How to Fix Low Cash Flow and a "Slow" Agent (Rookie Reply)

0:00Ashley Kehr:Welcome back to the Real Estate Rookie Podcast, where we tackle the real-world questions new and growing investors are asking every day.

0:08Tony J. Robinson:And today's episode is proof that no matter where you are in your journey, whether you're closing on your first deal or managing 20-plus units, real estate brings new challenges at almost every level.

0:20Ashley Kehr:We're breaking down three powerful questions from rookies at very different stages. One, struggling with a slow agent. One, launching a wholesaling business in college. And one, realizing that a 23-unit portfolio doesn't always mean predictable income.

0:41Ashley Kehr:This is the Real Estate Rookie Podcast. I'm Ashley Kerr.

0:45Tony J. Robinson:And I'm Tony J. Robinson. And with that, let's get into our first question for today. So this question says, hey, everyone, I'm new to real estate and I need some advice. I'm currently working with a buyer's agent, but I'm getting really frustrated. Each time I see a house I like and send it to her, we eventually go to see it. When I tell her to put in the offer, she won't do it right away. By the time she finally tries, usually three or four days later, the house already has an accepted offer. I've already signed a buyer's agent agreement with her, so I'm not sure what my options are. Has anyone experienced this?

1:17Tony J. Robinson:Is there a way to change agents or to get out of the agreement? What would you do in my situation? Thanks in advance for any advice. This is actually a tricky situation because I'm not super knowledgeable of the new NAR agreement. And for Rickies that are maybe unfamiliar, the National Association of Realtors, there was some big changes that happened to how agents and buyers of real estate have to work with each other. Now you have to sign this exclusive agreement with them. Have you signed one yet, Ash?

1:50Ashley Kehr:No, I haven't. But my agent, when I listed my flip house back in the fall, this is when it first like came into motion and my we didn't get any showings right away. And my agent said like part of that is because buyers don't want to sign this document and agents aren't going to give you a showing unless you sign this document. And so like it was kind of like scary. It's like, oh, my God, we're not going to sell this house. so that was kind of like my first experience with it as to if you wanted to get a showing you had to sign a document um with the agent and so i'm not sure how that's if that's there's a workaround now that has been made so that you don't have to do that but um another thing is too is with paying the commission.

2:43Ashley Kehr:So I had another house that I just sold and when we had an offer come in, the buyer's agent said, the seller will be paying my commission, my buyers will not. Because as it kind of stands, the rule is like the buyer and the seller are each responsible for the commission to whoever, but they put in their offer that I would be paying, which is what the standard was forever, but now you can use that as a negotiation tactic. So they put in their offer that we would be paying the commission, which was fine. The other piece they put in was that I would be paying, my agent had put in the listing that it was a 5 % commission and they asked for 6 % commission total.

3:29Ashley Kehr:So it was three to the buyer and three to the seller. And my agent actually said no, we're, or my agent, yeah, said, no, we're going to keep it at the 5%. So that's just kind of like the little bit I've had to deal with it. I haven't gone to any showings to have to sign with an agent to be exclusive with them. There was one time I did that years and years ago, signed it with someone. And I have to say it was the worst real estate agent I ever worked with. They lost my deposit money, my earnest money deposit, tried to blame it on the secretary that worked in the brokerage office. And they ended up having it sitting on their desk for days and days.

4:10Ashley Kehr:And I almost lost the deal because they never actually handed it over to the seller.

4:16Tony J. Robinson:So I actually signed one of these about a year ago for a flip we bought in a city I'd never really worked in before. And I just wanted someone who is knowledgeable of that specific city. And I'm looking at it here now. And the first thing that jumps out to me is that the broker has a non-exclusive right to represent me in transactions as a buyer. Now, there is a section here where they could have made that exclusive, but that box wasn't checked. So I think the first thing that I would do if I'm the person who's asking this question is go back and review your contract and just try and get an understanding of is it exclusive or is it non-exclusive?

4:47Tony J. Robinson:Because if it's not exclusive, there's another section here that says in order for me to cancel this, all I have to do is give them written notice, right? It says cancellation upon receipt of notice. So that means all I have to do is let them know in some sort of, you know, official form, email, text, whatever, that I'm canceling the contract and then we can walk away. And either way, it was only for a 30-day period as well. So I think my advice for this person would be to go back, review your contract, and try and understand what are your levers to step away from this without causing too much of a scene or maybe violate in the terms of that agreement.

5:20Ashley Kehr:Yeah, I think having the conversation with the agent, have you, you know, at least communicated to her that, you know, that you would like offers put in same day? And if she's too busy, could you refer, could she refer you to somebody else? And then she'll still get her, you know, most agents, if they're referred to someone from another agent, they give them a referral fee or a percentage of the commission, things like that. So that could still like, you know, go into play there. So I think there are options, but you need to maybe even talk to the broker of the firm that she works at that is contracted with her and, you know, say the issue that's going on because really your exclusivity really, I think, comes or your contract comes down to working with the broker that if maybe they have another agent within house, they can just transfer that to that because the majority of the commission anyways goes to the brokerage too.

6:21Tony J. Robinson:It's actually a good point, right? It's really the, even the contract that I was just reading was with the brokerage, not with that specific agent. So there's other brokers or agents within that brokerage might be a good step as well. But I like your point, Ash, of just like have a conversation with the agent and maybe reset expectations. And I remember the very first agent that I worked with, and this was in Shreveport in Louisiana, and I was feeling a very similar way. And I'd actually flown out there when I, or I think it was, I was visiting like some family out there and we just happened to be walking some real estate.

6:54Tony J. Robinson:And I gave him that feedback as well. It's like, Hey dude, like, I feel like I'm not really a big priority for you and it's fine if I'm not, but just let me know that so I can go get a different agent. And he was like, yeah, I totally, I hear you. I gotcha message received loud and clear. And he was great after that. Right. So I think just having that, that heart to heart around like, okay, here are my expectations. Here's where you're at. How can we bridge that gap? And I think the final piece that I'll add is that part of being a real estate investor or really just an entrepreneur or a small business owner in general means you have to have difficult conversations.

7:30Tony J. Robinson:And I think the sooner we as rookie investors can get past that fear of the uncomfortable conversations, the easier it's going to be for you to handle problems quickly and efficiently without them dragging on to these big, long ordeals. So there's a book that I read that I would highly recommend for all of our Ricky audience. It's called Crucial Conversations. Can't recall who the author was, but I read it, gosh, I don't know, maybe my early 20s. And it's a book that just kind of stuck with me. So Crucial Conversations, but you got to get comfortable with being uncomfortable in those tough conversations.

8:09Tony J. Robinson:Otherwise, you're going to be the one that loses almost every single time.

8:12Ashley Kehr:Next, we are going to go over how you can get started in real estate while being in college or even just working at W-2. So stay tuned because our last question, we are going to hear from an investor who built a 12 property portfolio and it is not performing with as much cash flow as they expected. We'll be right back.

8:31Tony J. Robinson:You know what changed the way I invest? Realizing that scaling rentals shouldn't mean creating more work for yourself. If you're trying to build that kind of system, Baseline is giving away$10 ,000 to help investors build rentals that run themselves. I own and manage dozens of properties. I travel a lot and I still work a W-2 job. And there was a point where I was checking multiple bank accounts, chasing rents, and updating spreadsheets just trying to stay organized. Even on vacation, I was constantly checking if rent came in. Now, everything runs through Baseline. It's BiggerPockets' official banking platform that automates my rental cash flow.

9:09Tony J. Robinson:Rents get deposited into dedicated property accounts, transactions get automatically categorized, and everything stays organized without me constantly managing it. That's the difference the right systems make. You can finally step away mentally without feeling like something's going to fall apart. Now, my rentals practically run in the background and yours could too. Deposit qualifying rental income into Baselain for a chance to win$10 ,000. Most banks will give you a line on your primary residence and stop there. Avon looks to underwrite the equity in your investment property, the second home you have, the property you hold in your own name, and put a line of credit against it on a Visa card.

9:49Tony J. Robinson:Same asset, same logic. Think about what this unlocks. Earnest money, the day a deal hits the MLS. A contractor paid on Friday instead of next month. High rate balances you are already carrying refinanced onto a line secured by equity you own. All at a fraction of the cost. With AVEN, you can check your offer at no cost with no impact to your credit score. There are no hidden fees and because you own a home, you qualify for a rate that credit cards simply cannot offer. AVEN has a 4.9 star Trustpilot rating from over 8 ,000 verified customers. If you own property and you're financing your next move on an unsecured card or expensive short-term debt, you are overpaying for capital.

10:33Tony J. Robinson:AVEN fixes that. Go to AVEN.com to discover your offer. Stop overpaying for capital. AVEN accounts are arranged by AVEN Financial, Inc., NMLS number 2042345. AVEN accounts are issued and held by Coastal Community Bank, member FDIC, equal housing lender, NMLS number 462289. 289. AVEN cards are issued pursuant to a license from Visa USA Inc. Terms and conditions apply. Subject to credit and property approval. Eligibility and availability vary by state and property type. Investing in real estate has always been smart, but it hasn't always been simple. Now it's both thanks to the Fundrise Flagship Fund.

11:14Tony J. Robinson:The Fundrise Flagship Fund launched more than five years ago with a mission of delivering low-fee access to blue-chip private market real estate. Today, Today, the Fundrise Flagship Fund has grown to manage more than a billion dollars of real estate on behalf of hundreds of thousands of investors, making it one of the largest funds of its kind. For those who believe real estate has an important role to play in their portfolio strategy, the Fundrise Flagship Fund has positioned itself as both a simple and a smart option. Whether you're starting with$10 or$10 ,000, the Fundrise Flagship Fund makes adding real estate's unique potential for both passive income and consistent growth?

11:54Tony J. Robinson:Just visit fundrise.com slash pockets to make your first investment today. Carefully consider the investment objectives, risks, charges, and expenses of the Fundrise flagship fund before investing. This and other information can be found in the fund's prospectus at fundrise.com slash flagship. This is a paid advertisement.

12:13Ashley Kehr:Okay, we are back from our short break. Thank you so much for taking the time to check out our show sponsors. Okay, this question is from the BiggerPockets forums. Hello, everyone. I am a rising sophomore at the University of South Carolina, and I want to get my first property before the school year ends. I have been intrigued by investing since I was 14. And as I have grown older, I have realized that real estate investing was a field I wanted to enter. For about a year now, I have been researching real estate. I started going to RIAs about seven months ago. Those are real estate meetups. And I have been building a network since then.

12:49Ashley Kehr:While I have been home for the summer, I have been interning and mentoring with a very successful wholesaler slash investor who I met at one of the RIAs I attended. At this point, I have learned a lot and have had great hands-on experience and opportunities. With the momentum I have built over the last year, I do not want to stay stagnant. For me, the next logical move seemed to be starting my own business. I'm starting a wholesale business in an effort to raise capital, get my own experience with starting a business, learn, find deals, and to get started with a long and fruitful career in real estate.

13:24Ashley Kehr:I don't want to stay primarily wholesaling properties, and I plan on using wholesaling to expand into flips and rentals. My biggest goal is to acquire my first rental property and house hack it for my junior year of school. I know it will be challenging to do all of this while a student, but I also believe that now is the best time to get started. I have about 10K saved up in cash, stocks, and crypto, and I also plan on getting a job serving or catering while I'm at school. I would greatly appreciate any advice or knowledge you all would be willing to share. Also, if there are any agents or investors in Columbia, South Carolina, I would love to have a chat.

14:01Ashley Kehr:Wholesaling, a controversial topic here, Tony. I mean, we haven't had any hot topics lately to talk about. But I guess first, should we go through and explain what wholesaling is? I feel like we honestly haven't talked about it in so long at all.

14:18Tony J. Robinson:It definitely has been a while. Yeah. So the basic idea of wholesaling is that you are selling contracts for real estate. So let's say, you know, we'll use an example. Let's say that my neighbor, maybe they pass away, right? It's a sweet old lady. She passes away. I'm aware of what's going on. I see the kids walking up in the driveway one day. I go talk to them and say, hey, I'm a real estate investor. If you guys don't want the house, I can help you get rid of it. And they're like, oh my gosh, thank you because we have no idea. We don't want this house. We don't want to have to deal with it. And I say, okay, hey, the house might be worth$300K if it's all fixed up.

15:00Tony J. Robinson:but it's pretty old, pretty dated, going to need a lot of repairs. I'll give you$150 ,000 for it. And like, deal done. So now I enter into a contract with those kids and I go out and I say, Ashley, hey, I've got this house. It's worth$300 ,000. I'm going to sell you the contract for $170 ,000. Now, remember, I'm under contract with the original owners at$150 ,000. I'm selling that contract to Ashley for 170. I get to keep that spread of$20 ,000 for selling Ashley the rights to that contract. I get paid on the day of closing. Ashley gets her keys. Sellers get their original 150. We all walk away happy.

15:41Tony J. Robinson:All right. So that's the general idea of wholesaling is that you're getting properties under contract and then selling the rights of that contract to other real estate investors. Now, one big caveat, and neither Ashley nor myself are wholesalers, so we're probably not super up to date, but just know that states are starting to regulate, you know, the laws around wholesaling because for the longest, you didn't need a license. You could be unlicensed to buy and sell real estate contracts, but I think every state is starting to adopt different rules and regulations around what it means to be a wholesaler.

16:11Tony J. Robinson:Like, are you actually an agent or operating as an agent? So just make sure you check with your local state laws around do you or do you not need a license to do this?

16:20Ashley Kehr:And technically, I did a wholesale a deal once before I did assign a duplex to somebody else. One-time wholesaler here.

16:29Tony J. Robinson:I think we've done three wholesale deals, whereas we wholesale to other folks, but definitely more of a one-off than a core part of the business.

16:37Ashley Kehr:And the reason it was one-off is because it was a very easy thing for me to do at that time. But wholesaling, it can be easy if the deals fall in your lap and you have buyers lined up. But this is a very, very active business. I mean, James Daynard, probably the most successful real estate investor that I know. He started out wholesaling. He door knocked for like one year before he even got a deal. Like every day after work, he'd go out knocking doors, knocking doors. And it was one year before he got a deal, I think. So there's ways that you can become a wholesaler and it can be very cheap to get started.

17:15Ashley Kehr:But that takes a lot of your time. And if you have that time and you have that motivation to grind, grind, grind, even if you're not seeing results right away, then the wholesaling might be for you. But you can take the money route where you're investing a lot into how you're finding deals. So that's paying for software, like ReSimply, where you can go in and you can pull lists where they're going to give you the information for all the properties. You can narrow down what type of property you want with your buy box. Then you can also narrow down the list to the type of seller. So like if somebody is in pre-foreclosure, somebody is going through a divorce, or if they live out of state and it's a rental, maybe they're more motivated.

18:02Ashley Kehr:And you can get a list of contacts and then you pay for direct mail to send a letter out to them. Or you do skip tracing. And that's where you get their phone number and you call them. Um, like recently has a ton of like AI features where you, I've tested them a couple of times and it is really incredible. You can have some, an AI agent actually answer the phone when somebody calls, get all the information you need. And it's like, you feel like you're having a real conversation with somebody else. But, um, and you guys all know me, that's like perfect for me to not have to answer the phone to use an AI agent.

18:40Ashley Kehr:But, you know, that takes, wholesaling takes time and it can take some money to get started in it, depending on how you're actually going to try to get leads. But then that's not the only side of it. You have to have a buyer's list. You have to have that pool of people who are, you know, that you can actually assign the contract to. So I think make sure you know the whole ins and outs of, like Tony said, the legal aspects of can you actually be a wholesaler without a license and go that way. But I wanted to give a couple other options too, like$10 ,000. I'm not sure of the market in South Carolina where he lives is how much the price is for a house, but could you house hack, buy a cheap single family home, get a FHA loan for three and a half percent down and use that $10 ,000.

19:40Ashley Kehr:When you make the offer, get some seller credits. So that can even take more off of your down payment that you have to actually bring to the table. So could you house hack and rent out the other rooms to kind of get yourself started? Another option is to become a real estate agent. You could do, you know, if you're going to wholesale, you could become an agent as well and actually do on-market properties. So I think there's other avenues besides just wholesaling to actually get started in real estate too.

20:11Tony J. Robinson:Yeah. And something else I want to call out too is that, looks like he says, I'm a rising sophomore. So it looks like, you know, school year is about to start here, which means what, roughly nine months maybe until the end of the year, end of the school year. And, you know, he said, hey, my goal is to get my first property before the school year ends. I mean, you've got nine months, give or take, to get that first deal. And I just want to go back to what Ashley said earlier of James Dayner knocking on doors for a year before he got his first wholesale deal. And I highlight that because I just want to make sure you have the right expectations from a timeline perspective around how long will it actually take to get that first wholesale deal.