Don’t Get a Real Estate “Mentor” Until You Try This (Rookie Reply)

0:00Ashley Kehr:How do you value extra bedrooms when comps just don't match? Is finding a mentor really essential? And should you get your real estate license or is that just another distraction?

0:12Tony J. Robinson:Today we're breaking down three key questions from rookie investors just like you.

0:21Ashley Kehr:This is the Real Estate Rookie Podcast. I'm Ashley Kehr.

0:25Tony J. Robinson:And I'm Tony J. Robinson. And with that, let's get into today's first question. So our first question today comes from Richard. Richard says, I'm looking to do a burr in a market that I'm not very familiar with. Actually, not familiar with this market at all. The person I am doing it with brings a lot of value and they have resources in that market that will make this cool. Comps are an issue, though, because there are really no comps of similar properties. The property is a five-bedroom, two-bath, but it's only 2 ,300 square feet, whereas most of the five bedrooms in this area are 3 ,200 to 4 ,000 plus square feet.

1:00Tony J. Robinson:This is more so the size of a 3-2. So here's the question. When evaluating after repair value, if we have a three-bed and a five-bed of similar size building condition, how much value do we give to the extra bedrooms for the five-bedroom when the square footage is about the same as a three-bed? I've seen articles with arbitrary numbers like 10 or 20K? Does anyone have any ideas? Thanks. So I think before we dive into this, it's a very real question that I think a lot of investors struggle with is trying to make sure you nail down your comps to get your ARV. But let's just describe first what ARV or after repair value is.

1:35Tony J. Robinson:So your after repair value or ARV is the value of the property after you've completed whatever renovations you plan to complete. So typically, if you're flipping a home or if you're refinancing plans, refinance, you buy a distressed property, right? A property that's in disrepair. You invest money to fix it up. And in the process of fixing that property up, you take its value from this lower level up to some higher level. That higher level is your after repair value. And the reason the ARV is so important is because if you're flipping, you need to know how much money you should spend because your ARV will dictate what you can sell it for.

2:15Tony J. Robinson:And if you spend too much, you might end up losing money on that flip. And if you're doing some sort of refinance, you need to know what your back-end refinance value is for the same reason, to make sure you don't overspend on your rehab. So that's what the ARV is. That's how to project it. But Ash, I guess, what's your take on this question? Small five-bedroom, how would you approach trying to figure out the ARV in this situation?

2:42Ashley Kehr:Yeah. The thing that I would recommend the most and this is a little more difficult to do, but is to get a copy of an appraisal from that market. So get the appraisal and look at how much money they're putting towards a bedroom. So it could depend on the appraiser, but you'll at least get a ballpark idea that because this is a three bedroom and this one is a five bedroom, they're saying the five bedrooms is worth$20 ,000 more value, then you know it's$10 ,000 more that they're adding in weight to having the additional bedroom. And then there will be other factors though. Like if they're the same square footage, but one is a five bed, one is a three bed, that is going to change the ARV a little bit too, because it's not going to give as much weight to other things.

3:33Ashley Kehr:Like if there is this appraisal I just had done. And one of the things they negated on the property was that there was no bathroom on one of the floors. So there was two bathrooms, but a basement, a main floor and a second floor. And there was no bathroom on like the first main floor. And they said that that was like the layout was not ideal or something like that compared to other properties in the area, which technically is true. And so they negated money off of that too. So just make sure that you're looking at other things. So like maybe if this property is five bedrooms, maybe it has a really, really small kitchen, small living room where they could also negate you for that too.

4:21Tony J. Robinson:That's interesting, Ash. I've actually, I don't think I've ever been dinged on an appraisal for like layout concern. So it's interesting that that happens, but I think it illustrates the point that appraisers appraise properties differently. So I could send two appraisers to the same exact property and they could come back with two very different opinions of value. So it is kind of part art, part science, but Ash, your advice to go out and get your hands on an appraisal, that's exactly what we did when we spent time in OKC earlier this month. As we were walking with this agent, I said, hey, if you can give me some copies of some recent appraisals, she like redacted all of the personal information from who ordered the appraisal, but I was able to see, oh, for bedroom variances, here's what they're adding or subtracting.

5:07Tony J. Robinson:For square footage differences, here's what they're adding or subtracting. For lot size differences, here's what they're adding or subtracting. And I think she sent me five appraisals. And looking across those five, I was able to get at least ballparks for, okay, if I'm plus or minus this on square footage, here's the adjustment that I should make. Because I think it's going to vary pretty dramatically from market to market in terms of how much you're going to add or subtract. So I definitely would not use an arbitrary number like 10K or 20K because in a market like Iowa, where maybe I can buy a property for$150 ,000, 10K is a big percentage of the purchase price.

5:42Tony J. Robinson:If I'm buying where I live in Southern California and say I'm buying a house for 600K, 10K is a very small percentage of that appraised value. So I think getting your hands on actual appraisals from that market is probably the absolute best approach as well.

5:56Ashley Kehr:What a great idea to ask an agent or a lender because really like how much information is really redacted on it. You can look up online, it's public record that who owns the property. So it's like, there's not like the social security number, like really any personal information on there. But yeah, that's it. I've never even thought of that. I've always just asked other investors, you know, or even just family, friends or people, you know, that did a refinance or purchase property for a copy of their appraisal to look at it for a market. But yeah, that's a really good idea. I guess one other thing too is to widen your net.

6:34Ashley Kehr:So widen your radius of how far you're looking at comps because the appraiser could also do that too, where if they're not finding a similar property in that area, they they could widen the net. So like, especially in your, in a rural area, that radius gets pretty big as to how they could look for a property. Like I had one property that was on 30 acres and had two single family homes on it. And I think the, one of the comps was like 10 miles away and was not even in the same town, but it was a similar property. So they had to go farther to find something that was more like common to it.

7:18Tony J. Robinson:Ash, another great point, because I think most appraisers will go further out as opposed to going further back in time.

7:26Ashley Kehr:Yes.

7:27Tony J. Robinson:And I think that's a mistake that a lot of rookies tend to make is that like, oh man, this is a great comp, you know, same build, you know, right next door, but it sold 18 months ago. And that is not a good company more because markets shift so much. So I think a good rule of thumb is maybe going back 90 days. And if you can't find any good comps within, you know, call it like a mile radius, then just start to, you know, mile and a half, two miles, two and a half miles, three, three miles until you can find something. But I would really caution all rookies from going too far back in the time machine to try and find good comps because most appraisers will not go that far back in time either.

8:02Ashley Kehr:Up next, are mentors really game changers in real estate investing? And if so, how do you actually find one? We'll dive into that after a quick word from today's sponsors.

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11:23Ashley Kehr:Welcome back. Okay, we are here with our second question. And this question comes from Patrick in the BP forums. Finding a mentor is mentioned in almost every single real estate book. And we do a lot on this podcast too. Whether it be from an individual or a group, receiving guidance from someone who has done what you are trying to do seems like a major step in getting started. I'm curious if people can attest to this and if so, how to go about finding this type of mentor slash guidance. I live in New York City, but would love to hear about anyone's experiences. So yeah, Tony, like I said, we are very guilty of this saying how important a mentor can be.

12:05Ashley Kehr:But that doesn't mean you need a mentor to get started. Yes, I 100 % agree. It will fast track you. But at least in your story, when you got started, you didn't have a mentor, right?

12:20Tony J. Robinson:Yeah. And I think that's the point that I was going to make is that a mentor doesn't have to be a single person who takes you under their wings and it's like an old school apprenticeship, you know? And I think that's what people always think about when they hear the word mentor. A mentor can mean multiple things today. It could be the books that you're reading and the authors are serving as sort of a mentor. It could be going into the BiggerPockets forums where there is an unbelievable amount of real estate investing education. And going into the forums and communicating with people and reading old threads could be your mentor.

12:53Tony J. Robinson:For me, there were certain Facebook groups that I was really active in early on, and it was those Facebook groups that kind of served as my mentor. So there are so many different places, opportunities to find people, and you don't have to put all of the pressure on one person to be your mentor. but you can use a community of people to guide you along in your journey as well.

13:11Ashley Kehr:Yeah. When I first started, I worked for an investor, but he was very passive in the investing side and really didn't know a lot about real estate, but I still felt like a sense of comfortability, just knowing somebody else that was doing it. Even though I didn't really seek guidance or ask questions, I would say, I did a lot of figuring that out on my own and then found bigger pockets and the forums was like gold to me being able to ask questions and to read other people's questions and really discover questions I didn't even know to ask. I think that was like a really big pivotal moment for me.

13:52Ashley Kehr:It was like, wow, that's such a good idea. I wouldn't even think to even come up with asking how to do that. So I would say more than getting a mentor is surrounding yourself with a community or an accountability group. I honestly think that is more valuable than actually getting a mentor. And I agree. I think of mentor, it's like the guy that's been investing for 50 years and you hop in his truck and you drive to his properties and you're helping to do stuff. I don't know. It doesn't survive, but there's so many different forms that a mentor can take. Like Tony said, like you're reading a book, you guys listening to the podcast, maybe me and Tony can be your mentors and be under our wing.

14:42Ashley Kehr:But the, I think even more so is surrounding yourself with a community. And I think that is easier, easier to find than a mentor because that community, there are so many different voices, so many different opinions, so much different advice that people can come from. Surrounding yourself with the community, there are paid communities, I'll say, just like there are paid mentors and free mentors. But with the community, just go on the Real Estate Rookie Facebook group and just start engaging. Even if you think you know nothing about real estate, when someone posts something, like their post. Congratulate them.

15:29Ashley Kehr:Ask a follow-up question so you can learn more. There's this person, Lawrence Briggs, who we had on the podcast and he actually came on to kind of like learn from us and, you know, we were helping him get his next deal. The part of the really big reason he was on the podcast episode as like someone we were learning is because me and Tony constantly saw him on Instagram. We did not know anything about him. We did not know him, but he liked every single post, every single story, commented on all of our stuff, everything in the Real Estate Rookie Facebook group. Every single day you would see him engaging.

16:07Ashley Kehr:So when we saw his application compared to the tons of other people who wanted to come on for this spot thing we were doing, we recognize him just from social media and engaging with people. We're like, you know what? We feel like we know him. We don't know him, but you know what? Let's have him on. Like he's really trying to get started here. And so, yeah, like you never know what opportunities will come about by putting yourself out there.

16:35Tony J. Robinson:Super valid point, Ashley. And I think that, you know, asking someone, will you be my mentor? Probably isn't the right approach. You know, say that there is someone that you want to be your mentor, just going to them and saying, will you mentor me is I think a difficult thing for most people to, to want to say yes to, I think a better approach is a doing what Ashley said is, is getting yourself into the rooms where your potential mentor could be. And it could be the local meetup where Ashley said, it's, you know, it's the old guy with gray hair with 50 rentals. Uh, it could be going to events like bigger pockets.

17:08Tony J. Robinson:And I, you know, we, we talk about BP con a bit, but it's because I really do think that aside from all of the content that's being shared on stage, it's the relationships, it's the connections that you make in between sessions, you know, the, the after hours, uh, you know, uh, time at the bar, wherever else you guys may be, where those connections are really propel you to that next phase of your investing journey, because you're talking to people who are maybe one or two steps ahead of you who've already gone through the, the, the struggles that you're currently facing. So getting into the same room as those people, I think is one of the best ways to find your tribe of mentors.

17:45Tony J. Robinson:I think one thing though, Ash, that I do want to comment on, and I might have a slightly contrarian view, but I do think there's value. And I'll put a big caveat on this because you got to find the right person. You got to find the right community. I do think there's value in paid mentorship and coaching because you get someone who is now financially incentivized to make sure that you're successful. And you've got to make sure that whatever program it is that you're joining is vetted, that they're on the up and up because there are a lot of folks out there who are doing it for the wrong reasons, who don't really have effective processes for help when you get the results they're talking about.

18:19Tony J. Robinson:But if you can find a community, if you can find a program that actually delivers on what it is they're promising you to do, I think A, you're going to take it more seriously because you voted with your wallet to say like, I'm not just gonna buy a 9.99 book, but I'm going to invest however much, maybe three, four figures for this help. So now you're committed to it. And then on the other side, They're committed because you've invested into their community as well. So I think it is a way to shortcut, but you got to make sure you do the homework to find the right community. All right, we're going to take one last break before our last question, but while we're going, be sure to subscribe to the Real Estate Rookie YouTube channel.

18:54Tony J. Robinson:If you're watching on YouTube, go ahead and hit subscribe. If you're on Apple Podcasts or Spotify or any other podcast player platform, look us up at Real Estate Rookie on YouTube, and we'll be right back with more after this. I think a lot of us grow up believing that if the bills are paid, we're doing okay. And honestly, that was my mindset for years. But as I got older, started investing, and had more financial goals, I realized I didn't just want to know my account balance. I wanted a clear picture of where my money was actually going. That's what I love about Monarch. It brings all of my accounts, investments, saving goals, and spending into one place.

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