What Real Estate Investors Can Learn from BiggerPockets (the Business, Not the Website)
Obviously, there’s a ton of things real estate investors can learn from BiggerPockets.com. There’s an entire library of articles, forum posts, books, and podcasts to choose from. I mean, yours truly, the legendary and extraordinarily humble author of this article, has a weekly column at BiggerPockets, so what else needs to be said?
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But this post is not about what real estate investors can learn from the website. Instead, I’m here to talk about what real estate investors can learn from the business behind the website. I should note that I have no ownership in BiggerPockets and am not an employee. I’m just a contributor (albeit an incredibly awesome and humble one) and fan. I will try to keep the sappiness (or “sucking up” for the more cynical out there) to a minimum. But hey, Josh and Brandon require a monthly quota of sucking up that I’ve got to fill if I want maintain my status as a blog contributor. So unfortunately, I’ll have to remain quiet about my true opinion regarding these two
hack frauds scholars and gentlemen.
In all seriousness, though, Joshua Dorkin started BiggerPockets back in 2004 as little more than a hobby and has since grown it into a very successful business. As he noted on BP Podcast 100 when he discussed his own story and the history of BiggerPockets, he originally started the site as “…a community for actors.” Only later did it morph into a real estate investment website, and even then it was a slow process. He noted that “…the first couple years of working on BiggerPockets full-time, I was not making any money.”
Related: The Incredible Value of Connections Made on BiggerPockets
But from those humble beginnings, BiggerPockets has grown into the one of the largest real estate investment websites in the world, with 16 full-time employees, over 500,000 members, 2 million forum posts and tens of thousands of articles. It has been cited in the New York Times, Bloomberg and Huffington Post, among many other mainstream sites. As of this writing, its Alexa ranking puts it as the 2,264th most popular website in the United States. Not too shabby for a niche as particular as real estate investment!
Currently, the Amazon rankings for books on real estate investment might raise an eyebrow amongst a few anti-trust attorneys. While Amazon has the annoying habit of counting different editions and audio versions of the same book as different books on its top seller lists so the same book often appears more than once, various versions of books published by BiggerPockets, as of this writing (August 2nd, 2016), still rank 1st, 2nd, 9th, 11th, 12th, 13th, 14th and 15th. Only Gary Keller’s series even competes.
And then there’s the podcast that leaves every other real estate investing podcast in the dust. Again, as of this writing, it ranks as the #1 real estate podcast and 7th most popular business podcast on iTunes. The second most popular real estate podcast came in at 42nd.
Needless to say, BiggerPockets, the business, has had a lot of success.
How BiggerPockets Got to Where it is Today
As noted earlier, BiggerPockets didn’t begin as some massive, venture capital-driven Silicon Valley tech start-up. Instead, it started as a home business and slowly grew from there. Josh mentioned in his podcast that the impetus behind BiggerPockets was the same as many start ups — to fill a consumer need that wasn’t currently being served:
“I mean, that is fundamentally why I created this site. I had property. I had questions, and I’m sitting around looking for a place to go where I could find an answer to those questions, and there were websites at the time, I mean, Facebook didn’t even exist by the way at the time that BiggerPockets was born. Zillow didn’t exist at the time BiggerPockets was born. There were sites, there were a bunch of communities for real estate investors, and as a budding investor, I looked at them, and I was like, ‘Oh, this is so cool. There are these communities, that’s great,’ and as I went and kind of spent time [there], what I found, what I felt, was these communities’ purpose was not — their primary purpose was not to serve as a community for real estate investors. Their primary purpose was to serve as a channel to sell content — to sell courses and boot camps and trainings and all that stuff, and for me, you know, I didn’t need to buy somebody’s $1,000, $5,000, $20,000 boot camp. I just needed an answer to a darn question, and I didn’t need the answer coming from somewhere where I didn’t really trust that I wasn’t going to be sold on something as soon as I got an answer.”
Indeed, while I don’t want to get into too much guru-bashing here, there’s no question that there are a lot of questionable services offered out there. Indeed, John T. Reed has a great site evaluating these gurus (although BiggerPockets, of course, does not necessarily endorse Reed’s views, and I have some disagreements with him myself). Not all these gurus are bad (I should note, I’ve learned some good things from some of them), but many are selling overpriced junk. Reed’s website even comes with his own “Real Estate B.S. Artist Detector” that notes, for example, that “B.S.” gurus tend to have rather, shall we say, overly-romanticized bios:
“Their bios are full of baseless, subjective adjectives and nouns, like ‘innovative… famous, spectacularly successful,’ ‘authority,’ etc. B.S. artists often use photographs or videotape of themselves hanging around executive jets, limos, yachts, mansions, five-star hotels, exotic resorts, or expensive cars to imply that they have achieved great financial success.”
BiggerPockets has none of that nonsense. When I asked him what the most important thing to BiggerPockets’ success was, Josh noted:
“I think our focus on running an ethical business with solid core values that put our users (customers) first is probably what has been the most important thing for our success. We were willing to do what no one had done before in the space. We put revenue and profits second to providing unquestionable value to our users — where everyone else in the industry had built a high-churn model with extremely high-profit margins.”
And this is not as easily said as done. As Josh noted on Podcast 100:
“I think what people love about BiggerPockets is they know that we stand firm for them, and we’re not gonna sell out, and listen, not a week goes by — and you [Brandon] can attest to this — where one of us on the team here has an idea, ‘Hey, this would be so cool if we…’ and then we’re like, ‘Oh, hey, no we can’t do that,’ I mean, how often does this happen, Brandon?”
“Every day” was Brandon’s response.
But that being said, I have to disagree with Josh to a degree. While he may have put “profits second,” in the long run, putting customers first and offering free, high quality information was and is the best business decision in my opinion. After all, there are many gurus who charge $3,000 for a bootcamp or $20,000 for coaching in order to teach the same thing someone could pick up by listening to a couple of BiggerPockets Podcast episodes. And how many of them have since fallen by the wayside as BiggerPockets continues to grow?
For example, Youtube, Google, Twitter, and Facebook could charge their members to use their platforms, but such activity would actually hurt their businesses, as their customers would flee and ad revenue would collapse. Online newspaper paywalls have generally lowered readership and had mixed financial results. And we’re talking about small fees here, not boot camps and courses that cost thousands and sometimes tens of thousands of dollars.
The Keys to BiggerPockets’ Success (& What Real Estate Investors Can Learn From It)
In the end, the simple truth is that BiggerPockets became successful by offering a superior product at a reasonable price. Indeed, the cheapest membership price is, well, nothing.
But BiggerPockets, as far as your humble (and legendarily awesome) author can see, has done five key things to achieve success that real estate investors can learn from:
- BiggerPockets has offered a quality product at a competitive price.
- BiggerPockets has stayed true to its core principals and not wavered to temptations for the quick buck.
- BiggerPockets started small and required a lot of hard work to build. It then grew at a consistent pace instead of trying to get from A to Z in the snap of a finger or contrarily hunker down and stop where it was.
- BiggerPockets has not tried to squeeze blood from turnip and get everything it possibly could out of every customer, but instead focused on the big picture of growing a large audience.
- At least from where I sit, Josh, Brandon, Allison, Hilary, Scott, Mindy, and the rest of team don’t seem to take themselves too seriously and realize that if you’re not enjoying yourself, what does it matter how much money you make?
We’ll take each, one at a time.
1. Quality Product at a Competitive Price
Abraham Lincoln once said, “You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.” In the end, cheap gimmicks, parlor tricks, and snake oil are not going to make a great business. You have to hunker down, learn whatever business you are going into (in this case real estate investment), and work your tail off to succeed in the long run.
Yes, you may cut some corners on a flip and not do the rehab right, underpay employees, or overcharge for a rehab to management clients and make more money up front. But in the end, these clients will almost certainly eventually leave, and the damage to your reputation will likely be incalculable. The only way to do any business, be it in the real estate investment or real estate investment education space, is to do it right.
2. Core Principals
We all know (or have at least heard of) some sleazy real estate investor who has flipped a property that wasn’t really finished, sold overpriced junk to unsuspecting out-of-state investors, been a slumlord, robbed owners they were managing for, or some other such terrible activity. Indeed, the owner of the largest property management company in Eugene, OR — the town I grew up in — went bankrupt and was found guilty of swindling the owners he managed for to the tune of $3.5 million dollars!
But it doesn’t need to be anywhere near this bad to cause a problem. As a real estate investor and good friend of mine who is also from Eugene noted about that case, “It all started with the willingness to lie.”
In business, your tactics will need to change, and your strategy might need to change. But your principals should not. Once BiggerPockets started to gain a bit of traction, it would not have been hard for Josh to decide to go the stereotypical guru route and start selling multi-thousand dollar courses. This would have almost certainly increased profitability at the time. But even leaving ethics aside (which, of course, we shouldn’t), this would have been bad for business.
BiggerPockets has become successful by becoming the hub for a community of real estate investors to congregate, network, and learn. Had they pivoted to try and up-sell a bunch of overpriced junk, that community would have never formed, and BiggerPockets would be joining many other gurus in the ash bin of real estate investing history.
3. Consistent Growth and Hard Work
I’ve half-jokingly noted before that real estate investment is a “get rich slow-scheme.” Unlike what some of the aforementioned gurus say, you will not be riding in a limo to the airport to board your private G-5 airplane for a month-long vacation at a five-star resort in Tahiti three months after starting.
When I asked Josh about the comparison of starting BiggerPockets to that of the typical real estate investor, he mentioned that:
“Like the average investor, I was working a full-time job while starting BiggerPockets — spending my nights and weekends to build the business. Every free minute was devoted to building my company. I put in countless hours without reward in the early years in order to see a payoff down the line. Real estate investors are entrepreneurs — just focused on a very specific niche.”
Early on, real estate investment can feel like a grind that just isn’t getting you there. Then, all of a sudden, you realize that you’ve made it. This was my experience, as well as my father’s. There’s simply no way around the fact that real estate investment requires hard work.
Furthermore, working toward consistent growth instead of either hunkering down or jumping ahead is critical. BiggerPockets started as a forum, then later, one by one, it added a blog, a publishing arm, and a podcast, as well as a variety of other features, such as its investment calculators.
In Great by Choice: Uncertainty, Chaos, and Luck — Why Some Thrive Despite Them All, Jim Collins and his research team discovered that the best companies grew at a consistent pace without either trying to grow like crazy in good times or hunkering down in bad times. From where I sit, it appears BiggerPockets has done just this.
The prudence to add one thing at a time, test it out, analyze the results, and then go with what worked and drop what didn’t is key for any business. So Josh and company didn’t try to add all these features at once (or engage in the overpriced guru techniques mentioned above). On the other side, remember when BiggerPockets added the live chat a while back? Well, it didn’t work out as well as they’d hoped. So they dropped it.
This kind of thing happens in business. In real estate, perhaps a particular location, niche, marketing strategy, or the like proves ineffective. It’s absolutely critical to measure this and change when it proves ineffective.
4. Not Squeezing Blood Out of a Turnip
Many members on BiggerPockets don’t pay a single penny. Even the Pro account only costs $29/month. Most of the books are around $20 off the website, and the podcast is free. This obviously pales in comparison to $3,000 boot camps and the like.
But BiggerPockets makes its money by getting a little from many rather than a lot from few. Not only is this a more ethical approach (especially in the education space), but it has proven to make better business sense.
With regard to real estate investment, it is important to remember that 1) every deal is not going to make or break you and 2) each deal, or decision for that matter, doesn’t need to be perfect.
Yes, you can add every little knick-knack that you can think of to a rental to try and increase the rent, but the cost in time and money isn't worth it. You can try to list a flip at the top of the market, and maybe it will sell, but in all likelihood, it will sit and slow you down on the next deal, and the holding costs will probably cost you more than if you had listed it at a more competitive price. You can try to chase down $500 from a tenant who skipped town, but it's almost certainly not worth it. You can try to hardball every contractor you meet to get a slightly better bargain, but you'll probably just drive them away.
The lesson is simple: Don’t be penny wise and pound foolish. In many ways, this will reduce the pressure and feeling of being overwhelmed many new investors experience. Don’t be reckless, of course. But you don’t need to hit a home run off of every pitch.
5. Have Fun
If you don’t enjoy what you do, what’s the point? Who wants to be rich and miserable? Especially when you can be rich and happy!
As you can tell from the podcast and just hanging around the forums, the BiggerPockets’ staff doesn’t take themselves too seriously. (Unless, of course, they are doing an incredible job of hiding the fact that Josh is a tyrant of Stalin-esque or your typical HOA board chairman proportions.)
Happy employees are more productive employees, and that goes for bosses, too. Even if things aren’t going particularly well in your business, make it a priority to enjoy yourself and what you do. The old “fake it till you make it” strategy has been proven by science to improve your attitude (and therefore your performance). Even failure can be seen as a positive, as failures generally make for great learning experiences.
Indeed, every successful investor I know (including my father and me) has had plenty of them.
Life is too short and business is too volatile to be taken completely seriously.
BiggerPockets, the business, has many similarities to real estate investment, and their path to success mirrors many of the investors in these forums who have become successful putting into practice what BiggerPockets teaches. Hard work, persistence, and sticking to your core principals are basically universal keys to success as far as any entrepreneurial venture is concerned. And why would it be different for a real estate investor and a real estate investment education website?
Alright, sucking-up quota has been met for the month. Time to sign off.
What do you think about BiggerPockets’ trajectory of growth? Do you use these strategies in your own business?
Let me know your thoughts with a comment!