5 Things You Can’t Afford to Get Wrong When Analyzing Deals (Rookie Reply)

Summary

Real Estate Rookie - Episode Summary

Title: 5 Things You Can’t Afford to Get Wrong When Analyzing Deals (Rookie Reply)
Host/Authors: Ashley Kehr and Tony J Robinson
Release Date: March 21, 2025
Podcast: Real Estate Rookie by BiggerPockets

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Welcome to this episode of Real Estate Rookie, where Ashley Kehr and Tony J Robinson dive deep into the essentials every new real estate investor should master. In this episode, they tackle two pivotal questions from listeners, providing insights into analyzing deals and forming solid partnerships.

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1. Analyzing Deals: Maximizing Cash Flow and Understanding Turnkey Providers

Question Overview:
A listener is considering purchasing a turnkey property in the Midwest where the rent only covers taxes and mortgage. The property management fees are waived for the first year, resulting in approximately $50 in cash flow. The market isn't appreciating significantly, prompting the investor to question the viability of the deal.

Understanding Turnkey Providers

Tony explains:
“Turnkey providers are companies who go out there, they find distressed assets, they fix them up, they place tenants inside of them, and then they sell those fully leased up units to other investors. Those are called turnkey providers because basically on day one it's turnkey. You don't have to do anything to it, any work, and you can really just kind of get started cash flowing on day one, hopefully.”
[00:48]

Key Points:

• Definition: Turnkey properties are fully renovated and rented out, allowing investors to start earning income immediately.
• Advantages: Minimal involvement required from the investor; ideal for those seeking hassle-free investments.
• Potential Downsides: Cash flow can be minimal, especially if only property management fees are waived temporarily.

Evaluating Cash Flow and Expenses

Ashley highlights:
“The person wrote absolutely nothing else is factored in, such as capex improvements like roofs, H Vacs. Usually we like to save a percentage of that.”
[00:34]

Essential Expenses to Consider:

• CapEx Reserves: Allocate funds for major repairs and improvements (e.g., roofs, HVAC systems).
  • “If I'm buying a home that was built in the early 1900s, I'm saving at least 10% to cover those improvements on the property.”
    [02:07]
• Maintenance Costs: Ongoing maintenance can quickly erode modest cash flows.
  • “Any maintenance cost would basically take away that $50 of cash flow.”
    [03:17]
• Bookkeeping and Administrative Fees: Additional costs such as bookkeeping, tax preparation, and legal fees.

Conclusion on Cash Flow:
With only $50 in cash flow after accounting for taxes and mortgage, and excluding other potential expenses, the deal appears unfeasible unless supplementary income streams or appreciation prospects exist.

Ashley advises:
“I think this probably isn't an investment that I would want to do.”
[06:00]

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2. Real Estate Partnerships: Structuring Ownership and Planning for Growth

Question Overview:
A listener seeks advice on entering the real estate market through partnerships. They plan to pool funds for a down payment and closing costs, with one partner qualifying for the mortgage. The questions revolve around claiming ownership, lender underwriting for future purchases, and avoiding pitfalls when scaling their portfolio.

Claiming Ownership Without an LLC

Ashley explains:
“You could not be on the mortgage, but you could still be on the deed. So whether you have ownership of an LLC or you have a joint venture agreement, or it's your personal name, you need to have your name on the deed or that joint venture agreement saying that you are, you know, own part of the joint venture that owns the house.”
[10:53]

Key Points:

• Deed vs. Mortgage: It's possible to be on the property's deed without being on the mortgage, ensuring legal ownership stakes.
• Ownership Structures: Options include holding property in personal names, forming an LLC, or creating a joint venture agreement.
• Down Payment Sources: Funds should come from personal savings or gifts from family members to comply with loan requirements.

Tony adds:
“Typically when you're doing a house hack, the reason that people like to house hack is because of the type of dust debt that you get access to. … the actual deed would show Ashley and Tony right.”
[12:28]

Lender Underwriting for Future Purchases

Tony discusses:
“So if you're both going on the mortgage together because maybe you can't qualify by yourselves when you go to buy that next property … They see you both are responsible for $2,000 each instead of 1,000, 1,000.”
[16:45]

Key Points:

• Debt-to-Income (DTI) Impact: Both partners' debts are considered individually, potentially affecting loan eligibility for future properties.
• Individual vs. Joint Mortgages: Joint mortgages may lead to higher combined DTI ratios, complicating future financing.

Avoiding Pitfalls in Scaling the Portfolio

Ashley recommends:
“Have some kind of operating agreement or joint venture agreement. … putting a five year exit plan.”
[17:51]

Tony elaborates on the Five-Year Exit Plan:
“At the end of the fifth year of the partnership, the default option … sell the property … extend the partnership on an annual basis thereafter.”
[17:51]

Key Points:

• Operating Agreements: Clearly outline each partner's responsibilities, ownership percentages, and procedures for conflict resolution.
• Exit Strategies: Implementing a structured exit plan ensures both partners are aligned on the long-term intentions and can amicably dissolve the partnership if needed.

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3. Making Appropriate Offers and Handling Appraisals in Out-of-State Investments

Question Overview:
A first-time investor made an offer exceeding the property's appraised value while investing out of state. They seek guidance on determining appropriate offers and managing appraisal discrepancies.

Navigating Appraisal Challenges

Tony advises:
“If you believe that the appraisal is wrong, then … it's very reasonable to … say, here are some comps … you picked a comp that was three miles away that sold for less, but here's one that sold more recently, that's two miles away.”
[25:44]

Key Points:

• Disputing Appraisals: Presenting better comparable sales (comps) can challenge low appraisal values.
• Switching Lenders: Changing lenders may necessitate a new appraisal, potentially leading to a more favorable outcome.
• Negotiation Leverage: Use appraisal results as a bargaining tool to negotiate purchase price reductions.

Building a Reliable Team for Out-of-State Investing

Ashley emphasizes:
“Get a property manager or someone on the ground to walk properties for you … take pictures, take video.”
[28:43]

Tony adds:
“Sometimes paying 200 bucks for a round trip airfare could be worth it to go and set up a whole bunch of properties … to actually look at them.”
[31:10]

Key Points:

• Local Representation: Hire a trustworthy property manager or local agent to inspect and report on property conditions.
• Documentation: Comprehensive photos and videos provide a clear understanding of the property's state.
• Personal Visits: Occasionally visiting properties can offer firsthand insights that remote evaluations might miss.

Utilizing BiggerPockets Tools

Ashley recommends:
“Use the BiggerPockets calculators … make your offer based on the verified numbers, not what you expect the property to appraise for.”
[32:17]

Key Points:

• Financial Analysis: Leverage BiggerPockets calculators to account for all expenses and ensure the offer aligns with financial goals.
• Data-Driven Decisions: Rely on accurate data rather than appraisal expectations to formulate competitive and appropriate offers.

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Conclusions and Key Takeaways

• Thorough Deal Analysis: Always consider all potential expenses, including capex and maintenance, to accurately assess cash flow viability.
• Understanding Partnerships: Clearly define ownership structures and maintain comprehensive agreements to safeguard both partners' interests.
• Appraisal Management: Actively engage in the appraisal process, dispute inaccuracies, and use local insights to ensure fair property valuations.
• Building a Supportive Team: Establish a reliable local team to manage and inspect properties, especially when investing out of state.
• Utilizing Resources: Take advantage of tools and resources provided by BiggerPockets to enhance deal analysis and investment strategies.

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Notable Quotes:

• Tony on Turnkey Providers:
  “Turnkey providers … you can really just kind of get started cash flowing on day one, hopefully.”
  [00:48]

• Ashley on CapEx Reserves:
  “If I'm buying a home that was built in the early 1900s, I'm saving at least 10% to cover those improvements on the property.”
  [02:07]

• Tony on Partnerships:
  “Typically when you're doing a house hack … the actual deed would show Ashley and Tony right.”
  [12:28]

• Ashley on Operating Agreements:
  “Have some kind of operating agreement or joint venture agreement.”
  [17:51]

• Tony on Appraisal Negotiation:
  “Appraisers are coming from … they don't know that area ... you might know that area better than the appraiser does.”
  [25:44]

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For aspiring real estate investors, this episode underscores the importance of meticulous deal analysis, strategic partnerships, and proactive management of investment challenges. Ashley and Tony's expert guidance equips listeners with the knowledge to navigate the complexities of building a sustainable real estate portfolio.

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Stay Connected:
For more insights and resources, subscribe to the Rookie Newsletter at biggerpockets.com, and join the conversation on the BiggerPockets forums to submit your questions and engage with a supportive community.

Transcript

[Ashley]

Investing out of state can be scary, but we will break down the steps to make your investment a confident one.

[Tony]

We'll also cover what exactly you need to account for when analyzing a deal along with determining the best partnership for you.

[Ashley]

Okay, so we got our first question on rookie reply today. This question is when looking at the closing disclosure and you see that rent will only cover the taxes and mortgage, if the property management fees fee is waived for a year, is that worth it? That would mean that the next year after the property management fee is not waived, then you're only getting about $50 in cash flow. Would that be worth it in a not so appreciating market? So here's some things to consider for this question. The person wrote absolutely nothing else is factored in, such as capex improvements like roofs, H Vacs. Usually we like to save a percentage of that. So that's great that they called that out. They also noted this is for a turnkey provider who is providing the property management who is saying they will waive one entire year for the rental which could be increased by only a certain amount due upon the next lease renewal. This is also a single family home in the Midwest. The rent cannot be increased right away. So I would only receive $50 cash flow after the insurance, taxes and mortgage. This would not include any maintenance. Pretty much the only reason why it would be anything more than $50 is because the property management fee is waived. But that's only within the first year. Okay, so there are to kind of sum up this question is is it worth it? Should they purchase this property? Tony, should we start out with kind of explaining what a turnkey provider is?

[Tony]

Yeah, it's a great, great call. So turnkey providers and I believe we recently did a reply specifically about turnkey. But turnkey providers are companies who go out there, they find distressed assets, they fix them up, they place tenants inside of them and then they sell those fully leased up units to other investors. Those are called turnkey providers because basically on day one it's turnkey. You don't have to do anything, anything to it, any work and you can really just kind of get started cash flowing on day one, hopefully. So that's what a turnkey is. But the kind of, sometimes the downside with turnkey, which is what I think we're seeing in this situation, is that your cash flow, depending on the property, depending on the market, depending on the provider can get a little, little squeezed which is, you know, 50 bucks is I think is what we're seeing here.

[Ashley]

So the next Kind of question here is I will, I guess we should kind of go over expenses. What other expenses should be considered? So they mentioned that any kind of savings for capex such as roofs, Avax, H Vacs, anything like that is not included in their numbers. So for me a general rule of thumb is how ever old the property is or if it's been recently remodeled, saving a certain percentage. So like if I'm buying a home that was built in the early 1900s, hasn't had a lot of updates or remodeling, I'm saving at least 10% to cover those improvements on the property. Um, if it was completely remodeled, I may be saving 5%. Some situations, like if I did the remodel, I updated a lot, then maybe it's only going to be knocked down to 3% of whatever the rental income is each month. But you want to factor these things in along with the maintenance he had mentioned. Like any maintenance cost would basically take away that $50 of cash flow. And if you have ever had a handyman or a service tech come out, you usually just for them to come out to your property is more than $50. So, so yeah, the, the maintenance, the maintaining the property. So this is a single family home, so most often you're going to have the tenant take care of the lawn care, the snow plowing, things like that. But there could be, you know, pest removal that you may have to cover or pay for depending on what the lease agreement says to Tony. Is there any other expenses that you would add? I think the last thing I can think of is bookkeeping expenses unless your property management company is taking into account those expenses.

[Tony]

Yeah, I feel like you, you kind of hit them all right. At a business level, I think you're right. Bookkeeping, tax preparation and tax filing, tax strategy, if you have an llc, you know, any fees associated with that. So there's always going to be some additional cost. So I mean is $50 in cash flow a lot? Obviously not. You know, I don't think anyone's going to retire, get super excited off of $50. But I think the one thing we don't have from the person answering or asking this question is like, like why are they doing this? They're in the Midwest. So my assumption here is that they're not hyper focused on appreciation. Typically in most midwestern states you're not, you know, those aren't the states that are known for appreciating, they're typically known for better cash flow. So if you're going into the Midwest with the focus of getting cash flow, but yet you're only getting $50. I can't imagine what your investment into this property is, but it would have to be a pretty small investment for that 50 bucks per month to be any sort of reasonable return on your investment. So just from that information, that doesn't seem like a deal to me. And the other thing too actually that I'm curious about is like for the PM to waive their property management fee in the first year. Obviously it's the turnkey provider, so they're getting money up front just from the sale of the property to this investor. So I get that piece. But I also wonder, like, is there any sort of long term contract that this investor is signing up for? Because I would assume that most PMs probably aren't just going to manage for free without any sort of security that they'll have that second year, that third year potentially. So I would think I would really just review that to make sure. Because what happens if you get into year two and that first year was kind of shaky and you're like, man, I really did not like working with these guys, but now you're locked in for another two or three or five years. So just a couple of things that are running through my mind as I hear this question.

[Ashley]

Yeah, I definitely agree. I don't think this sounds like a great deal, especially if you're not getting appreciation. Maybe you need this property for the tax advantages and that's all you care about is you want to be able to write it off, then maybe it could work for you. But I think if you're not getting cash flow or you're not getting appreciation, but you know, definitely do your research on that and see if there is an appreciation play. Also, when can the rents be increased on the property or is there any kind of value add that you could do, for example, turning you know, the dining room into another bedroom to actually increase the the revenue that way. Could you rent out the garage for storage? So see if there's any other revenue potentials. But I would say this probably isn't an investment that I would want to do. One thing to keep in mind, if this is the only way that you can get started is by going through turnkey provider. I would go and talk to other turnkey providers and compare what their closing disclosures look like. Compare what are the costs that are associated with using them, what are they charging, things like that. So you can compare the different turnkey providers too. Okay, we have to take our first ad break, but we will be back shortly.

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[Tony]

All right guys, welcome back. We are here with our next question in today's Rookie Reply. So this question says beefy community. I'm entering the real estate investing world through partnerships. Ding ding ding. All right, Ash and I love talking about partnerships. Myself and my buddy, we've been friends for more than 15 years and we decided to get into real estate through a multifamily house hack. We plan on pooling our money for a down payment and closing costs. If one of us can qualify for the loan amount, then we'll choose to only have one person apply for the mortgage. So the question, or the first question is how does the other claim ownership on the property? My understanding is that this can be done by keeping the property in an LLC and being 5050 partners in the LLC. Are there any other ways to claim ownership without the llc? What is a better way to go about this? Question number two. If we plan to buy a second property one or two years down the road, how would lenders approach the underwriting? And then question number three, do we need to watch out for any pitfalls in the future for scaling our portfolio together or separately? Lots of good questions here before I think me and Ashley jump in. We gotta give a nice plug here for our book on real estate partnerships. So for those that don't know, Ash and I co authored a book with BiggerPockets called Real Estate Partnerships. And you can head over to biggerpockets.com partnerships to pick up a copy of that book. So, Ashley, let's. Let's hit the first question here, right? Or first part of this question. If one person is on the mortgage, how does the other person actually show ownership of the property?

[Ashley]

So for this, I think there's different ways that you can do it. We can kind of go into that as to how to structure is it should be in your personal name, should be in an llc, joint venture. But the way that you own the property is if you are on the deed. So you could not be on the mortgage, but you could still be on the deed. So whether you have ownership of an LLC or you have a joint venture agreement, or it's your personal name, you need to have your name on the deed or that joint venture agreement saying that you are, you know, own part of the joint venture that owns the house. Okay, so that is how you claim ownership is having a right to the deed of the property, making sure that you're on the deed. In this situation, this property is a house hack that they are doing together. There's one thing you should be cautious of. When my sister was doing her house hack, I couldn't give her money for the down payment and say that she had to pay me back. You have to use your own funds, or it has to be a gift from somebody and it has to be a family member usually. So just because you've been friends for 15 years. I'm not sure a standard FHA loan or conventional loan would allow, if this is your primary residence, for the funds to be provided by somebody else to actually close on the property they'll want to verify. Tony, do you know if that's true for conventional or is that just an FHA rule that you have to use your own funds for a down payment or a gift from a family member?

[Tony]

And guys, when we say conventional, we just mean anything that's backed by like Fannie and Freddie. Right. The big. They're not technically government entities, but the people that like, insure a lot of these mortgages that are going out to the general public. I think one of the things you made a phenomenal point Ash, about like the mortgage and the deed being different. Just one thing, because they also said that, like, should we put this in an llc? Just, you know, word of caution, or maybe not word of caution, but something to think about. Typically when you're doing a house hack, the reason that people like to house hack is because of the. The type of dust debt that you get access to. Right. And Ashley just talked about that. Right. Like using an fha, but with those types of debt, typically it's got to be in your personal name. So even if you guys created this llc, you can still a lot of times run the income and the expenses through that entity. But the actual deed would show Ashley and Tony Right. Title would be us jointly on that deed together. So I don't know if the ownership in the LLC is necessarily going to impact the ownership claim on this property.

[Ashley]

Yeah. And I guess really you have to figure out how you want to finance the property because that's going to really play into what you're actually able to do. So if you're both doing the house hack, they're, you know, if you both want this to be your primary residence, which I don't remember, does it say they're both going to live in there?

[Tony]

I believe so. It seems that way.

[Ashley]

Yeah. So, like, if you're both living there, then I don't see a problem with you both splitting the down payment, you both going on to the deed, you both being. You can have one person on the mortgage. So even with my sister's house hack, I'm on the deed, but I'm not on the mortgage and I gifted her the down payment fund. So you can definitely do it where you're on the deed and you're not on the mortgage with one of you. If one person qualifies. And I really like that strategy that you're going to try and do it that way, just make sure you have some kind of agreement where it states that you both are responsible for the mortgage. Because, you know, whether it's you or the other person that's putting the debt in their name, ultimately if you know someone doesn't pay, you say the mortgage is in your name and this your friend or whatever stops paying, there it's going to be you personally that the mortgage is going to go after. You know, say they foreclose on the house. You're both loose down on the house, but it's going to affect your credit score and hurt your credit if mortgage payments are missed. So make sure you have some kind of protection or security against that too, or you really, really trust the person.

[Tony]

And I think that kind of ties in nicely to the second part of this question. Right? So it's like, if we plan to buy a second property one or two years down the road, how would lenders approach the underwriting? So, like Ashley mentioned, if one person is on the mortgage, both of you are on the deed. One person's on the mortgage, both of you are on the deed. When you go to get that next property, even though both of you are on the deed, only the person who's on the mortgage, only their debt to income will be impacted by this first house hack. Okay, so if Ashley and Tony buy a duplex together, but it's just Ashley who's on the on the mortgage, we're both on the deed. When we go buy, when we go to buy that second property, my DTI is going to show zero in terms of mortgages, and Ashley will show the house act that we have together. Now, say both of you go on the mortgage together because maybe you can't qualify by yourselves when you go to buy that next property, since both of you are on the mortgage, and actually, check me if I'm wrong here, but since both of you are on the mortgage, underwriting doesn't split that in half. Like, if the mortgage is, you know, 2000 bucks, it doesn't say, okay, Ashley's, you know, liable 4000 bucks per month, and Tony's liable 4000 bucks per month. It says Tony's liable for 2000 bucks per month and Ashley's liable for 2000 bucks per month, even though both of you are sharing that cost. And the reason why is because the lender who's doing the underwriting, they're like, well, we don't know who this other person is. Right. Even though both you guys Technically applying together, like we don't know who this other person is. You are always responsible at the end of the day for making sure that mortgage payment is made. So that's why it is very, it's helpful if you guys can get approved individually. Otherwise you'll both get double dinged for those mortgages.

[Ashley]

Yeah, that's 100% correct. So it like kind of stinks because now that's being accounted against both of you. So if you could do go and get another property, they're looking at it as you both are responsible for $2,000 each instead of 1,000, 1,000. So it can affect your debt to income on the property. And then kind of the last question here is, do we need to watch for any pitfalls in future for scaling our portfolio together or separately? So the thing that I would want to have in place is some kind of operating agreement or joint venture agreement. Even if you are doing this in your personal name, have some kind of agreement in place where you are writing out what happens in the future. And Tony, I always use your, what you have done as an example, as in when you take on a partner, you put in there a five year exit plan. So do you want to explain to everyone what that is and how this person should use this to protect themselves from any falling outs or pitfalls?

[Tony]

Yeah, the five year exit plan I think is one of the like smartest things we've done in our real estate business in terms of partnering with other investors. Again, part of the way that we built our portfolio was finding really good deals and then soliciting those deals to folks that we felt might be good partners for us. Right. And a lot of these people we'd never met before, these are people who we would meet in different places through different means. So even though we had a good initial conversation, who knows if down the road we would enjoy continuing to work together. So that was the genesis of the partnership kind of five year clause. So basically what it states is that at the end of the fifth year of the partnership, the default option, the kind of default action that needs to be taken is that we sell the property. The only way that the sell is avoided is if both parties, both partners, agree to extend for another year and then 12 months later, the same thing happens. So every year thereafter, we have another opportunity to reevaluate that partnership to see if it makes sense to move forward. We actually haven't needed to leverage that at all yet. Most of our partners we have are actually pretty solid people, so. But it is good to have Just in case things do go south, there's a there's an easy exit for both of you rookies.

[Ashley]

We want to thank you so much for being here and we are so close to hitting 100,000 subscribers on YouTube. We would love it if you aren't subscribed already if you would head over and find Real estate Ricky on YouTube and follow us. We have to take one final ad break and we'll be back after this.

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[Tony]

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[Ashley]

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[Tony]

Yeah, I agree with you 100%. And I think both of us have had experiences where appraisals came in lower than what we had anticipated. And yeah, if you believe that the appraisal is wrong, then, yeah, it is very reasonable to go out and say, like, hey, here are some comps, some comparable sales that I found that I feel are a better match than the comparable sales that the appraiser found. Because sometimes, you guys, appraisers are coming from. Maybe they don't know the area as well. Right? Maybe they're coming from somewhere a little bit Further out, they just picked up this appraisal because they were still on work, whatever it may be. But they don't know that area in crap incredibly well. And sometimes you might know that area better than the appraiser does. So if you can point out, hey, you picked a comp that was three miles away that sold for less, but here's one that sold more recently, that's two miles away, now you've got some, some ammo to maybe to really contest that appraisal. And one other thing, like say that the appraiser says, like, nope, my appraisal is perfect. Nothing here needs to change. Another route you can always go down. And this is obviously a little bit more of a nuclear option. But if you change lenders, and I don't know if this is law, but, or maybe just like best practice, but lenders can't use the appraiser appraisal from a different lending institution. So if you change lenders immediately, there has to be another appraisal that gets ordered. Now, if you're working with the seller, typically sellers don't want to push back closing. But if it's, hey, either we're going to close a little bit later or we're not going to close because the appraisal, they might be a little bit more willing to working with a different lender. So just another way to kind of put some more pressure on the appraising process to make sure it gets done the right way. Actually, I think one of the things you mentioned as well that's like super important is that sometimes a low appraisal can work in your favor. You just have to have the confidence to be able to leverage that as a bargaining chip with the seller. Because it sounds like maybe you, maybe you did run your numbers and maybe it did make sense at the purchase price. So it was a good deal. So that doesn't necessarily mean the value isn't there, but if you ran the numbers, you like the deal, everyone agreed that maybe it is a good deal, but maybe it's just the fact that the appraisal didn't come back where you wanted it to. So I would go to the seller and say, Look, Mr. Mrs. Seller, I'm very motivated to buy your home. I love it. The numbers work. However, if I ran into this issue with my appraisal, chances are the next buyer is also going to run into this issue with their appraisal. So what is in your best interest? Is it giving me the, you know, 10, 20, $30,000 discount on the purchase price? So we can still close, you know, next week. Or do you want to go through the process again of taking the listing down, relisting it, having another buyer who can hopefully get the right appraisal? Maybe they do, maybe they don't. And you're in this exact same position another 60 or 90 days from now. And a lot of times you can get sellers or, you know, if they're motivated enough, maybe they will come down and meet you at the price that you needed or at least maybe give you, you know, hey, let's meet in the middle. But I think you've got to be. Be confident enough to ask that question. If you got a good agent, I think they should be able to negotiate that conversation for you.

[Ashley]

Well, yeah, and that kind of leads into. The next thing I wanted to bring up is building a team, because it mentioned this person is investing out of state, so they can't actually go and see the property. Whether it's an agent or you need some kind of boots on the ground person that will actually go into the property and be your eyes, but also take a million pictures of the property, Take video of the property. We've had Nate Robbins on before on the podcast. When he goes to a property, he takes the pictures like you're walking through the house. Like, basically, as he takes a step, he's taking a picture and turns around. Each room takes a picture of the door frame. So, you know, you're entering into a different room. So. And then all of that is collected and it's sent to his partner. And then his partner builds out the scope of work in the rehab from just the pictures. So it definitely can be done, but just kind of getting an idea of, like, this is what we should offer on the property based on what you're seeing. And he always likes to do photos because it's easier to zoom in on things than it is on video. But they like to have the. The video too, to kind of get the flow of the house as you go through it. And they do that for the interior and the exterior of the property, too. So, you know, whether that's a property manager that you find in the area that you say, hey, you know, I want to find a property, I want to do this through you guys. Do you have someone on your team that could walk properties for me? You know, maybe they'll. You chart. Do it for free, wanting your business, or maybe they'll charge a flat fee, which is definitely worth it to have the boots on the ground. You could go to the Bigger Pockets forums. You can post, hey, anyone in this area. And it's not like you really have to, I guess say trust the person. It's not like they're entering into your property, they're going with your agent or they're going along and seeing these properties on, you know, looking and taking pictures and giving you their feedback. And if it's not super detailed, then yeah, you can find someone else to do it too. But I think there's a lot of people eager to learn would love to just go and walk houses and you know, work with another investor to see what they're looking for, things like that. I guess. Tony, the last thing piece I would add to this is what is the cost of a plane ticket to go and see this property. Sometimes, you know, paying 200 bucks for a round trip airfare could be worth it to go and set up a whole bunch of properties, you know, showings in one day or one weekend or something to fly out there and to actually look at them.

[Tony]

I couldn't agree more. Right. And obviously there is, there's value in long distance investing and building that team. But if it makes sense, I think there's always value and kind of getting eyes on it yourself as well. But I guess just one last thought for me as well actually, because the question says what should I be looking at when trying to consider an appropriate offer. It is, you know, you can get a good guess of what you think the property will appraise for if you kind of go through the process of finding comparable sales yourself. But you know, appraising a property is part art, part science. So it's virtually impossible to know down to the dollar what the appraisal will come back at. So as long as you, the investor, the buyer, do your due diligence upfront, you're using tools like the bigger pockets calculators, you're getting quotes from insurance agents to make sure you know what your insurance is. You're shopping around to get the best debt that you can. As long as you're controlling all of those things, then I feel like you are following the right process to make an appropriate offer. But don't feel like you did something wrong simply because the appraisal didn't come back where you wanted it to. So just a bit of a mindset shift for the Rickies that are maybe experiencing a similar issue issue.

[Ashley]

And if you want help like analyzing your deal better, go to the bigger pockets calculators because they show you exactly every single expense that you should need. So if you do think it is a deal analysis thing and not actually an appraisal thing. That's just another resource that you can kind of go. Because the numbers don't lie. As long as you're verifying what the numbers are, you know, go by that. And that's what you should be making your offer on, not what you expect the property to appraise for. Unless the you want to go and you want to add value and then you want to flip it or you want to refinance it, but just if you're purchasing that property that, like Tony said, the appraisal could not be correct. And an appraisal there is, you know, it's. It's an art form. You could have three different appraisers go to the property and each give you, you know, different numbers on it.

[Tony]

Three different. Yeah.

[Ashley]

Okay. Well, we have a special announcement. We have a rookie newsletter that is being sent out every single week. Tony and I writing it ourselves. And we're trying to give you guys so much value, some reading material and some fun things to learn about real estate investing and what's going on in the news. You guys can stay up to date as real estate investors in today's markets. You can head over to biggerpockets.com, hit the get started tab and you'll see newsletters and it's got a little new shiny button next to it. Hit on newsletters and you can subscribe right there to the Ricky newsletter. We can't wait to hear you guys feedback. Also, if you want to respond to that email, it gets sent right back to Tony and I. So any questions or any feedback you have on the newsletter or things you would love for us to write about, please let us know. Well, thank you so much for joining us on this week's rookie Reply. If you have questions, head over to the Bigger Pocket Square forums. Submit your question there. I'm Ashley and he's Tony. And we'll see you guys on the next real estate rookie podcast.