← The David Greene Show
The David Greene Show
David Greene Show: The Investment "House of Cards": Why Most Investors are Failing Right Now I Episode 122
00:51:00
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- [00:00]
A
Welcome to Real Talk Real Estate, the show where we cover how to build wealth in real estate with no fluff, no BS, and no sales pitches. I'm David Green, and I've been doing this for over 10 years. I've seen the ups, the downs, and everything in between. This is the show where we pull back the curtain and show it to you, too. So if you want to build wealth through real estate or you just love learning about it, you found your home. What's going on, everyone? Welcome to Real Talk Real Estate. Thank you, all you real talkers for rocking with us. I'm joined today by Emily Lopez, one of my favorite real estate investors. Brokers, salespeople. What else? Contractors all around real estate. Badass in a whole lot of ways. And she's super humble about it, which is really hard to find. Occasionally you find someone who's really good. Usually you have to deal with a lot of ego, but she doesn't have any ego and she has a lot of skill. And that's why I'm happy to bring her to all of you today. Emily, good morning and thank you for joining.
- [00:53]
B
Thank you for having me. What a nice introduction.
- [00:56]
A
Super true. You're one of the good ones. All right, let's get into this thing. The market today is possible but challenging. We hear a lot of influencers that are sharing what they're doing, how much money they're making, how nice their car is. And then those of us that are actually owning a lot of real estate trying to do it find that we're digging our fingernails into the cliffside, trying not to fall over the side. So today's show is all going to be about regional markets, what we see working in which areas, and how to see through the glitz and the glamour and the lies to actually building the skills that you need to be successful at this so that you can have the proper expectations, walking in and know where you need to put your effort. Anything else you think that we should cover that you're passionate about? When you see what's going on in
- [01:40]
B
today's market, I think just paying attention to your area because you might see this big guru who's talking about, hey, this works. This is how I'm doing it. This is what they're selling. Right. And you have to make sure that that works in your area, because there's many things that make sense in certain times, in certain economies and in certain regions and not in others. So just don't put all your eggs in one basket as far as who you're getting Your advice from. And make sure you do hyperlocal research.
- [02:05]
A
Okay. Now, one of the things that I really like about your perspective is it's similar to mine. You're selling real estate, you are managing real estate agents, you are buying real estate, you are managing real estate, and you're doing work yourself, which I do more of that now than what I used to. That was never really my thing, but that is definitely your thing. Every time you come to one of the. The calls that this show sponsors on Mondays for Real Talk training is what we call it. You're making something, you're building something, you're putting something together. I don't know how you haven't run out of stuff to do, but it's incredible. You'll be installing a light or putting up shiplap or hanging stuff up while we're doing the call. Can you just give us a little bit of your background and how you learn to do this stuff and why that's the approach you took?
- [02:47]
B
Yeah. So I heard someone say once, I don't know who it was, so I don't want to take credit, but this is from someone else. If you don't have resources, you have to have skills. And so when I started investing in real estate, I had been fortunate enough to work for a family that owned. This was before trailer parks were cool. This was before everyone was telling you to buy trailer parks. So I was working in a trailer park doing maintenance and repairs, and they trained me on everything. And so I worked for an investor for all through high school and college. Never thought I would start investing. And then eventually started to invest myself. At that time, it was just a job, but I had the construction background. And so when I wanted to start investing, I didn't have a bunch of money. I didn't know about the options for borrowing. And back then, probably nobody would have lent to me because I didn't have the established. You know, you have that track record as an investor. It always gets easier. But that first one, that first two, that first three, those are hard to get those purchases. And so I could get my hands on them. But there was no way I was paying anybody for any of that work. And so for years, I just did everything myself because I had been a maintenance person for so many years. And then once I had a lot of people start asking me for help, I thought, well, I could help you, but if, God forbid, something happens, we don't have that protection of insurance. So I went and got licensed as a general contractor so I could help other people. With projects did that for several years. Now I only work on my own properties unless someone's really in an emergency and they need help because they just don't have time. But that was kind of where the construction piece came in for me.
- [04:16]
A
Okay, and did you have like a mentor that was walking you through how to use these tools, what to do? Was it you just would go when you had an individual job and ask someone how to fix it? Like how did you acquire the database of knowledge that's needed to fix things and build things?
- [04:31]
B
Yeah, so they worked with us. So I worked for, I had two high school teachers who invested and every day after school we would go back when people had the home phone and the, you know, the voice machine at your house and we'd click and we'd listen to all the problems of all the rentals in the trailer park and everything that needed to go picks and we get fixed and we'd jump in the work truck and we'd run up to the trailer park and they'd get done with school at 2, 3 and then we'd go tell 3 to 5 to 6 we'd fix stuff. And weekends and summers and all the holidays, they were always working with us and they just kind of showed me and then I was an extra set of hands and sometimes they would leave me or send me off on things once I knew more. But for years I just worked side by side with them and they just taught me on the job.
- [05:12]
A
I mean, you say that like it's so easy, but I know so many people that are given opportunities like that just can't figure it out. Like, I mean, literally, people that were getting paid to work for these companies didn't figure stuff out to the degree you did. And they're still pouring concrete or staining decks because they never learned how to do more challenging things. Like, was there something about you specifically that allowed you to learn this? Do you think it was an attitude thing? Like what separated you from the people that are still putting fence hole posts in the ground because they weren't able to graduate to tougher things?
- [05:48]
B
Well, first of all, I was really lucky because I had patient teachers. These, my mentors were actually teachers. And so they were good at kindly and patiently teaching something. And so they always hired students and they just picked students that worked hard in class and that's who they kind of found, who they give gave jobs to. And so I had somebody that was really kind and patient to teach me because you can make big mistakes in construct if you mess up Tile or you mess something up. And. And I never got screamed at. I never got yelled at. And so I had really kind, loving teacher. I mean, these people are still. They're like second parents to me. I'm still close with them to this day. And this was almost 20 years ago. And so they were just super kind people. And then I just kind of realized I. I had always cared a lot about money. I always just really wanted financial security. Not in a. I want a fancy car, not in. I want big flat stuff. I just always. It was very important to me to be financially secure and be able to. If I ever had to take care of my family or whatever came up, that was always something that was very important to me. So I saw two people who were on teacher salaries had really built a great life for themselves with what they had done. And so I didn't think I would use. I mean, I had this job, I went through college, I got a master's degree, because back then everyone said, go to college, it doesn't matter what for, just get a degree. And then I went, oh, shoot, maybe I should start doing this. And as I wanted to learn more, I learned the basics from them. And you can learn anything on YouTube, right? Everything is on the Internet now. And by then, it wasn't so big as it is now. But there were a lot of resources where if I knew the basics and I couldn't figure it out, I could find out most of what I needed on the Internet and figure out how to do a project I hadn't done before. And I couldn't afford tools. And so they had the tools, and they would let me borrow their tools to do my projects on my properties.
- [07:38]
A
There's an underrated element of your approach to this that led to you receiving the mentorship that ultimately made you successful. Because those in our position, I'm sure you get the same as I do, will be frequently be approached by someone asking to be their mentor. Will you be my mentor? Will you teach me how to do this? And it's. You do need that to be successful. Almost every successful person I know, when you trace back how they got there, they. They fell into a situation where they had a mentor. But also after interviewing so many people, I've seen that there is a certain type of human that encourages one to want to mentor them. It's like an X factor that's hard to describe. When I was in my real estate office, I didn't know anything about selling houses. I did not have a good personality for selling houses. I Was like a cop that just put on a button up shirt. That's what I was. But I got the realtors that were very good at selling to want to help me because I would offer to help them. I had a good attitude. I would go put out their open house signs. I would go put all their information in the MLS for him. If I saw him stressed, I'd say, why are you stressed? I got to go show a house, but I also have a listing appointment. Oh, I'll go show your house for you. Give me your key. Tell me a little bit about your client. I'll make you look really good. And they were like, their job would hit the floor. You're going to do that. I'm like, absolutely. Every time I see you in the office, you're helping me. That's not a big deal. I'll drive out there and show your house. Now they're giving me buyers that they don't want to work with. It actually happened pretty quick. When you just bring that mentality, do you think you had a little bit of that that you were bringing to the job sites where you were willing to help? You saw yourself as a team player. There wasn't a taking advantage of thing or was it something else that led these people to invest in you so much?
- [09:14]
B
I think the first thing is a lot of people had this opportunity. Like I said, they always hired students. And a lot of the people that I know that have worked for them over the years now do have a couple investment properties. And so a lot of us have been able to learn from them. And the joke I always made, I was the dumbest kid in AP calculus. So my, my mentor, Dave, he was an AP calculus teacher and he was a P.O. also plays poker. He's in a poker band. And so when all the kids would get stressed, he'd be like, okay, everybody get up. Let's, let's play. I mean. And he had like national as far as, like the amount of people that passed his AP calculus exam, he was just such a good instructor. And, and so he was always willing to help. So he had, after school, you could go in and get extra help with your homework. They had a calculus club if you needed extra help with your homework. And there were a lot of really smart kids in there. And I was not the smartest kid. I just worked hard. And so that's what he said. He said, you're working really hard in here. You want a job? And I was like, sure. Like, I didn't have a job at the time. And so I think the only thing about me is he just saw how hard I was working in the class, and he. He wanted somebody that was willing to work hard. But, yeah, lots of the people that have worked for him were able to go on and become investors, and they planted a lot of seeds in a lot of students.
- [10:26]
A
So you think it was mainly the Blake, like, that he was just the right guy, and you happen to come across him. You don't think it had anything to do with your approach?
- [10:35]
B
I. No, I think that I was willing to put in the work. I mean, investing is hard, and I. There's no. There's. People always say, oh, come in. You know, it's. It's passive. It's not passive. And when you're starting, it's definitely not passive, especially if you don't have capital. And so I definitely was willing to put in the work when I had the opportunities, but never would I have ever thought about doing something like this if I. Like you said, it's kind of luck. You kind of just fall into it, and then you go, okay, am I gonna do something with this, or am I gonna just have this information? And then what? It's just for fun.
- [11:07]
A
I told you folks, one of the most humble, successful people you are ever going to come across. This is why I love Emily so much. Because if you knew Emily like I did, you would know that it's not just luck that there were a lot of other people, I'm sure, that were in your shoes and they did not take it and run with it. But there's, like, something about you specifically that is just, like, endearing in an authentic way that I think these people like. But I'm not going to force you to admit that. I will move on. If you're uncomfortable with it, we'll go on into the next stage. Now, not only did you learn how to build houses and fix stuff, but you also then became a real estate salesperson and then ultimately started a brokerage. Can you tell us a little bit about that journey?
- [11:45]
B
Yeah. So I was. I had. I. I had gone to school. I started working for the county. I was a juvenile probation agent, and very quickly realized that was not for me.
- [11:56]
A
Is that like a law enforcement position?
- [11:58]
B
Well, so honestly, it was more social work because it was juveniles. And so we were county. We were in the same office as the sheriff's office, but I didn't have. I didn't care.
- [12:07]
A
You were, like, a sworn position. They just gave you, like, limited training on controlling a combative juvenile or something. Like that, but probably not even that. Okay.
- [12:15]
B
Yeah, it was definitely more social work. So in our county, they have two juvenile probation departments, or they used to. They had county and they had Department of Family Services. So I was in the county diversion division. And I did that for a couple of years. And that was just. I honestly think that I got hired because I was a little bit bilingual. I don't speak great Spanish at all, but I had some. And so it was just easier to have somebody where you didn't have to bring translators in as often. And. And I had a degree. They didn't care what it was in. They just wanted you to have a degree. So I did that for a couple of years and I realized I got to do something different. And so we talked about, me and my husband at this point we were investing in real estate. I did have rental property and I liked the idea of real estate. But if you're not a realtor, and actually a lot of people don't know this, you only make money when you sell properties. Unless you work for a builder and you're on salary, it's commission based. You can make as much as you want to, but it's. It's hard to get started. And so I thought about going back to school for accounting. I thought about going to law school. And my husband was like, I think you should just do the real estate license thing. So I. We planned for it. I saved up because he was a state trooper, so we were not making a lot of money. He was a cop and I was a probation agent and our incomes were not great. And so I set aside quite a bit of capital because I wanted to know if I don't make a dollar for the next year, I have enough money to advertise, pay what I need to pay, and not be terrified all the time by taking this. This jump. So then I went and worked for another real estate broker.
- [13:48]
A
I got a question for you about money. There are a group of people that say being ambitious is terrible and it makes you greedy and selfish. Which there are people, of course, that become that way. And then there are other people that say, I don't want to be greedy and selfish. So I'm just going to make sure that I never care about money. And they end up usually like taking everybody else's money and living off of that. What's your thoughts on if there is a good ambition versus a bad ambition or if just ambition is always good or bad?
- [14:21]
B
I read something once that said everything that's free is paid for by Someone else. And so that sticks with me a lot.
- [14:28]
A
That is so good. Can you explain what you think that means?
- [14:32]
B
Yeah, I mean, nothing's free. There's all these things that people want in the world. And I, I do not disagree with this. Right. Like, people will say, kids should have free lunch at school. There should be no delinquent lunch accounts. Yes, comma, where does that money come from? So we have to find a way if we want these things in the world. Money doesn't, you know, like, like food. Food grows out of the ground, but you don't just get it unless you have a garden at your school. That's not where your school lunch comes from. There's a company behind preparing that. The lunch ladies get paid. The, the food gets shipped to your school. I mean, this is just one example. I think there's a lot of things that we want in the world, but then there's the logistics behind making it happen. And sometimes the people that are the loudest about it are really loud, but they're not doing anything behind the scenes. So for me, finances are really important because I didn't come from a lot, and I, I, I just wanted stability. I wanted to be able to sleep at night. I wanted to be comfortable. I didn't want to be worrying all the time. And I give a lot of. We give a ton of money away. We're just not some of those people that are like, hey, let's post it everywhere. So I think we have a huge responsibility to help people that want to better their lives and maybe like, scholarships and, you know, helping. There's a lot of things I really believe in, but if I want to be able to give more, that money has to come from somewhere. So I don't want those people who's complaining about how much I hate the world. I want to be somebody who is making it better. So I have to have enough money that I can take care of my family and then also help your kid pay for their sports or whatever other thing I want to give to and donate to. Right. And so, again, that all comes from money. None of that's free. And so I think that there is an ambition that is not good. And I do, I think there's a lot of guilt. I have a, I do have, like, kind of a church background and kind of a corrupt church background. I feel like that I grew up in and it makes you feel guilty about money. And I think there's sometimes a lot of shame in that environment with the way that's taught. But I Think it's the love of money is what the phrase is. I believe not. Money is a tool. You can do a lot of good stuff with money. So what are you going to do with it and who are you going to help? That's kind of my perspective.
- [16:51]
A
When I wrote the 10 ways you make money in real estate, the better than cash flow books, I had this, like. I don't know if epiphany is the right word, but I had a paradigm shift in how I looked at money, and I don't know where it came from other than I would say, like, had to come from God, because I didn't come up with this idea. But I could see that money's not real, right? Because we can print a whole bunch of it in the government. You could take it away. What money really is is a full. It's like a form of magic, if you think about it, that motivates people to go do something. Okay? Because you could be a place like Zimbabwe that has 100 trillion bazillion dollars they could give you. But if the money doesn't have value to the people that are there, doesn't do any good. You can't get anything with it. Real wealth comes from living in an area where all of the people have decided to wake up that day and pitch in to make that area a better place to live. Like you said, someone has to get the food out of the ground. Someone has to plant the seeds, somebody has to water those seeds. Someone has to drive the food somewhere. Somewhere has to keep the grocery store running once it's been made. We could talk about this for the whole podcast, like, all the jobs that have to be done to make society work and wealth is when you live in a society where there's someone fixing the potholes in the road and there's someone building the roads like it's productive, people create a wealthy atmosphere. It's the beautiful buildings and the manicured parks and the swimming pool that's clean that make you able to be wealthy. Okay? Money is what motivates people to do that, because we're not intrinsically good. When, if you took it away, nobody would grow the food. They would get their own food, they wouldn't care about anybody else, and everything would collapse. But money is this amazing tool that we figured out is how you trick people into being productive. But productivity is actually what matters here. And my opinion is that's why our current economy is really struggling, because you don't have everybody pitching in and working. You've got half the People or less on the boat rowing and the other half sitting there really fat, taking up space, not doing anything, and it's slowing down the people that are rowing and eventually they get discouraged and they stop rowing as much or they stop rowing at all. That's where you get poverty, that's where communism ends up coming in because someone has to whip you on the back and make you row the boat. And that's a big reason why we see housing is struggling feeling right now, people don't feel safe, they don't feel like they're going to have a job. All the money that they're making is being taken from them through taxes to fund the people that are not working. Like you said, everything free comes from somewhere else. But my point was when I saw that money was just a form of energy that you had put into the world and then you were compensated with this, which you could then exchange for somebody else's effort. If you think of it that way, it makes a lot of sense that you can't help others if you don't have energy to help them with. If you're not an able bodied person, you can't do anything to help the person that needs help. If you don't have an abundance of stuff, you don't have anything to give somebody else. And money is a representation of that. But really the way that you build wealth and you get ahead, as you become productive, you pitch in, you do something of value, you receive compensation. And some people need to be taught that. And some people, it just clicks. They're born sort of in an environment where everyone's doing this and so they understand it and they become wealthy earlier. Real estate is just the vehicle with which we store that energy. And there's lots of ways to do it, right? There's flipping, there's, there's buying, there's buy and hold rentals or short term rentals or traditional rentals, or there's even having a business. So what got you interested in having like a little bit of energy in all of these different storage boxes of real estate?
- [20:32]
B
Well, okay, I want to say, I want to add something to what you said. So I did hear you one time talk about this and I think this was when you. I. So actually I never, I never heard you on the Bigger Pockets podcast because I was in the forums, I never listened to those podcasts, podcasts and so I first listened to you when you went out on your own. And then I found that podcast and at the time you were talking about money as energy and at that point was probably the first point I had bought and hold for years. I had done really like conventional loans, traditional financing. And that was the first time after years where I felt like the investing was starting to get to a point that, wow, this is actually paying off. It's not, you know, like we're finally making some progress and we started doing a couple of flips here and there. And as I looked at how you could borrow money from banks and I could get a line of credit second just off of my equity, off of an investment property or where I'm never touching the money, I'm just getting this revolt. I'm paying you interest. Like it. And I was like, it makes. Did you ever watch prices right where they. Prices right where the scores made up and the points don't matter? That's money in real estate, when you're starting and you don't have it, it's everything. You got to have that 20% down or that 5% down. You have to have the debt to income ratio, you got to have the credit score. But once you're an established investor with a track record and you have some cash and you have a lot of equity and you have tax returns showing you know what you're doing, it is a completely different game. And I always just think like it's all this flow energy, what points score, it doesn't matter. I'm not actually pulling money. I'm borrowing against equity I have without having to sell it. And then I pay it back when I buy the next flip. And it revolves. As long as you're responsible and you're, you know, you're paying attention. It's like a whole different ball game. It is so different. Once you, you kind of get to that point.
- [22:19]
A
Yeah, that's a great point. The bank is going to give you energy because they look and see you have a store of energy in this other property that we call equity. And so they see you also have a form of energy coming in every month from the work you do or the investments that you've made. And they go, that person has a lot of energy. I'm comfortable giving them some of my energy because they're going to give me more back. We call that interest. But when you're looking at it like it's money, it becomes deceiving. When you understand it's really just nothing, it doesn't exist. Like the equity in your house can go away like that. Everyone could just stop buying houses and then it disappears. And that energy can be created almost out of nowhere. When we have a housing run and there's a limited supply, but there's a lot of demand and really the energy and housing is just energy moving from the workforce where people are being paid to go do things that are productive, where profits are made, which is a form of energy, and it moves into housing. And then if you own more of it, it expands, you start to realize that even at times you don't have money, energy, you can still be, be productive and learn things. And at times where you don't have to do anything, you sit around and feel wealthy. That's unwise because that energy can be gone. But the one constant in all of it is your drive, your work ethic, your heart, and your knowledge. And those are four things that we control. We always control that. And that's one thing I love about you. You're doing successful work, you are a successful person. You stay humble and you keep working. You're being productive all the time. You're not sitting there like, I have this many doors and I need to go make myself a really big deal on social media and I need to go show everybody. I'm on a private jet and I'm at a nice location. You're just working all the time, providing value, fixing up stuff. And I know that you're that type of person that whether things are good or they're bad, they're up or they're down, you're going to keep doing well. So I'm glad that people get to hear you because I wish that we had like, you just amplified times. How many people do we. 400 million or something in the country. I should probably know that, but I don't. For everybody. If we had a whole nation full of Emily's, like, we'd be untouchable. There's nobody that could, could that could stop us. So tell us a little bit about your brokerage. Like how is it going with you selling homes? How is it going with you training new agents? What are you seeing with your buyers where certain things are working or maybe their expectations are off and that's not working?
- [24:30]
B
Sure. And I have to clarify, I'm pretty sure I said price is right and I meant whose line is it anyway? So if that didn't make any sense, when I said the scores made up and the points don't matter, I was talking about the wrong show. Okay. So I was really fortunate. When I started working at my brokerage, I had a broker who trained me. Now, I don't think that a lot of people realize that there are Brokers who don't train their agents. And I just thought when I took that class, everyone said, oh, you know, the instructor was like, well, my job is to teach you to pass the test. Your broker will train you on this. Your broker will train you on this. And there are so many agents that started at the same time I did that, went through my class, and their brokers were not teaching them anything. So I was really fortunate that I had a broker that trained me. And she was very, very knowledgeable about what she was doing. And she. It was important to her that she trained her agents. And then I was fortunate that she was pretty sure she wanted to retire soon. And so she wanted to sell her brokerage. And so she asked me pretty early on if it was something I would be interested in, knowing that I would have to be an agent for two years before I could be a responsible broker. And she literally. We made a plan. I knew what I was going to buy it for. We knew. And she. She waited for me for a year and a half. We activated my broker's license. I had all the education ready. I hit my two years. We activated it, and then I purchased it from the broker who had trained me for the last two years. And so another situation where I just had somebody who really fed into me and was willing to teach me and train me, and it worked out great. And so shout out to Mary, thank you for that.
- [26:06]
A
Of course, complete luck that you had a great mentor that liked you so much that she handed you the business and sold it to you instead of everyone else. I'm sure it had nothing to do with you, Emily. It was just the right place, the right time. Right.
- [26:17]
B
Well, but so that, that it was. I was just really fortunate. And I. I think that to have somebody that's willing to train you and cares. She cared that I did it right when I was with her, because, of course, she's liable for my activity as her agent. But that someone will wait for you for two years to do that. That's probably pretty special. So I. I purchased it from her that was, I want to say, eight or nine years ago. And since then, we have. We. We bought a building. At the time. I bought an old eye doctor's office. And the ceiling was leaking into buckets in the back. He had bought it in the 70s, and it was like shag carpet mirrors on the wall. Like, the carpet was like, you could have raked it. It was this tall. And so we moved into an office. We have a handful of agents. And I think what I'M seeing right now and I hear a lot of people talking about this now. We're seeing a shift in real estate from pre 202019 Covid. And then now we're back to real real estate again. I feel like we had this false expectation with those low interest rates, whether you were an investor, whether you were an agent, especially if you hadn't been before and you came in between 2020 and 2024 and then things went back to being hard and. And you go, what's wrong? I had agents literally ask me, what am I doing wrong? Because their houses weren't going under contract in two days. And I was like, well, this is real life. This is what it was like before 2019. Doing anything wrong, it just, it's an adjustment back to normal.
- [27:40]
A
Oh, that's such a good point. And I remember when, when it was abnormal, I remember telling everyone, it's not normal. This isn't normal. I am giving you abnormal advice to buy a house now because we printed way too much money, that we have an abundance of energy. That energy needs somewhere to go and it's going to go into housing and like just screaming from the rooftops, you got to buy, you got to buy, you got to buy. But also saying, don't quit your job. Do not quit your job. Only a tiny percentage of people should be quitting their job. Most of you need to be working the job and taking advantage of this gift of real estate equity. But there was such, I was like one tiny voice and there was a wave of voices that said, quit your job. Do this full time, get out of the rat race, buy as much real estate as you can. And for a couple years, like you said, it appeared to work. And then exactly what we should have predicted is happening. Housing prices have slowed and dropped. Not because of interest rates, not because of war. It's because our economy is weak. There is not energy coming from the job market to go into housing. We shipped all those jobs overseas. And now our bougie attitudes in America that we are too good for work and working in these blue collar jobs is beneath us. And we all want to be influencers or financiers or some prestigious college graduate that does fancy stuff has left us in the position where there is not enough money being made to pay for everything that we're used to. And there's definitely not enough stability in the job market to provide for housing. And we need to get our heads out of our butts and get back in there and start swinging hammers and building stuff and moving Stuff and stop expecting that we should have such a luxurious, lifesty style without a lot of work to match it. And I think the real estate industry is a microcosm of that exact problem. Agents think that it's all about looking cute and doing a get ready with me as you get ready to go show properties and you're 20 years old and you get to get a bunch of attention online and make a hundred thousand dollars, opening doors and saying words like amazing all the time. And that's not real. Like you're saying, it is not how the world is supposed to work. No one should ever be making that much money or getting that much energy for doing so little value. And it feels like the public is kind of pushing back against that. People don't like real estate agents, people don't like lawyers. People don't like the pretentiousness and the sell. Like, look at me, look at me. That we see in a lot of our industry. And I think you made a great point. The agents are saying, what am I doing wrong? And you're saying that's normal. It's normal to start a business and struggle for three, four, five years before you pick up momentum. Like imagine if you just picked up a hammer and showed up at a job site and said, when do I start making 250 grand? And they're like, when you're good at stuff.
- [30:18]
B
I've got some of those bids.
- [30:19]
A
Okay, yeah. They think they're just gonna step into it, right? And it takes skill to get to where you make a bunch of money. And to get skill, it takes effort plus experience. And that usually takes time. And it takes a lot of sweat equity and it takes a really good attitude. And it takes struggling with yourself. And over. I messed up cutting the tile. Why did I do that? I got going too quick, or I didn't understand the math or I didn't understand how to. To measure it the right way. Wrestling with that, taking the humble pill, recognizing what you have to do and then doing it better. And sometimes you have to fix your mistakes and not get paid. That is exactly how the world works. And to your point, I think we just spent 10 to 15 years with quantitative easing and free money, and now everybody's hypnotized. They just think this is crazy how there's no jobs out there. Remember that dumb and dumber line? You ever see that movie where they're looking for jobs and they get out of the car and one of them goes, I can't believe there's not a job to be had in this whole town. And the other one says, yeah, unless you want to work 40 hours a week, like that's what I think we have turned into. Not everybody, of course, probably my listeners aren't thinking that way, but that's what we see in a lot of places. And that's why I think we're going into this bad economy.
- [31:30]
B
Yeah, and, and also one thing I'm really seeing now too is when I, I started selling real estate as an agent, 10 or 11ish, 10 to 12 years, I don't remember around there. And it seemed like people would buy their starter home and realize this is not my forever home. I have a reasonable expectation of what I can afford, what that condition is going to be for the price. And we're going to fix it up as we live in it and then make a little money in the future when we sell it. But we know we're going to have to put some work into it. And I'm really noticing buyers now have a really mismatched expectation of what they're able to sell spend and what they expect to get from that and how upset that makes them. I mean, a really kind of weird sense of entitlement and also like, hey, if we can't get what we want to start, we're just gonna rent. But I've seen people do this because I've watched them go and come back to me. A couple years later they come back, their budget's not really that much better, maybe a little bit, but not enough to make a difference. But now houses are so much more expensive that something they could have gotten and now has sold for 50 or 60 grand more than if they would have just bought it then because it's been back on the market. I'm think of specific examples in my head. Now they can't even get that same home that like wasn't good enough for them then. And so just this expectation of buyers in the market is really, really hard. And they're not willing to buy houses and start on like not a new build.
- [32:55]
A
Yeah, yeah, that's a really good point. And it, I think there's a lot of people in the job market also that have that attitude, hey, I'm looking for a job. Okay, well, you're going to get entry level pay and you're going to have the hardest job. No, no, no, I'm looking for a good job that pays me a lot of money and has really good benefits and doesn't make me do anything hard. And we're sort of in a Stalemate. Because the only opportunities available are for people that need to learn something. And the people that would normally learn aren't willing to learn at a grand scale. And we see that playing out through real estate. Now. Another problem that I see in our industry is the people that are flipping homes or buying rentals are relying on strategies that were portrayed by me and other people years ago in a different market than where we're at today. When you're in a, in an exploding market or even a climbing market, your strategy is based on how you put yourself in a position to sort like a kite to catch the wind and go up. But when the market's not going up, it's going down or staying the same. You need to adjust and have a different strategy in mind. And you have to be thinking, like you said, about what the buyers of today want, what they can afford and how to hit that target of what they, they're looking for. What are some of the things that are working for you in your market and what are some of the things that you see other investors getting wrong?
- [34:11]
B
So what I'm doing right now in my market is I am purchasing properties that make sense. Now I will start by saying I am not a new investor. So if I, if I were to lose a little bit of money, it wouldn't ruin me. So you got to look at this a little bit different. If you're putting everything you have into your first property, or you have a little bit of money to play with, or you have a good income, if something kind of doesn't go exactly to plan. Right. Because I think you're in a slowed market. We are not in an upward trending market. And so we can't count on things to be better than they are today. Might be the same, they might be a little bit worse, maybe slightly better. I always like to plan for things getting worse when I buy a property. That's all. Even when the market was good, I'm like, this could, this is going to change at any minute. So I, when I buy a property in my market, this, if I bought out of state, I don't do that. I would probably do this differently and I would get someone that knew that area to help me in my market. I buy a property and if I buy a property as a flip, I make sure that no matter what, this could be a rental property for me if the market shifts and I don't want to sell it for what I have into it. I have a big enough margin, but I have a profit. I want to make maybe I hold on to this for a while, right? And so everything that I'm purchasing, I could rent it and it would make sense or at least be comfortable or I can just sell it when it's finished. And so I'm thinking of that slightly when I make my decisions now. I would never put carpet in a rental. I will put carpet in a basement of a flip. So there's things like that that I am lean towards a flip for, but I'm thinking of it sort of in my finishes. And there's things in my market that are going to be hyper local to your market. And, and part of the decision, like I just put a house under contract, supposed to close in April, and it was just a great deal. It was a great price for the house. And so I'm like, this could be a rental or this could be a flip. It's probably going to be a flip for me. But the numbers worked both ways. And I was just thinking like in my market there's these numbers, right? Like there are things that rent for $2,000 a month. There are things that rent for $2,200 a month and they rent. But a real sweet spot I have found after years of renting stuff here, when you get over fifteen hundred dollars a month. In my economy, people struggle to pay rent on time. Those 1500, 1400 and under, it's usually doable. You'll get someone in there, they'll qualify. But they always tend to struggle paying on time, not paying late, not needing concessions. And so I have kind of thought in my little box, I'm going to stick to things that I can rent for 1500 bucks a month or under. If they're over that, then it's going to be a flip for me. Or I hold it for a while if the market shifted and then I'll sell it later. But I always struggle once I get above that price point. So like this flip that I am going to buy and do, it would be like a $2000 a month rental. I don't want to have a $2000 a month rental. I'm struggling with renters paying on. And so unless that market shifts, I could rent it and it would rent. But those would be more troublesome tenants just from the history. So I'm paying attention to like what can people afford in my market? And if it doesn't flip well or it doesn't rent well, can I go the other direction with it?
- [37:13]
A
I like that attitude. I think that a lot of the sellers of today and the Flippers of today and the investors of today, if we're just being candid right now, they walk into real estate and they go, all right, I didn't like having to show up for a job. I didn't like having somebody tell me that what I need to do better or different or more. I want freedom from that situation. I didn't like I could have got really good at what I did, and that would have given me leverage in negotiating my pay and my position. But instead, I'm going to abandon ship and I'm going to come to real estate where I'll have all this freedom like all the influencers tell me. And then they get here and they go, I got to make a certain amount of money.
- [37:50]
B
Money.
- [37:50]
A
What's the best way to make it? Do I want to go flipping or do I want to go rentals? And then they. They have this, like, false illusion that they're in control and they actually get to choose in which way they're going to make a bunch of money. When in reality, you would be lucky if you made money in any of them. And instead of thinking about what, who is my client and who am I serving, they're thinking about, what is the best way that this can serve me. Now, no one would say this out loud. This is not a conversation that they would be conscious of having, but that's what their attitude reflects. And what you're saying is, you can't ask the question of where's the most profit? Or how can I make the most money? You need to be thinking, what do the buyers want? What can they afford? What are they going to actually be writing offers on? How do I provide that to them? And that is what I have to figure out how to make money in. I can't just make up this idea in my mind that there's chances. Yeah, yeah, sure. Theoretically, you could go buy a house for $700,000, put 200 into it and sell it for 1.5. But if there's no 1.5 buyers, then you're not selling it for 1.5, and you're just losing a bunch of money. But it takes the approach of seeing what your market is, who you are serving. You are serving the buyer of a house that needs to be at a certain price range. So if you're a house flipper, it may be that you make 10 grand on that deal, because that's what you can make out of a deal that those people are looking to get. And if you say ten grand is not worth it, well, then you maybe shouldn't be a house flipper right now. Maybe you need to go back to your job and maybe you need to work a job and buy that same house and make it a rental and wait 10 years to make your money. This is to you and I, this is pretty clear. But obviously to the people that are trying to get into our industry, very confusing. What can you offer to shine some light on this? For the people that are inexperienced, I
- [39:32]
B
think, and I could be wrong, and you probably have more access and talk to more people that are in the real estate world that everyone knows about. But I wonder because everyone's selling a pretty expensive course and I've talked to people that have some pretty. They have given me the numbers on what certain people are charging for certain courses. And some of these numbers I'm like that's a house. Like that's a house or that's a down payment or a couple down payments. I wonder if a lot of these people that are making a lot of money selling a course, the people buying their course don't understand that that person is rich because you bought their course, not because they're making that money in real estate.
- [40:08]
A
Say it again, louder for the people in the back.
- [40:11]
B
And so there's an unrealistic expectation of the margins you can make in the real estate world today. It's going to shift, right? The economy cycle, study the economy in any way. There's going to be times where you make stupid amounts of money and there's going to be times where you make smaller amounts of money. But when you see this lifestyle Bro A is living, it's probably because you bought his hundred thousand dollar a year course and so did ten other people. Not because he just made a million dollars this year in real estate. And so I just, just think that you got to think with your brain about realistically where that money is coming from. Because I am still buying stuff and flipping stuff that makes money. There was a house that came on the market yesterday, that is one. I have three of those same houses. You could buy it as a rental. And cash flow, 400 bucks a month before expenses, right? Like there are still things you can buy as rentals, there are still flips you can flip. But those out of this world margins, I, I'm not seeing them happening right now. And so I think people that are not as knowledgeable think they're going to buy this course and it's going to change their life. No, you just changed his life because you bought his course. But it's not going to do it for you in this market. So you just have to be discerning when you're looking at what people are presenting to you when they're trying to sell you something.
- [41:21]
A
You're. I know these people that you're talking about and you're spot on. That's exactly right. They, there's a pattern of how this works. They sell courses, let's say 10 grand a pop to six people. They take that $60,000 and actually before they take it, they go partner with the new person who doesn't know anything. They call it a jv. That person puts up all the money for the deal and they say, you bring your money and I'll bring my experience. They have none of the debt. They have none of the risk at all. They take the money that they made from the courses and they use that money to blow out the property. 60 grand to make it an amazing backyard. Incredible design, Gorgeous. Oh my God. Okay. Then they wait until spring or summer, whenever the hot month is, and they do really good because they're the new market in town. They have all the bells and whistles that nobody else has. They crush it. They take the numbers that they just crushed. They put that all over social media and they say, I will teach you how to do this. You look at that and go, my properties aren't doing that at all. I'm not making that much money on a flip or I'm not making that much money on my short term rental. So then now 12 people say, hey, here's $10,000. Can you teach me how to do what you just did? Now they go partner with two more people who put all the money in the house. And then they take that 120 and they blow out two more houses. And now they have three houses that do great. And they go, I'll show you how to do this. And it perpetually gets bigger and bigger and bigger as they continue to build this big thing. And if the market turns or the house does poorly or it's not managed well because they grew really quickly and they don't have good staff and their staff is inexperienced and the deals go bad, they didn't lose the money. Their JV partner, who trusted them with the experience, loses the money. And if you don't have the money for the down payment, plus the money for the closing cost, plus the money for the design, plus the money to pay for this membership, you can't get into the game like what they're doing. You just don't know any of that. All you See is the tiny little part of that story that I just said where they show online how good their property just did at the very best time, and then everybody thinks that's real estate. They think that's what I'm doing. They think that's what you're doing. They think that all of us are basically just making money hand over fist while we're on yachts and we're wearing rompers and we have our Ray Bans on and we're just acting like complete imbeciles because that's the part that gets shown. Do you want to be part of a community that will make you as douchey as me? And of course you do, because if you think that's an option, you're not going to say no to it. And then they pay the dumb tax, or the ignorant tax, I should probably say. And then I find them and that's when I try to coach these people up and tell them it's okay and help, you know, talk them off the ledge because they've lost 10 years of savings from these terrible decisions. And I'm glad you're here for the people that can listen to this to know you're not crazy. You don't suck. You're not falling behind everybody. What you're seeing is not real. It is a manufactured thing.
- [44:05]
B
And meanwhile, there's houses that you can buy in small towns that have a little bit of cash flow that you can buy them now, you can hold them till you retire, you'll have them paid off, or close to paid off, depending on your age. Right? Like, and if you just can grab a handful of these, what difference would if you even had a normal job and just bought man a house every three or four years? Because instead of making dumb financial decisions, you put a down payment on an affordable house that's a little bit of cash flow now, but it's paid off when you retire. So it's either cash flow or you sell it. Right. And so you think you're behind. But this house of cards that people are presenting, it takes one and it's gone. Right? And you just don't know what's going on behind the scenes until you actually, I guess, pay attention or see or talk to some of these people.
- [44:49]
A
People. Yeah. Also, that house you just described might have like wood LVP paneling on the walls and it might have wallpaper and it might have a popcorn ceiling and the foundation might be a little scary, but it's not terrible. And there might need to be an update electrical system and the roof could be leaking, and it might have other issues that you might have to fix. Yeah, you might not be able to pay a contractor $40,000 to put up wallpaper and fix popcorn ceilings because they're charging out outrageous astronomical prices because nobody wants to do blue collar work. So maybe this is a springboard into you learning new things that you didn't know much. Like Emily said, maybe this is a springboard into you overcoming things you didn't think that you could overcome and having your brain be rewired in new ways and getting some of the confidence that comes out of realizing, I can cut tile and I can lay tile and I can do siding and I can do some, like, minor plumbing work or something like that. It might be the best blessing that you could have had because it makes you more experienced, more skilled, it gives you a better drive, it gives you more ambition. The four things that we talked about earlier. And it's not a free ride, but it's the best thing that could ever happen. I just think people miss it. They're like, okay, if I pay this much for the house and these are my closing costs, and I gotta borrow money from somebody else, and then I have to pay them interest, and then I gotta pay a contractor a whole bunch of money. Nothing. Pencils. But if you switch out a lot of those moving pieces with elbow grease and you delay gratification, like, hey, when it's paid off 10 years from now, 15 years from now, you look at the principles and better than cash flow, and you make a whole bunch of small wins in the same deal instead of just one huge one. A lot of things might pencil. Is that what you're seeing, or is this a pipe dream that I'm explaining?
- [46:31]
B
No, that's exactly it. No one wants to delay gratification, though. That's the thing. You know, people, they want it and they want it now. And I just. The time's gonna pass anyway, right? Like, you're gonna look back in five years and go, man, I wish I would have just bought that. Or I wish I would have just started and it goes. It sucks to go. Yeah, like, it's. I. I did not get any sort of like warm and fuzzies about my investments for like 10 years, right? Like, they cash flowed a little bit, but I was saving all that money because who knows what's going to come up? But then there's these cycles, like seven to 10 years in the cycles in the economy, right? And values go up or by then your balance is paid down. A lot more. And you go, oh, wow, like my rents are now this much more. And this cash flow is actually something tangible or you see how much equity you have paid down or, you know, so it is several. Just doing a cautious, slow growth investing, which is, here's the deal. I was always very cautious because I saw all these people that looked great and did awesome things, earn and lose it and earn and lose it. And I was not going to do that. And so it wasn't flashy, it wasn't exciting. But you know what, like now I have a really solid base and I also can sleep at night because I did it so carefully and so cautiously, Right? So there was these big hotshots that looked like, yeah, they're doing a lot of stuff, but then also like they were in really stressful situations too. So you kind of got to know what you're comfortable with and what you're willing to do. And then so one thing too that I want to mention. When you were talking about doing stuff yourself, pick what's reasonable for you. You might not go, okay, maybe I'm not tiling a bathroom myself. We're going to put LVP in there, right? You don't have to pick the hardest thing. Or maybe I'm not going to try to fabricate my own quartz countertop, but I can get the pre made laminate at Home Depot again for a rental. There's things you can do that are not, not scary with a really expensive product when you're trying to do something yourself when you have to, because that's how the numbers make sense.
- [48:21]
A
Yeah, that's exactly right. I'm so glad that we talked about it. I'm gonna have you back in the future to talk more about what you see going on in other markets and how it compares to your market and maybe how people who are just watching Instagram and who knows what market you're seeing when you're watching an Instagram video. It could be Detroit, Michigan, it could be Miami, Miami, Florida, it could be Wyoming, it could be Southern California. And you're trying to make sense of all of these strategies everybody's talking about. I remember when I was new and it was kind of overwhelming and then I learned they're not sharing a strategy with you. They are marketing a mastermind or a group or an educational program or something to you to get your money. And that's the way that this whole thing works. If you're going to learn how to do it from the Internet and you're going to get it for free. You're often going to pay the ignorant tax, which can be more expensive than just like you said, finding a mentor and having someone teach you. So thanks, Emily. Any last words you want to give before we get you out of here?
- [49:14]
B
Man? No, I just be discerning. Pay attention. If it looks too good to be true, if it looks like, how do they make that happen? It probably is not the full story, just especially if you're getting started getting into it. You absolutely can be successful in real estate today. You still can if you're willing to put in the work and go through the punches. But be discerning.
- [49:33]
A
For people that want to reach out to you and tell you how great you are, where's the best place for them to find you?
- [49:37]
B
You can find me on. I have Instagram. It's at Emily A. Lopez. My real estate YouTube channel is at Emily A. Lopez. And my renovation DIY channel is at you can DIY home.
- [49:51]
A
There you go, folks. Pause, rewind, write that down. Make sure you reach out to Emily and tell her how great she is. We need more voices like hers in this space. Thanks for joining me today, Emily and everybody. Remember, today's show was sponsored by the One Brokerage. The one Brokerage where you can get any kind of loan that you need to buy houses. We've got standard conventional loans, DSCR loans, fix and flip loans, HELOCs, HELOCs on investment properties. If you name it, we got it. You can go to the1brokerage.com and check us out. Or even better, go to my website, davidgreen24.com use the chat option and get a hold of me directly and I'll find out what you're looking to do and I'll put you in touch with the right person. Thank you guys and for listening. Thanks all of you for subscribing and thanks for your loyalty to the podcast. We'll see you next week on Real Talk Real Estate.