, I don't have a team, enough experience or the market knowledge to get in. Well, that's where you're wrong and that's also where rental retirement comes in. Rental retirement offers fully turnkey properties that are newly built or renovated, leased and managed, allowing you to invest out of state with confidence. They've got single family, multifamily, new build and syndication opportunities across multiple markets. They even have bird deals with immediate equity. Rental retirement helps investors learn how to build a bulletproof business plan with the best investment and tax strategies around to help you reach financial freedom through real estate. There is no excuse not to get started in real estate investing when you have the right team and systems already in place. To learn more, visit RentalRetirement.com. That's RentalRetirement.com or call 800-311-6781. That's 800-311-6781.

To learn more about how you can get started investing in some of the best cashflow markets today. More than 2 million young professionals start their day with the hustle's daily email for its informative, impactful takes on business and tech. In fact, I'm one of those 2 million and can say without a doubt it's one of the best newsletters around. But if you prefer listening, you'll love the Hustle Daily Show where you can get bite-sized updates on the biggest business headlines all in 10 minutes or less. They don't just tell you what's going on, they explain why it matters. One of my favorite episodes was one called Disney Goes Residential where the hustle team shows how Disney is getting into residential real estate by buying a creepy village in the California desert. And let me tell you, it sent a short-term tingle down my spine. Whether you wanna stay informed or you just need an interesting story to share at the dinner table, check out the Hustle Daily Show. If you wanna give it a listen, you can search for the Hustle Daily Show in your podcast app, like the one that you're using literally right now. Oh my gosh, that's meta.

Anyways, go listen to it, it's great. In today's show, you're gonna learn when you can buckle down your finances and if you should use a HELOC or continue to save money to expand your portfolio, where to find off-market properties that are not listings but properties other people aren't looking at or seeing, and when you should start leveraging help from an assistant as well as the best way to go about doing that. We have questions from people in college that have not bought their first house yet and people that are approaching retirement and trying to figure out what the best type of asset class is for them at their time in life. This is an amazing episode I had a great time doing. I know you're gonna like listening, so buckle up and let's get started. Before we do, today's quick tip is, what's your GPA? You've heard our goals and you've met our mentees for the start of 2023. Well, what's your goal? Can you put a clear plan in place and can you take action on that plan to make 2023 different and better than 2022 was? Remember, life does not get better by chance, it gets better by choice.

All right, let's get to today's first question.

Quick tip. Hi David, thanks for having me on. The reason I'm reaching out is because I'm at a bit of a crossroads. I work full-time as a firefighter and I own a personal training business. I also own a two-family that's fully rented out. The reason I'm at a crossroads is because I feel like with the amount of time I put into personal training and the amount of revenue that it generates that maybe it's not worth my time and maybe I could be making more money elsewhere. I do have a pretty strong knowledge of the real estate market here in Boston. However, I have no desire to be a real estate agent. I work with a lot of laborers, tradesmen, contractors here on the fire department. So, one idea I had was to partner up with one of them to start a construction company which I would then use the capital from that, put it right back into real estate and also integrate the real estate with the construction company with buying and fixing more homes. I don't know if that's a good idea. I don't know anyone that's done it.

But I do know I need to do something. I know you always say real estate is a get rich slow game, but I still don't feel like I'm using my time wisely and I could be using it better.

Thank you so much. Daniel, I love the question. I'm gonna guess your accent's from Boyston, some of that area. I don't know for sure though, but that's what I would guess. And also, thank you for your service as a first responder. There's lots of things I like about your story. I'm gonna jump into that right now. You're a hustler, I love that. You are not a dreamer. You're not sitting here like, I'ma to quit my job and I'm just gonna go do something and hope it works out. You're working this job. It's a difficult job.

Anybody who works as a firefighter and a first responders of any form, right? You've got law enforcement. You've got the paramedics. You've got lesser degrees of paramedics. You've got higher degrees. Those people have so much policy they have to understand and testing that they have to go through and procedures they have to memorize and they actually have to perform. They can't just show up at work and not do anything for the most part. That there's a lot of talent in that pool. And that's one of the reasons I have a heart for first responders is they're able to do more than just what they're doing. And some of them want that. So let's get into your actual, specific scenario here. You're working as a firefighter.

You're making some additional coin as a personal trainer. I don't think personal training is a business that you get into because you want to make money. That's something you do because you're passionate about it. So this is not knocking on personal trainers. They serve an incredibly noble purpose. especially the ones that are not workin' out with the Buff people, they're workin' out with the people that are horribly unhealthy and out of shape and they need someone who has the gift and the skill of encouragement and a positive attitude and accountability to help get them in shape. Those people are saving and extending lives in their own way, just like a first responder does. We're not talkin' about that. We're talkin' about if your goal is to make money, that's not a business to be in. You're gonna get bitter, you're gonna get unhappy, and you're not gonna enjoy it. I do like your idea of starting a construction company And I probably wanna give you some advice on a practical way to go about doing it. So it is gonna integrate very well with your own real estate investing business.

It's also gonna be an easier way to make money. And with the background you have, specifically a database of people that know you like you and trust you that you work with in the fire department and other fire departments, you get some credibility. You wanna be the guy that people say, hey, I hear you talk about wanting to remodel your kitchen. You gotta hit up my boy Ahmad. He'll do it for you, he takes care of us. There's a way to get business right off the bat in that business. I don't know if I'd wanna start with construction. When I think construction, I think contractor and then I think licensing and bonds and insurance and like a lot of work you're gonna have to do upfront before you generate any kind of revenue. So I don't know if that's what you meant by construction, but that's what I was thinking. I'm thinking more like you start a form of a handyman service. So you fix things that break. You do work like flooring, that's a big one.

Flooring and paint can get you some business right off the bat. Maybe you find some people that have some experience with drywall, with sheetrock, with woodwork so they can repair dry rot that's outside. A little bit of carpentry, nothing huge. A little bit of plumbing so you can replace sinks, you can replace toilets, cosmetics stuff. You wanna be the guy that can come in and be like, hey, they got a deal going on at Lowe's or Home Depot or online, look at this faucet, I can have this installed, I can get you six of them for this price. And they go, wow, that's great, yeah, do that. And then you just gotta work up your labor, add that into the cost of the materials, boom, you got yourself a bid, you can send it to someone, very easy, and you can generate revenue before you invest a lot of time, capital, or energy into the business. If you go the contractor route, you're putting a huge amount of labor and time and energy invested into this endeavor before you ever see a dollar. So I don't like that. Start with the handyman route, slowly see what kind of business opportunities you get and then look for specialists that you can bring in to help you with that type of work. Eventually you'll make roofing contacts, you'll get plumbers, you'll get landscapers. And I think if you're good at that, I mean, if I was gonna start over, I'd probably go that route as opposed to being a real estate agent because there's such a need for people that can do construction.

You can add so much value to a property or a person's life if you can come in and do good trustworthy work and actually get that stuff done on time. So I love that idea, especially if you're handy. Imagining you have some degree of mechanical aptitude if you're working as a firefighter right now, you probably have to learn how to repair stuff, fix stuff, put things together, manipulate the equipment that you're using, you know, probably translate very well into the construction business and we need people in that business that are good people. So yeah, man, I'm fully behind you. You got the seeing green seal of approval. I'd love to see you go forward with that and then let us know how it goes. All right, our next question comes from Freda who's lived in New York for the past 25 years and just moved to Las Vegas early this year. Freda says, as a newbie to real estate investment, I really cannot find positive cash on cash return for a long-term rental in Vegas. Should I move on to another market or should I wait for price coming down in Vegas and gain some experience before I move to a new market? This is a good question, Freda. I think everybody's asking the same thing. I can't find cash on cash return anywhere.

The question used to be, where do I get the most cash on cash return? Now the question is, can I get cash on cash return? And this leads people into investing in the worst markets that still show some form of cash on cash return, at least in theory, and then they often don't work out. You're probably gonna have a very difficult time in a hot market like Vegas. Any market where a lot of people are moving to, people wanna live. You're not just competing with investors, you're competing with the regular homeowners. So it used to be that only homeowners would buy a triplex, but now people are smart and they've been educated and they listen to stuff like this and they figured out I'm not an investor, I want a primary residence, but I don't wanna pay three grand a month. I'm gonna buy that triplex. I'm gonna rent out the other two units that I'm only gonna pay 500 a month or I'm only gonna pay 700 a month instead of 3000. Now you're competing with the person that used to just go buy a house to live in for themselves and they're willing to pay more than you because they're only coming out of pocket $700 instead of 3,000, which means that they're making 2,300 a month and you're looking at it like, man, I'm only gonna make $100 a month or I'm gonna make no dollars a month on my investment. They're in an advantageous situation compared to you. They have leverage in this negotiating and any market where people are moving into, you're competing with a primary residence buyer, you're gonna have this problem.

So this is just for use for everybody listening who's frustrated. They're often trying to get cash in a market where you're competing with regular homeowners and they're gonna beat you every time because they can afford to pay more than you. They don't have the same expectations that you have. They're getting a better interest rate as a primary residence homeowner as opposed to an investor and so on and so forth. So if you're insisting on buying multifamily property, Vegas may not be the best place to do it. Like you said, you might have to go look somewhere else. But this is usually where I give people the advice of can you house hack? Can you not be comfortable for a year or even less than that if something goes wrong and you can't stay with it where you buy a house to live in it, you become the house hacker by the triplex instead of the investor that's losing every single time. You get the property that way and then in a year you move out and you've got this property that now is cash rolling or close but you only put three and a half percent down, not 20% down. So you saved like you spent a sixth of the money, right? You could do six of those for the same amount or close to six that you could buy one if you put 20 or 25% down. I love to see more investors taking that road.

I know it's not comfortable but it's often the most profitable option that you have. So if you're gonna buy in Vegas, I'd probably look into house hacking and if you're not willing to house hack, you're probably are gonna have to look into a different market and either go the short-term rental route

or the multifamily route in a less competitive environment. Hey David and all you BP listeners out there. This is Nate, the copywriter for the Bigger Pockets podcast network. I'm here with a question from Gordon who's from the San Francisco Bay area. I'm also from the San Francisco Bay area. David's in the San Francisco Bay area right now. So David, could you please answer this question for all the Warriors fans out there? Gordon is asking, I found David's recent comments about Castle versus appreciation in the Bay area particularly relevant. My wife and I are in our mid to late 40s and are looking to retire in 10 to 15 years. From what I see, $1.5 million could get us a single family home in a more desirable part of the Bay area but could also be used instead for a five to eight unit multifamily and a less desirable area. What would be the better play for retirement in 10 to 15 years? Home price appreciation or rising rents?

Let us know, David. All right, thank you, Nate, for your assist with the question there. And then thank you, Gordon, for asking it. First off, we're neighbors, we're in the Bay area. You need to be reaching out to me directly so that we can help you with doing this. Same goes for anyone else in California. I still see houses out here. Now for everyone who's not in California, let's reverse engineer this question to figure out how we can use this to apply wealth everywhere. First off, there's a few key points of Gordon's scenario. He's got 10 to 15 years, which is a decent amount of runway, and I'm glad that this got thrown in. Second off, the question is being framed as do I get in a good neighborhood single family or a not so good neighborhood multifamily? Those are not great options to be going back and forth with, Gordon.

I don't wanna see you get into a not good area multifamily in any part of the country. Now, by not so good, if you're comparing this to the best neighborhoods anywhere, and now you're saying, well, it's not grade A but it's B minus and it's not so good, that's okay. But every time I D-class neighborhoods, no. We're not gonna buy in those neighborhoods no matter what. It just doesn't make sense because rents aren't gonna rise like you're thinking, and the money that you're gonna waste in vacancy and the problems with evictions and tenants destroying properties is going to destroy any money that you think you're gonna make from cashflow. So this is not about do I buy it in a good neighborhood or a bad neighborhood, appreciation versus equity. This is more about do I buy it in a good neighborhood good neighborhood for appreciation or for equity. I want to... No, that's the same thing. For appreciation or for cash flow. I want to clarify that that's what we're discussing here. If you're, in a situation where you've got 10 to 15 years, you're probably going to do better.

Buying in the better neighborhood, a fixer upper property, adding value to it yourself, getting the best deal that you can, letting it appreciate and then waiting for rates to go lower so that the properties go up in value more. If you've got 10 to 15 years, I feel pretty confident that within that timeframe, that's very likely to happen. If you got three to five years, I would be giving you very different advice, all right. Now let's say we go the other route and we say, we're going to buy a small multifamily, five to eight units. I guess that's not a small multifamily. It's just a regular multifamily, five to eight units, and we're going to get cash flow. In most markets I like that play more. The Bay Area might be a little bit different, but I like that more because the cash flow that you make from that five to eight units can be used to offset the mortgage that you'd be paying on the house that you want to live in. The only reason I'm saying for the barriers specifically that might not be your best bet is because the wages here are so high and the inventory is so low that the appreciation of a property is naturally occurring is disproportionate to the rest of the country. You often hear people say, I can't believe a house could cost 1.5 million. I get it. But you also don't get paid $100 an hour to be a nurse wherever you live.

Or you're not a firefighter. They can make 110,000. Or if you work overtime, you can make 180,000. Some of the people listening to this, firefighters get paid $45,000 a year and they think like a million and a half is impossible. So you have to keep in mind that areas with really high home prices, Manhattan, New York, Southern California, Bay Area of Northern California are often associated with very high wages. And that's why it's like that. Now, when you're renting to the people in the worst neighborhoods in these same locations, like you're in the Bay Area, California, but it's a really bad neighborhood, you're renting to people whose wages are not appreciating at the same level as the people buying the $1.5 million house, which means you have a new kind of problem. Because even though the house itself is going to be expensive, the tenant you're renting to isn't able to get those big wage increases. You're not renting to the nurses and the firefighters. They're not going to live in a D class neighborhood. That's to buy into, you only get those benefits when you take advantage of the demographics of the actual location, which in this case would be people working in the tech industry or in public health, somewhere that has a pension plan where they're going to get built-in raises to what they're doing and they're going to have money that's flowing in. So I'd love to help you guys find some of the up and coming neighborhoods, look for a house that you can do a live and flip.

You just slowly fix it up over time. You get a lot of square footage. Maybe it has an ADU that can be rented out to make it into a rental property. Maybe it has an ADU and it has a garage or a basement that can be converted so you can get three units out of one, all totally legal, all totally up to code. And you get the benefit of rising prices with single family residential houses in the best neighborhood. If I was your agent and I hope I get to be, that's the advice that I would give you. Now I get to read the comments from previous shows and see what y'all are saying. First one comes from Makara Nuon. I just love this bald guy named David. I love the fact when you respond to a negative comment about appropriately displaying risk to investors, I don't think anybody could do better than the way you did. Brilliant. You respond in a way that couldn't be offensive to anyone.

I just love you David. Well, thank you for that Makara. That's probably like the nicest comment we've ever gotten for anybody, especially it was over me responding to something negative. So what I love about you pointing this out and I'm grateful to you for saying so Makara is I like it when people bring the smoke. I'm not afraid of someone saying I think that that sounds wrong. I don't think that could work or it's okay to challenge as long as you're doing it respectfully and thoughtfully. Don't call names, don't make up slanderous accusations that aren't true. That's not cool. But if you just say in this case, someone thought that I wasn't highlighting the appropriate risk to investors, appropriately displaying risk to investors. So I was probably in their opinion, highlighting certain elements of real estate while leaving out others. I want you guys doing that. Tell me more.

Tell me what you don't understand. Tell me why you would disagree. Come from a place of curiosity and then when I give the answer, it usually opens up your mind to something that you weren't saying before. So I appreciate Makara you acknowledging that I did that in a way that wasn't offensive. I got to tell you something. You said last year it triggered me to take action, got me out of analysis paralysis and bought my first three rental properties in the past 16 months. And also Makara, congratulations on buying three properties in 16 months. I'm very proud of you. That's great. You're clearly taking action. Keep doing more of that and then keep us up to speed here at Bigger Pockets with how that's going. Our next comment comes from Ann Nguyen.

Thank you for this video. This is inspirational and motivational. I learned the most from seeing greens more than all the other BP videos. Please have more of these and let's be more green. Thank you. Every time I hear someone say that I'm green friendly or green conscious, I know they're talking about me. Next comment comes from Ani Kufu. Hey David, I'm glad I found Bigger Pockets. My wife and I don't have a lot of people in our circle that are interested in real estate. The more I listened to the shows, I realized we kind of scaled up quick and not the traditional way. So we are new to traditional real estate purchases and leaning towards short-term rentals. Do you have any advice is the general question, but it's been hard to find information that I think would help us to the next level.

We're trying to take advantage of our existing properties, but not really sure where to start. Thanks. And I hope to hear from you. Okay. This is a comment and a question and I appreciate that there Ani. This is going to be very broad information. So people listening to this, I could easily give advice in another direction. It's just hard to answer something like this. So just take it with the grain of salt. Okay. This is an incredibly difficult market to make work, right? And I can tell you why is the interest rates have increased to the point that investors are having an incredibly hard time cash flowing, but comparable sales have not gone down enough because we're still so close to the time that houses were selling for record high prices that sellers and appraisers can easily justify prices that are much higher than the market is willing to pay.

So you have pressure on the, on the value side where prices are sort of higher than they should be. And then you have pressure on the cashflow side because interest rates are high. That's making profitability lower than it should be. We're stuck in this pressure cooker as investors. Now, if you're a person who's looking to buy a house just to live in, they don't feel the same level of pressure. Okay. It's specific for investors that are trying to cashflow. I'm not saying don't buy rental properties. If you find a good deal, if you find where the numbers work, hell yeah, do it. What I am saying is from an overall general level, this is not a market where I'm going like balls to the wall, crazy hair on fire, scooping up as much as I can get. I was doing that when rates were like three points lower than where I'm getting them right now. I'm often getting quoted for my personal properties of rates that are in the tens.

Okay. It's very hard for me to make it work. These same deals were priced very similar to where they are now when I was getting rates in the sevens. That was a very big difference. So my advice to most people, again, this is not every single scenario. I'm not saying buy now, sell now. It's not that simple. In general, put your focus on saving your money. Put your focus on paying off your high interest rate debt. Put your focus on getting your own financial house in order. You still buy properties when you find them. I wouldn't put as much time into analyzing deals as I would put time into analyzing my budget.

Where is my money going? Have I been spending money frivolously for the last five years because it was coming in easy? And if it doesn't come in easy, am I going to be in trouble? Do I have four gym memberships that I don't need? Am I on Netflix or do I have a cable bill that's $250 a month and I don't even watch the TV? Do you know where your money's going? When I was a little kid, they had this little saying, it's 10 o'clock PM. Do you know where your children are? Right? Well, do you know where your money is? So I invest in real estate, but when the economy slows down to this point, I start paying a lot more attention to defense. Where am I spending my money?

How much money am I able to save? How stable is my job? Can I get a second stream of income because I don't know if things are going to get worse? So that's advice I'd give to you. If you can't make real estate work, still build wealth through the other tools you have available to you. All right. We love and we so appreciate your engagement. Thank you guys so much for leaving these comments. Please continue to do so. All you got to do is follow us on YouTube where these podcasts are recorded. And you can actually see the video, see my face, see the green light behind me, see this thing where I don't know what to do with my hands. And follow us there.

You get to leave comments on what you think, and then please subscribe to our YouTube channel and share it with anyone that you love. We want to get to better. So if you leave us a comment, if you drop us a line, you tell us what you'd like to see more of, you might find your way onto the show, but even if you don't, it will help us to make the show better. All right, before we move on to the next portion of our show, let's take a quick break to hear from today's show sponsors.

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Rent Ready. All right, getting back into our questions here. Our next video comes from

Caleb LaBelle in Denver, Colorado. Hey, what's going on, David? So hey, quick question for you. I am trying to figure out whether or not I should use my HELOC or if I should save up more cash to buy my next rental property. So I had about an $80,000 line of credit. I used about $26,000 to buy a new primary residence for my fiance and I. And so I have access to another 53, 54-ish. And so I'm trying to figure out would it be wiser to just save up my cash and then use that to purchase a turnkey property. That's kind of where I'm thinking right now. Or would it be better to use that HELOC and get into the game sooner? I know that on a previous episode, I think you had alluded to just being really cautious with HELOCs because of the rising interest rates. So I wanted to get your advice on whether or not I should save up my cash and use that or would be better to get in the game now by using my HELOC.

Thanks for any and all advice. Appreciate it,

David. Great question there, Caleb. This is actually what Seeing Green is all about. These are the types of questions I want you guys to be asking. Now, I can't answer your question right off the bat because there's a piece of information I would need I didn't get. I need to know how fast you're able to save money. If you and your fiance are only able to save $1,000 a month, I'm not going to give you advice to go max out that HELOC and go buy an investment property in the market that we're currently in. But if you told me, no, no, we're saving $8,000 to $10,000 a month between us, I would lean more towards if you find a deal you like, go ahead and put it on the HELOC. And the reason is the money you have coming into the rest of your financial picture is enough to bail you out if the investment itself does not go well. Here's why I'm pointing this out. And there's times in this industry where I give advice wildly different than all my contemporaries. And I just want you guys to understand why I do that.

For the last five to six years, it was tough to miss. We were printing so much money that even if you made a mistake, you got into the game on a bad deal, or there was something about real estate investment, you don't understand your first one to two deals, it tends to happen the most. Your risk was still so limited because there was so much money that was flowing around, you could just sell the property and break even in the worst case scenario. It's not like that right now. The advice I'm giving now is different than what I would have given you to three to four years ago, because we're not seeing the bailout that we had when we were printing money like we were. Now you actually have to focus on more than just the investment property to replace your income. You have to think about how you keep your income solid if you're going to be investing in real estate, because you're going to hit tough times. I've said it before, you want to be building a financial fortress, not a tree house. You got away with tree houses the last seven to eight years, so you could build them quick and people would buy them. Now you got a plan for the storm. So the first piece of advice I'm going to give you is, are you guys living beneath your means? Are you saving your money?

Are you financially safe and sound before we even talk about real estate? If you are, I think it's okay to use that HELOC to buy a turnkey property instead of waiting until you've saved up a whole bunch more money. If you're not, I'm going to lean more towards save the money for the down payment. Maybe supplement it with the HELOC, right? Maybe you save 40 grand and then you borrow 15 or 20 from the HELOC so you don't have to wait another six months before you buy this house you really like. But I'd like to see you focusing on saving more money and investing that and keeping the HELOC as sort of your bailout plan. You run out of money for a rehab, you have a couple of bad months of vacancy where it's not booking whenever the case may be. You need to pull money from the HELOC to cover your debt until you could pay it right back with the profits from the property or the money that you're making. But to sum this up, think about money that you're making outside of real estate when making real estate decisions. If you're making good money, you can use the HELOC earlier. If you're not making and saving good money, I'd like to see you save it. And it's okay to not look at one of two extremes.

You don't have to use your money or the HELOC. You can actually blend the two together, but I'd love to see you saving more money, working hours at work, you look like you're a young guy, you're not quite married yet, now's the time to be putting your financial future at the forefront of your plans and really doing everything you can to prepare for that as opposed to saying, I'm young, I'm just gonna live a little bit, and then spending the rest of your life trying to come back from a financial catastrophe that could have occurred buying into the wrong market. Our next question comes from Chris Rickenbaugh from Hickory, North Carolina. I'm a college student starting to invest in rental properties and since I'm in college, I don't qualify for general normal loans because I have no income. I've been reading a lot, I found a great opportunity on rental property with tenants and that would cash flow because it's already occupied. I'm ready to take action, but this is a hurdle I'm running into at the moment. I wanna know if I should wait until I graduate and have a full-time job to go through with it or use the rental income as my income to be able to qualify for the house. All righty, good question here, Chris, let's break this down. First off, probably don't wanna buy this property if it has tenants in it. Not everyone's gonna tell you this, but I am gonna tell you this, it's not a guarantee that the tenants aren't paying or they're problematic. The statistical likelihood of inheriting bad tenants is way higher than if you find your own and everyone out there that's ever bought a property with tenants is nodding their head right now saying, "'Preach it, brother, tell him more, "'Say it louder for the people in the back.'" Oftentimes, landlords don't sell their properties. Even if they could be getting a better return, they just don't think about it.

It doesn't come to mind to sell the property until there's a problem with the tenant or a problem with the house. It's the same as your car. Could I have a nicer car? Yes. Am I going to look at different cars and putting my time and energy into it? No, because there's more important things for me to be focused on. But what happens when something starts to break in the car? And it gets to that point where we're like, oh, more and more stuff is gonna break all the time. What's the first thing we always do? I need to sell it and make it somebody else's problem to fix all the stuff that's gonna break in this car. That's why when you buy a used car, you often have a bunch of stuff go wrong and you think you had terrible luck, but it wasn't terrible luck. You just waited to buy a car from when somebody else wanted to get rid of the problems.

The same thing can happen with rental properties and you don't wanna fall into that pit. As a college student, I would much prefer to see you buy a house and rent to tenants that are other college students whose parents are making their rent payment for them, not tenants that you don't know anything about. I'd rather see you get a four or five bedroom house, add one or two bedrooms to it, buy something with a lot of bathrooms and rent it out to other college students for income. Now, the other problem that you mentioned is you don't have income because you're in college, so you're not able to get a loan. Can you not work when you're in school? I mean, are you taking like 20 units at a time that you can't have a job? And if you do get a job, you may not still qualify for a loan, but it's gonna put you in a position that people feel much more comfortable lending you money. I worked when I was in school. In fact, I haven't told this story a whole lot, but I worked as much as I possibly could when I was in college, and I graduated college with my school paid for, no debt, my car completely paid off in cash, and over $100,000 in the bank. And that was just the equivalent of saving $500 a week from working in restaurants and making tips. Now not everyone can maybe save that much money, but I don't think it's impossible to save half of that. If you only save $250 a week, that's very possible.

It's because most people in college don't look at it like a time to earn money. They look at it like a time to have fun, a time to grow. You can do all that stuff and still make money, man. So I would push you towards finding a job where you can earn more and then get your parents or someone else that you know to cosign with you on a loan to buy a rental property, preferably someone with some experience investing in real estate. They can underwrite that deal and make sure it's gonna work for you. I like that way more than buying a house that somebody else has right now with very likely problematic tenants and having your first experience as a real estate investor being a scenario like that. Our next question comes from Darren Jones in Tulsa. Darren says, I hear a lot about VAs. I'm wondering if hiring one is worth the investment. I'm sure Darren here is referring to virtual assistants. My email follow-up game is slacking. My inbox can be overwhelming.

I'd love to be able to pass the small task ball, set up pick and rolls for easy dunks in real estate. I know you know. He's using basketball analogies here. So I know Darren is a real fan of the podcast and probably seeing green. At what point in your real estate journey did you add an assistant? What has been the biggest benefit thus far? Okay, good question. Let me clarify some stuff. There are certain things in life and especially in business and real estate investing to a smaller degree where the way we explain how it works is much different than experience you have in practice. Let's stick with the basketball analogy here. I can tell you, you're gonna come off of a pick and roll. You're gonna put your shoulder down.

You're gonna turn the corner. You're gonna drive all the way to the rim and you're gonna go lay it up. That sounds great. And I can draw it on a blackboard and show you is the X and here's the O and here's the arrow showing where you're gonna go. It is easy to understand conceptually what you're gonna do. The execution of that where you have another player who's actually trying to stop you from doing it and you haven't practiced it very often to get some of the details down and maybe it involves you dribbling with your left hand, not your right, where you're not as good. And oh, there's two really huge guys that are the rim that are trying to stop you from being able to lay up the ball and they practice too. Now the execution becomes much more difficult and understanding conceptually what you're trying to do and businesses like that. We often when we're explaining how to scale a business, how to grow, we say things like you gotta get your time back, you gotta leverage your time, you gotta hire someone else, those are the right answers. You gotta come off the pick and roll, you gotta drive to the rim. The successful people practice it so much and understand nuance and subtlety in getting it done. Most people that hire VAs struggle mightily because VAs don't come out of the box ready to go.

Just like most people trying to go lay the ball up at the rim struggle mightily because there's a person in there trying to stop you from doing that. You're not just gonna hire a VA and have them answer your emails. They're gonna do it all wrong. They're gonna say the wrong thing, they're gonna turn away people that you wanted coming to you, they're gonna schedule appointments for people you don't wanna talk to. You're gonna get massively frustrated, imagine having a small child, like a six or seven year old and putting them in charge of a task in a house. Like I want you to cook this food or I want you to clean this thing. You have to spend so much time showing them what it should look like when it's done. You tell any little kid just go make your bed and you don't look at what they're doing. Do they make the bed like they do at a hotel? Absolutely not. They do the quickest, sloppiest, fastest, dirtiest bed make. I would have done that.

I didn't wanna be doing it so I didn't try very hard. That's what you're gonna get when you hire an assistant. The only reason you should hire one is if you are willing to put in crazy amount of time upfront to train them and then probably have to do this over and over and over until you get the right fit for your team. Not every player that every NBA team drafts works out. Not every player that every college team drafts works out. Not every player that every high school team keeps on the roster is actually a contributing member of the team. Most of them don't. Most people tryouts get cut. Are you willing to have tryout after tryout after tryout one at a time to get yourself an assistant that might be able to help with your inbox and then once they do, they might quit and go get another job. And you gotta start all over. I'm not trying to pee in your Cheerios, bro, but I am trying to explain to you, this is what it looks like when you're trying to scale a business. You're gonna put a lot of time and money and energy up front and hope you get a return on that investment later.

No one tells you this when they're saying hire a VA and that's what I'm getting at. It's easy to say on the chalkboard, here's how the play runs, it's much more difficult to actually execute it. So I'm not gonna turn you off from the idea. I'm gonna say you better be committed to doing this for a long period of time and doing big things

before you bring other people in to try to help you scale. Hey, David, how's it going? My name's Alexi Wayman, I'm from Seattle, Washington. Thanks for taking my question. First, I just wanna say thank you for putting on the Bigger Pockets podcast. I've learned so much. I've been watching religiously every single day for the past couple months. If there isn't a new episode out on a given day, I just go back and kind of go backwards in chronological order trying to absorb as much the great information as I can. I'm a relatively new real estate investor. I bought my first condo in 2021 in the Seattle area. It's currently being rented out. I have a tenant in there on a 12 month lease, netting about 400 a month in cashflow.

I'm looking at my next opportunity. I do wanna get into house hacking. I do wanna buy a tri or a fourplex, but I'm having difficulties finding those opportunities in the market. And so my question is kind of two parts. The first part is how do I go about actually finding those off-market listings? Like where do I go to find them? And then secondly, when it comes to financing, how do I find private lenders? I bought my first condo with the traditional brokerage and I got a conventional loan on it, fixed 30 year. But I know with my next one, I wanna dip more into the private sector. And so I'm curious, how do I find those opportunities? And also again, that first question, how do I find off-market listings? Thank you guys so much.

I appreciate you putting these videos together.

Would love to hear from you, thanks. All right, Alexi, great question. I'm gonna have a fun time answering this one. I'm gonna try to make it as entertaining as I possibly can. Let's start off with a few misconceptions I can probably clear up for you. I heard you say twice. How do I find off-market listings? That's an oxymoron. If they're off-market, they're not a listing. You're not gonna find them. The very fact that they're off-market means that they can't be found, okay? When somebody wants to sell their house and they're going to put it on the market, they're trying to get as many buyers as they possibly can.

And so they put that in a place where buyers go to look for homes. They put it on the MLS and then Zillow and Redfin and Realtor and all of those portal sites are then a amplification or an expression of what is in the MLS. And real estate agents send them to their clients' houses from the MLS. It all goes into the MLS if somebody wants to sell their house. What you're looking for when you're looking for something off market is a seller that may not even know if they want to sell their house, okay? It's very difficult to find. You're trying to find a person who owns a property and then convince them to sell it or see if they want to sell it but they didn't know that they did. So there is not a place you go to find these off-market listings. And I say this because I hear a lot of people, especially new people in real estate, that ask that question. They're asking the wrong question. what happens is they're like uh where do you go to find like the off-market deal? So you go to roof stock, do you go to loop net, like where do you find the deals that nobody else has?

Well if there was a place like that, then people who own their real estate would put it in the place where everyone else is looking so they could sell it for more money or all the people looking on the MLS would be going to this place and now it's not off market anymore. That's why you're never gonna find it. Now I do like the question that I think you're getting at here which is how do I find something off market because there's nothing on market, right? I like that a lot. If you're looking at online dating apps and you can't find a girl that you like, and that's because they have too many other options, it's better to go find a girl that's not on the dating apps. You get a much better chance of getting to know the person in a more organic way if you meet them in a natural sense. I know, I'm gonna get all your comments about how you know someone who found their wife on Tinder and it's possible, please, I get it, it can happen. We're talking statistically here. You're better off looking for someone to date that isn't dating 40 other people if you're trying to get married. Well, you're trying to get married to real estate. You're trying to buy a house, so you don't wanna be going after the house. It's got 40 other potential suitors

that are all trying to get it.

I know. So where can you go to find people that own homes? Well, the first thing you can do is get a list of the people that own homes in an area. Now, what could make this easier for you is cities tend to zone themselves according to single-family and multifamily. You don't usually have a triplex right in the middle of a single-family neighborhood. They usually put them all in the same part of town So you can go to your city planners office or city or not city council but like the city division or you could call them and you could say, I wanna get a list of all the people that own homes in this block in this neighborhood, this area, they're all the single fam or sorry, they're all the multifamily properties. Then you can skip trace and either call or you can send letters to the address of the person. Now this is actually public information. So 123 Main Street rental property, the owner probably doesn't live at 123 Main Street. They live at 321 Forest Street. And you can mail letters to the Forest Street address saying I wanna buy the house on 123 Main Street. This is how a lot of wholesalers make their money.

That's one way you could go about it. You also could go about knocking on the doors and talking to the tenants and asking for their landlord's information. That's a slow, laborious way to do it, but it could work. There's other software like Invelo that BiggerPockets offers to people that are pro members that you can use to actually send those letters for you. That's the way I'd go about doing it. I'd sign up for a pro membership. I'd use the name David so you can get a discount on that when you go to fill out for it. And I would go right to Invelo and I'd say, okay, send letters to this part of town and this is what I want the letter to say, and I'd spend whatever money it was. And then I would put a phone number or a landing page or an email or something that I wanted the people who own those properties to respond to if they wanted to sell and I'd start the conversation there. The other thing you can do is find the wholesalers in your town that are already doing this and you could get from them. Those are not off-market listings, but those are off-market opportunities. And you could try to buy a house from a wholesaler and then just make sure that you get the inspection that's done.

Oftentimes you're not gonna get the same contractual protection that you're gonna get if you're buying it through a license realtor and you're doing it the quote, unquote right way. But you can get access to deals that other people aren't selling that way. So there's a couple routes that you can take. I love the hustle. I like that you're saying, hey, there's no one on the dating app that I like. I'm gonna go find my own. I think more people should be doing that and I wish you the best luck. The other part of your question, Alexei, was about private financing, okay? That can be a little bit trickier because people are usually gonna wanna see you have a track record. So I'd start with the people in your life that trust you the most that are not getting a return on their money. Rather than saying, hey, do you wanna fund my real estate purchase? That sounds very risky.

I would say, what rate are you getting on your money in the bank? Oh, you're getting 1%. How would you like to get 8% instead? Tell me more. Well, I would use your money as a down payment on real estate and then I would pay you an 8% return on that money and it would come from the cashflow of the rental property. That's the best way to have that conversation. I'm also gonna direct you to Bigger Pockets Podcasts episodes 636 and 637 and 654 and 655. We interview Amy Mejuri who teaches people how to have these sort of elevator pitch type scenarios where they can tell people that they'd like to borrow money from them and then just go out there and shoot your shot. It's just like dating, like I was saying earlier, the more people that you talk to, the more people you get yourself in front of, the better chance you have of actually getting to know one of them, building a relationship and hopefully finding both your private financing and the deal that you need. All right, everybody, I wanna take another minute to thank all of you for listening and for participating. Every single time somebody writes a question or they submit a video, we have content we can make a show out of and I get a chance to share the information that you all get to hear. So thank you for contributing and thank you for listening.

I understand, there are so many options right now with the way social media has exploded, podcast, YouTube, all of it, where you could be listening to anyone and I really appreciate that you're listening to me and following us here at Bigger Pockets. So sincerely and genuinely thank you for doing that. If you wanna hear more about me or my opinion on things, you can listen to other Scene Green episodes or you could check me out on social media DavidGreen24. YouTube, I'm also at DavidGreen24. There's an E at the end of green. And I want to encourage all of you to please leave me a comment on YouTube. Give me a rating at your favorite place to listen to podcasts, whether that's Apple Podcasts, Spotify, whatever it is. Give us a five star review. Please, some more people can hear this. And then make sure that you like, subscribe, and follow Bigger Pockets and the content we're putting out. If you got a minute, listen to another podcast video. If you don't, I will see you soon.

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