Episode Transcript

Welcome to Episode Seven of season one of the Growing Empires show. Today's episode is the Mythbusters segment. I'll be here with my special guest, Ronald Bowser. Stay tuned.

00:13

Welcome to Growing Empires hosted by real estate entrepreneur and trusted investment advisor Jennifer de Jesus. Growing Empires provides insight to building wealth through passive income producing real estate investments for those who want to build and manage a more profitable real estate portfolio.

00:31

Today, my special guest is Ronald Bowser. Ronnie has been working with me for the last couple of years. He's previously from the IT world where he was a business analyst. And recently he's been helping investors buy, sell and renovate their investment properties and creating great streams of passive income. Today I’ve asked Ronnie to be on this episode so that he could help us bust some of those myths in regards to real estate investing.

00:59 All right. Welcome Ronnie to the Growing Empires show. So glad that you are here. Let's kick off this episode about myth busting with you sharing a little bit about the work that you're doing now, as well as how you got into real estate and real estate investing.

Ronnie: Thank you for having me. So currently, I'm working with you and your brokerage. My main task is working with new investors to help them secure new properties and transition them under management if they choose. And just providing insight on our area, our market, things that are going on right now in the crazy world. But that's mostly what my focus is new clients coming in and trying to help them begin and build their portfolio.

Jennifer: Okay, why don't you tell my listeners a little bit about your background? Where did you come from before you got into real estate or investing?

Ronnie: Sure. So I was in IT I was a business analyst for a number of years. And my buddies and I formed a little LLC and began investing on our own. This is about 2013 when we first started so we all had our nine to five and got ourselves a property. I jumped in and began self managing, and just got more and more involved with all the pieces of the process that are involved in investing, and realized how much I liked it. Working with the tenants, making sure everything was in compliance with the cities I just kind of really jumped in, just kept trying to expand my knowledge and learn more. And a little over two years ago, I was fortunate enough to be introduced to you and transitioned into real estate full time, got my license as an agent and have just been enjoying myself ever since.

Jennifer: And what made you decide ultimately, to leave the IT world and to leave your nine to five?

Ronnie: To be honest, I just wasn't passionate about what I was doing. It was paying the bills and taking care of everything, but I didn't really wake up with much desire to go in. But as I learned more and read more about real estate, you know, I used to sit at my desk daydreaming about, “Oh, I wish I was checking out this property,” or, “I wish I was coordinating this rehab,” or whatever the case may be. And so when the opportunity presented itself, I made the jump.

Jennifer: That's interesting, because we talked a lot about passive investments and why you would even have them. And, you know, ironically, you have a common story, right? Most people have nine to five jobs that maybe they're not so passionate about in real estate as a way to, in a sense, I guess have a means to an end, right? If whenever you want to be able to leave your job, you have the flexibility to do so. Now, I think in your case, you took a good leap of faith. Right. And I think that included some risk, right, but I don't think that everybody is so willing to take that risk or take that jump. But, you know, when we talk to investors about real estate investing, one of the things that they always say is, you know, I want to be able to make money for my future. I want to be able to make money to retire early. I hear that very often.

Ronnie: Absolutely. And that's pretty much exactly what what the how it started for us, we were definitely focused on buy and hold, create some passive income, have tenants paying down your mortgage, you're building equity in this property and then a handful of years down the line, you have that kind of cash out with somewhat of a extra retirement plan. We just wanted to build, grow our portfolio and just keep moving. So that that was definitely the initial strategy. And still what I'm doing today, I still focus on buy and hold. But yes, like you said, I kind of made that leap of faith because I just wanted to spend my time in real estate and not some database or whatever I happened to be working on at the time at work and my old career.

Jennifer: Right. And for my listener that you know, maybe loves their nine to five and is really passionate about what they do, real estate still is a vehicle to, you know, create wealth and to be able to give you flexibility and not essentially have you married to your job, you know, and I got the analogy in one of the earlier episodes that what happened if you lost your job today, right? If you work a nine to five, even if you love it, what if your superior today decided that you were no longer valuable to them? Where are you? What do you have? And for a lot of people, the risk is so great because they have no backup plan, right?

Ronnie: That's correct.

Jennifer: Your 401k your retirement, your IRAs are not enough to support day to day life if you don't have your job. So real estate investing even for those that do love what they do, is, you know, protection, right? It's protecting your family. It's protecting your assets, it's protecting your way of life. So, I'm really excited about today's episode, and I'm thinking that this might be something that we do every season, is myth busting, because there is definitely a large share of fact versus fiction out there in the world. You know, with Google, you know, everybody has access to things very readily and sometimes the information you get on the web is fantastic and it’s right on point. And then sometimes the information that you get on the web or that you hear on blogs or forums is just completely inaccurate to one specific market. Maybe that's not that is inaccurate everywhere, but it's inaccurate to one specific market. So the question to my listener is, did you ever wonder how real some of the stories are that you hear on real estate related blogs or forums? Well, today we're going to put some of those myths to the test. And I've asked my colleague, Ronnie to provide his expertise and insight on this topic. Ronnie has been working with new and seasoned investors for quite some time now. And he's also studied forums like BiggerPockets, as well as being an investor himself. So today we're going to talk about four main topics. One is the BRRRR method. We're going to talk about cash is king. One of the other myths is going direct to the listing agent or seller will get you the best deal. And last but not least, we're going to talk about the myth behind lowball offers. Let's get started. I think this is Ronnie's favorite topic. So tell me a little bit about Ronnie about the BRRRR method. And what does it mean? And why is everybody so hot to find properties that fit this method?

7:11

Ronnie: Yes, the BRRRR method, the burst strategy. So it's an acronym. It stands for by rehab, rent, refinance, and repeat. And it can be a phenomenal strategy. And a lot of people that I've been working with recently really want to target that strategy. And similar to how you said earlier, when we were first beginning, there's a lot of great information. Bigger Pockets is a website that I go to a forum all about investing, and that's where I've done a lot of my learning. So it's a global website, but it's basically centered around the entire nation. So what may work in some markets doesn't necessarily work in ours or is a challenge in ours. And as you stated, I spend a lot of time speaking with investors on the BRRRR strategy, and again, it's phenomenal. But there's a lot of challenges with it and with how competitive our market is, it can be difficult to execute. So focusing on the first letter, buy, is one of the most challenging aspects because you have to buy that property at a discounted rate. Because the whole goal is to do something to get it back up to force that appreciation or get it up to that after repair value. So that when you get the appraisal on the back end, you can pull that 75-80% out and use that money to do the next one, the repeat the final R in the acronym. And that can just be challenging because we have a very competitive market. If you're looking at listings on the MLS, realtors, Zillow, things like that, thousands of people are looking at that. So thousands of people are trying to get that deal, you know, maybe not thousands, but the point is there's a lot of competition. So being able to buy it at that discounted rate that’s needed to get it up to a higher value and then pull out that capital on the back end can be a challenge for the first step.

There's other methods, you can look for foreclosed properties or auction sites, those come with their own risks and rewards. If you can find a good property and properly vet it and make sure you know what you're going into, it can be a great strategy, but the very first challenge is buying at that right price. And in our market here, which is very competitive, it can be a challenge. The second largest challenge, in my mind, is the refinance part. So it's great in theory and on paper, when you're saying hey, okay, look, I bought this property. I fixed it up, I have renters and now we're back on to the refi part. Well, banks don't really want to assume the risk. And I think that's one of the largest challenge, Now a third party is doing the appraisal for the bank, but they they speak with each other and they know how things work and ultimately, the lender is going to have their own underwriting process. So actually I have experience so about five or six years ago, there was a property a single family home right my neighborhood just a couple blocks from my house. I've walked my kids past it while at the time I only had one daughter, but so we would go on walks and I would walk her past that. And so I was always keeping an eye on it, not the time it started at like close to 90,000. This is an REO. This is a short sale of bank owned property that they had foreclosed on. Started around 80 or 90. I don't forget the exact numbers. Couple weeks go by it's dropped and it gets down to 70. It actually got down to 60. So I started talking with the agent who is handling it and again this I was not in the industry. This was me as a complete novice just trying to figure things out. We got it down to the point that we actually were going to be able to purchase the property for $35,000.

Jennifer: Wow!

Ronnie: Yeah, it was a great thing. And this was one of those times where the buy worked out because it had been on the market so long so people weren't jumping at it at the initial price. That's one other strategy you can look for look for older listings that are sitting. Again, I'm just kind of going back to the buy side. But that runs those risks too, because it's sitting for a reason why hasn't anybody jumped at it? For this particular property the price had come down to such a point, I started working with my guys and saying, “Okay, how can we get this I mean, we can get this property here that single family home in a great neighborhood for $35,000.” ARV had to be 80 to 90,000. So and then again, this was five or six years ago.

11:40

So we called our lender and I was talking to him and he's explaining to me that they had different rules. Okay, well, we can't, we can't loan to you guys on a vacant property without showing any income. So that was the first hurdle. Okay, that's not gonna work. But in talking with him, if we got the place and we got it rented and we showed occupancy for a year, we could refinance at that point and pull out 75 to 80% of the value. So everything clicked in my head, I was so excited, we okay we'll find private money or we'll pool our money together, get the property, you get to rehab, do all those steps refi out at the back end, and we're going to be able to pay off ultimately what became a private money loan, we had somebody that gave us $50,000 in cash, to buy the property and use for the rehab.

12:30

Fast forward, we did all that we got the place rented. If we were to have listed this on the market for sale on treated it more as a flip, we easily could have gotten $90,000 for the appraisal came back at $56,000. So you can see we were not able to pool what we had been anticipating. And I of course went and not argued but I was like how can this come so low? This is ridiculous. And what the challenge is, is they're pulling comps there for one to four unit properties, there want to pull a sales comps, not base it on the income method. So a little tip, if you're working on towards this strategy, talk to lenders and find out how they work it see if they'll do the income approach. That's one of the biggest steps is to make sure you understand how things will work on the refinance on the back end because the lender is the challenge.

Jennifer: Yeah, that's so true, because you know, the challenge is always going to be the refinance, right? Even if all the steps leading up to that work, the refinance is going to be the challenge because typically people are buying properties that are one to four family and in the banking world, that is a sales comparison approach appraisal, right. And when they become investment properties, clearly the value is based on the income. So what you really want is an income approach. So unless the appraiser is willing to do an income approach, or the bank is willing to accept an income approach, you're really kind of losing some value. Right? And if it's typically one to four family, that's not normal for the industry. So, you know, that's something that you very good point is that you should be talking with the lenders in advance because you just never know. Plus, keep in mind, too, that, you know, they're independent opinions, right? That's all they are. That's all appraisals are. I literally just had one recently on my own portfolio, right? 13 units, and they were, they were all townhouses, so they were appraising them individually, right? We got a crazy low appraisal. If I had put these properties on the market, I easily would have gotten $130,000 a building easily. The appraisals came in around 70 nearly half. And when I did flip out, because I was really mad about it. The appraiser actually said, “well, I saw what you bought it for, and I can't justify how you doubled your value.” And I literally lost my mind. I was like, “How dare you? First of all, I’m a great investor! That’s why I doubled my money. How about that? And you're not the judge and jury. So what gives you the right to say that I'm not entitled to all the equity that I put in to create the value to this property? You're basing it off of what I purchased it for.” That’s not an appraisal, and that's working outside the scope of your license. And I was livid. And I did, and I was able to get the bank to adjust it because I was able to shoot holes in his appraisal. But I think about the people that even go at this alone without any kind of education or without any kind of expertise, I knew that that appraiser was working outside the scope of his license. So I was able to call him out on that.

15:32

But if I was just a general consumer, I'm going to listen to whatever the bank says because I don't have any other way I have nothing to measure it against. So I'm glad that you brought that up. Because even if you can truly get your property to that value, right and even if you could put it on the market today for a much higher value. Even with a good appraisal, the bank is only going to give you 75 to 80% of that after rehab value. So if it's valued at $100,000, you may get 75 to $80,000. You never get 100% of the value. And I also find that sometimes people come in and they don't even know that piece of the puzzle. You'd never get 100% of your value. Absolutely. It's gotta have some skin in the game.

Ronnie: Yep. And it's like you said back then, I was just learning. I was trying to figure out I thought I had struggled. I had not read about the BRRRR strategy yet. And I thought I figured it out. We were so excited. This is great. We find this way to get this property and after a year, well, you know, 15, 16 months after you know, counting the rehab and getting the place occupied. This is going to be phenomenal. It'll be a great way for us to you know, establish some some equity and get some cash out on the back end to do it again. This’ll be great, everybody's gonna win. But I didn't know any better. And ultimately the appraisal came back, we had to pay a couple hundred bucks of course fee for it. We're small time investors, you know, especially back then. So our options were, oh, well, you can get your own appraisal, but there's no guarantee the bank will consider it. And that's all I got. I was like, alright, well, I can keep yelling at this guys saying this is ridiculous. There's no way this property is only worth $56,000. So ultimately, I was barking up the wrong tree. I couldn't win the argument. We pulled out what we could we were able to pay back our investor because we had been building up capital. So everything worked out fine. And ultimately, we got a nice single family rental that we still own to this day. A little funny side note is with the way rates and everything are going right now. We just got it reappraised and it came back at $105,000. And that was maybe three three to four years ago when we refi’d? So literally in that time it they've said okay now is worth double what it initially was or what we had purchased it because just going from 56 up to over 100 there's that it almost doubled. But unfortunately for part of the strategy when we were trying with, we couldn't pull out that capital the way we were hoping to. So we didn't lose our shirt we did get a good property at the end everything but it didn't quite the strategy itself didn't quite play out the way that it was intended.

The episode will continue in just a moment.

18:33

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Jennifer: So what would be your advice to any investor that's looking to do the BRRRR strategy in the Lehigh Valley?

Ronnie: I would recommend trying to find a source for off-market deals because honestly, in my little my little example, I gave, I've watched that property for at least two months and I watched it come down to that low discounted rate. I want to say it was about like 50 or 60. And I started talking with the guy and not even necessarily negotiate it with short sales, you're putting an offer into the bank and they're either going to accept it and the whole process is pretty long, but because it had been sitting so long they wanted to get it off their books. And we threw out that ridiculous number and they were willing to do it. And I think that's just one of the biggest components is finding that discounted property. And then as we were discussing, it's really important that you understand the let your lenders terms, what they do, how they'll base, you know, the approach on income or sales comp, because that really is really is a big factor. Another thing. So, Bigger Pockets is fantastic. As I said before, I've learned so much from there, but it's not a black and white thing. So things that work out west or down south don't necessarily work the same way as in our heavily active market. And as I'm talking investors, they're kind of confusing. rehabbing a property and getting it rent ready for a tenant with flipping it to an extent they want to put it in nice floors and and you know, granite countertops and stainless steel appliances and they want to make it real fancy. And ultimately, that's not really going to make your appraisal a higher value from when you purchased it. If you can convert storage space to a bedroom, that's a value add, if you can make a if you can find a small closet or area on the first floor and put in a half bath or even a full bath, then you're adding some value, then that's truly like creating equity injecting equity so that you can pull it back on the back end.

But in our area, most of our properties are over 100 years old, they've already gone through the conversion over the decades, they were once huge single family homes that eventually have gotten broken down into smaller units, you know, so it's hard to find those value adds and I and I had the conversation a lot with investors I'm working with don't over improve. You want the property to be nice. You want it to be clean, safe and as nice and new as possible. But you're putting contractor grade materials in you're putting in Lowe's and Home Depot you're using their cabinets and their types of materials and flooring you don't want to over improve because it's just not gonna play out the way you're hoping on the appraisal at the back end they're basing it on square footage, bedroom bath counts and things of that nature.

Jennifer: So it sounds to me like the top three tips that you would give our listeners or my listener, regarding the BRRRR method is trying to buy off market don't do what everybody else is doing. Try not to buy on market properties when the market’s hot, right? So try to buy off-market. Second would be know what the conditions should be to get you the best valuation on the back end. And make sure you're educated enough to know what your lender is going to do from the standpoint of the refinance so that you're not kind of left in a sense with your pants down and not getting the valuation on the back end when you need it.

Ronnie: Absolutely.

Jennifer: And I just thought of one other thing. There's also a misconception around “Well, I can give my my appraiser comps, I can put a package together to show the appraiser all the things that I've done to this property and why they should give a valuation of such” because they read that on Bigger Pockets or a forum where somebody told them that they are able to sway appraisers. What's your input on that?

Ronnie: Don't do it. I held back from you know, using profanity, but honestly, I mean, they'll take offense. And that's my experience, because like, in my experience now in industry, we get lousy appraisals back and that can be that can break a deal, right? If they're not getting the value to, you know, for the loan. So we've had that argument and honestly, that's their job. They're certified, they're licensed to do it. They know what they're doing. And it offends them for lack of a better word, or just to put it bluntly, if whatever your career is out there, I mean, I'm happy to learn learn I learned so much from you, Jennifer, but and I'm always happy to take stuff in. But if somebody off the street comes in is like, Oh, well, you showed me these comps. But here, here's everything that you know, it takes a little offense. I wouldn't recommend it.

As you said, Look, you get the report back. It's not it doesn't hurt to go back and say, Well, how did you get this value? Well, what about this property? It's a half mile away, it's sold within the last six months. Why? Why isn't this included? But really, you just, you just run the risk of upsetting the person up front before they even do their portion of the job? doesn't hurt to talk to them or anything like that. But I'd certainly be weary about offending them, because then you could have a negative impact.

Jennifer: Yeah, so it's definitely a myth thinking that you can sway an appraiser. It is not going to happen in a great market in any market. I mean, let alone the fact that they've got regulations that they have to abide by.

Ronnie: Exactly.

Jennifer: So if anybody can show them a fancy packet of the question, hardwood floors that were put in and that's just their opinion, we'd have a real problem in this industry grow definitely a myth that we're busting here.

25:10

Alright, so on to cash is king. Cash is king. So clearly people think that cash is the ultimate end all be all to offers and if I'm offering cash I can offer 20, 30, 40 ,50% below market and the seller is going to have to take it because it's cash. What are your thoughts on that?

Ronnie: There's no denying that having cash is a strong offer. I was just talking about getting the appraisal and the mortgage and everything. So having cash is great. Nobody wants to list their property, get it under agreement, we still buys due diligence and all the inspections and all that good stuff is happening, ultimately to find out that the property doesn't appraise that they agreed upon purchase price, and the buyer ultimately has to back out so there's no denying cashes. Great. We have again we have a very competitive market. So you're not going to be able to get that 20 30% discount just because you have a cash offer. And what I try and explain to the people I'm working with is put yourself in the sellers shoes. They're an investor as well. They're trying to obviously fetch as much money as they can for their investment. They want to pull it out there selling for whatever reason. So they want to make as much money as they can. It makes sense. So if you have two offers here, cash is amazing, right? It's clean. It's so much simpler of a process. But you're not going to get that discount, because for round numbers if you're offering me $80,000 in cash, or even lower, but I have an offer with a mortgage contingency at 100,000. That's significant, right? I mean, that's 20 grand, that's 20%. So, personally, I would take the offer with the mortgage financing and not necessarily that cuz ultimately, as the seller, they want to get as much as they can for their property as well.

27:01

Jennifer: Okay, so cash is not always king. But there are definitely ways to strengthen your offer and working with an educated real estate professional will help you identify the different ways that you can strengthen your offer. This is not to say that cash doesn't win you the deal, because if you're in a multiple bid situation and you're one of the only cash offers and the seller is in a more dire situation, they may very much elect to take your cash offer. But this shouldn't come with the with the expectation that we're going to get 20, 30, 40% below market.

Ronnie: Correct.

Jennifer: Right now are trading at or above listing price at or above the good properties at or above listing price. So back to, you know, cash is king. I'm certainly not saying the cash is not a valuable thing in an offer because depending on whether or not the seller has a specific situation that requires a quick closing or less hassle, maybe, cash could be the the chosen offer, especially if you're in a multiple bid situation, but the days of thinking 20, 30, 40% below market just are not reasonable anymore. So Ronnie, just quickly give me an idea of some of the other things that you need to think about when presenting an offer that would make your offer more appealing to a seller. If you're offering cash and want to try to get a lower discounted price.

Ronnie: Yeah, absolutely. I mean, there's a lot of terms that go into a contract. So do your due diligence and your inspections. If if you're comfortable with the property, you could forego those that due diligence timeframe that sweetens the deal obviously, because that's one less thing that the seller has to worry about, which is the buyer coming back to renegotiate after inspections, they want to be set where they are. You could increase the deposit amount show the seller you're serious and put down a large deposit on the property. Certificate of occupancy is required with have sales of properties in Pennsylvania. So if you would assume the responsibility of clearing that CO that can be a huge thing, because then the seller knows they don't have to worry about fixing everything up in accordance with the city's you know, zoning laws. So that can be one good thing. I have a quick little anecdote. I was at a property this weekend, multiple people were there, I was in with one investor. We were outside talk, and I saw a couple more people walk through and then a half hour later by an alternate investor came and walked through the property. So both parties were interested and I know other people were interested. So I reached out to the agent and said, “Hey, we're going I'm assuming you're going to get a bunch of offers curious about your highest and best and is there anything any concerns that the owner has or anything that would motivate him?” And he and he just said, he doesn't want to do what the tenants they're leaving, he's talking about getting the place re rented. So for that seller, the motivation was cutting ties he no longer wanted to deal with the tenants. That clearly was his biggest challenge. So as I speak with investors today and see where they're at with the property and what they're thinking, that's going to be one thing I'll recommend, like, tell him he doesn't need to worry about it leave the existing leases in places you don't have to worry about evicting anyone, you don't have to worry about filling the vacant units because they're lined up one of the tenants is leaving in like the end of this month, and the other one lease ends in like three months. So that's just one way that we're going to try and approach it, you know, the numbers are, of course, important. And then back to what you said about cash versus financing. But making it a clean deal and no worries with the existing leases I think it's going to be helpful in this situation.

30:41

Jennifer: Yeah, so, you know, cash is not always king, but there are definitely some things that you can do to strengthen your cash offer if that's the method that you choose to make sure that your offer is the most bulletproof as you go into any kind of multiple bid situation. This kind of leads me into the next topic and that's, you know, going direct to the listing agent or seller is going to get you the best deal. And I hear people talk about this all the time, “oh, I bought this property and now I need your help to manage it because I have a problem.” And when I start to kind of quiz them on, how would they even got to the problem, so I can try to figure out a solution to fix it, it almost always comes back to they bought the property on their own, and they didn't use any kind of professional expertise or any kind of professional, you know, direction they went direct to the listing agent or direct to the seller. And now they're faced with a bunch of challenges that they didn't didn't know at the time of contract or purchase. So what can you tell me about you know, your belief on going direct to the listing agent or seller does it work? Does it not work and, you know, would you advise people to do it or not?

31:55

Ronnie: I would advise people to have their own representation. You want someone in your corner who's doing the negotiating, do it working the deal on your behalf. So it's one of the problems that I think Zillow, Realtor.com created. It's, it's fantastic. Anybody can go and look at properties in the area they're looking and it's fantastic. But when you call the listing agent directly, they're trying to sell the property, they're already representing the seller, and they're the listing agent, trying to sell that property. So when you call them directly, not that they're going to feed you lines or lie to you or anything like that, but they're not necessarily representing your best interest. And that's what having a dedicated agent on your side brings to the table in your aspect. Again, not not to say that they're trying to rip you off or anything like that, but they don't have your best interests necessarily in mind. They want to get the property sold. So things like leaving the open CO or maybe some issues that are underlying they're not going to do necessarily be like, “Oh, well, you really have to consider that.” And that's why I always would recommend having a dedicated agent on your side who knows the business who knows how the deals work, and will be fighting to get you the best deal in terms they can.

Jennifer: I think it's also important to point out in our market that representation for a buyer is free. Exactly. That's another free. Yeah. I'm so why would you not want to have somebody that's contracted to be on your side, right. Ever since that listing agent, it's free because it's paid in Pennsylvania, the commission is solely paid by the listing side. So the seller pays both the listing agent and the buyer's agent. The other thing that I've experienced just in my own, you know, purchases and sales of properties, and in general, the sellers do not necessarily know their requirements. How about the requirement for disclosure?

Ronnie: Correct? Absolutely. Absolutely. I mean, it's I'm so glad actually you mentioned the the commission and how that works to have a buyer's agent representing you is free, it's literally free because they're the sellers handling the commission. So that's, that's huge. And it, it just it's a perfect illustration of why would you not have somebody working for you, you know, on your side. And and and back to the disclosure? Yes, it's the responsibility of the seller and of the agent for any known defects or issues to make sure all parties are aware.

Jennifer: So going back to the myth, right, going to the listing agent and the seller is going to get you the best deal. Not true at all. And matter of fact, it can get you a dangerous deal. If you're not prepared to know if you're not familiar with contract law. If you're not familiar with all the caveats to buying real estate investments, you may be setting yourself up for the unknown, which could be truly costly on the back end.

Ronnie: I agree. My recommendation is find an agent that you're comfortable with and you know is working on your side and when you find that listing on Zillow or wherever it is, contact that agent and let them set up the showing and let them start doing it. Because if you go right to the listing agent, there's just no guarantee you're getting for representation.

35:12

Jennifer: And any agent can go after any property. So maybe you identify a property that's off market and you happen to you know, have a seller that has mentioned that they want to sell but is not listed on the open market. Any agent worth their weight can go direct to that person and work a deal for you. And they'll they can work their own commission in so it's not even like as a buyer, you have any responsibility to pay anything correct. You know, and you really should be protected. Make sure that you are putting your best foot forward and making sure that you're you're protected on all sides of the deal, not just during the deal, but even after the deal so that you're not buying a bad property or a property that's laden with defects that you were not aware of.

Ronnie: Agreed. Couldn't agree more.

Jennifer: So last but not least, we kind of already touched on this. And that's the lowball offers, you know, do they hurt you or get you the best deal? And when we were talking prior, we talked about cash and cash offers, right? Not every lowball offer has to be a cash offer. But and we talked about multiple bids situations a little bit. So let's let's stretch this out a little bit and say, if I'm the only offer, is there any benefit to me going in with a lowball offer? And by lowball, I don't necessarily mean like five or 10,000. Under asking I'm talking 20, 30, 40% off of the sticker price.

36:37

Ronnie: I understand everybody wants to purchase at the best price you want to get the best deal. That's the first step. Many will say it's the most important step you make your money on the buy side so I completely get trying to get the best price. In my experience, you run the risk of offending the seller. If you go in low I mean every situation is different. But most people have some sort of personal attachment to the property. If it's an investment, it's a little easier that to keep, you know, not not so much of your heart into it, I guess. But if you have a property that you've owned for, however many years, five years, 10 years, 30 years, and you have somebody that wants to come in and literally try and undercut it, I personally would be offended. You know, I mean, in the scenario, I said, $100,000 property, blah, blah, blah. If somebody came in and tried to offer me 50 or 60 grand for it, I truly would be offended. And I'd be like, nope, no way. I don't want to talk to that guy anymore. He's way unreasonable. It would take a lot, it would take them coming up way higher than it sounds like they would want to at that lowball offer for me to even consider their offer. I mean, they would have to wildly change their strategy, or I'm just not going to talk to the guy again. So if you go and you offer a 50 50,000 60,000 on this property, I'm not going to come back and negotiate. I'm not going to say “oh, well, how about 99?” You know, you're just way too far in that scenario, I as a seller would be offended and wouldn't even counter offer. So you may offend people and run the risk of having no skin in the game or chance at the deal at all.

38:13

Jennifer: So the advice to my listener would be, know your market, right? Know, you know, in this particular market, if we're referring to the Lehigh Valley specifically, it is a seller's market, right. So for a buyer there is no benefit to going in with some crazy lowball offer, because you're not going to get met with you know, pleasantries. You're going to get met with flat out rejections because the sellers if they are priced right, right, are going to sell literally in days, so they don't need your crazy lowball offer to get their property. So now, I'm not referring to properties that have maybe sat on the market for 365 days, clearly they have a pricing problem or some other maybe potentially a maintenance deferred maintenance issue that was causing people to look at the property and then look away. But I'm referring to something new on the market. You just saw it, it just got listed and now you want to go in 20, 30, $40,000 under asking or even percent under asking there, you're going to get laughed at in this current market. It's not gonna work out well. There is definitely a time and a place for aggressive offers, I wouldn't even want to call them lowballs. There's definitely a time and a place for aggressive offers. But again, if you have a seasoned expert real estate agent guiding you on strategies for offers, they should be able to talk you through, when is the right time and not the right time to go after with an aggressive offer. And it may not be as Ronnie stated before, it may not be on market properties you may need to if your goal was to get 20, 30, 40% off of the actual value, you're going to want to look at other sources to find those properties to accomplish those goals. So I'm certainly not saying that we can't do that, or that you shouldn't expect that. But there's a right place and a right time. And there's aright method and a right property for those strategies to work.

So it's again, knowing, knowing the market, knowing what is happening, knowing how fast things are trading, knowing what the actual value really is, will help you know what would be realistic in your offer. And using a dedicated real estate agent that has their expertise in real estate investing will be gold for you, as you're trying to negotiate the best deal.

Ronnie: Agreed, completely agreed.

Jennifer: So I think that really kind of ends our myth busting session. I'm so happy that you were a part of this, Ronnie, and I love all of your analogies and your stories that you've shared with my listener, and I really hope the listeners enjoyed as well. So thank you so much for your time, and wish you so much success in the future.

Ronnie: I really appreciate it. Thanks for having me.

Jennifer: All right. Take care.