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by | 04, Jan 2023

Step-By-Step Guide To Investing In Real Estate In 2023

2023 is here, and we have the step by step guide for real estate investing in the new year.

If this is the year you’ve decided to finally invest, then we’ve already done all the work for you. All you’ll need to do is follow this guide. Whether you want to passively invest, or actively invest, we’ve laid out the road ahead of you.

Here’s one important note for you… this is not going to be easy. Real estate investing is needlessly complicated, and that scares a lot of people away from it. But we’ve made it as simple as possible. But that does not mean it will be easy. There is a lot of work involved, and it takes time.

Real estate is a long-term game. BUT… if you’ve been thinking about it for a while now, this is the time to start!

So listen in to hear our step-by-step guide to real estate investing in 2023.

Tweetable Quotes:

“I’ve never seen a mentorship mentee relationship where it started because the person said, will you be my mentor?”– Anthony Vicino

“It’ll take a lot of underwriting before you’re able to look at a deal. and feel confident.” – Dan Krueger

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five rules of investing

The Five Rules of Investing

*Transcript*

Investing In 2023

[00:00:00] Anthony: Hello and

[00:00:13] Dan: welcome to the podcast and

[00:00:16] Anthony: to the year of our Lord and Savior. 2023. Amazing. That’s not how people say that. Welcome to the new Year.

[00:00:25] Dan: Hi, .

[00:00:28] Anthony: Dan. Dan, it seemed like maybe you were left behind him last year, like it took you a minute to come in there. You left me all alone, floundering, um, in the new year.

This feels, this feels terrifying. This feels,

[00:00:37] Dan: this feels fake to me because technically,

[00:00:40] Anthony: Well, we’re faking it

[00:00:41] Dan: this December 30th, so here’s the problem. Yeah. This ism movie magic here. We’re pretending. Yeah.

[00:00:47] Anthony: We’re in the past, projecting into the future, and in fact, when you’re listening to this, we will be dead.

[00:00:53] Dan: We might be, I don’t know what’s gonna happen. It might be like Y2K all over. Ooh. What if

[00:00:57] Anthony: I call, what if we call our shot right now? Ooh. [00:01:00] Say, Hey, this episode, we’re recording it on December 30. Wait, today’s the 31st. 30th. 30th. Okay. So for a minute there I thought, oh man, it’s today New Year’s Eve. No, shows you how outta the leap I am.

But there is a chance that Dan and I will no longer be with you, um, in the new year. So this is a message from beyond the grave. And now that we’re dead, Dan, I feel a whole lot wiser. I feel

[00:01:26] Dan: like I have a lot less responsibility.

[00:01:28] Anthony: I feel like my baggage is amazing. I feel free

[00:01:33] Dan: you just kick back and haunt people.

[00:01:35] Anthony: If you were a ghost, like as you kind of think about your afterlife, do you think it’s going to be a traumatic experience ghost, or do you think it’s gonna be kind of a whimsical experience? Ak Casper. Oh,

[00:01:52] Dan: when you said ghost, did you mean the,

[00:01:53] Anthony: like the pottery? Demi Moore? Yeah. Like it’s, it’s kind of romantic, but also heartbreaking at the same.

[00:01:59] Dan: I felt like [00:02:00] that was a pretty cool way to be a ghost cuz you’re like able to walk through walls, but for whatever reason, and he’s cool with whoopy gold all through a floor, but you could walk through. I didn’t understand that piece. That’s a huge plot

[00:02:11] Anthony: hole. There’s plot holes, just so you guys know. Yeah.

Any plot holes in Casper you’d like to discuss? No. None. Okay. Well, coming from beyond the grave as we are, uh, we now have, uh, Omnis. That’s a thing ghost have, right? I’d assume so. Yeah. We just know everything, which means that we can look into the future and to the, and to the rest of the year further beyond where you currently are.

You, you, time locked, mortal. And we can tell you with absolute certainty what you should do in 2023 to succeed as a real estate investor. Especially actually, not just especially, but only, um, really this advice is only good for a limited time. ,

[00:02:51] Dan: um, yeah, this year, next year, year 2024. This advice is good

[00:02:55] Anthony: advice.

Horrible. So if you’re just starting out and you’re like, how do I get started? How do I get into this game? [00:03:00] How do I maximize 2023? I want to be a billionaire. I got the big billion energy. What do I do? Well, you’re listening to the wrong podcast. First of all. Um, clearly that’s not what we’re gonna discuss here, but maybe we can lay out a, a framework, a timeline of things that you should be.

To maybe get your first deal done. Yeah. So who, who, who do you imagine this episode’s for? Like who’s, who’s listening to this and, uh, and that person’s gonna perk up and be like, they’re speaking to me.

[00:03:30] Dan: It’s, it’s an excellent question. Mm-hmm. , because I feel like there’s probably six camps and I wrote down two lists.

Oh, you did? I’ve got a passive list of what you need to do and an active list. And to be honest, the first half of each list is exactly the same.

[00:03:45] Anthony: Last. Where do they don’t tell me, don’t tell me this is No, you’re fine out. This gonna be, this is gonna be exciting. He’s just kind of buried the lead. Okay. I like that you went this angle because I was much lazier and I was thinking, okay, somebody, I, I see no notes.

I literally no notes. Notes done. No [00:04:00] preparation per you. Um, these are still notes from the last episode. , like, because I’m dead. I stopped planning. Um, I was thinking, okay, so if you’re between 20 and 40 years, and you’re looking to get into your first active real estate investment and your, your, your hope, your i your dream is someday to scale into larger commercial deals and make this a full-time endeavor.

Like you wanna build a business around it. Um, but you wanna start first, get your hands dirty with something small and manageable. You could be

[00:04:29] Dan: older. I mean, the individual you were talking about is, I think over 40. That’s a very good point. Some people get into this at 50. Honestly, I talked to a, a couple investing, uh, potential investors a couple weeks ago who are retired.

I’m must say they’re probably, at least in their sixties, I didn’t ask, but you know, some people don’t get started until they’re

[00:04:47] Anthony: Yeah. Sixties. Yeah. Age is such a weird, weird thing. Let’s not even like bucket that, because it doesn’t matter if you’re just looking to get started, go small and then get bigger over time.

Mm-hmm. , we’ll lay this out, but I like that you brought in the passage too, because I didn’t think about. [00:05:00] because they’re so, they’re so quiet. You guys just sit there in the corner so passively, so quietly, I don’t even know you’re there. Maybe you could make a ruckus. You could go over to iTunes, you could drop a review.

You could let us know what you think of this. Very, very strange peculiar New Year’s episode. Mm-hmm. . Um, you know what, if you don’t leave us a review, I’m gonna come haunt you. I’m gonna

[00:05:20] Dan: haunt you. That’s not good. Yeah. So I have a question. What’s up? If we’re ghosts and people are watching us on YouTube, which they should, uh, can they see?

[00:05:28] Anthony: Yes, of course. Okay, good. I mean, it’s very strange because in death I actually tanned a bit more than I was in life. You don’t look like you did no . Yeah. Well, uh, it’s all different levels of translucence, isn’t it? I don’t even know what that means. It means I’m pale. means means they called me Anthony, the pale ghost.

Well, before I was. Deceased. That’s all good. Yeah. All right, so let’s talk about some bad investing advice before we get into the actual [00:06:00] stuff that’s supposed to be good.

[00:06:02] Dan: Okay. Let’s do it. Bad in bad investing tip of the week is, uh, the best way to invest in anything is to find great asymmetric risk reward ratios, which means those risk reward ratios are lopsided.

I mean, there’s a lot more upside than downside. Usually so many

[00:06:21] Anthony: big words that would win you Mini scrabble contests. Ratio. What is this Asymmetric. If

[00:06:29] Dan: you risk the, you trying to impress me to make $2. That’s lopsided. That’s asymmetric. There’s more upside than downside. Oh, that sounds like good advice

[00:06:39] Anthony: though.

Way. Wait, wait. Is that true though? If I risk $1 to make $2, I, I, I risked one full dollar for the opportunity to make one full dollar. Is that

[00:06:47] Dan: asymmetric? . If you’re wrong, you lose a dollar. If you write, you make two. I make a dollar.

[00:06:53] Anthony: No, I only make $1 if I’m right. Cause I already had the dollar two

[00:06:56] Dan: anyways.

This is the we. The profit is two . [00:07:00] Is it? Yeah. The initial of this was one. No, you’re overthinking it . You’re risking one for the potential to make two. Okay, I see. Two would be the. Okay. , like you’re way overthinking. It seems like ones a anyway, , but that sounds like it should be good, right? Because we say it all the

[00:07:19] Anthony: time.

I mean, Neci Tole is all about those asymmetric returns as barbell investing strategy. Make sure that you invest in things that have capped downside and potentially infinite upside. Right. This is, um, the, the whole game of angel investing, right?

[00:07:35] Dan: Yeah. Pretty much. Those are extreme scenarios. Yeah.

[00:07:37] Anthony: Yeah. Um, but this is bad advice.

[00:07:39] Dan: This is bad advice. They should not be doing this, uh, Not necessarily, but there’s another very important component that you must take a look at when investing, not just where the asymmetric risk reward ratios and getting into those, but. . Secondarily, you also want to de-risk your investments as soon as [00:08:00] possible.

And this is very much in line with good old Buffett’s, uh, first couple rules of investing, which is number one, don’t lose money. Number two, don’t lose money. So what does this actually mean in practice? What this means is, okay, you find a great opportunity, maybe it’s a real estate investment. Um, the way to de-risk that investment would be at some.

To do maybe a cash out, refinance and extract some, or maybe all of your initial investment, your initial cash invested, right? That takes a lot of risk off the table. It’s a great way to do it there in the public markets, if you’re, you know, doing stuff with stocks, things like that, maybe you got into, let’s say, apple, 200 bucks and you said, okay, if it goes down to one 50, I’ve got a stop loss there.

I’m gonna cut my losses get out, but my target is, um, three 50, right? Stock goes from 200 to 2 75. You move your stop loss up to break even, or maybe a little bit above. Then your worst case scenario is you only make a little bit or you break even, right? You wanna try to get to that point where you can take that risk off the table as soon as possible, so don’t just look for the asymmetric risk rewards and then leave ’em static.

You [00:09:00] always wanna try to be managing your risk and trying to get as much of it off the table as possible while still keeping that. . So this

[00:09:06] Anthony: is where that phrase take profits or don’t comes in. Mm-hmm. .

[00:09:11] Dan: Yeah. Yeah. And it might not be a stop loss thing, like maybe you bought a hundred shares of Apple, it gets halfway to where you thought it was gonna go.

Sell a little bit, sell a third, sell half of it. Take some of those profits, lock ’em in, let the rest of ’em run. But uh, yeah, de-risk your investments as soon as possible because it’s not necessarily a fixed, um, it’s not necessarily a fixed thing. You can massage that and hedge. In various different

[00:09:33] Anthony: ways.

What, what are your thoughts on tax loss harvesting and how does this play into that concept?

[00:09:37] Dan: Most people I don’t think need to worry about that. If you’ve got a lot of money to work with it, it makes a lot of sense. And that’s basically where like the very end of the year, you’ve got some, uh, positions and equities.

This wouldn’t be related to real estate at all. This would be with stocks, but maybe you’ve got half your portfolios down, uh, for the year. You might sell some of those losers to lock in. Those losses, those losses would, um, uh, offset [00:10:00] some of your. Uh, actual gains in that year, and then you just turn around and buy those things right back, uh, right after the first year.

Mm-hmm. , get

[00:10:07] Anthony: back into it. Pr presumably you could do this in real estate, maybe not with the buyback option, but you could, you could take your losses and, and then if you really wanted to,

[00:10:16] Dan: you don’t need to, you just depreciate, you know, accelerated depreciation does it. So Coop,

[00:10:25] Anthony: so, uh,

[00:10:27] Dan: now what? I don’t know.

I. , I guess we talk about, um,

[00:10:31] Anthony: how to get started in 2023. Yeah, man. Okay. Well, I mean, if people are still listening, that’s what they want here. I kind of thought, is that what you guys want? I kind of thought they would tune up. I know. I’ll be honest. That’s why I didn’t take any notes. Okay.

[00:10:43] Dan: Yeah, we didn’t, we assumed we were gonna be able to weasel our way out of this one, so now we’re, now we’re on a pickle.

Yeah.

[00:10:50] Anthony: Yeah. . Okay. Okay. I can wing this. Let’s do it. Okay. Let, here’s how to get started in 2023. Do you think they believed us when I said that we were on mission and knew exactly what they needed to do [00:11:00] in

[00:11:00] Dan: 2023? I hope not. Okay. I was totally bluffing

[00:11:04] Anthony: y I was. It was a lie.

[00:11:05] Dan: Damnit. There’s wasn’t a bluff. We got, we got a phone it in.

You ready? Yeah.

[00:11:08] Anthony: Okay. So if you’re getting started 2023. Let’s take this from the active investor’s perspective first. What do we need to do to set ourselves up for success? And I think the first thing is always to. , right? Like you have to be listening to these podcasts. You have to be reading books. You need to be talking to brokers, to lenders.

You need to be talking to other investors in your market. You need to start educating and becoming a sponge, absorbing all the information that you can, because before we can sit down and say, is this a good investment or not? We need to know a whole lot more about real estate, about investing, about the market cycle, about the neighborhood, about everything before we can get down to that single yes or no.

Is this worth? and so start with educating. That’s an easy one. Yeah. Mm-hmm. , I think we

[00:11:54] Dan: can all agree there. Yeah. My number one for both active and passive individuals was read, but really what that means is, [00:12:00] you know, educate yourself, whether it’s podcasts, books, articles, Blogs, just consume as much as possible.

And you’re probably gonna have to spend, uh, you know, I’d say if you’re gonna be active, you’re gonna spend more time on this piece. But you know, anybody who’s interested in this, and they’re coming in completely green, prepared to spend at least a few months, uh, cramming knowledge into your head knowledge.

Um, this is the most important step, and that’s why I put it as number one.

[00:12:26] Anthony: Yeah. Yeah. I think if you’re a passive investor, you can pick up this book right here. Passive Investing Made Simple. Um, you could listen to this podcast. We talk a lot about this. Where can people find that book? Is that Amazon? Um, you could go to Amazon and get it.

You could go to the passive investing book.com. I, I don’t tell people this nearly enough, but you can actually get the book for cheaper. by going to the passive investing book.com rather than buying it from Amazon. So tell Jeff Bezos well on Amazon, this book sells for, I think, $20. If you go to the passive investing book, you, you technically get it free.

You just have to play sh pay shipping and the [00:13:00] shipping’s $7. So that’s way better than that. It’s way better. Yeah. I, I probably should tell people that more, more frequently. Sorry, Bezos. I just, the other day, I think Reid didn’t even know that he was our marketing guy. That’s, that’s where the deals are, guys, the passive investing book.com Anyway, but if you’re active, you’re gonna need to spend a whole lot more time getting, getting comfortable with this stuff.

But you have to. Resist the, the temptation of just going into that analysis paralysis and, and making the mistake that I see a lot of people make, which is they confuse consuming information with taking action. Mm-hmm. , and they think, oh, I’ll just read this book about this, this thing and that other thing.

And at a certain point, you know, enough technical like book knowledge to go out there. And now the important thing is to start applying what you know because it’s in the application that you start to realize how. The theoretical knowledge falls from real world practical application. And so as soon as possible we want to get out there.

We wanna start, you know, talking to brokers, getting on the m l s, and we wanna see their listings and get on [00:14:00] their email list. We wanna start touring properties we wanna sit down with, with lenders and start having conversations about like what the lending environment in your particular market looks like.

Because in those conversations, you’re gonna realize just how little the books in the podcasts can actually prepare. for the actual conversations you’re gonna have.

[00:14:19] Dan: Yeah. Yeah. I’ll tell you what, I’m gonna lead this because you’re all over the place. Oh, I’m so sorry. I’ve got this done sequentially. You got all the stuff in there.

Oh, but you’re kind of throwing it all in there, . So step number two, okay. On my list is, uh, networking. And the way I’d, I’d think about this for everybody, active or passive, is it’s not like you finish learning in step one and then start step two, networking. You’re just starting to add things in there. So you’re gonna be constantly learning.

Mm-hmm. , um, whether you’re passive or active. When you’re passive, you might kind of, Uh, taper down a little bit, but if you’re active, you damn well better be. Consuming new information as much as possible. But as you’re learning, as you kind of get to that point where you’re okay, what’s the next step? I gotta start integrating myself [00:15:00] into, uh, the ecosystem.

Whether you’re active or passive, that’s where you need to go out. In certain networking, like Anthony mentioned, if you’re active, this would be brokers, lenders, that kind of stuff. Uh, if you’re passive, uh, going to conferences, going to meet. Uh, try to meet other people who are doing the thing, both active and passive, so that you can get plugged into the right networks and be able to actually start seeing opportunities when you get to that stage.

[00:15:20] Anthony: Mm-hmm. ? Yeah. Okay, so I, I understand where you thought I was kind of flopping around and I was flopping like a fish a little bit, but what I’ll say is that I, I think one of the difficulties of networking in the beginning, that, uh, kind of annoys me is when people reach out and they don’t have a clear agenda, they don’t have a clear purpose for the meeting, and so they’ll say things like, Hey, I would love to meet you.

I love networking with other professionals in the market and I’d like to get some coffee and meet up and, you know, see if there’s any way that we can work together. I have no time or energy for that. And most like established people that you’d want to network with, they don’t have time for that either.

And. . I find one of the easiest ways in the beginning to network is when there’s a very clear intent. Mm-hmm. . So like, instead of just reaching out to [00:16:00] the broker and like, Hey, do you wanna go out for lunch and like get to know you? The best way to network with a broker is to go tour a property with a broker.

Right?

[00:16:07] Dan: Yeah. No, I, so I think actually what I’ll do, Don, is I’m gonna flip flop my number two and number three. So I had reading, getting educated. Uh, number two was, was networking, but number three was identifying your parameters. So let’s actually flip flop three and two. , get yourself educated, then identify your parameters, figure out what you’re looking for.

Then get out there in certain networking, because to Anthony’s point, Very good point. And you’re not gonna realize this is a newbie, but once you get integrated, you’re gonna realize this is kind of annoying when people are just networking, but they don’t know what they’re looking for, or they’re just all over the place trying to do a million things, like figure out what it is you wanna focus on so you can have much more productive conversations with people.

Yeah,

[00:16:42] Anthony: that’s really good. I can’t believe we, I, I totally for missed this one, but that the, the defining your investment parameters is the, one of the most important steps because it’s chalking the field and saying, this is the game I’m gonna play. And until you do, When we sit down, and even if I want to be helpful to you, if I don’t know [00:17:00] whether you’re trying to play soccer, football, baseball, or tennis, I can’t really be helpful.

Like if, if you’re asking me like, for advice on how to hit the ball, and I’m like, well, what kind of ball is it? Is it a tennis ball? Is it a football? Uh, I don’t, I don’t know any other kind of balls. We got volleyball, I guess like, and, and so many conversations. I want to be helpful, but I just simply cannot because you don’t have a clearly define.

Outcome. And so that’s gotta be the start is pick your lane. And the temptation in the beginning when you’re new is to try and hedge and pick like three balls. You’re like, oh, I’d like to be able to, to play volleyball, baseball, and football. You’re gonna suck at all of ’em, and you’re not gonna get chosen for any of the teams.

So you need to pick a ball. I don’t know why I’m going so hard at the sports analogy, but we’re here. You gotta pick a team, you gotta pick a sport and you gotta like dedicate yourself to that thing. So within real estate, that’s, if you wanna be a wholesaler, be a wholesaler. If you want to be single family, fix and flip, be that.

But [00:18:00] don’t be the guy who’s interested in house hack hanging a duplex who’s also looking at a 32 unit self-storage and who’s also looking at a mobile home park in, in Tampa, like, Don’t, don’t be

[00:18:09] Dan: that person. And that’s the tough part about, uh, getting out there, networking, learning. And in these early stages, you’re gonna be discovering all this cool new stuff and it’s really easy to get shiny.

Object syndrome. Um, try as hard as you can to not get it. Just focus. Find the thing that you can understand the best that, uh, seems, uh, as frictionless as possible for you to get up to speed on. And it might not seem like the sexiest thing compared to what this guy at this conference was freaking out about.

That seems. Amazing. But just pick something and focus on, I can’t speak highly enough of, of, of the power of focusing on one thing and getting really good at it.

[00:18:44] Anthony: You pro probably in the beginning, a lot of questions I’ll get is like, what’s the best investment for me? and I’m like, truly, it doesn’t matter.

Like in the grand scheme of things, like in commercial real estate, like you could put, you could throw a dart at the board. If it landed on industrial, it’d be like, cool, that’s a great, that’s great. Oh, you landed on multifamily. Fantastic. [00:19:00] That’s great too. It doesn’t really matter where it lands. What it matters is what can you get excited about and what can you stay consistent with?

Yeah, just pick that lane and then go hard at it. But then to your point, like in the beginning, you’ll be tempted with these shiny objects because everything looks like green pasture. But the truth is the grass is greener where you water it. So water, the grass you’re standing on. But then as you get to like further along, and we’ve learned this the hard way too, is that the opportunities that are presented to try and distract you from your lane, they get sexier and sexier.

Right. Yeah. So we went through this last year where we were looking a lot of development deals and like looking at, okay, what would it look like to get into ground up development, because that’s a really sexy looking siren. Sounds cool. It sounds really cool. Build a building. Then we realized like, oh crap.

It’s a learning curve. Now we got distracted . Yeah. We didn’t stay in our lane entirely. Yeah. You know, and luckily we didn’t cost us anything. We didn’t get just that distracted, but

[00:19:58] Dan: yeah. But it’s like, the [00:20:00] question is how much time did you. to that. How much time did we spend going to, we met some great people, but had we put all that time and energy into our, our niche, our core focus, you know, what could have come of that?

I don’t know. Yeah. 2023 was, or I’m sorry, 2022 was a lot different focus than 21. A hundred

[00:20:18] Anthony: percent. It was very productive. It was because we were solely f we said no to practically everything. in 2022. That came our way literally. And as a result we closed 12 buildings. Yeah. So who, who? Hoorah. Hoorah. Um, alright.

What’s your next step? So we, we’ve set our investment parameters, we’ve done some networking, done, done some educating. , that’s not the order in which we talked about ’em, but what comes next?

[00:20:41] Dan: Yeah. So at this point, number four, and I don’t know if you wanna call this networking or whatever, but when I wrote networking for number three, I, I was thinking of that more as like conferences and meetups and things like that.

Still for education. Yeah. Okay. And then step four, I’ve got, uh, for the passive individual, start [00:21:00] finding slash meeting operators. Step four for the active investor would be to, uh, start reaching out to brokers, touring properties, uh, meeting with lenders, meeting with all the people you’re gonna need to get involved.

Lawyers, syndication attorneys, CPAs, all those professionals you’re gonna need in your court. That’s when you need to start, uh, meeting up with all these people cuz you don’t want to go out. focus on the brokers first, which a lot of people do. Yeah. Get a deal under contract and then realize, oh wait, I don’t have a lender.

I don’t know who to get insurance from. I don’t know who a good C CPA is. I don’t have a lawyer to put the docs together. You wanna have all these people in your court before you find a deal that you’re actually gonna run at. Mm-hmm. . And then for the past individuals, I think it’s mostly about trying to find those best operators, which could take a little while because these are private deals

[00:21:45] Anthony: typically.

So, yeah. So from the passive perspective, There it is probably a lot easier in one sense to network with operators because if you have money and you’re interested in, in giving it to somebody, like they’ll probably take your phone call, right? And [00:22:00] so getting in front of these operators is fairly easy, but the harder part is for you to get to the level of comfort required where you could confidently give them large sums of.

and that part takes time. I think like between when you first maybe learn about us and what we do and we hop on a phone call between that moment and when you finally feel comfortable enough to invest with us, that could be 6, 9, 10, 12, 42 months, 42 months. That’s a long time . But you know, you gotta give yourself that period of time.

And the same with, um, on the active side. I think you had a really good distinction there in the beginning. That first layer of networking is probably more conferences, meetups. gen, very broad, general, and you really want to delay getting into the room with a broker and a lender until you can speak their language intelligently enough.

Yeah. And confidently enough that they can say, okay, you’re new. , but I can see that you understand what you’re doing. You’re committed to this and you have the tools and resources to succeed. If you go to them too early and you don’t have those things, you just burn a [00:23:00] bridge and they’re never gonna take your call again.

Yeah.

[00:23:02] Dan: And plus, I think if you, um, like Kathy said, start with your initial networking up. Conferences, things like that, that could lead to a really warm introduction to a broker, which would help, um, them take you a lot more seriously. And the same goes for lenders. If you’re newer, and this is your first deal, that might be a, a bit of a hurdle, is trying to find a bank that’s actually gonna work with you if you’ve never done the thing.

Your balance sheet’s looking a little bit light. Um, , you know, having a warm introduction, which is how I got into my first deal. I had a family friend who did a lot of business with a, a certain banker. He made the intro. They were willing to work with me right off the bat, which is great cuz my balance sheet was not impressive.

Mm-hmm. and I had no applicable experience, um, a finance experience. I had no property management experience. I had no, uh, real estate experience. Warm intro helps. Going to conferences might be a good way to, to do that.

[00:23:49] Anthony: Yeah. So the next thing here in my mind is that you need to start seeing deals and whether you’re active, passive, if you’re getting into like small residential or larger commercial.[00:24:00]

It’s all gonna be kind of little, a little bit different. So on the one hand, if you’re looking to start small in residential, like a duplex, TriFlex, quad, something that’s under five units, and the reason that number is important is because those properties are valued differently in the type of loan product that you take out is different than on properties above five units and so on.

The smaller ones, they’re typically gonna. on the mls, which is like the multi listing service. They, they’re usually gonna be represented by residential brokers. And one thing to know here is you’re gonna want to get onto the MLS and start seeing these deals, but depending on which broker you go through or realtor, they, they might try to get you to sign an exclusivity contract.

No, and don’t do that. Like your goal is to get on their list and see deals and to get on the mls, but do not sign an exclusivity contract with any, with any brokers at this point. If they ask for it, just say, oh, I’m not comfortable doing that yet. Like I, I really just wanna see what’s out there, get, get an understanding.

If they’re not cool with that, just move on. Find a different person that will,

[00:24:59] Dan: and this is [00:25:00] probably gonna be most common if you’re working with an agent that primarily is working with single family homes. Yes, it. Almost guaranteed not going to happen if you’re dealing with a commercial broker. But those, uh, residential, uh, agents that are primarily working with people who are just buying their primary residents, it’s very common for them to want to try to lock that person up with them.

But you are severely limiting your options if you sign that, that means any deal you do has gotta go through, uh, that individual. , which just wiped out like probably 99% of the opportunities that you might be able to find. So yeah, hard pass. Don’t do that. So

[00:25:33] Anthony: then on the commercial side, like you said, that’s not gonna happen so much.

So what happens in the residential side, just for clarity, is there’s typically two brokers involved. Two agents, there’s usually a buyer’s agent, there’s usually a seller’s agent, right? So the buyer’s agent is one that’s putting it en listing on the pro, uh, putting it on the MLS and putting it out there.

And then your buyer’s agent is representing. and ideally we’re not exclusive to them. Now, this is different. That’s normal in that world, and sometimes you can even get by with just one agent, but typically there’s two. [00:26:00] As you get to the commercial side, that changes. And this is what trips up a lot of people.

So go into a deal and they’ll have their own agent to try and like liaison and be their broker. That’s a no-no. That’s a good way to quickly make yourself look like a nbe. There’s usually only one agent on a commercial deal. There’s one broker and they represent both the seller and the buyer. And that’s, well, they represent the seller.

That’s not an ideal situation. Yeah.

[00:26:22] Dan: Right. Like that’s an important distinction I think too, for people who are newer to. When you are looking at a property that’s being listed by a broker, um, yes. There’s only one guy in the transaction. He’s the only middleman there, but he doesn’t represent the guy. He’s not yours.

He’s getting paid by the seller to sell the property. So take what they say with a granted salt. Um, they’re trying to market a product to sell it and get their commission. They, and most of the guys we work with, they, they have everyone’s interest in mind, but at the end of the day, they have a fiduciary responsibility to the.

And they gotta put that guy first.

[00:26:53] Anthony: Yeah. When, when I say that they’re representing, what I really mean to say there is that they’re probably gonna be the bridge that negotiates between both [00:27:00] shores. Yes. And that’s problematic because they have a bias towards one of those shores. Mm-hmm. . So just be aware of that.

Um, okay. So, but when you start looking at those deals, you’re going to, there’s not an mls, there’s not just a single website that you go and get these commercial listings. You’re gonna need to go and get on these individual brokers actual email lists, so that as they have opportunities, they send them to you.

And that’s where you’re gonna wanna start. You can go to LoopNet, you can go to Krei. Those are kind of the garbage cans of the internet, but. You can go there, you can find these crappy listings and find the brokers that are listing them and then join that broker’s email list. Cuz a lot of times these brokers, they know these deals aren’t gonna sell, but they keep ’em there for, for publicity so they can get their name out there.

So that can be a really good way if you don’t know. Who should I even go? Who should I find? Who, who are the brokers that I should talk to? Mm-hmm. . They’re probably not gonna be the cream of the crop, but it’s a starting point.

[00:27:51] Dan: Yeah, no, that’s a good point. Um, and we actually had the same number five here for the passive investors.

I said, go look at deals from those operators you’ve been networking [00:28:00] with and start to look at a lot. And then for the active individuals, which is what we were just talking about here, um, I wrote underwrite like crazy. But that basically means like, go look at a ton of deals. And like Anthony mentioned, like LoopNet.

Kind of the commercial mls, so to speak. But really the stuff that ends up there is the stuff that has already been shown to all the, uh, experienced, active guys around and they’ve passed on it for some reason. And that’s when it ends up in looped up. And that’s why Anthony was saying that’s kind of the garbage can of the internet there, because if it’s on LoopNet, that means it’s already been shown to everybody.

And for some reason or. It didn’t, it didn’t sell. So if it’s there, it’s a tough deal. But it’s a great spot to find deals, to practice underwriting cuz you’re gonna be able to go over and find, uh, price point, uh, rent rolls and most of the data that you’re gonna need to start to underwrite deals. And. If you are gonna be active, you’ve gotta set your expectations reasonably here.

You’re gonna have to look at a lot of deals before you find anything worth doing, and you’re gonna be really tempted to run at all the first, you know, 5, 10, 15 things you look [00:29:00] at cuz you’re gonna want to get in so bad. But trust me, you’re gonna probably look at a hundred things before you find. , the one that’s actually got those, those parameters that you need.

That nice asymmetric risk reward that we were talking about.

[00:29:13] Anthony: Mm-hmm. , I think the, the LoopNet angle is interesting because you can often go there and just download operating memorandums with No, you don’t have to give any contact information. Yeah, it’s all free. Yeah. And that can be a really great way just to see how deals are structured, what kind of broker information they give out.

And the exercise here is not to say, does this deal make sense or not? It’s to ask yourself, under what parameters would this deal make? Yeah, and once you start looking at things through that lens, you realize every building that comes across your table is a potentially good deal. You just have to know at what terms it would be a good deal.

Doesn’t mean you could ever in a million years get the building for those terms, but there are terms in which it would be a good deal. So your goal is to not just dismiss things and say that’s a crappy deal. . That’s a hard pass. They’re asking way too much. It’s they, okay, [00:30:00] what would I need to buy this for?

Mm-hmm. , like, what’s the minimum or the maximum number I would buy this for? That would make sense. Yeah. And so go through that motion, because that’s one of the best educations you can get.

[00:30:10] Dan: Yeah. And it’ll take a lot of underwriting before you’re able to look at a deal. and feel confident, like, okay, this is the outlier, this is the one that makes a ton of sense.

Early on, a lot of people are gonna be like, okay, how do I know if this is good or not? You’re gonna have to probably underwrite at least 30 to 50 different properties before you start to notice, okay, here’s uh, here’s a really good one, here’s the outlier. But early on, everything’s just gonna kind of look like, oh, it could be good, it could be bad.

I don’t know. But if you do it enough, if you get the reps in, you’re gonna develop that sense. determining what’s actually a good deal because they’re very few and far between at at

[00:30:46] Anthony: some point in all this. I don’t know if you have it listed here, but, and I don’t even know if it would be like a step six or seven or like whatever, but kind of like tucked in simultaneously is it would not be a bad idea to find a mentor or a [00:31:00] coach.

It have somebody who’s further along on the journey to look over your shoulders at this. because to Dan’s point, you don’t really know what’s a good deal or what’s not. So having somebody who’s experienced in your market and like the, the things that make sense, it’s a good deal that that can be a really good idea.

Yeah, I don’t

[00:31:17] Dan: have that in here, but that would be a great one to probably tuck in around the first three steps where you’re learning, networking, identifying parameters, you know, maybe when you’re out there at those conferences, meeting all those, uh, people who have more experience than you. That’s, that could be a good time.

To find that it’s, it’s tough. I mean, you don’t want to just go up to people at a conference and say, we be my mentor. Don’t do that. You’ve actually gotta curate a really good, strong relationship before that develops organically. You could obviously hire somebody too,

[00:31:43] Anthony: but, um, I’m not as big a fan of that.

I, I like the organic mentorship relationship. And here’s a secret that you can do with this is go to those meetups and find the people that are further along that you look up to and know this person’s interesting. Find ways to add value to them, stay relevant in their. , see if you can take ’em out to lunch and [00:32:00] not just pick their brain.

That’s not value to them like, but figure out what would add value to their life. Mm-hmm. try to maintain that relationship and then as you start to get deals, you just reach out to them and say, Hey, I underwrote this thing. I’m, I would love your opinion on it because people love giving advice, right? And so if you can do that from a position where you’ve already established the relationship, if, if you’ve already taken me out to lunch and we’ve had a good rapport, and I like you and I, I’m, I’m invested in your success and you show me a deal, I’m like, Yeah, I’ll take a look at it.

I’ll give you some feedback. Mm-hmm. , it won’t take me very long typically. So that’s how you get mentors. It’s not, it’s never, I’ve never seen a mentorship mentee relationship where it started because the person said, will you be my mentor?

[00:32:42] Dan: Yeah. And pro tip on that adding value thing, I think that’s, that’s key, uh, to build a rapport on a good relationship with somebody.

But, uh, here’s a little pro tip for people who are newer to this, don’t. come up and ask the person, what can I do to add value for you? Because I mean, you could, but generally speaking, [00:33:00] that’s gonna make that person have to sit there and think and do work. And they’re probably just gonna be like, ah, nothing.

You’re fine. Um, especially if there’s a big gap between where you’re at and where they’re at. But if you actually spend enough time developing a really. Organic, like a true relationship with the person, have a lot of really good conversations. You’ll start to figure out where you can add value, and then you just come with that idea on your own.

Don’t ask them to do the work for you and think of it, you propose what you could do for them, and I think that’ll come off a lot better than you asking them to think of it for

[00:33:30] Anthony: you a hundred percent. Because, uh, every time somebody asks me, how can I add value to you? I’m like, I don. answer and I’ll just default to No.

Yeah. But if you were to, if you were to podcast or Yeah, if you were to identify like very clearly, if you paid attention to what we do and like the, the pain points, you can say, Hey, I kind of identified that you, you look like you might need some help with this and this and this. So I went ahead and did this, this, and this.

Here you go. And like, or Hey, do you need any help around this and this and this. Being very clear about it, I think helps frame it because if you just come to the conversation [00:34:00] with, how can I add. I don’t know. Don’t gimme that mental homework. I don’t need to figure out like how you can add value to my

[00:34:05] Dan: life.

Yeah. And that’s, I mean, that’s what this guy did when we met for the first time. Um, he just, we were meeting up, we met our conference, you know, a couple weeks or maybe a month or two after that. Um, he just says to me like, Hey, your website sucks, but I made you this new one. And I was like, oh, shh. Thank you.

Like, had you asked me how can I add value to, I wouldn’t have come with up with that. I would probably just would’ve blown it off. Been like, yeah, let’s just, you know, keep meeting up, chatting, whatever. But you figured it out. You did it. And then. Here we are here. Here’s a

[00:34:31] Anthony: pro, pro tip on that one too, because I see a lot of people doing this where I get a lot of dms from people that wanna do graphic design for me or video editing for us.

And it’s like, what they’ll do is they’re like, Hey, I went and I, I see you need some help with these thumbnails and blah, blah. I, I created some thumbnails for you. Let me know if you’d be interested in seeing them. and I’m like, Hmm. I’m like, you didn’t actually create ’em yet. You’re just waiting for me to tell you yes or no before you go do the work.

Yeah. The key, the key with, with what I did with Dan was like, I [00:35:00] did the work without ever telling him, and then I handed it to him and I said, and I turned around. I was like, I don’t, I don’t care what you do with it, like let me know if you need help, like getting it up and running or whatever. But like, It, it’s truly a thing that’s given with no expectation and, and no waiting.

And so those cold dms guys and gals that you’re doing where you’re like, I edited this video. Let me know if you’d like to see it. I’m like, you’re not fooling anybody. Yeah. If you did it, you’d

[00:35:23] Dan: be sending it. You’d be sending it

[00:35:25] Anthony: and just send it like truly. Like even if the person ends up using it and gives you no credit, no money or whatever.

Okay.

[00:35:31] Dan: Yeah. You can put him on the blast. Cool. Like, this dude sucks , he just stole my

[00:35:34] Anthony: work. This guy’s a dick. I sent him this. Put it up. Yeah. Hey, that’s a good thing. At the end of the day, it Metro thing was good enough to use, so, yeah. All right. What’s, what comes next? We’ve done, we’re

[00:35:44] Dan: looking at some deals, so my, my final one is step number six, which is, Is, oh, excuse me.

Um, make an investment if you’re a passive investor. Um, and this whole step number five for passive investors, which was look at the deals that might take a year. Yeah. Okay. So it’s not like you look at two or three and you’re like, [00:36:00] okay, that’s the one. It takes as long as it takes before you feel, uh, a really good comfort level with the operator.

Uh, you feel really good about the deal, you, you understand it. Uh, the final step is to deploy some. And for the active people, it’s look for those asymmetric risk return ratios and actually start putting out offers. Now again, could take a year. You might have to put up. 50 offers, especially if you’re new.

It’s not uncommon for buyers to not have a lot of confidence in complete newbies. So be prepared to be rejected. Mm-hmm. by lenders, by sellers, by brokers. Um, you might get kind of a condescending tone from people, uh, specifically brokers. If you’re not experienced, they might just be like, oh, you’re tire kicker.

You’re never gonna do anything. Not uncommon at all. Just ignore it. Um, but yeah. Final step is go up, look for, look for deals, put in offers. look at deals from those operators. If you’re a passive investor,

[00:36:56] Anthony: yeah, you got to make offers, otherwise you will never get a [00:37:00] deal. And that sounds so stupid and simple.

And yet I know so many people who just, they, they spend forever underwriting all these deals and then they treat each l loi like a golden goose and they’re like, oh, I, I, and it’s got, it’s gotta be perfect. The truth is you’re gonna submit a lot of Lois before you get the ones accepted, and so don’t treat them as like precious little jewels.

You just need to put them out there. And so to your point on timelines, I was having a conversation with a friend right before we recorded this, about this very conversation of like how’d get started. And I told him exactly what you did, which was, I want you to peg your expectations that this is gonna take at least a year before we do it, before we find you.

and he goes, Ooh. I was thinking maybe like three to six months. I was like, okay, there’s a chance that we could do it in three to six months, but I want you to peg your expectation at a year because if we make it to three to six months and there’s no deal, you’re gonna [00:38:00] get frustrated and give up. And I don’t want that.

And the truth is, you can very easily, if you set the goal around like, I’m gonna do the deal in three months, you will more likely or not do a deal, but it will not be a very good deal.

[00:38:14] Dan: Yeah, yeah. Thinking back, I wanna say I started. engaging with brokers. I have to go back and check my emails to confirm this, but I feel like I probably started around June or July, found something attractive in November, put an offer in in November, closed in January, so it was about six to seven months for me, but mm-hmm.

it felt really fast.

[00:38:36] Anthony: Mine was 11 months. Yeah. I remember coming in at the start of the year, I set the goal, I’m gonna close my first building by the end of the year, and I had a deal under contract in June, and then I pulled a plug on it in. And I was really bummed out for September and October and then at the end of October I was like, oh my God, I only got two months left to get a deal.

And then lo and behold, lightning struck. I got my first deal mid-October, closed it like first week of November. No, [00:39:00] no, I’m sorry. Mid-November is when I got it and then I closed it like first week of December. So I ended up getting the deal done the first year. But it took the almost entire year.

[00:39:08] Dan: Yeah. So don’t try to rush this.

I mean, sometimes the best deal is no deal. You’ve heard to say some variation of that a lot on this podcast. You know, if you’re looking at stuff and it just doesn’t make sense, like that’s important data, you can’t ignore that. Mm-hmm. , you don’t wanna say, okay, it’s my goal to do this within X amount of months and we’re almost at the end here, so I gotta get something on contract.

No, don’t do that. No. Wait for that one. That makes so much sense. It feels stupid to walk away from it. Yeah.

[00:39:31] Anthony: Here’s a really good book I to recommend for anybody new. Starting off. I, so I already talked about passive investing made. Which you can get for super cheap at the passive investing book.com. Um, if you’re on the Actis side, and you’d love this book too, I think is the ABCs of Real Estate Investing by Ken

[00:39:46] Dan: McElroy.

Yeah. Before, um, before our, uh, passive Investing Made Simple came out, that was my go-to recommendation for people who wanted to, uh, wrap their heads around how this kind of value add multi-family machine [00:40:00] works. And I’d recommend it to people who are gonna be passive investors in, uh, my syndications. It was, it’s pretty technical and it works, uh, for past investors because it touches pretty much every aspect, but it’s a little more detailed than it needs to be for the average passive investor.

So if you want to, you know, the 1 0 1 guide. I know I’m a little biased, but passive investing made simple would be a much better, uh, entry point into the, that topic for the passive investors. And then for actives, ABCs is, uh, a great one. There’s, I mean, there’s tons of book for active investors. No shortage of them.

Yeah, a

[00:40:33] Anthony: hundred percent. But I think that’s it. Yeah. Pretty much. If you follow those steps and that again, it’s gonna take a while. It’s not hard. Wait. No, it is hard. It, but it’s not complicated. You just have. You have to just put in the effort on a consistent basis and not give up. And eventually that’s hard.

That’s, that’s really, that’s one, that’s one of the hardest things to do in life, not just real estate. It’s just showing up consistently every single day until the thing gets done. Yeah. But if you do that, you’re gonna, you’re gonna [00:41:00] succeed in 2023, whether it’s 2023 or 2024. Doesn’t really matter. Right.

Like, because real estate is a get rich, slowly but surely game. Mm-hmm. . And so be committed to playing it for the next 15 years. There’s no way you can.

[00:41:12] Dan: Yeah, just do all these things. Boom. Just repeat over and over. Might take a year. Might take five.

[00:41:17] Anthony: A good, good thing to know too here, guys and gals, is that this list that we gave you, this is great for beginner investors, but this is literally the playbook that you will need to continually execute.

uh, all throughout your career. Yeah,

[00:41:28] Dan: that’s, that’s an important point because we haven’t stopped doing the first few steps. We didn’t, we don’t, we, we haven’t stopped reading. We still educate, haven’t stopped, uh, networking. We haven’t stopped, uh, meeting brokers and bankers. We haven’t talking mentors, sought underwriting.

We haven’t kicked our mentors out and we haven’t stopped looking for really good deals. Yeah.

[00:41:47] Anthony: So that’s the game plan, whether you’re new or you’re old and curmudgeonly, inexperienced. Just keep doing it and you’ll succeed. So hope this brought you guys some value. I know the beginning of the episode started really weird.

It’s really a bit of a downer cuz you know, I’m, [00:42:00] we’re dead. But, uh, yeah, hopefully this is the most value two dead guys have ever brought you. and, uh, I dunno, Dan, I hope I’m not dead in the future. ,

[00:42:10] Dan: I’ve read a lot of books by dead guys that have brought me probably more value than this podcast dead, so Oof.

That’s a good point. Don’t, don’t put us up against the other good dead guys. There’s a lot, there’s a lot of, there’s

[00:42:19] Anthony: a lot of dead guys out there, . All right, so, uh, let us know what you thought of the episode. Go drop a review and uh, I do hope that you have a fantastic 2023. Um, Make all your dreams a reality.

That was so 20. No. Make all your dreams a reality in 2023. There you go. There’s your run.

[00:42:40] Dan: All right, we’re gonna go with it.

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