← Real Estate Rookie
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- [00:00]
A
Everywhere you look, the headlines are saying the economy is slowing down, jobs are cooling, consumers are cutting back, and investors are getting nervous. And for a lot of rookies, that creates a big question. Should I put my money on the sidelines and wait it out?
- [00:16]
B
But here's the crazy part. Some of the best opportunities in real estate actually happen when the economy looks weak. Today, we're going to break down why a slowdown can be your green light, to invest more aggressively, how to protect yourself from risk, and the exact strategies rookies can use to come out ahead.
- [00:32]
A
If you've been wondering whether now is the time to buy or pause, this is the episode for you. Welcome to the Real Estate Rookie Podcast. I'm Ashley Kerr.
- [00:46]
B
I'm Tony J. Robinson. And with that, let's get into today's episode.
- [00:49]
A
So the first thing I want to look at is why does the economy actually look weak right now? So first of all, there's rising unemployment. Okay. We're, we're seeing that across the nation. There's also softer GDP growth and consumer spending has cooled. People have gone through all of their stimulus money and now they're realizing that they need to cut back on spending. So these are factors that can come into play no matter what strategy you're doing. So long term rentals, this could mean that if you have very high end luxury rentals, if consumer spending is cooling and people are fearful of losing their job, getting laid off, that they may not pay for that high end luxury apartment just to have that little bit sense of security or they just can't afford it anymore. Tony, on the short term rental side, our. Are you seeing the economy have an impact on short term rentals?
- [01:51]
B
I think the. I'll talk at a macro level and I'll talk more about my specific portfolio. At a macro level. I think there are a few headwinds that we've seen. Number one is, yeah, just discretionary spend is down. I think part of that is a. Folks here in the United States, we're seeing more credit card debt. So, so if you look at the trend of credit card debt, it's definitely increased post Covid, whereas immediately coming out of COVID we were, I think, near historic lows in terms of how much credit card debt we were carrying. Not historic lows, but recently speaking. But now that number's definitely gone up. The other piece that I think has impacted the travel industry is international travel. For whatever geopolitical reason you want to look at, the number of international travelers coming into the United States has gone down. And you saw Major airlines all, you know, reforecast what they thought 2025 was going to look like. All the big hotel brands pull down their forecasts as well, because international travel does impact, you know, how much people or the travel industry here in the United States. So those are kind of two of the macro things. At a portfolio level, we've personally seen it mostly steady year over year. Our hotel is actually doing much better this year than it did last year, which is something, something that's exciting for us. But on the single family side, we've pretty much been steady year over year, but that is after two years of revenue declines. Right. So we, we kind of peaked in 2022 for the most part. On the single family side, as a portfolio, 23 was lower than 22, 24 was lower than 23, and 25 is kind of stabilized. So we've got a better sense of, I think, what to look forward to. But yeah, it's been a little up and down for sure. So we're seeing some of that.
- [03:35]
A
Yeah. On the international travel thing is we have a ski resort town that a lot of come to. And when there was that big push of Canadians not wanting to come to the US Boycotting the US like actually a bunch of the houses even went up for sale that Canadians had owned in that area. And just the, the people coming in from Canada really reduced during that time period. And it had to hurt a lot of the short term rental owners and even the small business owners in that specific market too.
- [04:09]
B
Yeah. So I think there's, there's a lot of factors here and I think the, and look, Ash and I are not economists, right. So we're sharing information based on what we've seen. So don't beat us up in the comments if everything we say isn't absolutely to the T. Correct. But you know, I do my best to try and stay on top of the economy. And I read things from folks who are far smarter than I am. And you know, we just came out of the Fed reducing interest rates. And part of what drove that reduction was the fact that the labor market was cooling. And we're in this weird spot in the economy where the Fed can lower their interest rate, Right. The Fed can lower the fed funds rate to like stimulate the economy, which is good when we're losing jobs. But the bad thing is that when we stimulate the economy, that also can potentially drive up inflation. And when we see some of the impacts of tariffs on inflation, we're in this weird spot where it's like, okay, maybe we end up solving the employment issue. But we then get back into this issue with inflation. So I think it'll be really interesting to kind of see where the economy goes. But Dave Meyer, and when he was on the podcast, we asked this question of when we talk about investing, what's more important? Is it the national headlines or is it the local headlines? And Dave's insight, you know, being the smart kind of economically driven guy that he, that he is, pay attention to the, the national stuff, but we make decisions based on the local piece. So even as we talk about, you know, gdp, unemployment, still focus on your specific market and see what's going on there. Because what's happening in Buffalo is very different than what's happening in Los Angeles. It's very different than what's happening in Montana, Very different than what's happening in Florida or Texas. So just pay attention locally as well.
- [05:49]
A
I think that is such a great piece of advice. Have that general knowledge of what's going on, but really local because, like, you know, as we're talking weak economy. Apartments in my area are still renting really fast. But those are the middle of the road apartments, not luxury apartments. Those are just your standard basic finishes, you know, nothing high end. They are going so quickly and getting rented out. One thing I did want to add is I spoke with a mortgage lender the other day and I still am, like, shocked about this. I don't think I have picked my jaw off the ground yet for, from this, but this mortgage lender was telling me and it was almost in like a motivating way as to, like, I can get this done, as in he just did a deal with somebody. They're about to close next week. It was for a VA loan. So obviously I'm not, I don't know everything about a VA loan. I obviously don't qualify. But for a VA loan he got, somebody approved that had a 70% debt to income.
- [07:02]
B
Wow.
- [07:03]
A
And when he said that to me, I was like, really? And he's like, yes. And I said, that's actually kind of scary. And he like laughed and he's like, I know, right? And he said that. I guess apparently the VA does have like higher debt to income ratios than a lot of other loan products from what he said, but 70%. So like, as they're driving the kids to school in the morning, I'm like saying like, okay, Darrell, this would be like if he makes $100,000, like he has $70,000 in debt payments throughout the year, like lifting out 30,000, like, and I'm like going through all these scenarios like, oh my God, that is crazy. But to be approved for that. So that I think is a warning sign if you look back to 2008 and you see what's happening. But if you guys are watching this on YouTube, I would be interested in the comments if you've had an experience like that recently where you got approved not thinking that you would get approved. And it really did like stretch the limits on this. Okay, so the next thing that I want to talk about on this is why aggression may actually be the right move. So even though we may be in a weak economy and everything is not perfect conditions for investing, how you can actually be aggressive and what are the things that can actually help you move the needle to get your first year next deal? So the first thing is interest rates. So interest rates actually have come down recently. I just had a friend who got quoted for a 30 year fixed at 6.25% for a primary residence loan. And I did a little poll on my Instagram and I asked, is this good? Have you gotten better? And there was a bunch. I think it was like at 18% of people that had responded had said they had gotten better. There was, I don't know, another 25% that said, I don't know if it's good. I, um, and then the rest there had said that they thought that that was a really good rate. Um, but it's not the, the rates that we were seeing years ago. So there's still people that are caught up on the fact of, you know, I want that 3% rate, I want that 4% rate that you used to be able to get. And I think looking at interest rates is that if you are waiting for interest rates to drop, you are trying to time the market because when they drop, prices are going to increase. Okay, so you, that would be like, you would have to find that perfect period to actually get the, the low price on the property and to actually get the, the low interest rate. So. And it also defers the time that you actually start investing. If you wait till interest rates drop. You don't know exactly when that is going to be. I've had properties for 10 years now. The appreciation that has accumulated in these properties will beat any little bit of cash flow that I would have made in those 10 years if I had a really high interest rate and barely had any cash flow on the property. But be. So it's better to start now than to actually wait for interest rates to drop and you have more flexibility and negotiation because if you can make a deal, work with today's interest rates and then they do drop, say two years from now, you can always go and refinance. And it's like a bonus because now you're going to cash flow even more because your interest rate was cut and your mortgage payment is going to be lower. Or you can refinance and keep your mortgage payment the same, but the interest rate is lower. So you're just taking out more money. So I actually looked at a property that I have that has about $150,000 in equity, and if I went and pulled out $100,000 in equity on this property and I started over my amortization, so I have about five years left on my amortization of this property, at what interest rates are right now. If I took out a loan and did that refinance and started over my amortization, so I had another 15 years, my mortgage payment would stay exactly the same. The differences. So my cash flow would stay the same. The difference is I would get that $100,000 cash out that I could go in and do another deal with. So don't get too focused on interest rates. That's like saying property taxes are too high. People still buy properties. That's saying any other insurance is too high. People still buy properties, make the deal work. So that means offering a lower purchase price on the property. That means how can you increase cash flow or increase rental income? Maybe it's turning it into a midterm rental or short term rental. So you can, you can still be aggressive with deals and not get the exact interest rate that you want.
- [12:24]
B
I could not agree more, Ashley. I think we're, we're in this golden period of buying real estate. And I know that sounds super counterintuitive, but I think that's the whole point of this podcast. Because if you think back to when interest rates were 3%, sure, there were a lot of ways to make a deal work with the 3% interest rate, but it was also incredibly difficult to find deals because everything was going within 37 seconds of being listed at, you know, 3x what it was listed for. We're at a point now where buyers have leverage. Interest rates aren't as high as they were when they peaked. They're definitely not as low as they were, but they're not as high as they were previously, which makes it a little bit easier to make some of these deals work. But, and then when you start factoring in things like, you know, buy downs, either temporary or permanent buy downs, There are ways to make these deals maybe more attractive. I want to share a quick story on a deal that I've been looking at for a while, and I actually forgot about this, and I might need to reach back out to them. But there was a cabin that was right around the corner from the very first Airbnb I'd ever purchased, and I saw it. You know, it's a very similar floor plan to what we have. That cabin does incredibly well. Location is great. This podcast is being recorded in September of 2025. This property was initially listed in May of 2023 for 1.15 million. Okay. It sat for six months, and in November of that year, they decreased the price from 1.15 to 1 million. When they dropped that price to 1 million, that's when I initially saw it. And I think I offered 850, I think is what I offered, maybe even a little less. They denied it just flat out. No. I followed up not long afterwards, offered 850 again. I think they countered it like 950. Still no for me. Right. They end up dropping the price to 950. Looks like another six months later, they dropped the price again. So we started at 1.15. A year later, they've dropped down to 950. They dropped it again to 843 months thereafterwards, dropped it again another four months after that to 840, and then it sat for an additional nine months. And they just removed this listing from the market a month ago at 840. So we're talking about a property that was originally listed for 1.15. They dropped all the way down to 840, and they still couldn't get it sold.
- [14:55]
A
And Your offer was 850. So, like, they should have taken your offer.
- [14:59]
B
They should have taken my offer. Right. And they removed the listing at. At 840. But I share that story because imagine. And, you know, I feel like I should probably reach out to them. Imagine how motivated this owner must be to have had this property sit on the market for a year and a half with no major movement.
- [15:17]
A
And now if it's not listed anymore, then they don't have to pay commission. So they can, you know, make a little bit more money than they would have.
- [15:27]
C
But.
- [15:27]
B
But those are the opportunities that are out there, guys. And. And I think the trap that we see rookies fall into is that they try and get into the mind of the seller and start making decisions for them. That is not your job. Our job as the buyer is to present the offer and then put the ball in their court to make the decision based on whatever offer you give to them. Don't worry about what is listed for what if they listed it knowing that they were asking for way too much, knowing that someone was going to lowball them. So underwrite the deal at whatever number makes the most sense for you and then submit the offer. If they say no, they say no. If they don't respond, they don't respond. But the best case scenario is that they come to the bargaining table, right? They come to the negotiating.
- [16:05]
A
I have a property that I've had listed for almost a year now. It's 10 acres. And I bought it for 102,000 in 2021. 2022. And I just haven't done anything with it. So I'm like, okay, it's time to unload it. We list that, you know, that I think was like November of last year. Very little traction. We got like eight. We had it listed for 139,000. We had like an offer at like 80,000 and like maybe like 115 and, you know, and finally we got an offer at 125. Then their financing, like, fell through. And just. So we finally, two months ago, got it under contract for 115,000 with it being contingent on this person selling another property. They were going to do a 1031 exchange. So we took it. We. It was still over the $102,000 we paid. It was 115. After commissions, after attorney fees, after everything's paid. Yes, we're not making money on this deal at all. But we had. So in New York, there's like weird laws about septic and, well, testing and blah, blah, blah. And they actually could not locate a septic on the property. Cause there's like a cabin house on there that's completely gutted and whatever. But they. The seller said he was going to back out of the deal because he got an estimate it would be $25,000 to actually put a whole new septic in there. And I said, takes $25,000 off the purchase price. Because for me to put it back on the market, list it for sale again, go through this whole process, who knows how long it will take. People will see that it's been on the market for almost over a year. Somebody backed out of the deal, and it is worth it for me to have. So it's knocked down to $95,000. I can do so much more with that money today than risking it setting, you know, even longer to get another 10, 15, $20,000. So that's where I come at from the investor standpoint, as I would rather take a little bit less to close now and to get it done than to actually, you know, wait and try to get $20,000 or more. So if you never know who the buyer is, it could be someone like me where you say, hey, give me a $25,000 price reduction. And I say, okay, do it. Like, I never ever thought that would be me. But it's just like this property is just, you know, Sansat. So there are motivated sellers out there. So if the headlines have you worried, remember, opportunity hides in plain sight during a slowdown. But before we get into the strategies to take advantage, let's hear from today's show sponsor.
- [18:49]
D
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- [20:20]
C
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- [21:13]
A
So now that we kind of gave you the reasons of what why you should purchase a property today even in a weak market, why you should be aggressive getting your deals. Let's actually go over some practical strategies for rookies, some actionable items that you can do today. So the first thing is, is really stick to analyzing your numbers accurately and correctly. Don't. As much as I love appreciation and I have become, you know, a lover of appreciation and what it can do for your wealth. Do not speculate and do not buy your deal on appreciation only unless you know for sure you can afford to pay that negative cash flow every single month into that deal. And that's something you know that you can sustain long term. So for example, if you're going to buy a property because you think it's going to appreciate in an area and it is negative $500 a month in cash flow and you say, okay, I have an extra 500 bucks a month. If something were to happen, you had a medical emergency, your car breaks down, will you still be able to afford that $500 that you're putting into the property? If you have like $5,000 in discretionary income every month that you invest anyways, okay, maybe that $500 isn't that risky for you to put into the property and, and you have a plan in five years that property is going to appreciate and you're going to sell it. You also have to make sure that if it doesn't appreciate that you're still going to that losing any money that you have into the deal isn't going to be super detrimental. So as a rookie investor, I highly recommend getting a little cash flow, having a little meat on the bones even if you are investing for, for appreciation and run your numbers accurately by not over inflating the rental income, thinking you can get top of the market just to make the deal work. Like I will play around with the bigger pockets calculators all day and I'll say, you know what, this unit is a little bit bigger. I think I can get maybe $100 more and I will, you know, play with it, increase it. But what I've learned over time is like the more conservative you are and even running the worst case scenario. So I like to do best case scenario as is, like what am I buying the property at right now? And like what it, what it's rented out for, what it could be rented out for without doing any rehab. And then worst case scenario, I am the bottom of the barrel of rentals and I'm getting the lowest rent in that market to see what the deal looks like. So really make sure that you are running accurate numbers that pencil out and just to give yourself some sense of security and less risk, do have some cash flow. Stick to deals that actually pencil out today. And as long as I not only speculation or not only appreciation, but don't speculate on interest rates going down and oh, I'll just refinance later. Don't speculate on your insurance going down. So make sure that you're actually running your analysis accurately.
- [24:38]
B
So many good points there, Ashley. And we're at a point right now where short term rentals are kind of having this moment again because of the one big beautiful bill that passed and brought back 100% bonus depreciation. And I've had a lot of folks reaching out to me recently saying, Tony, I want to buy an Airbnb, a short term rental before the year is over because I need to get this material participation. And I think it's a great notion. But what I've encouraged folks to do is don't buy a bad deal just to get this tax benefit, you know, and it's the same way of someone buying a long term rental that doesn't cash flow to get appreciation. Still make sure that the underlying economics of the deal are sound. Still make sure that the underlying economics of the deal are, are solid. Because we don't know where things will shift and where things will go. So yeah, cash flow first conservative underwriting I think is true for all of those things. I think some other practical things, and we touched on this in that second part of the show as well. But I think we're at a point where we can get a little bit more creative with how we put some of these deals together. A lot of transactions right now are happening with some sort of seller concessions. Right? Seller credits. And let me just kind of briefly talk about the difference between like a seller credit and a purchase price reduction in most situations. For me as the buyer, actually let me define both of these. First, a purchase price reduction. Let's say that I'm buying a property from Ashley and I ask for a $10,000 reduction in purchase price. And let's say that the property was $200,000. Now, our contracted purchase price, instead of being 200, it's $190,000. Okay? Not a whole significant difference to me in terms of cash out of pocket to get that deal. Right? 190 versus 200, I'm putting 20% down. I go from $40,000 to. What is that, $36,000. Right? So not a. Not a significant difference there, if I'm doing that math right. Instead, let's say that I use that same $10,000, but as a credit. Right? That basically means that the seller, out of their proceeds from this deal are going to give me back $10,000, which can be applied towards my closing cost. So in that same scenario, let's say that we're still at the $200,000 purchase price. I'm putting 20% down. It would be $40,000. But with their $10,000 credit, that goes from 40,000 now down to 30,000. So it materially impacts the amount of money I have to bring to the table. You can also use seller credits to maybe buy down your rate. Temporary buy down where it's maybe a 2:1 buy down where your first year is 2 points lower than your final rate, the second year is 1 point lower. You could use it to do a permanent buy down. Right. Maybe you put up 1% of your price as, you know, as a way to buy down your rate permanently. And now you've, you know, brought it down by a few basis points. So I think every single person who's submitting deals right now or who's submitting on deals right now should be asking for some sort of seller credit. You'd be silly not to because again, going back to what we talked about before, less competition, more motivated buyers, they're willing to give you these concessions to move this inventory. Last thing I'll say, new home construction. They're going crazy with the seller concessions right now. We live in a community that's still like being built out. And they've been building it for, I don't know, eight years now, but they're still building. And my wife and I were just like went through the, went by the new ones that they're building. Just check them out. And it's crazy what they're giving away. They're like, hey, we're going to upgrade your kitchen for you. We're going to buy down your rate. We're going to give you a 750 visa gift card. They're giving all kinds of crazy concessions. So it might not sound like a strategy to use, but even go look at some new construction and you might be able to find some really good deals just based on all the incentives that sellers or that builders are giving buyers right now.
- [28:39]
A
That $750 Visa gift card, you could, you could buy a coffee table. But I think along those lines of like, how to get creative and look for those incentives and how to ask the sellers for different things. It leaves more room for you to have liquidity because if you're having to put less money into the deal, this gives you an option to hold your reserves. So building reserves, this will really help you weather any bumps that actually do happen in the economy. What is to come down the road. So if you use any of these incentives or you get a seller credit, like, you should plan on taking that money that you have now back in your pocket and using that for your reserves. So if you planned on putting, you know, 5% down, but now you've got that seller credit where you're only putting 3% down, take that money and have it in reserves. Because when, if the economy does get, you know, we do go into a recession, we do property prices decrease. Not only do you want to be able to weather vacancies, maybe longer turnovers, your short term rentals not being rented out and you're having to cover these expenses, but also too, you want to be in a position to buy. So during COVID March of 2020, like I feel like that is kind of like the peak of when it shut down. March and April, as in like my kids got taken out of school, you're not supposed to go anywhere. During that time. I bought a foreclosure. The house was listed at like 90,000. As soon as everything shut down, everyone panicked, didn't know what was going to happen. I still did. I'm not saying that I was super confident and everything's going to be okay, but I got that property that was listed at $90,000 for $27,000. So I. So like that's just. You want to have the reserves to protect yourself so you can weather the storms, but also so that you are ready to jump onto an opportunity because again, you can't time the market and you can't know perfectly. But if things happen again, something happens or whatever, we have a recession and the economy does tank and you know, real estate tanks and you have these cheap properties. You want to be able to jump on those deals. And then once you do jump on them, it could take some time for real estate to, to come back up. So you have to be able to, to hold those properties or do whatever with them until they do have some appreciation in growth. But I mean, if you just look over the history throughout the U.S. no matter which market, most often you've held a property for 30 years, it has appreciated. You know, you hear your grandparents talk about how they built their house for $27,000 back in, you know, whatever time. So I think the, the liquidity is important to have the reserves to weather any storms and also to be ready to be aggressive to jump on any deals if the market does take a turn for the worse.
- [32:03]
B
Just on the topic of liquidity and building your funds, I was doing a little bit of research while you're talking, Ash, because I know Apple, I think Berkshire Hathaway is the same way. But Apple is known for keeping just like a ton of cash on hand and you know, fact check these numbers, right? But they're probably directionally correct. Apple's got, as of June 28th last quarter, they had over $36 billion with a B in cash and cash equivalents, $36 billion just sitting there. Right.
- [32:34]
A
I wonder what they're getting as an interest rate for like a high yield interest rate.
- [32:38]
B
Imagine they're earning billions of dol. Hundreds of millions at least. Right? But, but why do they do that? Right? I think part of it is flexibility and what we talked about, you know, if Apple wants to go out and buy, you know, like some new company, they've got billions of dollars just sitting in a war chest. So they can go and do that in the same way that if we as investors, Ashley comes across a great deal at a great discount, she can go deploy that capital to go get it. Part of it is like managing.
- [33:06]
A
My kids have been really into collecting Switch sports memorabilia and it is getting very expensive. So that is my little stash there. I'm gonna start selling those babies off when it's time to buy a property.
- [33:19]
B
And just a side note, I don't know if I've been seeing this like across social media recently where it's comparing the return of like the S P against Pokemon cards and Pokemon cards have like far outperformed the S P. So.
- [33:31]
A
Oh really?
- [33:32]
B
It's like you, you never know. You never know.
- [33:34]
A
When I was in fifth grade, we're getting really sidetracked here today, but when I was in fifth grade, my brother loved Pokemon and there was a boy in my class that had a big Pokemon collection. And he told me if I kissed him, he would give me his Pokemon collection. And I said no. So my brother never got it.
- [33:54]
B
You don't know, you just said no. It's like a multi million dollar Pokemon portfolio. You wouldn't even have to invest in real estate as you just, just give them that little boy. But hey, hindsight is 20 20. But, but that, that's one of the reasons that Apple stockpiles so much cash so that they can have flexibility. Part of it is just like managing debt. You know, even these big companies, they take on debt for different strategic reasons. And think about when interest rates went from near zero to, you know, whatever they are now, that debt immediately got a lot more expensive. So whereas maybe strategically it made sense to have this, this debt when it was super low interest, it doesn't make a ton of sense once it gets high. And again, if you've got a lot of cash, you can just start paying down that debt more aggressively. Same thing for us as real estate investors. If we, you know, are buying properties at 2.65% debt makes a lot of sense. If we're buying it at 8%, maybe it's a little bit harder. Maybe now we want to start putting down 30% on these deals instead of, you know, 15 or 20%. So I can go on and on, but just know that not only, you know, are we saying that it works here in the real estate sense, but just in a general business sense. Building your cash reserves is typically better for business.
- [35:05]
A
Now besides, just like the analytics, the numbers of it is, you have to have some kind of mindset shift. You have to be able to block out all the noise. So first the headlines as the, you know, major headlines that, you know, maybe affect a different market than yours. Like Tony talked about, like you should be like hyper focused on your local market. So like if you're seeing, you know, look, what for unemployment, what is actually the unemployment in your market, your area may not be as detrimental as what it's forecasting across the nation. So really understanding that and blocking out the noise, but not only with the news, the media, but social media, as far as like having like looking at what other people are doing and realizing that it's your Own journey, it's your own market, it's your own life. That just because somebody else is doing this and getting that doesn't mean that that is the right thing, thing for you to do. You have to analyze your own market, analyze your own numbers, make sure whatever strategy or shiny object they're talking about would actually work in your market where you want to do this and don't get caught up. And I've talked about this before where I went through this year, long period of like, figuring out what's next. And I just felt like this pressure that like, I had to do more. Everybody was doing syndications that I knew, and I, I, I hadn't done a syndication yet. I wasn't even close to doing a syndication. And I started, I got a property under contract, and I was just like, okay, I got it under contract. The next step is authentication. I started learning more about syndications, all this stuff, and I was like, you know what? This actually isn't for me. And luckily enough, there was like major problems with the property, so I ended up backing out of the deal for that reason. And I didn't even have to, you know, do anything more with the syndication. But it really made me realize that that's not actually something that matches the lifestyle I want or the, the type of thing that I want to do. I don't want to, I, I don't want to deal with other investors asking me what's going on with their money or what's going on with the deal. Just like I don't want to be a property manager to anyone else ever again except for my own property, because I don't want to deal with owners, deal with landlords. I, I see how I am. I, I don't want to, you know, someone else to be like that, to be, so I, I ignore the noise and really just focus on what's best for you. And that goes back to the basics. What's your, why, what kind of life do you want? What actually fits around that?
- [37:54]
B
And I think the next piece of that too. Ashley. Well, let me chime on that first, because I couldn't agree more. I think it's so easy right now in the age we live in to get, get enamored with so many different ideas and what's going on. But I, I think being able to focus on, hey, what's best for me, what actually works best for me will allow you to really maximize the things that are going on in the economy right now. I think the other piece too, about the mindset, shift Is that, you know, Warren Buffett has that quote, right? Be fearful when others are greedy. Be greedy when others are fearful. But, and I think we're entering into this phase where there are a lot of people who are fearful about getting started. But sometimes, and historically, some of the biggest fortunes are made when people are fearful. The biggest fortunes are made during a downturn. Think about all the people who made tremendous amounts of wealth after the 2008 crash. Think about all the people who made tremendous amounts of wealth investing through Covid. Right? It's like all these little things that have happened, created tremendous amounts of wealth and we're still in that golden opportunity. So I think just shifting your perspective from, man, this is a scary time to, yeah, it's scary, but it could also be the best time, is the way that we kind of get around that. And I'll just finish this point out with just a personal story. The very first short term rental that we bought, we bought that during the summer of 2020. This was like the thick of COVID You know, obviously we had just gotten past March and April. Everything was super crazy. But people kind of looked at us like, what are you doing buying a short term rental when you know people are staying home? But it turned out to be the best investment that we ever made. Like, still to this day, that is by far the best deal we've ever purchased. And had we been fearful, have we not had a little bit of courage, that never would have happened. You know, I wouldn't even, I wouldn't be me. I wouldn't be Tony J. Robinson, the guy who's built the short term rental portfolio. So, yeah, sometimes we got to take a little bit of risks. Measured risks, but risks all the same. So, guys, we've covered the numbers and the strategies, but sometimes the biggest hurdle is how you think about the market. Now, before we wrap up with action steps, we're going to take one final break to your word from today's show sponsors.
- [39:59]
D
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- [41:29]
C
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- [42:10]
A
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- [43:18]
B
All right, guys, welcome back. Now, before we wrap, we want to talk about really the action steps that you, the rookie, should be focusing on as you try and implement what we've talked about here in today's episode. And the first thing that you should do is to define your buy box. And when we talk about buy box, it's essentially what type of property should you be looking at? So obviously that's knowing your market, but more importantly, it's the type of property you want to go after. Are you looking for single family homes? Small, multifamily, large, multifamily manufactured homes, mobile homes, dirt lots? You know, like there's so many different ways that you can go about but know what your buy box is. Do you want big? Do you want small? Do you want expensive? Do you want affordable? Identify what makes the most sense for you so that you can move fast when something does hit. When I got my very first deal, I could tell you within five minutes, even five seconds whether or not a deal was a good deal in the zip codes that I was looking at because I'd analyzed so many different deals in that specific zip code at a very tight buy box. I was looking for a three bedroom, two bath, single story home built 1950s or later and a specific zip code. And I'd analyze virtually every single deal that fit that buy box. So I got really, really good at quickly identifying what a good deal is and what a good deal isn't. So when the right deal did pop, I was one of the first people to submit an offer because like, okay, this is the one, let's go get after this one.
- [44:48]
A
And you guys, we have a checklist template for you guys to go along with this. If you go to biggerpockets.com resources, make sure it's plural because they're also be taken to like the guides. But biggerpockets.com resources and you go to the beginner rookie, you know, real estate investments, whatever the first option is. And you go into there and you'll find our buy box checklist. So it will walk you through everything you should think of if you want a property that has that or not or like bedroom count, what's the ideal bedroom count? Is it 2 to 3? Is it 5? To 6 for house hacking rent by the room. So there's. It just helps you think through how to actually build your buy box and what you should include in it. The next thing that you can Also use on BiggerPockets.com is the calculators. The calculator reports. I still have calculator reports saved from when I first discovered biggerpockets in like 2017. So you can save them all in there. You're a pro member, but you need to practice, think about great athletes. What do they do? They practice, think about anyone who's in a competition. They practice, think about even, you know, professionals. They practice in a sense that they're going to get their CE credits. They're doing continuous training, they're learning their, you know, doctors. They're continuously doing something to, to keep that, that memory that, you know, physical memory of doing. What's that? What am I thinking of, Tony? That muscle memory. Yes. When, you know, doing a surgery. So run the numbers as much as you can take a property off the mls, even if you just look at it, knowing like this would never ever in a million years make a good rental practice. Running the numbers. Where are you getting the insurance quote from? Where are you finding the property taxes? How are you estimating the rehab? And just keep doing that, doing that, doing that and really figuring out how to niche down. If you're in some kind of meetup or even a Facebook group with investors in your area, plug in these numbers for this property in this calculator report or the Bigger Pockets forums, you can do this, add the calculator report and say hey, this is for a property in Oklahoma City. I would love anyone's feedback that invests there to take a look at it. You will get, especially in the Bigger Pockets forms, you will get so many responses. I would assume it'd probably be even more if you're like in a super local Facebook group where everybody is investing in that market to give you feedback as in, you know what? I actually don't think that would be the insurance. I have a property down the road, it's a duplex. It's similar that my insurance on that is X amount a year. So getting that feedback can be super helpful and can help you really tighten up your numbers and just get more and more comfortable. But I think just like exercising that.
- [47:58]
B
Muscle memory, the next important piece is building out your team building. And luckily BP has made it incredibly easy to at least start this process. There's the agent finder, there's the lender finder. You'll find plenty of insurance agencies within the biggerpockets ecosystem, and those are really the kind of the foundational people that you need. As you start thinking about getting your first deal, your agents or the multiple agents are going to expose you to different potential markets. They'll also be like your expert in that market. I talked to an agent once who was in Florida, and I've shared this story before, but it's just such a crazy thing. But she told me, she was like, hey, you know, if you want to buy in my city, don't buy in this hoa. And she, like, named the hoa. But she said, don't buy in this hoa. Because I just found out that the owners have all banded together and they're about to sue the HOA and the builder. You're not going to see that, like, on the Zillow listing. You know, it's like, like, hey, come buy my home. But I'm in open litigation. But because she there, because she's in that city, she had that insight. And then she told me, she said, do not buy any homes in my town that were built in the 90s. Any other decade. You're fine. She's like, but I've been buying and selling homes here, you know, for a long time. And for whatever reason, the ones built in the 90s are always the most expensive when it comes to flood insurance. Again, like, you couldn't get that information without seeing dozens and dozens or hundreds of transactions to pick up on that nuance. So finding the right agent, I think, is oftentimes a great starting point because they have that insider knowledge and they can connect you to the other folks you own in that market as well.
- [49:34]
A
And they can help you build out your buy box too, because obviously you probably added to your buy box not a home in the 90s that you're. You're looking at. So the last piece I'll kind of add here is just to stay educated, you know, keep sharpening your knowledge, absorbing podcasts, reading books, talking with other investors. By the time this airs, you guys will have missed a bpcon, but it should be announced where the next BPCON is by now. So you start planning to get there, to meet people, to network with them, to learn some things, and just constantly, constantly absorb as much as you can on Instagram. Just follow people who are doing real estate investing that are educating on real estate investing. And the very last thing is take action. So you can only get stuck in analysis paralysis for so long, and at some point you have to Take action. Even if you're not 100% sure this is the home run deal, this is it. You have to at some point take that leap and buy that first property. And Tony and I are here for you. We are here to help you along the way of your real estate journey. And we appreciate every single one of you that tunes in every single week to listen to us, to listen to the rookies that take the time out of their busy days to come on here and share their own experiences and to tell you all the lessons that they learned. And then even the experts that we have come on most recently too, we've been trying to add some more in here and there to, you know, really help you guys, like on very specific things that are far beyond what me and Tony are experienced on to really give you that insight, that knowledge. And then lastly, the people that actually ask the questions publicly, like in the BP forums, in the real estate Rookie Facebook group, so we can take those questions and answer them for you guys on the rookie replies. So just a big thank you to you guys. We appreciate you guys so much. And if you are a rookie investor that is stuck in this analysis paralysis or has been worried about this weak market, find some accountability. Go into the BP forums, go on to Instagram, find somebody that you can work together with where you're going to hold each other accountable and you're actually going to get that first deal. And then when you get that first deal, after listening to this episode, you're going to DM Tony or I and on, on Instagram or message us on our bigger pockets and we're going to get you on the show and you're going to tell us your story. So Tony, how does that sound?
- [52:19]
B
I can't wait to hear more success stories coming onto the show and you guys would be surprised. So many of our guests said, I started off by listening to the podcast and hearing someone else's story and it's so cool to be here now. So we would love for you to be that next, that next success story. So actually, if you guys want to apply, head over to biggerpockets.com guest and we'd love to hear your story to be joined the show as well.
- [52:40]
A
Shay. I'm Ashley, he's Tony. And we'll see you guys on the next episode of Real Estate Rookie.
- [52:45]
C
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- [53:37]
B
If you're watching this, we want you to apply to be a guest on the Real Estate Rookie Podcast. That's right. Ashley and I are looking for amazing stories just like yours to be a part of our Real Estate Rookie Podcast. Now look, you don't need to be an expert. You don't need to have done thousands of deals. Even if you've done one deal, your story could help inspire the next listener.
- [53:55]
A
As a rookie investor. Especially if you just got your first deal. It is all fresh in your minds and you are the best person to tell your story. Give your experience on how you got it done to help someone else get their first deal.
- [54:07]
B
So head over to biggerpockets.com guest if you want to be a part of our show again. That's biggerpockets.com guest and we'd love to have you on.