How to Invest in Real Estate with Joshua Dorkin & Brandon Turner

Welcome to the BiggerPockets Money podcast, show number 42, where we interviewed Joshua Dorkin and Brandon Turner for BiggerPockets.com.

‘If you are the $100,000 a year person living in Denver or you are the $8 an hour guy living in Podunk, Washington, you can figure out how to make it work because real estate works for every person in every area anytime. The question is how?’

It is time for a new American dream, one that does not involve working in a cubicle for 40 years, barely scraping by. Whether you are looking to get your financial house in order, invest the money you already have or discover new paths for wealth creation, you are in the right place. This show is for anyone who has money or wants more. This is the BiggerPockets Money Podcast.

Scott: How is it going everybody? I am Scott Trench. I am here with my co-host, Ms. Mindy Jensen. How you doing today, Mindy?

Mindy: Scott, I am so so so excited. I am doing great, but I am so excited for this episode because we are interviewing Josh and Brandon from BiggerPockets and these are, I do not know if this, but they are kind of a big deal. I am really excited about this episode because I get people asking me all the time, how do I get started investing in real estate? How did you start, Mindy? How did you learn? Were not you scared? I learned by just jumping in with both feet because I started when I was really young and I thought I knew everything, but that is not necessarily the best way to go about it.

Sometimes you can make bad decisions as I have done in the past, but our guest today, Josh and Brandon, have literally written the book on how to invest in real estate. BiggerPockets founder Joshua Dorkin and Brandon Turner from the BiggerPockets Real Estate Investing podcast. Join us today to talk about real estate investing and specifically how to get started. They have got a new book coming out this Thursday called How To Invest In Real Estate. This book is available at biggerpockets.com/investinre, invest in real estate, but you do not have to spell it real estate.

Scott: Yes. These guys, obviously Josh and Brandon, are the architects. Josh is the architect and founder of BiggerPockets and Brandon was the first employee and is really crafted I think a lot of what we are all about here on BiggerPockets. Between the two of them, they I think have gathered more perspective about real estate investing than maybe anybody else in the planet. What is going to be awesome at this book is it is just general ability to introduce you to the concepts of real estate investing. It is the place to start when it comes to that.

Also, what is going to be unique about it is they have 40 different personal stories in this book. What is powerful about BiggerPockets? What is powerful about real estate investing in general? What is powerful about our community is that there is no one right way and you are going to relate to someone’s story more than you are going to relate to somebody else’s story, right? What is the best way to move forward with investing real estate business, personal finance?

Well, I think that it is to hear and read or other or somehow consume information about what people like you, or near you, are doing in a way that you can relate to and take action. Use your, ‘Hey, I can do that too. That is the way to learn.’ I think that is what this book is really going to offer you over the course of your time reading it.

Mindy: I have a quote from Andrew Carnegie before we get started. I love this quote, ‘90% of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or woman or wage earner of today invests his money in real estate.’ This is Andrew Carnegie saying this. He kind of knows a little bit about money and investing and it is just completely true. If you want to grow your wealth, real estate is kind of the way to do it. I mean, yes, you can invest other ways but it is so easy to do it with real estate.

Scott: Yes, that is what this show, BiggerPockets money is all about. This is personal finance, but really it is personal finance for people who intend to use real estate as at least one contributor in their portfolios, right? That is what we are all about. BiggerPockets is using that as one of the many tools in wealth that are available to you and it is a powerful one. Our founder, Josh Dorkin, and of course Brandon, whatever the heck he does a are incredibly gifted in this area of just kind of walking you through how to begin investing in real estate and have experienced from hundreds and hundreds of interviews and tens of thousands of hours studying how to make ordinary people successful through real estate investing.

Mindy: Yes. As I think back to all of our guests, I think there is probably 75% of the people that have been a guest on the show already have at least some real estate holdings.

Scott: Yes, I mean the point of this, the point of BiggerPockets is just to help you build that financial foundation that is capable of producing many investments and you will have to decide for yourself but we believe that as you grow your financial position, you will find room for real estate as at least one of the investments in your portfolio because it is powerful and because it is one of the most effective ways to build wealth. That is not neither truly passive nor truly business.

Mindy: It is kind of fun. Okay, we should bring them in because this show runs really long, mostly because of Josh Dorkin who cannot seem to stop talking and Brandon Turner who also cannot seem to stop talking. Before we bring Josh and Brandon in, let us hear a note from today’s sponsor.

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Scott: Alright, Josh and Brandon from BiggerPockets.com. Josh and Brandon, welcome to the BiggerPockets Money podcast. How is it going today?

Josh: What is going on, Scotty Boy?

Brandon: I got to tell you this is a lifelong dream fulfilled at this moment.

Josh: Oh, yes.

Brandon: I have been waiting for almost a year to be asked.

Josh: I have never been asked.

Brandon: Do you know who asked to come on the show? I had to ask them to come on the show today, Josh. How rude is that?

Josh: What is funny is this, we had them both on our show.

Brandon: I know.

Josh: Neither of them asked us like I would have thought maybe show one or maybe show two that they would have us on. What episode is this?

Brandon: Like 400.

Mindy: This is episode 42. Also, I would like to say that here on the BiggerPockets Money podcast, we do not do tit for tat shows. We do…

Josh: Oh you do not.

Mindy: We interview people that we find worthy. After 42 weeks, we have run out of people that we find worthy so you guys had an opening in your schedule and we thought we would bring you on.

Scott: That is exactly right.

Josh: By the way, we also did not do tit for tat on our show, and nor did they continue to do it on the show now, but I have found you worthy and I am insulted, but that is okay.

Mindy: That is okay. I am okay with that.

Scott: What was like the most awesome two show in the BiggerPockets podcast of all time?

Josh: It was not yours. It might be Scott’s, it is up there.

Mindy: Scott is above every other episode. The one that interviews Brandon, the one that interviews Josh, except I think episode 200 was above Scott’s.

Josh: That was about me, was not it?

Mindy: No, episode 100 was about you. Episode 200 was a step by step guide to buying your first investment property, thanks for remembering. Anyone familiar with BiggerPockets knows that we all love real estate as an investment vehicle. Today’s guests are the original host of the original BiggerPockets Real Estate Investing podcast. Josh Dorkin and Brandon Turner, who we have not yet introduced because they will not stop talking. Normally doing the asking, today they switched places and sit in the hot seat. First off, thank you for coming onto my show. I am a huge fan of you both.

Josh: By the way, Mindy, I am excited to be on your show. Scott’s show, not so much. Yours, I am super excited.

Mindy: It is not Scott’s show, it is my show.

Scott: This will be the 42nd best show we have ever had.

Mindy: It so will, it will be the 42nd best show until 43 comes out. I am a huge fan of both of you and I hope that comes across as I lovingly tease you for the next 40 minutes to two hours.

Josh: I will take it.

Mindy: I know that I love real estate. I know that we all. I know why I love real estate and I want to know why you guys love it too and why you recommend it as an investment vehicle over things like stocks or bonds or gold or Bitcoin, but even before we get to that, I want to know about your experiences with money. Where did your money journey start out and what got you to where you are now? What got you to real estate?

Josh: When I was a kid, I mean my parents were entrepreneurs, I got to work at my mom’s store. I got to see what it was like, see how hard she worked and see what it was like to actually make money. It was not this hate my parents working. I really do not understand it, they just bring home money. I can see what they were doing on the day to day which I think really helps a young kid get an appreciation for the time value of money, the value of labor, the value of effort. We got allowance and I would save my allowance. I was the kid who did not like to spend it on Pokemon like Scott.

Brandon: Is Scott into Pokemon?

Josh: Scott still likes the Pokemon. Have you seen his desk?

Scott: I squirreled away all my money.

Mindy: I do not know what that means. To be fair, when Josh was a kid, Pokemon was not invented yet.

Josh: This is true, this is true. I did waste my money on transformers.

Brandon: When Josh was a kid, like houses were not invented yet. There is a lot of things that were not invented.

Josh: Yes, my social security number is four.

Mindy: Josh, now everybody is going to steal your identity. Go home, scoot.

Josh: I saved my money and I do not know. My parents did not particularly teach me, hey, save all your money. It just was something that I did and I think it was because I wanted to save up for bigger toys and what happened was when I had enough for big enough toys, I would keep saving.

Then when I had bigger toys, it was like oh I want a car and then I did not really… I was able to get a crappy car from my parents and then when it was that I was like, oh, I want an apartment. Then I used the money. I wisely saved and saved, kept my allowance, put it away in the bank and by the time I… I grew up in New York, right? New York is like a money centric culture and so everybody is in the market and everybody knows about the market and on Wall Street and that is kind of like the thing that it is like this motivator, everybody knows it, it is part of the culture. I think I was 17 or 18, I ended up interning at a Wall Street brokerage and learned about how stockbrokers, who do not really exist anymore today, work with clients and how traits work and how to evaluate companies and things like that. I do not know.

Just being in New York, I was always interested in money. I think one of the biggest influences was one day I was in the bookstore and I know we still have those today, but I walked into a bookstore and I saw on the magazine shelf this copy of Forbes. It was the 400 richest people in America or the 100 Richest People in America Edition. I was like, ‘Oh, that is interesting.’ I sat there on the floor flipping through and they were these little stories of these people and like how they took like a small potato farm and became the largest potato farmer in America. It was inspiring to see people go from zero to something.

For me, again, my beginnings and money revolved around entrepreneurship and my excitement around it came from just being inspired by these people who took something small and turned it into something magnificent.

Scott: Yes, you get motivated. You are interested in how these folks are building something out of nothing. You have built something pretty incredible out of nothing. Can you walk us through that story with money? I know that you have a very, very fast in terms of different avenues you have tried it at your career and all that kind of stuff. But can you walk us through that and a little bit about the creation of BiggerPockets?

Josh: Absolutely. Then, obviously, we need to give time to Brandon, Not a lot. I mean he is…

Mindy: He is like 12.

Josh: If you look at his beard, it is disgusting.

Brandon: I do not need much. 

Josh: The beard is gross.

Brandon: Hey, it is beautiful.

Scott: It makes you harder to even communicate.

Mindy: Beard is beautiful. I would like to point out that Josh has his little stubby, nothing beard. You should look at this on YouTube to look at Josh’s not even close to Brandon’s beard.

Josh: There is even grace in there. I did this Wall Street thing. I went off to college. I was definitively privileged in that my family took care of college. I did not have student loans. I, beyond a shadow of a doubt, absolutely privileged for that. I mean, that is extremely challenging for a huge swath of people and the system, well we can rant and talk about that a whole another day. But anyway, when I worked at this firm, I actually took money and I started investing in the stock market.

I started investing before I was in college, I began to learn and I took what I had saved away. Every allowance I had jobs throughout the summers. I worked for my parents growing up so I had stored away a lot of money and by the time I was done with college, six figures saved away between the jobs and turning and multiplying it in the market. Post college, I ended up I was a stock trader. I became a prop trader. I traded professionally and I was not the best prop trader the world. I left that but really I always was, as Brandon and Scott lovingly like to say, cheap. Really the cheap…

Brandon: I think we use other words than cheap but you know…

Josh: Behind my back.

Mindy: To your face, we say frugal.

Josh: Yes, I mean you are kind about that but not always. The frugality has always been on myself, right? Like I am frugal on myself. I tend to be generous to other people that are not me. Anyway, I saved this money up post college. I did this, I moved in with my parents again. I got into the entertainment business and when I moved out to California I said, well, I have got this money. You know what? It is time to invest in real estate. Now, rewind a little bit. When I was in college, my roommate and I were obsessed with real estate. We always talk about like how the math on real estate and how we instead of paying rent to the guy whose apartment we were living in, we should buy the building. We just did not conceptualize it. We could borrow money as 20 year olds to buy a multi-unit property.

Now, if I knew what I knew now, then I would have done it. Fast forward, I am in LA. I get a real estate license. I started helping buy real estate, did not really love that. Ended up in education and my brother reaches out to me and says, ‘Hey Josh, I started to buy these properties,’ and he showed me the numbers and the numbers were awesome. I was like, wow, these numbers eclipse what I could potentially even be getting in the market right now. I am going to go and buy some property.

I did, I flew in the Midwest, bought a bunch of properties and I should have been doing excellent and over time, owning these properties and not the greatest neighborhoods, thousands of miles away with bad management. It turned out to really be challenging and ultimately BiggerPockets was born out of this. But for me, money has always been a means to an end.  I have always saved more than I have spent and I have always regretted that in a lot of cases. I have always looked back and said I wish I had spent money on certain things and enjoyed myself a little more with the money.

Anyway, I mean that is kind of the long and short. I could answer a million specific questions, but in broad strokes, that is me. I am not as interesting as the bearded man.

Scott: Then you started BiggerPockets and built it into a million member community over the course of 14 years.

Mindy: 1.25 million.

Josh: Now, my job is to help people learn to be responsible with money and learn how to build wealth through money and I love that, teaching people, I mean, all four of us. It is the passion of the four of us to educate people about money. There is nothing more exciting, right? I mean like being able to talk to somebody and then having them come back six months, a year, five years, 15 years later saying you helped change my life.

Mindy: Yes. I love those e-mails.

Scott: Yes, actually I know I have already just said it, but I will say it one more time. Like we all in the BiggerPockets community, owe you a lot because you put this thing together over 14 years with love and sweat and tears and I do not know if there is any blood, but all that kind of stuff. Like the reason we are here and some people are investing in real estate is because of that effort you put in. That financial journey, that background was the foundation for this incredible company that we have.

Josh: Yes. The last thing I will throw in here is my parents absolutely played a role in this. I mean my parents were never of the mindset of hey, go and be flashy. Hey, go and show off. Hey, go and do this. I mean they were successful. We were middle and upper middle class and the kids in the neighborhood were driving fancy cars to school and I got my first car was the 1982 Pontiac Firebird, like the kid car. It was nice and born in, followed by the 1987 Audi 5000 which would spit water at us. It was falling apart so much. For us, it does not matter. It is not about flash, it is not about fancy clothes, it is about just using your money for experiences and living a good quality of life. It is not about show on the outside.

Mindy: Brandon.

Brandon: Hi! What is up?

Mindy: Where did your money start? Did you grow up rich and getting sports cars and Audi all the time?

Brandon: I did. I actually grew up in a billion dollar household. No, alright, my money story, I will be much more terse than Josh here. My parents taught me three lessons with money. First one, that we do not talk about money, right? My family, I was raised in a very religious household. Money is the root of all evil which is a misquote of the passage but money is evil. We do not talk about it, we do not have conversations about it. You never asked what somebody makes that kind of thing, right? Rich is bad. But my parents, they never said money is bad, right? But that was the feeling. We do not talk about money, rich people, you kind of make fun of them, right? That is the first thing they taught me.

Second thing, money is a responsibility, right? Like it is something you work for, you go to college for, you work hard, you save your money. They got me a piggy bank early on but very much the traditional go to college, work for 40 years, set aside money and you will be fine when you are 80 and you can be the richest person in the retirement home if rich was actually that important, which it was not, right? That is the second thing, money is a responsibility.

Third, which I think is the biggest lesson I learned from my parents, is you cannot take it with you. My parents were very, very generous. I mean they were blue collar. My dad is a meat cutter. My mom did in home daycare. They were like, we did not make much money, but whatever we did make they would give back in terms of cheap vacations. We would drive across the country all the time and they really believes strongly that experiences are what life is made up of, not how many zeros are at the end of your bank account. I love that, I took that I think from them. Anyway, that was kind of the kind of three things to learn from them. Yes, I got out of college and was supposed to go to law school. I started studying for it because that is kind of what was expected of me. I remember I found real estate.

I read a book on it, I was like this sounds like the best thing ever. I bought a house and then I decided I am not going to go to law school. I dropped that whole plan and told my dad I am going to be a real estate investor. He said I was crazy, I was going to be homeless. I think he used the word stupid in there and you are going to lose everything. He said, ‘What are you going to do if tenants do not pay rent, Brandon? What are you going to do then? You will not be able to afford it.’ I was like, ‘Oh, you are right.’ Okay, well, I guess I will go back to the law school idea because I did not know what to do with. I went to Google and I typed in what to do when tenants do not pay rent. I found this little, I will call it not a very attractive…

Mindy: Rinky dink?

Scott: Wow.

Brandon: It was a rinky dink blog or not even blog, a forum at the time called BiggerPockets. I found BiggerPockets website and I found little articles and blog. There was not even a blog at the time, I do not know that word existed, but a forum posts in real estate. I was like, alright people are doing this. That is when I jumped in and started of buying real estate.

Mindy: I would just like…

Josh: Can I ask a quick question, Mindy? Really quick.

Mindy: Please, by all means, go ahead.

Scott: Are you commandeering?

Mindy: Yes, he is.

Scott: How rude.

Josh: No, I have a serious question which is you bought that first house, how did you buy the first house? Because you talk about your money journey, but you did not talk about how you got the money to buy the first house.

Brandon: This is ’07. They gave loans to anybody who had a heartbeat. They are like I remember the phone call was a call it was like a call of the lender and they are like, okay, ‘Well do you have a job?’ I was like, well sort of. I just started working at Coldstone Creamery making $8 an hour. ‘Like how is your credit?’ I do not have any credit. I have never used it in my life. ‘What about like do you have any like assets?’ No, nothing at all. Actually, I have got a lot of student loan debt. Okay, great. You are approved for half a million dollar loan. No doc, no doc, nothing. Just go ahead.

Mindy: Wait, how did the market crash?

Brandon: Yes, exactly. That was, ’07. Maybe even end of ’06 I bought that first house. I actually think I needed like two grand down and that just came from, I think I borrowed it even from my dad. I was like, can I borrow two grand?

Mindy: Your Dad who said you would be crazy to be an investor gave you money?

Brandon: Well…

Mindy: He really does actually.

Brandon: My Dad came around and today he is a business partner of mine in a couple of deals. I have actually like one of those deals we sold and we moved it on and now he just gets like 60 return income and basically an investor now with me. That helped him retire early, which is kind of cool. It is kind of a neat like turn around. Now, like his investment in me helped fund his retirement three years earlier than he could have normally done it. Anyway, came full circle.

Scott: You bought this house getting a loan that you had no business getting. How did you? Can you walk us through how you made some money on that deal? On that particular one?

Brandon: Yes. Short answer is that my mom is a garage sale genie, right? Like I was raised, every Saturday you go to garage sales, I watched my mom negotiate. All I knew about real estate at the time, I did not know anything when I bought that house except for buy the cheapest thing possible and negotiate lower, right? Just garage sale style. At the time, I literally told the agent friend that I had, like when I looking at it, like find the cheapest house in the area, what is that? We went and looked at it. The cheapest house in the area, I was like alright we will buy that. I bought it and of course the cheapest house needed a lot of work. I just got a book from Home Depot, 123 Home Improvement, I still have it today.

I learned how to do everything in the house and so I fixed it up over the course of a year, sold it and made 20 grand. I was like, wow, that was way better than a job. That is when I got into real estate because that was way better.

Scott: How many hours just scooping ice cream does it take to make twenty grand?

Mindy: Too many.

Brandon: A lot of hour. We were singing. Coldstone is where you sing for tips, right?

Mindy: Oh God. Josh never there, right?

Josh: No, no.

Brandon: At Coldstone? He clearly did not.

Mindy: Clearly he did not.

Josh: Once or twice, I do not think they ever sang to me though.

Scott: You just did not give them a tip because you are cheap.

Mindy: Maybe they did not want to do for you because you look like Adam Levine.

Josh: Had they sang for me. I might have given them a tip.

Brandon: You got to tip first and then they sing. It is like they take like old songs, like one was like, ‘Thank you for your dollar. Listen to us holler.’ Anyway, it was stuff like that. It was fantastic.

Mindy: Wow.

Scott: Eight bucks an hour. Thus, no more tips came to you.

Brandon: After like a year, after I got there, that individual Coldstone went under. I might have contributed to that. If you are like I do not want to hear that tall guy sing. It is okay.

Mindy: Okay. We have not even discussed why we have Josh and Brandon on the show today, but I believe that Josh and Brandon have both written a new book called How To Invest In Real Estate. We are interviewing them today on our show because we all really love real estate and we want to present this as an option for building wealth, which is kind of the whole point of BiggerPockets Money. Brandon, can you tell me why you think real estate is the best thing in the world?

Brandon: Oh, well, I think it is the second best thing. The best thing is like speculating on Bitcoin. If we are going to speculate at Bitcoin…

Mindy: Yes, okay. Bitcoin is the best ever.

Scott: How much money did you collectively lose in Bitcoins?

Mindy: Zero.

Brandon: I have never put a dime. However… However, I want to make a claim here. I made a video…

Mindy: Scott, did you invest in Bitcoin?

Brandon: I have lost $0 in Bitcoin.

Mindy: Okay.

Brandon: Like you put money in Bitcoin?

Scott: I have $0…

Brandon: Okay. Yes, yes, yes. Six months ago I made a video for BiggerPockets called Bitcoin is a stupid, horrible investment. The next day, Bitcoin crashed like that was like the 30% or 40% that day. I am going to claim full 100% credit for tanking a Bitcoin.

Mindy: For all of you who lost money in Bitcoin, his name is Brandon Turner.

Scott: But there is so much intrinsic value in these coins. Bitcoin and all that coin and all the other ones, right?

Mindy: No.

Brandon: Yes.

Mindy: Do not coin is the way they go.

Brandon: Alright.

Mindy: Alright, Brandon.

Brandon: Back to the question.

Mindy: Besides the Bitcoin, why is real estate your second favorite investment? Like what do you love about real estate? I know why I love real estate, I love having the control over like I do not have any control over what the guys at Enron do. I wish I did because then all those people would not have lost their money, but I know exactly what is going on in my real estate investment and I am the boss of them. Brandon…

Scott: You are everybody’s boss.

Mindy: Brandon, why do you like real estate?

Brandon: I like it because I am not a smart man and yet I can figure out real estate. Like I have no idea how most things that you guys talk about on the money show work like. I just do not get it. It is like stocks and mutual funds and just over my head, I just do not know. I do not have the attention span for it. But real estate, like I understand this is a house, I can hit it with a hammer, I can rent it out for this amount, I have this expenses and I make money. Like, I totally get that and I can control how it does.

When the market tanks, I can like improve it a little bit. I can manage better because I have that control, right? If I wanted to get more technical about it, there are four wealth generators of real estate that I like. There is cash flow which means extra money every month. Like making it rain, right? I can go spend it on, I do not know, Starbucks. Appreciation, properties tend to go up in time, up in value over time. That is not always true of course in short term runs but in long term real estate generally rises.

Scott: Yes.

Brandon: There are the tax benefits. Yes, tax benefits. When you own real estate, like you pay way less taxes, typically. I am not a CPA so take that with a grain of salt but typically you pay way less with taxes and the loan pay down. This might be the coolest part about real estate, I think, or one of the most like under talked about cool parts. Basically. Let me give you a story of how the loan pay down works. I bought a fourplex for my daughter Rosie the week she was born. This is a cool strategy any parent out there can do.

Scott: This is really good by the way.

Brandon: Well, thank you. I bought a fourplex the week Rosie was born and you can do this anytime between your kid is zero and five years old. I mean you can do it anytime but it really works well when they are zero to five. You buy a property, any property at all, it cannot be a bad deal. You buy any like decent deal anytime between your kid is zero and five years old and you put them on a 15 year mortgage. What I mean by that is the property gets paid off over 15 years. It does not even have to cash flow. You do not need cash flow, you do not even need appreciation. You do not even need tax benefits.

If nothing else, if you just flat broke even, in 15 years that property is paid off. Let us say you buy a $200,000 house, right? In my case, I bought roughly $160,000 into this fourplex. It will be paid off in 15 years from right now. In 15 years, what is it going to happen there? Rosie is going to college and that property should based on just an average and appreciation of 3% should be worth between $250,000 and $300,000 and I will owe nothing on it. Just the tenants paying off the loan over 15 years now covered my kid’s entire college education and I will do that for every kid I have.

Scott: Then, what you can do, what is cool about this is you have several options with your exit strategy, right? You could, instead of selling the place and paying taxes to pay college education, you can refinance and put it on a 30 year and when Rosie’s kids go to college, you have another one. You can just repeat the whole cycle, right?

Josh: Yes.

Brandon: You could pretty much have your entire generation for the next thousand years with college paid for with one property each generation.

Scott: Generation of wealth. Anyway, that is why I like real estate, the four wealth generators and of course there is leverage. I know there is like ways to buy a margin, but besides that, like typically if I have a $1000, most people go buy a $1000 in stock. But with real estate, if I have a $1000, I can buy $10,000, $50,000, $100,000. I mean like depends on how far you want to leverage, but real estate you can replace the cash needed with creativity. That is one of my favorite things. With stocks and those things, you cannot do it as much, but with real estate you can literally replace cash with creativity.

Josh: Your risk levels increase, I think dramatically, when you go on margin for stocks.

Brandon: Yes.

Josh: Unwise move for 99% of the population.

Brandon: I agree.

Mindy: Yes.

Scott: Brandon, you invest in your East. You started in a pretty low cost market, right? What if my market is more expensive than that? What are the differences or how should you approach it differently if you are at a more expensive market that maybe expects more appreciation over time?

Brandon: Well, one thing, we actually talked about this in the book a little bit, but Josh says something. He says it all the time, right? Within like a two hour drive of your house, like almost everywhere in the country…

Josh: There is a deal.

Brandon: There is the deal. You can find something usually within two hours. I mean if you live in bay area, I know guys that live in like downtown San Francisco that are investing in an hour and a half outside the city and they are getting cash flow and deals. There is actually like a couple options. You have three options when you live in an expensive city, right? You can either, one, find out what works in your market because some kind of real estate works anywhere. Number two, you can invest where somewhere else, right? Where whatever you want to do works. Or three, you can sit on the couch and watch TV every night and wait until you are 60 because you have a lot of excuses. Like those are kind of your three options in real estate.

Josh: Dancing with the stars.

Brandon: You can watch Dancing With The Stars every night and The Bachelor and find out who gets the rose.

Scott: No, I think it is great advice. I think also like a lot of people are like throw their hands up in the air, there is no deals in the market. I am giving up.

Josh: Yes.

Scott: They are great, no competition for me, right?

Josh: Yes, yes, exactly.

Brandon: I mean Scott and and Mindy are living in the Denver market and you guys have very competitive, very extensive market. Both of them invest, right, Josh? Like you live in Denver, you are able to buy stuff. I lived in Washington where it is super cheap and now I just bought a triplex in Hawaii, which is the most expensive property I have ever bought. Like you can buy real estate anywhere, it is just the strategies change a little bit which to come full circle.

Josh: Which we talked about.

Brandon: Exactly that is the whole point. I know you did not ask me to plug yet, but I am going to because this is Mindy’s show and you are going to let me do it. Right, Mindy?

Mindy: You can do anything, Brandon.

Brandon: Okay. Alright, good. Here is the idea, we wanted to write a book, I am not going to spend too much on this, but we wanted to write a book where when people say how do I invest in real estate, we wanted to give them a book that said Start Here. We actually titled the book for a long time Start Here. We changed it to how to invest in real estate because it is a little bit more obvious what the book is about. But really it is like here, before you go and decide you want rentals or flipping or expensive market or cheap market, you need to get a full landscape. Start here with How To Invest In Real Estate, that is the book.

Josh: I will tell you all about it when you asked me if I ever get asked a question again.

Mindy: We will see.

Scott: This is for Josh and both of you if you want to both chime in on it. Suppose that I am earning a high income or like a moderate high income like a $100,000 a year in a median city, right? I want to invest in real estate while working with a full time job. How does that compare? What should I be prepared to do differently than say what Brandon did when he was working $8 an hour at Coldstone Creamery with no credit, right? What are the differences in expectations that you should have in those two kinds of different scenarios?

Josh: I do not think there is any difference.

Brandon: Despite what the late night TV guys will tell you, there is not any single one way to build wealth using real estate. I cannot tell you what is the right way for you in the median neighborhood, making 100K. I cannot tell you what to do because even if what I tell you to do is effective and works, it may not work for you because of your circumstances, right? Scott, you may have three kids and a mom who is in the hospital and you may have to work a second job because of that and you may have other exigent circumstances. Like the strategy that I might have told you is the right strategy or the right tactic is not necessarily going to work for you. We break things down and not to plug the book, but I have to, we have got this thing called The Ultimate Beginner’s Guide To Real Estate Investing.

Brandon and I wrote these things five or six years ago. It was this basic primer on we looked at the different niches and the different strategies. You can flip a house, you can buy and hold the house, you can wholesale a house, you can do the same with commercial property, with mobile homes, with all these different things, right? We said, okay, let us expand upon that and really dive in deep and that is where this book came from. But in order for us to give you an answer, I mean, we just need a heck of a lot more information and I would say, before you cut me off, that it is not for anyone other than you to determine.

What you need to really do is stop and map out who the heck are you. Like what are your inflows, what are your outflows, current and future and planned? What do you like doing? Do you want to be active? Do you want to be passive? Do you want something local? Do you want something distant? Do you want to be managing it yourself? Do you want somebody else to manage it? Do you want to just invest money or do you want to invest time and equity? I mean there is a lot of decisions that go into what you are going to do as a real estate investor. This book helps you find the answers to those decisions. We do not tell you the answer. Nobody could tell you the answer despite, again, what some of the claims of the get rich quick guys are. Only you can answer those questions.

Once you answer them, then you can start to methodically make a plan to help you go forth towards that first deal and then tools like BiggerPockets are fantastic. In fact, BiggerPockets is the only place you should go to help you with this. There is really no need to go anywhere else. But anyway, does that help? I mean I really do not think there is an answer.

Scott: I think I phrased my question poorly. What I was trying to get at was is this book going to be helpful to a broad range of people in a variety of situations. It sounds like the answer is yes and the information in the book is going to allow people to figure out how to map out that path.

Josh: It is too young or old, if you are broke or rich, it does not matter if you are looking to buy your first deal. This book will help you get the foundation you need to start making decisions you need to make in order to go forth and then there is, for example, if you do not have a lot of money like Brandon at Coldstone, we do not do a huge deep dive on every creative strategy for investing with no money down. Well, that is why you go and buy The Book On Investing with No (and Low) Money Down, written by Brandon Turner. This is a really broad book that answers a heck of a lot, well, helps you find the answers to a lot of questions.

I think one of the coolest things, Brandon, I think we agree on this and I am going to shut up, is we have got over 40 stories in this book from successful real estate investors that have all been on our podcast. I think the coolest thing about that is in one of those stories you will relate. You will find somebody that we interviewed, that whose story is written there that you will be able to relate to and you might say, ‘You know? I kind of like how they went about doing this.’ I think I am going to try going the same approach.

Brandon: We talk a lot about like the story Josh and I have told this before and you probably may have heard it in another connotation, but I really liked that story. There is like three blind hikers walking through a jungle, right? Like they are blind, they cannot see anything they are walking, all of a sudden they get stopped by something in their path, right? The first blind hikers says, well, what is this thing? He fills out and he says, ‘It feels like a rope. There is a hanging rope. I feel it but I cannot get past it.’

The second one says, ‘Are you stupid? It is clearly a gigantic leather wall. It is a huge wall. It is like hard, but kind of soft.’ The third guy says, ‘You guys are both nuts, this is clearly a tree trunk that I can wrap my arms all the way around. They sit there arguing about it, arguing arguing until the elephant gets up and walks away, right? This is my analogy for real estate. It is because when somebody says, no, real estate is this.

No, real estate is this. No, I am a real estate investor and I do this. It confuses a lot of newbies, right? Because everyone has a different perspective of this giant elephant that we call real estate. The problem with like, and I mean yes, you should read real estate books, you can listen to podcasts, but the problem with anything specific is that you are just getting one part of the elephant.

Josh: Yes.

Brandon: We wanted to say, we want to step back and say, ‘Hey, let us look at the whole thing. This is what the elephant is.’ I mean whether or not you read it in a book like ours or just listen to a lot of podcasts or read a bunch of it, you need to get an overarching view. That way, like Scott, your question, right? If you are the $100,000 a year person living in Denver or you are the $8 an hour guy living in Podunk, Washington, you can figure out how to make it work because real estate works for every person in every area any time. The question is how and it changes and shifts. Until you understand the entire elephant, you are always going to struggle.

Brandon: That is a preview of the book, by the way, because we do talk about the elephant in the room in our introduction.

Mindy: I really liked that story. I had never heard that story until I read the book.

Brandon: Oh, nice. Thanks.

Mindy: I like that story because it is, I mean, it is kind of of true. I am a real estate investor, okay, obviously you are a landlord because I am coming from my personal experience bias of I am only a landlord or oh you must be flipping houses because that is what I do too. That is what I like about this book. It is like here is all the different ways to invest in real estate. You might like the idea of real estate but you do not want that fabled 2AM toilet call. How many times have you got that call in your whole life, Brandon?

Brandon: Once, I think, ever.

Josh: Personally…

Mindy: Yes, personally.

Scott: I think I am with you when you got a 2AM call about your house burning down.

Josh: I was there too. By the way, I burned your house down.

Mindy: It is the firemen.

Brandon: That was fun.

Mindy: I love how we are all laughing about this now. People do not realize how, maybe…

Josh: It is pretty awful when it was happening.

Brandon: I mean we took it all in stride. I mean it was like, yes, I got… The story was just for a quick background in like 30 seconds. I had a tenant, we were evicting him. He stopped paying rent. This was a mistake tenant. I should not have put him in the first place. It was my very first tenant. He lived there for a number of years, ended up allegedly getting into drugs. As he was moving out, finally, like two days before the eviction, he had all his personal stuff out, but he had left probably I think it was like two or three tons of garbage in the house. He was not going to clean it out. Instead he said a box on the stove, “accidentally” turned on the quotes turned on the…

Mindy: Burner.

Brandon: Turned on the stove, tap the element burner, and then left.

Then of course the house burns. Luckily the neighbor saw it, was able to call the police and shut it down and it was an accident. It was ruled an accident. Anyway, insurance took care of it. That is the great thing about real estate too, right? Like everyone is always like the worst case scenario is like what if your house burns down? Okay, well insurance takes care of it. Okay.

Josh: The worst case scenario is somebody is in the house when the house goes down.

Brandon: Okay.

Mindy: Thanks, Josh.

Brandon: You get the idea what I am saying, right? Anyway, but I got that message from the tenant who was like, ‘Hey, you need to call me. Your house is on fire.’ That night when we were all, the four of us, were hanging out together.

Josh: He did not even say that he did it. He is like it is on fire.

Brandon: It is on fire. Weird, I do not know how that happened. Anyway, moving on.

Scott: What is your opinion on the current state of the market right now? It is been going up for 10 years straight and everyone is talking about cycles. You are seeing posts pretty frequently on BiggerPockets, people are commenting on the market. What is your kind of take on where we are in the market and how that should affect strategy?

Josh: If this was a stock market, what is your strategy? Your strategy is it does not matter you invest in the market. You do not sit and wait and time the market. If it is the housing market, I think the strategies are somewhat different but maybe not. I mean really, it depends on the property, the strategy that you are looking at. If price appreciation has started to slow down dramatically, you are in a market where flipping houses becomes a lot riskier.

If you are in a market where rents begin to decline, you are in a market where you want to be very aware of buying into a buy and hold situation or at least you want to make sure that you buy the property cheap enough that you can take a decline of x percent and sustain it. It really does depend on your strategy, but I think the key is to be aware of what the market is doing. When I say the market, I do not mean what the market of real estate in the United States is doing because that is kind of irrelevant. You want to keep an eye on it, you want to keep your ears to the ground on interest rates, you want to know what is happening in the global economy in broad terms because if you have a massive recession, at some point people are going to start losing jobs and they are going to stop paying rent across the board and that will affect you even if you have seen a pocket of growth in your city for example.

Amazon moves into your city, you are going to see a huge influx of people, that micro economic factor is going to determine things even if the rest of the economy is going to hell, you are probably in a fairly stable market there, right? A huge, huge manufacturer, a huge company comes in and brings a ton of jobs. I think the key is to keep an eye on what is happening broadly, but then what is happening in your city. Denver, as an example because some of us live there, has seen dramatic growth over the last bunch of years and a ton of businesses have moved in. Real estate prices have shot up in kind, appreciation has been fantastic, rents, everything has gone up. Is it going to stop as a toppy?

Feels a little toppy. If it feels toppy, you better be a little more careful with that next deal. Yes, maybe you want to put a little more money down. Maybe you want to make sure you are, instead of using the 70% rule on a flip, maybe you have had it even more. I think that is how it would come into play. I would love to hear Brandon’s take on it.

Brandon: Sure. I mean, I think Josh just hit the nail in the head, right? Like you want to buy, like when the economy is doing like where it is today, or feels like maybe it is toppy, right? You have a couple of choices. You could sit down and just watch TV for the rest of your life, right, and always be afraid. Watch Dancing with the Stars, yes. Or you could just go out and get really good deals. Like Scott, this time is time you told me once and I really liked the way you phrased it. You said something like, I am going to buy really good deals in this market. When the market crashes, I am going buy really good deals.

When the market rises again, I am going to buy really good deals, when market is on the top, I am going to buy really good deals. I am just going to buy really good deals no matter what because over the long term, that should work out well in my favor. I am going to buy good solid investments no matter what. It is kind of like what is the word dollar cost averaging, is that the right analogy, right?

Mindy: Yes.

Brandon: I am just going to go buy continually and overtime I am going to be fine. For example, it does change a little bit like Josh said, right? If I was going to flip houses right now, I would make sure that either one I can get in and out super quick. I would not right now personally do a flip that is going to take me 12 months unless I had another exit strategy. For example, like if I could turn it into a rental and it would actually cash flow or break even. Okay, well then I might flip it because worst case scenario I turned into a rental and I waited out and do the next one. I do not want to set myself up to a point where the only option is bankruptcy. That is what I am going to avoid.

The last thing I will say, and I will shut up, is like in this part of the market, even if you do not want to invest and that is fine. Maybe you want to wait until the market drops and okay, but it does not mean you should not be trying right now anyway because right now if you get really, really, I see this all the time on live webinars that I do, it is like I believe one of the perhaps the number one greatest skill a person can have in real estate is knowing how to run the numbers on their deal. Because if you are good at and writing numbers, you can find good deals.

You can know what the bad deals are. You can find partners easier. You can raise money easier when how to find really good deals, but are you going to start learning how to find good deals when the market crashes? Or do you want to start right now so you will be ready to jump in when everything goes Kmart blue, light, special. Start now, start running numbers.

Josh: Nice.

Brandon: Start meeting with people, start interacting, start… Like having those conversations now and who knows, maybe you will find a good deal in this market, great. If not, you will be really ready to do it once the market corrects a little bit.

Scott: Do they have Kmart in Hawaii?

Brandon: They have old Kmart buildings in Hawaii.

Mindy: They have those here too.

Josh: They are converting the one by me into something pretty cool.

Brandon: Actually, we had a guy on the podcast, on the BiggerPockets podcast a few months ago who took an old Kmart building that has been empty forever, put it in a couple of million dollars of self-storage and I cannot remember. I think he made like $10,000,000 in equity on this thing because he like bought it for like 3 million, put 3 million into it, now it is worth by 21 million. Just self-storage from an old Kmart building. Again, like different strategies work in different areas for different people at different… Find what works in your market or go somewhere with a strategy…

Scott: One thing I will chime in with this is that here on BiggerPockets Money, our goal is to build just general good financial habits that support real estate investing, right? If you just have a strong personal financial position, spending less than you make, stockpiling cash, right? That is a good defense mechanism against the market downturn as well in and of itself. I think that that is a big component of what you are doing outside of real estate investing can impact your portfolio. If you are forced to withdrawal or sell because of your week personal financial position, that can put you in a bad spot and in a financial downturn rather than a position of ability to exploit opportunity.

Josh: There is a book out there where the guy talked about different ways to be smart with money. I think it was called Set for Life.

Brandon: Oh yes.

Mindy: I heard that book.

Josh: Yes, yes. It is pretty good. This is Scott’s book. It is brilliant and fantastic book about money. But like I think outside of even like the what do you do on that event? I think one of the things we talked about how to invest in real estate is money. This is a big component of BiggerPockets, right? We talk about money because you have to understand how money works in order to have enough money saved away to put as a down payment or at least you have to be savvy enough with money to be able to go and get alone and things like that. But Brandon loves these triangles that we have put in this book and we have created this model about how the typical person deals with their money and the typical person at the top of the triangle, imagine an upside down pyramid, the vast majority of their money goes to fund money.

Income goes into fund money then the variable expenses and fixed expenses, the donations followed by the savings, right? That is the average person. The average person that I know, the first thing their money goes to is all the crap they want. The clothes, drinking in the bar, Mindy’s tossing it in the air. Now, if anyone listening has read a book called The Richest Man in Babylon, I know Scott has and Mindy has and Brandon has. It is one of my favorite books, one of the best books ever written on the topic.

Brandon: I do not know to read yet.

Josh: That explains a few things. You should buy a manual on how to cut a beard. In this book, you talk about taking that income and the first thing that you got to do is pay yourself. Before you go and buy all the fancy stuff this fancy stuff you want to buy to keep up with all the neighbors and flash around is you got to pay yourself. You take the first dollar and put it to savings. You set a budget. with something commensurate with what you can do. If you are making $30,000, it is not going to be $10,000. It might be 50 bucks, but start somewhere and put money away every single month into an account for savings and pay yourself first and then where you can put that.

You can put that in one of a number of banks. You put it in Ally, you put in on CAT. You put it on any of these banks that pay high interest rates and you could start making money on your money, which is really cool, but the point is start paying yourself first so at the top of this upside down triangle, in the world of The Richest Man in Babylon, the first payment is savings and investments then donations are fixed expenses variable and at the very very bottom is fun money, right? That model is a model that will help you get to that first investment.

Mindy: Why do you think so many people live paycheck to paycheck?

Josh: Far too many people… Well, I think the answer has changed over time. I would say today, unfortunately, far too many people are caught up on social media seeing what their friends are doing and seeing what celebrities are doing and seeing what influencers are doing. If you are on social media, if you are on Insta or Facebook or Twitter or whatever and you are watching the people you know and the people you aspire to be doing all this stuff and wearing the stuff and having experiences and you are seeing it yourself and you are like, oh well all the cool guys are doing it, I got to do it too. You start doing that and all of a sudden now you are chasing everyone else, right?

One of the most important thing somebody taught me early on was life is not a race. You really are not racing other people. You have to live your life for yourself and it is really hard for most people to do that, unfortunately. Stop worrying about everybody, stop worrying about what Scott is doing and Brandon and Mindy and Josh like were irrelevant to you. Worry about you, start putting money away for you, start saving. Shut down social media for a little bit and stop letting this stuff warp your brain and influence your brain as to what you have to do to keep up with the Jones’. I think that is a big part of what is happening today. I think there is another subset of people who just do not have the education yet, who do not fully understand it.

School does not teach this stuff. We do not learn this stuff. In school, a lot of people’s parents never learned how to be financially responsible so they are not going to teach their kids. For me, I am a huge advocate for schools going back to adding financial education, we have to teach us in schools because I think if we start to teach people young enough, we are going to get there now. Obviously, the very poorest of the poor, the folks who are really struggling. That is obviously a whole different story, but I would say the vast majority of people, you have people paycheck to paycheck making millions of dollars. You have people paycheck to paycheck making hundreds of thousands of dollars a year.

It does not matter your class, it does not matter your financial status, it is training.

Brandon: Yes, I want to piggyback on that real quick. You guys remember the Harry Potter movie, like the prequel, fantastic beasts and where to find them? In the movie there is this creature, I honestly feel bad I do not know how to pronounce it. They are Ocammy, Ocammy, or something like that.

Mindy: Ocammy.

Josh: Ocammy. This creature is one of the fantastic beasts that is involved in the movie. The idea behind this animal is that it fits in whatever container it is in, right? It could fit in a tea kettle, which it does, or could fill an entire room, right? I believe why most people live paycheck to paycheck is because their finances are like an Ocammy, right? However much they make, it naturally rises. Josh, going to turmoil, income creep, right? Our expenses rise to whatever we make. If you make $30,000 a year, you probably spend about $30,000, maybe $29,000, maybe $31,000. But as soon as you double that to $60,000, you probably spend $59,000 or $61,000 a year. Most Americans spend a little bit more than they make, right? You make $100,000… I mean I know people making half a million a year or a million a year and they are living paycheck to paycheck, they are broke, because people tend to fill their life like an Ocammy.

If you want to contain that, you just see the smaller container which is where, I mean everyone hates the b word, right? Budget, but like that is essentially what you are doing is you are saying I am going to put, say it is not so, I am going to put my money into a… It does not have to be budget, it could be just a financial plan. In fact, that is in the book, we include like a personal financial plan where you are saying I am going to tell my money where it goes rather than just letting it be an Ocammy and fill whatever space it is at.

Scott: Yes, I think that is a great analogy. I think that is exactly what we are all about here at BiggerPockets Money. Spend less than you earn, invest the difference and do it in something that is as effective as possible. Speaking of containers though, where you live, see that transition, right?

Josh: Wow.

Scott: Speaking of containers, when I wrote that book, Set For Life, that you mentioned earlier, I invented a term called house hacking and I patented it and all that kind of stuff. I want to know your opinion on this because I thought this was one of the best ways around to get started in real estate investing. I want to know what you guys’ opinion on that is for folks that are… Because a lot of folks that are looking to buy their first deal, this might be an option that would be appealing to them getting their portfolio started.

Josh: Hey, Brandon, I will defer to you as the man who coined the term, not the man who invented it. By the way, let us talk about that discrepancy. There is all sorts of terms out there in the world of real estate investing. Some had been coined by people like Brandon and some have been coined by gurus and stuff, but this stuff is all existed before.

Brandon: Yes. We did not invent anything. He did not make it up. It existed. We just coined a term to describe what it was that people were doing. Do not ever be fooled that like just because he coined it, that means he invented it. Yes, it has been happening for a very long time.

Scott: I just coined it. That is all.

Josh: Scott has got a personality disorder clearly.

Mindy: Brandon’s article came out way before your book did.

Brandon: Let me talk about house hacking. Alright, when I bought that very first house, my story right way back in the day. I bought that house, I lived in it. I fixed it up with the 123 Home Depot book, right. And then I sold that and I made like twenty grand. The next thing I did is I still did not know much about real estate, but I was like a duplex was for sale in my area. It was two houses on one lot. It is like a two bedroom, one bath and then a one bedroom, one bath. I was like, ‘Hey, if I bought this property,’ I could live in it,’ because I need a place to live. I sold my house, I could live in the back house, like the smaller one and I could rent the front one out. I did that, I lived in the back, I rented the front one o. My mortgage payment, including taxes and insurance and everything was like $625 a month. I remember my tenants walking over like the first day, which I should not have collected the rent by hand, but I did.

They came over and gave me $650 in cash and I realized, like all of a sudden like this epiphany, like I am living for free, like I am living in a house that I own and I am not paying anything. When you do that, you now have the ability to, I mean not that you have to live free but you can live, I know people is doing house hacking in like  Maui more like I am actually doing it right now. Like still, here, but you can do it in pretty much any market but it either lets you live cheap or free. And by doing that, you can get in with a very low down payment loan, like three, three and a half percent. Sometimes even zero percent down if you use like an FDA loan or VA loan. You get like training wheels, right?

You learn how to invest while you are kind of doing it and you are living there and maybe best of all you can save money because you are not spending so much in your housing expense which is what Scott talks about at Set For Life. It is like your housing is probably your biggest expense. When you can eliminate that, think of how much more money you have to invest in something else. That is why I think house hacking is a fantastic choice.  There you go.

Scott: Well said.

Brandon: Mic dropped.

Josh: I do not really know how to respond to this.

Brandon: I know. Side note, that duplex later on we found out, people would take pictures of it occasionally. I thought it was the county. I thought the county was like taking for assessing every few months for some weird reason. Anyway, when we finally found out later, we found this out because somebody knocked on the door. Some Swedish tourist knock on the door of the other house, my tenant’s house, and they wanted a tour of their Cobain house. We found out this was the house Kurt Cobain was born in. He actually lived in both houses on the property when he was born. From like zero to six months, lived in the one bedroom. Then his parents moved, from for the next two years of his life to the larger house, the two bedroom house and then they moved out. But yes, Kurt Cobain is my former tenant.

Josh: By the way.

Scott: Did it smell like teen spirit?

Brandon: What?

Josh: I have been encouraging Brandon to turn this into a museum, a Cobain museum. If you have a bunch of Cobain memorabilia and you want to open a museum and you guys should partner, get in touch with Brandon.

Mindy: Mail it to Brandon.

Scott: But a grungy first house and go from there.

Brandon: There you go.

Scott: I am going to roll here. I am sorry, I will get going.

Mindy: I quit.

Brandon: That is alright. Alright. Well…

Mindy: Moving on, okay guys, you wrote this book How To Invest in Real Estate. You have a whole website, a whole two podcasts, a forum, a blog about real estate. What is the takeaway you want people to take away from this book? What is the main thing you want people to get out of this book?

Josh: I would say the main thing is you can do it. Well, I would say there is a few main things. One, it is possible. I would say, secondly, there is not any one answer for how to do it. The book is really helpful in helping you come to the decision on what works best for you, what tactics and strategy. I would say, thirdly, the thing that Brandon has harped on a couple of times already which is you could sit on your behind on the couch and do nothing or you can get started today. Having a sense of urgency in your financial life I think is probably for me, one of the more important things.

I think you guys do a good job in talking about that on the show here, but if you keep waiting and waiting, ‘Hey, one day I will be able to do it.’ ‘One day I will be able to start saving money.’ That day, you are going to drop dead. You live today like you are not going to have a tomorrow. Start making moves towards the end that you are seeking and you will start to make progress. Make a plan, start mapping it out. First, you got to map your financial plan. Then if you have got money, you worry about that lesson, you start mapping out your real estate plan. If you do not have money and do not see that coming in anytime immediately, there is other ways to do real estate without money like I talked about earlier with the book on Investing With No (and Low) Money.

But again, we cover all this stuff. Get your act in order, make the conscious decision that you are going to change your life financially and that you want to build wealth for yourself or generationally. Or even if you do not, like even if you want to build wealth for like, ‘Hey, in 10 years I want to own a jet ski.’ Cool, start doing that. If you never ever want to own real estate, at the very least, hopefully this book motivates you to get off your behind and start planning your life financially but really book is more catered towards real estate. Hopefully in 10 years you are buying that second home or the house for your kid. That would be my say. What do you say, Brandon?

Brandon: I am going to wrap up Josh’s thought. I am going to say this, Jim Rowan, one of the best speakers of all time. First of all, the guy says, ‘Life does not get better by chance, it gets better by change,’ right? I hope that is what people walk away with what Josh is saying here, right? Like if you want your life to get better, you have got to make a conscious choice to make it better. Remember, life does not get better by chance, it gets better by change. My hope is that this book makes a change.

Scott: Love it.

Mindy: That is fantastic. Why do you think people are still scared to get started investing in real estate?

Josh: I think they are scared because it is scary. I think the reason it is scary is because we do not teach this stuff. There is no knowledge, right? I do not know, Mindy, why do not you go snorkeling with sharks?

Mindy: Why don’t you think I do not?

Josh: Because I know you well enough.

Mindy: I do not want to get eaten.

Josh: You do not do it because you do not. But if you knew that the sharks that are in the water right there are not ever going to bother you, you still probably will not do it because that is total fear.

Mindy: I know, be it all.

Josh: Thank you, Spielberg. But with real estate, like it comes with knowledge.

A lot of people do not put money in the banks because they do not trust the banking system. They do not know, they do not understand that like, no, the government is not going to just take your money. No, the bank is not just going to collapse and everything is going to disappear, right? It just comes with education. The more we know, the more we understand, the less nervous we become. Again, which is why I passionately advocate for increasing financial education as early as elementary school. I mean, I think we should be teaching this stuff in elementary, middle, and high school. It should be part of the curriculum.

Far more important to walk out of school learning about money and how it works than learning to write cursive at this point. Let us expand a couple of resources on curriculum around that. I think that is where the fear comes really. Also because most people that you talked to probably have never invested in real estate and they are scared. The same reason Brandon’s father told him that he was going to be broke and stupid, he was right on half of it. This is generational knowledge that does not really exist. I think that is the answer.

Brandon: I am going to add in like there is two different approaches to real estate. People naturally feel like they are jumping off the cliff. Like I have this picture of like somebody cliff diving, right? Think of somebody jumping off a cliff, their friends at the top, laughing at them falling, and that is a lie our brain tells us, right? Because our brain has one goal, keep you alive. The brain does not want you to venture out and do new things. It does not want you to like, I do not know, risk anything because your brain wants to keep you safe. Our brain tells us real estate is jumping off a cliff, it is scary. Your friends are going to laugh at you, you do not know what you are doing, right? But in reality, that is not what real estate is. Real estate investing is like a hike through a mountain, like through a mountain area. Like me and Josh did a fourteener in Colorado a few weeks ago or a month ago. It was awesome, right?

That is what real estate is. The cool thing about that is it means that it is a community like hike, like you do it together. The more people you have on the hikes, and hey watch out for this little rock here, hey there is a easier path right here if you go around this way. Like that is what real estate really is and that is what BiggerPockets is in the whole. I mean, that is what Josh here built over 14 years, right? It is a community of people hiking together on this quest to financial freedom and saying this is how we are going to get there. That is why I think people are afraid because they feel like they are alone on it but you mean you are not alone.

Josh: As Michael Jackson would say, yes, you are not alone.

Brandon: Wow.

Scott: Deep.

Mindy: Okay. Now it is time for the Famous Four Questions. This is the same five question…

Josh: This is a creative segment, wow.

Mindy: Thank you.

Scott: Yes.

Mindy: This are the same five questions that we ask all of our guests.

Brandon: Five?

Mindy: Yes.

Brandon: Five questions?

Mindy: Yes.

Josh: Why is it called the famous four?

Scott: The last question is tell us where people can find out more about the book. That is a command, not a question. We got four question, one command. Alright.

Mindy: As we heard in the Zena Kumak, in kind bonus episode, I will demand that you tell me that last one. But the first question is what is your favorite finance book?

Josh: Richest Man in Babylon.

Mindy: Brandon?

Brandon: I am going to go it is a toss out between three books. Rich Dad, Poor Dad, Dave Ramsey’s Total Money Makeover, and Set For Life by Scott Trench.

Mindy: Woah.

Scott: I invent house hacking as a term.

Mindy: Scott, you are so smart. I am so glad you are here.

Josh: Me too, Scott.

Scott: What were your biggest money mistakes?

Josh: Is that the only book question?

Scott: That is the only book question.

Mindy: That is the only book question

Josh: I know, I know. I am so sad.

Scott: It is all on command until our command later on.

Josh: I want to add a book though. It is not a money book, it is a life book.

Mindy: Okay.

Josh: It Is The Monk Who Sold His Ferrari. This is literally I think one of the more impactful books I have read in my life. It is about an attorney who has everything, who is crushing it in life. Rich, he is famous, he is successful, and he has a heart attack and he realizes that he did not actually have everything. He had all this stuff that society tells us that we want, but all this stuff that we do not really need and it is a book about life. It is a book about how to find that happiness, how to find the true you. It is deep and it is awesome. I think everybody should get out and read that.

Scott: I have never heard that one recommended so I will have to check it out.

Mindy: I have not heard that one either. We will have links to all of these books in the show notes at biggerpockets.com/moneyshow42.

Josh: Awesome. What was the questions? Sorry, Scott.

Scott: The next question I would say is what is your biggest money mistake?

Josh: I would say my biggest money mistake was unloading parts of my stock portfolio because I thought I could time the market. Instead of being disciplined, I mean this was 20 something years ago, right? Instead of being disciplined and holding on tight to those stocks because now I do not have them and they are worth many, many, many times what they were worth back then and I did not multiply the money as well as I could have in the other uses that I put them towards. I would say not being smart with stocks and trying to time the market and chase the market.

Scott: I think it is a great one and I think it is good to point out that we have had a number of these mistakes called out on the show sometimes. It is like I bought a car that I should not have and all that kind of stuff, but the biggest ones, the one that seems to have like the largest dollar amount of impact is that opportunity costs, that under deployment of capital over time compounded every year. It is like that definitely, I think it is just a great lesson of hey, that is the biggest money mistake is not investing and not investing in a way that is reasonably likely to have a strong long term result now.

Mindy: Brandon?

Brandon: There was a time, I do not know, probably like eight years ago now where I was building my real estate portfolio. I started flipping some houses and I was just continually losing money and I could not get a handle on it. Then that is why I say Dave Ramsey’s Total Money Makeover, it is not that I follow every single thing Dave Ramsey necessarily teaches in there, but I read that book at that point and I was like, he is right. I do not even have a budget, like I did not have a budget at all, right? I sat down and I took my entire, like last three months and I categorize everything in like a spreadsheet and I realized that I was spending on average a $1000 more than I was making every month during those three months and I had no idea. No wonder I was going deeper into credit card debt,

I could not get out like, I was just overspending because I did not know what I was doing. That was a huge mistake, it was not driving my money. I was letting my money drive me around like I was banging around in the back of the pickup truck like with no seat belt on, right? Like that is what my money was doing. It was not until I was conscious of that and made some tweaks. What is funny is like I turned that around to where I was actually saving a large chunk of money and I did not change anything about my lifestyle. Like I never noticed the change at all. It was not like all of a sudden I was like picking up cans from every grocery store trying to go cash them in at the store or at a aluminum recycling place. Like I was not doing anything weird. It was just knowing what my finances look like forever changed my finances. Just being aware of it.

Josh: What did you change by the way? I am just curious.

Brandon: I mean I do not even know. I mean it was probably like eating out a little less and it was maybe, looking at my bank accounts saying do I really need this thing? In fact, actually there is a story in the book where I talk about how recently I found, what was it, like $300,000 hidden in my bank account. Like I actually tell the story how I found like, I wish I had the exact number, it was like $200,000 or $300,000.

Mindy: How big is your bank account that you just find $300,000?

Brandon: It was hidden. The key to that, when I say that I found $300,000 sitting in my bank account, what it was I found like three subscription services.

Josh: Recurring payment services.

Brandon: Recurring payments and add it like to $150 a month. I was not using them. If you $150 a month times an 8% return over the course of like 30 years, it was like $300,000.

Mindy: $365,402.

Brandon: Ah, you have my number. That was it, right? Like if you take those little things like in your life that are just subscription payments, right? Are you using Netflix and Hulu and are you using your Amazon Prime or whatever video or Amazon music? Like so many businesses today are going subscription models. It was just like being aware of them and canceling things I did not use. Anyway, it turned around that $1000 spend and I did not even notice it. Like I literally did not notice it. It just all of a sudden got better.

Josh: He did not actually find $300K in his bank account folks, just to clarify. It is a metaphor.

Scott: Yes, sounds better that way.

Brandon: It should compound to $365,000 once I shut those things off.

Josh: By the way, like we all talked about like in Set For Life, you might read about stopping your coffee habit. We also have these subscription habits and it is only going to get worse because businesses have realized that this is a good model. I heard that the washing machines, pretty soon are going to all be like subscription. I mean this is crazy stuff.

Scott: Yes, well, I will put it out there that like this is what is killing your budget. It is your fixed costs, right? We have gone through almost all of them right now. It is the subscriptions, your housing, and then after that it is your transportation. Most people have a fixed expense there with their car payment or lease or whatever. As you eliminate those fixed expenses from your life, saving comes really easy. You do not have to worry about that coffee habit. Brandon has a really bad Starbucks habit right now.

Josh: Me also.

Scott: It is not a bad, it is a good habit . It is a good habit every day. But that is a way harder than every morning.

Josh: It is a daily habits.

Mindy: As a Startup shareholder, I say thank you.

Scott: Brandon cannot kick his Starbucks habit.

Josh: Starbucks is closing.

Scott: Brandon cannot kick his Starbucks habit.

Brandon: Thank you for disclosing.

Scott: He can take his mortgage payment in housing payment though and that is why he is able to save so much money.

Josh: There you go.

Mindy: Okay. What is your best piece of advice for people who are just starting out?

Josh: In what?

Mindy: In their financial journey, particularly in this case, in their real estate journey because we are talking about how to invest in real estate. What is your best piece of advice for people who are just starting out after buying the book?

Josh: I would say my best piece of advice after buying the book is get out there and I have already given other advice. You can figure out what you like, look at your budget, all this stuff. Start looking at real estate, walk around the neighborhood, look at houses, go check out open houses. If you are a renter and do not own a home, go to every open house in your area. You will start to learn a lot about real estate.

You will start to learn what you like, what people like. Look at nice houses, look at crummy houses. You will be able to tell the difference. Get out there and do that. Start evaluating those deals. Brandon puts on a weekly Webinar every Wednesday at BiggerPockets. What is the URL, Brandon?  biggerpockets.com/webinar. Yes, it is a great boot camp, great training camp to learn how to evaluate real estate deals and other things. We have other webinars as well. I think that knowledge, understanding your market, understanding how to evaluate a deal, reading the book, getting a sense on what strategies will work best for you. You start with that, dive in on the forums, listen to BiggerPockets podcast. I mean, it will be hard for you to not continue forth. You will be motivated, you will be excited, but do something, right? I think that is the last thing is it is hard to do, but what makes it easy is doing something and doing it every day.

Set forth time every single day. Set 10 minutes a day to read our book, read Scott’s book, read Mindy’s book, read any book that is not our books, right? Read the forums, go on and interact and communicate and connect with one of the million other investors or people in the real estate space. Evaluate a deal, look at properties, do something every day. If you are doing something 10 minutes a day, 15 minutes a day, it will be inevitable within six months, a year, you will have the knowledge, the fear will be gone. You will have expertise and skills to be able to make it happen.

Mindy: Perfect. Brandon, what is your best piece of advice?

Brandon: I was also going to say the consistency thing as well because like everyone knows how to lose weight, right? Diet and exercise. But very few people do it because people are not consistent with it, right? Josh stole mine, so I will add another one. Famous quote, you are the average of the five people you associate with the most, right? We naturally become like the people. That is why like people end up looking like their dogs, right? Like you end up like the people that really should not use that example. I look exactly like my dog. No, have you ever actually see something like jogging and just like this dog and then usually the owner and they are like they are the same person. I see that all the time. Husbands and wives end up looking like each other. If you hang out with a lot of people who play rugby, you probably start playing rugby.

You hang out with a ton of people who play magic to gathering, you probably start playing magic in the gathering. When you hang around people who invest in real estate and do it consistently, you naturally are going to start investing in real estate. It is almost like a Thermostat, right? Where like you surround people who are on the warm temperature, like you are going to work up to their temperature. You are probably not going to bring them down, right? Yes, hang around people.

Scott: Love it.

Brandon: It is all that I got.

Scott: What is your favorite joke to tell at parties, Brandon? A guy walked into a bar and set out.

Mindy: I do not ever want to go to a party with you. You guys are both dads. I was going to say, Josh, you are a dad. You should have some dad jokes, but I guess Brandon is a dad too.

Josh: Yes, I am like the worst joke teller of all time.

Mindy: I would not have, I would have to say, this one came direct from the mouth of Mr. Scott Trench. It would have to be a. What is the pirates favorite letter are? No, it would be the C.

Brandon: I lost to that joke. Where the real pirate jokes battle with a real pirate and Jimmy Buffett’s Margaritaville on a family vacation to Orlando. It was very embarrassing. We had gone back and forth for like five, 10 minutes. The whole restaurant was into it and I lose on that one. He goes, what is the pirate’s favorite letter are? Arr, no. We are in love with this and the whole restaurant just… Oh, you lose kid. It was pretty devastating.

Scott: I am sad I was not there.

Mindy: I am not. Okay. Josh, where can people find out more about you?

Josh: They can go on BiggerPockets. I have got lots of information all about me on BiggerPockets, but I am taking a bit of a rest a bit from social media. I would say the best way to find me is on BiggerPockets. If you reach out on social, I am probably not going to respond at this point in time because…

Josh: Hey, Josh. I feel like I need a little down time. I am tired of chasing Brandon  into Hawaii and Scott to the rugby matches and Mindy up the mountains. I am feeling envious of all you people and all the things that you are doing and so I had to take a break. No, I mean I legitimately, I am taking a bit of a break or on social, but BiggerPockets, it is probably the best way to reach me.

Scott: If you want to reach me, Scott, you can e-mail [email protected] and it will come right on through to my inbox. Feel free to say hello. Always happy to respond and answer any, any questions.

Mindy: You can also reach him at [email protected] or really really [email protected].

Josh: My tools and my Twitter is @jrdorkin. My Facebook is at JoshuaDorkin. Feel free to follow.

Mindy: Brandon, where can people find out more about you?

Brandon: I am like a 13 year old girl so Instagram, @BeardyBrandon. Beard with a Y, BeardyBrandon and BiggerPockets of course.

Mindy: I was going to say not in BiggerPockets.

Brandon: Amazon and Barnes & Noble, come around. They were all over.

Mindy: Okay. The book is How To Invest In Real Estate. You can buy this book on BiggerPockets at biggerpockets.com/investinre. If you purchase the book by October 31st, you will get access to the live webinar which is being hosted on November 8th with both Josh and Brandon. Exclusive Webinar only available to people who purchase at biggerpockets.com/investinre.

You can ask Brandon any question you like, like what is your favorite least clause? what is your favorite way to fund a deal? Why does your hair look like that? Do you want to tell Josh how awesome you think he is? Do you want to thank them for founding BiggerPockets or simply comment on how striking his resemblance is to Adam Levine. Go to biggerpockets.com/investinre and purchase the book to gain access to the webinar. Okay, Josh and Brandon, I know while Brandon I know you are really busy. Josh, thanks so much for waking up on time to chat with us today. Really appreciate you guys. Scott, do you want to say anything?

Scott: I thought that was the best exit we have ever had.

Mindy: That is because I feel…

Scott: I have nothing to add.

Mindy: Because I feel  most comfortable with these guys giving them crap.

Josh: I have got to say that after your 432nd show, I really appreciate the invite. It has been great. Lots of humor, lots of entertainment, and maybe a little bit of knowledge espoused. Well done, you guys are doing a great show here. Not…

Mindy: Not BiggerPockets.

Josh: We do a great show with the BiggerPockets show. This is pretty good too. Keep listening.

Mindy: Keep listening.

Scott: Thank you. We are trying. You guys want to come back with some better jokes next time and that would make it go from a nine and a half to 10 out of 10.

Josh: That is cold man, that is just cold.

Scott: I was trying to sneak a cute joke in about your triangle but did not work out.

Josh: Next time.

Mindy: I am really disappointed because Scott usually you are pretty on top of it. As much as I hate your joke, you are like right there with them all the time.

Scott: Yes, I like that angle for jokes.

Mindy: Alright, we are out of here again. Thank you so much for your time today and we will talk to you later.

Scott: Alright, that was Josh and Brandon, authors of How To Invest In Real Estate. What do you think, Mindy?

Mindy: Oh, that was so much fun. I really do miss seeing Josh at the office every day and he has got this energy about him that is just infectious.

Scott: He is funny.

Mindy: He is really funny.

Scott: I just love talking to Josh, like he just fun.

Mindy: It is. I just want to hire him to just come over and talk to me for a while.

Scott: Yes.

Mindy: He is all busy. We definitely should have had them on before. I am really glad they were able to come on now and we will surely have them back again. I really, really, really loved reading the book. I did a lot of like pre-reading the editing, not the actual editing of the book, but I edited for like content and make sure that they were not just telling big fat lies, which they do not. Everything in the book is true. But the book is set up in a way that anyone can understand. It is not filled with jargon and all this garbage.

You are like running to a dictionary. What does this word mean? What does that word mean? It is written in plain English and it just tells you, kind of what the title says, how to invest in real estate. If you are interested in the book, if you just want the show on the webinar and give Josh and Brandon a hard time, buy the book at BiggerPockets.com/investinre.

Scott: Nice. I was really unclear on what the book was about at first.

Mindy: It is kind of hard.

Scott: But I am glad we cleared up over the course of this.

Mindy: Well, that ran very long. Thank you so much for listening to the show today. I am going to ask you a question, if you are already all the way here, I want to ask you for one more favor. We want to grow our show. I hear from people all the time, your show changed my life. Your show introduced me to the concept of financial independence, your show is so great. I just really enjoy listening to your show and people do not necessarily find it if they are not looking for it. If you like the show, if you know somebody who wants to invest in real estate, please share this episode with them. You can find the show notes at biggerpockets.com/moneyshow42. Just send them a link, ‘Hey, this is a show I think you would really enjoy.’

Scott: Yes. Also, if you are listening on your phone via the podcast, like through iTunes, go ahead and click subscribe. A lot of people actually do not know that you can just click subscribe and you can subscribe to our podcast and you will get notified whenever a new one comes out so that you do not miss one.

Mindy: I believe it automatically downloads.

Scott: Yes. I think that would be really convenient for you if you like this show and do not want to miss any episode and that obviously helps us out.

Mindy: Yes. We do come out on Monday morning, sometimes Monday morning is the shuffle and bustle is a little much. You do not have to worry about downloading it, it is already there if you subscribe. Alright, Scott, thank you so much for your time today. From episode 42 of the BiggerPockets Money podcast, this is Mindy Jensen and Scott Trench with Josh Dorkin and Brandon Turner. We are leaving. Goodbye.

Scott: Goodbye.