Teaching Real Estate Literacy

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2:45As content creators around real estate, we are trying to get better at showing you guys behind the scenes things that happen and not just the podcast recordings. We recently received an email, and this email was from a principal, and they do all of these programs with their students to teach their kids about financial literacy and getting started in real estate. Tony and I are really passionate about helping young people get started. One of my biggest pet peeves is that I've seen people graduate high school and not even know how to read a check or write a check. And I think financial literacy is so important and is not taught enough in a lot of homes or at schools.

3:33So Diana reached out to us asking if we would be open to answering some questions for her that she could relay and bring back to her students. So we went ahead and pushed record on this interview so you guys could be like a fly on the wall in listening in. Hopefully this is helpful to you guys. So this won't be like a normal interview. I'm just gonna hit play right now on the interview. And Diana kicks it off with asking us the first question. If educators had one hour to teach people, something about young people, something about real estate, what do you think is like the most important piece that they could give?

4:16You just had one hour for every single kid, no pressure in every part of the United States. what would you tell them to teach them? I would have to teach them how to analyze a deal and to understand the numbers of like, this is what buying a piece of property can do for you, as far as appreciation, building that equity, that long-term wealth, but also the cashflow. And I think looking at the numbers, being able to visualize, we say this all the time with like trying to get your spouse on board as to like show them what it looks like on paper, map this out, analyze the deal for them, show them where the money is coming from to buy it, show them where, you know, what the expenses are going to be, show them what the cashflow is going to be, what does the risk look like?

5:04So that would be the biggest thing I would say is like how to actually analyze a deal and show them how to do that. Yeah. Ash kind of stole my answer. I love that. So I guess I want to, I want to try and give something slightly different. I think maybe what I would focus on is, is what is the alternative look like to not investing in real estate? Because I think that was the, the, the lesson that my dad drilled into me when I was younger. And it was, if you don't build something alongside your W2 income, then you'll have to get up and go to work every day until, you know, you're however many years old.

5:41But if you start to plant seeds and you start to do things today, then one day that day will come hopefully much faster where you can wake up and have some choice, some freedom around what it is you choose to do. So yeah, I love the idea of like the tactical side of analyzing, but maybe it's also that mindset piece of if you don't do this and what are you actually signing up for? So you would start with kind of like the mindset, the conceptual pieces or maybe pair them alongside each other. Yeah. Yeah. Just, you know, I don't want to say like the big lie, but you know, It's like we've all been fed this one version of what the American dream looks like.

6:16And I think most people who get there realize that it's not all that it's cracked up to be, you know, and it's like you've got the choice of making some different decisions to hopefully get a different outcome. This really like shows like the difference in me and Tony. Like I am so analytical and like Tony is such a better like visionary. Yeah, but that's what it plays. That's what plays well together, you know, especially with youth because you want to like inspire them and get them excited to get that. initial like click and like, oh, wait, we can do things different. But then it goes the other way.

6:46And you want to like be able to ground them in something realistic as well. Be like, yes. And right. So what do you think is a common being the what I kind of just said, but like, what's a common myth about real estate investing that students should know is not true? Don't believe everything you see on social media. All right. Like the there's so many young people. And I know this because I have a son who's 17. There's so many young people on social media who are talking about how easy it is and how much money they're making and what it looks like. But there's so many of those people who aren't necessarily making money in real estate, but they're making money by teaching other people how to do this thing they did one or two times.

7:29And I think if you get caught up in the influencers who are driving fancy cars and living in high-rise apartments, you start to get this unrealistic view of what real estate actually looks like and the amount of work that actually goes into it. My son, um, he went virtual this year. Like he, he did like homeschool basically. And one of his goals during this semester was that he wanted to get his first wholesale deal done. And I told him, I was like, I love that you're doing this, but I don't think you're going to do it in the five months you have for this semester. I was like, you'll be lucky if you get one deal before the year is over and, um, you know, we're in May, so hasn't closed the deal yet, you know?

8:12So I think having realistic expectations about the time, the effort, the energy that actually goes into it. Yeah. And I guess the little piece to add on to that is that this isn't like a, in most cases, isn't a get quick rich scheme. Like, yeah, you may make a bunch of money off doing a flip here and there, but then there could be deals where you lose a lot of money that basically wipes out that profit you had made from a previous year. But I think really focusing on the long-term play of real estate and how that can impact your life of just building retirement, building generational wealth. I think touching on the personal finance piece too, as far as reinvesting what you're making from real estate into buying more real estate or into paying off your mortgages and having free and clear properties, but not using that cash flow or the initial money to actually increase your cost of living and still being able to be diligent by living below your means and not inflating your lifestyle as your cash flow grows and grows.

9:26So that you can keep reinvesting it. The lifestyle creep concept. So like, so I mean, you can use both of your kids are kind of teenage age, right? I think actually you have like, you have a couple in that range, right? Middle high school. Three boys, but my oldest, he's only 11. So then, so with students, with kids like that, like, how do you, how do you balance the, the excitement and the like wanting them to believe the pieces about generational wealth and also the inevitable, like not if, but when something goes wrong? um how do you kind of like do you prepare them or are you just kind of like i don't want to prepare you because i want you to figure it out and like the the negative experiences you have are actually going to be positive for you like how do you counter that the the one thing i will say is like talking to them about what is happening in the business like what is going on in the properties including them in the conversation like letting them know about the highs and the lows and not necessarily telling them what to do, but just like talking about it.

10:24So they're, they're, they're listening and understanding all the ups and downs. But honestly, Tony is the best one to talk about this because like for the first couple of years we were podcast hosts, he literally every day would come out with this lesson that he taught his son and, you know, this life lesson. And so Tony, you really are knowledgeable in this thing. Real estate stories, bedtime stories. it's all right because I I think that um I like I was literally just we were just talking to my son like a couple weeks ago and he was kind of like down on himself because he felt like he's like behind from where he should be and and behind because aka he hadn't like done what he was hoping to do and you know we sat down and we told him and we're like out of all the 17 year olds that are walking around on the planet you've probably done things that maybe one percent of them have actually done.

11:16And it's like, if we had started doing what you're doing at 17, we would be in a very different situation now because we would have had such a huge head start. So I think the lesson that we were trying to tell him in that moment was like, you failed, I guess, in hitting your goal of getting the deal while you were still doing this whole virtual thing, but failure is a part of what's necessary to be successful. And when you meet someone who hasn't failed a lot, you're typically meeting someone who hasn't succeeded a lot either. It's hard to be super successful without having failures along the way.

11:48So instead of looking at the failure as something to avoid, you've got to look at something that's necessary to get to that next step. And if we just reframe what it means to fail, it makes it easier to keep moving forward when you meet those obstacles. Yeah, that's a huge one. And I think maybe because this generation is just, it's seemingly more immediate. They see successes that seem quicker, right? It's a little bit, more difficult for them to fail and believe that they're still on the path. It's always hard in general, but like, I feel like we didn't always have so many levels of success that seemed like they happened so fast right in front of us.

12:23But so what's continuing, like, so what small steps can young people take now to prepare for investing later, whether they have a parent like you in the house more likely than not, they probably don't have having people like that to kind of guide them. So what can they do even on their own to prepare? Yeah, I think maybe the biggest things are just continuing to educate themselves. And that's something that we tell to rookies of all ages, listening to podcasts, watching YouTube videos, reading books, just like engrossing yourself in the knowledge. But I think the huge advantage that a teenager has when talking about becoming a real estate investor is that everyone wants to help them.

13:09everyone wants to help the 16-year-old that wants to buy their first real estate deal. So even if you don't have a parent in the house or someone that you know personally that's doing real estate, if you go and, you know, any, you know, Facebook, meetup.com, wherever, BiggerPockets, if you find where some of the local real estate events are happening in your area, you know, and Diana, you're, you're in New York, right? So there's tons of real estate groups and meetups and things in the city that you're in, go there and just be honest with people. Hey, I'm however old you are. I'm just looking to learn.

13:48Can I come work for you? Can I do this for you? Can I, can I intern with you? Oh, people would eat that up in a second. Yeah, for sure. You know, they'd eat it up. So I think that's the biggest thing. Even in the BiggerPockets forums, like if someone were 16 and they were to post in there, I'm 16, I'm just getting started. Here's what I've learned so far. This is what I'm looking to do and wanting to learn more about. there will be so many more comments than if somebody who's my age went and commented the same thing I'm so and so I want to do this like to the younger person there would be a way more response because there would be excitement of like people like me regretting not starting at 16 that They'd want to help this person get started.

14:37Yeah. I think the only other thing I would add is understanding personal finances as to like, what are some of the basic elements of having a strong personal foundation, learning how to live within your means? What do you actually need to do to get pre-approved for your first loan? Like when, you know, if you're deciding you want to buy a house hack when you're 18, what are things that, you know, a lender is going to want from you? And the same thing, reach out to a local lender in your area. Even when you're 16, you can email and say, I want to buy a house in two years and I'm 18. And what would I need to do in the next two years instead of waiting until like, okay, you're ready.

15:26then going and them saying, well, you have no credit. You needed to have X amount saved for the type of property you want. You don't have enough. Like having that time to get yourself ready is such a huge benefit. Yeah. I think that's a great idea. That's actually, that's something I hadn't even ever thought about is like teaching them in terms of like the, the networking piece. And like, we, we talk about it, but like, but showing them exactly where forums are or where meetups are. Cause you're right. Like I've been to, you know, X amount of meetups in my life, but like showing them how to access those.

16:01I think that's a great, that's a great idea. Um, I'll do that next week actually. Um, and, and also for that generation too, cause they're, they're not as person to person, you know, obviously they're, they more live in more of a digital world. So, um, that's interesting. So segwaying kind of a little bit more to, actually, no. Do you have any off the top of your head, like, do you have any specific episodes or stories from your interviews? I know, I remember a few of yours that I have shared with them in the past, but off the top of your head, like, what stories do you think would resonate with young students that, like, maybe educators couldn't use in the classroom or something?

16:41Yeah, we actually had an episode with Dan Sheiks, and he does something similar where he works at a school and teaches a lot of financial literacy and stuff like that. It was episode 179. So episode 179, and it's from freak to financially independent as a full-time teacher. So he went, he goes on and talks about like lessons that he does to educate his kids in his classroom about becoming financially independent. And what do you think about, so in terms of educators who have limited real estate experience, how do you think they can effectively teach these concepts? Like what are a couple of steps that they can take specifically to make themselves feel more confident to kind of engage students in this topic?

17:34Read the book, Real Estate Rookie, 90 Days to Your First Investment. It's a book that I wrote And it basically lays out a blueprint of like, these are the steps you should take and in which order you should take them. And it's just like a very easy to understand breakdown of each of those steps to actually get your first deal and what that looks like. And it's just like all encompassing. Like there's so much information on the internet about real estate investing. And what I tried to do was really take that information and condense it into steps in a path. So I think that book would give you like a good overall understanding of what it looks like to do real estate investing.

18:19Yeah. Cause I'm putting a couple of books in the, for each chapter, I'm putting some books in the appendix, like to support the outside learning when people are continuing to become educated. And I love, I would love something like that. I think Rich Dad, Poor Dad is probably the other book that should be required reading for like everyone before they graduate from high school, just to get the right mindset. Cause it's not, you know, it's not as much as an X's and O's book about real estate investing. And it's not even honestly, the book isn't even really just only talking about real estate investing, but it's just a good mindset book about what does it mean to actually build wealth today?

18:55And, you know, how do you put together assets that pay you versus buying things that become liabilities for you? So even for teachers who aren't investing, yeah, Ashley's book on the tactical side, and then Rich Shad poured out on the more like mindset side. There you go again with your mindset. Yeah, no, I did. I did. I did that. The last two years, I do the intro in the first chapter, because I feel like those are the like they really gripped the kids really quickly. And then we like segue into an exos and old books, like right, it was like right after that. So yeah, it's a great, they really like that one.

19:29What hands-on or real world projects do you think could help students grasp real estate basics? Like, let's say like, so I do a unit that's about three weeks. So I have my own like concept of it, but like, if you had your choice to teach them for a couple weeks or a month or something like that, like what would, what kinds of projects do you think that the young people should experience. This just shows what a BiggerPockets groupie I am, but like just going on to biggerpockets.com, there's so many like calculators or tools or resources to play with. So like just the calculator to analyze a deal, having the students take a property off the MLS, inputting the numbers into the deal analysis and seeing what the outcome is.

20:16Like how exciting to see like, oh, this person's having$500 cashflow. The deal this person picked has negative$200 cashflow. So like giving them a scenario as to, okay, you each have this much money as a down payment. You're going to get a loan for this amount. This is your interest rate amortized over how many years. This is the area you guys are looking for a deal in these markets and then have them go and scour the MLS and have them analyze it. and then they each present their deal. And if it was a winner and a loser and to compare, you know, and like maybe go through and say like, okay, this, you know, this, why do you have zero for property taxes?

20:58You forgot this and like kind of break down through each of their deals and figure out things they could have done better or done differently. But, and it kind of plays into some competition as to like, who can find the best deal too. I think I would have them call homeowners and maybe the best way to do this if they're like calling for sale by owner properties. I'm dropping out of your class, Tony. It's very high pressure. It's a very high pressure class. But the reason why I say that is because I feel like if you do that, you kind of get a mix of everything. Like if you want to, if you really want to negotiate a deal with someone on a phone, you've got to know what purchase price makes sense.

21:37And in order to back into your purchase price, you've got to have a good sense of, hey, what is it going to cost me to rehab this property? What am I going to be able to rent it for? Or what kind of expenses should I include? So you get the element of the deal analysis, but then you also get just like the negotiation side of being a real estate investor. And to Ashley's point, like not everyone's going to need to build that skill, you know, but I think like if you really want like the fastest way to get indoctrinated into the world of being a real estate investor, like getting on the phone and actually talking to someone and trying to buy their house from them.

22:09But that is a great skill to develop. like I should have developed that skill at some point in time you know like I probably would be better off like yeah that's great so do you in do so I so I generally I do a week of residential and then I do a week of what Ashley is kind of alluding to is the analysis I use the four square method and they analyze properties in different locations and then they for the first time we did a house split project to this last week to teach them kind of those numbers around that. Do you also think something like Airbnb or like short-term rentals are a good thing to also include?

22:49Or do you think that like that comes in time, if that makes sense? I think exposure to the different types of investing would be good for them, you know, knowing that there's different ways to get started. Because yeah, maybe someone hears regular long-term rentals and their eyes glaze over, but they hear self-storage, you know. There's like a teenager out there that gets super excited about self-storage for whatever reason, right? So yeah, I think giving them some sort of exposure to the different avenues makes sense. Thank you. I appreciate that. That was so helpful. Thank you for wanting to interview us.

23:21Yeah, I'm a BiggerPockets nerd as well. So I've been, since I bought my first one, even before I bought the first one, I've been spiraling into BiggerPockets wormholes for a long time. Are you going to the conference in Vegas this year? No, I don't think so. I think it conflicts with something. Is it in the summer? In October. Yeah, I think it conflicts with an education. There's an education conference I'm presenting at in New Orleans. And I think the CEE conference, they wrote the National Financial Literacy Standards. So I think it conflicts with that one. Oh, yeah. Hopefully we can get you out to one of the upcoming BUP cons.

23:57It's in Las Vegas? This year it is. It moves around every year. Let me look again to make sure that. Yeah. And Diana, where can people reach out to you or find out more information? Sure. Yeah. I'm on LinkedIn. So LinkedIn is I'm on there pretty often and I post stuff about financial literacy and about students and different projects and fun stuff that we're doing. I also have an Instagram, DianaDinero underscore edu. So either of them or I have an email as well. Well, great. Thank you so much for joining us today. Yeah. Thank you. I appreciate your time. It was awesome. Labor Day savings are happening now at The Home Depot with select appliances starting at$399.

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