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Real Estate Spy

BiggerPockets Review: Real Estate or Online Marketing?

< Sorry I'm reworking my video. In the meantime check out our Apply for a video from James.

BiggerPockets Podcast and Social Network| A Fresh Look

This is clearly an example of a hybrid…an amphibian business model….and I like it. It’s brilliant.

Hey It’s Paul, the real estate spy. I’m sitting here at my desk with my really red ferrari fresh espresso shot cup of coffee and the urge to write a crap cargo ton of information on what’s going on with bigger pockets and the members of this gigantic group.

Can anyone say frog fry?  I gotta freeze for a moment and enjoy a frog fry fest related to this deal for a sick second.

What do I mean by that? Well… Who is Josh and Brandon? Yes, they are real estate investors, but what are they more? Tah Dah!!!

biggerpockets reviews

(photo biggerpockets.com)

They are amphibians…  hence the frog pun…entrepreneurial amphibians -they operate in two different arenas.

I’ve done my research…so…. I have to say they are more Internet marketers than real estate investors. The real estate investing was just a doorway into what they are really up to these days.

They may disagree with me, but they don’t get to here ’cause it’s my blog, and I get to be the digital emperor on this block.

So, what’s going on Mr. Magicians right under our noses that you might not want us to notice? Care to know? Don’t believe me? Check it out for yourself.

Back to the basics. 1+1=2 kinda stuff. Remember my concept of “do what the rich guys are doing not just what they tell (rookie) you to do.”

These rich guys are running a successful social network and you my friend are researching this because you’re either a member or want to be a member. So can it help you? Sure… it’s a safe way to stick “A stinky TOE” into the real estate investing waters without having to learn how to swim first, but no matter how you slice it you’re going to end up in the deep end of the pool screaming out from are a Baywatch babe to rescue you before you know it.

That is just simply how real estate investing goes. I’ve never talk to anyone that said it always went smoothly. It’s a difficult deal. There is a lot of risk when you’re using your own monopoly money. That is why I believe there is a better way. And! You are seeing it exemplified right before your eyes in a place called biggerpockets.com.

So let’s dive in. I’ll make sure that your orange floaties stay intact while we’re swimming around and what’s more? I will try to make you feel like Michael Phelps on four flasks of 5 hour energy.

Think real estate, think Facebook…think Facebook for real estate. Think perfect combinations like Reese’s Peanut Butter Cups…Are you following? That’s what you have found with the bigger pockets guys.

So, let’s talk about the people behind the curtain…

Josh Dorkin: Biggerpockets |The founder

The reason why I am doing a case study on this is simply because Josh is an example of the reason why I created this site to begin with. He said he never created it (biggerpockets.com) in order for it to be the reference site for all things related to real estate, however, like you, he started off in real estate and realized how difficult it was, and needed some help.

Did he become successful in real estate? Yes, eventually but he became even more successful in his online business.

Why do you think this is? It’s simple. There are huge markets and huge niches of people searching for things online every single day. And while you can make money in real estate, making money online is something that can be done 24/7, so much so, that I think it is more like 224/70 because the exponential ability of web marketing is enormous. While you’re sleeping, people are researching things online. You may even be reading this blog right now while I am sleeping.  Shoot, 1,000s come to this blog, so you might be on here with a hundred others right now.

That’s really not that important. What’s important is that there is a faster sexier way to make money from home on your own time and make yourself your own boss without the risk that real estate brings to the table. Ask the guy that knows. I lost everything. Well, not everything… I kept my health. I just mean that I lost everything financially because of my real estate mistakes.

Back to the bigger pockets founder: He started off by being a real estate agent. He had done a banana boat full of things for extra money and at the time had been dabbling in building websites. He was teaching high school in Southern California. His brother was the one that actually opened the doorway for him.

Josh Dorkin Story:

As I was asserting…He got a call from his brother who had started doing some real estate investing.

He told him how he was making money and doing well with it. That got Josh’s attention.  He dove right in.

His first acquisition was a multi family property for around $100,000. He said that he wasn’t really that sophisticated or anything. He just had heard from his brother that he possibly could do well and he went out and looked at a bunch of properties and settled on one.

Because he was a newbie, he ended up hiring a property manager to take care of his property and oversee it while he was gone.

He said this turned into a nightmare, and he cycled through many maggot managers.

He quickly realized that he didn’t have the type of information that he needed in order to run a successful real estate business. He said his options at the time was pretty much limited to going to the bookstore and buying more books on real estate, staying up late watching late night TV infomercials, or jumping into a bunch of seminars that basically sold you until you’re broke.

Hey? Just checking in….does any of this sound familiar…Yeah, me too. So wish I had some of my money back from all the fuss. Moving on….

The online presence of quality information for real estate really didn’t exist in his mind. From his perspective all of the Internet-based real estate programs were extensions of what the late night TV and commercials were all about.

So he decided to put together a website that would answer his own questions. He started the forum.

At first he launched a directory that he thought would be helpful to somebody that needed to know information about real estate investing and then overtime he decided to open up what we now know as the forum. At first, he was the man behind the curtain for the forum, the lone wolf.

After creating the site he realized that there were a whole lot more things to figure out like: how does he actually get people to his own website? and how does he build a community of individuals interested in the same information?

If you asked him today if he’d want to start a new forum, his answer would be a solid no.

He said building the site in the forum took a long time. It really was a hobby site for most of the time in the beginning. He says that he got most of the traffic simply by going on other sites where he left reviews or comments on financial information and left his link in his signature.

That coupled with word-of-mouth of others telling real estate investors, agents and anyone else they knew was what opened the portal for people to visit the site.

He’s pretty transparent that the reason that he had started the site was because he just really wanted to get his own questions answered. He started posting his own questions hoping that somebody would come by and have the answer to them.

But his selfishly self-centered intentions turned into something marvelous.

After a little while, other people started asking questions that…go figure… he realized that he was able to answer. This has all turned into over 850,000 posts on his site.

There is a concept in online marketing that if you want to start a blog on something that you know little about and you realize you aren’t the expert…it’s just a matter of time before you are the expert and authority on the subject.

The depth of information is incredible on the BiggerPockets site.

Now they have 35 writers. This has all turned into a podcast and they interview different people involved in real estate each week. From newbies to seasoned investors.

One of the key components to how Josh thinks is that he doesn’t want to ever get complacent in building his website/forum/publishing company out.

He said as soon as he gets comfortable he is inviting the business to fail.
Even today there are lots of struggles related to developing the site and for him to be bigger and more relevant to his readers/members.

Josh reports that he’s always been like this. But it is also what drives the spirit of progress.

Josh Dorkin Real Estate| Author of: The Book on Investing In Real Estate with No (and Low) Money Down: Real Life Strategies for Investing in Real Estate Using Other People’s Money and Creator of BiggerPockets Summary

What are the most interesting things that stands out in reviewing Josh Dorkin’s work and his website?

I think it is that the heart of the beginning of the website was to share with other people. Sharing really is caring… ;-) He claims that the members that have taken time to share on this forum and become a part of the community and have remained really engaged are the ones who seem to trend upwards in the real estate business.

One of my (more philosophical) mentors…(Dr. Aggarwal) has told me many times that life should really be more about sharing.  He says, “2 year olds share uninhibitedly, and so should we.”  The other key component that I think is a nugget that Josh is on to is that we have to take ownership of our business. It isn’t something we are just trying out. It’s something that we are committed to with resolve. It is our definite chief aim.  That part is from my business mentor James.  I put a sneak peek there. Shhh- Don’t tell anyone.

Every day it becomes clearer for me. Most of us spend our time in a world where we are trying to survive. However, once we get beyond that we recognize that there is a whole much bigger world out there. It is a “you and me” world, and it is an exciting world of sharing.  That’s another saying I just borrowed from one of my mentors. LOL

Brandon Turner | Leading contributor to the BiggerPockets Forum, Author and Podcaster:

He’s not just “the other guy.” Brandon Turner of biggerpockets is a family man.  I also consider him an entrepreneur and an online marketing guru.

Brandon Turner Background:

The first house that he ever sold he made a small profit and he turned around and dumped it into the wedding with a woman of his dreams.

Gotta love his Marvin Gaye “Get it on” kind of style.  He’s totally my speed. Find the woman of your dreams and keep her!

Continuing on:  What Brandon didn’t know at the time was that this was a precursor…  a sign of things intended.  This was the key that would allow him to continue to invest into real estate and make it his business. Within a few years he had dozens of rental properties.

He got smarter. He recognize the fact that he got good at what he was doing, and all he needed to do was to involve others to make it bigger…better.

Involving others was a way he could actually tap into cash and funds that were unavailable to him, grow his business and make everybody money.

You know I think this was the original concept of the no money down. A.k.a. no cash deal system.

I mean.. if you become really good at something, then you can enlist other people in making money with you, am I wrong? For instance, I’ve gotten really good at this Internet thing.

(Reason #79 why I don’t recommend real estate investing for beginners)

So, if I went around asking my friends if they wanted to invest with me, it would probably be a no-brainer for them.

They see the results that I’ve gotten since I plugged into my coaching program.  It’s only natural that they might want to get a piece of it. It’s a normal progression of events when you go out and raise money for a business that you are really good at (and can prove it).

However, I think a lot of the seminars have it backwards. Follow me down this yellow brick road for a moment.

Here you are. Clueless. (No offense. I’m including myself).

-You hate your J-O-B. You want change. You gotta find something that doesn’t suck the life out of you every day when you go punch the good ole 9-5 ticket.

-You want change and you want to make your own schedule without reporting to anybody. (hehehe, that is still me.)

-You go to a seminar….it’s a bright lights, big New York moment experience.

BUT!

….just one small problem.

You show up and realize that you don’t have any money.

Why let that stop you? This is what you have been waiting for. You want to make money in real estate. The surrounding, the people, the everything is amazing. The stories are even more awesome.

You slowly sip down the “no money, no cash down seminar” like a 5 year old tasting cherry koolaid for the first time.

It’s like a scene out of a DMT ritual and they fill your brain with the excitement of owning your own real estate brokering company.

You are charged like Jimmy Neutron meeting Iron Man.

The only problem?  -is that you’re still really not that good at it yet.

So the natural progression of the events of you becoming good at your business before you start trying to involve people without any money of your own, is a huge turtle. I mean turd. Sorry, I mean hurdle. You’re liable to fall flat on your face. JUST like ME!

That is exactly what happened to me.

Now, at this point I would say that I am somewhat knowledgeable about real estate investing but I am not good at it. That is why I’m not going around asking all my friends if they want to drop some cash into my bucket for us to go make millions through real estate investing.

I’d be much more likely to approach them and say that I have a new blog idea than let’s flippin’ flip a Phoenix flat fast.

They know that my skills are solid and I’m not a poser. Not bragging, just stating that once you get the right coaching, anyone can do it.

But good lord, this review has gotten off on a bunny trail. Back to Brandon!

Brandon is now senior editor at biggerpockets.com. One of the key things that they’re doing nowadays to be in the forefront of the real estate education market, is the podcasts that they put out. Are you like me? Do you notice kind of a trend here? Brandon is great at real estate investing and he is quite an entrepreneur.

-However, he has made a sidestep to Internet marketer. He openly admits that he writes for bigger pockets nearly every day and other sites all around the Internet.

->The point is once you figure out how all this works, it’s just like real estate, you can seriously blow it up. Once you have the size of a big daddy site like biggerpockets behind you, your online strength is almost unstoppable.

Brandon Turner Real Estate| BiggerPockets Tips that I like:

One of Brandon’s calculations is one of my favorite calculations to consider when you’re looking at real estate investing. I’ll share it with you here. It is called the
50% Rule and it is used to determine the cash flow that you might expect on a Multi-Family property as well as give you a basis for how much money I can expect to make on my cash that I invest into a property.

First I want to know the gross monthly income: all income that will come in for a property. (The 50% rules says that HALF of all of the income that comes in from a property will go out in expenses.)

It’s a rule of thumb.

This simply means that if I make $1,000 per month on an income property, I can expect to spend $500 in expenses not including the mortgage.

This is a down and dirty way to analyze multifamily investment properties. This is one of the key strategies that Brandon teaches.

Use this formula to figure out what cash flows might be.

For the example that I just mentioned if you expect to spend $500 a month in expenses, then, whatever the difference is between the remaining $500 and the cost of your mortgage is going to be your cash flow.

On paper it might look like this:

$1,000 income

$500 estimated profit

$500 estimated expenses

mortgage $300

Cash Flow = $200

(Then again, go find me a property that has a mortgage for $300/month and rents for a thousand.) ;-)

Did you ever stop to think about that?

The ultimate beginners guide to real estate investing by Joshua Dorkin and Brandon Turner and other products Review:

This is a free book (probably worth getting) that they give out to people that are just getting started in their real estate investing career or who are at least kicking the tires to real estate investing business. It is part of the expose, involve and upgrade process. Most online marketers use this type of method.

But through my digging, I was able to find something you might find interesting… they actually attend FinCon. FinCon is actually a Financial bloggers conference. In the biggerpockets podcast number 90 you can find a nice little overview of what first-time real estate investors are in for, but in the process they mention their attendance.

-Don’t worry I will give you of the key take-aways from the interviews so that I am not leaving you high and dry if you are still crazy about trying to do the real estate thing.

Here they are:

  • You should make sure that the home that you are trying to rent or sell is staged well.
  • It is typical to pay a real estate agents the first month’s rent if they help you find a tenant. (Just as a side note simply because I’ve had this experience, If you have a tenant who complains of the garbage suppose was not working, It is often a little red button on the bottom of the garbage disposal. I remember one landlord friend that told me he never puts garbage disposals in his houses because people can get stupid with the garbage disposals.  There is also a little Allen keyhole thing that you can use to turn the blades if something has gotten stuck. When it comes to managing these bloody things, the best way is to go online and look for information on fixing a garbage disposal.
  • 1% Rule: You may have heard of the one percent rule which says that your monthly rent should be about 1% of the cost of a property. But, this does not always apply. Sometimes you just need to get something rented out. It is better to have some kind of cash flow then no cash flow.  However be careful because if you have any sort of HOA or condo fee when you’re renting it out for less than 1% of the purchase price, then you can be looking at losing cash every single month.

I think this is probably the most common thing that I see with newbie real estate investors. They think it’s going to be a bed of roses, then they get their first property and find out that it’s hard to rent out.

The text books warned us about this, but we believe it’ll never happen to us. We’re holding onto the dream way too hard.

Once we rent out the property we’re excited about it but we realize that the maintenance kind of comes to bite us in the butt.

This can really leave you losing cash every single month just owner property. If you’re banking on the fact that your house is appreciating… Well better pray that happens when you’re losing cash every month. However I’ve heard it from seasoned real estate investors that given enough time the market will naturally change and you will end up with a positive cash flow if you can hold the property long enough.  Real estate is a very forgiving asset class so if you can hold it for long enough a lot of the wrongs will be made right. I believe it was Robert Kiyosaki that said that most mistakes are made selling properties not buying them.

-More Tips:

  • If you have more than 2 properties it is smart to have a property manager.
  • Flipping properties: Brandon suggests that you have to be prepared for the home not to sell fast. It isn’t like it is on TV.
  • Make sure that you really research on how to flip before you start. Make sure you have reserve capital to sustain you if things don’t go as plan.
  • Don’t always trust the broker to disclose all of the important info. Do your due diligence, aka Real Research.

The Verdict

Biggerpockets dot com is a great forum. Just be aware that while you’re focused on one thing the magician is doing something else. These guys are really expert Internet marketers nothing more nothing less. Real estate is great but Internet marketing is better. Otherwise, they would just be spending all of their time doing real estate investing.

Am I lying or dying?

 



About the author: I give real estate investors a faster, sexier, lower-risk laptop lifestyle alternative to flipping, fixer-uppers, and all the frustrations that come with chasing money in the cutthroat real estate game.

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