BiggerNews December: 3 Coast-to-Coast Markets We’d Invest in Next Year

David:
This is the BiggerPockets podcast show 697.

Dave:
Are you then recommending mostly long-term buy and hold-type deals for your clients?

Dahlia:
I do. I mean, I just feel like it’s the safest route because people always need a place to live, right? And so your long term rental is just going to be the most stable. And not only that, especially in these markets where you are seeing a lot of short-term rentals and then not enough properties for just regular renters, which is why I’m sure they’ve implemented these restrictions for you guys.

David:
What’s going on, everyone? This is David Greene, your host of the BiggerPockets podcast. And in case you’ve been living under a rock, we are the best, the biggest, and the baddest real estate podcast in the world. The show’s being hijacked today by my co-host and friend, Dave Meyer, who joins me from Amsterdam to bring you guys an awesome show with a little bit different of a situation than we normally have. Dave, welcome.

Dave:
Thank you so much. Yeah, it’s a little bit of a hijacking, but we also just want to bring some of the things that we’ve been doing on my podcast on the market to this episode to help everyone listening to this episode get some knowledge about what’s going on in the market. We do these regular panel episodes where we get experts from across the industry and do sort of a round table discussion. And so today we’re going to do one with different agents. So we’ve brought in two new real estate agents who are going to be coming to provide their insight, and David is going to switch roles and instead of being the host as he usually is, I’m going to sort of moderate the conversation and Dave’s going to put on his agent hat and help us understand what’s going on in the markets that he operates in.

David:
That’s exactly right. I love getting to do this, I’ve been a real estate agent for a while now, and I’m still intimately involved in the details of the David Greene team and what’s going on in the market. And I buy houses in these markets too, so it’s fun when I get to jump in and give the advice and the council of someone who’s leading others towards building wealth the same way that I have.

Dave:
Were you an agent or an investor first?

David:
Investor.

Dave:
Really?

David:
I’m probably the only one dumb enough to go from being the investor to willingly getting into the real estate agent space. Almost everybody in our market does it the other way. They’re like, “This is driving me crazy. I want to be the person to own the real estate, not sell it.” But it’s that drive to want to share the information, and there’s not really a better way to share information about how to wealth build than jumping in the mix with your clients and walking them through that process.

Dave:
Yeah, good point. It seems to have worked out well for you. And yeah, it’s the best situation for an investor, right? If you are an investor and you willingly became an agent because you knew you had something to offer, I mean, that’s exactly as an investor who you want to be working with. And that brings us perfectly to today’s quick tip. Quick tip. Do I have to say it weird? Do I have to say it like-

David:
Brandon made me say it weird for years and I can make you say it deeper. Yeah. But no, that PTSD that I have from those high pitch quick tips I did, I would never wish that on my worst enemy, so no.

Dave:
Okay, we’re liberated now.

David:
That’s exactly right.

Dave:
Than you, thank you.

David:
Free market.

Dave:
All right, today’s quick tip. There we go. That was as boring-

David:
That’s such a Dave Meyer way of saying it. That’s how you’d expect a data analyst to say quick.

Dave:
I calculated the most efficient way to say quick tip, and then I said it that way. All right. Well, today’s quick tip is to check out the BiggerPockets agent finder. It’s completely free. And as you’re going to learn over the course of this episode, having a great agent is not just about doing all the transactional stuff that is involved in being a real estate investor and buying a property, but it’s also someone who’s a partner with you and helps you navigate these challenging times that we’re going through. David, I’m guessing you agree, but I personally believe you can make money in any type of economic cycle, it’s just about adapting your strategy accordingly. And in this type of environment, it’s more important than ever to find a good partner who’s usually an agent to help you adapt your strategy to meet what’s going on in your market.
So if you want to do that, you want to find a great investor-friendly agent, you can do that for free on BiggerPockets, just go to biggerpockets.com/agentfinder, you put in your market like San Diego, Washington, D.C., or Tulsa. Those are where our guests are from today. You just enter in what you’re looking for, put your investment criteria in, and then you can get matched with agents who can help you succeed. So that is the quick tip. I guess I’ll give a second quick tip because you said I can do whatever I want. And that’s if you like this type of market-based information, these panel discussions, check out BiggerPockets’ other podcast, it’s called On the Market. You can find it anywhere you listen to podcasts, Spotify, Apple, whatever. David, anything else before we get into this episode?

David:
Yeah, last thing I’ll leave people with is when you’re using the agent finder, you’re still going to have to vet the agent to make sure this is a person that you want representing you, so take the conversations that we’re having here today and use them as a form of template or a model that you want to be able to have a similar conversation with the agent that you’re choosing. If you have an agent on there that’s never sold a house, just because they’re on the deal finder doesn’t necessarily mean they’re going to be amazing. It also doesn’t mean that they’re going to suck. You don’t know. You got to have the conversation with them and figure out what they know about the market, what strategies they can recommend, and what they can do to help you on your goal. A lot of people always say, “What am I supposed to ask my agent?” Well, listen to today’s show, hear the conversations we are having, and try to find the closest thing you can to that.

Dave:
David, I love that advice because I just think that’s true of anything. Like finding an agent or anything people, you need to just vet whoever you’re working with in real estate investing. Even if you hire a turnkey company, you do a syndication, make sure you do your due diligence that’s an important part of being an investor. Okay, one more thing, sorry, you told me that I could do what I want with the quick tip and now I’m drunk with power and I’m going to give one more tip. And that’s if you like this show, if you like On The Market, please give us a positive review. We really appreciate them. It really helps us make these great shows that you all love and rely on to become informed and successful investors.
With no further ado, let’s get to today’s interview. All right, well thank you all so much for being here. Super excited for this show. Let’s just start with a round of introductions. Rob Chevez, could you please tell everyone listening a little bit about yourself?

Rob:
Thanks for having me guys. I appreciate it. I’m Rob Chevez out of the Washington D.C. Metro market. I have the honor and privilege of leading The CAZA Group. We’re a team within Keller Williams that will do around $180 million in volume this year. And I run one of the largest real estate investment networks in the country called GRID. And I’m just happy to be here. I’m happy to participate, so I appreciate it guys.

Dave:
Great, thank you so much. Next we have Dahlia Khalaf. Dahlia, could you please introduce yourself?

Dahlia:
Yes. Well, also thanks for having me. I am so excited to be here. So my name is Dahlia Khalaf, I am the owner and managing broker of ASN Realty Group. I’ve been an agent for about 15 years and then a broker for the last two. I also have my own investment portfolio that I personally manage and I primarily work with investors and my real estate firm has just kind of naturally evolved into an investment firm and it’s kind of our niche. And that’s pretty much me in a nutshell, and I’m just super thankful to be here.

Dave:
All right, great. I feel kind of weird asking you to introduce yourself, David, but just for giggles, why don’t you introduce yourself to everyone who probably already knows you?

David:
I am the other David in the David and David shows here, often called Dave and David by real estate connoisseurs who are a little more cultured. But I’m a real estate gadfly. I do a whole bunch of different stuff. I run the David Greene team, so we sell homes all throughout California looking to continue helping the BP community, representing them out here. I have a mortgage company called The One Brokerage, where we help people financial estate all across the country. And then I buy rentals all over the place, write books about real estate, and host the BiggerPockets podcast, which is what people already probably know if they’re listening to this.

Dave:
Let’s hope so. Today we’re going to be talking to all of you. All have a lot of experience, but talking to you in the context of being real estate agents because so much of what’s going on right now in the market is very fast paced and it’s sort of hard to keep up. Even someone like me who looks at a lot of data, data is always in arrears, it’s backward looking. And so we want to hear from all of you about what you’re seeing on the ground in your respective markets and what you’re counseling your clients with and how you’re preparing yourself for this shifting market dynamic. So Rob, I’d love to start with you. Can you quickly just tell me a little bit about the D.C. market over the last couple of years? What happened during the pandemic and has anything changed recently?

Rob:
Well, a lot has changed, but let’s go back in time a little bit. Let’s start from 2017 to 2019. We saw just kind of this modest appreciation at 3% to 4%, which was normal. Same volume of properties was selling year over year. And then in 2020 we saw an 8.5% spike in appreciation, and then we also saw a 5% increase in the number of homes that were selling, so more home sold for 8.5% more. But then the next year was super interesting, 2021, we saw a massive spike. We saw another 8.5% or 8.2% growth in the D.C. Metro market, but there was a 13% year-over-year increase in the volume of homes, the number of homes that sold. So we just had a lot more homes sold, it’s almost like we pulled some of those future sales into the present.
And then year to date, it’s been fascinating because year to date we still have experienced about a 6% appreciation, but we’ve seen a 19% drop in the number of homes sold. So pretty significant. And really we know it’s the second half of this year, it’s really been the second half of this year. When I compared the Q3 of this year compared to Q3 of last year, it’s pretty fascinating. I mean, it’s like a 26% drop in the volume of homes, but we still had a 3% appreciation. So there’s still low inventory in our market was about 24 average days, our market’s 24 days and there’s about a month and a half supply in the D.C. Metro area.
But if you drill even, go down a little bit deeper, what’s fascinating is that D.C., D.C. proper is actually having kind of its worst five-year cycle. And so D.C. is experiencing longer days on market, more inventory than the historical five-year average. And it’ll be interesting to see how this plays out over the next couple years. I think what we’ve done is we’ve gotten to the other side and so we hit this inflection point and now over the next quarter to two, we’re going to start seeing a significant drop in my opinion.

Dave:
All right. That’s great. I want to get to the point where you tell us a little bit more about what you think is happening. So it sounds like you had solid growth for five years with the last two years seeing above average appreciations, I think you said 8.5% in 2020, 2021, which in a normal year in times is pretty high. I mean, that’s extraordinary, but not necessarily compared to some other markets like David in San Diego. What were appreciation rates like over the pandemic? I mean, I assume it was double digits, right?

David:
Well, before the pandemic things were humming along really, really well in that market. California’s a big market, we like to call it California around here. And so a lot of people don’t realize Northern California and Southern California could be different states. They might as well be like North Carolina, South Carolina. So every city’s different, you can’t look at this state and say this is what’s happening, but San Diego’s been one of our crown jewels for as long as I’ve been around. It is massively popular. There’s hardly any reason to see why that would change, the industry’s very solid there, the weather’s incredible there. And so before the pandemic, days on market was at less than two weeks, like houses, even an old ugly house was just flying off the shelves because everybody wants to be in San Diego and inventory was always the biggest problem that we had there.
Now with rates going up, I’ve talked about this before, the higher that a price point is in San Diego, the average price point in the city is about a million, and if it’s in the county it’s about 800,000. But higher price points, the markets become very sensitive to interest rate hikes. When you get a higher rate, if it’s a $200,000 house, it doesn’t have a big effect. But on a million dollar house, that’s massive. And so you sort of see a point where a market can only get to be so expensive if people are using loans to buy the properties.
Now, you also have a couple areas in California where people just pay cash. They don’t care. They’ve got $8 million, they go throw it down on a house, they’re not going to be using financing, so those markets are different than these, that’s just pure comparable sales. And they actually can do better in down markets because people want to throw their money onto a beachfront property in Southern California. If they’re worried that the market’s going to crash, that’s a safe place to hold it. But San Diego in particular has slowed down from what it was like pre-pandemic. It’s actually growing in about 1%, which is not amazing, but that’s actually an incredible good opportunity if you’re looking to buy in San Diego, because it’s been very, very difficult. It’s not crashing by any means, but days on market have about doubled in the last year. So they were around two weeks, now they’re sitting just under four weeks right now, which means buyers actually have a chance to get into one of the most solid markets in the country.

Dave:
Awesome, great. Well, that’s super helpful to understand because already we’re seeing different dynamics in certain types of markets. D.C., it seems like has sort of been the last five years, slow and steady, hasn’t started to come down so much yet, but is maybe at the precipice, whereas San Diego saw this explosive growth and now is, I guess at least approaching flat.
Dahlia, how is it in Tulsa? I think that’s probably one of the markets I’m personally not as familiar with. So curious to learn what’s been happening in your area over the last few years.

Dahlia:
Yeah. So Tulsa is going to be very different from you guys’ markets. We are always a very stable market as long as I’ve been in real estate. So even things that are affecting you guys on the coast and you’re seeing a lot more in terms of price drops and that kind of thing or huge inflate appreciations and that kind of thing, we see some of those things, but on a much smaller scale just because we’re just so stable there in the Midwest. So we saw our median sales price back in 2020 was around $200,000. And now we’re at around $250,000. That’s our median sales price right now. So we saw some really good appreciation these last two years, but what a lot of us in the real estate business here are saying is that this is Tulsa playing catch-up. We were so undervalued for so long and now we feel like we’re getting to where we should have been and just stabilizing.
And then as far as days on market, obviously in 2020 things were just flying, our average days on market was less than eight days. Now we’re around two weeks. So things have slowed down, but they’re still moving fairly well, especially in certain price points. Our inventory is still low back in 2020, it’s still very low. We have less than two months worth of inventory right now. And then obviously the interest rates are the huge factor that we’re seeing between 2020 and now is how that has impacted buyer demand. So those are the main things. I would say, especially our under $200,000 is still moving very well. Once you get over the 220, 230 price point, and I think that’s obviously because it’s closer to our median sales price, things are not moving as much, staying on the market longer.

Dave:
Well, just for context for everyone listening, going from eight days of days on market to two weeks is a dramatic shift percentage-wise, but is still remarkably low in any historical context. Anything really under, I don’t know, 30 days is still pretty low, I guess depending on the market. So it sounds like things generally in Tulsa are still, would you say it’s still a seller’s market or how would you categorize the environment now?

Dahlia:
Now, when I’m talking about that eight days on market, we’re talking about in 2020. Now, if we’re talking about prior to that, it probably was closer to around 30 days, but this was once we started seeing the inventory shortages and all of that. Now, as far as buyer’s market, seller’s market, I feel like under $200,000 is a seller’s market still. That’s a competitive price point. I mean, think about what your entry level price point is in your markets versus ours is just so much lower. But once you get to that 230, 240 and up, it’s definitely become more of a buyer’s market.

Dave:
So, Rob, you mentioned that in your market in D.C., that you think at least D.C. proper, and I know D.C. is a pretty diverse group metro area, it’s comprised of Virginia, West Virginia, Maryland, all over the place?

Rob:
It’s got a lot of facets to it, kind of like California.

Dave:
Yeah. And so you mentioned that you think things are going down. Can you tell us first why you think that? And then secondly, if that’s the case, how do you advise your clients right now about what to buy and how to invest wisely?

Rob:
I feel like what we’ve experienced is tons of momentum and inertia. So we have all this inertia that pulled us, has been pulling us through in 2022, and we start seeing a slow-down. I’m hearing Dahlia say the same thing, there’s a little bit of a slow-down in her market. Same thing with David. And that inertia will start going the other way. And we are already seeing it in D.C. proper, it’s still… Here’s the thing guys, seriously, it’s still a seller’s market. There is in Virginia, in Northern Virginia, there’s a month and a half of inventory, some sub-markets it’s under 30-day inventory. In D.C. proper it’s like 2.4 months, so that is still a seller’s market. It just feels so much different than the 15 days. I think that was the lowest that we had, Dahlia, in our market was like 15 days. It’s now crept back up.
But what I’m seeing is that just like there was momentum going up, there’s now momentum going the other way and there’s no way to time a market like Dave, I believe that if the numbers work for somebody, and depending on what their hypothesis is, and the numbers work, they should buy. And if somebody’s looking to hold onto an asset long term, that they should buy if they can make the numbers work. Rentals increased quite a bit, so it helped calibrate some of those higher prices. And within our market, people have gone just an hour away in places like Front Royal or in Winchester. And the Airbnb market is thriving in that market right now. And so what we do is we just kind of look at where can we get the return and how can we help clients win over the long haul? And over the long haul, things look great, right?
Employment in this area is ridiculously amazing. We’re like a tech hub in this area, we’ve got the government that’s in our backyard. I mean, that’s the thing with the Washington D.C. Metro market is that we’ve always had the government that kind of helps stabilize us and is a backbone to the business. And then we’ve got all these tech companies that are generating a lot of new jobs. And so even though we’re going to see a dip in pricing, which I believe we’ll see a dip in pricing toward Q1 of next year, still incredibly good market over the long haul to buy it. And I went through the whole 2007, 2008 craziness and values came right back and past that. So long term, still a great market for us to be buying into.

Dave:
I’m glad you brought up 2008, Rob, because I wanted to ask you about that. D.C. strikes me as one of those markets that are relatively recession-resilient, I would say, if that’s a term.

Rob:
Sure.

Dave:
And just because of the government public sector jobs, they’re less cyclical and volatile than a lot of private sector jobs. So did D.C. bounce back faster than other areas of the country? Was the dip as severe or how did it compare to other markets back then?

Rob:
So it held better than other markets for sure, especially compared to a lot of the Sand States that are out there, but we still got whacked in certain areas in the D.C. Metro market, like 30%, 35% off market highs. But then by 2009, 2010, you started seeing values come back up. And Dave, I remember in 2012, 2013, because we bought, I’m an active buyer as well, we bought things at such discount. When things started rebounding in 2012, 2013, I felt like things were overpriced and I kind of pulled back some of my buying a little bit, shame on me for doing that, right? But there’d been a 30%, 35% drop and I just bought at pretty low prices, but it came back pretty quickly.

Dave:
All right, cool. Thank you, Rob. That’s super helpful. I mean, think over time, I’ve just seen this dynamic where certain markets are a little bit more volatile, they spike up, they come down, they peak and valley a little bit more, but certain markets, it sounds like D.C. is more of like a slow and steady kind of thing, but that can be very beneficial, especially for long-term investors. David, what about you? You said appreciation’s out to 1%, which is obviously still up, but a pretty big shift. I was actually… Well, I’ll share something I read the other day after, but just what do you think the play is in San Diego right now? What are you advising your clients?

David:
You’re probably not going to, your average person isn’t going to go get nine San Diego rental properties. They’re going to have to put $200,000, $250,000 down on every one of them, then you got to just look for the needle in the haystack to make it work as far as the cash flow is concerned. It’s not really a market where you’re going to make this the meat and potatoes of your portfolio, but I’m very big on what I call understanding portfolio architecture. How do you add properties to your portfolio that compliment each other, that make up for the weaknesses of other properties with the strengths of this and vice versa? San Diego is very resilient. To me, I think it’s the best weather I’ve ever seen and it might be the best weather in the entire world. We just had BPCON there. Every time I go, I’m like, “I could never live here because I would never work. It’s the Bermuda Triangle.”

Dave:
It’s so nice.

David:
It’s so nice. Yeah. People that have money are going to want to be there. There’s no way around that. And weather is not dependent on industry or population trends or whatever technology company happened to go there and bring all the jobs with them and they can’t really build a ton because the city’s built out really far. So the play for San Diego in my opinion, is that if you’re a resident there, you need to be buying a property in house hacking. I think this is the best house hacking market in the entire country as far as what I know. And it’s because it’s got all the pieces that you need, a bunch of people that want to live there that will never be able to afford a home, so they got to be able to rent something.
We all know somebody who moved to San Diego after high school and never came back and they’re still working at a bar, working at a restaurant. They’re not ever going to be a homeowner because they’re stuck in that Bermuda Triangle, they need a place to rent. Then you’ve got the rents that are crazy expensive for you if you’re trying to live there. So house hacking works best in areas where housing is expensive, it gives you this added benefit of doing it. And then you’ve got the fact that it’s got a strong short-term rental market, but it’s very difficult to get a short-term rental occupancy deal from the city. They limit how many people can actually do short-term rentals, so if you want to try to just go buy a property and throw it up as an STR, the odds of you getting picked are low and that’s a very expensive property to hold while you’re waiting, but if you live in the property yourself, you can rent out another part of it as a short-term rental.
It’s sort of a back door that you can get in, which is just another benefit to house hacking. So I don’t think that you’re going to build your entire portfolio full of San Diego properties, but you definitely should have one or a couple if you can get it over a span of a couple years because the appreciation is going to be incredible and it’s not an investment you’re going to have to have significant worry about losing. It’s not an area like, “Oh, fracking went away. So all these properties in North Dakota that were exploding at one point cut off completely.”

Rob:
Dave, the D.C. Metro market is similar. It’s a house hacking kind of market for investors. But then if you just go an hour and a half outside of D.C., you’ve got some beautiful country, you’ve got the Blue Mountains, you’ve got the Shenandoah River, and STRs are where I’m seeing a lot of investors go out to those markets and making the numbers work. And it doesn’t sound like there’s the same hurdles that you have to go through compared to a place like California. One of the rules is in the Warren County area, you just have to be a hundred feet away from your neighbor. That’s it. If you’re a hundred feet away from your surrounding neighbors, if you go through the process, pretty easy to get a permit for an STR.

Dave:
Yeah, that’s awesome. Dahlia, I want to check in with you. What are the top three strategies you recommend right now given what’s going on in Tulsa?

Dahlia:
So Tulsa’s definitely more successful when it comes to long-term rentals right now. Surprisingly, we do have quite a few short-term rentals, although we’re not necessarily a vacation destination. I think the culture has just changed, especially in the last two years, where people would just rather rent a house or a town home or whatever than stay in a hotel to accommodate their family or just to be more comfortable. So we did see quite a bit of saturation with STRs here. And we don’t have all those limitations in terms of getting a license here, it’s very easy. It’s basically, I think $300 for a license for the year. There’s no inspection, there’s no process you go through other than just applying and paying the license fee.
So we saw a huge influx of STRs in the last, I’d say four years. And so now we’re pretty saturated. So I had clients purchase STR in the last couple years, now I’m advising it’s always great to purchase something that would serve great as both, something that’s in a location that would do well as an STR or an LTR so that you have the flexibility to flip back and forth if you need to, you have an exit strategy.

Dave:
Yeah. I mean, I love that point about creating that flexibility. That’s a great way to protect yourself and mitigate risk. I was just curious though, how are you seeing, how is this oversaturation in STRs manifesting itself? What are you seeing that is telling you that there’s too many right now?

Dahlia:
Vacancy.

Dave:
Okay. And are you seeing clients that have bought STRs struggle to make their numbers work?

Dahlia:
And I try to keep in contact with my clients after they purchase. We stay connected. I try to keep a pulse on what’s going on. So far, the ones that had STRs, they’re doing okay, the ones especially that are in more high-demand locations. But I’ll tell you where I saw more of a flip is my clients that bought midterm rentals, specifically catering to traveling nurses, which we saw an influx of those during COVID. But then as things calmed down, those contracts got canceled. And so I did see multiple clients of mine that had bought midterm flip to either short term or long term.

Dave:
Got it. That’s super helpful to know. Honestly, I think you hear a lot about the things that are working, which is always helpful, but it’s great to hear the things that you would recommend people stay away from. That’s really helpful for our audience. So are you then recommending mostly long-term buy and hold-type deals for your clients?

Dahlia:
I do. I mean, if you’re going into it, I just feel like it’s the safest route because people always need a place to live, and so your long-term rental is just going to be the most stable. And not only that, especially in these markets, so especially for you guys, where you are seeing a lot of short-term rentals and then not enough properties for just regular renters, which is why I’m sure they’ve implemented these restrictions for you guys.

Dave:
Yeah, that’s super interesting. And yeah, personally, I know this is a boring thing to say, but I just think you can’t go wrong with buy-and-hold investing. It just works as long as you hold onto it through the cycle.

Dahlia:
If it’s not broke, don’t fix it.

Dave:
Yeah, exactly. David, I’m curious. There is this dynamic where I mostly invest in Denver and there’s this dynamic where they put in a lot of short-term rental restrictions where it has to be your primary residence. So basically you need an ADU or I have a primary, I live out of the country so I could rent out my primary. But for the people who have it, it actually turns out to be even more lucrative in those markets because there’s constrained supply. So do you see people who do this house hacking strategy really do well with their short-term rentals?

David:
Yeah. And you made such a good point. The fact that it’s a constraint supply to many people is a reason they don’t want to invest in the market. “Oh, it’s hard. I wrote an offer I didn’t get accepted. I wrote two, it just isn’t going to work. I’m just going to go out of state. I’m going to go find a market where I can get a house and a contract right away.” But there’s this rhythm to life, I need to come up with a name. If Brandon Turner was here, he’d come up with a name. He was very good at that.

Dave:
Brands everything.

David:
Yes. If it’s easy on the front end, it’s hard on the back end. If it’s easy on the back end, it’s hard on the front end. And human beings have this erroneous belief that they can have both. They think like, “All right, it’s a market where real estate’s appreciating rapidly. It should be easy to get into that market.” No, the fact it’s appreciating rapidly is why it’s hard to get in. And if it was easy to get in, you wouldn’t get on the back end all the appreciation, all the increasing rents. Every real estate agent understands this, you can’t have a buyer’s market and a seller’s market at the same time. You have to learn what makes this market appealing. So if for instance, in the city of San Diego or the area, it is the fact that supply is very constrained, there’s massive demand for it, and it’s very expensive.
So the stakes are high. You can make good money if you do it well, but you can’t just go buy a tract house. It’s got to be a place that’s got an ADU or ideally two ADUs or play you could turn something into an ADU that other people aren’t seeing. It’s got to have something unique about that. And then when you buy it, you’re going to do great on the short-term rental market. There’s a lot of conferences that happen in the San Diego area that a lot of people travel to, there’s a lot of vacationing. I mean, the weather’s so nice, there’s people that don’t go to Mexico, they’ll just go to San Diego even though it’s right there because it’s so, so nice.
But the key that I think every good agent understands is helping their clients see the angle that works on their market. You can’t hear about what works in Tulsa, Oklahoma and go try to do the exact same thing in Washington, D.C. And vice versa, there’s very specific strategies that we talk about on these podcasts that work better in certain locations and in better cycles in the market. And the right agent who’s listening to BiggerPockets, who owns investment properties, who’s working with investors all the time, they’re like the Sherpa that can lead you to the top of your own market’s Mount Everest, that can help you find the deals.
And so those are the questions I just think people should ask. If you’re going to work with us in San Diego, you want to know, “Well, what are your other clients doing that’s working? What are some things you’re figuring out?” The same would go for Tulsa and for Washington, D.C. Don’t try to take that basic understanding that, “Well, I heard this strategy on the podcast, so go make it work,” when the market is not applicable to that specific set of circumstances that the market’s facing. Or, “Well, I want to be a short-term rental investor, but I want to invest in this area because it has the best something else.” Sometimes they’re in conflict with each other and they don’t work.

Rob:
I don’t know if you guys are seeing this in your market, but in our market we’re seeing a lot more sub-twos and lease options, a lot of creative financing. There’s a lot of that happening right now because we’ve had all of these really low interest rates that people have locked in for some time and yet life happens. Death, divorce, drugs, like all the rest and people need solutions. And so I’m seeing a number of my investors kind of shift to some of these strategies. And we just put a property at a contract, it’s a lease option at $1.2 million and they put down $100,000 non-refundable deposit because they just couldn’t settle straight away, but they still wanted to lock-in the property.
And so we’re seeing some of these strategies kind of come back and an agent that understands how to navigate those strategies or has done this before, is more valuable in this marketplace. They see real estate from a 360 standpoint versus just kind of the narrow lens of helping somebody buy and sell, you’re literally becoming a problem solver in a market where people are going to face problems and the right agent’s going to know how to solve those problems for their clients.

Dave:
Rob, can you explain quickly what sub-two is and why it’s becoming more popular?

Rob:
Sure. Well, we all know interest rates had been really low for a long time. People locked in at 2%, 2.25%, 3%. And these loans are out there and life happens where somebody for whatever reason might lose a job. You see all these tech companies that did lay off thousands of people and now they have an asset, not only the physical asset, but the mortgage, the underlying mortgage itself is an asset that becomes valuable to somebody. And sub-two is merely just taking over the payments for somebody in exchange for the deed of that property. And you might pay them some of the equity up front, you might be able to structure it so you pay them some of the equity on the back end. But it’s a way to solve somebody’s problem if, let’s say, not even if they’re behind. Let’s just say they were an expired person who failed to sell the first time, but they need to sell because there’s a job relocation happening and it’s a pretty house.
Well, if they’ve got a really good loan on that asset, an investor like myself might be able to put that property under contract and essentially buy that property with the underlying debt that’s there, so effectively the loan stays in that seller’s name. We effectively almost become partners together in that respect. And so I know our team has completed a couple this past month, we’ve helped navigate that process with some of our sellers. We personally have bought, I bought one last year in the process of buying one right now that way. And it’s just one additional strategy, Dave, that people can use in a shifting market like we’re in today. And as long as you can create a win-win-win for everybody, then you should employ.

Dave:
Thank you, that’s super helpful. Yeah. And you can find those types of deals super beneficial right now and hopefully there’s more sellers willing to do that for investors out there who are interested in it. Dahlia, David mentioned earlier about people trying to find great agents, and I think it’s a perfect example, especially in these types of markets, over the last couple of years, you could just buy anything and it would go up and it looked great, but these are more challenging times. Do you have any advice to people who are trying to find a good agent to work with to help them navigate these times? What should they be looking for in an investor-friendly agent?

Dahlia:
Sure. So I think one important thing is are they an investor themself? Do they own investment property? It just gives them what Rob was talking about. It just gives them insight that a non-investor just most likely doesn’t know. I’ve had, I don’t know how many times where I have someone come to me and they say, “Hey, I was working with this other agent, they were great, but they just don’t get it. I need someone that understands the investment world.” As an investor agent, you just have such a pulse on what’s going on, or at least you should. You should know what the rental rates are like, you should know how long properties are sitting, rental properties are sitting on the market. Is this a good area? Is this a rentable area?
You’re going to have an understanding about, you’re going to have resources, contractors, property managers, creative financing lenders. All these things that a non-investor agent just doesn’t have access to because it’s just not part of their niche. So that’s why I just think it’s imperative to have somebody who is an investor themself and just very familiar with what’s going on in the investment world.

Dave:
Dahlia, were you agent first or a real estate investor first?

Dahlia:
So I was an agent first. I got my license about 15 years ago. It just kind of happened by chance. And not only that, my dad’s an investor, so I always knew that at some point I was going to go that route, it was just getting financially ready for it. But I grew up around it, grew up with my dad buying rental properties, so it’s just always been around me.

Dave:
That’s awesome. Was it hard, did you have to learn or do anything extra to start catering and working with investors once you were already an agent?

Dahlia:
I mean, I feel like it just happened organically because I was already an agent and an investor. I was getting referrals, people that were just referring people to me because they knew that I was doing both and that I was knowledgeable. And so it just kind of naturally happened that way. As far as doing anything extra, not really. I just gained experience working with a lot of investors, especially the out-of-state investors. I’ve pretty much created a very seamless process for them now since I’m eyes and ears for those out-of-state folks that a lot of time never even set foot in the property they purchase. So it’s really just experience.

Dave:
Awesome. What about you, Rob? How have you built out your expertise as an investor-friendly agent and what other advice do you have for people who are looking to find a great partner to work with?

Rob:
So a couple things. One, I love… Actually, I’m going to say it right now, the investor-friendly agent Moniker. Hate that Moniker.

Dave:
Really?

Rob:
Yeah. Only because I feel like what you are, it almost sounds like GoFetch. GoFetch is a friendly investor agent, but really the Moniker is really more of a consultant, like helping somebody understand all of real estate from a 360 standpoint. So I know everybody uses it, it’s just one of my things. But I started off as an investor first, so as an investor first, my wife and I would buy 20 to 25 houses a year, we’d fix up small multi-family properties, we’d then sell them to investor’s turnkey, then we would manage assets for other investors, and we learned the game there. And what I realized was that we had a skill set at that point to be able to guide other people to be able to do the same.
When you put your own money where your mouth is to sell your own asset and to manage your own asset, you understand all the little nuances that help you make a better return on the investments that you buy. And so I really feel that a great agent investor understands those nuances. They’re consultants, like David said, they’re Sherpas, they’re literally guides in the marketplace that can help you build massive wealth. And I think the only way that you’re going to learn how to do that is by doing it yourself. How could you possibly take anybody on a wealth journey if you haven’t gone on the wealth journey yourself? And so I think that that’s a critical component of being able to help other people. You just got to do it yourself.

Dave:
Got it. That’s great advice. And I will never call you an investor-friendly agent again. It’s [inaudible 00:43:50].

Rob:
No, it’s fine. Everybody uses it, can’t escape it. David, you got to come up with something that’s better than that.

Dave:
Sherpa.

David:
Yeah, the Sherpa. We tell our agents, “You’re not an order taker. This isn’t a restaurant where someone says, ‘Can I have a Coke?’ And you run and get it and bring and say, ‘What else would you like?'” All that is people absolving themselves of the responsibility of leadership. It’s easier if someone tells you what to do, you don’t have to think. You want the person at the best restaurants, I used to work in fine dining places when I was in college, where I don’t say, “What do you want?” I say, “Would you like wine tonight?” “Maybe. What do you have?” And then I show them the list and I say, “If you’re looking for something like this, this would be a good pick, but if you want something like this, that would be.” And then you ask me questions and then I show you I know about wine, so now my suggestion sounds like something you’d want to trust.
Real estate should work the same way just with higher stakes and more details. If you’re an agent and you don’t know what’s happening in your market, it’s like being a person that is trying to sell wine and you don’t know anything about wine. You want to be recommending things to people, you want to be advising them, leading them in a sense. And you got to have confidence to do it. And I love the point you made that you should be building wealth for yourself. Ideally, you want an agent that owns properties in that market and is very comfortable with it, because if your motive to become an agent was, “I hate my job, I hate my life, I just want a different one. Maybe I’ll strike it rich.” You’re like the person that move out to California for the gold rush and try to figure out like, “Maybe the face will bless me.”
Those were not the people that did well. The ones that did well had a plan. They were the people that went out there, they sold the picks and the shovels to the gold miners. That’s what you need. You need to be the agent who has a plan, who’s doing it yourself, who’s in it for the right reasons. You have the right motives, you’re trying to help people build wealth because you’re also building wealth. Nobody wants a personal trainer that looks terrible. If you pick a personal trainer, that looks really nice. So if you’re financially unfit, then you’re going to have a very hard time being the Sherpa that can get people to the top of that mountain.

Rob:
Yeah, the agent investor advisor or something. I don’t know.

Dave:
Yeah, you need to lead by example, David. It’s like you can’t just spit theory, you have to also be able to walk the walk a little bit.

David:
Yes, absolutely.

Dave:
Well, this has been super fun, but we do have to get out of here soon. But I would love for you all to leave us with one piece of advice. So could you each give me 60 seconds or less on why you think your market is a great place for investors to consider investing right now? David, your experience. I’ll make you go first. Experience at podcasting, I know you’re all experienced investors and agents. I could just make David, put him on the hot seat first.

David:
Yeah, I dropped so many mics that they actually put it on a stand so that I can’t drop it anymore. I was breaking material with all these great clips. My advice is don’t think I’m too busy to help you with getting a house. That’s something that people just stop reaching out to me when I started hosting the podcast. I’m like, “I have an entire freaking company that’s designed just to help you make money with real estate, with all of the information that I’ve learned that I’ve tried to pass on to my agents to help you. So reach out.”
The second piece of advice that I’ll give is stop looking at what’s right in front of your nose. Whenever we talk about strategies that work, people that built wealth, unless they invested in FTX and they thought that they were really rich, which they’re now regretting, it’s people that took a long-term perspective. The people that made money real estate did it over 20 years, over 30 years, they didn’t buy a house and when one fence board broke, they thought, “Ah, this isn’t worth it. There’s an expense I didn’t know.” They played the long game.
So stop zooming in on what’s happening right now or how to get the perfect deal or waiting for the perfect market. And then 10 years go by and it never came and you lost hundreds of thousands of dollars that you could have made had you just found the best deal you could in the situation that you were in right there and then went and recapitalized so that you could do it again and let time does what it does with real estate. So I’m constantly just trying to be an evangelist for this zoom out perspective that I have. No one remembers what was in their inspection report 30 years ago. You can all ask your parents or your grandparents what freaked you out about buying the house, and they don’t remember. They don’t know the escrow officer’s name, they don’t know the inspection report, they don’t know what interest rates were. What they know is how much money that they made in real estate holding it over a period of time, letting the loan get paid off, and letting inflation appreciate the asset.

Dave:
Love it. And I assume you believe that San Diego’s a great place for that long term, right?

David:
Yeah.

Dave:
There’s been a lot of exodus from California or people say like that, but you still believe San Diego long term is going to perform well.

David:
Yeah, that’s a good point too. Your agent should be able to guide you. I would tell San Diego’s very strong, Orange County’s very strong. There’s a lot of places in San Francisco that are still strong. Like Downtown LA, not very strong. That’s not a place that I’d be aggressively routing offers right now. So not every path to the top of Mount Everest, to use that analogy, is the same. And when weather changes, you’re going to take different paths. Sherpa’s know all of them, so that’s why you want to have an agent that knows your market, so we can guide you away from the wrong areas and into the right.
San Diego’s one where I’m happy to talk about on a show like this because that is as resilient and bulletproof of a market as I’m aware of. And when things are slowing down like they are right now, you want to be in the grade A places. This is not a time to get into D neighborhoods or even C-minus neighborhoods. You can get away with that when the market’s going up, up, up or right after you’ve already had a crash, not when we’re sitting at a point where we don’t know where things are going like right now.

Dave:
Great advice. Dahlia, what about you? What would you say for people who are considering Tulsa, what’s your pitch?

Dahlia:
I mean, the great thing about Tulsa is affordability. I mean, you can get a great single family rental for under $200,000. And stability. Like I said, we’re not seeing the crazy ups and downs, it’s you park your money there. Just like what David was saying, this is not a sprint, this is a marathon. So Tulsa is a great growing market, we are seeing some really good appreciation catch up, it’s just the perfect time to invest here. A few things that I would just like to touch on is if you’re looking to get started, just take that first step. Nobody regrets their first investment purchase, they regret not doing it sooner. So there’s never a better time than now. Get your finances in place, get your lending figured out, find the right agent, which is hopefully why you’re watching this, and learning about all of this great agents on here. And run your numbers, use those BiggerPockets tools. They make it so easy for you to run the numbers and then just take the emotion out of it. And if the numbers make sense, do it.

Dave:
All right, thank you. And Rob, what about the D.C. area?

Rob:
Well, this is our nation’s capital. We’ve got the federal government that’s kind of like the backstop here in this market. We’ve got a lot of growth, a lot of technology growth happening in this market. And I echo what David said. I mean, long term this market has just been stable, just keeps growing, keeps getting bigger and bigger. I mean, a couple years ago I listed my dad’s best friend’s home. His family, his mom and dad had passed. And this was in Arlington, Arlington is a ridiculously hot market in our backyard, and they bought the house, they’d bought their house for $45,000. And I remember talking to him. He said, “I felt like I overpaid for the house when I bought it. And today that dirt was worth $850,000.” So just time, time and a growth market. This is a business that plays out over time. So I echo everything that David said and this market is just a great market to see it play out over time.

David:
Yeah, let me say one last piece before I get out of here. It’s not always about, “Do I invest in San Diego, or Tulsa, or Washington D.C.?” I think that there is absolutely a way you construct a portfolio where you invest in all of those markets and you just construct it in a way that the long-term appreciation you get in San Diego is going to be paired with the short-term cash flow that you can get in Washington D.C., and the cash flow paired with actual odds of scoring and being successful investing in Tulsa.
You find the best properties for what you want to do in each one, you put them together, they all sort of make up for the weaknesses of the others with the strengths that they provide, and you continue to build momentum buying in the right markets and putting it together like a puzzle piece versus thinking, “Ah, I got to pick the best one.” And then you stay in analysis paralysis for six years and then just beat yourself up because you never bought a house for six years. And then every time you listen to the podcast you get guilt and you feel terrible and then you don’t want to do it. You see, this is the spiral that I’m talking about getting into. That’s what we want people to avoid.

Rob:
David, do people have to… Do you think they have to leave San Diego to build that portfolio? I mean, not San Diego, but California’s huge, right? I mean, Northern California is considerably different than Southern California. Can you construct that same portfolio properties there and never leave the state?

David:
You absolutely could because the principles are the same. And in places versus California, you could grab one from this city, or this city, or this strategy and this strategy. It’s a principle that will work. And it doesn’t have to be across the country. The idea would be in Dahlia’s market, you could get something that cash flows, you’re not going to be fighting with a hundred other people, the price points are not going to be massively high, so you’re not making a million dollar mistake, you’re making a $200,000 mistake as you’re learning. And then once you’ve got some momentum, you’re like, “Hey, now I want to go invest in one of these other markets where the stakes are a little bit higher and I could take the training wheels off. Maybe I don’t want to start off there.”
And then the same would be true of individual properties in those individual markets. We all know the markets within our own city where this is where the big boys play, and this is the shallow end of the pool where you can get your feet wet and you can get into with an FHA loan and relatively reduce your risk as you learn the rhythm here, but it’s breaking out of that mindset. “I got to be perfect, I got to find the perfect deal at the perfect time in history with the perfect tenant.” And when nothing is Perfect, and you don’t take any action.

Rob:
I have one more question. I’m sorry, Dave. Just my question for Dahlia because where were most of your investors coming from? Like California?

Dahlia:
Yes.

Rob:
Okay.

Dahlia:
Most of my investors are from California. I have some from Colorado, Texas, some other places, but the bread and butter is California.

Dave:
Okay, great. Well, thank you all, first of all, so much for being here. I would love for you to just tell our listeners where they can connect with you if they want to do that. Rob, where should people find you?

Rob:
Sure. They can go to gridinvestor.com or just find me on Instagram. Rob Chevez, @RobChevez. Pretty simple.

Dave:
All right. What about you, Dahlia?

Dahlia:
So my website is asnrealtygroup.com. You can also find me on my Facebook page @ASNRealtyGroup, and then of course on BiggerPockets.

Dave:
All right, great. And then David, I know you’re pretty tough to find, but where could people seek you out?

David:
I will give you an email that you are guaranteed to get an answer at. Email us at [email protected]. [email protected]. There’s an E at the end of there, I have a person monitoring that email all day long. We would love to help you with buyer selling in California. I am not too busy to help you buy or sell a house, that’s actually why I exist. So please, like the biggest sting ever is when somebody uses another agent and comes to me and they say, “They screwed it all up. What do I do?” I say, “Why didn’t you ask me?” “I thought you were too busy.” “But I wasn’t too busy to come ask me how to fix it, huh?” So reach out to us first.

Dave:
All right. Well, David, Rob, and Dahlia, thank you all so much. This was really insightful, and hopefully everyone listening can learn a little bit about how to navigate the current market, what’s going on, and what to look for in building when you’re building your team in this correcting transitionary market that we’re in. Thank you all so much for being here.

Dahlia:
Thank you.

Rob:
Thank you.

Dave:
All right. Thank you so much to our panel for joining us today. They all abandoned me, so it’s just me here, Dave, now. And I’ll just remind you that if you do want to connect with any of our panelists today, David, Dahlia, or Rob, or any of the great investor-friendly agents who are on BiggerPockets, all you have to do is go to biggerpockets.com/agentfinder, search for a market like San Diego, Washington, D.C., Tulsa, any other market. Enter your investment criteria, and pick agents that you want to connect with, all of whom are investor-friendly agents.
Lastly, remember, if you do want to learn more about the current events data, news that is impacting the real estate investing market, make sure to check out BiggerPockets’ other podcast called On the Market. You can find that on Apple or Spotify. And lastly, for David, the Gadfly Greene, David Meyer. And just so everyone knows, I had to look up, I Googled what gadfly means, and it means it’s a fly that bites livestock, especially a horse-fly, warble fly, or botfly, or an annoying person, especially one who provokes others into action by criticism. I don’t think David really meant that because he is neither of those things, but I just wanted to poke fun at him. So thank you all for listening. We’ll see you next time.

David:
It seems like everybody got a haircut today. All of you guys’ hair is looking really good.

Dave:
Oh, thank you.

Rob:
This is how I rolled out of bed.