BiggerPockets Podcast 040 with Josh & Brandon Transcript

Link to show: BP Podcast 040: 40 Quick Tips for Buying Your First (or Next) Investment Property

Josh: This is the BiggerPockets Podcast, Show 40.

You’re listening to BiggerPockets Radio. Simplifying real estate for investors large and small. If you’re here looking to learn about real estate investing without all the hype, you’re in the right place.

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Josh: What’s going on everybody? This is Josh Dorkin, host of the BiggerPockets podcast. Here with Brandon Turner, as always, what’s up Brandon?

Brandon: What’s up Josh? Things are good.

Josh: Things are good. I’m doing well. I’m doing well. I know you asked.

Brandon: I always do don’t I? Today is the over the hill podcast though so it’s more important than you or I.

Josh: It is, it is. You know I’m getting close to being over the hill, approaching 40.

Brandon: I’m approaching the hill, but.

Josh: You’re approaching the foothills my friend. You are young guy who’s got a long ways to go.

Brandon: Long ways.

Josh: Yes. Anyway, so this is our 40th episode and you know, we’ve done some amazing shows, man. I mean our first show with Marty Boardman was especially exciting, you know, kicking the thing off. Then we did the Ultimate Beginner’s show which was just you and I. I think our most popular show so far was probably Arthur Garcia’s show about what was it, working a full time job while.

Brandon: I think we’re going to going to actually cover that today as well.

Josh: We are, we are. I think, what Aaron Mazrillo’s was probably the second most popular show.

Brandon: Yes.

Josh: That we’ve done, but yes, you know, we want to thank first of all everybody who’s been a guest on our show so far. We really appreciate the time and energy you guys have put in. We appreciate everybody for listening. The show is going great and you know, we’re continuing to get lots of great ratings, reviews, things like that. On iTunes, if you haven’t done so already, please do jump on iTunes and share your feedback. Do jump on the show notes afterwards at BiggerPockets.com/show40. If you’ve got any questions, comments, thoughts, or anything like that interact with us, but today’s show as you have deduced is a little different because we actually don’t have a guest today. Today instead, we are going to, in honor of this being our 40th show, we’re going to talk about 40.

Brandon: Quick Tips.

Josh: Quick Tips for buying your first or next deal.

Brandon: Don’t worry. We’re not going to be singing Quick Tip.

Josh: Quick Tip.

Brandon: Every time. Don’t worry.

Josh: Nope, no so why don’t we just jump into this because 40 tips is going to take some time so we’re really going to need to speed through it. Since we can’t go into incredible detail, we do really encourage you guys to jump into the comments in the show notes and we’ll be there engaging in those conversations. Also, if you’re an experienced investor, we really want to encourage you to jump into the show notes and leave your own Quick Tips for others as well. This way those listening to the show in the future can got to the show notes and find much more than the 40 tips that we’ve already mentioned.

Brandon: Cool. Alright, well that sounds good. Should we get going?

Josh: Yes, let’s do it, man. Enough chitty chat.

Brandon: Alright, so get your papers and pencils out. Here we go.

Josh: Papers?

Brandon: Paper, pencil, notebooks.

Josh: I think paper is the plural.

Brandon: Keyboard.

Josh: Of paper. Isn’t it?

Brandon: Papers, paper, I don’t know is it?

Josh: Papers refers to like a—no yes, paper is plural of paper.

Brandon: Alright fine, well, thank you for publicly correcting and humiliating me.

Josh: I believe so. It’s okay. That’s what I like to do. It’s fun.

Brandon: Alright, good deal. Alright, let’s start this off. Number one tip is to look at a lot of properties because you don’t actually know how good a deal is until you analyze a whole bunch of them. I mean I’m a firm believer in this that you know the like, look at a hundred offer on ten and buy one rule a lot of people say. I like that rule because, yes, if you don’t look at a whole bunch of properties, you just go and buy the first one you look at, there’s a good chance you’re going to screw something up so yes.

Josh: Yes, yes, and that’ll give you the experience to better understand what the numbers really mean.

Brandon: That is true.

Josh: Yes, yes, for sure. Cool, alright, tip number two, find a good agent. There’s over a million agents in the United States, real estate agents of course, but only a small percentage know anything about real estate investment. That’s no disparagement on the others, but I, you know, most agents don’t go and put in the time to understand real estate investing.

Ideally, it’s good to find somebody who understands how to work with investors and maybe owns some rental property of their own. When you’re hunting for agents, you want to ask them that, find out, hey have you worked with investors? You know, how do you do that? You know, what’s your process?

Do you own your own rental properties? You know, what’s your criteria? Things like that to get a feel for their understanding. Definitely want to look for a good investor friendly agent that said, really quickly, if you know other agents who are not investor friendly yet, but you think would be amazing at it, definitely want to have them check out our agent’s guide, which is this guide that Brandon and I collaborated on. It is the Ultimate Guide for Agents Working With Real Estate Investors, something like that.

Brandon: Yes.

Josh: The title.

Brandon: I guess so. Yes.

Josh: Yes. You can go to that at BiggerPockets.com/AgentGuide. We’ll also have a link in the show notes so that’s tip number two.

Brandon: Alright, quick number—quick tip—quip—I just made up the word quip. Quip number three is to line up your financing early. If you start looking at properties and you can’t actually buy a property, you’re going to be wasting a lot of people’s time including that agent that you just got so this is a thing that I’ve stumbled on several times in my career so definitely get your financing lined up today. Whether it’s, you know, traditional loan, cash, portfolio lender, private money, whatever, just figure it out and do it.

Josh: Nice, nice, alright, tip number four, how to find good lenders. I’ll tell you one way not to do it is just to go posting on the forums that you’re looking for a loan. Don’t post on our forums. Don’t post on Craigslist. Don’t just post it anywhere. Instead, get to know other local investors in your area and find out who they’re using. If you’re looking for hard money of course, be sure to check out the BiggerPockets hard moneylender directory at BiggerPockets.com/HardMoneyLenders for the web’s largest collection of hard moneylenders. I think we now have over 300 lenders there.

Brandon: Woohoo.

Josh: Definitely check that out. If you’re looking for traditional or portfolio loans, on of the best ways to find them is simply by picking up the phone and making a ton of calls. I remember in show number six, BiggerPockets.com/Show6, Arthur Garcia talked about how he found his portfolio lender by picking up the phone book and making a ton of calls. Definitely don’t be afraid to start those lending conversations today even if you aren’t quite ready to go ahead and buy.

Brandon: Yes, I agree. Alright, before we go too far in the show, let’s take a second and let everyone know, this is show 40 again, reminders so if you want to go to the show notes, BiggerPockets.com/show40.

Josh: Nice, nice, and before we go on guys, today’s special not only because we’re celebrating our 40th episode, but also we’re introducing our first sponsor of the show, which is, you know, it’s kind a big deal I think.

Brandon: Yes.

Josh: Now, before you guys start freaking out over having a sponsor, I just want to let you guys all know that the show takes a lot of time and energy which.

Brandon: Yes. It does.

Josh: Yes, as Brandon chuckles in the background over our all the hours he spends editing and scheduling and everything else.

Brandon: Yes.

Josh: I just come here to talk, really. You know.

Brandon: Yes, you do a little bit more than that.

Josh: Okay, alright so you know listen and with the sponsor thing, we’re not going to have sponsors that we don’t know or believe in. You know, our idea is let’s get companies and folks who are part of our community who we trust and who we know and like and who are doing things that we think are good fit for you.

Brandon: Things that will value to the community, so.

Josh: Yes, and bring those guys on board so let me give our first sponsor just a quick shout out for being so awesome and supporting this episode. Chances are you know the company already and you’ve actually seen them interacting on the site on a daily basis on our blog, on the BiggerPockets blog, on the forums. These guys were also sponsors of the BiggerPockets Summit last year so, MemphisInvest.com is a family owned turnkey real estate company with offices in Memphis, Tennessee and Dallas, Texas. They were named small business of the year by the Memphis Business journal and is one of America’s fastest growing companies by Inc Magazine in 2013. If you’re interested in passive investments or even learning how to buy real estate in solid cash flow cities, contact MemphisInvest.com for a free consultation. They have nearly a quarter of a billion dollars in real estate value under management, comprised of 2,000 properties for 800 plus investors. If you guys want to check out more about Memphis Invest go to Blog.MemphisInvest.com/BP.

Brandon: Cool and we actually did interview Chris Clothier here on the show a couple months ago. I think it was episode 26 so it was an awesome episode.

Josh: Yes, yes, definitely and Chris is a good friend of mine as well and we’re—I know I’m kind of honored to have him as a sponsor. This decision didn’t come lightly to bring sponsors on and you know, they’ve been great to work with so.

Brandon: Yes.

Josh: We’ll have a link in the show notes as well and again it’s Blog.MemphisInvest.com/BP.

Brandon: Cool, let’s move on. Alright, tip number five is to learn to do the math right because honestly the math is not very hard, but it does take practice. If you guys know me, you know I’m always harping on this. If you want to see a really detailed analysis of how I analyze a property, I’m going to put a link in the show notes also to a post I wrote called How I Quickly Analyze An Investment Property so again, speaking of math, let’s go to tip number six.

Josh: Tip number six is the BiggerPockets analysis tool. It’s not really a tip, but it’s kind of a feature that.

Brandon: Well, the tip is go there.

Josh: Yes, that is the tip.

Brandon: The tip is go there.

Josh: Yes, go there. Alright, so go check out the BiggerPockets analysis tool. We’ve got a flipping calc out today and the buy and hold calculator is very soon to be on its way for its delivery. Not only do these calculators help you analyze the deal in its entirety, they also try to show you how the numbers were calculated so you can get to it, by going to BiggerPockets.com/calc, but keep in mind anyone who’s a BiggerPockets member can go test things those things out a few times, but if you want to use them on a continual basis and be able to print out PDF reports to give to lenders, partners, or others, you do need to be a pro or pro basic member. You can upgrade to those accounts, at BiggerPockets.com/Pro.

Brandon: Cool. Alright, so let’s talk some more about that math. Number seven, the 70% rule, I’m sure you’ve heard of it before. Basically, that means, this is something that flippers or wholesalers might use. Basically, you take your after repair value, what the thing’s worth when it’s all fixed up and multiply that times 0.7 and then subtract out the repairs. Take 70% of the ARV and subtract out your repairs and that’s a good general way to kind of estimate how much you should offer. It’s not an end all be all number, but it’s a good estimate.

Josh: Nice, nice. Alright, tip number eight, if you’re a buy and hold investor or are trying to analyze a buy and hold deal, make sure you’re using the 50% rule to make sure this property cash flows. The 50% rule basically says, 50% of your income is going to go out in non-mortgage expenses. In other words, if you’ve got a thousand bucks in rent, you’re talking about $500 in expenses so if your mortgage were 400, you can estimate about $100 bucks a month in cash flow. We’re going to have links in the show notes to some good 50% rule articles and videos. The 50% rule is just that. It’s a rule to, you know, it’s kind of a safety net to help folks find cash flow properties.

Brandon: Yes, and when I started out, I did not know about the 50% rule and I honestly like screwed up and I bought some properties that I probably shouldn’t have because even though they seemed like they cash flow, they really don’t because there’s all those expenses you don’t expect, so anyway, yes.

Josh: I think the key there is really just having an understanding of what all the expenses are that come in to play with a rental property, things like cap backs, vacancy rates, and things like that. Stuff that most new investors and agents who don’t have the experience—they usually ignore.

Brandon: Yes, agree.

Josh: Learn it.

Brandon: Alright, the next one is the one percent rule or the two percent rule. You guys probably have heard these numbers. There’s a lot of arguments about it. Basically, what it means is the percentage of monthly income compared to the total purchase price so before you get too confused, what that means is a property sells for $100,000, the one percent rule says it should rent for a thousand a month or the two percent rule says it should rent for $2,000 a month. Does that make sense? Am I saying that good Josh?

Josh: You’re saying it good.

Brandon: Alright, so the one percent rule is one percent of the purchase price per month so in a lot of areas, honestly, the two percent rule is completely impossible to find and people complain about that. Even when one percent is impossible in some areas and some people say well you shouldn’t pay attention to that, but I, I don’t know, honestly, for me, like which one, one percent, two percent and how much you should pay, it’s up to debate and where you live. Anything that I’ve ever bought in my life that fit the one percent rule only is not a good cash flowing property for me. Like I really, those are the ones that I regret and say yes, they don’t give me any income because I, it seems like they should, but they really don’t. I personally stick to the two percent or as close as I can get to it.

Josh: Yes.

Brandon: I’m a cash flow guy so that’s what I do.

Josh: I agree. I’m a two percent guy as well and in fact there some markets, if you listen to our podcasts with Dawn Anastasi.

Brandon: Yes.

Josh: She’s up in Milwaukee and she goes for three percent deals which are pretty sexy.

Brandon: Yes, that’s awesome. Yes, I have to say I am getting my first three percent deal right now. I should close in about two weeks.

Josh: Nice.

Brandon: Yes, I’m pumped.

Josh: That’s great. That brings us to number ten right?

Brandon: Yes.

Josh: Ten is make sure it cash flows, don’t buy negative cash flowing properties unless you’re uber rich and have another agenda with the property even then, frankly, I don’t know. I mean I think if you’re betting on appreciation, you’re gambling, so you know.

Brandon: Yes.

Josh: I don’t know. As a buy and hold investor, personally, I see no reason to buy property that is not cash flowing. I know a lot of people do it. They explain why they do it. It makes sense to them and it just doesn’t work for me so anyway.

Brandon: Yes.

Josh: Make sure if you buy a cash flow, a rental property, that is trying to bring income in that it cash flows.

Brandon: Yes, good. Alright, number 11 is to use Craigslist to get rent comps and to see what other properties are renting for. People often wonder, you know, is this property going to rent for $500 or $600 or $700, well Craigslist is really, I think, at least in my area, like the best way to do that. I mean some people say use Zillow, but my area with Zillow isn’t as accurate as Craigslist because Craigslist is so current. It’s like updated everyday and they do have a map feature too so you can actually look at a map and see all the properties for rent in a certain area.

Josh: Yes.

Brandon: You can get a really good idea on how much possible rent is.

Josh: There you have it. Good stuff. Alright, number 12, don’t use the pro-forma number that’s given out by the selling agent often times you’ll find that selling agents tend to—I’d say what, inflate the numbers just.

Brandon: Inflate.

Josh: Just a little bit.

Brandon: Nice. Yes.

Josh: Yes, so verify and definitely double, maybe triple check the information being provided to you.

Brandon: I find that a lot with rental properties. They’ll say, you know, it’ll be a triplex for sale and they’ll say each of these units we’ll rent for $850 a month and I know for a fact, I mean, I know for a fact.

Josh: No, but they will rent for $850 Brandon.

Brandon: Yes, like I’m getting like $450.

Josh: You will rent it for four, but it will rent for $850.

Brandon: Yes, that’s what—that you really got to watch with numbers cause agents again they don’t know a lot of times what a place will rent for. They just pull out a number out of somewhere and yes, alright, moving on.

Josh: This is not so 40 the bag on agents show.

Brandon: I love agents I do, I just yes, alright. Number 13, when running your numbers, be conservative. Do not let emotions cloud your judgment. For example, I don’t think repairs will be that much since the house looks nice or I don’t need a budget for vacancy because then you know, units are easy to rent here.

Josh: Yes, yes, that’s the ticket.

Brandon: Yes, it’s easy so anyway, budget conservatively and again that’s what makes the 50% rule so important because the 50% rule helps you budget conservatively.

Josh: Yes, absolutely. Alright, well speaking of budgeting, Brandon, budget Brandon.

Brandon: Another nickname. Yes.

Josh: There you go, yes. Alright, so let’s talk about budgeting for repairs. If you are brand new at this, I definitely recommend always doubling your repair budget and doubling your timeline.

Brandon: Yes.

Josh: See then if it makes sense, particularly on these rehab properties. I know we’ve covered that in a bunch of our other shows and you know, the especially these new guys. It’s really hard to get it right.

Brandon: Yes.

Josh: It’s really, really hard to get it right and you know if you’re safe and you’ve double the budget, yes, the odds of you screwing up that bad.

Brandon: Yes.

Josh: Are lower so.

Brandon: Yes, but it is like and people wonder like they think I’m kind of kidding. When I always say that on the forums, it’s double your budget, they think I’m kind of joking, but I’m really not. Like, double your budget and if you still can make a profit you’re probably okay going forward so. Alright and even now.

Josh: Probably.

Brandon: Probably, yes, number 15, if you are getting bids from contractors, get at least three of them and do your due diligence on the contractor because honestly, a contractor can make or break a deal and they’re one of the most important people on your team so. Actually, quick interesting story, this morning, actually, I got up at 6 am and had to go work at one of my rental properties because my contractor dropped the ball and never finished and the tenants are moving in—they moved in this morning and there was like couple minor things like I had to move the fridge from the left hand to the right hand side and anyway. Yes, he never showed up. He just stopped calling and I. Yes, it was my fault. I paid him before he was done with the last hour of work. I know.

Josh: Oooh.

Brandon: That should be a tip too. It’s not in here, but don’t pay your contractor ‘til they’re a hundred percent done, not 99.9, anyway.

Josh: Yes.

Brandon: Yes. Terrible.

Josh: Yes, that’s why you were late for work.

Brandon: That’s why I was late for work.

Josh: Alright, well, tip 16. When getting started, you’ll be shocked at how much some contractors charge because contractors of course in my mind there’s three categories of contractors. You’ve got the low-end cheap guys who are usually working under the table. Then there’s the expensive guys who’ve—who are—they’re like the finish carpenters who charge $500 bucks to screw in a light bulb and another $500 to put flashing above the light bulb, you know because they’re just, they’re used to working with rich home owners and things like that.

You probably are not looking for either of those guys. Who you want really are the middle guys. These are the guys who do very good work at a fair price, but it’s not always easy to find them. Let’s go to tip number 17 here. Yes, 17 is the next one, for an idea on how exactly to find these mid-level really high quality guys.

Brandon: Alright, this was from the episode that we interviewed J Scott on and he said to go to Home Depot at like six in the morning and find out who’s there getting materials. You got to get business cards, strike up a conversation, talk with these guys, those are the ones getting up early and actually doing the work. You can—he said that’s a really good way and I love that idea, so.

Josh: Or just ask other real estate investors, you know, it’s true that some investors might try to hold on to their contractors and not share them. Stingy. Brandon.

Brandon: I tell everyone.

Josh: Yes. That’s why you don’t have any good contractors.

Brandon: That’s probably why, yes. Use this guy. He’s great.

Josh: Yes, he’s awesome.

Brandon: Then I lose them.

Josh: Where’s my—where is he? Why isn’t he answering my calls? Listen, so most investors love to give out referrals because they want to help out. It makes them look good.

Brandon: Yes.

Josh: Reach out to other investors and see if they’ve got recommendations and that is tip number 18.

Brandon: That was so number 19 is if you are brand new at this. Do not skip your professional inspection before buying a property.

Josh: I mean even if you’re not new. Even if you’re experienced, I don’t recommend skipping it, but you know, especially if you’re new, make sure you pay them money. It’s like usually $300-$400 to get a good professional inspection and yes, definitely do it.

Brandon: Nice, nice.

Josh: Tip number 20. We’re half way there huh?

Brandon: We are.

Josh: Tip number 20 is when you’ve got that inspection, go with the inspector, actually go and be there, be present for the physical inspection. Follow him around like Brandon, like a lost little puppy and ask him a million questions. These guys listen, these guys—and we actually had—we had an inspector.

Brandon: We already did this. Oh it was appraiser.

Josh: Oh it was an appraiser.

Brandon: Yes, you know, close enough. Yes. Wawa. Alright, we haven’t had inspector, but anyway, follow your inspector around. Those guys have a crazy amount of knowledge and since you’re paying them anyways, you might as well get to know the property you’re about to buy and you’re definitely going to pick up some tips and tricks to help you out on future investments so show up and be there.

Brandon: Definitely. Alright so the rest of these tips for the second latter half of the show are kind of in category. The first category we’re going to talk about is off market properties and kind of marketing so we already talked about the agent thing, so let’s talk about off market. Tip number 21, driving for dollars. This can be a really really good way to get started if you do not have a lot of money for marketing. It basically means get in your car and drive. Find some neighborhoods, or communities that you want to focus on and the price ranges you’re interested and just drive around and look for vacant lots or vacant property or whatever. There’s actually a few really, really good articles on the blog that I’ll link to on the show notes that give kind of a step by step detail on what to do when driving for dollars so, yes. Those will be in the show notes at BiggerPockets.com/show40.

Josh: Yes, I actually think that’s probably one of the most important jobs a new investor can possibly do.

Brandon: Yes.

Josh: I know the first time I bought a property, I didn’t know what driving for dollars was. I literally just got in a car and was like, “Hey, I need to find a property. This is the area that makes sense.” I went up and down every single block, you know, got to know the properties, the pricing. You know, features, things like that and you know, by the time it was all said and done and it took a good number of days to do that. I had such a great understanding of the area. I could tell you, you know, if somebody was overpriced or under priced. You know I could tell you rent rates. I knew everything so.

Brandon: Today, it’s even better with the smart phones we have. You can take a picture of the house and it will tell you all the information about it with the couple apps so anyway, cool stuff.

Josh: Yes, yes, we didn’t have smart phones when I was doing this you’re right.

Brandon: No, you had like the rock and the stonewall, I think it was.

Josh: You can’t see, but I’m eyeballing him right now.

Brandon: He is eyeballing me. Well let’s go on to number 22.

Josh: Number 22, if you’ve got some money for marketing, one of the most popular strategies out there and a fact of strategies is direct mail. Direct mail is the process of sending out letters or postcards to a huge number of people, hoping that a small percentage will respond. Typically, you do want to target those folks to specific criteria, say you’re targeting folks in probate or divorce or things like that. The most common type of direct mail is either postcards or yellow letters and usually they have a very simple, I want to buy your house for cash message on them. Yellow letters are very popular. We’ve got dozens, hundreds, if not, thousands of conversations on the site about them. Lots of great articles so just search direct mail on BiggerPockets and you’ll get a ton of great tips so direct mail, check it out.

Brandon: Cool, alright, number 23, the secret to direct mail. This is a tip, is repetition, you’ve heard every—pretty much every guest we’ve had that uses direct mail. They say the same thing, is contact people over and over again. Aaron Mazrillo said on, I think it was show 38 that the letter on their table, the day they decide to sell is who they’re going to sell to. You know, don’t be a one and done mailer unless, of course, it makes sense for your niche like last week with Seth Williams. He does that with land. It makes more sense from him, but.

Josh: Yes, yes, there is an art also this and we have covered that in previous shows. Knowing when an event is going to happen and making sure that you send direct mail in the lead up to the event like a foreclosure or things like that so.

Brandon: Yes.

Josh: Definitely pay attention to that. Another tip about direct marketing for tip number 24 is if you are sending to a really large list, either spread out your letters throughout the month so you aren’t flooded with calls all at one time or use the voicemail service like Google Voice so that all the calls are sent to voicemail and you can do some prescreening and call people back on your own time. You know, if you think about it, right, you can do the math, right? I send x number of letters. I’m going to get x number of responses and some people might say, “Oh okay, well, I want to do ten times that many deal so I’m going to send out ten times as many postcards.” If you don’t have the infrastructure, you’re going to get flooded and you’re not going to be able to get back to people on time. You’re going to be on the phone constantly and until you build that team out, you know, most of those leads are going to go to waste so you know, start small and kind of work your way up.

Brandon: Yes, perfect. Alright, another good phone tip comes from the episode number show 21 with Jerry Puckett and he mentioned when somebody calls and doesn’t leave a message, text them back if it just, you know, you don’t pick up and they don’t leave a message, yes. I thought that was an awesome idea. It just kind of makes it so you’re not bothering them if they really don’t want to talk to you, but it still leaves the door open.

Josh: That’s a good tip, except some people like me think it’s creepy.

Brandon: Maybe, but you know what are they going to do?

Josh: Yell at you.

Brandon: Maybe.

Josh: Or something.

Brandon: You get used to it.

Josh: Yes. You should. No. it’s, you know, I think it’s a great tip. I personally, if somebody text me that I don’t know. I just don’t respond.

Brandon: Yes, but you had just called them anyway, so you know.

Josh: Whatever.

Brandon: Whatever.

Josh: You want to argue about it? You want to fight?

Brandon: You want to fight?

Josh: Geez man. Yes, let’s do it. That’s it. Alright, tip 26 when dealing with direct mail, look for motivation in equity. If someone has motivation, but no equity, there isn’t a whole lot you can do for them other than maybe short sale. If they’ve got equity, lots of equity, but no motivation, there probably isn’t much you can do. What you want to do is you want to focus on those who have both equity and motivation. Remember, as a real estate investor, your job is to help people solve problems and if they don’t have problems then there’s no motivation.

Brandon: Yes.

Josh: If they’ve got problems, they’re motivated and then you can step in and help them resolve that so. You want to find somebody who’s got both of those things happening and that’ll help you get the deal.

Brandon: Alright, number 27 and 28 are a little bit in a category themselves. It’s kind of about networking so number 27, get some business cards and just start handing them out. Don’t stress about it, just go order some from Staples if you don’t have any or Vista prints or Moo.com or whoever and then go to like REA’s chamber of commerce meetings, or anywhere where professional people get together and start them out handing out.

Josh: Courthouse steps.

Brandon: Courthouse steps. Yes, that’s right.

Josh: Hand them out. Give them out. Let people know who you are that you’re the guy. You’re the man.

Brandon: You’re the guy. You’re the man now dog.

Josh: You’re the man now dog.

Brandon: There we go, you’re getting [Inaudible][28:38].

Josh: That was Sean Connery, right.

Brandon: That was Sean Connery. Nice, nice job.

Josh: Well, there you go.

Brandon: Go to YoureTheManNowDog.com people. It makes—it’ll make you laugh, anyway. Number 28.

Josh: Yes, why don’t you do it since you paired them all together.

Brandon: Alright, alright so consider starting your own local real estate club or meet up. I’m not talking about a guru pitch fest. I’m talking about like an actual networking event and you don’t have to be like a seasoned professional to do it, to gather like minded people together and you actually build your reputation quite a bit just by being that guy who brings people together. It’s like the connector. Everyone likes the connector, so yes, start a meet up.

Josh: Everyone likes the connector.

Brandon: Is that a song?

Josh: I don’t know.

Brandon: Oh ok, I was like I didn’t even know that.

Josh: You know and along those lines, you can also use BiggerPockets to do that.

Brandon: Yes.

Josh: I know Brandon’s actually put together a couple of articles on that topic, how to use BiggerPockets to set up your own local BP meet up of folks. Hopefully, we’ll link to those in the show notes as well.

Brandon: That we will.

Josh: Yes, yes, alright, so why don’t we move on from marketing and talk about what happens when dealing with sellers, otherwise known as the negotiation.

Brandon: Negotiation.

Josh: That was creepy.

Brandon: I try.

Josh: Alright, tip 29, Brandon, good tip, ready? Shut up and listen.

Brandon: I like it.

Josh: That’s nice. That’s nice.

Brandon: Thanks.

Josh: Yes. Alright, so shut up and listen guys, seriously. A seller is going to tell you a lot of things so before you start talking, negotiating, and trying to make things happen. Just literally sit back and listen. What’s the reason they’re selling? Use words like tell me more to go deeper into the issues. They may act, for example like the prices is their number one concern, but in reality, if you’re paying attention, it might be that their monthly budget or losing their job or one of a million other things is really what’s troubling them. If you actually listen and don’t have to talk on top of them, you’ll know what’s going on and you’ll be at their paying point. Where you could come in and help them so that’s tip 29.

Brandon: Oh, I’m sorry, were you talking? I wasn’t paying attention. Alright tip number 30.

Josh: Tip number 31 is [Inaudible][30:54].

Brandon: Yes. I’m paying attention. Alright, tip number 30, try to think creatively when talking with sellers and because a lot of times, people think they’re a hundred percent firm on price and they might be more flexible in other areas like terms or monthly payment or maybe you could structure the deal a little differently. For example, if—let’s say they don’t have a lot of equity. Maybe you can do a lease option. That’s a, you know, decent option for people who don’t have equity, a lease option or a short sale so anyway, be creative.

Josh: There you go, be creative. Tip 31 is closely related to creativity and that’s to focus on speed.

Brandon: Not the drug.

Josh: You’re funny man, you’re getting funnier.

Brandon: Oh look at me.

Josh: Alright, so in today’s world guys, people are used to having things like right now. There’s No Time to Think, which by the way is a great book if you want to know anything about the changing speed of the media landscape that we’re in today by Charles Feldman and Howard Rosenberg. Fantastic book and I was actually a researcher on the book, which is why I bring it up.

Brandon: Nice.

Josh: How about that plug. No time to think so use that to your advantage. It may seem crazy, but people may be willing to sell for tens of thousands of dollars less if you can close your deal next week instead of next month. Get out there and make it happen for sure. Nice, Nice. Brandon is actually holding up the book No Time to Think right now, which is pretty cool. I didn’t know you had it.

Brandon: Yes, you recommended it once. I bought it. I never read it yet.

Josh: That’s awesome. It’s kind of like, what’s that book that you recommended to me. Oh, All of Them.

Brandon: Yes, All of Them. You started 4 Hour Work Week though.

Josh: I did. I’m on page like 28 and I’ve been on 28 for about a week and a half so.

Brandon: Nice good job, well you know.

Josh: Yes.

Brandon: Some time in all your extra down time, you can read. Alright, next one, number 32, do not be afraid of the word “no.” The truth is a lot of deals simply are not going to work out so don’t try to force one. It’s far better to buy one great deal than a hundred crappy deals so focus on the great deal that you know you can profit from instead of the hundred deals that you have to force. Be patient.

Josh: No means no, folks.

Brandon: No means no.

Josh: That’s right, alright. Let’s move onto the next topic and that’s tips for investing while holding a full time job. Both Brandon and I work full time and probably more so, so we certainly understand that this can be tough. Why don’t we move to tip 33. Tip 33 is evaluate what kind of investing will fit your current lifestyle. If you’re working, say 80 hours a week, my guess is flipping houses is probably not going to be an ideal solution for you.

Brandon: That’s why it’s not working. I get it.

Josh: Yes, good job. Yes, there you go so yes, listen. Find your fired. Find investment niches and strategies that fit with your job and since Brandon’s fired, I’ll move on to 34. No, just kidding. No, seriously, like you know, a lot of new investors don’t realize this, but it really is important. Like flipping houses is a job. You can’t flip, especially starting out until you build systems and processes. You can’t do it on the side. You really can’t I mean there’s just so much required so think about all these things when you’re deciding on the strategy and the niche that you’re going to be focusing on.

Brandon: Yes. I know it’s easy to get like the shiny objects while listening to the BiggerPockets podcast because it’s like, oh I want to do that, oh I want to do that, oh I want to do that, but yes, pick.

Josh: Didn’t I fire you already? Why are you still here?

Brandon: I’m staying. Alright, number 34.

Josh: No means no, Brandon.

Brandon: Number 34, you’ve got have a business mindset or you will go crazy. Trust me. Like, you need to develop systems to handle your business so that you are not a bottleneck within your business so that’s basically the idea if you guys have read the E-Myth or the 4 Hour Work Week. It’s that you got to turn your business into a machine that runs smoothly with or without your direct involvement.

It doesn’t mean you’re never going to work at it and I think that a lot of people misunderstand the E-Myth or the 4 Hour Work Week. They think that you’re trying to get out of work, but it’s not about getting out of work as much as it is getting out of being that clog in that work. Anyway, good example that having a maintenance guy you can call, I mean, you might be you know, Handy Manny, but if you are out of town and you can’t fix a leak and you don’t have anybody to call, you’re going to stress out and have a problem and you’re going to have a bad day and can’t go on vacation and whatever else, anyway, systems, good things.

Josh: Nice. That leads us to our next Quick Tip which is don’t be afraid of property management. You guys want to plan for it when we talked earlier about the 50% rule, we talked about all the expenses that come into play when you’re buying your rental property, investment property, but property management is something that you need to plan for even if you’re not actually paying a property manager per say so when you’re just starting out, it’s easy to say well I’ll just manage myself so I don’t need to budget for it. It’s really. It’s a huge mistake because there might be a time when you are forced to use that property management, but if you don’t budget for it, you’re probably not going to be able to afford it. Even if you’re going to manage your own property, make sure to do the math as if you’re going to hire it out. I think a safe bet is to factor in about 12% for property management. Just in case.

Brandon: Yes.

Josh: Definitely budget for that number. It’s really going to be key because you know what, if you’re doing the job, you know, you’re spending your time working.

Brandon: Yes.

Josh: You know you need to be compensated for that time as well somehow.

Brandon: Yes.

Josh: That’s how it kind of all works out.

Brandon: Nobody told me that when I was starting. Like I didn’t have the BiggerPockets podcast to hear that so I didn’t—all my first houses, I never budgeted for property management and now if I’m going to add it on, all of the sudden it doesn’t make, you know, it makes my cash flow supposedly properties no longer cash flow good. [Inaudible][37:20].

Josh: Losers.

Brandon: Yes, so anyway, I wish I had known that when I had started.

Josh: Yes.

Brandon: You know, but now I can know that based on experience and tell everyone else.

Josh: There you go.

Brandon: Alright, number 36, speaking of property management. If you do hire property management, don’t settle for a mediocre one. Find a great property manager because I mean these people are in charge of your collective financial destinies. Yes, find somebody who actually does an amazing job, gets units rented, obeys the laws, follows everything, I mean, it will save you a ton of time and a ton of money in the end.

Josh: Yes and we’ve got a lot of articles on that topic.

Brandon: Yes.

Josh: On the BiggerPockets blog. We also have an interview worksheet which I put together years ago after suffering through some horrible hells caused by terrible property management and so what I did was I compiled a property management interview worksheet and we’ll link to that in the show notes as well. Check it out, print it out. Do what you want with it, but make sure to ask all those questions when you’re hitting up property manager so you’ve got something in writing and you know you can compare them even laying across the board.

Brandon: Yes. Good tip.

Josh: Yes, there you go. Alright, tip 37. Another tip for those of you who are working a job and looking to buy an investment property is to set your criteria extremely tight and don’t waste your time on properties that don’t meet those requirements. Realize that you do have a limit on the amount of time that you’ve got in your life. You know, your free time is certainly limited because you’re working a job so focus on your specific niche and criteria and do not deviate. That’s—it’s really easy to do so, you know, focus on that. Do not deviate. You could probably actually even set up automatic alerts with your real estate agent once you’ve created those criteria. For example, say you want small multi-family properties between two and four units that are under $200,000 in a specific location. This way you’re not looking at that five-plex that just came on the market or the single family home that popped up. You know, you might miss, potentially some good deals, but when you’re working a full time job, that’s something that’s going to come with the territory.

Brandon: Yes.

Josh: Focus, focus, focus and go from there.

Brandon: That kind of comes back to that tip we had earlier about not forcing a deal. Like when you’re working a full time job, you can’t always take the time to try to be super creative and force every property into a deal. I mean if it works, it works, if not, move on. Alright, number 38, finally, find an agent that is good with online signatures because seriously this saves a ton of time. When my agent started sending me all these documents to sign and I could just take my iPhone out and sign them right there, that was like life changing. An offer became like a two-hour event down to like a two minute event so totally changed my investing life.

Josh: Nice.

Brandon: Yes.

Josh: Who do you use by the way? I use EchoSign for online signatures. Who do you use?

Brandon: What is that company? I don’t remember actually, but I don’t like them as much as EchoSign. I’ve used EchoSign too, but agent doesn’t use EchoSign so I use this subpar one.

Josh: Nice, nice.

Brandon: It still works.

Josh: Alright, yes, there you go. Alright, so we’ve got two final tips for you guys, 39, it’s really, really, really, really easy to get overwhelmed. On this show, in particular, we’re talking about 40 different tips, but you don’t need to master each and every one of them. Just you know, sit back, relax, take a deep breath and know that you actually don’t need to know everything. I think that paralysis by analysis thing comes up from people who just think they have to have their answers to everything before they jump into something. Start by taking baby steps, but start. You know, don’t wait, don’t deviate. Just get it going. Start today, like right now.

Brandon: Go.

Josh: Do it. Do it now. Like stop listening to this show and go do something. No, don’t stop listening. Alright, this show is about over so when it ends, you know, go out and follow at least one of these tips. Maybe it means calling up a real estate brokerage, local brokerage to find a good investor friendly agent. Maybe it means calling back that motivated seller you’ve been putting off because you’re scared to hop on the phone. Maybe it means getting in your car, driving around your target neighborhood, driving for dollars. Whatever it is, just go do it. Just one. Just do it. Baby step. Make it happen. Do it Brandon.

Brandon: Do it. That’s right. Our last tip for the day is okay, it’s a little self serving, but it’s important none the less, but it’s definitely jump into the BP forums with your deals. Like honestly, if you have a deal that you think, “Hey, this might be a good option.” Like take it to the forums, you don’t, if you’re worried about somebody, you know, stealing your deal which you shouldn’t be, but if you are don’t put the address down. You know, say here’s what I’m thinking, here’s what the rent will be. Here’s what the price is, what do you guys think? It’s really really really helpful to jump in especially if you’re new, but jump in and talk to other people who might also be in the same boat as you or those who are super seasoned and they know what they’re doing and they can help you walk through it. There’s so many guys that like, I mean, I’m grateful for who’ve helped me over the years to look at deals from kind of another angle and tell me if I’m on the right track or not.

Josh: Yes. Yes and guys like John Holdman and Will Bernard and J Scott, and a lot of these folks will—you know they’ll write a whole diatribe about what on earth you’re doing right, what you’re doing wrong. I think Brandon explained. It’s free.

Brandon: Yes.

Josh: There’s literally no cost to you so, you know, go to the analysis forum, put down the deal and ask for help. Are these numbers good? Are they bad? You know, what should I do? Or you know what can I do differently? Get it out there so that’s a great tip and we will of course link to the analysis forum in our show notes as well at BiggerPockets.com/show40.

Brandon: Cool.

Josh: Yes, so that was 40 tips. Not bad.

Brandon: Not bad.

Josh: Not bad. You know, it’s been about an hour since we started recording, given all the cuts that we’ll probably have to make to this thing. It’ll be a little shorter, but listen, hopefully you guys can take those 40 tips and apply them to your life this week. Make it happen right? As always we do want to thank you guys for supporting for the past 40 shows. It’s—I don’t know, I think of it as an honor to get to hangout with you guys each and every week and talk about real estate and more importantly just get to make fun of Brandon for an hour, an hour and a half. That’s a lot of fun.

Brandon: Yes, everyone loves that.

Josh: Yes, but no, seriously thank you guys for everything for being part of out BiggerPockets community and you know, this isn’t a tip and this is kind of off book, but we’ve got 13,000 plus listener now on the podcast. If you guys get value from this community and you’re not engaging and you’re not connecting on our site on a regular basis, it doesn’t be to everyday, it doesn’t have to be every hour, although that would be great. You know, get involved. Really, get involved.

Jump in, you may think hey I have nothing to say, but you know, if you set alerts, you know for local discussions, for topics that are of interest to you like multifamily or lease option. Whatever it is, whatever is interesting to you. You’re going to find out that there’s a ton of awesome stuff happening. There’s a ton of people on the site who are connecting and sharing great ideas and their doing it and it costs you absolutely nothing. You don’t have to spend a lot of money to learn.

You don’t have to spend a lot of money to build your network. You just have to interact. You know, take a couple of minutes and introduce yourself, welcome other members in your area. You know, get involved in debates, discussions, conversations, help people, give them tips, you know, you actually learn by teaching many times and I think that’s a great thing that happens daily on our site so give it a go. If you haven’t yet jumped in on the site and or if you’ve jumped in with one post and haven’t done anymore, you know, give it a try, you know, you’ll find that it’s really a warm and friendly environment and a great place to hang out.

Brandon: It is. Yes, I mean, I’ve been on there now for what, like five, six, seven years, who knows, forever, and I’m continually, I’m asking questions all the time. Like, I’m not just, you know, the get made fun of on the podcast guy. Like, I actually, I’m in there asking questions a lot because I’m learning a ton as I grown on my investing so anyway, please, you know, jump in. Also, if you guys appreciate the site and the community, you know, pay it forward. Tell other people about BiggerPockets. You know, there’s like, what, 27 million investors in America or something like that we figured out. Like in that survey we did, but not all of them are on BP and you know, they don’t all have to be on there, but it’d be cool to have, you know, a bunch of them.

Josh: Yes. Well, well, you know and it’s not just self-serving because the more of this interaction that happens in the site, the better it is for you.

Brandon: Yes.

Josh: You know, you’re building your brand, you’re building your name, people are getting to know you and recognize you and so engaging is definitely going to help you. By the way, that study was done—that was a BiggerPockets/Memphis Invest study.

Brandon: Yes, speaking about Memphis Invest.

Josh: Yes, we did it in coordination with Memphis Invest and Memphis Invest is of course the sponsor of today’s show who we want to thank once again for being our sponsor so definitely make sure to check those guys out at Blog.MemphisInvest.com/BP. Alright guys, so you know, again, beyond the usual following us on Facebook and Twitter and all the other social media channel which we help you do and the interacting on the site, you know, Brandon did say spread the word. I can’t tell you how cool it is to watch the site grow. Next week is going to be the ninth birthday of BiggerPockets.

Brandon: Ooh.

Josh: Next Tuesday and I don’t, we’re at a 140,000 members. I remember the first member. I remember the fifth, the tenth, you know, I don’t remember the 138th thousand, 333rd, but you know, it’s really special to see this thing grown and I’ve really really enjoyed being a part of so many people’s lives and watching so many people benefit from this community. You know, if you’re on the site, if you’re an investor, and you get value from it, just tell you friends. You know, tell your agent. Tell your title company. Tell your lender, appraiser, and everyone else to come on board. If you do that, you’re going to bring them value. They’re going to learn more. They’re going to derive value. They might get more clients and customers and business as a result. You know, we’ll take this thing from you know the 140,000 members to 200,000, 500,000, and more. The more people we have, the more information there is from the collective right? For all you Star Trek fans, you know, there is power in the borg, there is power in the collective mindset so come in, get your folks in and let’s hang out and learn and do business together.

Brandon: Yes.

Josh: Show 40. Thank you.

Brandon: That’s a wrap.

Josh: Thanks for listening. Thanks for engaging. Jump on the show notes. BiggerPockets.com/show40 and tip for me. What do you think B? How did we do?

Brandon: We did.

Josh: Alright guys, this is Josh Dorkin signing off.

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