Podcast Summary
Exploring Bigger Pockets Website Features with Special Guests: Listen to episode 86 of the Bigger Pockets Podcast for a tour of the site's features, insights on using DealMachine and Rent to Retirement, and learning about tax savings through 1031 Pros.
Bigger Pockets offers a comprehensive tour of their website at biggerpockets.com/tour to help users navigate the site and understand all its features. This tip was shared during the Bigger Pockets Podcast episode 86, hosted by Josh Dworkin and Brandon Turner. They also discussed the addition of a new community manager and lead editor, Allison Leung, and introduced Corey Binsfield as their guest for the episode. Additionally, they mentioned the benefits of using DealMachine for skip tracing and gaining access to contact information for off-market deals, and Rent to Retirement for buying turnkey rental properties with no or low money down. Another important topic was the tax savings potential through 1031 Pros' 1031 tax-deferred exchanges.
Learning from Real Estate Investors: 1031 Pros and Corey's Journey: 1031 Pros specializes in tax-deferred exchanges, helping investors save on capital gains taxes. Corey's success story highlights the importance of hard work, determination, and exploring various investment strategies.
The 1031 exchange is a valuable tax strategy for real estate investors looking to defer capital gains taxes on the sale of investment properties. With over 30 years of experience and having handled over 20,000 audit-free exchanges, 1031 Pros specializes in various types of exchanges, including delayed, simultaneous, reverse, and improvement exchanges in all 50 states. By working with them, investors can save significant amounts in taxes. Corey, a real estate investor and podcast listener, shares his experience and encourages exploring different theories and paths to success in real estate, as there's not a single right way to achieve it. Corey started investing in 1998, inspired by his brother's success and the lower cost of living in a smaller town. He emphasizes the importance of hard work and determination, as opposed to relying on inherited wealth.
Freedom to create value in real estate markets: Real estate allows individuals to create value and potentially manipulate market conditions, as demonstrated by a personal anecdote of a man who chose real estate over marriage and made his first deal on a napkin.
Real estate offers unique opportunities for individuals to create value and potentially manipulate market conditions, unlike regulated markets. This was evident in a personal anecdote shared about a man who had the chance to marry a wealthy woman but chose to pursue real estate instead. His first deal was made on a napkin and sealed with a 12-pack of beer. Although unconventional, this demonstrates the freedom and potential for individual actions to impact real estate markets. However, it's important to note that while real estate may not be as heavily regulated, there are still boundaries and potential consequences for actions that violate laws or ethical standards.
Buying a property without consulting significant others or employers can lead to unexpected emotions and financial consequences: Communication and financial planning are crucial in real estate investments to avoid unexpected emotions and financial consequences.
Buying a property without involving significant others or employers in the decision-making process can lead to unexpected emotions and financial consequences. Corey shared a personal story about purchasing a triplex without telling his fiancée and without consulting his boss. The experience resulted in tears of surprise and financial commitment, as he took out funds from his IRA for the down payment and entered into a contract for the remaining amount. The property required repairs, and Corey, who considered himself a handyman, attempted to fix it up himself, only to be discovered by his wife as an imposter. The triplex was eventually rented out, and Corey employed house hacking to offset living expenses. This experience taught Corey the importance of communication and financial planning in real estate investments. House hacking, as described in Brandon's article, is a strategy of buying a small multifamily property, living in one unit, and renting out the others to cover living expenses and generate income. While Corey still practices house hacking, he now lives in a nicer property and acknowledges the challenges that come with managing a property while growing older.
Considering Significant Others and Property Challenges in House Hacking: House hacking can save expenses and generate income, but it's essential to involve significant others and consider potential challenges like managing basement apartments and attracting difficult tenants.
House hacking can be an effective strategy for offsetting expenses and even generating income through rental properties. However, it's important to ensure that all parties involved, especially significant others, are on board with the strategy. Additionally, some types of rental properties, such as those with basements, may attract specific types of tenants and potentially lead to more management challenges. It's crucial to consider these factors before making an investment. The speakers in the discussion shared their experiences, with one emphasizing the challenges of managing a basement apartment and attracting difficult tenants. Another speaker, Ben Leibovitch, also agreed with this assessment. Despite some challenges, both speakers acknowledged that their investments were still worthwhile.
From one property to 97 units: The power of determination and hard work in real estate investing: Determination and a strong work ethic can lead to significant success in real estate investing, even if it requires long hours and personal involvement in the early stages. Building a strong team and staying fully committed and passionate about the venture are key to achieving success.
Determination and a strong work ethic can lead to significant success in real estate investing, even if it requires long hours and personal involvement in the early stages. The interviewee shares his journey of starting with one property and gradually acquiring more through a process of buying, holding, refinancing, and cash-outing, eventually reaching 97 units. He emphasizes the importance of being fully committed and passionate about the venture, as well as building a strong team to help manage the properties and business. While the path to success may not be easy and may require sacrifices, the potential rewards can be substantial.
Using different loan options for real estate investing success: Veterans can use VA loans to buy multiple properties, including multifamily units, with low down payment and interest rates, but they must live in one unit first before renting it out.
Having a clear goal and a strong determination to achieve it, even in the face of failure, is crucial for success in real estate investing. The speaker, a veteran, shared his experience of using various loan options to acquire multiple properties, including a contract for deed, FHA, and VA loans. He emphasized that veterans can use VA loans to buy not just single family homes but also duplexes, triplexes, or fourplexes, and they can live in one unit while renting out the others. Moreover, veterans can use the VA loan more than once to buy separate properties. The VA loan's benefits include low down payment and interest rates, which can make it an attractive option for investors. However, it's essential to note that the borrower must live in the property with a VA loan as their primary residence for a certain period before renting it out. Overall, the speaker's story highlights the importance of being informed about different loan options and utilizing them effectively to build a real estate portfolio.
Using VA loans for real estate investment as a veteran: Veterans can use VA loans for real estate investment, but they must live in the property initially and provide a reason to move on. Find a mortgage broker offering this financing option, build relationships, and have a proven track record to secure financing.
Using a VA loan for real estate investment is a viable option for veterans, but there are steps and requirements involved. You must live in the property initially, and if you want to move on to a new property, you'll need to provide a reason to your lender. VA loans can be obtained from various mortgage brokers, but it's essential to ask around and find one that offers this financing option. The speaker shared his experience of transitioning from single-family homes to multifamily properties using VA loans and conventional mortgages. He emphasized the importance of building relationships with local banks and having a proven track record to secure financing. The speaker also mentioned that he prefers self-financing and avoids partnerships. The largest property he owns is a 13-unit building, and he has a total of 29 properties.
Considering Real Estate Partnerships: Partnerships in real estate offer shared responsibility and potential for higher returns, but require trust and good communication. Retirement accounts can be used as a source of partnership capital.
While some investors prefer to go it alone in real estate deals, others see the value in partnerships. The fear of losing someone else's money and potential sleepless nights are valid concerns, but the shared responsibility and potential for higher returns can make partnerships an attractive option. The use of retirement accounts as a source of partnership capital can also be a win-win situation, helping friends or family members earn better returns on their savings while investing in real estate. Ultimately, the decision to partner or go solo depends on personal risk tolerance, resources, and goals.
Peace of mind for homeowners and easy lending for investors: SimpliSafe offers peace of mind with home security systems and a money-back guarantee, while Host Financial simplifies the lending process for real estate investors with fast approvals. Brandon invests in college towns, emphasizing their potential for student renters and government loans, but advises adding overlays to lease agreements to minimize risks.
SimpliSafe provides peace of mind with their home security systems and a 60-day money-back guarantee. Meanwhile, Host Financial simplifies the lending process for real estate investors with fast and easy approvals. Brandon, the speaker, shared his investment criteria, which includes looking for distressed properties within 5 miles of his home in a college town. He believes college towns are great investments due to students' ability to secure government loans for rent. However, he cautions against potential damage caused by students and suggests adding overlays to lease agreements to mitigate risks. Overall, both SimpliSafe and Host Financial offer solutions to make life easier and less stressful for homeowners and real estate investors, respectively.
Effective communication and enforcement of lease agreements: Maintain positive landlord-tenant relationships by communicating effectively, enforcing lease agreements promptly and consistently, requiring one-year leases, and conducting thorough background checks.
Effective communication and enforcement of lease agreements are crucial for successful landlord-tenant relationships, especially when dealing with college students. Being firm yet polite, and addressing violations promptly and consistently, can help prevent issues and maintain a positive living environment. Additionally, requiring one-year leases and conducting thorough background checks can help ensure reliable tenants. Lastly, finding deals through various methods, such as knocking on doors and using courthouse records, can lead to profitable investments.
Discovering Opportunities Through Everyday Tasks and Engaging with the Community: Stay open and engaged with your community to discover unexpected opportunities. Potential deals can arise from simple tasks or everyday interactions.
Networking is not just an event or an intentional act, but a lifestyle. The speaker shares his experience of discovering real estate opportunities through simple tasks like mowing lawns and losing his Palm Pilot. In these situations, he was able to meet people in the community, build relationships, and ultimately find valuable deals. This goes to show that potential opportunities can arise from unexpected places and moments, making it essential to stay open and engaged with those around us. The speaker's advice to take a different route to work and keep an open mind when driving through neighborhoods is an excellent strategy for discovering new opportunities. Furthermore, dealing with landlords in the multifamily space can be advantageous, as it often reveals those who are tired or burned out, creating opportunities for savvy investors.
Treating landlord business like a business: Proper financial planning and forward-thinking strategies are crucial for successful landlording. Avoid neglecting math and potential issues.
Successful landlording requires treating it like a business with proper financial planning and forward-thinking strategies. Many landlords fail due to neglecting the math and not considering potential issues. An extreme example is buying distressed properties from elderly owners who have held them for decades, as shared in a story about a 4-plex sale to a tough negotiator named Myrtle. However, the risks can be high, as illustrated by a wild incident involving tenants from Mongolia who turned out to be dangerous and a tenant's roommate with a foot fetish that led to a district attorney's involvement. When dealing with multiple college students sharing an apartment, potential issues can arise, and landlords must be prepared to handle disputes and lease violations.
Enforcing Roommate Contracts and Managing Maintenance: Landlords must enforce roommate contracts, ensure each pays rent separately, act as mediator for new roommates, and have a reliable maintenance team for emergencies. Focus on making all money going into the deal and understand that real estate is not forgiving if bought wrong.
When dealing with roommates in rental properties, it's essential to enforce the legal contract and require both parties to fulfill their obligations. The landlord should not allow one roommate to move out unilaterally without the consent of the other, and each roommate should pay rent separately. The landlord acts as a mediator to help facilitate the process of finding a new roommate if necessary. It's also crucial to have a reliable maintenance team in place to handle emergencies when the landlord is away. An important lesson shared was the misconception that appreciation would bail out a real estate investor. Instead, it's essential to focus on making all your money going into the deal and understanding that real estate is not forgiving if you buy it wrong. The investor in question learned this lesson the hard way with three underwater properties, but fortunately, they were still generating cash flow. Lastly, when the landlord goes on vacation, they should ensure they have a reliable maintenance team in place to handle emergencies. The landlord can provide tenants with a contact number for maintenance and trust that their team will handle the situation professionally.
Importance of a Strong Team in Real Estate Investing: Finding good team members through referrals, building a network, trusting them to handle problems, and considering passive real estate investing methods like master leasing, note investing, or property management software for larger-scale investments.
Having a strong team in place can help alleviate the importance of an individual in managing real estate investments. The speaker shared personal experiences of trusting team members to handle problems while he was away, and how the business continued to thrive during his absence. He emphasized the importance of finding good team members through referrals and building a network. Another key takeaway was the consideration of transitioning from active real estate investing to passive income through master leasing, note investing, or other passive real estate investing methods. The speaker also highlighted the importance of technology, specifically property management software, in managing larger-scale investments. Lastly, the decision between single family and multifamily investments depends on individual goals and objectives, with multifamily investments offering more opportunities to create value.
Desire for a great life drives successful real estate investors: Successful real estate investors prioritize a great life, work hard, take risks, and maintain a clear vision to achieve their goals.
Successful real estate investors, according to Corey Binsfield, are driven by the desire for a great life, rather than settling for a good one. They're willing to take on risks and work hard to achieve their goals, even if it means stepping out of their comfort zones. Corey also shared his favorite real estate and business books, including "The Millionaire Real Estate Investor" by Gary Keller and "Berkshire Hathaway" by Warren Buffett. He also mentioned his hobbies, such as spending time with his family and paddleboarding. When asked about what sets apart successful real estate investors, Corey emphasized the importance of having a clear vision and not letting a comfortable life get in the way of pursuing bigger goals. He encouraged listeners to take action and go after what they want, even if it means taking on risks. Overall, Corey's insights offer valuable advice for anyone looking to get started in real estate investing or looking to take their business to the next level. By focusing on the right mindset and resources, anyone can achieve success in real estate.
Leverage the BiggerPockets Community for Learning, Networking, and Business Opportunities: Engage with the BiggerPockets community to learn, connect with investor-friendly agents, and grow your real estate network for financial freedom
Engaging with the BiggerPockets community can greatly benefit real estate investors. Whether it's leaving a review or joining the platform, the community offers opportunities to learn, network, and do business with like-minded individuals. Additionally, finding an investor-friendly agent through BiggerPockets Agent Finder can help investors navigate the market and make confident investment decisions. Remember, the goal is financial freedom, and it's not about timing the market but rather time in the market. So, join the community, connect with agents, and take the next step towards achieving financial freedom. And don't forget to follow BiggerPockets on various social media platforms for more resources and updates.