February 23, 2024

You want cash flow, but how do you get it in a housing market with high rates and home prices but low inventory? Or, how do you escape the rent cycle and get into real estate investing? Should you buy your first rental before a primary residence? And what financial position do you need to be in to leap into homeownership? When starting your real estate investing journey, questions like these seem to have no end. That’s why we’ve got David Greene, experienced investor, agent, broker, and author, to help guide you to the answers.

Welcome back to another Seeing Greene, where your tips, flips, and financial freedom-finding host, David, is here to help you build wealth through real estate investing. We’ve got questions from investors, renters, and homeowners trying to take their first step into the rental property investing world. First, we talk about tenant-friendly states and how house hacking can allow you to dodge many of these harsh landlord laws. Next, we hit on some HELOC (home equity line of credit) questions about when to pay off a HELOC and whether using one to buy a rental is a good idea. Finally, David talks about growing your financial foundation and how to systematize your business, so you AREN’T working sixteen-hour days. All that and more, coming up!

Want to ask David a question? If so, submit your question here so David can answer it on the next episode of Seeing Greene. Hop on the BiggerPockets forums and ask other investors their take, or follow David on Instagram to see when he’s going live so you can hop on a live Q&A and get your question answered on the spot!

David:
This is the BiggerPockets Podcast Show, 750. You’re trying to find cash flow and what you said was quick or easy cash flow, that is even harder to find than regular cash flow. Now, I’m not going to deter you from real estate investing, but what I am going to say is we’re going to have to tweak the mindset a little bit here. You got to have time on your side in a situation like this, especially because the deal has to be extra good to not only cash flow, but to cover the money you’re going to spend on the loan when you take it out on the HELOC. I would probably lean towards house hacking, but not a situation where you’re sharing parts of the house. Look for something that your family can be okay with where you’re renting out different parts of the property, and the reason I say that is house hacking is going to allow you to reduce risk more.
What’s going on everyone? This is David Greene, your host of the BiggerPockets Real Estate Podcast here today with a Seeing Greene episode. If you’re unfamiliar with these, they’re a little different than our traditional format where we interview a guest on how they built well through real estate. In these shows, I take questions directly from you, our listener base as you ask me what I would do if I were in your situation, or you seek wisdom and guidance in the decisions that you have to make. We have an incredible show for you today and I know you’re going to love it.
In today’s show, we cover why your financial foundation is more important than what you’re thinking and how looking to real estate to be the way that you make money as opposed to investment you’ve already made can be a mistake. We talk about when to pay off a HELOC and why, how HELOCs work, when to use them, and what to be aware of when using them, and we talk about how waiting tables may solve your systems problems in business and real estate investing, which leads us right into today’s quick tip.
Today’s quick tip is write down the steps or make a list of everything that you’re doing in your real estate investing business. Stick around and you will hear why you should do that. It’s at the end of the show, so make sure you listen all the way to the end, and I give you a very, very compelling argument for why you need to be systemizing the work you do in business and in investing. All this and more in a great show. If you’re watching on YouTube, don’t think it’s weird, you’re about to see a light turn blue. That happened because I keep forgetting to turn the light green before I do a Seeing Greene episode, but be patient with me, and if you’re listening to this on a podcast, you have no idea what I’m talking about and that is fine. You don’t need to. Pretend you didn’t hear that and I don’t make any mistakes. Let’s get to our first question.

Pat:
Hey, David. My name’s Pat, big fan of the show. I was listening to the episode from the other day about investing in expensive markets and it reminded me of the question I have about doing just that but as a recent college graduate and a first time real estate investor. I’m graduating this spring with a master’s in accounting and going to be working in the New York metro area, and I want to house hack something as soon as possible to get started investing in real estate. But New York’s high prices, their high taxes and the tenant-friendly laws made me hesitant to do that. I’m going to have a decent amount of money saved up and I’ll have a nice starting salary when I begin work, but I do have a little bit of student loans to pay off, so I was wondering what your opinion is on someone in my situation. Is it too risky to invest in New York as a first time real estate investor? Should I just save up money and rent as cheaply as possible? Basically, what are my options? Thanks.

David:
All right there, Patrick, very good question. Let’s dive into this. First thing that I want to say is don’t let that money burn a hole in your pocket. It’s okay to hold onto it. There’s nothing that says you have to make a huge decision right now. You’ve set yourself up. You put yourself in a really good situation in life, saving up a chunk of change and getting a really good job. I don’t want to see you lose that momentum that you’ve already built rushing into a deal. So, let’s start it off by just saying there’s no rush to go buy a property. I also like that you’re house hacking and you’re asking the right questions. You’re saying, “Hey, are the tenant-friendly laws in New York going to be something that is too much to overcome?” A lot of the laws that protect tenants do not apply when the landlord lives in the property as their primary residence.
I don’t know specifically New York laws, I’ve never lived there. I do think that that’s something you should look into. Just do a Google search about these tenant-friendly laws and see if they apply to someone who’s house hacking because many times, in many municipalities, when you live in the property and you’re renting out rooms or you’re renting out units, the laws that are against landlords don’t apply. It’s a weird little loophole in a lot of different cities, but I would look into that certainly.
The last thing I’d say is there’s other people that are house hacking In New York. The tenant-friendly laws are not always an issue. They typically become an issue if you’re buying in an area where you’re going to get less desirable tenants. There may be laws that protect tenants that make it harder for you as a landlord to get an eviction. Maybe you have to wait longer. Maybe it’s harder to raise the rent. I understand that. However, there are still consequences to tenants that don’t pay their rent or have to be evicted. They just take longer to come about.
One of the things that I’ve found in my journey of real estate investing is if you’re renting to people that have something to lose, they don’t want the consequences that come from an eviction, just like you don’t want the consequences that come from being a landlord and having to evict somebody. You have something to lose. You want to rent to tenants that have something to lose also. People with good jobs who care about their credit scores who make a decent income are much less likely to force you to evict them if they can’t pay their rent. Most of the time, if they can’t pay their rent, they’ll just leave. Worst case scenario in those cases is you get a broken lease. That’s not the end of the world. What you really want to avoid is the eviction or even worse, an eviction when they trash your property. So, keep that in mind. If you’re buying in a good area and you choose your tenant carefully, you pick someone who has a good job and they have something to lose, they’re less likely to cause these problems.
Now, as far as your limited capital, I don’t know enough about your finances to give you a straightforward answer, but I would like to see that you have a cushion of money after you put the down payment on the house. Now, I don’t know how much money you have, but I don’t think you should buy a house if it’s taken up all the money you’ve got. I want to see you build up 20, 30, $40,000 in savings in addition to the down payment of a property before you get in, just in case you do come across some of those first time landlord woes where you make some mistakes that are going to cost you a little bit of cash.
I also would like to see you get a running start and do well at your job before you put on the stress of being a landlord. It’s very important that when you start a new career, you make a good impression with your boss, that you learn your trade, that you build skills when it comes to that. I wouldn’t be opposed to seeing you throw yourself with abandon into being the best you can at your new career, and once you can finally exhale and you feel like you got that down, then look into real estate investing and just keep saving money in the process.
Last thing I want to leave you with, there’s no rush. You’re in a great situation. We don’t know what the market’s going to do. There’s deals out there, there’s opportunities out there, but there’s also, at this stage, no sign that it’s going to go back to being a fury anytime soon. So, you’ve got time on your side. Keep saving money, keep focusing on your career, keep hitting the fundamentals right. If you do see interest rates take a massive dropdown, maybe we make this more of a priority of finding a property. But if that’s not the case, just hang tight, stay the course, things are going your way, my man. All right, up next, we have two different HELOC questions. Let’s check them out. Our first question is a video from Brandon Diet in Denver.

Brandon:
Hey, David. Love the podcast and thank you for taking my question. Really looking to get involved in the investment property game. I got a $50,000 HELOC loan and I’m trying to figure out what is the best way to cash flow right away. I know you always say the first investment’s not going to be a home run. I would like to at least make it a double or a triple. So, I’m looking at a couple opportunities. I actually do live in Denver, Colorado, as you and I both know tough market to do anything with $50,000 in. So, I’m looking at places like San Antonio, Texas, and I’ve even looked into these short-term properties in Tula, Mexico. I kind of wanted to get your thought on terms of what you thought was the best way to go for a quick cash flow so then I can in turn use that money and get into the next property. Thanks, David.

David:
All right, Brandon, thank you for your question. Also, love the hairstyle. All right, you are in a bit of a dilemma. We’re just going to be honest here. You’re trying to find cash flow and what you said was quick or easy cash flow. That is even harder to find than regular cash flow, like clean cash flow is even harder to find than dirty cash flow. This is a very tough market to be investing in. You’ve got 50 grand to work with which isn’t going to give you a whole lot of breathing room, especially when it comes to down payment, closing costs, and money you want to keep in reserves. You mentioned in the video you have about $50,000. That doesn’t give you a ton of breathing room to make a down payment, pay your closing costs, and have some money set aside for reserves in case something goes wrong.
You also mentioned in the notes that I have here that you’re not into house hacking because you have a growing family. As if this wasn’t tricky enough, now you’ve got the additional payment that you have to make on that $50,000 loan that you’re looking to take out. So, this isn’t the same as just 50 grand that you’ve saved up. This is taking a loan of 50 grand. The cash flow has to be even stronger to cash flow after you pay back that second mortgage of the HELOC. Now, I’m not going to deter you from real estate investing, but I am going to say is we’re going to have to tweak the mindset a little bit here. This is going to be a very difficult endeavor. This isn’t just a, hey, what city should I invest in, what properties should I look for. You are competing with a country of people that are all trying to find cash-flowing properties right now and having a very difficult time due to the raised interest rates that we’ve had and the lack of supply that’s allowing sellers to not have to drop their prices.
This might be something that’s more of a marathon than a sprint. Okay? You’ve got access to that HELOC, that’s great. You’re listening to the podcast, that’s awesome. You’re gaining this information. It can be tempting to think, “I got to go do something.” You don’t got to go do something. There will come the right deal if you wait. You got to have time on your side in a situation like this, especially because the deal has to be extra good to not only cash flow, but to cover the money you’re going to spend on the loan when you take it out on the HELOC, and by the way, those are adjustable rate mortgages most of the time, which means that they can go up if rates go up.
Here’s what I’m getting at. You can use HELOCs to buy investment property, but it is more risky and an environment where it’s already really thin margins and it’s tough to make it work, I don’t like you taking on additional risk at this stage. I would probably lean towards house hacking, but not a situation where you’re sharing parts of the house. Okay? Look at some creative things where you buy a triplex and live in one unit or rent out the other two, or you buy a main house and rent out the ADU and rent out the basement. Look for something that your family can be okay with where you’re renting out different parts of the property, not sharing living space, and the reason I say that is house hacking is going to allow you to reduce risk more than anything. There’s also an inherent value in that you’re eliminating or reducing a mortgage payment so you’re not relying completely on cash flow to make the deal make sense.
Whichever road you take, I just want you to remember, this is a marathon, not a sprint. Take your time. All right. Our next video comes from Cory Budak.

Cory:
Hey, David. Quick question. So, we are in the infancy of our investing career. We have a pretty successful little short-term rental and currently doing a live-in flip to just buy and hold and rent out. With that, we have put a lot of money into this and also increased the value a lot. So, we took out a HELOC and we continued to add to the value of the home. We’re probably, we’re in about 355,000, but the home is probably worth closer to five, but our HELOCs went for 50 grand and we’ve only used about 30, 35,000 of that. My fiance is a real estate agent and she has closed some deals, so we have some money saved up as well that would actually be able to pay off the HELOC. My question is, should we do that because the credit line will be there for us any way to use that money to keep investing, or should we hold that money and just pay the interest down on the HELOC over 10 years and then maybe refinance it?
Our payment’s less than $200 a month which we can easily make, but I just wanted to know what would be the best case scenario because it’s kind of we don’t have to pay the interest if we don’t want to because we have the money to pay off the HELOC, but I just don’t know what the best case scenario would be for us. So, should we pay off the HELOC with the money that we have and use that to invest moving forward, or should we keep the HELOC at its current $35,000 and just pay the interest until we want to refinance in 10 years? Thank you.

David:
Cory, love this question, man. Thank you very much for reaching out here and asking it, and I’m actually able to give some practical advice finally, which is great. Yes, you should pay that thing off. Let me give you the logic behind why. First off, you’re currently paying $200 a month or close to $200 a month which you can afford, so you don’t have to pay it off, but you don’t need to be spending that. Over six months, that’s $1,200. Think about how many hours of work it would take to be able to earn $1,200. Also, think about what else could you invest that money in that would get you more than 200. If you’ve got opportunities, maybe consider spending it and buying some more property, but most likely you don’t have opportunities, so I’d pay that thing off.
Now, here’s, like you mentioned, you’ve got access to line of credit. You’re not actually losing anything by paying it off. You could just go take it back out again if you do come across a deal. So, it’s all in how you look at money. Money is a store of energy. I’ve been saying this a lot. When you keep that store of energy in your savings account, you’re going to pay interest to have access to it. When you put it back into the equity of your house, you now don’t have to pay interest, but you still have the store of energy. Whether you’re keeping it as equity or you’re keeping it as in savings, it’s all the same. The HELOC is just the door that allows you to move it from one to the other.
So, my advice would be to put it back into the equity of your home, pay off that loan, but keep the door open so if you do see an opportunity, you just pull it out and you use it then. This is a pretty straightforward solution and I love that you’re thinking this way and you ask that question. Make sure you keep us up to speed with what you ended up doing and if you found something else to invest that money in, I’d love to hear it.
All right, at this segment of the show, we are going to turn to the YouTube comments and I am going to share what you and other BiggerPockets followers have all been saying on YouTube. Reminder, I’d love to hear what you have to say. So, as you’re listening to the show, head over to YouTube and leave your comments for me to read on a future show. Our first comment comes from Professor X who says, “This was just perfect. The answer to the question/scenario about paying off properties was exactly what I needed. I’m going to keep working and enjoying living at the same time.”
I don’t know for sure, but I believe that this came from episode 735 and this was a person who was a real estate agent and was trying to figure out should I keep working or should I try to retire off of a handful of properties. They had some of that like work guilt that I call it where people feel bad that they’re working and they think that the point of life is to avoid work at all costs. So, when they have to go to a job and make some money, they think they did something wrong.
That’s just not my philosophy. I don’t think you should slave it away at a job you hate and I don’t think you should do something you don’t like. I do think you should pursue your calling in life, but that’s still a form of work. So, whether you’re working in a cubicle, you’re working in a commute, you’re working from home, or you’re working to help other people, it’s all work. You got to be doing something. So, in this case, they liked my advice that you should continue working, selling homes, helping people build wealth in real estate, and adding to your own nest egg in the process. Worry about quitting work when you no longer have a passion to do it. Thank you, Professor X.
Our next comment comes from EC. “David, I must commend you on the excellent and sincere advice you have provided as a real estate expert. Your analysis of the practical realities of the situation and the importance of avoiding complacency in our thinking can greatly enhance our portfolio growth over time. You are truly remarkable.” Well shoot, EC, you are welcome to follow me around and talk about me to other people as much as you want. I kind of like having this hype man here. Make sure you submit a video at biggerpockets.com/david. I’d love to answer one of your questions. Thank you.
Jared Hackston says, “Hey, David. Is your company able to offer loan product that allows a seller to carry part of the mortgage in second position? For example, I’d buy a primary residence for 700,000 if I get a mortgage for 400,000 and the seller carries 300 in second position. Can it happen? Challenge question. If not, how could a loan company or business make it happen? Thank you.” This is a very good question, Jared, and I’ve looked at this a few times. Most of the time, conventional loans will not let you do this. They just won’t give you a loan if there’s also going to be another loan in second position, and the reason is it’s going to affect your debt to income ratio, but that doesn’t mean that it cannot happen. Occasionally, we can find lenders that will do it or you can structure it after the loan is done, depending on what the terms of the loan are.
So, what I’d encourage you is to reach out to us at [email protected] and literally paste this into your email and I will have one of my loan officers see what products we have, and if they don’t have, they’ll bring that to me and my partner and we will go look for a lender that will do something like this so that we can help people like you. Great question and love the way you’re thinking. Thanks, Jared.
All right. Our next comment comes from S. Sue who says, “Thank you so much for the generous sharing of your knowledge. Could you please talk about how to prevent someone from stealing the title/deed to your property?” I’m so sorry that this happened to you. This is a very good question and it’s happening more and more in real estate. I’m working with our production team on trying to find an expert, maybe an attorney who could come onto the BiggerPockets’ main show and talk about how this happens and how you can be protected. So, thank you for your comment there.
And our last comment comes from Shalin7023. “First time in your channel. So far, good information and delivery. Very smart responses to the questions. We’ll check the channel out again.” Well, awesome. We got a first time listener and a new fan, so welcome Shalin to Seeing Greene. We are glad to see you here, and you just reminded me, once again I forgot to turn the light green behind me. All right, and we’re back with a green light. Welcome to the green light special of the BiggerPockets podcast, also known as Seeing Greene, where your host, David Greene, which is me, routinely forgets to turn the light to a different color behind him. Thank you for your patience. I will someday, I will someday remember and I’ll work this out.
Thank you for all the love and support as I share my own trials and tribulations. We’re a community and we help keep each other strong, and that’s something I love about BiggerPockets and this podcast. So, thank you for listening. Thank you for submitting your comments. Thank you for asking your questions, and thank you for making the show possible. If you would like to make sure that the show continues, please go to bigger podcast.com/david and submit your real estate questions.
Also, take a quick minute to like, comment, and subscribe on this YouTube channel. If you’re listening to it on a podcast app, take some time to give us an honest rating and review. Those help us a ton. We’re trying very hard to keep BiggerPockets the top real estate ranked podcast in the world, but there’s plenty of competition, and there’s always some new young gun trying to take us out, so with your support, we can maintain that top spot.
All right, let’s get back to the questions. We’re going to start with a reading question from Caleb Bryan in Salt Lake City. “Hi, David. I’m looking for advice on how I should start my investing career. I currently live in the Salt Lake City market and I’m renting a basement apartment for $1,100 a month with my fiance. I’m not in a great financial situation. I currently have about 12,000 in consumer debt and have no real assets to my name or a large sum of money for a potential down payment on a home. My fiance and I are currently qualified for an FHA loan in the 300,000 range, but that gets us very little here in Salt Lake. I’m in the process of getting my real estate license as a way to boost my income while holding onto my current W2 job as long as necessary. I’m struggling to decide on if I should focus all my energy and money on getting me and my fiance into a primary home as the area is booming and I would hate to lose out on all the potential equity, or if I should look into out-of-state investing where I can get into high cash flow rentals or is it not a good idea at all to look into investing until I’m completely out of debt?”
Well, this is a great question, Caleb. Thank you for asking it. Let’s get into this. First off, no, I don’t think you should go out of state and buy a property somewhere else because finding a high cash flowing property in this market is incredibly difficult and you might actually end up losing money, which is not a thing that I want to see happen, especially if you’re already not in a strong financial position. I am writing a book, it should be out in maybe a little under a year called Pillars of Wealth, How to Make, Save, and Invest Your Way into Financial Freedom, something like that. This is going to be a book written specifically for people like you, Caleb. I’m very excited about finally getting this book out. It’s not quite an autobiography, but it’s close to one as it shares examples from my life, stories of what I went through, how I looked at money, how I thought about money, how I saved money, how I made money, and giving advice for how you can make more money, save more money, and then ways you can invest it.
Long story short, I want to see everyone, not just you, but everyone, first put themself in a position of financial strength, then worry about real estate investing. I think it’s a mistake that people try to put themself in a position of financial strength by investing. You should do it first, then invest the money that you have. So, you’re house hacking right now. You’re spending $1,100 a month. You’re living with your fiance. You admit you’re not in a great situation. You got $12,000 of debt. You don’t have an amazing W2 job, and you’re working on getting your license.
Let’s break that down. First off, great job working on getting your license. You’re taking some positive steps in a good direction. Here’s a tricky little trick that I’ve seen get into people’s heads that screws them up. It’s when they have one plan to move forward. Okay? People say, “I am going to find an off market deal. I am going to buy a bunch of cash flow in real estate and retire. I am going to get my real estate license,” and they put all their chips on one bet. I have a path to get to financial freedom, and while you’re waiting, because it’s a long time to get that license or it’s a long time to find that off market deal or it’s a long time to find your first client as an agent, you have all of this potential to be making more money that you’re not taking advantage of because you’re only thinking about one thing.
Let’s break that. You’re studying to get your license. Cool. What are you going to do with the other 22 hours of your day? Let’s say you have eight of it for sleeping, which leaves you with 14 hours. Are you busting your butt all 14 hours to be the best version of Caleb that you can possibly be? When you go to your W2 job, are you bringing incredible energy, an amazing attitude, and a hunger and a thirst for excellence?
I don’t care if you’re standing at 7-Eleven ringing people up who buy Slurpees and chewing tobacco. Okay? Are you trying to upsell them sodas? Are you telling them about a special of chips? Are you stocking the store in between customers? Are you doing whatever you can to make your boss think you’re the best? Because here’s what I’ve found. If you’re not excelling and giving your very best at where you are in life right now, the real estate gods, the financial gods, however you want to look at it, they tend not to smile on those people, and what happens is when those people do achieve wealth, they lose it incredibly quick because they haven’t built a foundation with which to keep it.
So, what I tell everyone, this is not just for you, this is for every single human being listening, when you want more, the first thing you should look at is what are you doing with what you have. If you’re going to work and you’re striving for excellence, you’re doing the very best you can at your W2 every single day, you should be really good at that job, which means you can actually start looking for a job that pays better in the same field, and you’ll probably get it if you’re really good, or you could ask for a raise.
If you hate your job and you’re sandbagging it and you’re not given your best at what you’re doing, it’s going to be very difficult to pay off that $12,000 of debt. You’re probably not going to crush it as a real estate agent. You’re probably going to have the same struggles when you get your license that you had with the W2 job, plus now you have all the licensing and all the broker fees and the desk fees and the MLS fees and the lockbox fees and the national association, the California association or your state association and the local association. There’s a ton of money that comes with being a real estate agent. You’re going to be losing more. All right?
So, this really comes down to the approach we take to life, and I don’t want to see you pushing yourself to try to buy a property before you’re in a position of financial strength. Okay? So, you’re in a good situation. You’re only paying $1,100 a month. Let’s think about what we can do in life that will allow you to make more money in the situations you have now, before you worry about trying to bring real estate and get that involved when you don’t have a big cushion. I would love to hear what you think about this. Send us another video or give us another submission and let us know how your progress has been. Also, if you’re going to be getting your license, checkout my top producer series with BiggerPockets, Sold, Skill, and Scale. You can get those at biggerpockets.com/store.
Okay, and our last question of the day comes from Manny Escobar. Manny says, “My wife, Yvette, is a high producing real estate agent in San Antonio, Texas. She has come to the point where she needs to delegate. For example, she has three offers she needs to submit. Currently working with an attention-intensive client. It’s 8:15 PM and she has two more to go.” Oh, how I remember those days, Manny. “What are some tasks she can delegate to VAs or other staff for max efficiency? She does not necessarily want to be a broker, although open to it, but even as a loan agent, I know there are some tasks she can delegate to free her up for what she’s great at, client interaction, negotiating, et cetera. She’s been a one-woman show for three years and has a hard time conceptualizing the idea of not doing everything.” Been there before too. “A breakdown or list of tasks she can delegate and to whom would be greatly appreciated. Also, where can she find these team members? Thanks for your time, brother. You and BT changed my life and continue to, so I’m forever indebted.”
Oh my gosh, Manny, such a good question, man, and I’m excited for your wife. She’s probably going to hate you at first when you implement these changes and then really love you after they get put into place. All right, let’s break this down. First off, your wife needs to read my book Sold, Skill, and Scale because I talk about this ad nauseam in those books. Second off, there is a couple principles that I think your wife can benefit from. I learned a lot of this stuff, oddly enough, working as a waiter in restaurant. I’ve realized there were these patterns to waiting tables because I was always trying to wait as many tables as I could with as high ticket of people as I could as efficiently as I could because that’s how I made money.
So, when I became a real estate agent, I thought the same way. How do I work with as many clients as I can buying the most expensive houses that I can as efficiently as I can? You hit it right on the head when you said she’s good at client interaction and things like that. She’s not great at paperwork or filling out forms. Couple rules of thumb that I picked up working in restaurants, I could handle a lot of tables. I was what they called a strong server. I could get up to 12, 13 at a time and I did that many times. I could not take 12 tables all at the same time. I couldn’t even take five tables all at the same time.
There is a very big difference between when the tables come in. So, what you have is these bursts of what you called attention and intensive stuff. So, when a table first gets sat in a restaurant, you have to go get their drink order. Right? You have to hope that the hostess remembering to drop off their menus or they’re sitting there with nothing to do. You might want to start some appetizers. That’s usually the first interaction. You introduce yourself, you get their drink order, you ask about appetizers.
Once you put their drinks in or their appetizers in, assuming you’re at a restaurant where other people walk the food to the table, which was not the case the first restaurant I worked at, it was in the second, you bought yourself some breathing time. Now you can walk food to your other tables, you can take orders from other tables. There’s these things that get you really busy at one minute, like I can’t be taken the order from a six-person table and also be getting a drink order for another table or bringing them more sauce or making sure that their steak was cooked correctly or helping them get more wine. I can only do one thing at a time. But then after I get the order in and I put it in the computer, I got a long period of time.
So, part of being a good agent is spacing out when you do certain tasks. So, for instance, when your wife is writing an offer, I know this because I’ve trained agents for years now, they don’t plan ahead. They wait until there’s an emergency and then they try to get it all done in that moment. So, she’s probably getting on the phone and saying, “What do you want to do for an earnest money deposit?” And they’re saying, “What’s an earnest money deposit?” And then she’s explaining it. It takes a long time. Then they’re saying, “Well, how much do we have to do?” “Well, I don’t know. Let me call the listing agent.” Then she calls the listing agent. Now it’s 8:45 instead of 8:15. Then she calls our clients back, but they just put their kids in bed so they can’t answer the phone. Now it’s 9:30 and they finally answer the phone and they explained the earnest money deposit. Then they ask the question about the down payment and so on and so forth.
What we did, because this was a problem for me too, was when I gave a buyer’s presentation when I first started working with the client is I got the answers to all these questions then. I had a form I would fill out, the earnest money deposit is typically 3% of the purchase price, but oftentimes we can get away with much less. Are you okay with half of that? So, we’ll do about 1.5%. On a $300,000 house, that would be $4,500. Yes, that sounds good. Okay. I’m going to need you to give me your proof of funds right now so that when we write the offer, I have it on deck.
What your wife’s probably doing is waiting till it’s time to write the offer, then her client is having to get the proof of funds, which is a bank statement showing that they have the down payment, and your wife’s walking her through how to get on Chase or wellsfargo.com and get that paperwork, and they’re doing it at the same time that all the other tables are coming in. You see what I’m getting here? You got to be able to space this stuff out. That’s the first thing your wife can do before she even hires anyone is to not wait until the client is saying, “I want to do something.” Be the leader. Take the wheel. Get the information you need ahead of time.
The second thing you can do is make a list of everything that has to be done and see which of those things can be delegated. Now, writing an offer is one of the easiest things to delegate. You have somebody fill out all the paperwork and then you go and review it and make sure it’s good before you hit send to send it to the client. It doesn’t need to be your wife that fills in what the earnest money deposit’s going to be, what the address of the house is, what the parcel number is. You can easily have a virtual assistant or even an intern from her office.
If she’s a top producing agent, there’s some agent in her office that hasn’t sold a house for two years that’s saying, “Can you be my mentor? Can you be my mentor?” They’re running around looking for a mentor. Your wife needs to be that person’s mentor. Have her tell that person, “I’ll teach you real estate, but when I need something done, you’re going to do it. When I need offers filled out, you’re going to fill them out.” Have your wife show the person how to fill out an offer and then let them see how they do, and if they make mistakes, get rid of them and get another one.
But that’s pretty simple. The things that are probably killing her are going to be the conversation she’s having last minute. “We just looked at the house, we have to get the offer in by tonight,” and now she’s trying to do it at 10 o’clock at night. Smooth that stuff out by being more organized and doing it ahead of time. Another reason that your wife probably can’t fathom having other people help her with her work is that she doesn’t have a system already lined out of what’s going to happen. So, in her head, she has to do it herself because she doesn’t know how to delegate something to someone else.
What I did when I started the David Greene team is I took everything that I had to do in a listing and I made a list in a Google document. Okay? We were talking about buyers. Let’s talk about a listing, all the stuff I have to do before an appointment, all the stuff I have to do at an appointment, all the stuff I do after the appointment, then all the stuff I do to put the house in the MLS, then all the stuff I do once the house is in the MLS and it’s active, then all the stuff I do when it goes escrow, then all the stuff I do when it closes. Every time I had a transaction where something went wrong, I would go back to my list and say, “Where can I put something in here so this wouldn’t happen again? Where could I prepare the client for this earlier?” And so, I would put, have conversation about blank, right after a different step in the process, okay, and it smoothed itself out over a long period of time.
I then took this very long list and I color-coded it for all the things that my first assistant could do. Everything that was blue is what I did, everything that was red is what she did. So, we were working off the same list for all the different listings that we had, and it was very clear what I was doing and what she was doing. Then I finally ended up getting a CRM that would take that list, and it would, instead of us having to look at the list, it would delegate to her the 75 things out of the 125 things that she could do, and it would delegate to me the 50 things I could do. That CRM is called Brivity. It’s for real estate agents. That’s what we use. And then what would happen is she would just show up at work and in her tasks list would be her being assigned all the stuff she was doing for every single property we had, and it was very clear what she was doing that day. She didn’t have to say, “What am I supposed to do?”
That’s what your wife needs. Now, is that going to happen at once? No, but if it doesn’t happen, she’s going to be running in this hamster wheel for the rest of her life and you’re going to be wanting some wife time at 10 o’clock at night when she’s writing offers and you’re not going to be living that life of financial freedom that we’re all pursuing through real estate. It’s going to suck. So, we have to be disciplined in the beginning so that that doesn’t happen. Just like it sucks when you get sat with seven tables at one time, but you don’t say no because you want that money, you want to teach a hostess they can wait five minutes before seating you and make it more smooth.
Now, let me tell you how this can work if you’re a real estate investor. My friend, Andrew Cushman, who is a multi-family investor, and I routinely buy apartment complexes together, and we have a system that works very similar to this. There’s three phases, phase one, phase two, phase three. Phase one, we have a list of eight things that we do to analyze the area that the apartment’s in. We go to certain websites and we look to see what the median income is. We look at a flood map and see if it’s in a flood zone. We look at a crime map and we see what kind of crime it is. We look at rents of other apartments around and see if our rents are higher than theirs or lower than theirs. It’s all very high level stuff, but it’s documented very simply to do.
After that, we analyze the actual property. We look at the T12. We look at the demographics of who’s moving into the area. We look at the vintage of the property. We look at the size and number of units, the vacancy in the area, a little more detailed stuff. Okay? And then in phase three we get in really, really deep. The beauty of having this analysis numbered out on a document is we can have interns or people that work for us do the work and then report to us, well, really it’s reporting to Andrew because I’m busy making podcasts like this for you guys, what they found. Pretty cool, right?
So, once you have it spelled out everything that needs to be done and we even put links in the Google document, click here to go to the flood map, click here to check out the crime, click here to see what the Census Bureau says about where people are moving to. We can have another person that goes through, fills in all the information for us. Andrew looks at it and it takes him 30 seconds to give it a thumbs up or a thumbs down before moving into phase two.
Your wife could do the very same thing. It is all about being disciplined enough and doing the same things over and over and over. When you don’t know your process, when you don’t know what you’re doing, when you don’t know what you’re looking for, you just trust your gut and you end up waiting for the customers at the restaurant to raise their hand and say, “I want this, I want that, I want this, I want that,” and you run around trying to get them everything they need with no system in place. I’m a big fan of this. It’s one of the reasons I wrote the book Scale, which is the last in the top producing real estate agent series so that agents can learn how to turn their job into a business so that they’re not working until 10:30 at night every single night.
Manny, thank you so much for submitting this question and all of you who are listening, thank you for doing so. I want to see you make money in real estate, but I want to see you enjoy your life at the same time. It doesn’t have to be one or the other. Systems allow that to happen. If you like this show, please do me a favor, give us a five-star review wherever you’re listening to this podcast. Those mean a lot, and don’t forget to comment on the YouTube because I want to know what you thought about what I said, what questions people had, what questions you have, and what do you think about me forgetting to turn the green light on again. I’m definitely not going to be called the Greene Lantern if I keep forgetting this all the time.
All right, everyone, love ya. Thank you for being here. Thanks for choosing to get your real estate knowledge from me and BiggerPockets. We know you could be getting it anywhere and it means a lot that you come to us. You can find me at davidgreene24.com or on social media, @davidgreene24. You can also leave me a comment here on YouTube. Our production staff will check it out and will hopefully get you featured in the show. If you have time, watch another BiggerPockets video, and if you don’t, we’ll see you next week.

 

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