← Real Estate Rookie
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- [00:00]
Ashley Kerr
If you're thinking about getting into real estate, you've probably asked yourself, where do I even start? There's so many strategies. House hacking, flipping, a burr, short term rentals. That's honestly a little overwhelming for most rookies.
- [00:14]
Tony J. Robinson
But what if we told you there's a simple framework that can help you pick the right investment strategy today without second guessing yourself?
- [00:20]
Ashley Kerr
In this episode, we're giving you the step by step formula to figure out which strategy is right for you. By the end, you'll have the clarity and confidence to take action and start investing.
- [00:32]
Tony J. Robinson
Look, we see it all the time. New investors jump into real estate without a clear plan and they either burn out or they get stuck in analysis paralysis.
- [00:39]
Ashley Kerr
But not today. We're going to break it down so you can avoid the common mistakes rookies make. I'm Ashley Kerr.
- [00:51]
Tony J. Robinson
And I'm Tony J. Robinson. And welcome to the Real Estate Rookie Podcast.
- [00:54]
Ashley Kerr
So there's no one size fits all in real estate. Each person has a different set of circumstances.
- [01:01]
Tony J. Robinson
So we wanted to give you like a super simple kind of four step formula that'll help you figure out exactly what strategy makes most sense for you to start with. Now be sure to stick around until the very end because we're going to talk about some of the biggest mistakes we see rookie investors make when choosing the strategy. But let's get into the actual four steps of this framework first. So I think the first step, and you know, we've talked about this a few times in the podcast, but it's really just about defining your goals and your motivations. And you know, I won't beat a dead horse here because if you've listened to previous episodes, you've heard us say this before. But before you can really identify what strategy makes the most sense for you, you have to ask yourself, why am I doing this? Why am I investing in real estate? Is it, you know, you want immediate cash flow today? Do you want long term wealth for tomorrow? Are you looking to replace your day job? Is this just something that you want as a side hustle? What is it that's actually motivating you to, to do this? And specifically, when I think about motivations, you have cash flow, you have tax benefits, you have appreciation, and to a lesser extent, you have the ability to use properties yourself for vacations if you're doing something like midterm or short term. But in most scenarios, you will not be able to equally satisfy all four of those motivations at the same time. So you've got to pick and choose which one is most important, second most important, third most important. And then you can make a better decision around what strategy might make might actually satisfy those motivations.
- [02:20]
Ashley Kerr
Yeah, and some of the common mistakes that I see new investors make when they're trying to determine their strategy is they jump in without knowing their true motivation, which can lead you to choose the wrong strategy. When you choose the wrong strategy and it doesn't align with your why or your goals, you're going to feel burnout, you're probably not going to like doing it, and you're going to get frustrated because you're not closer to achieving your goal. Even though this might have been a shiny object that you listened about on a podcast. And you know you want wanted to do this investment because it seemed like it was going to bring you lots and lots of money. But if that wasn't your true goal was high cash flow. And now you're spending every single night and every single weekend operating a short term rental that you definitely didn't want to do. Maybe you make that pivot and that change, you realize it was actually time that I desired financial freedom and time to actually do the things I wanted to do. So a high demanding operational investment was not actually the right strategy for you. So there should be some additional questions that you're asking yourself. What is your desired monthly cash flow goal? Or how soon do I want to see results from my investments? Are you financially comfortable right now? Do you enjoy your W2 job? Are you not strained for cash and you don't need anything immediately? Right now you're looking farther down the road. So you really need to know your motivations and why you're actually investing to make sure that the strategy you choose aligns with that.
- [03:57]
Tony J. Robinson
So that's a super important first step, is just making sure you understand your motivations. I think the second step is just really taking a moment to define not only the time that you have available, but also kind of lifestyle that you want to live. It kind of ties into that first piece of like the motivations, but like how much time do you really have? I mean, most people listening to this probably have some combination of family commitments, work commitments, hobbies, community commitments. Maybe they just want free time in general, but there's, there are always demands on our time, like no one has absolutely nothing to do. So ask yourself, how much free time do you have within those other responsibilities to actually dedicate toward building this real estate portfolio?
- [04:39]
Ashley Kerr
Garrett Brown, who kind of leads The Bigger Stays YouTube channel we've had him on before to co host with us. He tells a story about how he did this $50,000 glamping investment where he bought the 10. And you know, all of these gurus told him you're going to make, you know, tons of money just from this $50,000 investment. And he said he's never worked harder in his life to actually make that investment become successful. That he didn't anticipate the operational, the hospitality and the work that would actually have to go into it besides just making that initial investment and setting up the tent. So you really do have to look at what goes into it other than just purchasing the deal.
- [05:25]
Tony J. Robinson
Yeah, I mean we talk a lot about like lifestyle and that's a big reason why people get into real estate investing is because they have this idea of the life they want to live, but then they pick a strategy that doesn't actually give them that lifestyle. You know, it's like, like you said short term rentals, right? The niche that I'm in, we have a hotel. It's like those are, those aren't passive, you know, like those are things that we're actively involved in on a day to day basis. And if you really want just to be sipping my ties on the beach in Cancun, like then maybe you need to be a private money lender, maybe you need to be something else. But anyway, we'll get into the examples later. But I think the goal is understanding the lifestyle and the time that you have available to, to kind of help point you in the right direction.
- [06:02]
Ashley Kerr
And we know this because we both started or at some point in our journey, picked the wrong strategy and realized that we needed to pivot. Like Tony started out with long term rentals and pivoted to short term rentals. I started out with long term rentals, but then I got shiny object syndrome and I went to campgrounds and I almost bought a million dollar campground and did a whole syndication deal. And that was my pivotal moment as to like, I actually don't want to do a syndication deal. I don't want to run this million dollar property. And I pivoted to what I was good at and what was actually helping me reach my end goal of getting more time and being financially free. Some of the questions you should ask yourself is do you want this to be a side hustle or a full time pursuit? So is this, and even when we say side hustle, you still want to operate it as a business, but are you going to keep doing what you're doing? Whether you're, you know, running a business already you have a W2 job and you're just going to build this real estate empire on the side? Or is it that you want to go full time into this? You want to be a real estate investor? And also how comfortable are you with unexpected issues with tenant calls, with communicating from people? And then kind of the last thing here is do you prefer passive income or active involvement? So usually typically the more active you are involved, the more money you are going to make compared to things that are passively because you will have to to share the gold with people who are actually involved in the management of the asset.
- [07:46]
Tony J. Robinson
All right, Ricky, so we have two more steps to cover and then we'll also break down some of the most popular strategies for rookies. But we'll do that right after a break from today's show. Sponsors, you ever thought about diving into.
- [07:56]
Sponsor
Real estate but got kind of stuck on where to start? I mean, of course you have.
- [07:59]
Tony J. Robinson
You listen to this podcast.
- [08:00]
Sponsor
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- [09:24]
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- [10:05]
Tony J. Robinson
Foreign. We're back and we're going over the four step process for helping you identify what you want out of real estate. So let's continue with step number three.
- [10:16]
Sponsor
So step three, and this is a.
- [10:18]
Tony J. Robinson
Big one, but it's to assess your own financial situation. I think a lot of people don't fully grasp like where they're at financially and kind of what it takes to actually get into real estate. And obviously, you know, there'll always be strategies where you can get in for no money down, low money down. But in, in a lot of scenarios there is some form of capital that's needed to get started in real estate. And I think one of the biggest questions you can ask yourself is how much cash do I actually have on hand? Or how much cash do I have? Do I have access to, you know, if you're low on cash, that's going to send you to maybe one strategy. If you've got an abundance of cash, it opens up a little bit more doors. But I think a common mistake that I see with new investors is that they get fixated on, hey, this is my idea. And then I say, okay, well how are you going to afford that? And they're like, well, I don't know. You know, human people don't just give you money when you've got a great idea. So you've got to have some form of understanding of where you're at from a cash perspective.
- [11:13]
Ashley Kerr
Yeah, some resources that you guys can check out is some kind of like app to actually track your assets, your liabilities, to build your own personal financial statement, but also to see where your personal finances are at. Look at your mortgage balance, look at your credit card, you know, balances, look at, you know, how much you have in cash. Monarch Money is a great app. It's the one that I use, but there's a ton of other like, and they have budgeting things set in. So if you really do need to kind of assess where you are financially, getting an app like that to try and help you establish that kind of base can be scary to actually see where your money is spending. But if you're having trouble saving right now or living within your means, that's a great way to start to actually build the capital to invest in real estate. One of the common things that can happen besides just not being able to financially afford the strategy is not having enough in reserves and not being okay with spending that money in reserves. That reserves are not your life savings. Those reserves aren't your kids college fund. That's not the money, you know, that you would use for their orthodontics. This is the money that is specifically saved in reserves for your rental properties. So that if you have to spend that money, that's okay. That's what that money is there for. So you have to kind of switch that mindset of oh my God, I'm taking money out of our life savings to, you know, pay for a new H vac system instead. That's what this money is there for. And if you don't have to spend it and you get to keep it, like, yay, that's a bonus. But I think that's a big mistake is commingling almost that your financial life savings for your family is the same that you have for reserves for your rental property. And that makes it a lot harder to part with when you do have those big expenses that come up throughout the lifeline of your property.
- [13:23]
Tony J. Robinson
It's a great, great explanation, Ashley. Just like around the psychology of, of money and reserves and, and, and how different money serves a different purpose and you got to kind of, you know, take that money out of your mind, right? Like once it starts to stack up a little bit. Just a few questions to ask yourself around, like the financial piece versus what's your credit score? You know, are you at, I don't know, 400 or you at 800? You know, obviously the, the higher your credit score, the easier it'll be for you to go out there and get favorable debt and the lower, the harder it'll be. But even if you have maybe better credit, like what's your dti? What's your debt to income ratio? If you're maxed out, it's also going to be more difficult for you to go out there and get approved for a loan, if at all. So you could, you could still have a decent credit score, but have like a poor DTI or potentially vice versa, you know, Right. Maybe you've got no debt, but it's because no one will give it to you, you know, so you want to get the combination of both of those things together to get a better idea of how is that going to impact your loan options. I think another one is like, how much debt are you comfortable taking on? I, I was like scrolling through Instagram and I saw who was it? It was Robert kiyosaki and Kim McElroy. They were like on a private jet and like the opening part of their, their, their, their post was like, we have billions of dollars worth of real estate debt, you know, and, and obviously they've done it very successfully. But are you comfortable going on and taking on that amount of debt? Like, can you, you know, are you okay if someone offers you a loan with only three and a half percent down, meaning you're leveraging almost 97% of, of what that property's worth? Or do you want to say, hey, I'm always going to put down 25% because I just want to make sure I can sleep at night. So you got to ask yourself, what kind of debt load are you comfortable taking on? And if for whatever reason, between your dti, your cash on hand, your ability to get approved for a loan, maybe you can't do it by yourself? Well, are you comfortable bringing on maybe a partner, you know, someone who maybe can fill in that, that gap, someone who can complement what it is that you're lacking, whether it be capital, whether it be the loan, are you comfortable doing that?
- [15:22]
Sponsor
And if not, then do you have.
- [15:23]
Tony J. Robinson
Access to other funding options? Do you have maybe you know, a self directed IRA or actually that, that only work in some situations. Do you have maybe a 401k that you're willing to cash out? Do you have a heloc? Are there private money lenders? Maybe? So you, you've just got to ask yourself, like in some way, shape or form, cash need to be involved in some sort of real estate transaction, whether it's yours, whether it's the sellers, whoever it may be, there has to be some sort of cash. So you got to identify where it's coming from.
- [15:48]
Ashley Kerr
And then the fourth step is understanding your local market. So what is the budget that you have available to yourself after you've went and evaluated your finances, knowing what you're able to afford, and maybe that even starts with getting pre approved by a lender, you need a lender. You can go to biggerpockets.com lenderfinder to be matched with an investor friendly lender in your area. But when you are deciding on a market, you need to understand, is it an expensive city where you're actually not going to be able to afford it, or even if you can afford it, the rents just don't justify, you know, the cost to actually purchase the property, or are you in an affordable market? So starting with your budget and kind of narrowing down as to what are the markets that fit within your budget, some strategies work better in different places. So you need to have your strategy defined before you actually go and start looking for markets. Because short term rentals are great in tourist areas, but long term rentals are great in good school districts. So knowing your market saves you from picking the wrong strategy.
- [16:57]
Tony J. Robinson
So a couple of questions to ask yourself here is, you know, what type of housing is just in demand in your area? You know, like Ashley, where she lives, there's a lot of small multifamily, and Ashley's gotten really good at buying small multifamily. Where I live, there's virtually no small multifamily. Right. It's like suburban sprawl, you know, so I couldn't really do a lot of small multifamily where I live. So what, what type of housing is in demand in your area? You know, is your backyard landlord friendly? I think Ash and I both live in states that are definitely more tenant friendly, which makes it a little bit more difficult for us. Um, but you gotta ask yourself like, hey, where you live, which way does it, which way does it lean? But even still, like, and just like, just as an example, right, like even if, you know, I'm in, I'm in California, Ashley's in New York. Both states that are definitely lean more so towards a tenant. But we've both been able to build successful portfolios in these markets still, right? So it doesn't necessarily mean that you can't do it. You just gotta kind of know how to navigate it. You know, vacancy rates, average rents, all things that you can go do research on to help help you get some of that, get some of those insights. And then obviously, if where you live doesn't work, are you comfortable going long distance?
- [18:02]
Sponsor
And long distance doesn't necessarily mean out of state.
- [18:04]
Tony J. Robinson
It could just mean two hours down the road, you know, it could mean six hours, it could mean 6,000 miles, you know, but just ask yourself, are you comfortable going long distance? If for whatever reason, your own backyard doesn't work. So those are the four steps, right? And I think as you again, Ashley, and I can't tell you without knowing you, hey, do this exact strategy. But the goal is that by going through those four steps, you, you get a better sense of where you're at. And now that we've covered those four steps and you kind of know what it is you want out of real estate investing, we want to hit some of the more common strategies that we see rookie investors take as they get started. Ash and I have done several hundred episodes of the Rookie podcast. We've seen some of the tried and true methods that work no matter where you start, no matter how much money you start with, no matter what city you live in. Like, these are some of the strategies that we've seen work time and time again. So the first one up and one that I, you know, Ash and I both probably think is a best, potentially the best way for a Ricky to get started is house hacking. And house hacking is basically the concept of you going out and buying a property, living in one portion of that property, and then renting out the other portion of that property. It could be done with a single family home where you live in one bedroom and you rent out the other bedrooms to other tenants. It's, it could be done in a small multi family. Maybe you go out and you buy a triplex. You live in one unit, you rent out the other units. It could be buying a single family home when you're renting out the basement. It could be a single family home and you have in an adu. Doesn't matter what the extra space is, but the idea is that you subsidize the cost of owning that home by renting out your excess space. The benefits of house hacking are that typically you can get into it for less than a traditional rental property. So if this, you know, if you're someone who's maybe light on cash, you can get into a house hack for, you know, if you go FHA 3 1/2% down. There are other loan programs out there like NACA, which I've talked about a lot on this podcast, where you can get them for zero down. So really if you want to make sure that you're getting the best kind of bang for your buck, house hacking is, I think, one of the best strategies.
- [20:06]
Ashley Kerr
So another great strategy for building wealth is to do a brrrr. So this can kind of go two ways where you're finding a property that needs to be rehabbed or you need to add value, but you can also find properties below market value and then add, you know, the rehab value to it too. So starting off this is a great way to build wealth by not having to infuse a lot of capital long term. So for brrrr it is you buy a property, you rehab it, so you need the funds to purchase it, you need the funds to do the rehab, then you rent the property out and you get that rental income. But then you go and refinance and you pull your money back out of the deal to be able to go for the last R to repeat it so you can the to purchase the property. There's many different ways to actually purchase a brrrr deal. You could use all cash, you could use a heloc, you could from your primary residence, you could use a hard money lender, you could purchase it with bank financing. You just have to be careful what their seasoning period is before they let you go ahead and refinance. But with this strategy, even if you're not able to pull out all of your funds, this could be less money you leave into the deal than if you were to go and just put 20% down on a property. I think we've definitely seen that it's harder to do a perfect burr where you're getting all of your money back out, but this is still a great way to generate wealth so that you can reuse any of the capital that you're investing into the deal. So one of the cons I will say for doing a brrrr is that you're going to be doing a rehab. And a rehab project, you know, comes with many things. Project management of your contractor, having some idea of what goes into a rehab or what needs to be rehabbed. So if you have no experience at all in construction rehab, you don't know what a two by four is. All of these things. There's YouTube University to gain some knowledge, but you can also find properties that just need cosmetic updates. And that's where I started where it was just flooring, you know, ripping out carpets, putting in vinyl plank. That added tremendous value, painting added tremendous value. Then I got a little more savvy and was changing out cabinets. But still it was a while before I worked my way up into like gutting and doing full guts and replacing all the electric and things like that. So with a burr you have to have a little bit of knowledge of what you're getting into and, and look at your comparables of the property to understand what is going to actually add value if you're purchasing a property that's in a C class neighborhood and the property values are probably capped at some amount where nobody is going to pay more than X amount to live in that neighborhood. If you're going in and putting in granite countertops, a luxury bathtub, you're probably not going to get the return. Even if it becomes the nicest house in the neighborhood. There's usually some cap as to like how much somebody will pay, but also how much somebody would rent that property for. So looking at your comparables is really, really important when doing a birthday. So this is great for investors with some capital or access to capital with, you know, a line of credit, a HELOC and who want to be able to grow and scale quickly by recycling this bur over and over again.
- [23:55]
Tony J. Robinson
And Ashley, you make a lot of good points around like some of the challenges around burrs. But you know, my, my very first deal was a burr and the way that I think I, that I navigated some of those challenges was that I, I had a really strong team around me. I had a lender, I, I had a lender who had lent on a lot of other bird properties in this exact market. I had a contractor who, you know, had, had been in the market for a long time, came well recommended for multiple people and it was really the people that I put around me that gave me the ability to do it the right way. Now obviously I educated myself and you know, I was on the Bigger Pockets forums and I was reading the books and I was listening to the podcasts. But I think having a good team around you makes a world of a difference. So if you are a Rookie that's listening. BiggerPockets.com Agent Finder BiggerPockets.com LenderFinder those are the ways you go out there and start building the right team of people to support you with this strategy.
- [24:50]
Ashley Kerr
And you had a great property manager too.
- [24:53]
Tony J. Robinson
I did, yeah. Yeah. Also had someone you know because I was working a full time job, lived several states away and found a great PM to to help run it for me as well. Third strategy, short term rentals. Obviously this is kind of my jam, my niche, but basically it's the Airbnbs of the world, right? So you get someone who comes in, stays for a couple of days and they go home. Then someone else comes in, stays for a couple of days and they go home and you charge on a per night basis as opposed to having having someone sign a long term fixed lease. The general pros of short Term are that typically, if you do it the right way, you should be able to generate more cash flow. Right. A same house rented on a nightly basis will typically generate more than that same house rented on a long term basis. The other benefit, which is the reason that it got a lot of people in the short term are the tax benefits. I won't go into it in extreme detail, but just know that there's something called the short term rental tax loophole. And there are a lot of people who want what's called real estate professional status, but it is very difficult to get when you have a W2 job. But through short term rentals, in the short term rental tax loophole, there's something called material participation, which basically allows you to take all of the paper losses from your day job, I'm sorry, from your real estate investment, and apply it against things like your W2 income and your day job. So definitely a big benefit. Look up the short term rental tax loophole. But some of the cons, I think are that there's definitely been an increase in competition. And I think, you know, the, the properties that were just okay a few years ago are now mediocre and the properties that were great a few years ago are now just okay. And it's really only the ones that are like the cream of the crop, you know, where people are really running this like a business that are doing, doing incredibly well. So you gotta make sure that you're stepping in with the right training, with the right resources. But overall, I still think there's a lot, a lot of opportunity here. And it's really best for people that are willing to like actively participate. You can't, I mean, you could passively do this, you know, if you just give it off to a property manager. But if your goal is to really like juice your cash flow, usually you're going to want to do that yourself. So you got to be able to actively participate. And then you need a certain degree of creativity or at least being able to hire out the creativity because you do want to be able to provide experiences for your guests. And I think, you know, you got to have a little bit of imagination to make that a possibility.
- [27:01]
Ashley Kerr
Tony, what is the going rate right now for a short term rental manager?
- [27:06]
Tony J. Robinson
Most short term rental property managers charge somewhere between, I'd say 10% of gross revenue. On the low end, I've seen it as high as like 35 or 40%.
- [27:15]
Ashley Kerr
I was just curious, like I remember when Airbnb was super big and like 20, 21, I like 30 to 40% really seems like very, very common. Do you see that like coming down now as there's more short term rental management companies like in co hosting becoming a big thing, has that really driven down the price?
- [27:37]
Tony J. Robinson
It has and you hit on a big piece. Like there is a, there is a slight difference between like full short term rental management and just like the co hosting model and I think the coasting model, you know, you're maybe just handling some of the guest communication but then the owner's still handling, hey the, the cleans, the maintenance, the supplies, you know, all of the other parts of running the business. Whereas if it's like you know, full service, they're doing everything soup to nuts. So yeah, I think we've definitely seen a shift in like cheaper managers coming on board. But it doesn't, you know, it doesn't necessarily always mean better.
- [28:07]
Ashley Kerr
So now onto our fourth one, which is my bread and butter, the long term rentals. So this is definitely more passive I would say than short term rentals. But it's not definitely, it's definitely not a passive investment. You can hire a property management company to take on the boatload of the actual active management, but you still have to do some kind of asset management. So you still need to review everything that the property management company sends you. Sometimes they'll need your approval for repairs that are over $500 or whatever their limit is. Most property management companies aren't going to quote out your property insurance for you every year. They're not going to go and fight your property taxes to get them decreased. So there still is an element of you know, having to be that asset manager on your property. So kind of some pros is the less involvement than short term rentals. It's also more predictable cash flow. So it's not as usually it's not as high as a short term rental, but it's steadier income. And then this is really best for someone who doesn't have a lot of 10 time. So especially if you're getting into a turnkey property or even if you did a burr and this property is, you know, well the rehab that you're not having to deal with repairs and maintenance constantly on the property. There can be way less interaction with a resident, there's lower risks. So definitely with smaller multi family like duplexes and then single family because you can always sell that property as an investment or to a family or to a person. So I really do like that with single family homes is that you have the option to sell it as A rental or depending on the market, sell it so somebody can purchase it for their primary residence. Doing that right now with the property. I bought it in 2020 I believe, and then it's been a rental property since 2020 and now I'm just fixing a few things on it. The carpets got destroyed by the last tenant putting new carpets in. We did some structural work to it and we're actually going to sell it. And I think there's going to be a really great pool of primary homeowners that will actually want to purchase this and not actually use it as a rental property. So I do like that option of turning a long term rental into a, you know, potential flip, I guess over the course of five years. This is also easier barrier of entry to purchase a rental than some of the other strategies too. Then there are some ways to get into long term rentals and to be truly passive. So first one is you can be the private money lender on the deal. You're not going to get the tax benefits of being, you know, invested in an actual rental property, but you can lend to somebody, um, that you know, that could really be on any property type. Not just long term rentals, syndications, where somebody else is the operator, someone else is finding the deal, they're managing the deal, they're operating the deal and you're just the, the limited partner. You have no say, you can't do anything, but you give them their money and you hopefully get your return. The last piece that I would add to a passive investment is real bricks. So this is like fractional ownership of a, or of a property. And so what you do is you basically can take a hundred dollars and you can go and invest it at real bricks and you pick your property you want to invest in and you own a small ownership of that property and I think the minimum's a hundred, but you could really invest as much as you wanted up to a certain amount too. So that's another way to passively invest your money also.
- [32:05]
Tony J. Robinson
So Ricky's obviously ash and I didn't cover every single potential real estate strategy that's out there. Right? Like there's far too many to cover. I think we just wanted to hit some of the more common ones that we see specifically for folks who are looking for cash flow. Right? I mean if you just want big chunks of cash, there's flipping, there's wholesaling, there's other activities. But in terms of like, hey, we just want some money coming in every month, we want to build long term wealth. These are some of the main strategies that we see now. We want to kind of fill in the last piece of the puzzle here, which is for all of you rookies to understand some of the big mistakes that we see as folks look to get started in real estate investing. So we're going to cover that right afterward from today's show.
- [32:39]
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- [36:09]
Tony J. Robinson
All right, guys, so we're back. We want to finish off by talking about some of the big mistakes that we see rookies make when it comes to getting started. And I think the first one is analysis paralysis. I think there's something to be said about doing your homework, about educating yourself about being responsible as you make decisions. But there's also a point where all of that quote unquote education and all of that quote unquote preparation just really turns into like, I don't know, I guess, analysis paralysis, right? Where you're just not doing anything and you've got to really be able to draw that line in the sand and say, I am now ready to take action. And my, my general kind of advice here is that if you are at the point where you're listening to the podcast and you're reading the books and you're watching the YouTube videos and you, you're like nodding your head because you already know like 90 of what we're talking about, you probably need to go do something now. Otherwise you're just Going to keep kicking the can down the road. You'll never know anything. Don't wait for that to happen. You just need to know enough that you can confidently take that next step.
- [37:19]
Ashley Kerr
And it might take longer to get that first deal than you think. So if you're not taking action, whether that's analyzing a deal every day or putting in offers, you know, you're. That could be something like we have a lot of people that come on and talk about door knocking, how they door knocked for a year before they even got their first deal. So imagine if you wait until you know everything and then it's a still a whole nother year before your offer is actually accepted on a property too. So I think creating a mix for yourself as where you're taking action, but you're also still engaging in, you know, informing yourself on what's going on in the real estate market right now. What's, you know, what else can you learn about or actually sitting down and writing out? What don't you feel confident about? I had somebody message me on biggerpockets.com yesterday and said, ashley, I'm having trouble with market analysis. Do you have any resources or links to try to help me with that? They identified what their struggle is. They were confident in other things. So I compiled a whole bunch of things and I said, start here and then let's talk again. But we, there's just so many things that can be overwhelming that it's hard to know where to start. But you first have to identify what is the thing you don't feel confident in and then tackle that, then move on to the next thing. Don't try and consume everything at once because that definitely will put you in analysis paralysis because it will be overwhelming.
- [38:52]
Tony J. Robinson
I think the next big mistake that we see often is, is shiny object syndrome. You know, this is where you keep jumping from one idea to the next. And oftentimes we see this from people before they ever, ever actually even get started. Like you talk to them on, on month one, they're like, yeah, you know, I think I wanted to be a flipper. You talk to him on month two? Yeah, I think I want to be, you know, self storage talk to them. Oh yeah, you know, I think I'm actually going to do ground of construction and you talk to them six months later and they haven't done anything. And I think again, there's something to be said about committing and looking to build excellence in one specific area. Ashley has become incredibly gifted at small multifamily in and around the Buffalo, New York area, right. @ Burring Properties in those markets. I've become incredibly gifted at short term rentals. Right. Like that's where we put a lot of our energy. So I think if you can really narrow in on, on one asset class, one strategy, not only do you start to build your confidence faster, but the, the, the speed at which you find success also increases because all of your effort is going into this one thing. So I, I think that's one big, big mistake. I see from Ricky's that they jump around a little bit too much and.
- [40:00]
Ashley Kerr
Then you can build your foundation for, you know, if you do want to chase that shiny object syndrome and try something new, if you fail or it doesn't go the way you think, like you still have that strong foundation of your original strategy that is working for you. And that happened to me. I did long term rentals and then I pivoted to doing my first short term rental. That wasn't an arbitrage and it was an a frame cabin I bought for $49,000. Okay. I went $40,000 over budget and it took me almost one full year to do the rehab on this property. If that would have been my first deal I ever did, that would have killed me. That would have killed me. I definitely did not have an extra $40,000 to, you know, infuse into that property. So. And I definitely, you know, maybe if that was my first deal, I would have done more research, I would have taken more time, but I was like, oh God, I can do rehabs, I've done burrs and you know, all this stuff, but it was just a very different property. And then it took us a couple months to actually get it furnished and get it listed and get it up and running as like our first full short term rental, which added on to the time that we weren't occupied. So there definitely was those learning experiences there. So like I think if you have an opportunity and one strategy that I did it because I was a property manager. So I knew how to manage a property that was my step above, that was my advantage into going into long term rentals. So if you do have an advantage, think about if there is a strategy like we talked about in the beginning that fits your. Why if maybe there's two you're deciding on, but one you have an advantage in, take that one, build your foundation first.
- [41:49]
Tony J. Robinson
I think the last one, and this is, this is a big one, it's taking advice from the wrong people. We all in our lives have well intentioned yet super ill informed people when it comes to investing in real estate. We've all got the, you know, the Uncle Joe, the. The Aunt Jane who says, oh, don't buy real estate. We're going to wait for the market to crash. And I literally know people in my life who've been saying that since, like, 2018, and the crash has not materialized. But guess what has happened since 2018? One of the biggest runs of real estate investing ever. And all those people missed out on that because they were sitting on the sidelines. So even if your parents, even if your best friends, even if maybe your spouse is saying, like, hey, I'm not sure if you should invest in real estate, you've got to take advice from people who have actually done it. You've got to understand when to filter information out, when to filter out advice from people who haven't necessarily achieved what it is you want to achieve. So I think the biggest thing that you can do as a rookie is commit to politely saying, thanks, but no thanks when someone gives you advice when they don't necessarily have the pedigree to be giving you that advice.
- [42:56]
Ashley Kerr
Well, thank you guys so much for joining us today. We hope you learned something and we hope you don't get stuck in analysis paralysis. If you're watching this on YouTube, make sure to comment below what your why is and what you want out of real estate investing and then what strategy you have chose. We would love to hear from you. I'm Ashley and he's Tony. And we'll see you guys on the next episode of Real Estate. Ricky.