BiggerPockets Real Estate Podcast

LIVE from BPCon2019: Ask Us Anything!

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All the BiggerPockets podcast hosts on stage in one place! 

This bonus episode was recorded at the BiggerPockets Conference 2019 on October 7th in front of a live audience of more than 1,000 people at the Gaylord Opryland Resort in Nashville, Tenn.

We turned the mics over to our members, who fired a bunch of great questions at Scott Trench and Mindy Jensen, Brandon Turner and David Greene, Joshua Dorkin, and J and Carol Scott.

Our panelists covered some nitty gritty real estate topics, like tackling vacancy and how to invest IRA funds, as well as big-picture concepts like motivation, marketing, and teaching family members the importance of investing at an early age.

Also, everyone reveals which animal they would be if they had to choose, and a member of the audience challenges David Greene to produce an analogy on the spot. Listen to find out whether he performed under pressure! 

Our first conference in seven years was a big success, and we’re so thankful to everyone who came out to learn, network, and have a great time.

Download this bonus episode, and be sure to subscribe to all three shows BiggerPockets Real Estate Podcast, BiggerPockets Money Podcast, and BiggerPockets Business Podcast so you won’t miss an episode.

Click here to listen on iTunes.

Listen to the Podcast Here

Read the Transcript Here

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Dave Meyer: All right. How’s everyone doing? Awesome. Awesome. Well, welcome to this very special recording of the BiggerPockets Podcast. This is a really new thing for us. We’re really excited to have all six of our awesome BiggerPockets Podcast hosts here as well as founder, Josh Dorkin. We have seven awesome guests for you. The format is going to be a little free flowing. We’ve never done anything like this before, but we would love if you could come up with some questions and come stand at the microphones in either aisle and we will have our esteemed panelists answer for you. So start thinking of some questions while we’re getting rolling here.

Dave Meyer: First, I’m going to introduce everyone even though you probably know who these people are. We have Scott Trench, host of the BiggerPockets Money Podcast, along with his cohost, Mindy Jensen. Host of the Real Estate Podcast, Brandon Turner and David Greene. Found of BiggerPockets and honorary podcast host, Josh Dorkin. He’s going to cry. And the host of our newest podcast, J and Carol Scott.

Dave Meyer: All right. So I would love to start by just getting a sense of who here listens to the BiggerPockets Real Estate Podcast. Okay, every single person here. That’s what we thought. How about the money show? All right, pretty good. How about our newest show, the business show? All right, great. Not as many. That’s not an insult at all. I want to give J and Carol an opportunity because of this to explain a little bit about the business podcast for those of you here, as well as everyone who’s listening at home because it is an incredible show and we’d love you all to learn more about it.

J Scott: Yeah. So the BiggerPockets Business Podcast, hosted by my lovely wife, Carol, and myself … every week, we interview founders and entrepreneurs of everything from small to very large businesses, as well as experts in the business field; sales experts, marketing experts, operations and process experts. So if you run a business … and anybody that runs a real estate business runs a business, the show is for you. And we’ve had some amazing guests. We’ve had some really new and small entrepreneurs who are just getting their businesses off the ground all the way up to folks like Barbara Corcoran from Shark Tank, Jay Papasan, who wrote The ONE Thing, and everything in between. So we’ve had some amazing guests and … Oh, Brandon Turner and David Greene were both guests and our inaugural guest, our very first guest who talked all about building BiggerPockets, Joshua Dorkin.

Carol Scott: And if you haven’t subscribed, right now, get out your phones. Subscribe to the BiggerPockets Business Podcast. Seriously, every single time we talk to one of these entrepreneurs, we are so incredibly inspired. Their stories are so relatable. They’re just like you and me. They made great decisions, they took big risks, and they’ve grown amazing businesses. You will absolutely love it, so tune in.

Dave Meyer: Awesome. Great. So if you guys have some questions, you can start lining up. But while you’re doing that, I’d love to just get a show of hands here for people. How many of you out there have yet to do your first real estate deal? A handful of you. Awesome. Great to know. How many of you have done one to five? Me too. And then five plus. Wow. Great. Awesome. So we have a real wide gambit of people here, which is excellent. Hopefully, you all are networking and meeting each other. And, yeah. Is everyone having a great time at the conference so far? All right. Great.

Dave Meyer: So before we go on, I should introduce myself. My name is Dave Meyer. I am the VP of Growth at BiggerPockets. I am also a real estate investor and I’m the one person charged with trying to keep seven people with large egos in check during this podcast. So we’d love to open it up to the audience. So, sir in the aisle here on the right, what is your question for our panel?

Speaker 5: I’m looking to invest some funds I’ve got in IRA and Roth IRA. Are there specific products that work better for b tax-sheltered or tax advantage accounts than others? Anything to avoid or anything that works exceptionally well there? I thought about note investing.

Dave Meyer: Great. J, did you want to take this one?

J Scott: Sure. I’m happy to take it. I’m not a tax …

Speaker 5: [inaudible 00:06:03]

J Scott: I’m not a tax professional. I’m not a legal professional. I’ll start with that, so don’t rely on anything I say. But the nice thing about a Roth or traditional IRA is it’s either tax deferred or tax free or pre taxed. So essentially, the first recommendation is focus on any investments that would otherwise have a high tax burden. So you don’t want to take investments that are already taxed-advantaged like rental properties. Rental properties are typically going to pay low tax. And I’m not saying don’t do those in your IRA, but don’t necessarily make those your first choice because the benefit of a tax-free or a tax-deferred retirement is that you’re not paying taxes. So focus on those investments that you’d otherwise pay ordinary income taxes, higher income taxes. So things like lending, things like notes, flips in some cases. There are obviously rules around doing room flips, you want to be careful there. But first thing’s first, focus on those things that would otherwise have a high tax burden.

J Scott: Next, because of the rules around IRAs, you can’t be overly involved. You can have certain involvement in your investments, but you can’t have day-to-day, active involvement in your investments. So typically what I tell people is focus on those types of investments that don’t require you to have day-to-day, active involvement. Something like a flip. There are ways to do flips out of an IRA, but you put yourself at risk if you find yourself managing contractors or buying materials. So it’s a lot easier to get in trouble when you’re doing active investments out of an IRA. So I typically recommend, focus on those investments that are passive or more passive. So notes are a great investment out of an IRA. Lending is a great investment. I do all of my lending out of my IRA. So those are the two big things I would say; passive and high-taxed or otherwise high-taxed.

Dave Meyer: Great. Awesome. So in addition to the people who are lining up … and thank you, we’ll get to all your questions … we did have a survey where we asked all of the attendees to submit some questions. So I have some up here that will also be interjecting. And the first one here, we’ll go with you, David, is how does being a realtor help you as a real estate investor? How do you deal with the balance between the two professions?

David Greene: Well, I'm in kind of a unique situation in the sense that I'm a realtor, but I don't do much investing in my own market. So most people think about getting their license because they think it's going to help them find deals where they live, and it's probably not going to do that nearly as much as what you would think. Access to the MLS is something a buyer's agent can give you very, very easily. I mean, it's almost like just … It's as easy as could be. You don't need your license to be able to get into that. Being a realtor can hurt you, in a sense, when you go after a deal because you have to disclose to the person you're buying the house that you are doing this with the intention of making a profit. And you could set yourself up to get in a lot of trouble because if they're looking at you as a fiduciary that's telling them this is what their house is worth and you're trying to get it for the best price that you possibly can, there's a big conflict of interest and, as a licensed agent, you're not supposed to do that.

David Greene: So in a lot of ways, if you're trying to invest in your own market, having a license is a bad idea. What I tell people is that you shouldn't be an agent unless you want to learn the job of being an agent. If you want to commit to that craft and mastering that craft and representing people, then you should go for it. Now, I love doing that because I love real estate, so why wouldn't I want to go be a real estate agent? I like looking about it, I like talking about it, it's kind of my whole life in a lot of ways. So of course, I do it.

David Greene: It does help me when I invest in other markets because I understand the language of real estate. I know how to talk to other real estate agents and I know what motivates them. I know what they care about. When that agent isn't getting me what I need, I know that I can say, "Well, why don't you let me talk to your broker and I can ask questions of that person," who's going to go tell the agent, "This is what you have to do." I recognize when an agent's good faster than some of you might because I work in that industry all the time and I know what questions they should be answering. I know what they should be giving me and I know, when they're pushing back, that's a good sign. If that agent's just saying, "Yes, yes, yes," to everything I ask, they're telling me yes, but they're doing no. They're not doing anything. If they're pushing back and they're saying, "No, that's just not something I'm going to do," I recognize that that's a really good agent.

David Greene: If you love real estate and you don't love your job, you should honestly look at if being a real estate agent is the best move for you. You might like it a lot more than what you do. It puts you around real estate. You will learn more by proxy just because you're around it. And the stuff that you're studying will actually help you to make money. You could make good money as a real estate agent if you're good. And if you guys are here … You've flown from all across the country to come learn about real estate. There's probably a very good chance that you like it just as much as I do. Putting that passion of play in your job is an awesome feeling. You'll enjoy going to work every day. But it works better to take your investing knowledge and make money as a real estate agent than it does to take your real estate agent knowledge and try to apply that to investing.

Dave Meyer: Awesome. Great.

J Scott: Can I also throw in [crosstalk 00:10:59].

Dave Meyer: Yeah, you can leave now.

J Scott: I want to throw out one more thing. For anybody here that might be interested in growing a real estate sales team, David Greene, he doesn’t talk about this whole lot but has a tremendously successful real estate sales team in Northern California under Keller Williams. He was on an episode … I don’t remember, it might’ve been episode 15 or 16 of the business podcast, so just to plug it. But seriously, he talks in detail about how and what it takes to grow a tremendously successful real estate sales career and sales team. So if you’re interested in that, definitely check out David’s episode on the business podcast.

Dave Meyer: Awesome. Great. All right.

David Greene: That’s very smooth, J, that you gave me a compliment that got people to tune in to your podcast.

J Scott: That’s what we’re here for.

David Greene: Nicely done.

J Scott: [inaudible 00:11:45]

Dave Meyer: Well done, J. Awesome. Sir, in the back there.

Steve: Thanks. Steve [inaudible 00:11:51]from Fargo, North Dakota. First of all, thank you all so much. I’ve read your stuff, I’ve listened to the podcasts, plural, creepy amounts. So thanks. I’m giddy to what [inaudible 00:12:03]turn this question into an analogy, just giddy. But this one’s maybe a little nitty gritty. I know everybody’s got different experiences. I’m in Fargo, North Dakota. I’m a multi-family guy. Love the market. Things are going awesome. But we have kind of an interesting problem where we had an overbill … lot of permits granted in the last couple of years in mainly A-class, really, really nice apartments, which is awesome. So we’ve got this great new availability of these wonderful apartments in Fargo. They have pretty significant vacancy right now, as that market adjusts.

Steve: And so overall market vacancy is between 8 and 11%. We, in the B and C classes, get compressed, of course, right? As the A people move down. Things that I have done to stand out … places that should have a laminate countertop, we put in butcher block. Tile bath surrounds at a normal 85 or less, that kind of stuff. And then catering to to pets. So putting a fence up and now we have a dog run. And so some lower-cost amenities and some things that make sense.

Steve: Any other suggestions in a market that has maybe slightly than higher normal vacancy? All the metrics are awesome. It’s going to balance out in time. To stand out, to have your vacancy much lower than the average, any strong suggestions in that way?

Dave Meyer: Brandon, do you want to take that one?

Brandon Turner: Sure. My thought goes to 95% of all landlords are absolute horrible at marketing. I’m a marketing guy, so that’s where I approach it from is, I’m just going to do a better job than everybody else marketing. If you listen to the podcast or webinars, everything is a funnel to me, everything. So if there are a million tenants in your area, how many know about you? How many are calling you? How many are signing an application? How many are moving in? So I would personally approach it from a marketing standpoint. Everything else, I would say is … The line I say often times is, “Even C-class tenants watch Chip and Joanna Gaines.” So they love the butcher block counters and stuff. So as long as you’re competing in that area, then it just comes down to a marketing thing for me. Anybody else want to jump in on that?

J Scott: I’ll throw out one thing. So I had lunch today with Chris Clothier from Memphis Invest. And for those that don’t know Chris’ business, they are a turnkey company and they do management. They manage the properties that they sell. They have 6,000 properties under management in the southeast. And I asked him what his typical turnover was. It’s not multi-family, they’re all single family, and they’re probably not A class. But I asked him what his turnover was and he said, in a typical year, their turnover is 18%. So for those that aren’t familiar, typical turnover is a tenant about every 22 months or about 45%. So the fact that he has such low turnover, my obvious next question was, “What are you doing differently?”

J Scott: And he basically attributed it to two things. One, properties were nicely renovated. So he renovated properties before he put tenants in. So tenants walked in, their first impression was good and they didn’t have a lot of maintenance issues that wanted to keep them around. But he said the big one was simply good tenant-landlord relationship. He said, “Good customer service is the differentiator.” Landlording is a commodity. Property management is a commodity business and if you can differentiate yourself with amazing customer service, your tenants are going to stay because they know that most landlords aren’t going to do that. So I’m not saying it would necessarily work in your business or make a difference, but …

Steve: Yeah, that’s great. Yes.

J Scott: For someone that has 6,000 units under management and 18% turnover, he’s somebody worth listening to.

Steve: Awesome. Thanks.

Josh Dorkin: And I’m going to piggyback on what J just said. One of the reasons that people in this industry get a bad name is because we don’t provide that service. The folks who stand out are the folks who are taking care of their tenants. They’re doing good flips. They’re not putting lipstick on a pig. They’re not just slapping stuff around. This industry, you need to have pride. You walk out. We all look good, right? You guys are all dressed nice and everything else, but you may have a property and let it run like crap, right? Because it’s cheaper or it’s easier. But that’s not going to help you grow. That’s why one of the big things at BiggerPockets that we’ve always emphasized was be good to each other, be good to the community, take care of one another and take care of your clients.

Josh Dorkin: So if you start doing that and you start talking to other folks out there, you’re going to notice other people don’t care. They really don’t. So if you guys commit to that and you say, “Hey, listen. I’m going to be the best. I’m going to communicate with them, give them multiple ways to communicate, whether it’s text,” whatever it is. Right? Create forms, create platforms and ways for your people to complain and then actually deal with those. Don’t just pass it aside. This stuff is really, really important. It’s really, really not difficult, but it is the difference between that low and high turnover and it’s also a difference in a good and a bad reputation. And I think some of the best landlords that I happen to know are the ones who’ve grown their business through word of mouth. “Hey, listen. I’ve got this building. We just got a new property. I know that this person wants to move up from the C to the B and I’ve got the C and I’m about to pick up the B.” I have that relationship with my tenant, I can move him up. Right? You’re not going to have that vacancy over there in that B. You may have it in the C, which is probably a little better than having it in the B.

Josh Dorkin: Anyway, point being, I think it was a good point, J. And yeah, be there for your folks.

David Greene: Did you still want an analogy?

Steve: Absolutely. Yes, please.

Josh Dorkin: I think Mindy wanted to jump in, as well.

Steve: Can it be involved in your falling down?

David Greene: I’m going to let Mindy go first. I’ll follow.

Mindy Jensen: I want to jump in really quick. I’m surprised nobody’s said short-term rentals. What is the short-term rental market? I’m not familiar with Fargo, but there’s short term and there’s longer short term. So traveling nurses. They have oil and gas up there, right?

Steve: We do. Yep.

Mindy Jensen: So the workers that are there, if you can provide furnished rentals for short or slightly longer term like corporate housing. That also could be a viable option.

Steve: Yeah, that’s a great suggestion. And it works really well for us in the winter. We do use that [inaudible 00:18:21]. So yeah, excellent suggestion. Thanks.

Dave Meyer: All right. Great.

David Greene: So you’ve got a B-class, C-class unit and you’re worried about losing your tenants to A class. Right?

Steve: Yes.

David Greene: You’ve got to think that you’ve got a girlfriend and you’re cool, but he’s got a six pack, he’s got a Ferrari, he’s got a jaw like a Greek God and you’re cool.

Steve: Are you describing me?

David Greene: You’re a loser if you don’t take extra good care of her. That’s what everybody’s telling you. You better be buying flowers, you better be telling her how you feel, you better be writing love letters. If you put more effort into it, you can keep that tenant, but you’re not the Italian stuntman with the Ferrari and the six pack who’s just going to show up and wave a shiny object. Right?

Steve: You nailed it. That’s perfect. I thought under all that pressure, you might not live up to the expectation, but you crushed that one.

David Greene: I know. It is a lot of pressure.

Dave Meyer: All right, sir. Over here on the right.

Eric: Eric Delaney. Lincoln, Nebraska. I want to house hack and preferably BRRRR for myself and my kids. Why is that funny? For myself and my kids to get foothold, right? So I’ve got a partner. We’ve got a little bit of money in a couple different sources so, in order to do that, we’ve got to go a little bit higher in the market and cobble together our finances to buy that piece. Right? But in our market, the best way to find something like that so far, to me, has been on the MLS. So there, and in our market again, those sellers are asking for preapproval immediately. You’ve got to have that, you’re not even in the game. Right? So cobbling together finances like that or funding like that becomes tricky when I’m trying to do that. So what I’m looking for is a strategy, ethically, to have that piece of paper or some kind of evidence going in the door on my first offer. I can say, “Hey, look. I’ve got it. Here’s my offer.”

David Greene: Did you talk to a lender about getting a preapproval?

Eric: Yes, yes. Right. But that’s the thing. Our resources don’t revolve around a traditional, conventional …

David Greene: So you can’t get preapproved, is that you’re saying. Right?

Eric: Not for the number that we need. No.

David Greene: Okay. Can you get a hard money lender to give you a preapproval and buy it that way? And then refinance it into the traditional one later?

Eric: Part of it. That’s what I mean. So it’s like I’d have to get …

David Greene: So think of it from the seller's perspective. They don't really care where the money comes from, they just want to know you have the money. If you have the cash, that's fine. If you can get proof of funds from some friends and note saying, "We'll let him borrow the money," that's fine. If it's a hard money lender, if it's a traditional financing, they just want to know that you have the ability to close. But you want to know that I can get into the cheapest interest rate that I possibly can. So what I tell people when they're in that kind of a situation is don't try to hit a home run on every pitch. You don't have to get … I just did it again, didn't I? Sorry.

David Greene: You don’t have to get the perfect financing for you and the perfect situation for this seller all wrapped up in the same move. Break it into small pieces. Get them the assurance that they need so that they know you can close on the deal. You close on the deal. Then at the same time, you’re working with the lender to figure out, what do you need from me so that I can get this interest rate? And break that into three or four smaller steps.

Eric: Right on. Thanks.

J Scott: How confident are you that you’re going to close on that deal? Any particular deal.

Eric: On any deal? I’m confused.

J Scott: So you make an offer to a seller, the seller accepts, it’s a financed offer. How confident are you that you’ll come up with the money?

Eric: Absolutely, totally confident.

J Scott: Okay.

Eric: It’s not a question.

J Scott: Then put down as big of a nonrefundable earnest money deposit as possible and the seller is going to think, “Okay, I hope he walks. I’ll take the 20K and go find another buyer.” So put down a big enough [inaudible 00:22:17]deposit that their hoping that you don’t follow through, and they’ll accept that offer in a heartbeat.

Eric: Got you. Thanks.

Dave Meyer: Awesome. All right. So Scott, I have a question for you. You are a famously frugal person. Are you not?

Scott Trench: I hope that’s not … yes.

Dave Meyer: All right. So we have a question from the audience here. If you had to spend $10,000 on yourself and you weren’t allowed to invest it, what would you spend it on?

Scott Trench: All right. First, the grocery bill. Lots of food. Nice and healthy food. I’m a huge nut for that. Second, if there’s one thing that you know about somebody who does CrossFit is that they will tell you that they do CrossFit. So I would spend it on my CrossFit membership that I’m working on there. And then I’d put probably the rest towards … I’m getting married next year, so the wedding. That’s probably …

Dave Meyer: I think, even when forced to splurge on yourself, you do the healthiest, most positive thing that you could possibly do.

Scott Trench: On my Audible membership. Yeah. The entire collective works of BiggerPockets.

Dave Meyer: Just try and learn as much as you can. Awesome. All right, Carol. I have a question for you.

Carol Scott: Oh, boy.

Dave Meyer: So if you could start over in investing, what would you wish you knew at the beginning that you know now?

J Scott: Different husband.

Carol Scott: Oh, my gosh. Don’t say that out loud. Wow. What would we do different in the beginning? I’ll tell you what. We’ve talked a lot about this in a lot of the different sessions and Brandon talked about it this morning, the whole concept of just … because J and I have worked together since the very beginning. And in the very beginning, I knew absolutely nothing about any of this. He knew absolutely nothing about any of this. But we were both convinced we knew absolutely everything about everything. So we decided that we were both going to just run the show and we fought like crazy. I’m just going to throw it out there. We had a tough couple of years.

Carol Scott: So I wish, in the very beginning, that we would’ve understood this whole concept of not only in real estate investing, but in any business, of really figuring out what it is that I really, really like to do and I’m really, really good at doing, and what he likes to do and he’s really, really good at doing. And then taking that a step further and actually just let him do what he’s good at doing instead of me deciding that I was really better at it than he was. So for me, the biggest thing that would’ve made all the difference would’ve been just to trust each other in the specific roles that we had.

Carol Scott: One other thing that I think was specific to our situation, it’s a hindsight is 20/20 type of thing. Like many, I think it took us awhile to get started and we fell into this whole situation in Atlanta in 2008. And we basically walked right into a goldmine and did not realize it. So what I wish we would have done differently is purchase every single house that was available out there and not sold them for a really long time.

Carol Scott: And how that translates to right now is, when you’re on your investing journey, yes, you run the numbers. Yes, you analyze and come up with exit strategy after exit strategy to make sure it’s a safe investment. But also, trust your gut. Go with what you know is going to work. Trust in yourself and know that these risks are worth it, and ask yourself, what’s the absolute worst scenario that could happen? So you lose some money. You know what? It’s not the end of the world. Worst case, you go back and get a regular job. Right? Your health is all that matters. Your health, your family, having financial freedom, and having the ability to do what you want with your time. So go with your heart, go with your gut, and not just with the numbers.

Dave Meyer: Nice. That’s great. Josh, I’m curious if you have anything to add sort of from an entrepreneurial perspective. What do you wish you knew at the beginning of starting BiggerPockets that you know now?

Josh Dorkin: Ooh, that’s a good one. I think Carol picked out a really good point about trusting your gut. I’m going to talk about this tomorrow. I definitely would’ve hired my first employee way, way, way sooner than eight years in. But truthfully, there were a lot of reasons that I waited for that amount of time and a lot of it had to do with confidence. I didn’t want to take out debt to build my business and I couldn’t afford Brandon Turner. I mean, look at him. But that was one of the big things, was hire more quickly, grow it more quickly, have more confidence in what I was building. The fear stuff is a really big run in. And I think, over the years, the thousands and thousands of people I’ve spoken to in BiggerPockets community, fear is the thing that stops everybody. And that fear is not only stopping somebody from getting started, it’s also stopping the next person from scaling and it’s stopping the person from scaling, who suddenly is facing objections because the market is shifting, from actually shifting their business as well.

Josh Dorkin: And so as Carol said, one of the biggest things, I think, really would be to do that. To trust your gut. That knowledge, you’re never going to know everything. You look at these people on the stage here and you think, “Hey, these guys know everything.” I’m sorry, we’re all still learning. And if anyone ever tells you that they know everything, run, because they don’t know what they’re talking about and they’re full of shit.

Josh Dorkin: So I think that would be some of the trinkets of advice I’ve got.

Dave Meyer: Awesome. Mindy knows everything, though. She does. Before we get back to the audience questions, J, you said that you and Brandon had prepared an interpretive dance for us, when we were getting ready. Now’s a good time?

J Scott: That’s just for the VIPs. We’ll do that …

Dave Meyer: Oh, okay.

J Scott: … later.

Dave Meyer: After the cocktail party?

J Scott: Private session.

Dave Meyer: Okay, great.

Brandon Turner: We were going to do it over on Little Beach.

Dave Meyer: Okay. All right. Yeah. Check in with them at the cocktail party about that. All right. So let’s get back to some of the audience questions. Sir, over here.

Speaker 13: Thanks again for this conference. This is Kyle Mast, CFP and real estate investor from Oregon. I’m going to go to the next generation here and anyone can take this. What is the most important thing that you will teach your children, or have taught your children, or wish you would’ve taught your children about real estate investing? I have a two-year-old son. Very selfish question.

Dave Meyer: Go for it.

Josh Dorkin: I’m going to take it and then I’m going to hand it over. So honestly, I think the best advice is not necessarily one that I would teach my child, but it’s advice that I would take for those people who are about to have a child. And this is where I hand it over to Brandon who, at the birth of his child, acquires a property in their name. Why don’t you explain kind of your strategy?

Brandon Turner: Yeah. A lot of you know this already but, when Rosie was born, I bought her a fourplex the week she was born. It’s in my name, I get the cashflow from it, but we put it on an 18-year mortgage. So in 18 years, it’s paid off to zero and it would be worth $300,000 to $4000,000 at that time. That funds her whole college. But more importantly, to answer your question, is from the … She already knows. Every time we’re visiting the area now, because we moved, but when we’re down in that area, I take her by it and I say, “This is your property and this is yours.” And then when she’s probably five years old, she’s going to start seeing, this is the money that came in, this is how much money went out. And then when she’s a little older, I’m going to teach her, this is all of the expenses and all the income. And by the time she’s in college … I hope she doesn’t go to college, but I hope that will be the lesson that she’s taught over 18 years. And a little boy who’s born December 7th-ish, I will do the same thing for him. He’ll get a property, as well, and …

Brandon Turner: What’s cool about the strategy is, no matter what, you can just pretty much buy any property anywhere in the country. It doesn’t even technically have to cashflow. Just put it on a 15-year mortgage and your tenants will pay for your kids’ college education. So anyway, it’s not about the college education. It’s about that lesson. And I’ll follow up on one more second thing, is when Rosie is 11 years old and my little boy is nine or eight or whatever the math is, I’m not good at math, but however that works …

Dave Meyer: Don’t tell people that. That’s why I use the BiggerPockets rental property calculator.

Brandon Turner: And if you sign up today, I’ll give you a discount. No. So when their friends wonder why their dad can’t go on the field trip with them and when their friends wonder why there dad isn’t at the ballgame and Rosie starts to wonder, “Why is dad always at my stuff?” in a good way, that is the impact I want to make because we can’t teach somebody that. You can’t tell somebody that, but that’s something that they’ll just know, that there’s something different.

Carol Scott: I want to add to that, Brandon. It’s exactly what you said. Because J and I, we do this full time now and our boys are 15 months apart, eight, and one just turned ten. And in addition to it just being something that they know, we make sure that we remind them all the time. We talk about it. We’re like, “We’re here. Yep. Get used to it, because we’re going to be at every little last thing. And why is that? Because we don’t spend all of our money. We invest our money and we put it towards other things.” And so they get that on a daily basis.

Carol Scott: The other thing that we tell our boys constantly, and I was having this conversation with Shannon at lunch today, is that they are living in such an amazing time. With all of this technology that’s available out there, anything you could ever possibly want to learn to do, any person that you could ever want to mentor you or anyone you want to connect with, learn from, is available at your fingertips. Right? So we remind them every single day, you want to learn how to do origami. Great. Go online and figure it out. Oh, and while you’re doing that, why don’t you start making them into Christmas ornaments and selling them? So just continuously letting them realize they’re just growing up in such an amazing time where the world truly is at their fingertips and they can do whatever the heck they want to do with hard work and if they make some sacrifices. They don’t have to have these amazing video games and clothes and all of those things, that there are so many better ways to invest your money. We have been telling them that since they were babies.

J Scott: And just to add to that, I know Carol and I kind of grew up in similar situations. Our families had very little money. Our families didn’t talk about money. I never knew how much money my family made. I didn’t know where it went. I didn’t know how much things cost. I didn’t know how to balance a checkbook when I got out of high school. And we’ve always vowed that, with our kids, we’re not going to make that same mistake. And money is not a taboo subject in our house. Our kids know how much money we make, they know how much we spend, they know how much things cost. And we’re very purposeful about communicating that and letting them know they can ask those questions. Everything we do, we try to bring back to the real world. And our kids, like Carol said, are eight and nine … I guess, eight and ten now. And a lot of people look at our kids and go, “Oh, they’re too young to really understand investing,” but they’re not. They can start to learn simple concepts.

J Scott: So a couple of the things we do is, a couple years ago, I started borrowing money from my kids. So my kids wold get money for birthdays or holidays or something like that and they always know they take some of that money and they donate it. They take some of that money and they put it in the bank. They take some of that money and they spend it. And what we talked about was, that money you’re going to take and put in the bank, how about this? Why don’t you lend it to mom and dad? Mom and dad will pay you interest. And not just are we going to pay you interest, but we’re going to do this the correct way. We’re going to write up what you call a promissory note. It’s going to say, “Chase,” my son, “is lending dad this much money for this amount of time at this interest rate, with payments paid at this scheduled time,” and very large interest payments. Generally, it’s 100% interest every other month.

J Scott: Because let’s be realistic. As adults, how exciting is it to get a $5 check or a $5 interest payment on your savings account every month? Even if it’s 10% interest, if you only have $1,000 in there and you’re only making $50 a month, it’s not exciting. And so for kids, you have to add that excitement. It has to feel like it’s adding up. So you give them high interest rates, but they actually sign this promissory note. They take this promissory note, they have a little kids’ … it’s like a piggy bank, it’s a safe, and they put the promissory note in there. And it’s their job every month … well, it’s my job every month to pay them. But if I forget to pay them, it’s their job to come tell me, “You owe me money. Oh, and there’s a penalty on there if you’re not paying me by the 5th of every month.” Completely, seriously.

J Scott: And so they’re excited. I’ll sometimes purposely not pay them because they get really excited. You can tell by the third or fourth of the month, they’re like, “Hey, dad. Hey, dad.” And then the fifth of the month, they’re like, “You owe me extra.” And so things like that. Last summer, they did their first lemonade stand. And instead of just giving them money or buying them lemonade, we talked about, “Okay, we need to figure out how much the materials cost and we need to do a cost of goods. And Mom and Dad are going to let you borrow $50. You’re going to buy cups, you’re going to buy lemonade, you’re going to buy the tablecloth and the sign and all of that. And by the way, here’s an IOU. You owe us $50.” They went out, they sold lemonade, they came back in and I said, “Okay, now we’re going to do a profit and loss statement. We’re going to figure out how much money you have in your little box and that’s your income, minus the cost of goods. How much did you spend on lemonade and all this? What were your other expenses and then your bottom line? That’s how much money you made.”

J Scott: And every day that they go out and do a lemonade stand, they come in and they do a profit and loss statement. And it’s obviously a lot simpler than a profit and loss statement that we do in our business, but it starts to get them thinking about the fact that somebody doesn’t just give you lemonade and you just make money and you keep all the money. That you actually have to spend money in a business to make money. And if you spend too much … My kids asked me a couple years ago, “So, if I want to sell more, why don’t I just lower the price? I can just make it really low and people will buy lots of it.” Well, they don’t understand necessarily, if you make the price too low, you’re going to lose money. And so this actually puts it in terms that they can understand. So start doing those things with yours kids even if they’re really young, even if it’s just on a really small scale. Start doing real world things with them. Talk about money, talk about how much things cost and don’t be scared to have those conversations because my parents were scared to have them with me and it took me a long time to kind of learn all of this and get out of debt.

Mindy Jensen: J, I will lend you money at 100% interest as much as you want.

J Scott: So I make my kids negotiate that interest.

Mindy Jensen: I’ll negotiate.

J Scott: They can also practice the … We talk about negotiation.

Mindy Jensen: 95. 95%.

Brandon Turner: [crosstalk 00:37:24]

J Scott: [crosstalk 00:37:24]

Dave Meyer: Is this a new financial independence strategy where you just teach your kids to work and then you don’t have to anymore? Sounds great. I’m going to follow up on that one.

Mindy Jensen: Okay. So J took most of my answer. Talk to your kids about money, but you ask, “What would I teach them?” I’m trying to impart upon them that they need to become real estate agents at the age of 18.

Dave Meyer: All right. Sir, over here.

Jacob: Hey. I wanted to ask a little bit more of a fun question and give J a plug. Episode 20, David’s episode where he did interview questions and I thought it was awesome. So David, this plays to you a little bit with the analogies. The question is, imagine a world where there’s no humans left and only animals. What animal would you be and why?

Dave Meyer: This is great. This is exactly what kind of question I was hoping people would ask. Please start asking more of these questions. I think we should just go down the line on this one.

Jacob: Jacob from Ann Arbor, Michigan.

Dave Meyer: Scott?

Scott Trench: I’d go with an eagle. Who wouldn’t want to soar on the updrafts and hang around and be above everything else?

Dave Meyer: Go with that.

Mindy Jensen: I don’t have any idea.

Dave Meyer: You don’t have any idea?

Mindy Jensen: Come back to me.

Dave Meyer: All right. We’ll come back to you. Brandon?

Brandon Turner: I want to be a super chicken. There are chickens out there and then there are super chickens, which are the best chickens. I want to be a super chicken.

Dave Meyer: But why?

Brandon Turner: The fluffy …

Mindy Jensen: Like the fluffy ones?

Brandon Turner: They dominate the field, but they also shelter everybody and make sure everyone is protected from the foxes and the eagles.

Josh Dorkin: You’re a warrior ….

Brandon Turner: I’m a warrior chicken.

David Greene: So are we turning into animals? Human beings are not allowed and we can be morphed into what we want to be morphed into? Or are we reborn as an animal? I need more clarity.

Jacob: Yeah, reborn is a good way to put it.

Brandon Turner: Does that matter?

J Scott: He needs backstory. He needs context.

David Greene: I was stalling, honestly. Because this is hard, right? If you give yourself a lame animal, everyone will look at you lame. Like, Brandon just called himself a chicken. A lot of you are going to come talk to me instead of Brandon now because you’re like, “Well, you kind of suck.” But if you go with a cool animal, that’s kind of arrogant and you just kind of made yourself a D-bag. So I really did have to stall and I’m a little too tired to stall any longer.

Brandon Turner: For those of you don’t know, David’s flight was canceled last night or messed up and so he ended up sleeping an hour and then getting here this morning at, like, whatever. So he had an adventure to get here. So you should be a …

David Greene: What’s an animal that sleeps a lot?

Mindy Jensen: A sloth.

Brandon Turner: A sloth is actually really intelligent.

David Greene: I could never pick that animal.

Brandon Turner: Because it can actually swim, which most people don’t know.

David Greene: That’s not me.

Brandon Turner: They can do a lot of different things.

Dave Meyer: It’s a zoologist over here.

David Greene: I think I would be an animal that … I just like to win at everything. I’m really, really competitive. And I’m okay if I’m not the best at first, but I have to end up being the best at the end. So maybe some of the audience could tell me an animal that’s like that, if that makes any sense. It’s almost like …

Dave Meyer: Bear? Lion?

David Greene: Yeah, I would be a lion. I really like taking on new challenges and I’m also kind of lazy at times, like a male. They don’t really do a lot of work. They let the female lions go do all the hunting. I use accountants like Ben to be my lioness to do all the heavy lifting and I just get all the credit. So, yeah. A lion would probably be a good bet.

Josh Dorkin: Wow. How do I …

Dave Meyer: How do you follow that, Josh?

Josh Dorkin: Being 5 foot two and weighing six pounds soaking wet, I want something really big and tall so I can feel what it’s like to be …

Mindy Jensen: Brandon.

Josh Dorkin: Like that. So I’d say giraffe. Yeah. Giraffe.

Dave Meyer: That’s a good one.

J Scott: I’m going to go with a bear. I’m lazy. If I could sleep six months at a time, I would. Knowing there are no predators out there so I can just eat all I want. Yeah. That’s the life.

Dave Meyer: I totally agree with you, J, just for the record.

J Scott: Mm-hmm (affirmative).

Carol Scott: I just want to be a unicorn, because who doesn’t love unicorns?

Dave Meyer: Before you go, what would you be?

Jacob: I knew that was going to be a rhetorical question. Actually, this is an interview question I ask people when I interview for my job. And after getting lots of answers, the one that I reflected most against and I think, “Okay, that’s kind of who I want to be,” and that was an elephant because an elephant is very sturdy, calm, centered, and intelligent.

Dave Meyer: Wow. Hire that man.

David Greene: What are the odds that he just asked that question so he could tell us all he wanted to be an elephant?

Dave Meyer: That’s just like when someone comes up to you and says, “How do you work out? I do CrossFit.”

Jacob: That’s awesome.

Dave Meyer: All right. What’s that?

Josh Dorkin: Mindy!

Dave Meyer: Oh.

Mindy Jensen: I really like anteaters.

Brandon Turner: That’s the weirdest answer.

Mindy Jensen: They’re so beautiful.

Dave Meyer: Why are you whispering?

Mindy Jensen: They’ve got that … I really like anteaters. I’m going to yell that. I’m an anteater! They’re really beautiful and their hair is so … and they’ve got that weird nose. I don’t know. They’re just really cool.

Dave Meyer: That’s not an answer I think anyone was expecting. All right. Do we have another audience question over here?

Daniel: Yes, Daniel Putman from Mountain View, and I’m be a chimpanzee because I like to get in trouble.

Dave Meyer: This is going to be all the conversation at the cocktail party now.

Daniel: I think it’s a requirement now at the mic. So earlier today, Charlie [Arbird 00:47:44] talked about how successful he was at flipping homes and then one day he woke up and he found himself really miserable. And his wife, they weren’t connecting. He had to take a beat and kind of redefine his business and he’s led it into a beautiful life. So I’d love to hear from the panel how they define their business so that they can better define their life.

David Greene: Great question.

Dave Meyer: I didn’t catch the last bit of that. Could you repeat? How you define your business?

Daniel: How you define your business so you can better define your life.

Scott Trench: I think for me, it starts completely with the mission has to align with my personal mission. And then the second piece is, everyone’s got a different personality. Right? We talked about disc profiles earlier today. And one of the other components is the C, which is the consistency. Or, no. The S, which is the steadiness piece. Right? It’s the green bar, if you’re familiar with it. And mine, I have to be doing something different every day. If I’m doing the same thing day after day, I get bored immediately and I’m no longer good at it. So that part of the business, one of the things that gets me going every day at BiggerPockets, is there’s always a new challenge to solve, a new skill set that needs to be applied, a new book that needs to be read, a new concept, a new mental model I need to unpack. And so I’m happiest doing that and having a clear plan to grow and move forward and accelerate.

Scott Trench: So for me, the work that I find myself going into is something that fulfills me in that capacity, where I’m able to go apply my skills in that fashion.

Mindy Jensen: So my investing business is live-in flipping and I do that because I’m cheap and I don’t want to pay taxes, and that allow me to pay no taxes.

Daniel: So what’s driving you? So more of the mission is what I’m looking for. What is that key component that drives you to make sure that your business is working well so it’s not taking over your life? So at the end of the day when you kick your feet up, you’re content and you’re loving the person sitting next to you.

Mindy Jensen: My business kind of takes over my life, because I live in my construction zone. Maybe I’m doing it wrong.

Scott Trench: On that, people assume that I’m the busiest person of all time, which I think is funny because every day, I’ll finish up work around 6, 6:30 and then I go home and I don’t touch any of it for the rest of the night. I almost never touch it on the weekends. I’m available if something’s needed, but there’s a time and place for business. I do it there and then I do not bring it home, which is very anti-millennial of me, I know, but that’s how I like to go about things. And for me, that keeps me sane and consistent and I’ve been able to continually apply myself to my work for the last five years straight without getting bored at all because I have that complete separation there. So I think that’s a sustainability and you can get that or not have that, no matter how big or small your business is, in my opinion.

Dave Meyer: All right, great. Sir, over here on the left.

Speaker 17: So my name is David. I'm from Los Angeles. And first of all, I'd like to commend you for being leaders and educators in real estate investment and financial literacy. So my question is, and you guys speak to this on the money podcast, the rising cost of education and the national student debt crisis. I'm just wondering with these students, these young, impressionable kids taking out more debt for education, how is that going to eventually impact the real estate industry? Because they can barely afford the loan payments as it is right now.

Scott Trench: So I’ve actually got an opinion on this one.

Dave Meyer: What?!

Scott Trench: Yeah, I've got a big, strong one. And I've been meaning to make this a weekend project, one of these weekends. But at some point, I want to model that. What's the value add for a college education against the median college graduate versus the median non-college graduate? And what's the cost of that education? And at some point, at some discount rate, that is going to intersect if it hasn't already where there's no value add from the average or median college degree. And at that point, a major shift is going to happen in the economy one way or another, regardless of the politics of the situation with all the student loan debt, because it's not going to be economical anymore. Prices are going to have to come down and demand is going to shift to something else.

Scott Trench: So that’s going to have an interesting ramification of the economy and I have no idea how that’s going to impact everything else. But as far as real estate prices are going, what you’re seeing is a portion of millennials, one in six millennials, has $100,000 saved. The remaining portion are famously bad with money, which I’m sure has been cited over and over again. But that portion is going to really dictate, I think, the house market over the next 20 years. So those are your home buyers. We’re the biggest generation in American history, so I’m not 100% concerned that that will impact your home buyers, but I also think you’re going to see a continuation of this long-term trend of housing shifting to that rental segment. So single-family homes converting into single-family rentals, because the people with more money are going to be able to buy more and more rental properties and outcompete the first-time home buyer. So I don’t know if that’s a helpful …

Speaker 17: Yeah.

Scott Trench: … concept on that.

Josh Dorkin: And that’s already happening. And I’m going to butcher the data, but I just was reading something the other day about how corporate ownership of single-family homes is at all-time highs. And what you’re starting to see is almost like the Europification … Is that a word? I made it up. It’s my first word. The Europification of the US housing stock, which is as Scott said, you’re seeing less and less individual owners and more and more owners of multiple properties. And so across Europe, you’ve got really a rental population. But at the same time that that’s happening, I think to kind of piggyback on the college thing … I’ve got a ten year old turning 11. We’re seven years out and my wife and I constantly talk … I taught high school for awhile. And we talk about education for our kids and college and the value of college. One of the coolest things that I’ve seen through growing my business was that you don’t actually need a college degree to be successful. I’m actually curious. Who here does not have a college degree? That’s a pretty good number. And of those people, I’m going to pledge that you’re probably all fairly successful in your own way, shape, or form.

Josh Dorkin: So more and more, if I ask that question next year, in two year, in five years, those numbers are probably going to go up and there’s reasons for that. The reasons are, if you’re on the engineering side, for example, there’s coding schools if you want to learn how to code. Technical schools that are providing skills that you needed a college degree for before, but you may not need a college degree for now. And so we’re getting to this really funny inflection point where, hey listen, to my kids what I say is, “Work hard, study hard, but when the time comes, if you want to just go for kind of general studies, I’m not going to pay or offer to help to send you to some very expensive school. You can go to a local school until you figure out what you want to do.”

Josh Dorkin: And we’re fortunate enough to not have the debt be as much of an issue, but for the average person, if you go to Harvard, obviously you can study whatever the hell you want and you’re probably going to do pretty well in your life. Right? If you go to the Ivy Leagues; Stanford, MIT … You go to these places, your life is pretty taken care of. But if you go and you study philosophy where I went, Washington University, great school, you’re going to be burdened with a hell of a lot of debt and you’re going to get out of school making $30,000 a year saying, “Why the hell did I do that?”

Josh Dorkin: And then all of a sudden, now how are you going to open a property? How are you going to do this? You’ve got these crazy payments? So that shift, I think, we’re starting to move towards and I think it’s going to accelerate as technology makes it easier and easier to get education in these different areas.

J Scott: So to tackle the question from a slightly different perspective, but to answer the question of what’s going to happen, just something to think about. I don’t obviously know what’s going to happen, but something to think about from an economic perspective. So the economy, as a lot of us know, especially if you’ve read my book, Recession Proof Real Estate Investing, the economy works in cycles. It goes up, goes down, goes up, goes down. One of the main drivers of that going up and going down is debt. And so we often refer to this five, six, seven, eight-year cycle as a business cycle, but we also refer to it as the debt cycle. Because one of the things we see is, as the economy goes up, American both personal and corporate, build debt. And eventually, we get to the inflection point at the top and the market starts to turn and we have a recession and it goes down. And one of the things we tend to see in the recession is we see a deleveraging of that debt. That debt goes away. People, companies file for bankruptcy where they restructure their debt. So that the end of a recession, at the bottom before we start that next expansion, we tend to see a relatively low amount of debt, both personally and corporate. And that’s worked for 160 years.

J Scott: Now the problem we’re seeing today is that, historically, that debt has been revolving debt. It’s been non-government college debt. The interesting thing with college debt is you can’t bankruptcy it away. It doesn’t go away in a bankruptcy. And we had nine trillion dollars in personal debt these days and a very high percentage of that, for the first time, is college debt. So what we’re likely to see is, in the next recession, while a lot of that personal debt goes away, the college debt’s not going to go away. And so what we’re going to see is, we’re going to get the bottom of that recession and debt is going to be disproportionately high compared to previous recessions. And so we’re not going to be able to dig our way out of the recession nearly as well. We’re not going to see that bottom as nicely defined as we typically do.

J Scott: And I think, at that point, the government is going to have to step in and they’re going to have to change something, policy wise. They’re either going to have to say, “We’re going to get rid of some of this debt. We’re going to allow people to restructure this debt. We’re going to allow this debt to be discharged to bankruptcy,” but I think it’s going to actually impact the US economy negatively over the next couple economic cycles if the government doesn’t change policy. Don’t know exactly what they’re going to do, but I think that it’s going to have a big impact and something is going to have to be done.

Speaker 17: Thank you.

Dave Meyer: Awesome. Great. Sir.

Mark: My name’s Mark. I’m from Fort Lauderdale. We’re in real estate in restaurants. And I just want to say one thing to Scott first. Don’t let your future wife listen to this podcast. You chose fruit [inaudible 00:59:04]. You’re going to get a lot of crap when you go home.

Mark: So I have a business that’s about two hours away that I have to visit about once a week. About four or five years ago, I actually changed the payroll day to Thursday so I can coincide it with the podcast. And I’ll tell you, Brandon, you’ve been great and a great inspiration. Now I have to find two more properties that are two hours so I can make sure I listen to the money show and the business podcast. But the question really is for Josh. You guys have kind of become our extended family, knowing you and listening to you for so long, how is your daughter?

Josh Dorkin: Thank you for asking. She’s doing well and I’m actually going to … tomorrow, Mike, you’ll learn more.

Mark: Okay. Great. Thanks.

Josh Dorkin: I appreciate you asking.

Dave Meyer: Additionally, Josh, would you rather fight a thousand horse-sized ducks … Did I screw it up? This was submitted. Would you rather fight one horse-sized duck or a hundred duck-sized horses.

Josh Dorkin: Could I be a super chicken?

Dave Meyer: Yes.

Josh Dorkin: A thousand duck-sized horses.

Dave Meyer: Yes, excellent. All right. Over here on the left, please.

Cameron: Hi. I’m Cameron O’Connor out of Indianapolis, Indiana. I’m 25 years old, currently house hacking. Just quit my job last week and wanted to ask you guys, what would be the single most valuable tool or method or something that you did or wish you would’ve taken advantage of to springboard yourself to financially being free?

David Greene: So for me, when I was 25 and I quit my job and joined a startup called BiggerPockets. So at point, what I would say is, one, you’ve got to find great mentors. I had Josh, Brandon, some of the other folks on this stage here to learn from. Two, it was kind of a relentless obsession, almost, with self education. I think I read 50 books a year on various topics and I was constantly getting continual intense pressure from these two to learn Conversion, Excel, and all the other online tools and things that we need to learn. And then the third was the accumulation of capital that I could readily access. So the cash in my bank account that I could use … what I ended up using it for was house hack. But regardless of that, some opportunity that I could take advantage of that I have complete control over. So those would be my three.

Carol Scott: I’d like to add one to that. First of all, congratulations on leaving your job. That is absolutely phenomenal. I’m so happy for you. I would recommend you network your butt off and specifically seek out other people who are already financially independent. Because you’re in this unique situation right now where a lot of people, frankly, that are outside of these circles, people who are not financially independent, they are not going to have any idea what you’re talking about. They’re going to think you’re kind of crazy. They’re going to be like, “Oh, good luck with all that.” It’s just people, if they’re not like-minded, they’re just going to question every decision and you’re going to start questioning yourself. So I would recommend … a big action item to do as soon as possible as to leverage these relationships in here. Find other people in your local community who have similar values and mindsets and views on money and financial independence that you do.

J Scott: I would also say part of being an entrepreneur, part of being self-employed, it’s a rollercoaster. You’re going to have good days, you’re going to have bad days, and you have to kind of take a perspective above the day to day and you have to realize that, every day, you just need to move forward. And no matter what happens, there are going to be days you want to quit, there are going to be days you don’t feel like getting out of bed. Get out of bed, take one step forward. Take two steps forward. Every day, keeping moving forward and if you ever question, say, “I’ll have that question tomorrow.” If you don’t think you can do it, if you say, “Yeah, this isn’t working,” put that off for a day or two. Just say, “For the next two days, I’m just going to keep moving forward and I’ll think about all the things that are going wrong in two or three days,” and just keep moving forward because, in two or three days, your perspective is going to change and things are going to get better. And so you’ve just got to fight through the bad and the good will come. Don’t give up.

Mindy Jensen: Create an LLC and then open up a self-directed solo 401K.

Dave Meyer: That’s a good point, J, about having bad days. I’m curious if you guys have any opinions on … What part of being an investor is the hardest for you? Brandon? David?

David Greene: As an investor, you are an entrepreneur. You’re acting in that capacity, at least, even if you have another job, your investing world, you’re an entrepreneur because you don’t have a boss telling you what to go do. And I think there’s two huge struggles that I found when I got out of being a cop and I got into being an entrepreneur, a business owner, a full-time investor, whatever. The first is that I was not prepared for what J said very articulately, and I will say very crassly, is entrepreneurial bipolarism. You are going to go from, “I am a lion and I can take on anything I want,” to, “I am a loser and I don’t want anyone to see me,” every single week. It’s insane how your highs and lows make no sense and you go through this. And you’ll just think something’s wrong with you and, I’m telling you, that is a part of the process. Every entrepreneur feels that. I guarantee you, I’ve never talked to Josh, but he will tell you, there’s times he thought BiggerPockets could take over the world, there’s times he thought, “I don’t even want anyone to know that I made this website because it sucks that bad.” And the truth is somewhere in the middle. Right?

David Greene: And the second piece that nobody told me was that we often look at a boss as a bad thing. A job is a bad thing. Structure is what we have to free ourselves from, that is the enemy. And we don’t realize that, often times, we operate our best within structure. The very best athletes have coaches. The Nay SEALs have a very tight system where they have to be in a certain place at a certain time and tons of training. And the people who operate the best do it under discipline and structure. And when you lose that, it’s very easy to start slacking off and not recognize when you’re slacking off.

David Greene: So the advice that I would give you, as an entrepreneur, is to focus on what we call KPIs. It’s a key performance indicator. What thing in your job, whatever it is, is the thing that will actually directly result to you generating income? You can spend eight hours in an office answering emails, designing a logo, creating a system, creating a spreadsheet, filling in boxes, and you will go home and you will have done zero work. You didn’t do anything that moved you closer to your goal. You have to figure out, however it is you make money, what is the things that will actually result in making money?

David Greene: So for me, as a real estate agent, it is obvious, it is just talking to people. If I just talk to people and say, "Hey, let me know when someone wants to buy or sell a house," I made money, but just I haven't got it yet. Right? Putting a listing in the MLS, taking the pictures, getting a form signed, that does nothing to make me money. That's just recognizing money that I've already made. So if you're an investor, it's going to be telling everyone you know, "Will you tell me when someone has a distressed property? Will you keep me in mind when you hear about somebody who has a house that they might not flip?" How many wholesalers did I talk to today and ask them, "What do I need to do to jump to the top of your list?" How many contractors did I talk to and say, "Hey, when you come across a house that's in really bad shape and you can't get the deal, bring it to me." If you let yourself slip away from KPIs and get caught up in all the other things in the business, you will look back over three months and say, "Where's all that money that I thought I was going to be making?" It is so easy to do it when you don't have a boss and you don't have built-in accountability.

J Scott: I have a question. How much money do you want to make this next year? Throw out a number.

Cameron: $50,000.

J Scott: $50,000. Okay. To make $50,000 next year, if you’re working full time, you need to make how much an hour? $25 an hour or so? If you work full time, you’re working about 2,000 hours a year. To make $50,000, you need to make $25 an hour. If you want to make $25 an hour, you cannot focus on doing things that generate less than $25 an hour in your job. Which means, if you want to put a listing in the MLS, you can hire somebody to do that for $10 or $12 an hour. That’s not the best use of your time. The best use of your time is the things that are generating you $25 an hour, at least, or $50 an hour, or $100 an hour, or $1,000 and hour. And those things are acquiring new clients if you’re in a service business, acquiring new properties if you’re looking to buy new properties, finding deals, raising money.

J Scott: Those are the things that are going to generate $25, $50, $100, $500 an hour. So think about that every day. “I need to make $25 an hour. I should not be doing anything right now, myself, that’s generating less than $25 an hour.” Go hire somebody that does the $12 an hour jobs, you make $50 an hour and you’re netting more than $25. So always focus on that $25 number. And when you want to make a half million dollars a year, don’t do anything that’s generating you less than $250 an hour.

Dave Meyer: Awesome. That’s great advice. All right. So we do have about ten minutes left and I know we have two more audience questions here. So, sir, what is your question?

Mitch: Mitch Kline, Evergreen, Colorado. Why all the hate for Dancing With the Stars? No, no. Just kidding. I hear you ask all of your podcast guests, a couple in the Famous Four business book and real estate book, but if you only had the bandwidth to read one book in your entire life, what would you choose? That could be business, real estate, self help, whatever you choose.

Josh Dorkin: I could do this one. It’s pretty easy. By the way, whoever works here, it’s like an icebox up here. If there’s any way to turn the cold down, we’re dying. Dying.

Dave Meyer: does anyone have a sweatshirt for Mindy? She looks really cold.

Josh Dorkin: Seriously, somebody on BP, can we get somebody to turn it down? I see nobody moving. Alex, woo! Yes. Okay. So for me, it’s a book I read in a … It still doesn’t have sleeves! For me, it’s a book I read in a tough time. It’s called The Monk Who Sold His Ferrari. Bit of a cheesy book, but it kind of follows the story of this attorney who is a top performer, he’s killing it, he’s crushing it, he’s driving the Lambo … driving the Ferrari, and … Thank you. Super successful. You shivering? You cold? You sure? Here, you know what? Here.

Josh Dorkin: And he’s going through all this and, all of a sudden, he has this massive heart attack and he collapses. The story continues from the viewpoint of his mentee who has been growing and becoming more and more successful. And he’s now overweight. He’s got all the things of life, the luxuries, but this young man comes into his office and … I’m going to ruin it for you, so you may not want to listen. But this young man comes in and the young man was actually his former mentor and he went off. It’s a fantasy, a fable, but I love these fable stories like Richest Man in Babylon and things like that. And just kind of walks him through all these rituals and different ways to think about how to improve upon his life. And it’s things that we’ve had [inaudible 01:11:36]and other folks really dive into and talk about visioning, meditation, goal setting, things like that that, for me, that book has been fantastic. And if it’s not that book …

Josh Dorkin: By the way, and Brandon can attest to this, I was the biggest, “Those books are all BS.” But as he and I’ve talked a lot over the years about different books and we’ve shared stories and things like that, I have to say that reading, besides being fundamental, reading … and Scott, too, obviously. We all read a lot. A lot. And I’ve noticed that amongst the people that I believe are the most successful people and happiest people that I’ve met. They tend to read and consume books a lot. Anyway, check it out.

Dave Meyer: The correct answer is actually any book by BiggerPockets Publishing.

Carol Scott: That’s what I was going to say. I was going to say that.

Dave Meyer: We’ve done, like, 12 books between the people up here. Anyone else?

J Scott: All the Places You’ll Go.

Mindy Jensen: Dr. Seuss.

Dave Meyer: Awesome. All right.

Scott Trench: [inaudible 01:12:46]How Not to Die.

Josh Dorkin: That’s a great book, yeah.

Dave Meyer: All right. So for our last audience question, ma’am.

Lucia: Hi, Lucia [Russian 01:12:57], realtor in DFW. Has anybody on the panel made an investment with cryptocurrency? And to follow up from that, how do you feel that cryptocurrency will play a role in real estate moving forward?

Dave Meyer: Brandon has a great YouTube video on this, if you haven’t seen it yet.

Brandon Turner: I made a video once called, Bitcoin is a Stupid, Horrible, Terrible Investment. And then, the next day, it crashed. And so you’re welcome. I’m going to let J actually answer that.

J Scott: So I have some investments in some Bitcoin companies, equity investments. Or not Bitcoin, I’m sorry, crypto companies. I’ve also done a bunch of crypto investing. I’m not a huge believer in crypto. I’m a huge believer in blockchain, though. Blockchain is the underlying technology for crypto. It’s kind of like, back in 1999, people saying, “So what do you think about” Or, “What do you think about” There were a lot of websites back then and I couldn’t have said this one was going to do well or this one was going to do poorly, but I think it was safe to say, at that point, that the underlying technology and the internet in general was going to do well. And I think it’s the same with crypto today. Bitcoin might do well, Ethereum might do well, they all might do poorly. A million cryptocurrencies out there, who knows how they’re going to do? But the underlying technology, blockchain, I think is going to be a foundational technology moving forward.

J Scott: In terms of how I think it’s going to affect real estate, I think the biggest way is that there are a number of companies that are focused on technology around fractional ownership. So imagine a situation where you own a Picasso painting and you want to raise some money. You don’t want to sell your Picasso painting for $200 million, but you’d love to raise $10 million. So you want to sell 5% of your Picasso painting. Blockchain, and basically something like cryptocurrency on top of it, could make it easier for you to sell fractional shares or shares of your painting to other people in a way that they can trust that they actually own it, they can sell it, they can trade it, and eventually get paid for it.

J Scott: And blockchain provides the ability to do that. I think we'll see a lot in the real estate and fractional ownership space with blockchain moving forward, where syndicators will be able to use blockchain and that type of technology to raise money. People like you and me will be able to buy a single-family house and say, "Hey, I want to sell 25% of that on the open market to raise some money so I can buy my next house," instead of going to a private lender or portfolio lender or getting a Fannie Mae loan, you may just sell 70% of that in equity or you may use it to get debt. So I think blockchain, and again, separate from cryptocurrency, I think blockchain is going to be foundational in technology and I think it's going to have a big impact on the real estate space. Crypto, in general, I think it's … I don't know.

Scott Trench: Yeah. With cryptocurrency, you’re investing in a store of value, a new currency. We live in the United States of America, and so if you try to pay me in Bitcoin, I can refuse. But I can’t refuse payment in dollars. So why Bitcoin versus Ethereum, versus another currency, or another currency? You’re betting when you buy that that currency is going to be adopted and people are going to accept that as a store value in the future. So to me, that doesn’t … for an investment, for long-term wealth, it’s got to generate cashflow and have a chance at long-term appreciation which, to me, these cryptos don’t offer either. So you have to hope that everybody adopts that currency for it to work out. And even in that case, if it becomes a widely accepted currency at a larger scale, then it becomes more like any other currency, like gold. Right? Gold is not an appreciating asset. Gold is a store value that is kind of used as a hedge against inflation.

Scott Trench: And one of my favorite Warren Buffet quotes is … Do you invest in gold war? And he says, “Well, if you took all the gold in the world, you could pile it up into a cube about 64 feet in length and height,” and all that good stuff, “and that would be worth $7 trillion,” at the time. “Instead, I could buy all the farmland in the United States and Exxon Mobile seven times over. And which is the better way to build wealth long term?” It’s the same thought experiment, I think, extended all the way to cryptocurrency. So for me, if you think it’s going to go up and you want to bet on it, that’s great, but how are you going to retire on Bitcoin? I don’t know.

David Greene: I can give you a good way to look at it that will bring some clarity, if you’d like, of course. During the Gold Rush, the amateur said, “Where am I going to go strike gold? I’m going to go check that load. I’m going to go to that mountain. I’m going to go to that river.” And they spent a lot of money and they invested money into trying to strike it rich. There was no way you could’ve known where the gold was going to be, just like what Scott was saying. Which cryptocurrency is going to be big? You’ll drive yourself mad trying to figure that out and it’s not a KPI. It will make you think that you’re doing some kind of work, but you’re really not getting anywhere. You know who guaranteed to make money during the Gold Rush? The people who sold the materials to the miners or the 49ers. That’s what you want to be a part of and that’s really what J is saying. Whether it was the internet or it was blockchain, it was being a part of the infrastructure. You’re not going to miss if you do that.

David Greene: And one of the reasons that I love real estate is that, for some reason Ethereum or Bitcoin takes off and I couldn’t have known, I don’t care. Pay me my rent in that thing. Right? I win. You guys can try to figure out where the gold’s going to be. You’ve all got to bring it to me at the end of the day and pay me for these supplies.

Dave Meyer: Great analogy to end on.

Lucia: Just piggybacking, just to clarify, people are buying houses using Bitcoin.

Josh Dorkin: But we don’t know … The value of Bitcoin shifts every single day by vast percentages. So if you accept Bitcoin as your form of payment, you’re going to get paid on a million-dollar house and tomorrow that payment is worth $950,000. Right now, it’s a gimmick. If you’re accepting that, until there’s any form of stability in that currency, you’re gambling. And it’s fine, go ahead and gamble, but can you not make as much on that property selling it for cash? So I would just say I think it’s exceptionally risky. You might as well accept rubles or Zimbabwean dollars.

Lucia: Thank you.

Josh Dorkin: Sure.

Dave Meyer: All right. Thank you. We do have one more write-in question and it’s for you, Mindy. You love BiggerPockets, do you not?

Mindy Jensen: I love BiggerPockets.

Dave Meyer: Okay. And you also hate mushrooms, is that true?

Mindy Jensen: More than life itself. No, I love life. I hate mushrooms with the burning passion of ten thousand suns.

Dave Meyer: This question comes all the way from Hillary C. from Denver, Colorado. And she’d like to know, if you were to choose to never go on BiggerPockets every again in your life or eat a mushroom, what would you choose?

Mindy Jensen: Hillary!

Dave Meyer: I think we have a mushroom for you.

Mindy Jensen: First of all, this is a horrible question.

Dave Meyer: We won’t make you answer.

J Scott: Turn to Scott, then you answer.

David Greene: How about this? Do you hate mushrooms more than Josh hates pickles?

Josh Dorkin: I don’t know.

Mindy Jensen: Nobody hates anything more than Josh hates pickles.

Brandon Turner: We’ve got stories. We have lots of stories.

Mindy Jensen: So many stories.

Dave Meyer: All right. Well, thank you guys so much for being here. We really appreciate this. Can we give everyone a round of applause? Awesome. Well, thank you guys for doing this with us. This was a lot of fun. It was our first time doing a live podcast. Hopefully, it went pretty well in all your minds. I had a good time. Just a bit of housekeeping, we do have a cocktail party right after this, sponsored by Memphis Invest. It’s right out of these doors. After that, there is also an after party at Jason Aldean’s downtown. If you guys look in your bags that we gave you, there is an Uber code that you can use to Uber down there. And also put on that yellow BiggerPockets premium wristband. That will get you free drinks at Jason Aldean’s this evening. And then tomorrow morning, we’ll be starting again at 9 a.m. with Josh’s keynote. So make sure to be there, as well.

Outro: (music playing)

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In This Episode We Cover:

  • Should you be an agent or not
  • Countering high turnover
  • Tenant/landlord relationship as a differentiator
  • How would Scott spend $10,000?
  • What Carol and Josh’s would do differently if they start over again
  • How to train your kids to become investors
  • What animals would they be?
  • Aligning your business with your life
  • The most valuable tool for financial freedom
  • Why you want to focus on your KPI
  • Thoughts on cryptocurrency
  • And SO much more!

Links from the Show

Books Mentioned in this Show

Tweetable Topics:

  • “If you commit to caring, you get results.” (Tweet This!)
  • “Fear is the thing that stops everybody.” (Tweet This!)
  • “You spend money to make money.” (Tweet This!)
  • “There’s a time and place for business, and I don’t bring it home.” (Tweet This!)
  • “Just every day keep moving forward.” (Tweet This!)
  • “A job is not a bad thing; structure is the enemy.” (Tweet This!)

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Real strategies that work for real people seeking to build wealth through real estate investments. Co-hosted by Brandon Turner and David Greene, this podcast provides actionable advice from investors and other real estate professionals, who chat about failures, successes, motivations, and lessons learned.