Podcasts about tom yeah

BOSSes Anne Ganguza and Tom Dheere examine the state of the voiceover industry a few months into 2025. They discuss the direct impact of political and economic events on booking trends and content. The conversation explores how corporate messaging is adapting to cultural and policy changes, the ongoing role of authenticity, and the evolving, perhaps less threatening, landscape of AI. Ultimately, they offer a message of adaptation, education, and resilience for voice actors navigating the current climate.   00:03 - Anne (Host) Hey bosses, are you new to voiceover and not sure where to start? Join the VOPeeps VI Peeps membership and get access to over 350 hours of pre-recorded classes, a 15% discount on all VOPeeps, guest workshops and free monthly workouts. This membership is perfect for those wanting to get started in the industry. Find out more at vopeeps.com. Slash join dash now.  00:32 - Speaker 2 (Announcement) It's time to take your business to the next level, the boss level. These are the premier business owner strategies and successes being utilized by the industry's top talent today. And successes being utilized by the industry's top talent today Rock your business like a boss a VO boss.  00:54 - Anne (Host) Now let's welcome your host, Anne Ganguza. Hey everyone, welcome to the VO Boss Podcast and the Real Boss Series. I'm your host, Anne Ganguza, and I'm here with the one and only Mr Tom Dheere. Hello, hello, hello, hi, tom. Oh goodness, tom, we're a few months into 2025, and it's been quite a year so far, wouldn't you say I would say yes, it has.  01:13 Lots of disruption going on in the world in so many ways I would say economically, socially, I mean. It's a new administration and I know that we spoke earlier about setting your goals and starting off on the right foot for 2025 and finding out who you are. Now that we're a few months in, I think we should go back and readdress what's happening. What's going on? How are you feeling about the state of things? Let's maybe open it up with the state of our industry, the voiceover industry. How are you feeling the state of voiceover is a few months into 2025?  01:49 - Tom What's interesting about it, Anne, is that your emotional state when you are watching the news or doom scrolling on social media is going to make you feel a certain way about how everything is going and, depending on your political inclination, you may think everything is going wonderfully or you may think everything is going terribly.  02:12 But then there's that pesky little thing called reality, which is the reality of how many auditions am I getting, how often am I booking, how much money am I making? Where are those voiceover bookings coming from? And, based on what's going on in the world, how much of that is directly or indirectly affecting our individual voiceover businesses?  02:39 - Anne (Host) Absolutely, and because we're service-based right. It affects us very much. Right, it affects us because companies are hiring us to, for the most part, entertain or sell. Right, and, depending on how the companies are feeling and companies are reacting to the issues that are going on in the world today, may have a direct impact on our business.  03:01 - Tom Yeah, so just as a point of reference, let's look at 2024. Our business? Yeah, so just as a point of reference, let's look at 2024. One of the major things that happened that had a huge impact on voiceover work was the presidential election, because, distressingly late in 2024, we weren't sure who was running for president on either side of the aisle, much less who their running mates were. That had a massive effect on corporations when it came to advertising budgets and what the content of the advertising would be. So last summer, 2024, july August there was a huge dip in voiceover work across the board because companies didn't know where to put their money.  03:46 - Anne (Host) Except in political maybe.  03:47 - Tom  Except in political.  03:48 And then when September, October, hit, the political campaigns all went crazy and a lot of the advertising got stopped up because so much ad space was being taken up by political advertising.  04:02 There was a noticeable drop in commercials for television and radio because all the political ad buys were taking up all the real estate. So that is one pretty clear, direct example about how what's going on in the real world affected what was going on in the voiceover industry. So let's look at spring of 2025 of what's going on right now is since there's virtually no political ads, as in campaign ads. I mean, there's a smattering of them here and there and a smattering of issue ads, but I didn't notice any more than there usually has been, which means the void that the political ads left got immediately taken up by commercials, left got immediately taken up by commercials. So there seems to be as much work as there was at any given time in recent voiceover history. I agree with you there. But the question is, what is the content and context of the ads and other voiceover genres and what are the casting demands and what are the performance demands for?  05:09 - Anne (Host)  Now also, we're thinking, I think, right now, commercial broadcast style voiceover. When we think about that, I agree with you that, yes, there's as much work, I think, as there ever has been. However, it's the content that might be changing and the context. You're absolutely right, but also there might be in terms of industrial content, like the industries that are advertising, the industries that are hiring voice talent that may or may not be broadcast. Maybe we're talking e-learning, we're talking corporate, we're talking all the different non-broadcast style voiceover. I think, in that realm where I'm seeing I'm not seeing a drop necessarily, but I'm seeing companies looking very carefully at what they're saying and what they want their brand message to be.  05:54 - Tom Yes.  05:54 - Anne (Host) And that is very key for somebody like myself if I produce demos, to make sure that the content is reflective of the culture and the society of the times.  06:06 - Tom Yes, culture definitely has an influence on advertising broadcast and it also has an influence on internal content, e-learning content, corporate industrial content. Actually, I just realized last year I had narrated an app for a large governmental organization, let's just say, and it was about harassment in the workplace and it was a big project and I did it all and the client was thrilled and I got paid and everything was great. Just a few days ago, the client wrote me and said hey, as a result of all of these executive orders that have been stripping away DEI policies and verbiage, I had to record a decent chunk of it all over again with the new policies and whatever we'll call it, awareness of it in mind.  07:01 - Anne (Host) Yeah, that's the biggest thing that I am seeing and, again, we're not here to be political. However, the two of us need to take a realistic look as to okay, so what are companies having to do to maybe adhere to policies? Because companies that maybe depended on support from the government may have to rewrite some policies. They may have to rethink how they're speaking, and that directly impacts a lot of the corporate work that I've done and also corporate training as well I do. The majority of my work in the e-learning aspect is through corporate.  07:34 I do some educational, which I think that also can be touched, but not in such a direct manner Like, let's say, dei or I'm just trying to think like, what other types of topics and support and safety and environmental. Let's think about environmental changes. Right Before, in a lot of corporate, there was a lot of talk about sustainability, talk about climate change. There was a lot of talk about sustainability, talk about climate change. Companies wanted their audiences to hear that they were supporting these things, because that's what mattered to the majority of people, that they wanted to be on board with them. Now, is that a thing when we're talking about alternative energy right, alternate energy are we going to now be talking about drilling and fracking versus, you know, solar power or those types of things.  08:18 - Tom  Yeah, absolutely, and top-down policies are going to have a trickle-down effect, but also, as in if federal laws are changing or being enacted or being repealed, that's going to have a big effect on a lot of the policies of the companies, because they have to be compliant with local, state and federal law to be able to run their business legally and effectively. So, yeah, it will definitely have a top-down effect. The other thing is economic.  08:47 - Anne (Host) Yes, we always have to look at the economics.  08:49 - Tom You always have to look at the economics of it, and we're still seeing what the full effect of all of these tariffs are going to be on multiple countries, which is going to the majority of economics say, regardless of your political bent, that this is going to create an increase in prices of many, many items. Or some items just may not be available in the United States to be imported and there's some based on reciprocal tariffs. There may be items that the United States manufacturers that cannot be exported.  09:23 - Anne (Host) Well, absolutely, and in terms of hiring, and in terms of hiring. In terms of hiring. I do know that I heard from one of my students, canadian students, that is it favorable now to be an American voicing a Canadian brand at this point?  09:38 Or vice versa, or vice versa, and so we have to think about that or any global brand. So it's interesting to really see. I think a lot of us are so in our studio bubbles that we forget how this impacts the industry, and it impacts our jobs. It can directly affect our jobs, and so it's something that we need to keep our eyes open to. And even though I know a lot of people are like I'm off social media or I you know, it's just sometimes it's difficult for people to watch the news I do think that we have to keep ourselves in touch enough to understand where the trends are going and what things are happening if we want to keep our businesses afloat. And now I guess the next question, Tom, is are we doom-scrolling our voiceover industry at this point? I mean?  10:27 - Tom How do you feel about it? There's a lot of hysteria and confusion and frustration and fear and anger on every social media platform that I have seen. Some of it is a healthy discourse, some of it is fear and hate-mongering. Some of it is a healthy discourse. Some of it is fear and hate mongering. Some of it is a cry for desperation and comfort and commiseration. It's a combination of all of those things.  10:44 So the question is do you shut off all of your social media and go take a walk? Sometimes that's a very, very good idea. But, just exactly to your point, anne, we need to keep an eye on what's going on. Also, all of the social media groups that we're on, they're national or international, so we can keep an eye on what's going on in other parts of the country and other parts of the industry and how it may or may not affect us. Like, for example, I just saw recently a social media post Somebody was talking about well, what happens if there's a recession? How is that going to affect the voiceover industry? Now, I don't know if you remember, but 2008, 2009, the great recession oh, I do. I did not remember and I went back and I looked at my numbers. I didn't notice any effect, noticeable effect, on it.  11:29 When COVID hit March of 2020, there was a noticeable dip, but then April it went right back up and 2020 was a pretty good year for me. But paying attention to things like that and you know, instead of being in your own little bubble, about being terrified about everything, but when you're actually doing your own research off of social media and looking for intelligent discourse on social media to find actual facts, and listening to people who've been around the block a few times, like you or I, who was like, yeah, no, the recession was not a big deal and oh, yeah, covid, things bounced back really quickly and, like I said, last year's, well, the strikes, the SAG-AFTRA strikes, the interactive strike, which is still ongoing, unfortunately, but hopefully they'll be able to fight for their rights and protect all of us. When it comes to AI and other bad practices, the voiceover industry seems to be relatively pliant and relatively resilient. Yes, because, no matter what, people are still trying to sell things. People are still trying to buy things.  12:28 I love that. You said that People still need to teach things. You know what I mean.  12:31 - Anne (Host) I mean, we are a company ourselves, right, we want to stay afloat.  12:34 We're right now looking at and if you aren't, you need to be right Always, you need to be looking at how are you going to stay afloat, how is your business going to continue to show progress, move forward, be successful?  12:46 And it just basically comes down to we're evolving. We're evolving with the times, right, and I think that I agree with you wholeheartedly that I don't think there's going to be any less of a demand for voiceover because, as you mentioned, companies still want to exist, they still want to sell a product, and so part of that sell is including a voice to speak the brand and to communicate that sell to others. And so I don't think it's doom scrolling, but I do believe that we need to educate ourselves on what the trends are, and not just the trends on the style of voiceover, although I think that it's good to understand, like, what's out there? How is that message being told? I always maintain that the best performance trend, the best voiceover performance trend to follow, is just be an actor, be a damn actor, right, because if you're an actor, you evolve, you can evolve and change, just like you need to do with your business.  13:44 And I think that you kind of touched on synthetic voices and AI Again, if we were to talk about how do you feel that that's affecting the industry these days? I can tell you, in my opinion, right now, I think that things are working themselves out, hopefully on a more positive note, and I don't think that the fascination is there for me. I'm not seeing the fascination there with voiceover jobs being stolen by AI. I believe that more of the focus needs to be on let's just protect our voices so that they're not being used without our permission and being developed into a synthetic voice. Or, if we have a synthetic voice, make sure that we're getting compensated for it. What are your thoughts?  14:22 - Tom  I generally agree, because everyone who decided that AI is the devil and decided not to get involved in any level of critical thinking or investigating about it, they have not changed their minds. The people that jumped in with both feet are probably still jumping in with both feet. What I think to your point you're saying is that everybody that wanted to give it a sniff, that wanted to try it out, test the water, has done it not just once, but maybe twice, because ChatGPT rolled out November 2022 and now we're in mid 2025. So I think there's been like At least from my observation, there's been like two rounds of companies giving AI a try. The first one was just to, oh, let's see what this is all about.  15:03 And then some were like, oh, this is great, this is perfect. Others are like, no, this is awful. And then there's others who, a year or so later, is like you know what? It's probably gotten two years better. Let's give it another try. And then same thing happens. Some thought, oh, okay, it's good enough now, or it's not good enough now, or making whatever decision. But yeah, the fervor from the consumer end, I think, has settled.  15:26 I think so too, and I think the terror from the voiceover end I think for the most part is settled. There's still questions about it.  15:33 - Anne (Host) Sure, and we've got great organizations fighting for us as well. Nava has been doing a phenomenal job in that regard, and if you're a business and you're not using AI in some capacity to manage your data, you're missing out. You're missing out on the boat, and we did talk about that previously in an episode, tom, you and I. It's just getting better and better at that, but it's not necessarily getting better at speaking your voice synthetically. But data management, I think, is just leaps and bounds and it's integrated in a lot of the products we're using and you may not even know it. It's kind of like.  16:07 I think I mentioned this to you before Back in the day I installed voice over IP phone systems when they first came out and people just said oh my God, they sucked, They'll never work, They'll never last, and ultimately, that's what we do today. I mean, it's all voice over IP. Everything that we're doing is we're communicating, Our phone lines are over data internet lines and it's just that's what's happening. Now. We have voice over IP and we don't even know it. It's seamless. So I believe that the AI data management is being built in seamlessly into things that we use like Google or I think you're using Google Workspace.  16:36 - Tom  I am using Google Workspace and Google Gemini is my favorite AI, google Gemini.  16:39 - Anne (Host) I have ChatGPT. I have a couple other products that do some automated things for me that are under the ChatGPT, and I continually look for tools that can help me to run my business more efficiently. So I don't think that in the voice realm of things. Oh my God. I just said a company.  16:54 - Tom  Naughty, naughty.  16:54 - Anne (Host) I didn't even know In the voiceover world. I don't know if synthetic voices are quite the terror and the scare that they were in the last couple of years.  17:03 - Tom  I still think the same thing is exactly what you and Andy said on that wonderful narratorlife interview that you did, which you said garbage in, garbage out. Good actors are going to make good AIs, bad actors are going to make bad AI are going to make bad AI. And the relevance gap I still think is growing, of people that are lacking in talent or training storytelling training, that are trying to enter the world of voiceover, are just not going to be able to get in. So I think that still stands.  17:28 - Anne (Host) And everybody I talk to we're talking about. Like anything today, if you want to capture someone's attention, right, marketing, wise, right it's all about authenticity. It's all about authenticity. It's all about give the human aspect to you. Even when I write a newsletter, it's like give somebody that vulnerable part of yourself that talks directly to them and doesn't just try to sell them or doesn't just try to, like, promote things. And give that authenticity. And I really believe that, as humans, that's who we are and that's what we have and that is just our strength. And when we are performing voiceover and we are voice actors, I think the more that we can be authentic in whatever genre we are voicing, the better off we are and the more successful we will be.  18:08 - Tom I agree. I had another thought about. Something that we were talking about a little earlier is that unemployment seems to be rising because of all of these federal layoffs.  18:19 Layoffs, yeah, and then as a result of tariffs.  18:20 if prices are going up, they have to maintain profit margins, so sometimes they need to cut labor. So what's been interesting in voiceover is that, as a result of AI, there has been less of the entry-level, lowest budget voiceover work, which means there's less opportunities for people who are entering the voiceover industry, and that may mean some people are not able to have a sustainable voiceover business model, so they're leaving the voiceover industry. However, if employment does keep going up the way that it does, does that mean more people are going to come back who want?  18:55 - Anne (Host) to give voiceover a shot. Yeah, exactly that was my experience when COVID happened.  19:01 And people, how many of my coaching business, I mean I had like tripled business with people who were using the time to learn voiceover and to get into voiceover and to utilize their voice for something good. I mean, I think that's still like. The desire of most people that get into this industry is they want to use their voice to do something good and, of course, make some money. Sure, that's always a key element to be successful in voiceover business. But what other aspects, tom, have we not covered here in this few months, now that we're in 2025? We've talked about, I mean, really, how dependent our industry is on the economy and the message that is out there, the brand that is out there.  19:50 - Tom Right. Yeah, it's dependent and it's independent at the same time, when we are getting into what seems to be a very interesting year on a sociological, social, cultural, political, economic level, what can we as voice actors do? So what should us bosses do? It's the same answer all the time, anne Right.  20:11 - Anne (Host) What do we do? Keep training, keep learning.  20:13 - Tom Keep growing, keep marketing, keep marketing. Keep following industry trends. Continue to have conversations with fellow voice actors. Continue to have conversations with your current and potential clients. Pay attention to what's going on on social media, but don't get sucked in by it. But pay attention, learn, grow, adapt, evolve and educate Educate yourself and educate each other.  20:33 - Anne (Host) Educate, adapt, evolve. I love that. Educate, adapt, evolve. I think that really should be our mantra for this year Educate, adapt, evolve and I think everything will be absolutely fine in this voiceover industry. And also just one thing that I want to make mention is that during those lean times where you may not be finding work or work slows down, it's always important to kind of go back and listen to other voiceover podcast episodes that I've had with Tom, of course, about your business and how to build your business and be successful, as well, as I've had a money series with Daniel Fambul, which talks about the fact that if times are lean for me or I'm considering investing more in my business, which would mean maybe I'm going to get coaching, maybe I'm going to get a new demo, maybe I'm going to get a new website which, by the way, I've done all those things and I've had to make a lot of investments this year, and so it's important to have the mindset right, the mindset of being willing to invest.  21:32 I think that's important being willing to invest in this career If you love this career and this is what you want to do and you want to grow, having the mindset of being willing to invest, and I, right now, in my own business, I've transitioned over to a new website, I'm doing a lot of new things that are on the scary side of things for me. I mean, I think if you're not scared every day, you're not taking a risk every day. And, by the way, this risk is not just a risk performance-wise or strategy-wise, it is a risk financially-wise, because I'm investing in a part of my business that I want to grow, and so it's not easy and it's scary, but it's something that I believe every boss needs to really take a look at and be willing to take a little bit of a risk. Take a look at and be willing to take a little bit of a risk, and I'm thankful that and, tom, we've talked about this I'm thankful that I have a little bit of a nest egg that I can make these investments yeah.  22:26 - Tom So my new mantra will now be if you're not taking risks, you're not trying, and if you're not scared you're not trying hard enough.  22:33 - Anne (Host) Oh, I like that a lot. Yeah, Tom. So I admit that I'm scared. Are you scared? Are you scared every?  22:39 - Tom  day. Am I conscious? Yes, of course I'm scared.  22:41 - Anne (Host) Yeah, what things scare you? I'm just curious what things scare you in running your business?  22:46 - Tom Well, I mean just as a basic normal, semi-normal neurotic human. I still have my imposter syndrome. I hear you I still have my FOMO.  22:55 I'm still afraid that 30 years later, that clients are just going to be like well we don't just like his face anymore and they're just not going to book me and they come back. They all come back, as in you know, most of them come back for all good reasons and other people don't come back for whatever other reason. 99% of the time has absolutely nothing to do with me. But my biggest fear is the fear of being irrelevant, and I've had a couple of times in my voiceover career where I, as a result of very poor business decision-making, I made myself less relevant.  23:28 The jumping off of Voice123 in 2013 and then being off it for seven years made me less relevant as a voice actor because I wasn't paying attention to what was going on in the industry. I was up my own you-know-what about it and making decisions based on fear, ego, insecurity and arrogance and ignorance.  23:47 - Anne (Host) Oh, my God, I just love that. You just you were so authentic with that. That's really wonderful. I mean, I love that you're sharing that with us because that's something that I think everybody can take and really learn from myself included taking these risks that have not always worked out and, yeah, a lot of it is because I was stubborn. I have a little bit of a stubborn streak. I'll admit to you that mine would be stubborn in feeling like what I was doing was the way and there was not another way to do.  24:18 It was the way and there was not another way to do it. And that stubbornness and not allowing myself to open my eyes, especially when because I hire a team of people right, and trying to do everything myself, thinking I was the only person that could do it, being that kind of a person, that control freak which I am that held me back. It was scary to me. I was scared that if I didn't control it myself, that I would lose control and that I wouldn't be able to grow the business. But quite the opposite happened. After all, that, when I allowed myself to be open to collaborating and working with others and it's one of the reasons why I love to collaborate with you, tom, because there's so much power in collaboration together and that is one of the basis is for when you want to run a strong business. I'll never forget Gary Vaynerchuk said hire people who are better than you to do those things and don't be afraid of that. Don't be scared of that and treat them right, because that's going to help you all grow and move forward.  25:07 - Tom Absolutely Surround yourself with smart people who disagree with you is another mantra that I've heard over the years, and it's really really true.  25:14 - Anne (Host) Yeah, yeah, I love it, tom. Thank you so much. I think that last nugget was the best of all out of this episode. I really love talking with you in these podcasts, so thanks again. I'm going to give a great big shout out to our sponsor, ipdtl. You too can connect and network like real bosses. You can find out more at IPDTL.com. Bosses have an amazing week and we'll see you next week. Bye.  25:41 - Speaker 2 (Announcement) Join us next week for another edition of VO Boss with your host, Anne Ganguza, and take your business to the next level. Sign up for our mailing list at voboss.com and receive exclusive content, industry revolutionizing tips and strategies and new ways to rock your business like a boss. Redistribution with permission. Coast to coast connectivity via IPDTL.   

Tom MacWright is a prolific contributor in the geospatial open source community. He made geojson.io, Mapbox Studio, and was the lead developer on the OpenStreetMap editor. He's currently on the team at Val Town. In 2021 he bootstrapped a solo business and created the Placemark mapping application. He acquired customers and found steady growth but after spending two years on the project he decided it was financially unsustainable. He open sourced the code and shut down the business. In this interview Tom speaks candidly about why geospatial is difficult, chasing technical rabbit holes, the mental impact of bootstrapping, and his struggles to grow a customer base. If you're interested in geospatial or the good and bad of running a solo business I think you'll enjoy this conversation with Tom. Related Links Tom's blog Placemark Play Placemark GitHub Placemark archive geojson.io Valtown Datawrapper (Visualization tool) Geospatial Companies mentioned Mapbox ArcGIS QGIS Carto -- Transcript You can help correct transcripts on GitHub. [00:00:00] Introduction Jeremy: Today I'm talking to Tom MacWright. He worked at Mapbox as a, a very early employee. He's had a lot of experience in the geospatial community, the open source community. One of his most recent projects was a mapping project called Placemark he started and ran on his own. So I wanted to talk to Tom about his experience going solo and, eventually having to, shut that down. Tom, thanks for agreeing to chat today. Tom: Yeah, thanks for having me. [00:00:32] Tools and Open Source at Mapbox Jeremy: So maybe to give everyone some context on, what your background was before you started Placemark. Um, let's talk a little bit about your experience at, at Mapbox. What did you work on there and, and what would you say are like the big things you learned from that experience? Tom: Yeah, so if you include the time that I was at Development Seed, which essentially turned into Mapbox, I kind of signed the paper to get fired from Development Seed and hired at Mapbox within the same 20 seconds. Uh, I was there for eight and a half years. so it was a lifetime in tech years. and the company really evolved from, uh, working for Human Rights Watch and Amnesty International and the World Bank and doing these small, little like micro websites to the point at which I left it. It had. Raised a lot of money, had a lot of employees. I think it was 350 or so when I left. and yeah, just expanded into a lot of different, uh, try trying to own more and more of the mapping stack. but yeah, I was kind of really focused on the creative and tooling side of it. that's kind of where I see a lot of the, the fun and programming is making these tools where, uh, they can give people the same kind of fun like interaction loop that programming has where you, you know, you do a little bit of math and you see the result and you're able to just play with, uh, what you're working on, letting people have that in other domains. so it was really cool to figure out how to get A map design tool where somebody changes the background color and it just automatically changes that in your browser. and it covered like data editing. It covered, um, map styling and we did, uh, three different versions of that tool over the years. and then Mapbox is also a company that was, it came from, kind of people who are working on the Howard Dean campaign. And so it was pretty ideological and part of the ideology was being pretty hardcore about open source. we hired a lot of people who were working on open source projects before and basically just paid them to work on the open source projects, uh, for their whole time there. And during my time there, I just tried to make as much of my work, uh, open as possible, which was, you know, at the time it was, it was pretty great. I think in the long term it's been, o open source has changed a lot. but during the time that we were there, we both kind of, helped things like leaflet and mapnik and openstreetmap, uh, but also made like some larger contributions to the open source world. yeah, that, that's kind of like the, the internal company facing side. And also like what I try to create as like a more of a, uh, enduring work. I think the open source stuff will hopefully have more of a, a long term, uh, benefit. [00:03:40] How open source has changed (value capture by large companies) Jeremy: When I was working on a project that needed offline maps, um, we couldn't use Google Maps or any of the, the other publicly available, cloud APIs. So yeah, we actually used a, a tool, called Tile Mill that I, I hadn't known that you'd worked on, but recently found out you did. So that actually let us pull in OpenStreetMap data and then use this style, uh, language called carto to, to basically let us choose what the colors would be and how the different, uh, the roads and the buildings would look. What's kind of interesting to me is that it being open source really let us, um, build something we otherwise wouldn't have been able to do. But like, at the same time, we also didn't pay Mapbox any money. (laughs) So I'm, I'm kind of curious, like, if it's changed, like what the thinking was in terms of, you know, we pay for people to build all these things. We make it open source. but then people may just not ever pay us, you know, for all these things we did. Tom: Yeah. Yeah. I think that the main thing that's changed since the era of tilemill is, the dominance of cloud platforms. Like back then, I think, uh, Mapbox was still using, we were using like a little bit of AWS but people were still just on like VPSs and, uh, configuring things in cPanel and sometimes even running their own servers. And the, the danger of people using the product for free was such a small thing for us. especially when tile Mill was also funded by the Knight Foundation, so, you know, that at least paid half of my salary for, or, well, sorry, probably, yeah, maybe half of my salary for the first year that I was there and half of three other people's salaries. but that, yeah, so like when we built Tile Mill, a few companies have really like built on those same tools. Uh, there's a company called Carto coincidentally, they had the same name as Carto CSS, and they built on a lot of the same stack they built on mapnik. Um, and it was, was... I mean, I'm not gonna say that it was all like, you know, sunshine and roses, but it was never a thing that we talked about in terms of like this being a brutal competition between us and these other startups. Mapbox eventually closed source some stuff. they made it a source available license. and eventually Mapbox Studio was a closed source product. Um, and that was actually a decision that I advocated for. And that's mostly just because at one point, Esri, Microsoft, Amazon, all had whitelisted versions of Mapbox code, which, uh, hurts a little bit on a personal level and also makes it pretty hard to think about. working almost like it. You don't want to go to your scrappy open source company and do unpaid labor for Amazon. Uh, you know, Bezos can afford to pay for the labor himself. that's just kind of my personal, uh, that I'm obviously, I haven't worked there in a long time, so I'm not speaking for the company, but that's kind of how it felt like. and it yeah, kind of changed the arithmetic of open source in this way that. It made it less fun and, more risky, um, for people I think. [00:07:11] Don't worry about the small free users Jeremy: Yeah. So it sounds like the thinking was if someone on a small team or an individual, they took the open source software and they used it for their own projects, that was fine. Like you expected that and didn't worry about it. It's more that when these really large organizations like a, a Microsoft comes in and, just like you said, white labels the software, and doesn't really contribute significantly back. That's, that's when it, the, the thinking sort of shifted. Tom: Yeah, like a lot of the people who can't pay full price in USD to use your product are great users and they're doing cool stuff. Like when I was working on Placemark and when I was like selling. The theme for my blog, I would get emails from like some kid in India and it's like, you know, you're selling this for a hundred dollars, which is a ton of money. And like, you know, why, why should I care? Why shouldn't I like, just send them the zip file for free? it's like nothing to me and a lot to them. and mapping tools are really, really expensive. So the fact that Mapbox was able to create a free alternative when, you know, ArcGIS was $500 a month sometimes, um, depending on your license, obviously. That's, that's good. You're always gonna find a way for, like, your salespeople are gonna find a way to charge the big companies a lot of money. They're great at that. Um, and that's what matters really for your, for the revenue. [00:08:44] ESRI to Google Maps with little in-between Jeremy: That's a a good point too about like the, my impression of the, the mapping space, and maybe this has changed more recently, but you had the, probably the biggest player Esri, who's selling things at enterprise prices and then there were, or there are like a few open source options. but they feel like the, the barrier to entry feels a little high. And so, and then I guess you have stuff like Google Maps, right? That's, um, that's very accessible, but it's pretty limited, so. There's this big gap, it feels like right between the, the Esri and the, the Google Maps and open source. It's, it's sort of like, there's almost like there's no sweet spot. guess May, maybe it's just because people's uses are so different, but I'm, I'm not sure, um, what makes maps so unique in that way Tom: Yeah, I have come to understand what Esri and QGIS do as like an extension of what CAD is like. And if you've used CAD software recently, it's just as crazy and as expensive and as powerful. and it's really hard to capture like the people who are motivated enough to make a map but don't want to go down the whole rabbit hole. I think that was one of the hardest things about Placemark was trying to be in the middle of those things and half of the people were mystified by the complexity and half the people wanted more complexity. Uh, and I just couldn't figure out how to get it to the right in between spot. [00:10:25] Placemark and its origins in geojson.io Jeremy: Yeah. So let's, let's talk a little bit about Placemark then, in terms of from its start. What was your, your goal with Placemark and, and what was the product itself? Tom: So the seed of the idea for Placemark, uh, is this website called geojson.io, uh, which is still around. And, Chris Fong (correction -- Whong) at, at Mapbox is still, uh, developing it. And that had become pretty useful for a lot of people who I knew in the industry who were in this position of managing geospatial data but not wanting to boot up ArcGIS uh, geojson.io is based on, I just tweeted, I was like, why? Why is there not a thing where you can edit data on a map and have a GeoJSON representation and just go Back and forth between the two really easily. and it started with that, and then it kind of grew to be a little bit more powerful. And then it was just a tool that was useful for everyone. And my theory was just that I wanted that to be more useful. And I knew just like anything else that you build and you work on for a long time, you know exactly how it could be so much better. And, uh, all the things that you would do better if you did it again. And I was, uh, you know, hoping that there was something where like if you make that more powerful and you make it something that's like so essential that somebody's using every day, then maybe there's some some value in that. And so Placemark kind of started as being like, oh, this is the thing where if you're tasking a satellite and you need a bounding box on a specific city, this is the easiest way to do that. Um, and it grew a little bit into being like a tool for collaborating because people were collaborating on it. And I thought that that would be, you know, an interesting thing to support. but yeah, I think it, it like tried to be in that middle of like, not exactly Google my Maps and certainly a lot, uh, simpler than, uh, QGIS or ArcGIS Jeremy: something I noticed, so I've actually used geojson.io as well when I was first learning how to put stuff on a map and learning that GeoJSON was a format that a lot of things were using, it was actually really helpful to, to be able to draw, uh, polygons and see, okay, this is how the JSO looks and all that stuff. And it was. Like just very simple. I think there's something like very powerful about, websites or applications like that where it, it does this one thing and when you go there, you're like, oh, okay, I, I, I know what I'm doing and it's, it's, uh, you know, it's gonna help me do the, this very specific thing I'm trying to do. [00:13:16] Placemark use cases (Farming, Transportation, Interior mapping, Satellite viewsheds) Jeremy: I think with Placemark, so, one question I would have is, you gave an example of, uh, someone, I think you said for a satellite, they're, are they drawing the, the area? What, what was the area specifically for? Tom: the area of interest, the area where they want the, uh, to point the camera. Jeremy: so yeah, with, with Placemark, I mean, were there, what were some of the specific customers or use cases you had in mind? 'cause that's, that's something about. Um, placemark as a product I noticed was it's sort of like, here's this thing where you can draw polygons put markers and there's all these like things you can do, but I think unless you already have the specific use case, it's not super clear, who uses it for what. So maybe you could give some examples of what you had in mind. Tom: I didn't have much in mind, but I can tell you what people, what some people used it for. so some of the more interesting uses of it, a bunch of, uh, farming oriented use cases, uh, especially like indoor and small scale farming. Um, there were some people who, uh, essentially had a bunch of flower farms and had polygons on the map, and they wanted to, uh, mark the ones that had mites or needed to be watered, other things that could spread in a geometric way. And so it's pretty important to have that geospatial component to it. and then a few places were using it for basically transportation planning. Um, so drawing out routes of where buses would go, uh, in Luxembourg. And, then there was also a little bit of like, kind of interesting, planning of what to buy more or less. Uh, so something of like, do we want to buy this tract of land or do we wanna buy this tract of land or do we wanna buy access to this one high speed internet cable or this other high speed internet cable? and yeah, a lot of those things were kind of like emergent use cases. Um, there's a lot of people who were doing either architecture or internal or in interior mapping essentially. Jeremy: Interior, you mean, inside of a building Tom: yeah. yeah. Jeremy: Hmm. Okay. Tom: Which I don't think it was the best tool for. Uh, but you know, people used it for that. Jeremy: Interesting. Yeah. I guess, would people normally use some kind of a CAD tool for that, or Tom: Yeah. Uh, there's CAD tools and there are a few, uh, companies that do just, there's a company that just does interior maps especially of airports, and that's their whole business model. Um, but it's, it's kind of an interesting, uh, problem because most CAD architecture work is done with like a local coordinate system, and you have like very good resolution of everything, and then you eventually place it in geo geospatial space. Uh, but if you do it all in latitude and longitude, you know, you're, you're moving a door and it's moving the 10th or 12th decimal point, and eventually you have some precision problems. Jeremy: So it's almost like if you start with latitude and longitude, it's hard to go the other way. Right? you have to start more specific and then you can move it into the, the geospatial, uh, area. Tom: Yeah. Uh, that's kind of why we have local projections for towns is that you can do a lot of work just in that local projection. And the numbers are kind of small 'cause your town's small, relatively. Jeremy: yeah, those are kind of interesting. So it sounds like just anytime somebody wants to, like you gave the example of transportation planning or you want to visually see where things are, like your crops or things like that, and that, that kind of makes sense. I mean, I think if you just think about paper maps, if somebody wants to sketch something out and, and sort of track the layout of something, this could serve the same purpose but be editable. and like you said, I think it's also. Collaborative so you can have multiple people editing the same, um, map. that makes sense. I think something that I believe I saw on your website is you said though that it was, it's like an editing tool, but it's not necessarily a visualization tool. Uh, I'm kind of curious what you, what you meant by that. [00:17:39] An editing tool that allows you to export data not a visualization tool Tom: Yeah, I, when you say a map, I think there's, people can interpret that as everything from raw data to satellite imagery and raster data. and then a lot of it is like, can I use this to make a choropleth map of the voter turnout in our, in my country? and that placemark did a little bit, but I think that it was, it was never going to be the, the thing that it did super well. and so, yeah, and also like the, the two things kind of, don't mesh all that well. Like if you have a scale point map and you have that kind of visualization of it and then you're editing the points at the same time and you're dragging around these like gigantic points because this point means a lot of population, it just doesn't really make that much sense. There are probably ways to square that circle and have different views, but, uh, I felt like for visualizations, I mean partly I just think data wrapper is kind of great and uh, I had already worked for observable at that point, which is also, which I think also does like great visualization work. Jeremy: Would that be the case of somebody could make a map inside a placemark and then they would take the GeoJSON and then import that into another visualization tool? Is that what you were kind of imagining people would do? Tom: Yeah. Yeah, exactly. Jeremy: And I could see from the customer's perspective, a lot of them, they may have that end, uh, visualization in mind. So they might look for a tool that kind of just does both. Right. Tom: Yeah. Yeah. Certain people definitely, wanted that. And yeah, it was an interesting direction to go down. I think that market was going to be a lot different than the people who wanted to manage and edit data. And also, I, one thing that I had in mind a lot, uh, was if Placemark didn't work out, how much would people be burned? and I think if I, if I built it in a way that like everyone was heavily relying on the API and embeds, people would be suffer a lot more, if I eventually had to shut it down. every API that you release is really a, a long-term commitment. And instead for me, like guilt wise, having a product where you can easily export everything that you ever did in any format that you want was like the least lock in, kind of. Jeremy: Yeah. And I imagine the, the scope of the project too, you're making it much smaller if you, if you stick to that editing experience and not try to do everything. Tom: Yeah. Yeah. I, the scope was already pretty big. as you can tell from the open source project, it's, it's bigger than I wish it was. the whole time I was really hoping that I could figure out some niche that was much more compact. there's, I forget the name, but there's somebody who has a, an application that's very similar to Placemark in. Technical terms, but is just a hundred percent focused on planning septic systems. And I'm just like, if I just did this just for septic systems, like would that be a much, would that be 10,000 lines of code instead of 40,000 lines of code? And it would be able to perfectly serve those customers. but you know, that I didn't do enough experimentation to figure that out. Um, I, that's, I think one thing that I wish I had done a lot more was, pivot and do experiments. Jeremy: that septic example, do you know if it's a, a business in and of itself where it can actually support one person or a staff of people? Or is it, is that market just too small? Tom: I think it's still a solo bootstrapped project. yeah. And it's, it's so hard to tell whether a company's doing well or not. I could ask the person over DM. [00:21:58] Built the base technology before going public Jeremy: So when you were first starting. placemark. You were, you were doing it as a solo, developer. A solo entrepreneur, reallyyou worked on it for quite a while, I think before you announced, right? Like maybe a year or so? Tom: Yeah, yeah. Almost, almost a year, I think, maybe, maybe 10 months in the dark. Jeremy: I think that there's, there was a lot of overlap between the different directions that I would eventually go in and. So just building a collaborative editor that can edit map data fairly quickly and checks all the boxes of being able to import and export things, um, that is, was a lot of work. and I mean also I, I was, uh, freelancing during part of it, so it wasn't a hundred percent of my time. Tom: But that, that core, I think even now if I were to build something similar, I would probably still use that work. because that, whether you're doing the septic planning application or you're doing a general purpose kind of map editor or some kind of social application, a lot of that stuff will be in common. Um, and so I wanted to really get, like, to figure out that problem space and get a few solutions that I could live with. Jeremy: The base. libraries or technologies you were gonna pick to get the map and have the collaborative aspect. Those are all things you wanted to get settled first. And then you figured, okay, once I have this base, then I can go find the, you know, the, the, the customers or, or find the specifics of what I'm gonna build. Tom: Yeah, exactly. Jeremy: I I think you had said that going forward when you're gonna work on another project, you would probably still start the same way. [00:23:51] Geospatial is a tough industry, no public companies Tom: if I was working on a project in the geospatial space, I would probably heavily reference the work that I already did here. but I don't know if I'll go back to, to maps again. It's a tough industry. Jeremy: Is it because of the, the customer base? Is it because like people don't really understand the market in terms of who actually needs the maps? I'm kind of curious what you feel makes it tough. Tom: I think, well there are no, there are no public mapping companies. Esri is I think one of the 10 largest private companies in the us. but it's not like any of these geospatial companies have ever been like a pure play. And I think that makes it hard. I think maps are just, they're kind of like fonts in a way in which they are this. Very deep well of complexity, which is absolutely fascinating. If you're in it, it's enough fun and engineering to spend an entire career just working on that stuff. And then once you're out of it, you talk to somebody and you're just like, oh, I work on this thing. And they're like, oh, that you Google maps. Um, or, you know, I work at a font type like a, you know, a type factory and it's like, oh, do you make, uh, you know, courier in, uh, word. It's really infrastructure, uh, that we mostly take for granted, which is, that's, that means it's good in some ways. but at the same time, I, it's hard to really find a niche in which the mapping component is that, that is that useful. A lot of the companies that are kind of mapping companies. Like, I think you could say that like Strava and Palantir are kind of geospatial companies, both of them. but Strava is a fitness company and Palantir is a military company. so if you're, uh, a mapping expert, you kind of have to figure out what, how it ties into the real world, how it ties into the business world and revenue. And then maps might be 50% of the solution or 75% of the solution, but it's probably not going to be, this is the company that makes mapping software. Jeremy: Yeah, it's more like, I have this product that I'm gonna sell and it happens to have a map as a part of it. versus I'm going to sell you, tools that, uh, you know, help you make your own map. That seems like a, a harder, harder sell. Tom: yeah. And especially pro tools like the. The idea of people being both invested in terms of paying and invested in terms of wanting to learn the tool. That's, uh, that's a lot to ask out of people. [00:26:49] Knowing the market is tough but going for it anyways Jeremy: I think the things we had just talked about, about mapping being a tough industry and about there being like the low end is taken care of by Google, the high end is taken care of by Esri with ArcGIS. Uh, I think you mentioned in a blog post that when you started Placemark you, you, you knew all this from the start. So I'm kind of curious, like, knowing that, what made you decide like, I'm gonna, I'm gonna go for it and, you know, do it anyways. Tom: uh, I, well, I think that having seen, I, like I am a co-founder of val.town now, and every company that I've worked for, I've been pretty early enough to see how the sausage is made and the sausage is made with chaos. Like every company doesn't know what it's doing and is in an impossible fight against some Goliath figure. And the product that succeeds, if it ever does succeed, is something that you did not think of two or three years in advance. so I looked at this, I looked at the odds, and I was like, oh, these are the typical odds, you know, maybe someday I'll see something where it's, uh, it's an obvious open blue water market opportunity. But I think for the, for the most part, I was expecting to grind. Uh, you know, like even, even if, uh, the odds were worse, I probably would've still done it. I think I, I learned a lot. I should have done a lot more marketing and business and, but I have, I have no regrets about, you know, taking, taking a one try at solving a very hard to solve problem. Jeremy: Yeah, that's a good point in that the, the odds, like you said, are already stacked against you. but sometimes you just gotta try it and see how it goes, Tom: Yeah. And I had the, like I was at a time where I was very aware of how my life was set up. I was like, I could do a startup right now and kind of burn money for a little while and have enough time to work on it, and I would not be abandoning an infant child or, you know, like all of the things that, all the life responsibilities that I will have in the near future. Um. So, you know, uh, the, the time was then, I guess, [00:29:23] Being a solo developer Jeremy: And comparing it to your time at Mapbox and the other startups and, and I suppose now at val.town, when you were working on Placemark, you're the sole developer, you're in charge of everything. how did that feel? Did you enjoy that experience or was it more like, I, I really wish I had other people to, you know, to kind of go through this with, Tom: Uh, around the end I started to chat with people who, like might be co-founders and I even entertained some chats with, uh, venture capital people. I am fine with the, the day to day of working on stuff alone of making a lot of decisions. That's what I have done in a lot of companies anyway. when you're building the prototype or turning a prototype into something that can be in production, I think that having, uh, having other people there, It would've been better for my mentality in terms of not feeling like it was my thing. Um, you know, like feeling detached enough from the product to really see its flaws and really be open to, taking more radical shifts in approach. whereas when it's just you, you know, it's like you and the customers and your email inbox and, uh, your conscience and your existential dread. Uh, and you know, it's not like a co-founder or, uh, somebody to work with is gonna solve all of that stuff for you, but, uh, it probably would've been maybe a little bit better. I don't know. but then again, like I've also seen those kinds of relationships blow up a lot. and I wanted to kind of figure out what I was doing before, adding more people, more complexity, more money into the situation. But maybe you, maybe doing that at the beginning is kind of the same, you know, like you, other people are down for the same kind of risk that you are. Jeremy: I'm sure it's always different trade offs. I mean, I, I think there probably is a power to being able to unilaterally say like, Hey, this is, this is what I wanna do, so I'm gonna do it. Tom: Yeah. [00:31:52] Spending too much time on multiplayer without a business case Jeremy: You mentioned how there were certain flaws or things you may not have seen because you were so in it. Looking back, what, what were some of those things? Tom: I think that, uh, probably the, I I don't think that most technical decisions are all that important, um, that it never seems like the thing that means life or death for companies. And, you know, Facebook is still on PHP, they've fought, fixed, the problem with, with money. but I think I got rabbit holed into a few things where if I had like a business co-founder, then they would've grilled me about like, why are we spending? The, the main thing that comes to mind, uh, is real time multiplayer, real time. It was a fascinating problem and I was so ready to think about that all the time and try to solve it. And I think that took up a lot of my time and energy. And in the long term, most people are not editing a map. At the same time, seeing the cursors move around is a really fun party trick, and it's great for marketing, but I think that if I were to take a real look at that, that was, that was a mistake. Especially when the trade off was things that actually mattered. Like the amount of time, the amount, the amount of data that the, that could be handled at. At the same time, I could have figured out ways to upload a one gigabyte or two gigabyte or three gigabyte shape file and for it to just work in that same time, whereas real time made it harder to solve that problem, which was a lot closer to what, Paying customers cared about and where people's expectations were? Jeremy: When you were working on this realtime collaborative functionality, was this before the product was public? Was this something you, built from the start? Tom: Yeah. I built the whole thing without it and then added it in. Not as like a rewrite, but like as a, as a big change to a lot of stuff. Jeremy: Yeah, I, I could totally see how that could happen because you are trying to envision people using this product, and you think of something like Google Docs, right? It's very powerful to be typing in a document and see the other cursors and, um, see other people typing. So, I could see how you, you would make that leap and say like, oh, the map should, should do that too. Yeah. [00:34:29] Financial pressures of bootstrapping, high COL, and healthcare Tom: Yeah. Yeah. Um, and, you know, Figma is very cool. Like the, it's, it's amazing. It's an amazing thing. But the Figma was in the dark for way longer than I was, and uh, Evan is a lot smarter than I was. Jeremy: He probably had a big bag of money too. Right. Tom: Yeah. Jeremy: I, I don't actually know the history of Figma, but I'm assuming it's, um, it's VC funded, right? Tom: Uh, yeah, they're, they're kind of famous for just having, I don't think they raised that much in the beginning, but they just didn't hire very much and it was just like the two co-founders, or two or three people and they just kept building for long time. I feel like it's like well over three years. Jeremy: Oh wow. Okay. I think like in your case, I, I saw a comment from you where you were saying, this was your sole source of income and you gotta pay for your health insurance, and so you have no outside investments. So, the pressures are, are very different I think. Tom: Yeah. Yeah. And that's really something to on, to appreciate about venture capital. It gives you the. Slack in your, in your budget to make some mistakes and not freak out about it. and sadly, the rent is not going down anytime soon in, in Brooklyn, and the health insurance is not going down anytime soon. I think it's, it's kind of brutal to like leave a job and then realize that like, you know, to, to be admitted to a hospital, you have to pay $500 a month. Jeremy: I'm, I'm sure that was like, shocking, right? The first time you had to pay for it yourself. Tom: Yeah. And it's not even good. Uh, we need to fix this like that. If there's anything that we could do to fix entrepreneurship in this country, it's just like, make it possible to do this without already being wealthy. Um, it was, it was a constant stress. [00:36:29] Growth and customers Jeremy: As you worked on it, and maybe especially as you, after you had shipped, was there a period where. You know, things were going really well in terms of customers and you felt like, okay, this is really gonna work. Tom: I was, so, like, I basically started out by dropping, I think $5,000 in the business bank account. And I was like, if I break even soon, then I'll be happy. And I broke even in the first month. And that was amazing. I mean, the costs were low and everything, but I was really happy to just be at that point and that like, it never went down. I think that probably somebody with more, uh, determination would've kept going after, after I had stopped. but yeah, like, and also The people who used Placemark, who I actually chatted with, and, uh, all that stuff, they were awesome. I wish that there were more of them. but like a lot of the customers were doing cool stuff. They were supportive. They gave me really informative feedback. Um, and that felt really good. but there was never a point at which like the, uh, the growth scale looked like, oh, we're going to hit a point at which this will be a sustainable business within a year. I think it, according to the growth when I left it, it would've been like maybe three years until I would've been, able to pay my rent and health insurance and, live a comfortable life in, in New York. Jeremy: So when you mentioned you broke even that was like the expenses into the business, but not for actually like rent and health insurance and food and all that. Okay. Okay. can you say like roughly how much was coming in or how many customers you had? Tom: Uh, yeah, the revenue initially I think was, uh, 1500 MRR, and eventually it was like 4,000 or so. Jeremy: And the growth was pretty steady. [00:38:37] Bootstrapping vs fundraising Tom: Um, so yeah, I mean, the numbers where you're just like, maybe I could have kept going. but it's, the other weird thing about VCs is just that I think I have this rich understanding of like, if you're, if you're running a business that will be stressful, but be able to pay your bills and you're in control of it, versus running a startup where you might make life changing money and then not have to run a business again. It's like the latter is kind of better. Uh, if stress affects you a lot, and if you're not really wedded to being super independent. so yeah, I don't know between the two ways of like living your life, I, I have some appreciation for, for both. doing what Placemark entailed if I was living cheaply in a, in a cheap city and it didn't stress me out all the time, would've been a pretty good deal. Um, but doing it in Brooklyn with all the stress was not it, it wasn't affecting my life in positive ways and I, I wanted to, you know, go see shows at night with my friends and not worry about the servers going down. Jeremy: Even putting the money aside, I think that's being the only person responsible for the app, right? Probably feels like you can't really take a vacation. Right. Tom: Yeah, I did take a vacation during it. Like I went to visit my partner who was in, uh, Germany at the time, and we were like on a boat, uh, between Germany, across the lake to Switzerland, and like the servers went down and I opened up my laptop and fixed the servers. It's just like, that is, it's a sacrifice that people make, but it is hard. Jeremy: There's, there's on call, but usually it's not just you 24 7. Tom: Yeah. If you don't pick up somebody else [00:40:28] Financial stress and framing money spent as an investment Jeremy: Yeah, yeah, yeah, I guess at what point, because I'm trying to think. You started in 2021 and then maybe wrapped up, was it sometime in 2024? Tom: Uh, I took a job in, uh, I, I mean I joined val.town in the early 2023 and then wrapped up in November, 2023. Jeremy: At what point did you really start feeling the, the stress? Like I, I imagine maybe when you first started out, you said you were doing consulting and stuff, so, um, probably things were okay, but once you kind of shifted away from that, is that kind of when the, the, the worries about money started coming in? Tom: Yeah. Um, I think maybe it was like six or eight months, um, in. Just that I felt like I wasn't finding, uh, like a, a way to grow the product without adding lots of complexity to it. and being a solo founder, the idea of succeeding, but having built like this hulking mess of a product felt just as bad as not succeeding. like ideally it would be something that I could really be happy maintaining for the long term. Uh, but I was just seeing like, oh, maybe I could succeed by adding every feature in QGIS and that's just not, not a, not something that I wanted to commit to. but yeah, I don't, I don't know. I've been, uh, do you know, uh, Ramit Sethie he's like a, Jeremy: I don't. Tom: an internet money guy. He's less scummy than the rest of them, but still, I. an internet money guy. Um, but he does adjust a lot of stuff about like, money psychology. And that has made me realize that a lot of what I thought at the time and even think now is kind of a rational, you know, like, I think one of the main things that I would do differently is just set a budget for Placemark. Like if I had just set away, like, you know, enough money to live on for a year and put that in, like the, this is for Placemark bucket, then it would've felt better to me then having it all be ad hoc, month to month, feeling like you're burning money instead of investing money in a thing. but yeah, nobody told me, uh, how to, how to think about it then. Uh, yeah, you only get experience by experiencing it. Jeremy: You're just seeing your, your bank account shrinking and there's this, psychological toll, right? Where you're not, you're not used to that feeling and it, it probably feels like something's wrong, Tom: Yeah, yeah. I'm, I think it, I'm really impressed by people who can say, oh, I invested, uh, you know, 50 or a hundred thousand dollars into this business and was comfortable with that risk. And like, maybe it works out, maybe it doesn't. Maybe you just like threw a lot of money down into that. and the people, I think with the healthy, productive, uh, relationship with it. Do think of it as like, oh, I, I paid for kind of a bet on a risk. and that's, that's what I was doing anyway. You know, like I was paying my rent and my health insurance and spending all my time working on the product instead of paying, uh, freelance work. but if you don't frame it that way, it doesn't feel like an investment. It feels like you're making a risky gamble. Jeremy: Yeah. And I think that makes sense to, to actually, I think, like you were saying, have a separate account or a separate thing set aside where you are like, this is, this is this money for this purpose. And like you said, look at it as an investment, which with regular investments can go down. Tom: Yeah, exactly. Yeah. Jeremy: Yeah [00:44:26] In hindsight might have raised money or tried smaller bets Jeremy: Were there, there other things, whether technical or or business wise, that, that if you were to to do it again, you would do differently? Tom: I go back and forth on whether I should have raised venture capital. there are, there's kind of a, an assumption in venture capital that once you're on it, you have to go the whole way. You have to become a billion dollar company, uh, or at least really tell people that you're going to be a billion dollar company and I am not. yeah, I, I don't know. I've seen, I've seen other companies in my space, or like our friends of my current company who are not really targeting that, or ones who were, and then they had somewhere in between the billion dollar and the very small outcome. Uh, and that's a little bit of a point in the favor of accepting a big pile of money from the venture capitalists. I'm also a little bit biased right now because val.town has one investor and he's like the, the best venture capitalist that I have ever met. Big fan. don't quote me on that. If he sacks me in like a year, we'll see. Um, but uh, yeah, there, I, I think that I understand more why people take that approach. or I've understood more why people take like the venture capital but not taking $300 million from SoftBank approach. yeah, and I don't know, I think that, trying a lot of things also seems really appealing. Uh, people who do the same kind of. of Maybe 10 months, but they build four or five different products or three different products instead of just one. I think that, that feels, feels like a good idea to me. Jeremy: And in doing that, would that be more of a, like as a solo entrepreneur or you, you're thinking you would take investment and then say, I'm gonna try all these things with, with your money. Tom: Oh, I've seen both. I, that I, yeah, one friend's company has pivoted like four times between very different ideas and yeah, it, it's one way to do it, but I think in the long term, I would want to do that as a solo developer and try to figure out, you know, something. but yeah, I, I think, uh, so much of it is mindset, that even then if I was working on like three different projects, I think I. My qualifications for something being worth, really adopting and spending all my time doing, you just have to accept, uh, a lot of hits and a lot of misses and a lot of like keeping things alive and finding out how to turn them into something. I am really inspired by my friends who like started around the same time that I did and they're not that much further in terms of revenue and they're like still, still doing it because that is what they want to do in life. and if you develop the whole ecosystem and mindset around it, I think that's somewhere that people can stay and, and be happy. just trying to find, trying to find a company that they own and control and they like. Jeremy: While, while making the the expenses work. Tom: Yeah. Yeah. that's the, that's the hard part, like freelancing on the side also. I probably could have kept that up. I liked my freelance clients. I would probably still work with them as well. but I kind of just wanted the, I wanted the focus, I wanted the motivation of, of being without a net. Jeremy: Yeah, I mean, energy wise, do you think that that would've worked? I mean, I imagine that Placemark took a lot of your time when you were working full time, so you're trying to balance, you know, clients and all your customers and everything you're doing with the software. It just feels like it might be a lot. Tom: Yeah. Yeah. Maybe with different freelance clients. I, I loved my freelance clients because I, after. leaving config. I, I wanted to work on climate change stuff and so I was working for climate change foundations and that is not the way to max out your paycheck. It's the way to feel good about your conscience. And so I still feel great about those projects, but in the future, yeah, I would probably just work for, uh, you know, a hedge fund or something. [00:49:02] Marketing to developers but not potential customers Jeremy: I think something you mentioned in one of your posts is that you maybe could have spent more time or had a different approach with marketing. Maybe you could kind of say what you did do and then what maybe worked and what didn't. Tom: Yeah. So I like my sweet spot is writing documentation and blog posts and technical stuff. And so I did a lot of that and a lot of that like worked in a way that didn't matter. I am at this point, weirdly good at writing stuff that gets on Hacker News. I've written a lot of stuff that's gotten to the top of Hacker News and unfortunately, writing about your technical approach and your geospatial project for handling errors, uh, in your JavaScript code is not really a way to get customers. and I think doing a lot of documentation was also great, but it was also, I think that the, the thing that was missing is the thing that I think Mapbox does fairly well now, in which the homepage really pushes you toward use cases immediately. and I should have been saying to each customer who had anything compelling as a use case, like, let's write an article about you and what you're doing, and here's how you use this in your industry. and that probably would've also been like a good, a good way to figure out which of those verticals was the one that was most worth spending all the time on. yeah. So it, it was, it was a lot of good marketing to nerds. and it could have been better in terms of marketing to actual customers and to people who are making the buying decisions. Jeremy: Yeah. Looking at the, the Placemark blog, I can definitely see how as a developer, a lot of the posts are appealing to me, right? It's about how you worked on a technical challenge or decisions you made, but maybe less so to somebody who they wanna. Draw a map to manage their crops. They're like, I don't care about any of this. Right. Tom: Yeah, like the Mapbox blog used to be, just all that stuff as well. We would write about designing protocol buffer layouts, and it was amazing for hiring and amazing for getting nerds in the door. But now it's just, Toyota is launching with, Mapbox Maps or something like that. And that's, that's what you, you should do if you're trying to sell a product. Jeremy: Yeah. And I think the, the sort of technical aspect, it makes sense too. If you're venture funded and you are looking to hire, right? You wanna build your team and you just want to increase like, the amount of stuff you're building and not worrying so much about, am I gonna have a paycheck next Tom: Yeah. Yeah. I, I just kind of do it because it's fun, which is not the right reason to do it, but, Yeah, I mean, I still write my blog mostly just because it's, it's a fun thing to do, but it's not the best way to, um, to run a business. Jeremy: Yeah. Well, the fun part is important too though. Tom: Yeah. Yeah. That's, that's maybe the whole thing. May, that's maybe the most important thing, but you can't do it if you don't do the, the money part. [00:52:35] Most customers came from existing audience Jeremy: Right. So the people who did find you, was it mostly word of mouth from people who did identify with the technical posts, or were there places that surprised you, that people found you? Tom: Uh, a lot of it was people who were familiar with the Mapbox ecosystem or with, with me. and then eventually, yeah, a few of the users came in through, um, through Hacker News, but it was mostly, mostly word of mouth also. The geospatial community is like fairly tight and it's, and it's not too hard to be the person who writes the article about some geospatial challenge that everyone finds. Jeremy: Hmm. Okay. Yeah, that's a good point about like being in that community, especially since you've done so much work in geospatial and in open source that you have this little, this built-in audience, I guess. Tom: yeah. Which I appreciate. It makes me nervous, but yeah. [00:53:43] Val.town marketing to developers Jeremy: Comparing that to something like val.town, how is val.town marketing? How is it finding users? 'cause from what I can tell, it's, it's getting a lot of, uh, a lot of people coming in, right? Tom: Yeah. Uh, well, right now our, our kind of target user, or the user that we think of is a hobbyist, is somebody who's, sometimes a pro developer or somebody, sometimes just somebody who's really interested in the field. And so writing these things that are just about, you know, programming, does super well. Uh, but it, we have exactly the same problem and that that is kind of being revamped as we speak. uh, we hired somebody who actually knows marketing and has a good sense for it. And so a lot of that stuff is shifting to show you what you can do with val.town because it, it suffers from the same problem as well. It's an empty text field in which you can type, type script, code, and it runs. And knowing what you can do with that or what you should do with that is, is hard if you don't have a grasp of TypeScript and web applications. so pretty soon we'll have pages which are like, here's how to connect linear and GitHub with OW Town, or, you know, two nouns connect them, for all of those companies and to do automations and all these like concrete applications. I think that's, you have to do it. You have to figure it out. Jeremy: Just briefly for someone who hasn't heard of val.town, like what, what does it do? Tom: Uh, val.town is a social website, so it has comments and likes and all of that stuff. but it's for writing these little snippets of TypeScript and JavaScript code that run. So a lot of them are websites, some of them are automations, so they receive emails or send emails or connect one service to another. And yeah, it's, it's like combining some aspects of, GitHub or like a code platform, uh, but with the assumption that every time that you save, everything's instantly deployed. Jeremy: So it's maybe a little bit like, um, like a glitch, I guess? Tom: Uh, yeah. Yeah, it takes a lot of experience, a lot of, uh, inspiration from Glitch. Jeremy: And I, I think, like you had mentioned, you enjoy writing the, the technical blog posts and the documentation. And so at least with val.town, your audience is developers versus, the geospatial community who probably largely doesn't care about, TypeScript and the, the different technical decisions there. Tom: Yeah, it, it makes it easier, that's for sure. The customer is, is me. [00:56:30] Shifting from solo to in-person teams Jeremy: Nice. Yeah. Looking at, you know, you, you worked as a, a solo developer for Placemark, and then now you've got a team of, is it like maybe five Tom: Uh, it is seven at the moment. Jeremy: Seven people. Okay. Are you all in person or is it, remote Tom: We all sit around two tables in Brooklyn. It's very nice. Jeremy: So how did that feel? Like shifting from, I'm in, I don't know if you worked from home while you were working on Placemark or if you were in coworking spaces, but you're, you're shifting from I'm like in my own head space doing everything myself to, to, I'm in a room with all these people and we're like working on this thing together. I'm kind of curious like how that felt for you. Tom: Yeah, it's been a big difference. And I think that I was just talking with, um, one, one of our, well an engineer at, at val.town about how everyone kind of had, had been working remote for obvious pandemic world reasons. And this kind of privilege of just being around the same table, if that's what you like is, a huge difference in terms of, I just remember having to. Trick myself into going on a walk around the block because I would get into such a dark mental head space of working on the same project for eight hours straight and skipping lunch. and now there's a little bit more structure. yeah, it's, it's been, it's been a overall, an improvement. Some days I wish that I could go on a run at noon 'cause that's the warmest time of the day. but, uh, overall, like it makes things so much easier. just reading the emotions in people's faces when they're telling you stuff and being able to, uh, not get into discussions that you don't need to get into because you can talk and just like understand each other very quickly. It's, it's very nice. I don't wanna force everyone to do it, you know, but it it for the people who want it, they, they, uh, really enjoy it. Jeremy: Yeah. I think if you have the right set of people, it's definitely more enjoyable. And um, if you don't, maybe not so Tom: Yeah, we haven't hired any, like, extremely loud chewers yet or anything like that, but yeah, maybe my story will change. Jeremy: No, no one microwaving fish. Tom: No, there's, uh, yeah, thankfully the microwave is outside of the office. Jeremy: Do you live close to the office? Tom: Yeah. Yeah. Like most of the team is within a 20 or 30 minute walk of the office and it's very fortunate. I think there's been something of a mass migration to New York. A lot of us didn't live in New York before four years ago, and now all of us do. it's, it's, uh, it's very comfortable to be here. Jeremy: I think that makes, uh, such a big difference. 'cause I think the majority of people, at least within the US you know, you're, you're getting in your car, you're sitting in traffic. and I know people who, during the pandemic, they actually moved further, right? Because they went, oh, like, uh, I don't need to come into the office. but yeah, if you are close enough where you can walk, yeah, I think that makes a big difference. Tom: Oh yeah. If I had to drive to work, I think my blood pressure would be so much higher. Uh, especially in New York. Oh, I feel so bad for the people who have to drive, whereas I'm just walking with, you know, a bagel in hand, enjoying listening to the birds. Jeremy: Yeah. Yeah. well now they have, what is it, the congestion pricing in Tom: Yeah. Yeah. We're all in Brooklyn, so it doesn't affect us that much, but it's supposedly, it's, it's working great. Um, yeah. I hope we can keep it. Jeremy: I've never driven in New York and I, I wouldn't want to Tom: Yeah. It's only for the brave or the crazy. [01:00:37] The value of public writing and work Jeremy: I think that's probably a good place to, to wrap up, but is there any other thoughts you had or things you wanted to mention? Tom: No, I've just, uh, thank you so much. This has been, this has been a lot of fun. You're, you're very good at this as well. I feel like it's, uh, Jeremy: Thank you Tom: It's not easy to, to steer a conversation in a way that makes awkward people sound, uh, normal. Jeremy: I wouldn't say that, but um, what's been actually pretty helpful to me is, you have such a body of work, I guess I would say, in terms of your blogging and, just the amount that you write and the long history of projects that, that there's, you know, there's a lot to talk about and I'm sure it helps, helps your thought process as well. Tom: Yeah. I, I've been lucky to have a lot of jobs where people, where companies were like, cool with publishing everything, you know? so a lot of what I've done is, uh, is public. it's, it's, uh, I'm very, very thankful for like, early on that being a big part of company culture. Jeremy: And you can definitely tell, I think for people who look at the Placemark blog posts or, or now your, your val.town blog posts, like there's, there's a clear difference when somebody like is very intentional and, um, you know, it's good at writing versus you're doing it because, um, it's your corporate responsibility or whatever, like people can tell. Yeah. Tom: Yeah. You can't fake being interested. so you gotta work on things that are interesting. Jeremy: Tom, thanks again for, for agreeing to chat. This was fun. Tom: Yeah thank you so much.

If you are a property management entrepreneur who is always looking to grow and scale your business, you are open to new ways to automate processes in your business. In this episode of the #DoorGrowShow, property management growth expert Jason Hull sits down with Tom and Diego from Calvary to talk about new maintenance coordination and manager trainings to scale property management maintenance. You'll Learn [01:28] Property management maintenance bootcamp and trainings [06:07] How to manage a maintenance team [08:12] Trainings for a maintenance coordinator [12:04] Making sure things don't fall behind [15:51] Maintenance teams at no cost Tweetables “The more involved you can make the material with all those different elements, the better the results are going to be for everybody.” “It's about preserving the property, but it's also about tenant satisfaction, of course, owner satisfaction, and then building a strong relationship with vendors.” “What you say and how you say it matters.” “When you get overwhelmed, especially during high season, it's very easy to let things fall through the cracks.” Resources DoorGrow and Scale Mastermind DoorGrow Academy DoorGrow on YouTube DoorGrowClub DoorGrowLive TalkRoute Referral Link Transcript [00:00:00] Tom: Why is maintenance important? Everybody thinks they really know, but it's about preserving the property, but it's also about tenant satisfaction, of course, owner satisfaction, and then building a strong relationship with vendors.   [00:00:16] Jason: Welcome DoorGrow property managers to the DoorGrow show. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, impact lives, and you are interested in growing in business and life, and you're open to doing things a bit differently, then you are a DoorGrow property manager. DoorGrow property managers love the opportunities, daily variety, unique challenges and freedom that property management brings. Many in real estate think you're crazy for doing it. You think they're crazy for not because you realize that property management is the ultimate high trust gateway to real estate deals, relationships, and residual income. At DoorGrow, are are on a mission a to transform property management business owners and their businesses. We want to transform the industry, eliminate the BS, build awareness, change perception, expand the market, and help the best property management entrepreneurs win. [00:01:10] I'm your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now let's get into the show. [00:01:17] All right. So today I'm hanging out with Tom and Diego from Cavalry. Call in the cavalry.  [00:01:25] Tom: Yes. Once again.  [00:01:26] Jason: Talking about what today?  [00:01:28] Tom: Maintenance as always, but I'm super excited, Jason, because we're finally launching our training programs. [00:01:36] It's actually our in house training program that we use for our own employees. Our own maintenance coordinators, and we're making it available to the public. So super excited about that. Yeah. And the reason why is because we gotten a lot of requests from people outside of our service areas. We're about 18 months into our business now, so we're not covering the whole of the U S yet. And therefore we found a way to still help those property management companies outside of our service areas. And that's what we're doing. Yeah.  [00:02:07] Jason: Awesome. So this training is pretty in depth, I would imagine, right? This is your best stuff. Because this is stuff you want your people to know to represent you and showcase your business.  [00:02:19] Correct.  [00:02:19] A lot of business owners might not want to do that? Like you're giving away your secret sauce.  [00:02:23] Tom: Yeah. So the reason why we're giving it away is, our main mission is to help property management companies. [00:02:30] And of course this one is also paid. Then the main reason for it being paid is because it's a fully guided course. So it's a cohort course. So it's not just like, "here are some videos go ahead." No, we're actually guiding the students through the whole process. We have two courses, one for the MCs and one for the managers. For the MCs, it's a 30 day bootcamp plus 365 guided throughout all of the seasons because-  [00:02:56] Jason: MCs meaning maintenance coordinator.  [00:02:58] Tom: Yeah, correct. Correct. Yeah, the maintenance coordinators. So that's 30 day bootcamp plus 365 guidance throughout all of the seasons. And then for the maintenance manager course, it is 60 day bootcamp and then also 365 days of guiding and implementation. [00:03:14] Jason: Got it. Okay. Very cool. We spoke earlier and you're like, "I've got a course." And I was like here's what I've learned about courses. And so what we've learned at DoorGrow it's a lot more effective to do what you're now thinking of doing, which is have a cohort, have people move through a class together, which is great. [00:03:30] We've just found we get so much like bigger results with our clients instead of just giving them videos, which we used to do. They still have access to some cool video material. But when we take people through a class with their peers, and they're working on it together, it feels like they're actually doing something with other people. [00:03:48] They tend to get a lot better results. They actually get stuff done. They have homework, they have deadlines, they have completion timelines for getting things done. And so we just found that they just get way better results because the completion rate on most courses is pretty abysmal. A lot of people like buy a course, but then they don't do it. [00:04:05] And I'm sure everybody listening, you bought a course before and just didn't do it like myself included. Yeah. And so we've learned at DoorGrow, coaching clients for like over a decade now that this is 1 of the best ways to get results is the hybridize everything. It's like we give them, a little bit of the ability to ask questions and have, that little 1 on 1 sort of accountability aspect. [00:04:30] There's the cohort where we're moving them through a program course material. Then there's the training material that's video course material. They can move through. And I've noticed also that people learn in different ways, right? Some people need to learn visually. Some people are more auditory. [00:04:43] Some people are more like kinesthetic, which means that it's more about feelings and the physical state in doing things. And so, the more involved you can make the material with all those different elements, the better the results are going to be for everybody. So I love that you've developed this program. [00:05:02] So why don't you tell us a little bit about. These two programs and how they would know which one should I have my maintenance person do? What's the difference between a maintenance coordinator and a maintenance manager?  [00:05:14] Tom: Yeah. So I would say that the maintenance coordinator course would, I would recommend those for maintenance teams that already have a maintenance manager in place. [00:05:24] Jason: How do you define that?  [00:05:26] Tom: A maintenance manager does it all and maintenance coordinator coordinates maintenance under the guide of a maintenance manager. [00:05:33] And that's why I wanted to say, I feel like if you have a one team person, they should follow the maintenance manager course. Why? Because it's so complete and you can build that person to then hire later on other people, them become under their guide.  [00:05:47] Jason: Got it. So if the maintenance person has an assistant or something like this, then they would do the maintenance manager thing. [00:05:54] And that assistant maybe could go through the maintenance coordinator course.  [00:05:57] Tom: Correct a one person team, 100 percent go with the manager course, because it's much more in depth. Hiring, vendor onboarding, it goes a lot deeper into all of that.  [00:06:06] Jason: Got it. Okay. So tell us about the maintenance manager course. [00:06:10] What are some of the things that you're going to cover so that you can turn these people into effective maintenance managers?  [00:06:17] Tom: Yeah. So it's going to be how to manage a team. So there's a lot talk about leadership, one on one meetings, evaluation of the team. What also sets it apart is the vendor onboarding aspect of it, how to find vendors, where to find vendors, what the process looks like, how to do it very time efficiently. [00:06:37] And yeah the manager's course goes a lot deeper into the training as well and how to implement our maintenance system as a manager and how to daily uptrain your team maybe not necessarily every day, but that's what we do. So that's what we recommend. [00:06:53] So it's really how to manage the team within our system. So the idea is that if you have a larger team, then you would just give the MC course to the maintenance coordinators and then the maintenance manager course to the manager and it all works in harmony. [00:07:08] Jason: Got it. Okay. Now, a lot of people are like "I don't need my maintenance person to manage a team. I just need one person. I've only got a handful of doors or maybe a hundred or maybe 200 doors. Maybe I just need the maintenance coordinator one," or what if they don't have a maintenance person yet? [00:07:27] Which one should they do as a business owner? It sounds like maybe the maintenance manager one would make sense because they need to hire somebody.  [00:07:33] Tom: Exactly. 100%. If it's 1 person, it's the maintenance manager. Why? Because we also give a vendor agreement example, an owner agreement example, a maintenance coordinator agreement example. [00:07:46] So it's very complete. And again, if you have a 1 person team you go with the manager course. [00:07:53] Got it. Okay, cool. The reason why we made the maintenance coordinator course shorter, it's just because there's stuff in there that they don't really need to know. [00:08:03] And if at some point they want to become a manager or you just feel like that person should know everything then you can just give them the manager's course.  [00:08:12] Jason: Okay. So what does the maintenance coordinator course material cover? And what's left out?  [00:08:18] Tom: Yeah. Let me grab the modules here. [00:08:20] So we have eight modules in the maintenance coordinating course. It is an introduction of course, and then understanding property management maintenance. It is about maintenance ethos. It is about why is maintenance important? Everybody thinks they really know, but it really highlights every single detail. [00:08:39] It's about preserving the property, but it's also about tenant satisfaction, of course, owner satisfaction, and then building a strong relationship with vendors. Then we have a module about vendor management, so how to communicate with vendors, how to explain to them what the NTE means and how to implement it or how to use it. [00:09:03] We have how to assign work orders to vendors. We have a day in the life of an MC. That's another module that is one of the most important ones. It is rather short, but it is super important because it talks a lot about time management, how to schedule your day and how to be very efficient with your day, because this is one of the biggest problems we see when we hire new MCs or maintenance coordinators is that they start by reading their emails, for example. [00:09:32] Classic mistake. No, you should never start with reading your emails. You should start with the open emergencies, then the new work orders, and then you go through all of those, and then you can go to your emails, right? So it's it's one of these small details that make a world of difference. [00:09:49] Okay. We also talk about the snowball effect. That is, for example, when you're a little bit slow and you get complaints, now those emails and those phone calls come in, right? So that means that now you have to spend a lot of time because when emails or complaints come in, you have to always go and dig a little bit, search a little bit further. [00:10:10] And that takes a lot of time. All that time that you're then spending on that. Now you're delaying all of the other work. So that's what we call the snowball effect. Another module, for example is communication. What you say and how you say it matters. We have leveraging chat GPT to write perfect emails to give great responses, troubleshooting, big one for chat GPT. [00:10:32] And then we discuss occupied service requests. And then the most important module is all of the flow charts. So the service request flow chart. So we have a full flow chart for every single type of work order. So emergency, normal, recurring vendor, owner, home warranty, or warranty job.  [00:10:49] Jason: Got it. Okay. So Diego, how involved were you with all this stuff? [00:10:54] Diego: Pretty involved when it came to creating the systems. Yeah, I'm sorry that I'm not talking so much today. I'm feeling a bit under the weather and and that's why I asked.  [00:11:04] Jason: I just figured you're probably the brainchild behind most of the processes and systems. Yeah, we better make sure that you get some credit here. [00:11:13] Diego: So, yeah, thank you. Yeah. No I'm sorry you guys. I do feel a bit under the weather, but I didn't want to miss this podcast. One of the things that I wanted to add with the maintenance scores and the manager scores. Is what we've seen is with new property management companies that we're working with a lot of times just looking at the KPIs, and looking at how many work orders you have open and how many you have closed and so on, which the course talks about, what happens a lot of times is that no one's really following those numbers. And as a manager, one of the reasons why we recommend the manager course, especially if you're looking to become a manager and how to manage your team members. [00:11:58] Is taking a look at those numbers and making sure that things don't fall through the cracks. You would be surprised by how easy it is. I've seen it countless times with multiple companies where work orders just get left behind. They were opened. Somebody sent a couple of messages, trying to gather more information, but no one actually followed through with those particular work orders with these type of courses and having those flows the SOPs, it allows you to truly follow up on all of your open work orders, making sure that they're closed out correctly and that nothing else is pending. When a maintenance coordinator, or even a property manager, when you get overwhelmed, especially during high season, it's very easy to let things fall through the cracks. [00:12:46] So the course does go through that in detail. Tom touched a very important subject about every different flow. Sometimes we tend to want to handle every work order the same way. When they're very different. So, for example, you cannot handle an emergency the same way that you would handle a recurring type of service request. [00:13:08] And so it does go into detail of yeah, pretty much every flow, how it's broken down and why it's so important to take specific actions depending on the type of service request that it may be.  [00:13:20] Jason: Got it. So you guys probably have certain systems that you use internally with your team. So, property managers, they all have different tools, different software different property management, back office accounting. [00:13:33] So is this system specific or are they able to use whatever system they have and apply these principles? How does this work? Is that an issue?  [00:13:43] Tom: Yeah, so there's a difference between systems, processes and SOPs, right? So the system is a culmination of all the processes with human intervention and technology, processes is what needs to happen. The SOP is how it needs to happen. It's by the company. So we recommend that every company writes their own SOPs. Now, of course, our courses do guide you on that, but everybody works differently, have different software, all of that. What we will be expanding on is tutorials for the different PropTech software. So Buildium, Meld yeah, whatever. And we also have a community available along with the course. So there's a chat where we discuss the course, but also a price estimating chat, troubleshooting chat, and, I'm sure we'll come up with other chats that we can leverage the community for. [00:14:30] Jason: Very cool. So it sounds great. I'll be interested to learn more about it. Maybe see it myself. I think this would be great. I think there's definitely clients that we could send your way that could use some support on the maintenance stuff. So how do people get started with this and what would be the next steps for those listening? [00:14:48] They're like, "Hey, I think I might be interested in this. How do I get more info?" [00:14:52] Tom: Yes. So you can go to cavalry.works. That's our main website, or you can go to courses.cavalry.Works. That's the landing page for both courses. And we have a special promo for the DoorGrow community. We're actually giving a 50 percent discount for all DoorGrow members. [00:15:10] It's a way to thank you for inviting us into your community.  [00:15:14] Jason: Okay. Very cool. So DoorGrow people like here you go. So, all right. Very awesome. We appreciate that. That's really cool. The discount code is DoorGrow. It's a difficult one to remember, but I know everyone will be able to do it. [00:15:26] All right. The discount code is DoorGrow. All right. DoorGrow is the word. All right. Very cool. So, Diego, Tom, I appreciate you coming on the DoorGrow show. Thank you for sharing discount with DoorGrow people. And I love seeing what you guys are doing to recap for those that didn't see the previous episode that I had them on, they do free maintenance coordination. [00:15:47] Do you want to just plug what you do real quick for those that maybe haven't heard the previous episode?  [00:15:51] Tom: Yeah. So honestly, I should have started with this because the reason why we're even qualified to teaching this is because we do this for a living. So we offer free maintenance teams to any property management company at no cost to you, the way that works is we get paid through a vendor volume discounts on the backend. But if you want more information about that, you can go to cavalry.works.  [00:16:14] Jason: Sounds really awesome. So, all right. Thank you, Diego. Thank you, Tom. Diego. Hope you feel better. I'll let both of you go. [00:16:20] Appreciate you coming on the DoorGrow show. Thank you so much.  [00:16:23] Diego: Thank you, Jason. Thank you so much.  [00:16:25] Jason: All right. Bye bye. Bye bye. Okay. So if you are a property management entrepreneur, you are wanting to get maintenance, check them out. You're dealing with maintenance. It's one of the most difficult and earliest problems that you need to deal with as a property manager. [00:16:39] You've got to figure out maintenance, got to figure out leasing. These are some of the basics. If you're struggling though, to add doors, you're like, "I just, I need more doors. I need to get more business. I need more leads. Or I need better processes throughout my business. I need to get like my systems going. I need a better team." Then these are the things that DoorGrow can help you with. So if you're struggling and you're not scaling your business, you're not adding minimum, at least a hundred doors annually, maybe two, maybe even 300. We have clients doing that and we want to help you do that. If you are not getting at least 50 percent profit margin in your business, we can help you get there and help you like implement some of the biggest profit levers that you'll ever implement in your business. So if you are struggling and you've got a handful of doors or you've got hundreds of doors, but you're not making enough money because your profit margin is low. Why are you even doing this crazy business? So let's get you some money. [00:17:35] Let's get you paid. Let's make sure that this is worth it for you. We've got clients that are able to close more deals more easily at a higher price point because we're optimizing all the different leaks that exist in their sales pipeline. So reach out to us at DoorGrow. We can get you to the next level and we can do it fairly quickly. [00:17:52] So check us out at doorgrow.Com. Hopefully we're working together soon. Bye everyone. [00:17:57] you just listened to the #DoorGrowShow. We are building a community of the savviest property management entrepreneurs on the planet in the DoorGrowClub. Join your fellow DoorGrow Hackers at doorgrowclub.com. Listen, everyone is doing the same stuff. SEO, PPC, pay-per-lead content, social direct mail, and they still struggle to grow!  [00:18:24] At DoorGrow, we solve your biggest challenge: getting deals and growing your business. Find out more at doorgrow.com. Find any show notes or links from today's episode on our blog doorgrow.com, and to get notified of future events and news subscribe to our newsletter at doorgrow.com/subscribe. Until next time, take what you learn and start DoorGrow Hacking your business and your life.

We are always looking for new, revolutionary property management tools and strategies that benefit property managers, owners, tenants, and vendors. In today's episode, property management growth expert Jason Hull sits down with Tom and Diego from a new company called Calvary to discuss how property management entrepreneurs can improve maintenance processes at NO COST.  You'll Learn [01:35] Innovating in the property management industry [08:30] Improving maintenance at no cost to the property manager [17:26] What kinds of businesses does this work for? [21:26] The biggest maintenance challenges [27:28] How do I implement this? Tweetables “You show what you can do and then you build trust.” “It all goes back to systems, SOPs, and training individuals.” “The one piece that's not scalable in a business is depth and depth is where the magic happens.” “If you want to scale your business, you have to do the things that are unscalable.” Resources DoorGrow and Scale Mastermind DoorGrow Academy DoorGrow on YouTube DoorGrowClub DoorGrowLive TalkRoute Referral Link Transcript [00:00:00] Tom: It's a true win for everybody. It really is.  [00:00:02] Jason: And you guys don't charge the property manager... anything?  [00:00:06] Tom: Nothing.  [00:00:08] Jason: Welcome DoorGrowers to the DoorGrowShow. If you are a property management entrepreneur that wants to add doors, make a difference, increase revenue, help others, impact lives, and you are interested in growing in business and life, and you're open to doing things a bit differently, then you are a DoorGrower. DoorGrower property managers love the opportunities, daily variety, unique challenges, and freedom that property management brings. [00:00:33] Many in real estate think you're crazy for doing it. You think they're crazy for not, because you realize that property management is the ultimate high trust gateway to real estate deals, relationships, and residual income. At DoorGrow, we are on a mission to transform property management business owners and their businesses. [00:00:52] We want to transform the industry, eliminate the BS, build awareness, change perception, expand the market, and help the best property management entrepreneurs win. I'm your host, property management growth expert, Jason Hull, the founder and CEO of DoorGrow. Now let's get into the show.  [00:01:10] So today I'm hanging out with Tom and Diego Alatorre? All right. I got it. Sort of. All right. And Tom Van Waelem. Yes. Perfect. You guys are stressing me out with these last names, man. These are not easy. All right. So it's good to have you both on the show. So Diego and Tom have this cool idea and business called Calvary. And we'll get into that in a minute. [00:01:34] And our topic today is how to improve maintenance processes at no cost ever. And this is something really unique. And I was like pretty surprised when they originally shared this idea with me, their business. And so we'll get into that, but first let's get into some background between the two of you, how did you get into property management? [00:01:56] And I think this will also help, you know, qualify you to the audience. So they go, "all right. Should I trust these guys with some maintenance stuff?  [00:02:03] Diego: So actually I could go ahead and get started and tell you a little bit about my background story. Yeah. It's actually really interesting, Jason, this was looking at your podcast and I saw that you did an interview with Pete Neubig. Pete Neubig was the owner of Empire. [00:02:21] Sorry, I'm a little bit, I'm a little bit nervous. It's the first time I'm doing a podcast. And he was talking about in your podcast that he hired four individuals, right? One of those four individuals that he hired, I was one of them. I started at the very bottom. I started as an assistant to a property manager. And from there working at Empire, I started to learn that maintenance was a very big struggle. Most issues pretty much happened because of maintenance, right? Escalations, billing problems, you name it. And from that point on I became a maintenance coordinator. [00:02:58] I started to take a really big like at maintenance. And I started to understand and build processes and start to, you know, find solutions on how to handle maintenance. So, and it really helped me because once Empire merged with a bigger property management company, I was able to utilize those same processes, that same structure and we were able to implement it at a very big property management company that had over 9,000 homes at the time. [00:03:30] And so after we implemented that, it really helped that company grow because we were able to rebuild the entire company you know, and scale it. Maintenance was one of those things that was hindering that company from growing and in less than two years that company went from 9,000 doors to over 18,000 homes. [00:03:51] And so after that, first I was headhunted by a couple of property management companies that knew what I was able to do when it came to, you know, to maintenance. And so that's when I decided to start working at Austin investors, I was able to do the same exact thing, which was implement you know, the maintenance knowledge, the processes, SOPs systems, and we had a lot of success. [00:04:18] We were able to help Austin investors grow as well, and we were able to solidify the maintenance department. It was actually during that time that I was at a conference with over 100 plus property management companies, and they were talking about their maintenance struggles and their maintenance issues and why they couldn't figure out how to handle it, you know, from you know, vendor relations growing from 100 doors to 500 doors and then how to handle maintenance, you know, once you have 1000 doors and so on. And that's when I realized that I had a lot of these answers that could help them. With these maintenance struggles, right? So after noticing those particular struggles, that's when I realized that we could help multiple property management companies, you know, and that was actually the same exact time that Tom approached me with the business proposition, and his business proposition it went very well with the idea of helping multiple property management companies. So Tom, my business partner he'll tell you a little bit more about, you know, himself and how we started our relationship. But yeah, that's  [00:05:32] pretty much it.  [00:05:33] Jason: So Tom, what did you think when you heard about some of the stuff that Diego had been accomplishing? [00:05:39] Tom: Yeah, crazy. I mean, when I approached him, I was a roofing salesman at the time, and I was knocking door to door. There was just a big hailstorm that hit Austin and the surrounding areas. And I was knocking doors, you know, helping people get insurance involved so they don't have to pay it out of pocket. [00:05:55] And I reached out to Diego with the hopes of, you know, landing, you know, a lot of inspections very easily without having to bother people knocking on the actual doors. So I reached out to Diego and I was like, "Hey, listen I would love to inspect all of your roofs because I believe that we can save your homeowners a lot of money just simply by inspecting them. If I find that if the homeowner doesn't want to continue, that's fine. At least the homeowner will know what the situation is with their roof." [00:06:19] Diego said, "wow, great. I've never heard about that. Let's do it." So we did the project, inspected 600 homes myself, and then after the project, we saved homeowners a lot. [00:06:29] We replaced about 60 or 70 roofs. So that's a lot of money that we saved because insurance claims, they have an expiration date, usually depending on the insurance company. And anyway, after that project, I reached out to Diego and I was like, "hey, what do you think? Do you think other property management companies would do this? Or are you the only one who was willing to do this? Because it was a lot of work." Right.  [00:06:52] And he was like, "yeah, I think they would, but," he said, "you're forgetting about all the other trades." [00:06:58] I was like, "what do you mean?" I was like, "yeah, roofing is only about 10 percent of all the work orders. So you're forgetting about all this." [00:07:06] And he said, "listen, I've been thinking about the same thing, and I believe that there's a way for us to provide excellent maintenance to all property management companies and we can figure out a way for us to do it for them for free." [00:07:20] I was like, "well, look, if we partner with multiple property management companies, and we get so much work, we can leverage that volume with our techs. So we reduce our technicians that we work with, we reduce their marketing and sales costs, and then they give us a percentage, which is much less than the marketing and sales costs. So the vendor wins, the homeowner wins because they don't get marked up, the property management company, of course, wins because they don't have to pay for payroll, and we win. [00:07:52] So everybody really wins. And also of course, the tenant wins because with our systems and our really well trained people. We can actually provide great service, faster and arounds and all of that.  [00:08:03] Jason: All right. So I think we need like a break sound effect. Everybody listening is like, "wait, whoa, what'd you just say?" [00:08:10] Like, that's like, sounds crazy. Could you take us back through that and help us make this make sense? So, cause you're talking a little crazy here. Like you can make maintenance more affordable and like, and do it and it would be free for them. And so let's break down the business model. So how does this work for a property manager? [00:08:34] Tom: All right. So when we partner with a property management company we basically. We can plug into their org chart wherever they'd like. So, for example, we work with big companies and we plug in underneath their maintenance coordinator, right? So that maintenance coordinator, they have about three, four hundred properties that they manage. [00:08:55] We just plug in there, they become our supervisor, and we provide the maintenance coordinators, we provide the vendor network, we provide everything. So we handle the work orders from start to finish. And whoever is supervising us within the company is also the liaison with the higher up. [00:09:13] Okay. Does that make sense? So for the smaller companies, for example, we would report to property managers. If a property manager is currently handling all of their maintenance themselves, they can just leverage our team. We have a specialized team with following the right processes. They leverage us and they just supervise us. [00:09:31] They send us the work and they become a supervisor. It eliminates 90 percent of their work. Yeah, sure. You know, sometimes there's an escalation. It's still maintenance, but at least we can handle most of it. They get daily updates. Everything runs very smooth.  [00:09:46] Jason: Okay. So the property managers listening are like, "yeah, but how's this free?" [00:09:50] Like explain that again, like take us through, how is it possible for this to be free? Because they know you want to make money. This is a business. Yes. So how is it free? And if it's free, then are the maintenance costs being marked up. Expressly high, right? And so this there, there's got to be a catch is what they're thinking. [00:10:10] Tom: Yeah, so there's no catch. So the way it works is with our vendors. We send them a lot of work. That work means that they have less cost on marketing and sales department. Usually that's about 25 to 30 percent of their revenue.  [00:10:25] Jason: Yeah. So let's explain this. So like, if you're a vendor, you have to spend a lot of time trying to market. [00:10:32] You're doing door flyers. You're like putting out mailers. You're like, they're wasting a ton of money. I get this stuff in the mail and it just goes right in the trash, right? They are going out on bids constantly trying to give quotes and none of this is making them money. This is all an expense. [00:10:49] So they're spending like a third of their revenue just to try and get customers. Exactly. Yes, sir. Yeah, exactly. And so vendors, you're able to basically eliminate that expense.  [00:11:02] Tom: Yes, correct. We cut it more than in half.  [00:11:04] Jason: Yeah. Okay. Yeah. So that's a big savings for them. They're not having to go out on bids. They're not having to like waste time. With the property management company, they're not having to deal with a lot of headaches and garbage. They just have work. And that's really what they want to spend their time doing is just doing the work. So this sounds like a selling point for these vendors and an incentive for them to work with you over maybe other, like through you rather than directly with property managers or rather out in the marketplace with random homeowners. [00:11:35] Tom: That is exactly. [00:11:36] Diego: Exactly. And the really unique thing about this, Jason, is that it doesn't just save them money, right? And we don't just get you know, the flat rate or we don't just mark up. We actually save the owner's money. Why? Because these vendors, they're so happy with the amount of work that we're sending them, that they also provide the best rates in the market. [00:12:02] Which are usually way below average. You know why? Because they want to be your number one go to technician, you know, they want you to send as much work as possible. And so they're pretty much booked up. You know, most of the vendors that we utilize, they're pretty much booked up. [00:12:19] And so they don't want to lose that relationship with you, which, you know, allows us to get better pricing for the owners, because that means we'll continue to get more work, you know, we'll continue to get more business, which also allows the vendors that we work with to expand as well. [00:12:37] We've had multiple vendors that started working with us in Austin and they have expanded to Houston, San Antonio, Dallas. And, you know, it's really a win scenario for everyone because vendors save money, owners save money, and property management companies don't have to pay any money when it comes to handling maintenance. [00:12:58] You know, they just have to have someone that oversees us.  [00:13:01] Tom: And I also would like to add in terms of pricing. So for example, because we handle so much volume, we actually have access to very good priced GE appliances. So the homeowners will pay around 15 to 25 percent less on appliances. That's black on white proof. You can check our price versus the store and then also Goodman HVAC units. We have extremely good pricing on a regular unit for 2400 square foot home. We save a homeowner easily 1500 to 2,500 dollars, depending on who we compared with. But those are things that we can actually prove black and white that we say.  [00:13:42] Jason: Yeah, awesome. So they're getting better rates on maintenance. They're not having to spend any money on doing that. They get discounted rates on appliances because of your buying power and they get discounted rates on HVAC.  [00:13:57] Tom: Yes, sir. It's really a win. It's a true win for everybody. It really is. And it works.  [00:14:03] Jason: Yeah, and you guys don't charge the property manager... anything?  [00:14:09] Tom: Nothing. Nothing. No. So because we have such a efficient processes we can provide a maintenance coordinator, a maintenance manager, a regional manager, we have vendor onboarding, we have a tenant success, and quality control. We have everything in place to function as a full maintenance department. And again, we just plug in right where you want it underneath a property manager, maintenance manager, maintenance coordinator. It doesn't matter. We just report and that person becomes the liaison to the directors. [00:14:42] Jason: Got it. So you guys can be the entire maintenance department for a small manager. If a big company already has. Some things going that they really like and some team members that they really value, then you guys can just plug in and be the pieces that they still need.  [00:14:57] Tom: Yeah, that's important to state. We don't want you to fire people. [00:15:02] That's not our goal. What our goal is, though, is now those people who are already in place, they can focus on tenant relationships. That is word to mouth right there. Same thing with the homeowners. Now you're going to grow your business because you provide a better service and you do not have to scale as fast. [00:15:20] So even without firing somebody, you just keep those people. They give a better service. Now you grow, but you don't have to hire as fast.  [00:15:30] Jason: The one piece that's not scalable in a business is depth and depth is where the magic happens. I always say to my clients, if you want to scale your business, you have to do the things that are unscalable and being able to spend more time talking directly with the owners, connecting with them, letting them know what's going on in maintenance, making them feel calm and that you've got things handled. [00:15:54] Yeah. That interaction is what's going to retain those clients. I mean, the number one reason people leave property management companies and go find somebody else is communication. It's lack of communication. So you can increase the communication level significantly. So you keep these clients forever and Calvary can handle all the maintenance, correct? [00:16:15] This sounds like such a good idea. Why has nobody thought of this before? Why is no one else doing this?  [00:16:22] Tom: Honestly, I think because it's hard. Maintenance is hard. And then not only that, yeah, I don't know if in maintenance, I guess you have to be a specific type of person, right to be able to handle that. And then you need to match that with entrepreneurship. Right. And most people, I think they have not seen the disconnect it's. Within the culture, all maintenance is handled inside the company. So I think, I don't know if like, a third company maintenance team has not come across. [00:16:57] Also, all of our competitors, they charge. They charge. Why? Because they can. You know, we want to provide value. We don't have to charge. We can. We don't have to. Our service is worth the extra cost, but we don't want to. You know, we want the smaller companies and bigger companies just to be able to grow without an extra cost. [00:17:17] And of course, by doing this it's smart business wise because now, you know, we can get our foot in the door more easily. So it lowers the barrier to entry.  [00:17:25] Jason: Okay. So, how small is too small of a company to work with you? Some people listening are like, "man, this sounds like a great thing. Like, I don't really like maintenance. [00:17:34] I don't have a maintenance coordinator yet. I would love to work with them." What's too small?  [00:17:38] Tom: Honestly, I don't think there is a too small. And the reason one caveat though, if we are already active in the market.  [00:17:46] Jason: And that's the next question then is there's certain markets you mentioned, you know, around Austin, Texas, et cetera, which markets are you in currently? [00:17:54] And what does it take for you to go into a new market? Like, so it's an option for people.  [00:18:01] Tom: So we're currently in all Texas markets. So Austin, San Antonio, Houston, Dallas, Fort Worth. We are very active in Denver, Colorado Springs. We have Tucson, Charlotte, North Carolina, Detroit. So those are the markets that we're already active in, so it's easy to just add a smaller PM company because we don't need to set up the whole vendor network right. We're constantly tackling new markets, by the way. But if we are in a market if you are a property manager looking, you're watching this and you're in a market that we are not in, we need about three weeks. [00:18:36] Jason: Yeah. Okay. That's it. So three weeks and how many units for a new market for it to make sense for you?  [00:18:42] Tom: I think 250 would be the minimum.  [00:18:45] Jason: Yes. Okay. Yeah. Got it. All right. So a property manager in a new market, if they've got at least 250 units. That could be it. If there's smaller ones, maybe they get together with their NARPM buddies and they're like, "Hey, let's get this." [00:18:57] And they add up to 250. That could work.  [00:19:00] Tom: Yeah. But also whenever we open a new market, for example, 250 would not be profitable for us. So then we just focus on these markets as well. So we have our sales team now has more to do.  [00:19:10] Jason: So then you start to like build that market up. Correct. Got it. And that builds up the business there and that allows you to get the discounts and do all the good juicy stuff that you guys do. [00:19:21] All right. Okay. Got it. Okay, cool. So you guys, this product sounds like a no brainer. And so you guys must be pretty busy rolling out to new markets.  [00:19:30] Tom: Yeah, we are. I mean, we started business when Diego? On October 21st, 2022, we received our first work order and now we're in what 12 markets already. [00:19:41] Jason: And it must you know, it sounds like Diego is a pretty sharp operator. So like the systemization of being able to do these rollouts is probably pretty tight.  [00:19:49] Tom: Oh, yeah. You go.  [00:19:51] Diego: Yeah. So it's actually one of the things that I wanted to mention, Jason cause Pete Neubig actually, you know, mentioned it in his podcast as well. [00:19:59] It all goes back to systems, SOPs and training individuals. You know what I mean? Because. A lot of people focus on churn when it comes to owner churn or you know, tenants leaving and so on. Right. But not that many people focus on you know, your maintenance coordinator churn or your internal churn. [00:20:20] And so that's one of the things that we like to focus on, you know, you want to train individuals correctly. You don't just want to, you know, let their hand go and roam free and figure out things on their own. You want to take time to, you know, to teach them, to train them, for them to understand the guidelines, the SOPs, the structure, so that whenever we do fit in with a new property management company, [00:20:46] they're ready to go. They understand the business, they understand the concept, they understand what is needed of them to make that maintenance department better. Because at the end of the day, that's what we want. We want to help property management companies grow. And so we can grow alongside them. And because that's what allows us to, you know, to continue to grow. [00:21:07] And so it all goes back to that. Yeah, exactly.  [00:21:10] Jason: So Diego, you know, having seen inside probably several lots of property management companies, maintenance issues and problems and having, you know, and being able to brilliantly do it really effectively and seeing that contrast, what are the biggest challenges that you're seeing or the biggest mistakes property managers are making when it comes to maintenance? And I think this is valuable because it helps people to understand how your brain works and how what you do at Calvary is a bit different than what they're doing.  [00:21:39] Diego: I think it's a couple of things, but let me pick the top that come to mind I would say vendor relations. Vendor relationships are so important because what ends up happening is if you tarnish vendor relationships, what ends up happening, you don't have good, reliable vendors that you can count on, you know, that will provide the best service, the best pricing possible. And so I feel like. In this industry, a lot of companies have treated vendors poorly, you know, and we notice it constantly when we go to new markets they usually mention like, "Hey, I don't want to work with a property management company." And then, you know, you ask them why, and it's usually because of that. You know, building that relationship is very important because they're part of your group, they're part of your network, and once they see that they're super, super reliable. They give you the best pricing, the best service possible, and so on. I would say that's number one. [00:22:40] Jason: And before we move on from that one, like, this is really interesting because what we hear a lot in the industry is people complaining about their vendors. Like property managers are always complaining about their vendors saying they're the problem. They're unreliable and having such a negative perception of the vendors and they might be creating it. Like maybe the property managers are the ones creating this problem. They're like, but maybe they're not like paying them on time, or maybe they're not like being responsive in communication, or maybe they're treating them poorly if there's like an issue or a mistake or a challenge, right. Yeah. Putting them into a bidding war. Yeah. None of them want to be doing that. Right. It's a big waste of their time.  [00:23:20] Diego: Yeah. Yeah, pretty much. I'm not saying all of them, you know, all property management companies do that, but I would say most do have that, you know, that they feel like they're entitled to get the best service instead of working together to, to build that relationship, to get the best service to have reliable individuals.  [00:23:40] Jason: What's the next thing that you noticed in contrast between, you know, the property managers that are ineffective with maintenance and dealing with issues versus how you do things at Calvary?  [00:23:50] Diego: Yeah. So I think it goes back to the maintenance coordinators or property managers, right? [00:23:56] Everybody is kind of doing their own thing. Right. So I've gone to different property management companies, and they're like, "Oh, no, I do things like this because this is the way to go. This is how I've been doing it for so long." But if you have five property managers, or if you have five maintenance coordinators. [00:24:14] They're all doing their own thing. They're not all working as a group, you know, towards the same direction. Which goes back to the structure, it goes back to the ESO piece. And so I feel like not that many companies understand maintenance entirely and so everybody's kind of doing a little bit different things, which is not scalable, you know. You can't have five individuals working, you know, differently because then what's going to happen is you're going to have people frustrated saying, "Hey, but this person said I could do this, but now you're telling me I can't do this and so on." [00:24:51] So I think it also goes, you know, that's one of the biggest things that I've seen going into different markets, different companies everybody's doing their own thing and so.  [00:25:01] Jason: So there's a lack of consistency and yeah, I could see how that'd be frustrating for vendors too. If like a company had like five property managers, like bugging them portfolio style and all of them are different. [00:25:12] One of them might be a jerk to the vendors and the other one might be cool. Yeah, it could be messy.  [00:25:17] Diego: Yeah, and then last but not least, numbers, KPIs, they never lie. And so if you have maintenance service requests that are taking too long, well, tenants are going to be frustrated. [00:25:32] Owners are also going to be frustrated. Why? Because most of the time, especially for small property management companies, the tenant has the owner's phone number most of the time, or, you know, I've seen that happen many times. So what they will do is they will reach out to the owner and they'll be like, "hey, they're lagging on this. They're not taking care of this. Hey, I'm having an issue with this." And so if you don't take care of things in a timely manner, it's always going to affect your business. I've seen where, you know, some clients they're okay with taking 14, 15 days to handle a maintenance request. And that's a big no no. [00:26:09] You know, you want things taken care of in less than five days. That should always be the goal. If it's an emergency, you want to handle it same day, you know, or at least mitigate the issue that same day so that the tenant is happy. So that they trust in the service that you're providing, and that will allow you to, you know, to dictate how you run your maintenance department and how tenants are trustworthy of your services. [00:26:36] And then, of course, you know, owners are also going to be happy with the services that you're providing, since you're not going to have that many escalations, that many issues, or that many problems that surface.  [00:26:46] Jason: So, yeah, it seems like kind of a snowball effect that when you start to be inconsistent, you don't have a quick enough turnaround time on maintenance. [00:26:54] You've got, you know, all these challenges that it starts to then. Turn it into escalations, more conversations, owners might even be getting involved. And so it starts to get messy. And that complexity then takes over the business because then something that should have taken maybe an hour is now taking three hours of manpower and time in the business. [00:27:16] And so then it's like the business owner is trying to run a race and they're shooting themselves in the feet, right? So things are just like snowballing and getting worse and worse. And then they're like, this is chaos. This is crazy. Yeah. So, all right. So those that are dealing with these challenges, they're like, maintenance is tough, like vendors are tough. [00:27:35] Like all of these are problems and they don't have all this stuff dialed in. Or maybe they've got things pretty well dialed in, but they're like, "Hey man, maybe I could save some money on. You know, team, or I could just improve and get my team focused on higher level tasks of like communicating with people, more depth and retaining clients longer." [00:27:53] What. What would be the first step? How do they connect with you?  [00:27:57] Diego: So they can pretty much, you know, reach out. We could set up a meeting where we can go ahead and explain, you know, go a little bit further in depth with their particular property management company, you know, how many homes they have and so on. [00:28:12] And then if they do sign up with us, in 7 days, we'll have a plan ready to go for them that will dictate exactly, you know, what is needed and what we're going to be implementing within those 7 days so that we're ready to hit the ground running.  [00:28:26] Jason: Yeah, that's pretty awesome. And so what's kind of the onboarding process like, like for those that would be getting started? What would, what's sort of the experience?  [00:28:36] Tom: So we have a two week process. So it starts by sending over the contract so they can read it over. [00:28:42] It starts by also getting all of the data of the current of the units they currently have, their history, the history of the work orders. Also, their current vendors are very important. We understand that property management companies, most of them have already built solid relationships with those vendors. [00:28:59] We don't want them to push them out. No, actually what we're going to do is we're going to contact those vendors. We're going to propose our proposal. And we're going to tell them like, "Hey, you will get more work, you know, by also getting work from other property management companies." So, yes, so we can use the same vendors as well. [00:29:18] So we collect all of the data, then we analyze the data. We implement everything into our software. There's something we actually haven't touched on, but we have found that Rentvine is a really, I mean, the best software out there. And we're also providing that for free to our clients. So we can I mean, we can work with any software, but if we do not have one, we can work with Rentvine. [00:29:44] Anyway, so that is also part of that onboarding process. Maybe it's like, "okay what software do you use? Do you want to switch to Rentvine?" And then over the second week, we start implementing. We have a few meetings where we discuss all the final, like who like the communication with the billing department. [00:30:01] Who's going to take care of that? Is that going to be the liaison? Is that going to be somebody of ours? So, yeah, it's a two week process. We have everything dialed down from a launch date, minus 14 days to launch date.  [00:30:13] Jason: And the reason you like Rentvine, do they have a pretty good maintenance system?  [00:30:18] Tom: Yeah, the communication is excellent. [00:30:21] The communication can be logged with timestamps, but more importantly as well, it aligns very well with bookkeeping. The bookkeeping is really solid in there and it just works.  [00:30:32] Jason: So, what about those that have different maintenance tools, like maybe they've been using Latchel and they've got them handling the phones, or maybe they've been using Property Meld and they're using that text based communication system, these things that they need to keep, are these things that you would work with? [00:30:49] Like this sends a whole nother level of complexity I would imagine to your business.  [00:30:54] Tom: Yeah, no, it actually, I mean, it works. So we started, so to get our foot in the door in the industry, we actually started as a vendor, right? So we, our systems work with any software. So it does work. It adds complexity, yes. But if we assign a certain maintenance coordinator to a certain account, they get used to that very fast. So it does work.  [00:31:15] Jason: Got it. So you can work with whatever tools that they do have. And if not, you've got some good ideas for them to get their maintenance systems dialed in well.  [00:31:24] Tom: Correct. [00:31:24] Diego: Yeah. Correct. And then, so that actually brings up a really good topic. So we can help them save money because most property management companies, they utilize, for example, Property Meld. Right. And that's an external tool to their actual software, which is usually Appfolio. And so they usually pay extra for per property for Property Meld, if they switch over to Rentvine instead of Property Meld, then we pay for that and it's, you know, it's completely free for them. So that means they save money there as well and pretty much Rentvine can do what Property Meld does. And one of the reasons why people choose Property Meld is because of the communication and Rentvine has a very good communication factor built into it. But it goes a little bit further when it comes to the, like, Tom mentioned the billing processes, because vendors can go ahead and submit the bills there and you can break down all of the information there, which fits in perfectly to the tool that the property manager is using. [00:32:27] So it allows us to have a very robust system that allows property managers, you know, to save money by choosing to work with us.  [00:32:35] Tom: So. Yeah.  [00:32:37] Jason: The more you share, the more stupid people might feel for not working with you.  [00:32:43] Tom: I have one more, 24- 7 maintenance. Okay. Say that again. 24- 7 maintenance. [00:32:49] So rather than paying an external company for a call center to, you know, receive phone calls from tenants. Yeah, we actually have a night crew that will pick up the phone and also dispatch those work orders for work orders, of course, that are dispatchable at night, right? For certain emergencies. So we have a team working around the clock. [00:33:10] The night team is a little bit smaller, but it's around the clock.  [00:33:13] Jason: That's amazing. So, yeah, because I know there's companies that are using Appfolio, they're using Property Meld, they're using maybe Latchel or EZ Repair H otline or something to do the calls. And these are all stacking as expenses in the business. [00:33:30] And then they're also having to coordinate all of the maintenance and go and source and find all the vendors. And you're saying, "we'll just take over all of this for you and it'll not cost you anything." Exactly. It worked. It worked. So, all right. So, a lot of people might be thinking this sounds too good to be true. [00:33:51] So let's say I sign up with these guys and I switch all my stuff over to using them and then I don't like it or there's something like they're afraid, right? This is their fear. And I've given everything to them. Are they going to have some benefits still? Like, will they have better processes? [00:34:09] Will they know what's going on? Like, like how do we lower this risk for those that are like concerned about handing over a piece of their business to somebody else and then what if it isn't good? Like, that's their fear.  [00:34:23] Tom: Yeah. So, part of our marketing strategy and part of our vision and mission is to share all of our information. [00:34:30] So, we're not going to keep everything to ourselves. We're actually in the process of writing a book, which will be finished very soon, on how we actually do the maintenance. So, it's one thing saying, "oh, we know how to do it." It's another thing showing it and that's what we're going to do. So we have the processes, we can share that with the teams, you know, if we're hopping on a call, we can share what that is, but also to make it available to the public, we've written a book, it's almost finished, which holds all of our processes in a story form, which then is connected to presentations and actually implementable knowledge. So if they don't want to work with us, fine. We will still teach you how to do it. That also means that, you know...  [00:35:11] Jason: like you're open sourcing your product.  [00:35:14] Tom: It is the 2023 way of marketing, right? You show what you can do and then you build trust. So, but that's really, and you know, it's also to help people. Many property management companies might not want to do this and that's totally fine, you know, but we can still help those people.  [00:35:31] Jason: Cool Well, I mean if things go well for you guys, which sounds like it will because it's a pretty sharp product If there might be the day when people are wanting Calvary doing the maintenance and not local property managers handling it. [00:35:46] So that's our vision. Awesome guys. I think this sounds like a no brainer. It sounds like a really awesome product. I'm really excited to see what you guys do. And I'm sure there's several that are interested in just once they hear this podcast episode, they'll be interested in giving you guys a shot.because maintenance is one of the biggest complaints we hear about in the industry. It's usually the first big challenge they all need to solve. And it sounds like you guys have got the product where it's solved and they can just get some Calvary and everything's going to be better. So, yeah.  [00:36:19] Tom: So our website is cavalry.works. That is cavalry, C A V A L R Y dot W O R K S, because cavalry works.  [00:36:29] Jason: Got it. Okay, cool. So check it out, everybody. So anything else you want to say before we end the show today?  [00:36:37] Tom: Yeah. Thank you for the opportunity to come and present us. It was our first podcast. I hope we did a good job. [00:36:43] Jason: Diego's camera's a little crazy, but it kept us on our toes. So I'm really impressed with you two. I know we met earlier and chatted and I was like this like, it sounds like such a crazy good business model. And I think it's possible because of the expertise that you both have and that you're able to bring to the table and excited to see about that. [00:37:05] When that book comes out, maybe we'll have you come on again and plug that book. That'd be really cool. And then man, Diego, I'd love to have you come and maybe present to some of our clients in our mastermind, just about maintenance because everybody has this challenge and I think it'd be really cool. [00:37:20] So. All right. Well, looking forward to hanging out a little bit more with y'all and seeing what you guys accomplished. So, thanks for being on the DoorGrow show.  [00:37:30] Thank you, Jason. [00:37:32] All right. Cool. So if you are a property management entrepreneur that wants to add doors, grow your business and you are struggling with getting more business and getting more doors, we can help you with that. [00:37:45] And we are really good at helping people grow. One of our clients, brand new, zero doors went through our rapid revamp class that we teach in our mastermind had zero doors and then after we cleaned up to the front end of his business, he started working on adding doors part time, like maybe 2 to 3 hours a day and then he was able to add and break the hundred door barrier. He was able to add a hundred doors in six months, and he was doing this part time. That would be impossible with advertising. That would be impossible with going and buying cold leads from doing SEO or pay per click or content marketing or social media marketing. [00:38:22] We gave him the right strategies. He went and took action. And he spent less time doing it than most people do. And he was able to add than most people do trying to grow their business. He was able to add a hundred doors in six months. That was what our client, Kent, who we just recently had on our podcast episode. [00:38:39] And if Kent can do it, you can do it too. And our clients can add a hundred to 200 doors every year, organically, just by using our strategies. If you have a really good full time BDM, we can help you add two to four hundred doors a year, organically. And then, we can also get you the right processes, and the right systems and things dialed in, so that you can become infinitely scalable, and then you can start to do acquisitions. [00:39:06] And you will make a lot more money off their doors, than the person you're buying them from was. So anyway, reach out to us at DoorGrow. You can check us out at DoorGrow. com and join our free Facebook group. You can get access to that. We have some free gifts for you by joining our community, go to DoorGrow club. com. This is just for property management, entrepreneurs, property management, business owners. Join that community. If you're starting a property management company, join that community. If you have an established company, join that community. People are helping people out in that group. It's an awesome community. [00:39:37] And our hope is that you will get so much value from the free stuff that we put out there and from our free content and our podcasts that you will want to join our mastermind, get beyond the paywall and see the amazing stuff that we're helping companies do and be part of an even more amazing community, our mastermind. [00:39:56] So until next time, to our mutual growth. Bye everyone. [00:39:59] you just listened to the #DoorGrowShow. We are building a community of the savviest property management entrepreneurs on the planet in the DoorGrowClub. Join your fellow DoorGrow Hackers at doorgrowclub.com. Listen, everyone is doing the same stuff. SEO, PPC, pay-per-lead content, social direct mail, and they still struggle to grow!  [00:40:25] At DoorGrow, we solve your biggest challenge: getting deals and growing your business. Find out more at doorgrow.com. Find any show notes or links from today's episode on our blog doorgrow.com, and to get notified of future events and news subscribe to our newsletter at doorgrow.com/subscribe. Until next time, take what you learn and start DoorGrow Hacking your business and your life.

The stage is set, the mic is on, and the cue is yours. In this episode, stand-up comic and voice actor Tom Sawyer shares his golden nuggets for aspiring voice talents hoping to benefit from the power of comedy. From the importance of having fun in the booth to taking a well-deserved break, and the power of belief in oneself, Tom is a reservoir of invaluable insights. We talk about standing out in a sea of talents, catching the ears of the right casting person, and the art of continuous learning. But remember, feedback is the breakfast of champions, and as Tom says, it's all about enhancing your performance. Get ready, it's showtime! About Tom   Tom Sawyer ran lengendary San Francisco comedy club, Cobb's for over 30 years. After stepping away from the comedy business, Tom was encouraged to explore voice acting by after famed comedian and voice actor Carlos Alazraqui (Rocco's Modern World, the Taco Bell Chihuahua) who knew Tom was an excellent celebrity impersonator. Tom signed with JE Talent in San Francisco and Aperture Talent in Los Angeles in 2017, and the rest is history. https://kitcaster.com/tom-sawyer/ 0:00:01 - Announcer It's time to take your business to the next level, the boss level. These are the premier business owner strategies and successes being utilized by the industry's top talent today. Rock your business like a boss, a V-O boss. Now let's welcome your host, Ann Gangusa.  0:00:20 - Anne Hey everyone, welcome to the V-O Boss podcast. I'm your host, Anne Ganguzza and today I am super excited to be here with very special guest actor, comedian, entrepreneur oh my God, the list goes on Tom Sawyer. Tom ran the legendary San Francisco Comedy Club Cubs for over 30 years booking legendary greats, and this list just goes on and on, but I'll give you just a few of them Jerry Seinfeld, dana Carvey, Bob Saget, Jim Carrey, Rita Rudner, Joe Rogan, Sarah Silverman and the list just goes on. He stayed on as a booker until 2012 and then ultimately stepped away from the comedy business. After that, he was encouraged to explore voice acting by famed comedian and voice actor Carlos Ellsrocki, a good friend of his. He signed on with JE Talent in San Francisco and Aperture Talent in LA in 2017, and the rest, they say, is history.  But boy, we've got a lot of history I'd like to talk to you about, tom. Thank you so much for joining us and welcome. Thank you for having me. Oh, it's my pleasure. So, gosh, there's so many things I want to start with. I mean the first tell. You have such a large history of comedy, so, of course, I'm sure a very common question you get asked is were you a funny kid, or have you always loved comedy? What is it that drew you to comedy?  0:01:44 - Tom Well, yeah, I was the kid in the back of the class making all the other kids laugh, so that was where I started and I always did impressions. So when I was a kid I was doing Don Adams from Get Smart and Ed Sullivan and Richard Nixon and you know, it's probably a little weird seeing an eight-year-old doing Richard Nixon but that's what I was doing. When I was very young I realized I could do voices and never stopped and that's what kind of led me to voiceover when I got out of the comedy club business.  0:02:15 - Anne But boy, there was a long history of being in the comedy business. I label you as entrepreneur 20 times over because I think just following that passion of yours and then ultimately opening up a club that literally was just famed and just housing some of the comedy greats. Tell me a little bit about that history. I mean, that is just so, so fun and impressive.  0:02:36 - Tom Yeah, actually, I went to San Francisco to become a stand-up comic and there were all these clubs, the Punchline and the Holy City Zoo and the other cafe. They were very packed all the time and getting stage time there was next to impossible. Or you'd get on at one o'clock in the morning in front of a very tired, very small, very drunk audience. And then there was this little.  0:02:55 - Anne Sometimes that helps, I'm not sure Mostly doesn't, oh okay.  0:03:00 - Tom But there was this little club in the Marina District in San Francisco called Cobb's Pub and they were trying to do comedy there and there was no audience, but there was stage time. You could get on stage there. In fact, sometimes you couldn't get off stage because there was no one there to take over, so you had to stretch, stretch and that was terrifying sometimes. Especially if you're the third or fourth comic going, hey, where are you from? And the audience goes we all know where we're from, so stop asking.  0:03:29 - Anne That's so funny. I just wanted to say that a lot of my actor friends I feel like being on that comedy stage is like a rite of passage almost, and it's probably I would think one of the toughest things to do is to stand on stage like that and try to make people laugh. I mean, that's just to me it's comedy without a net. Yeah, exactly.  0:03:48 - Tom And the thing is it's like you're stuck there, literally. You have an allotted time that you have to perform and they give you 10 minutes. You have to do 10 minutes, doesn't matter if it's horrible right from the word jump, you're on stage for those 10 minutes. That's the time you have to do and that's one of the things you learn right away is like if you get on stage early.  you're not going to get back on stage. So you have to go through the rite of passage of bombing, and I've seen comics bomb from Paula Poundstone, kevin Meany, kevin Nealon, the list goes on and on. Every comic has bombed. But even later on you get in front of an audience that just doesn't dig you.  0:04:27 - Anne And again, nowhere to go. You can't run off the stage.  0:04:31 - Tom You're mean, I get that.  0:04:38 - Anne And it's funny because I literally I just went to a comedy club a couple of weeks ago and I was thinking about that, like what do you do? I mean, they are there until the next comedian is called on stage. And it feels interesting as being a part of the audience, because a lot of times I think, as the audience, you are part of maybe not part of the act, but it's very interactive, it's very back and forth and engaging because, of course, you're trying to make us laugh.  0:05:02 - Tom Yeah, you have to communicate to the audience without really engaging the audience, because you're the boss on stage, you're kind of like the crowd master and you're crowd control and entertainment at the same time. And because comedy, some people feel like, oh, I'm going to be as funny as the comic.  0:05:22 - Anne And that's when things get really sideways.  0:05:24 - Tom You're there to be entertained. Sit back, relax and leave the talking or the driving to the person with the microphone.  So you got some stage time on Cobbs and and then I realized that I just kept seeing these shows that weren't very good. The guy who was booking the club at the time wasn't doing a great job, and I was a big fan of stand up as well. So I started thinking about what I would do instead, and then I started telling the owner at the time first owner of Cobbs. I was telling him you know, here's what I would do differently, and then I could tell him at the beginning of the show how the show was going to fail. And then he was started realizing that everything I was saying was happening and he went what do I get to lose? We're doing horrible business. And so he gave me the job of booking and from there I started getting the people I really, really like to perform and it started going great and we went from being like about 20% capacity to 90% capacity in about a year.  0:06:23 - Anne So let me ask you a question that, to me, is very interesting how do you get, at the time, the talents that you booked? I mean, they were big names. Were they big names then? And how did you get them to book? I mean, that's a skill, right? It's something that we do in our businesses every day, right? We've got to try to get clients to like us and to work with us. So how did you do that? Did you have a secret?  0:06:42 - Tom Yeah, my secret was I paid really well.  0:06:45 - Anne Okay, okay, that's a good piece.  0:06:48 - Tom My biggest competition, which was twice the size of our club. We were out paying that Because we decided that the most important thing was getting butts in the chairs and the only way to do that was having acts that actually brought an audience. So the only way to do that was to offer these guys more of an opportunity to make more money. So we would give them a percentage of the door and say, hey, the more people come to see you, the more you're gonna make. And because of that we had people that would call up and go, hey, I'm gonna be on the Tonight Show in six weeks with Johnny Carson, do you have anything open? And I would move stuff around and get them in there and then I would get a Tonight Show plug or a Letterman plug or Arsenio Hall. At the time and that was kind of my thing was I'm gonna pay everybody. Really well, so everybody could. Percentage of the door.  In the early days before all the big agencies came in, sure, and remember this was at a time where there were just like a couple agencies doing personal appearances for comedians. Comedians were pretty much on their own. They were doing their business themselves. So if I wanted Bob Sagan, I'd call Bob Sagan, so I get his number from another comic and everybody was kind of looking for each other and I would bring one comic in. They'd go, hey, you should book these guys. And I go, okay, great, and call them up. And they'd go, right, when can you give them me a date? And I'd give them a date. Plus, we flew people up and we put them up in the hotels. So we didn't personally make a ton of money. That wasn't my thing. My thing was having the best shows I could possibly have and making a name right.  And making a name for the club?  0:08:24 - Anne Absolutely, and that's interesting because, again, I like to talk about the entrepreneurial business side of what we do as creatives and freelancers, and there's a lot of thinking outside the box and also recognizing the value of the talent, that if you wanna put out great work, then you wanna hire a talent that's amazing and great and pay them fairly and absolutely. And so talk to me a little bit about the networking aspect. I mean, the cash is a good draw, but you also had to communicate effectively, I would say, to really book these talent.  0:08:58 - Tom Well, the thing that separated me from everybody else, besides being generous with the money that was brought in, was that I knew what they were going through, no matter what it was going on on stage. If they were dealing with a heckler, I'd gone through that as a comedian. If they were bombing, I knew that pain, so I could empathize with them, I could be their counselor, I could give them advice. I looked at it like I wasn't really a good comedian, and mainly that was because I wasn't true to who I am personally. So my mantra after that was be yourself.  0:09:32 - Anne I love that.  0:09:33 - Tom Yeah, that's who I wasn't. I was trying to fit in and have everybody like me and that really affected the quality of my stand up because I wasn't being true to me. So that was my mantra to everybody be yourself. Because nobody can take that away from you.  0:09:49 - Anne That's so interesting because I never ventured into comedy myself. However, I find that people find me the most funny when I am being my dorky self and I'm making mistakes and I'm just being oops, sorry, and I think in voiceover as well. I wanna talk more about that. I think it's all about being authentic and being yourself and that's really, I think, what connects you to people and engages you to people and endears you to people.  0:10:14 - Tom Yeah, I think it's really important when you get a job, and especially if it's somebody you want to get more bookings from play around, have fun. I mean, I booked a video game and the first thing we did we went through several of the lines I had to do and then we went through all those and I just did just the lines, basically no acting or anything like that and they went. Yep, that's about it. I went great, thank you.  0:10:33 - Anne Love it, love it, bye, bye.  0:10:35 - Tom So everybody started laughing. It loosens everybody up and that's really it's just. Don't be a pain on the ass. Realize that you're always learning. They're always learning. Everybody's a professional too, and so be courteous and nice and smart and be entertaining. You are the talent, so show some talent as a professional as well.  0:10:53 - Anne Show some talent. I love that. So talk about in the transition while booking talent. So you did that for a very long time, I mean 30 years, and so, wow, I mean, was there a point? I mean, were you just so busy for 30 years Did you think about voiceover? Was that a thought in your head or something that you would do, or you just were completely. You loved running the club and booking talent.  0:11:18 - Tom Prior to moving to San Francisco, I lived in Florida, lived in Sarasota, Florida, and I did a lot of theater there.  That's why, I fell in love with theater and acting. You know, I always thought like, oh, stand up might be a good gateway to getting into acting, but then I got into the business end of it. So I didn't really think about it until I got out and I didn't know what I was gonna do. And I was talking to Carlos and he said dude, you do so many voices and stuff. You'd be great at voice acting.  Cause I've always done impressions, never stopped doing impressions. In fact I would teach other people like Kevin Pollack or something, if they had an oppression and they couldn't figure it quite out. They were doing it but they weren't quite right. We'd kind of jam and help them get there, or they would help me get there and we'd all do our really weird outside the box impersonations. You'd have to spend five minutes explaining who that guy is Right right right.  0:12:07 - Anne So you can't do that one.  0:12:09 - Tom But for comics, we love doing those, especially impersonators, impressionists, we love doing those for other impersonators. It was kind of like our jazz moment, you know, where you get to jam behind the scenes with another musician.  0:12:20 - Anne Absolutely.  0:12:21 - Tom So Frank Calliendo, I had the club, and Dana Carvey, of course, was the master of the not perfect impression, but getting the perfect funny it didn't matter, that's what his genius is. Bye, you know, is finding the perfect funny to any voice. And then Tom Kenny played. The club started at Cobbs as well Again, the guy who did so many crazy voices. It was another inspiration for me to move there, and every once in a while I talked to him, cause I'll get a audition for something that I know is directing or in, so I go heads up and he's going dude.  I have nothing to do with casting, you know sometimes they cast people and I'm scratching my head. So yeah, but I'll put in a good word for you.  0:12:58 - Anne So Well, hey again, networking totally helps. Now comedy skill. I think comedy is a skill and art form. What are your thoughts on that?  0:13:07 - Tom I mean cause, oh, absolutely.  0:13:08 - Anne Yeah, it's not something that I can go on a stage and execute.  0:13:11 - Tom Yeah, it's like anything else I personally believe.  my philosophy is we all have a gift somewhere along the line. We might not be in a position ever to know what that gift is, but we all have a gift and sometimes there are people out there have more than a couple fair, but there's also people who just don't ever find theirs. And I think that the idea is you know to try to discover who you are and your strengths, weaknesses. Stay away from those weaknesses and hurdle towards your strengths, you know, and don't get locked up into one thing to always be on the road to discovery.  0:13:42 - Anne I guess I want to ask you first of all about once you got into voice acting and then was it like you were always wanting to book a certain genre because you've had lots of characters inside of you that wanted to come out? Or did you find any of the genres outside of character Interesting, because I'm a believer that you're a character in just about everything you do, even if you're doing e-learning.  0:14:05 - Tom Yeah, I always try to find a person, even when it's just one of those hey, you're a dad, or hey, you're a regular guy. Or I just had an audition yesterday where you're just a regular father, you know it's regular. But the line said something else, you know. So I gave one as what they were saying and then one. That's what I felt the lines were doing. It was a subtle difference, but it was a difference that maybe whoever put this together wants to see. If somebody figured it out, or they didn't know that's where they were going and they don't know. Sometimes they don't even know until they hear it.  So give them what you think they want, and then give them what they say they want.  0:14:39 - Anne So interesting. I guess I would talk to you then about writing right, especially now that you've transitioned in voice acting and you're given a script right, or you're given an audition and finding the humor. Sometimes there's subtleties in that humor, sometimes it's obvious. Are there telltale signs to look out for? And then, once you do see it, is there a specific way that you feel it should be performed? Should it be performed in the obvious way? Or maybe, if you wanna capture the ear of the casting director, you do something different?  0:15:08 - Tom Well, I think you know what you do with a couple takes is you do the one that's on the page and then you do the one that where you think they go or where you can go with it to show what you can bring to the party. I always like to find the humor in something, especially if it says it's humorous, you know, and then play around with it and add a little bit, do a little improv with it, find a little spontaneity into there, or sometimes I'll even rewrite a line, cause I think it's kind of like flat, so I'll make it a little funnier. A punchier.  0:15:36 - Anne Okay, now that gives me a segue into a question In terms of with the script, in terms of improv right For an audition, are you improving in the audition and or improving the line, and at what point do you feel that people may go too far if you're completely rewriting, or do you think that's offensive maybe?  0:15:54 - Tom I think you have to be pretty subtle in rewriting. I think you do run the risk of people going why do I bother sending you a script? Cause you're adding all this stuff to it. So you pick and choose your moments. You know I've done that before, I've added jokes. But I'll listen to it again and go okay, that's a little too much. Plus, I want to have them. I don't want the person thinking after the third one, is he gonna go back to the script or what you know. So I wanna pick and choose my moments and make sure that I think of the funniest, the ones that have the most oomph. You want them to land, and so era on the side of too few than too many.  0:16:33 - Anne Let's talk about character development for you, especially because you're an impressionist. So how can you take, let's say, and you don't necessarily wanna have a character that's just after a particular person, but you wanna develop it into your own character. Is there a formula or a process for that, in terms of developing new characters?  0:16:51 - Tom Well, I have a book of all the impersonations I do, well, a book with the impersonations I do. And then I have like one that's like the ones I do pretty right on, and the ones I do that are just kind of soft. I don't really have it down, but that's great because it's a character.  0:17:07 - Anne Do you have a number for that? Somebody wants to have how many characters in their arsenal, how many to build off of.  0:17:13 - Tom Every day that I can figure out how to do a different celebrity or something like that. I write it down in the book Cause it comes to you sometimes. I mean, when I figured out how to do Robin Williams, it just was an accident. It's one of those things where you find a word and all of a sudden. Then you find a place in your throat and you're doing it and you can't stop.  0:17:32 - Anne It's crazy so it just never stops. I love it, I love it.  0:17:37 - Tom So one day I did Robin for Robin and that didn't go so well, apparently I didn't know he doesn't like his voice, apparently being impersonated. You didn't like that. No, it's really a very awkward Cause. I thought it'd be a lot of fun.  0:17:50 - Anne Yeah, and that's interesting because I'm curious about that. You know, celebrities like their voices impersonated, or now we've got a whole another, a whole another digital thing to be thinking about, when voices might be impersonated or turned into right With synthetic voices. But that might be another podcast.  0:18:10 - Tom That's a little scary.  0:18:11 - Anne That's a scary one, absolutely.  0:18:13 - Tom The thing about it is is like the flaws, like, let's say, go back to Dana Carvey, cause again there aren't many that he does right on, he'll leave me be the first to admit it. He's not like somebody like Frank Caliendo, who's just like amazing. He's verbatim, you can hear the voice. He's somebody who can do a sound alike. Dana could never do a sound alike, but he gets people's caricature down. That's the thing is it's like, and that's kind of what makes it funny is the imperfections is going up, finding those words.  I just, you know, I used to do Bruce Stern and a lot of people kind of forgot who he was, and then one day I just was doing it for somebody to just start laughing Cause they didn't even remember who that Bruce Stern was. But it's just his voice is funny, you know, cause he has a kind of voice like that and it's very inquisitive either. Everything goes up at the end Doesn't make a darn gosh darn bit of difference, and not sometimes he gets crazy. But and so you find those little imperfections actually make a character and make it really funny. That's what I like to do. You know, I did a animation pilot and it was like a hippie character and I was going through a bunch of voices with a writer cause they booked me and they didn't feel like they wanted to do something different with it. They said what can you do? And I was going through my book and I started doing Nick Nolte and they loved it and then you ended up going with that over what they originally had, with me doing it.  0:19:37 - Anne So I love how you have a book with everything written down. Now, do you also have audio files that go along with that, so that you can help yourself get into words?  0:19:45 - Tom Yeah, I have one where it's all my impressions, so that way I can go back. And how do I do that? One Cause I don't practice them all the time. Cause.  0:19:54 - Anne I have life.  0:19:55 - Tom So, and I don't want to be walking around talking to myself, of course, of course. Man, it's got so many voices.  0:20:00 - Anne So are you writing down then the name and then you write down the qualities of the characteristics or how you get into it. Is it a kick phrase? Maybe that gets you into the character.  0:20:10 - Tom Well, there's certain words, for example, you know, I came up with for Christopher Walk and I came up with the word pantaloon being the perfect Christopher Walken word. I'm thinking cowbell but that's yeah, cause. Well, that's, this is before cowbell yeah, before cowbell.  0:20:26 - Anne But pantaloon automatically gets me there. I love it. I love it Cause I say it.  0:20:33 - Tom I can't help but do more. Christopher Walken, who doesn't like a nice pair of pantaloons?  0:20:43 - Anne I love it. I love it.  0:20:44 - Tom Cause you want your calves exposed. So yeah, and then with Kurt Douglas, it was horse, oh Horse, okay, I'm going to read my horse. If I say horse, I go into Kurt Douglas Well.  0:21:01 - Anne I think there's something always so obviously so entertaining, but something that just draws people to comedy. What are your thoughts about this crazy, chaotic world that we live in today, and where does comedy sit now, I mean, in terms of how important is it?  0:21:17 - Tom I think comedy is as important as it ever was. And it's in a weird place right now, cause I think a lot of people are reacting to people saying words and there's a lot of people getting offended easily and comedy is not for those folks that have thin skin, both sides of it.  I find it funny that I think a lot of comics right now have thin skin as far as getting some criticism back, cause it's also about growth. What was funny in 1970, if you listened to comedy in 1970 or the 80s, it's not as funny now. In some of it's just not funny at all. We grow, we expand, we move on, and to me, that's what's great about comedy is it's about adapting. You're always adapting. You're always growing, as you should be as a person. So to me, if you're moving the ball forward constantly in your life, you're gonna be a better person than you were 10 years ago. So why not take that to comedy? Absolutely, the things that were funny like 15, 20 years ago are real cringy right now, and it's not because they weren't funny back then. They were. It's the same reason I get upset with people who go back like 20 years and go. I can't believe you said that back then.  0:22:28 - Anne Well, back then that wasn't offensive.  0:22:30 - Tom Exactly, we didn't find that offensive back then. Now we've all grown up and we've all moved on a bit and we understand that's not the same. But don't punish me for something that was okay Back then. Mark Twain, who wrote a famous book about a guy named Tom Sawyer, had a lot of cringy stuff in his books. There's still masterworks of literature, but those were the times. We have to accept. That's where those books came and there were a reflection of those times. Same way we would stand up. So to me it's just about. Everybody just needs to grow up. Everybody needs to understand where everybody was back then and where they are now and be better for them.  0:23:06 - Anne Yeah, yeah. Do you find that you miss owning a comedy club or booking talent or having that in your life?  0:23:12 - Tom I miss working with young comics. That's the thing I miss the most and it was actually when I started. The last version of Cubs when it exists now, because it's a 400-seat room has really amazing acts, but they're much bigger acts and they generally bring their own acts with them, and comedians who can bring their own acts generally don't bring really really great acts because they don't want to have to work as hard. I would make comics work hard because I would have really good acts going on before them.  Sure, so they have to try to continually stand tall, so they had to keep their game. My thing was like Interesting strategy. I like that yeah yeah, absolutely Nobody could coast. And then later on it was comics they would bring in.  I didn't think they were as talented as some of the people I could book with these guys, and so I wasn't really working with the comics anymore as much as I used to, and so that's one of the things about smaller room is you can get to work with younger comics and you get to tell them the dos and the don'ts and hopefully guide them to a path where they can be their best selves on stage. Sure, that part I miss.  0:24:14 - Anne And actually, speaking of that, what sort of advice would you give to voice talent out there that want to continually up their game and stay on top of the voiceover game, because, boy, it's competitive out there, super competitive.  0:24:27 - Tom It's crazy, it's crazy.  0:24:29 - Anne Like just as I'm sure it was in comedy and being in the club. It's such a mental game a lot of the times too.  0:24:34 - Tom Yeah, the nice thing about voiceover having been a stage actor very early in my life is you don't see the person who you're auditioning for, so you don't see that look, as soon as you hit the stage, that you've already lost your audition. You're not the person they're looking for, and that's so disheartening sometimes so at least you go into every audition with this could?  0:24:56 - Anne be the one.  0:24:57 - Tom And I love auditioning, so I love going into another character or finding something I haven't found before, or even sometimes there's a couple of characters I do that I think, oh man, this one is definitely gonna find a home someplace. It's just a matter of getting in front of the right casting person hearing it. So I'll bring out those guys every now and then, when it's the right opportunity for those characters, cause they're like they're my buddies. I want them to succeed. Yeah, I think just have fun in the booth is the main thing, and if you need to take a break, tell your agent I need to take a break. I mean, I talked to other voice actors and it gets a little depressing. Everybody came in this business thinking that everybody always said I should be in voice acting and everybody always said this is what I should be doing and I did it and nothing's happening.  0:25:43 - Anne Yeah, what's your advice for that? Because that becomes like a mind game. It becomes like oh my God, I've done all this work, what else can I do? I mean, what would you suggest in terms of getting work? It seems like the question I get most often as a coach is like so all right, I've got this great demo now and had this great coaching, and so now, where's the work? How do I get the work? Or how do I stand out?  0:26:04 - Tom I think the thing about it is acting as a lottery. You're buying a lottery ticket is what you're doing. I mean, carlos Alice Rocky was a comic Lucky, had a job, state entertainment state creative, but it was getting the Taco Bell, chihuahua and all those people you auditioned from and he hit it, hit the lottery, you know so, and from there he's done so many other things. But when I say who Carlos Alice Rocky is, when I bring him up, I always go the Taco Bell, chihuahua guy and they go oh, I love that. So it's the same thing where you just go, my lottery ticket is gonna come and you're gonna believe in yourself.  When you believe in your talent and talk to other people in the business too. Just do classes I think it's still a good idea to do, just as even a workout session. Plus, you get some inspiration from other people who have a different style, maybe that you see something in yourself or you bring out something in yourself you didn't know was there. So I would say, take a class every now and then network with other people who just to have support, just so, hey, I'm here for you when you're down on yourself, in the same way that if I need somebody to talk to and say, hey, I'm really kind of wondering what the hell I'm doing here.  And they can talk you down from being sad or lift your spirits up and let you know you're really a talented person. That's why you got into this whole thing in the first place.  0:27:16 - Anne Yeah, I think that self-sabotage can happen to the best of us even.  0:27:20 - Tom And then sometimes you'll hear it in the reads. I mean, again, I'll go into a class and you can tell the person who's been beat down on pretty bad by themselves, mostly Cause do you have an agent? Yeah, do you have a demo? Yeah, well, you're doing all the right things and I think it's good to have an agent or two that are giving you good feedback or giving you feedback.  0:27:40 - Anne I was with an agency that way too many people.  0:27:43 - Tom The poop sticks agency you have 400 people that they represent and you just go. That's too many. I don't feel special when you're just going okay.  You got a demo, you're in. So I think, being with a smaller agency, that's a little more hands-on. Both my agents give me feedback every time, even if it's just a nice job. Yeah, and because of that I feel like I'm better for it, because I already know if I see a script, I know exactly what kind of read in the ballpark I need to be, so that's what I'm gonna get back. I'm at the point now where I really get back oh, you need to do this, this is too much, and something like that. So it's always I recognize what I'm working with right away. I do it, get it out, get the feedback, forget about it.  0:28:26 - Anne That's what you gotta do. I think a lot of people really crave feedback in this industry because we are just in our studios, kind of just talking into our little four padded walls, and so a lot of times it's hard when you don't get feedback and it's interesting.  0:28:40 - Tom Yeah, especially if you don't have a partner in a relationship, you know where you can at least go hey, honey, what do you think of this?  0:28:47 - Anne Yeah, you can bounce it off.  0:28:48 - Tom I don't bother my wife with everything, but every once in a while, you know, I go. You know, what do you think of this? Or she'll hear me and she'll go. I need to hear the whole thing. She'll hear me in my booth screaming, you know. And then now she has to hear all the stuff I did in that character.  0:29:04 - Anne I love what you said about well, at least when you're in front of a stage, I can, you can get that reaction from the audience. You know that, if you've bombed or not already, and the fact that when you're in your studio you actually use the fact that you're not in front of an audience as a creative kind of positive outlook, that you can be creative and not have to face that which is so interesting from, let's say, somebody that doesn't necessarily or hasn't started from being on stage. They might've worked a corporate job and now all of a sudden they're getting into character acting, and so they don't have that perspective. So I really like that perspective of taking the challenge and I think the creativity has to be in your brain, your imagination. You have to imagine that character in that scene, which is so difficult for some people. Do you have any tips on how to really create a scene realistically while you're sitting here in your studio?  0:29:53 - Tom Yeah, I think the most important thing, especially when you get those video games where it's like one line, one line, one line, one line, five, one lines and they're like hey, don't touch that rock and you're going. How are these people going to book somebody based on five lines that are no more than 10 words for the longest one?  and you're going, how am I gonna stand out in front of anybody? So you gotta kind of create a scene around those and those. I generally will write a bigger scene for the line and then because I'll have the line in there and I'll make sure that it doesn't bleed into the other words that I'm saying, but that gives me a little bit more emotional pop for that line.  0:30:35 - Anne Are you developing the characters that you're interacting with as well?  0:30:38 - Tom I know who I'm talking to. Yeah, so I might not have the character fully developed, but I know who I'm talking to.  0:30:44 - Anne Right, and what's happening in that scene? And what's happening, yeah, and you actually write that down.  0:30:48 - Tom I'll go on Word, I'll cut and paste the lines and then I'll put words around the line and highlight the line that is actually in it. So I have all the other words and a highlighted line to make sure I hit that one. But I know what's going on and I try to create more around it.  0:31:05 - Anne So how long would you say do you spend, let's say, analyzing and doing all that work? How long would you say you take for an audition to kind of do that creating the scene and writing that down before you go in and record?  0:31:17 - Tom It depends on my schedule and what I have to do and also how much I think something is really in my wheelhouse. I mean there's things you get where it's like I knock it out in 10 minutes because I really have a solid idea of what I'm gonna do with it and I go and do it and I listen to. It sounds good. With characters, though, with video games and animation, I really like to do as much as I possibly can. I remember I did this video game audition where the character was cockney. I called my dialect coach and we went through the whole thing together.  It was like a class for me. I thought this was a good opportunity to have a little class on doing a cockney accent and I said can I book our session with you? And we just worked on the script I was auditioning for because I really I loved it and I really wanted to nail it and, regardless, I got a class out of it. So it did two things for me helped me learn, and I put that learning to immediate use.  0:32:11 - Anne Absolutely absolutely.  0:32:13 - Tom And again, that's a really good thing to do is have a network of people, find a good dialect coach, find people that are teachers or coaches that you can work with, that you can go to and use them when you need, when you're stuck or when you just need something. Had a Pixar audition that I did and the character was obviously somebody from Eastern Europe and I had a friend who's from Ukraine and we went through the script and she helped me with some of the pronunciations and I didn't book it but I really felt confident sending it in.  0:32:45 - Anne I really felt like I nailed it Exactly. I love that because you've gotten the worth out of it, whether you booked it or not. So that's the other thing. So when you really are excited about something and you do all that work and you feel like you nailed the audition, but then you didn't book it, thoughts on how to stop that from getting you all upset and, oh my God, that's it.  0:33:03 - Tom Well, it's sort of like you still have to go. This is out of my control. I have no idea what the other person at the other end is going through what they've got in front of them. If they end up going with somebody that they've already booked for something and they can give them another character because union rules and it's like you did a really good job, maybe even better than that person but they're already booked and they don't have to pay another person to do that voice. They can do up to three voices and not get a penny more. So they go. Let's just give them that, so you don't know all the little things that transpire for somebody to get that part over you.  0:33:35 - Anne Yeah, and I think it's important for people to understand that it doesn't necessarily reflect on a poor performance or a poor audition.  0:33:42 - Tom No, my agent is a very funny woman and my auditions who I'm getting in front of have escalated. I'm doing more Disney Pixar auditions and stuff like that and she just goes. You're feeling upwardly.  0:33:53 - Anne There you go. I love that.  0:33:56 - Tom Which I thought was hilarious, because we always think we're failing. We're not. We're all doing the best we can and we're all doing great auditions. But because I'm doing so well in my auditions, other casting people are getting interested, so I am getting in front of people that I didn't get in front of, like four or five years ago.  0:34:12 - Anne Awesome, that's awesome. So even if you don't book the job, you could be making an impression on someone that can get you maybe the next job or the job after that.  0:34:21 - Tom That's the idea. They go well.  I really like that because you don't know, when I was booking COBS I would get DVDs and before that VHSs of comedians from around the country. We were very well known so I would get them from New York, boston, other parts of the country and they'd just pile up on my desk because it was excruciating for me at some times. So then at one point, when they were ready to fall over, I would just start watching them. In the beginning I would watch two or three minutes of somebody. Then it came down to just 30 seconds to a minute, because you know right away and that's how I'm sure it is for casting people.  0:34:56 - Anne You know right away if there's talent or if they were gonna be bookable absolutely or if they're right or wrong.  0:35:01 - Tom You might like them and you might wanna listen to the whole thing and you would go ah, they're just not quite right. I need a little bit of a younger voice. This is obviously somebody who's an older voice and I think it's really. I mean, I try to do what I can and have as much fun as I can, because there's gonna be probably 10 years down the road where this voice isn't gonna sound the same and I'll be doing grandpas and wizards.  0:35:22 - Anne So yeah, our voices do change as they age. I have experienced that myself. I certainly sound a whole lot different than I did 10 years ago. Well, well, this has been an amazing discussion, Tom. I so appreciate you taking the time and just dropping all these wonderful tips and tricks and words of wisdom for the boss listeners out there.  0:35:45 - Tom Yeah, yeah, have fun kids. That's the message.  0:35:47 - Anne There you go. I love that. So, bosses, I want you to take a moment and imagine a world full of passionate and powered, diverse individuals giving collectively and intentionally to create the world that they wanna see. You can make a difference. Find out more at 100voiceshoocareorg. And a big shout out to our sponsor, ipdtl. You, too, can network and connect with amazing people like Tom. Find out more at IPDTLcom. You guys have an amazing week and we'll see you next week. Bye.  0:36:18 - Outro Join us next week for another edition of VO Boss with your host, Ann Gangusa, and take your business to the next level. Sign up for our mailing list at vobosscom and receive exclusive content, industry revolutionizing tips and strategies and new ways to rock your business like a boss. Redistribution with permission. Coast to coast connectivity via IPDTL.  Transcribed by https://podium.page  

https://www.thebereancall.org/content/t-mcmahon-ron-merryman-part-2More topics on our website: https://www.thebereancall.org/topicsFree eBooks: https://davehunt.orgDownload our app: https://www.thebereancall.org/appFollow us on Social Media: https://www.thebereancall.org/socialTom: Thanks, Gary. Today, my guest is Ron Merryman. Ron is an author, former Bible college professor and president, long-time pastor, and is involved currently in writing as well as speaking at Bible conferences. Ron, welcome to Search the Scripture 24/7.Ron: Oh, thank you very much. I consider it a great privilege to be with you all.Tom: Thanks, Gary. Our guest again is Ron Merryman. He's the…well, he's an author, former Bible college professor and president, and longtime pastor, and is currently involved with writing as well as speaking at Bible conferences. Ron's website is merrymanministries.org.Ron, before we get onto where we left off last week, I've got a question for you: didn't you say that your mom and dad were Czechoslovakian?Ron: My mother came from Czechoslovakia, an immigrant family—both her parents were from Czechoslovakia. My father was not. My father had a long history in his family [of] generations in the United States. They came to Virginia colony very early on in the 1600s.Tom: Yeah. Well, the reason I bring that up is because I guess I misunderstood you last week. I was saying, “So Ron, where did the name ‘Merryman' come from?' [laughing] It's a terrific name…Bitchute: https://www.bitchute.com/thebereancall/Brighteon: https://www.brighteon.com/channels/thebereancallGab: https://tv.gab.com/channel/TheBereanCallRumble: https://rumble.com/user/thebereancallOdysee: https://odysee.com/@TheBereanCallVimeo: https://vimeo.com/thebereancallYoutube: https://www.youtube.com/user/TheBereanCall/videosFacebook: https://www.facebook.com/thebereancall/Freetalk45: https://freetalk.app/thebereancallGab: https://gab.com/TheBereanCallGettr: https://gettr.com/user/thebereancallInstagram: https://www.instagram.com/thebereancall/Mewe: https://mewe.com/i/thebereancallParler: https://parler.com/profile/thebereancallTwitter: https://twitter.com/thebereancall

What would it look like if you could harness the energy of a conference and convert it into effectiveness? What would it feel like to be your own boss in the voiceover industry? Our esteemed guest, Tom Dheere, joins us as we unravel the answers to these thought-provoking questions. We share valuable insights on setting the right objectives, maximizing conference experiences, and the commitment required to become a full-time voice actor. Plus, we examine the liberating perspective of entrepreneurial freedom offered by the voiceover industry. 0:00:01 - Anne Hey everyone, welcome to the VO Boss podcast and the real boss series. I'm your host, Anne Ganguzza and I am so happy to bring to this series Mr Tom Dheere. Thank you so much, tom, for joining me on this.   0:00:15 - Tom Yay, thank you so much for having me. I'm very excited about this. This is going to be great.   0:00:19 - Anne Oh, tom, first of all, it was so awesome to see you at the One Voice conference.   0:00:25 - Tom Yes, likewise.   0:00:27 - Anne I know we just had. You were just a guest on my podcast and, lo and behold, like two times I see you within the span of a month or two, which is really incredible, right?   Sometimes we have to go to conferences to just meet in person so whew, I was exhausting that conference, but super motivating, and I know a lot of people who went to that conference are all revved up and ready to go, motivated, inspired. We took amazing classes and so I think it's a good time to talk about. You know, what do we do with all that amazing energy that we just absorbed in that conference? Because I'm revved up, I'm motivated, ready to go. What can we do to, I guess, keep ourselves or keep the momentum going, tom?   0:01:16 - Tom That is a fantastic question and I know you've been presented at dozens and dozens of conferences over the past 10 years, and so have I, and we go and we meet wonderful people and we present and we also attend workshops and panels and we learn a lot and we get to commiserate with our peers, voice actors and coaches and other producers and stuff like that. And then there's this glow.   0:01:42 - Anne There is a glow. It's wonderful glow. There is a glow.   0:01:46 - Tom And then you go home and then for the vast majority of people that go to these conferences, it's like whew.   0:01:53 - Anne And then life sets in right. I have laundry to do. Yeah, family, yeah, right Bills and auditions and stuff like that.   0:02:02 - Tom So it's great. Conferences are great for, obviously for education. They're great for networking, they're great for renewal of purpose, refocus, re-energizing. The trick is how to take all that positive energy and inspiration and revved up-ed-ness and coming, taking it home with you and turning it into effectiveness. Because the positive attitude, while great it can only get you so far, it's not going to get you home. You're going to run out of that momentum and now there's work to be done.   0:02:37 - Anne Interesting, tom. Before we went to the conference, I think somebody had actually created a note sheet of like here are the I guess the talks that I want to go to, here are my goals, or here's what I got out of it, and I thought it was a really great way for people who like that type of thing and they take a lot of notes to write down your objectives. What are you hoping to get from that? And then what do you hope to do once you get, maybe once you get home, to put those lessons learned in place? And so I think that maybe everything should start even before we go to the conference in terms of writing things down and what is it that you hope to get out of this conference. And I'm a big planner, so I am a big proponent of yeah, you guys should plan out what sessions you want to go to, look at the schedule multiple times and just see how you can get the most out of the money that you've spent on that ticket of yours.   0:03:33 - Tom Yeah, absolutely, and different people at different points in their voiceover journey go to different conferences for different reasons, if it's. I've never been one to been one to one before, and I just want to. I haven't even produced a demo yet. I just want to see what this universe is like.   0:03:47 - Anne Great.   0:03:48 - Tom If it's, this is my 15th conference. I've had all these demos done, I've gotten all this work. What am I going to get out of it this time? Or some people go because they specifically want to meet you, or they want to meet another coach or demo producer to see, I want to get in the same room with this person and see if we click because I may want to work with you as a coach or a demo producer. Um, you know, and some go purely as presenters and you know, and then they, you know, do their stuff and then they get out of there and yeah, which is which is which is cool too.   0:04:19 - Anne I think there's such a, there's such a momentum to be gained by just joining forces with like-minded people and, just you know, renewing um relationships, and that just keeps you going, because it's so isolating sometimes just what we do and yeah and I will tell you, though, that the other day I was I don't even know what it was that made me think of it, but I I think I was getting ready to, you know, start.   I had a full day of students, and I said, I don't know what made me think about, oh god, what if I had to go to work for somebody?   um, you know, back in my days of corporate and I'm like I I could never do that again. So boss is out there. This is just a little segue. If you, if, if you know that this is what you want to do and you end up pursuing it full time, I don't say rush into it with your, you know, with your eyes closed. But, um and Tom, we can talk lots of strategies about that, but once you make that decision to go full time, I don't do you know anybody who's actually gone back because they've been unhappy being their own boss um, I know lots of people who have gone back to a regular job because they just couldn't book enough right they needed the money.   0:05:24 - Tom Yeah, exactly, it was purely financially, like I've been trying this and I just, I just can't get enough work to sustain myself and they've come gone back. Um, I can't think of anyone specifically, but I'm sure there are people out there, because there are people who just like to be told what to do, because then they don't have to think about it and there's a level of security in that and I totally that's sympathize with that.   0:05:45 - Anne I'm not one of those people, I can't. I don't, I don't think I could, I could not go back to taking now, I think, now I can take. I can take instructions from my client. Sure, I can be directed um, and then I want to get paid and be done with it. I think that's really it's. It's an interesting. It's an interesting, it's a different dynamic, because that's a, that's a, that's a business to business thing where you and the clients are on equal footing there's no high. There's no hierarchy.   0:06:10 - Tom It's it's you and the client trying to make this finished, great finished product, which is, you know, the audio files that you're gonna send to them or their, their source connecting you through. But with what? When it's a, I am in charge of you and. I'm telling you what to do, and this is when you can go to the bathroom and stuff like that it's like ah, I don't know if I could.   0:06:29 - Anne I don't know, I don't think I could go back to that it makes me think of okay, it's similar to I know I just went off on that on that weird tangent, but that happens sometime, bosses, sorry, um, but it was just a weird like. It just came to me. I was like I could not work for somebody now, so I will do everything in my power to make my business so that I do not have to do that. I think that also was leading into that.   But I think isn't that similar to, let's say, I, I pay my money, I get my ticket, I go to a conference, I take these classes, I'm inspired for a new genre, I'm inspired to work with a new coach, and then we come back and, oops, we're by ourselves, right. So now, yeah, it's very similar to what now, you know, we're gonna be talking about is we've got to take the reins and we've got to do the work and it's, it's now up to us, and we're not necessarily having that coach or that director saying, okay, do this, do this, do this. Now we've got all of this energy and this motivation. How do we cement that and you know, and and start to just really move forward on that?   0:07:27 - Tom right. The trick is if you want to be the vo boss you need to learn how to be your own boss. Yeah, yeah, you know it's empowering to like be the boss. Yeah, I'm a tough boss. I'll tell you that my boss is a jerk my boss, I would say my boss is a bastard oh, I just said that oh. I had another word in mind, but I didn't use it.   0:07:49 - Anne I'm not sure if we'll bleep that out, but yeah woo, I'll tell you what. I've never worked for a harder boss, but isn't that true?   0:07:57 - Tom yeah, yeah, I'm hard on ourselves. I'm pretty real, I'm I'm often pretty relentless and I have to be because I have this bad habit.   0:08:05 - Anne It's called eating and and having a roof over my head, yes, and not living in a cardboard box, yes, yeah, you know.   0:08:14 - Tom So yeah, the motivation is like there's no net yeah, you know what I mean. If I don't audition for this, there's a 100 chance that I'm not gonna book it well, yeah, and I think that's what propels me for sure you know what I mean to get work done, I mean right the fact that I need right.   0:08:30 - Anne I need to be able to pay the mortgage right, and that's the, and that's a.   0:08:33 - Tom That's a great point, anne, is that different people need to find different motivations. To stay motivated when you are alone in your booth talking to yourself? You know, so that's a big part of you know I talk about effectiveness. There's a difference between talent and effectiveness. There's a lot of talented aspiring voice actors out there with interesting voices but like I have an interesting pen, it doesn't make me an author, you know.   0:09:02 - Anne I own a wrench. It doesn't make me a plumber, so having talent, voice doesn't make me effective. Yeah absolutely.   0:09:11 - Tom You know, because no one's going to get discovered, you're not going to get your big break. It doesn't really work that way.   0:09:16 - Anne It's what you do with that pen that matters. It's what you do with that voice that matters.   0:09:20 - Tom Exactly and consistently. Yes, absolutely so when you get home from that conference and you've got all that positive attitude. That's great If you can bottle it and put it on a shelf for later.   0:09:30 - Anne That's great.   0:09:31 - Tom But when you get home, it's about what can I do to be effective today, tomorrow, next week, month, quarter year, two years, five years? And I'm not necessarily talking about writing a business plan, which is something I do do as the, as the video strategist, but it's about how do I think about myself to stay motivated. How do I think about and understand the voiceover industry? So there's a reality, because that's the other thing and, as you know, people coming into the industry have no idea what the industry is. They just have this odd preconceived notion of what it is. Oh yeah, I talk interesting. I got to just get an agent and then they'll just throw Saxa cash at me.   0:10:10 - Anne Exactly and I think, yeah, you don't know what you don't know right.   0:10:13 - Tom You don't know what you don't know.   0:10:15 - Anne And especially not only that is it a new industry for a lot of people, but it's also the fact that there's a lot of people who are very unhappy in their current job situation and get out of that work for somebody else, but then working for yourself is a whole different animal and that really is, I think, where the double it's.   The double whammy comes in for those people new to the industry, because not only are they trying to acquire the skills to be a good talent, but now they also have to have good business skills as well, and they're not used to working for themselves or having to go out and market themselves and get work and all those hats that they've got to put on.   0:10:58 - Tom Yeah, I had a maybe 15 years ago here in New York City. I had a 10 minute meet up with an agent I don't remember which one but he said tell me about yourself. And I talked about all the things I do. He's like, wow, you got a lot of hats.   And I'm like, yeah he's like but you only have one head and I'm like, yeah, so you kind of to be an effective voice actor, you need to kind of be the Dr Seuss Bartholomew in 1001 hats and have all those hats stacked up on. Some of them, some of them, you can take on and put on and take off, but a bunch of them you have to have stacked on your head at the same time, because there is no job description for being a voice actor.   I mean, there is, but nobody knows what it is, until you get here and it's like unlocking these doors and you know, moving these hedges aside and going oh, I need to do, I have to do that. You know it's like. It's almost like a maze, which is the logo of the VO strategist. Now that I think about it helping you navigate the voice over the industry, absolutely. So, navigating the maze of what it means to be an effective voice actor, and staying motivated at the same time. Because, yes, invoicing.   0:12:08 - Anne Staying, staying motivated when you're doing something like accounting.   0:12:12 - Tom Like for me.   0:12:12 - Anne I mean, well, I'm not. I mean, there are some people who love accounting, right, so there's accounting for me. How do there you go See for me? I'm like, oh God, actually I will tell you, tom. So for me, staying motivated while I have an S corp, right, and an S corp is creating all of this paperwork for me and for me, I can't, god it's, and it's just like I need to, either just, you know, be educated about, you know, the entire S corp thing, or I outsource, right. So I think if I had to do all that paperwork and try to understand it all and to stay motivated, it would be very, very difficult for that to happen, and it may discourage me from wanting to have a voiceover business because of this paperwork that I continually have to supply to the government, to you know, support this business, but I, you know, for me one of my solutions is to outsource that right.   And make sure that I have somebody that I trust and can go to if I have any questions, that can handle that aspect for me. So if I'll, I know, constantly get mail, mail, snail mail saying you need to provide this information, or you owe us this amount of money, or you need to prepay this or you know whatever that is, and so I literally will just be like, oh my gosh, this is a lot of paperwork. So I will literally scan that in and send that to my accountant, which, by the way, I will say to the to to my dying day, I will say my accountant was my very best investment for this business. I just I can't. I can't do the numbers.   0:13:45 - Tom Right, well, and that's that's a very important point, and is that if you're getting into the voiceover industry, obviously you need to understand what does that entail on you know soft skills, hard skills, hardware, software, marketing, money and all that stuff, and you need to know, you need to have an understanding of what your S corp is, or what this is, where that is, and then you can decide okay, this is a skill I need to just understand, but I'll outsource it and this is a skill like, for example, using your DAW.   0:14:14 - Anne You have to know how to use your DAW.   0:14:17 - Tom You need to know how to audition and you need to know how to record and clean up and save and, you know, deliver audio file. Some stuff is non-negotiable. You know what I mean.   0:14:27 - Anne But managing your S corp, you know right, that's another thing.   0:14:31 - Tom Or if you're an audio book narrator or a long form e-learning narrator, do you want to hire an audio, an audio engineer, to clean up your clean up your audio or do you want to do that, Do it yourself? Or do you say do it yourself first to understand how it works and why it works and then outsource it? And I'm sure some of your bosses are thinking I don't have that money. To outsource yes, I don't have the money to outsource.   0:14:54 - Anne You need to invest your money to make the money. That's what I always start by saying invest the money to make the money, but and maybe not try to put yourself wholeheartedly into the business until you do have money that you can invest, because that would be, from any perspective, any business. You have to have some investment money.   0:15:15 - Tom I mean it's not just voiceover, just some.   0:15:17 - Anne for some reason it became this like oh, we just talking to a microphone, how easy is that. I don't need to have any money or be prepared, or maybe I just got to buy a mic.   And that, I think, is where, where in the problem lies, where then you start to have, you know, predators in the industry that will sell that dream and people who will get taken for that dream and without the realization that, yeah, they have to put things in place and make investments to do that. So let's, let's kind of go back to we've gone to a conference and we've gotten motivated, and even it doesn't have to be a physical conference, it could be a virtual, online, you know, workshop or whatnot. I just went to a workshop called Unstoppable you. It was a Tony Robbins thing, which was all about the motivation, all about the motivation.   But yeah, now that you've, now that you're motivated, you've got to do the work and you've got to maybe take a look at the hard like really take a look at the the hard questions and and then make concrete steps to move forward. So it's like I can ask the hard questions. I can maybe, I can maybe get through the answers and they might make me cry, some of them Right, they right and so I can do that, but now I have to actually do the hard part, which is moving forward. So what, what would be the first thing you would recommend? Let's say, somebody that comes back from a conference or, you know, a workshop or whatever, and maybe a meeting with a coach and they're they're inspired, they're motivated. What's the first thing that you would have them do?   0:16:46 - Tom The first thing that I would have them do is write down in severe detail what they're perfect.   0:16:51 - Anne Severe detail, not just detail. Severe detail, severe detail.   0:16:55 - Tom What their perfect voiceover day looks like.   0:16:58 - Anne Oh, okay, okay. Follow me with just work with me for a second.   0:17:02 - Tom What time of day are you waking up? What time zone are you in when you wake up? Are you waking up in a house, a cabin, a condo, a space station?   a bunker, a submarine Like? Where are you waking up when it's time to start doing voiceover? Does the limo pick you up? Are you walking downstairs into the basement? Are you getting on a bicycle to go downtown? Are you going into your backyard to your custom built booth? Are you going into the attic? Are you taking a bus or a train? And then, when you get there, what are? What kind of? What kind of bookings are you doing? What genres or subgenres of voiceover? One or more? How much are you getting paid? Obviously, we all want to get paid as much as possible, but what is that actual number that you need to cover all of your voiceover expenses, all of your personal expenses? Manage your debt, save for retirement, save for that college education for your kids, save for that car and have enough to have a little fun.   0:18:01 - Anne And this is before. You're a working talent, right, this is still a, really, if you're just new to the industry and you want to get into it and you're let's say, you're in the process with a coach and you're making demos.   You want to project what genres? First of all, if you're working with a coach, you should probably have a genre in mind already yes, right, and with a genre specific coach. So you kind of know where you want to go. But putting that down, right, even if you're not actually doing the work as you were mentioning okay, this is the work, I'm going to be doing these auditions, even if you don't have audition opportunities yet and you're still just working. Put down that on the list because you want to make sure that you have the space for it and the time for it. Right, right, right. And then the goal, steps, the steps.   0:18:42 - Tom Right, exactly. And once you have that perfect day realized, written down in severe detail, you walk that backwards to the day to the moment that you're writing that list. What are you missing between right now and that perfect voiceover day? What money, how much money do you need? What training do you need? What tools do you need? What marketing acumen do you need? All of the things big and small, knowledge, hardware, software, tangible, intangible mindset to get you where you are and figure out what are you missing and what you need to do to fill those gaps. So when you come home from a conference, all motivated, try to figure out what the practical application of all the wonderful information that you just collected is. We go to all these workshops and listen to all these panels and take all these notes and some of the knowledge is immediately actionable and others are, for you know, I took this genre workshop. I'm gonna keep these notes and maybe I'll be ready for it in a year or two.   And so on and so forth. Organize, organize everything, because you need to figure out how actionable and practical everything that you need is to do to get you to that perfect voiceover day and use the glow and energy and momentum of the conference that you just got home from to kind of build that foundation, build that scaffolding, create that structure. So, when you get back into the day to day grind of trying to build or develop or nurture your voiceover business, you have effective systems of thought and effective systems of execution.   0:20:23 - Anne And let me interject also what I think is important is, of course, yes, you took that workshop on animation or whatever promo, imaging, whatever it is, you know, medical narration, I say because I just did that, love it or corporate.   I think that you always have to keep your eye on the market. I gosh, I feel like sometimes we become so blinded by our own like performance because we're like, oh, I want to get really good at animation or I want to get really good at, you know, whatever commercial or corporate. But I think we always have to keep our eye on the marketplace because if there's not a demand or if the demand is not as big and I'm always telling this to my students about corporate, it's a huge market, is a huge opportunity there Versus animation. Not that there isn't a huge opportunity there, but there's less of an opportunity there than there is in corporate. There's more of an opportunity in e-learning than there is in even I would say, promo, promo, of course. Right, documentary. Everybody that comes to me for narration says I want to do documentaries and I'm like well, how many documentaries do you think there are at any given time? Do you know?   0:21:32 - Tom what I mean yeah.   0:21:33 - Anne Compared to the 30.4 million registered companies that have a product or service to sell that need a corporate narrator.   0:21:40 - Tom And need human resources videos and need orientation videos and need compliance videos Right.   0:21:45 - Anne And I think that that is something that we really need to take into consideration at all points in our business, because that will affect right when you're talking about here's where I am. Here are the here's my perfect day, here's where I want to be, I want to be animating, I want to be doing animations on television or whatever that is, or I want to have a national commercial spot. That's all well and good. However, I think that you also have to take in account what is the market for that? Is there okay? Are you going to be able? And I used to think erroneously back in the beginning, before I realized what the market was oh, I just need a commercial a day, right? Or you know, oh, wouldn't that be nice.   Oh yeah, tom, we're talking about real talk, right? Real bosses. Well, okay, I don't know anybody that gets a commercial a day, except for people who are maybe on rosters for serious exam or they're doing, and that's usually for lower pay. But if you're thinking like, oh, if I got a national spot, even one a week, right, I mean, unless you're in it, voice for a campaign. I mean, I love how you laugh, that's the perfect way.   0:22:46 - Tom Well, I laugh because I thought I had to sound like James Earl Jones.   0:22:47 - Anne Right, I mean yeah, and so like that is. You know you have to understand what's realistic for the, for the industry too, when you're jotting these down. So any education that you can get on that right. Listen to podcasts like Vio Boss. I mean, we've been doing this for six years, right, talking about markets and business. And, tom, you've been doing gosh. How many years have you been doing business consulting?   0:23:10 - Tom and strategizing Over 10 years.   0:23:12 - Anne Yeah, over 10 years and specifically in our industry, and so, like guys, I mean, look, I'm not saying of course you should come to us, but I mean we've been doing this for a long time, we've watched the market evolve and so that's why I want to point it out and say that this is so important for us to have in consideration in our, in our step by step process of here's where we are, here's where we want to be. Now, if I want to be, you know, a commercial, you know Vio artist, well, maybe I want to think about another genre as well, to add in, to supplement those days when I don't get the national campaign every day. And I'm not trying to crush your dreams, guys, that's just not, that's just not it. But you know we're. This is a dose of reality, right, tom?   This is our whole series is based on let's talk real yeah.   0:23:57 - Tom The reality is is that you may be. You may be good at something you don't like, and you may not be good at something you do like.   A lot of people are drawn to the industry because they love cartoons and video games, and a lot of them may not be good at it, but they may find out that they are good at corporate or e-learning, which is a far more to your point, stable form of voiceover income, because, when it comes to effectiveness, the bottom line of effectiveness as a voice actor is you're able to make money. You're able to develop a revenue stream.   0:24:28 - Anne Develop any revenue stream that you need to make. Yeah, develop any revenue stream.   0:24:32 - Tom you can in any genre, whether you like it or not, and I always say all genres of voiceover is storytelling. I get my storytelling jollies out of any voiceover genre.   0:24:44 - Anne I don't care Teaching statistics right or you're narrating corporate responsibility or HR policies. You are absolutely a character and you are acting, and so that is a requirement, that is, I mean, baseline requirement, especially now when we talked about this in our last podcast. It is such a requirement for us to be the actors that we are called to be, I mean, and that includes all genres. So, yes, and that's the reality, that's the real talk.   0:25:14 - Tom Yes.   0:25:15 - Anne The real talk is you've got to invest in yourself, in developing those skills and getting good coaching, and not just taking acting classes. I know everybody would say take an acting class, and I think that's wonderful too, but you've also got to take acting classes as they pertain to voiceover as well.   0:25:32 - Tom Yes, there's a crossover. I mean, I always say improv classes are extremely important because it gives you the ability to make strong decisions quickly while you're narrating your copy. But to an end, compliment stuff like that, and there's like there are people who do improv for voiceover and acting specifically for voiceover. It's a very specific skill.   0:25:54 - Anne There's very specific muscles that you need to flex, Absolutely, absolutely To be to do voiceover as opposed to on camera or as opposed to theater. I'm all about teaching the acting for narration and, by the way, tom, I miss you. I don't see you. Did you turn your camera off by any chance?   0:26:09 - Tom No, I'm still here.   0:26:11 - Anne Oh, I don't see you how interesting. That's that's. Do you see yourself?   0:26:16 - Tom I do.   0:26:17 - Anne Oh, okay. Well, I'm just going to assume.   0:26:19 - Tom Okay.   0:26:20 - Anne I'm going to assume that it just kind of blipped off. But you know, hey guys, technology Riverside, hopefully we'll have your, we'll have your video anyways.   0:26:30 - Tom Okay.   0:26:30 - Anne Absolutely, so, okay, so, so what a great conversation. So now you're back. Okay, so that's interesting. So now we've taken our, we've come back from the conference, we're motivated, we're, we've written down our, our perfect voiceover day, right and so, and then we've worked backwards to the steps. And so what would be next after that, tom, how do do we need to? We probably need to take time to evaluate whether we've accomplished those steps right, absolutely.   Once we've written them down and we've and we've developed our to-do list. Now we've got to go back, maybe in a week or so or in a you know at the end of the day and say did I accomplish my tasks?   0:27:07 - Tom Yes, self-evaluation and self-reflection is one of the most important skill sets to be an effective voice actor. Because you don't have. Unless you're part of my mentorship program or you're mentoring with Ann, you are working in a vacuum. You need to develop the ability to metacognate, which is the ability to stand outside of thank you, the ability to stand outside of yourself. Look at yourself objectively and say did I do what I assigned to my assigned for myself? Did I do it? Well, if I didn't do it, why didn't I do it? Was there a logistical problem? Was a financial problem? Was there a motivational problem? You know and find out why, why you do what you do, how you tick, and there's a time to be kind to yourself and there's a kind, there's a time to be tough on yourself. You know.   0:27:56 - Anne And so taking I think I've always tough on myself, but you're right, yeah.   0:27:59 - Tom You have to be able to. You have to be able to do both, because we're all human. We all have different energy levels and emotional states that fluctuate constantly throughout the day, week, month, year, decade, and we need to be accommodating for that. Oh, mercury's in retrograde today, so I'm not going to get my invoicing done, or what were you?   0:28:18 - Anne know oh, technology sucks, technology sucks. You know what I mean?   0:28:21 - Tom Oh, great retrograde, yeah, you know but if you find yourself making excuses for yourself about why you're not doing things, then you are not being effective.   0:28:28 - Anne Because I have an, I have an action for it. That's a whole another podcast right there.   0:28:32 - Tom Yeah, I have my action plan right here and I don't check off every single box. I get about 80% of my action plan stuff done every month, dating back to 2006. And sometimes it's-.   0:28:42 - Anne Do you have records from back then? Do you do you have a-.   0:28:45 - Tom I have a binder right here with every single one of these. So January 2006-. I love it Was my first printed one and I've done 12 a year since 2006 and it's in this binder right over here.   0:28:54 - Anne It does not surprise me that you love numbers too. I love numbers, right, yeah, see, and so that I feel goes along with.   Now I'm not so much, although I will. I will share my book is out there, but I have my to-do list that I love to cross things off on and I have my planner where I like to write my goals down. I'm not always as good as I propose to be, but, yeah, I think that's super important. But, wow, what a great conversation. I want to talk to you more, in more detail, about a lot of these steps because I think they're super important in our series. So, tom, thank you so so much for joining me for our first, our first in a series of real bosses.   0:29:35 - Tom Yeah.   0:29:36 - Anne So, guys, if you, I have a simple mission for you, but one that has big impact 100 voices, one hour, $10,000. Four times a year. Do you want to know what I'm talking about? Visit 100voiceswhocareorg to find out more and to join us. And big shout out to our sponsor, ipdtl. We love IPDTL. We love connecting with bosses like Tom and myself. Find out more at IPDTLcom. Bosses, have an amazing week and be real bosses. We'll see you next week. Bye, bye.   Transcribed by https://podium.page

In this week's episode of The Humane Marketing Show, we have the pleasure of speaking with Tom Greenwood about the concept of a Humane Web. Tom is the co-founder of Wholegrain Digital, a trailblazing digital agency that prioritizes sustainability as a Certified B Corp. Renowned for his expertise in business, design, and web technology's role in addressing environmental issues, Tom is also the author of the enlightening book, Sustainable Web Design. Throughout our thought-provoking conversation, we explore the meaning of a Humane Web, its connection to ethical design, and the crucial role website owners play in contributing to a more humane web. We delve into best practices for prioritizing user wellbeing while achieving marketing objectives, discuss the social and environmental impacts of AI, and highlight successful examples of organizations embracing the principles of the Humane Web. Tune in now to gain a fresh perspective on the future of digital marketing and web design. In this thought-provoking episode we discuss about: How Tom's newsletter readers described a humane web and what Tom's definition is What humane web has to do with ethical design Best practices for website owner to do their part to contribute to a Humane Web The winners of a humane web: humans AND the planet The social and environmental impacts of AI How Tom sees the future of humane web and much more [00:00:00] Sarah: Hello, humane marketers. Welcome back to the Humane Marketing Podcast, the place to be for the generation of marketers that cares. This is a show where we talk about running your business in a way that feels good to you, is aligned with your values, and also resonates with today's conscious customers because it's humane, ethical, and non-pushy. [00:00:23] I'm Sarah z Croce, your hippie turn business coach for quietly rebellious entrepreneurs and marketing impact pioneer. Mama Bear of the Humane Marketing Circle and renegade author of marketing like we're human and selling like we're human. If after listening to the show for a while, you are ready to move on to the next level and start implementing and would welcome a community of like-minded, quietly rebellious entrepreneurs who discuss with transparency what. [00:00:52] Works and what doesn't work in business, then we'd love to welcome you in our humane marketing circle. If you're picturing your [00:01:00] typical Facebook group, let me paint a new picture for you. This is a closed community of like-minded entrepreneurs from all over the world who come together once per month in a Zoom circle workshop to hold each other accountable and build their business in a. [00:01:15] Sustainable way we share with transparency and vulnerability, what works for us and what doesn't work, so that you can figure out what works for you instead of keep throwing spaghetti on the wall and seeing what sticks. Find out more at humane.marketing/circle, and if you prefer one-on-one support from me. [00:01:37] My humane business coaching could be just what you need, whether it's for your marketing, sales, general business building, or help with your big. Idea like writing a book. I'd love to share my brain and my heart with you together with my almost 15 years business experience and help you grow a sustainable business that is joyful and sustainable. [00:01:58] If you love this podcast, [00:02:00] wait until I show you my mama bear qualities as my one-on-one client can find out more at humane.marketing/coaching. And finally, if you are a Marketing Impact pioneer and would like to bring Humane Marketing to your organization, have a look at my offers and workshops on my website@humane.marketing. [00:02:30] Hello, friends. Welcome back to another episode on the Humane Marketing Podcast. Today's conversation fits under the P of People of the Humane Marketing Mandala. If you're a regular here, you kind of already know what I'm talking about. And these are the seven Ps of the Humane Marketing Mandala. And if this is your first time here and you're curious about those seven Ps of humane marketing, you can go to humane.marketing/.[00:03:00] [00:03:00] One page, the number one and the word page, and download your one page marketing plan with the seven Ps of humane marketing. And this comes with seven email prompts to really help you reflect on these different PS for your business. So today I'm speaking with Tom Greenwood about a humane Web. When I first saw him, uh, talk about this in one of his newsletters, I was like, well, I just have to talk to Tom, but before you, I tell you a bit more about Tom. [00:03:33] Allow me a moment to share that. I just. Open the doors again to my marketing like we're human, a k a, the Client Resonator program. So this is my flagship program. It's a three month program that is tightly linked actually to this podcast because it follows the same framework, the seven Ps of the Humane Marketing Mandala. [00:03:57] It's a deep dive into these seven [00:04:00] Ps to help you discover who you are. What your passion is and then bring more of you to your marketing. Market from within, so to speak. So we're really kind of flipping the script and starting with ourselves rather than the usual marketing program that immediately goes to your ideal client, the avatar, and then focuses on, uh, techniques and strategies. [00:04:26] We're starting with ourself first, so it's almost like a business. Or a personal development slash business development program. Uh, it's more than just marketing. It really is building the foundation for your life's work. And we start with passion, personal power, and then go into the outer. So we start with the inner and then go into the outer, the people, the product, the pricing, the promotion, and the partnership with others. [00:04:56] We go deep in an intimate group and. [00:05:00] Really come out transformed with a business that you are truly aligned with. It's a hybrid program with a 20 to 30 minute video to watch each week. Uh, that shares a bit of the framework, the principles. And a lot of, uh, transparent information and kind of lived experience for, from myself. [00:05:21] Uh, it comes also with a beautiful workbook, with journal prompts, and then we have a live group call on Zoom each week to go deeper. So we, I'm not teaching anything on these group calls. I we're just having the space together to go deeper, and that's why. It's such a transformational program because we really get to share and uh, and. [00:05:46] Yeah, make it unique for each person. Who is it for? Well, whether you have one year, five years, or more than 10 years business experience, it's never too late to go back to create the [00:06:00] foundation and is instead of just a business, really create your life's work so you can truly market from. Who you are because that's when things flow freely is when you market from who you are. [00:06:14] And the best is always to hear it from other participants and not just ha have it all from me. So have a look at humane.marketing/program. There are plenty of testimonials. And also a handful of in-depth case studies that really show you the transformation that people have gone through. Book a call with me now to discuss if this is the right next step for you at this point in your business. [00:06:43] Again, it's starting in August. Uh, August 24th. I'm only running this live. Twice per week. So this is the last time, uh, this year it's a three month program, and yes, I would absolutely love to talk to you and see and find out [00:07:00] whether this is a good fit for you at this time. Okay with that, back to the P of People in today's episode. [00:07:09] So Tom Greenwood is the co-founder of Whole Grain Digital, a certified B Corp and Green Trail Blazer. In the digital agency world, Tom is known for writing and speaking about how business design and web technology can be part of the solution. To end environmental issues and is the author of the book Sustainable Web Design. [00:07:34] So in this, uh, thought-provoking episode, we discussed how Tom's newsletter readers described a humane web and what Tom's definition is of a humane web. What humane web has to do with ethical design, ethical web design. Best practices for website owners to do their part, to contribute to a [00:08:00] humane web, the winners of a humane web, humans and the planet, the social en and environmental impacts of ai. [00:08:11] How Tom sees the future of Humane Web, and I guess also AI and so much more. Let's listen to Tom and this concept of a humane web, which to me just sounds delightful. Let's tune in. Hi Tom Sok. See you and hang out with you for a little while to talk all things humane, like I just said offline. Right. [00:08:38] That's basically what we're here for. I heard you talking about Humane Web and I'm like, I gotta have him on the podcast. You're [00:08:47] Tom: humane. Yeah. And I likewise. I was excited when you reached out and I was like, huh, humane Marketing, like, great. We're on the same page. Yeah, exactly. [00:08:55] Sarah: So the, the. The way. Well, I've been on your email list [00:09:00] for a while, and then obviously when I saw you talking and actually asking readers about how a humane web would look like to them, uh, that's when you got my attention and I'm like, yeah, let's talk about this. [00:09:16] So I'm curious, um, what kind of answers did you get to this question when you asked your readers? [00:09:23] Tom: Yeah, it was really interesting and it, I mean, we got a lot of enthusiastic responses and it was, it was quite mixed. It sort of ranged from people talking about how um, basically like technology should be designed to like, respect humans in terms of like their privacy and their safety and, um, to make things more accessible in a sort of tangible ways to people with kind of maybe like a more like pie in the sky vision of like, A web that is like more personalized and it's actually like, like more like fragmented and [00:10:00] decentralized rather than this sort of like homogenized big tech kind of internet that, that we've come to. [00:10:07] Um, and then other people talking about like more like the experience that we have as humans and that actually, what if it was more. You know, like a garden that you can, or a library, like a place that you can kind of step into and browse calmly, slowly, mindfully relax into like find beauty and inspiration rather than it being like this high paced kind of intense experience that much of, much of the internet's become. [00:10:39] So it was really interesting just hearing kind of like that breadth of. Perspectives on like what that might mean. [00:10:45] Sarah: Hmm. Yeah. So interesting. I, I love this image of either the library or the the garden and why not a library in a garden. Exactly. Yeah. That'd be even better. So what that means to me is, yeah, you, [00:11:00] you said it after like what we're experiencing is something so intense and probably, um, Yeah. [00:11:09] It's more like the in our face experience where if you are going to a library, you are the one in control. You are the one who's going to look for information rather than just showing up and everybody's throwing information at you. Right. Is is that also what you Yeah. Exactly. Felt [00:11:25] Tom: that's what happened? [00:11:26] Yeah. Mm-hmm. That, that you are really in control of your own journey and, and it's your experience. For you to have and for you to lead rather than mm-hmm. You're kind of entering into these worlds where you're very much kind of led down a path. I mean, at best guided down a path at worst manipulated, you know, to perform certain actions. [00:11:48] Um, Yeah. And sort of, yeah, put people back in the driving seat in control of their own experience, um, in more of a conscious way. [00:11:56] Sarah: Yeah. Yeah. That's so much aligned with humane marketing [00:12:00] because it, it, in the end, pretty much everything on the web is some type of marketing now, you know? Yeah. It's like wherever you go, You, they want you to enter into a funnel and then basically control your mind and control everything you do. [00:12:16] So it's, yeah, it's, it's very much the same in terms of humane marketing. It's like, well in, give the power back to the people. Right? Yeah. And it seems like that's the same, uh, idea here on, on Humane Web. So, so was that also your definition if you thought of it before? Or did you think of even something else, um, that you can add here? [00:12:41] Tom: Yeah, I think, I think it was a, a mixture of a mixture of things, but I think, I mean, the whole exploration and, and it's still an exploration to be honest at this stage, but the whole exploration that, that some of us at Whole Grain are doing into this concept of a humane web really came from sort of a [00:13:00] frustration that the internet kind of in the early days, Did seem like something that was gonna be very democratic and, you know, allow people to have a voice and controller and experience and share information with each other and build communities and, and it has all of that potential. [00:13:21] And yet more and more it feels like this thing where it's like it's, it's very much like a domain controlled by these big tech companies and where. You know, as you say, like we're we're manipulated into these funnels. It's like it's the web has become a web of funnels. Yeah. And, you know, and, and you enter into it kind of almost at your own risk. [00:13:41] And, and it's not an equal relationship. You're very much like you're going in on their terms. They're doing things behind the scenes to manipulate you that you don't even, you're not even aware of. There's like legal terms that you're effectively agreeing to just by. Like visiting a site or [00:14:00] using an online service. [00:14:01] Um, and then, and then, and then it's like, you know, there's the, also the fallout of like mental health and the fact that actually like, yeah, the internet should be serving us as humans, and yet you have this like, huge mental health crisis that's in par related to our relationship with digital technology and the internet. [00:14:19] And, and it's like, well, something's really wrong here that it's. There are like big corporations that are making vast profits out of the web, but at the same time that it's not that there's not any good things have come from it for, you know, most of us, like we all get some benefit from it day to day, but like on some level it feels like this is, this relationship isn't working like it's unhealthy. [00:14:42] Um, so what would it look like if we reimagine that and said, well, okay, let's kind of go back to the beginning. Take all of the. I guess take capitalism out of it for a minute and sort of say, well, like, let's just look at it as a technology. Like [00:14:58] Sarah: what? Remind me, Tom, [00:15:00] what was the name of the, it's escaping me right now. [00:15:03] Like when it first started, what did they call it? Um, Some term that I'm, I'm forgetting right now, but they actually said it, it's a conversation, you know, the web is a conversation. Um, yeah. So, so really, yeah. That's what you're saying. We need to go back to, right. To, to these early days of the [00:15:24] Tom: internet. [00:15:24] Exactly, exactly. Sort of like today's technology, but with yesterday's principles maybe. Yeah, [00:15:32] Sarah: yeah. Yeah. So much so. Yeah, so true. It's, it's, it's almost like we've. Made such a big, yeah, we lost our way. We lost our way. It's, it's kind of like kids who are given, you know, the, the, the gadget and then they just like lose their way because they're so excited about this s gadget and all, all the things you can do with it, and it ends up going the wrong way. [00:15:58] It ends up [00:16:00] going to almost like, Evil. Right? That's what we've done with this technology and, and or we, we can discuss whether it's you and I, it's definitely the, you know, the, there's always money behind it somehow now. Yeah. Where that was not the intent of, uh, the internet back in the days. [00:16:18] Tom: Yeah. I think that's the thing that it's, there's, there's so much potential to make money by manipulating people that. [00:16:27] In a way that you can't really do as easily in a physical environment. You know, like, you, like digital technology can kind of capture people for like, most of their waking hours. You know, like it's very addictive. You've got your phone with you like all the time. Um, it can ping you and like, you know, pull your attention back in when you start ignoring it in a way that like the physical world can't. [00:16:49] And yeah. And likewise, it's very easy to do like sneaky things in terms of how you. How you manipulate people to perform certain actions or to think a certain [00:17:00] way in ways that if you were in a physical environment, would be a bit more like, I, I think just a bit more tangible for people to sort of see what's going on and think, Hmm, this doesn't feel quite right. [00:17:10] I'm not sure I wanna shop here. Um, right. Um, You know, and even things like privacy terms, you know, that you kind of get sort of forced to like click a button to say like, I agree before you come in. But there's some like giant legal contract behind it that they know that nobody's gonna read. Whereas if you went into a shop, you enter the supermarket and they said, well, before you enter, like, please sign this 30 page contract. [00:17:32] Yeah. You'd probably be like, nah, I, I'm not, I'm not gonna shop there. I'm gonna, I'm gonna go to the green grass. It's, you think about, it's insane. Yeah. Yeah. It is and it's very one-sided. It's sort of like, sign this or you can't come in. Um mm-hmm. So [00:17:47] Sarah: what's the solution? You're working on a solution? Um, what [00:17:53] Tom: is it? [00:17:53] Well, to say we're working on a solution might be overstating it, but we're exploring what [00:18:00] alternatives might look like and I think, I think there are. Like, none of this is like necessary, you know, like we talked about kind of the early days of the web when it wasn't like this on the web. I think the early, you know, pioneers of the web, like Tim Burners, Lee didn't envision it becoming like this. [00:18:17] No. Um, so I think inherently like the principal. Is that you could design and build digital services that don't treat people in this way. And start by actually thinking about like, how you serve their needs. What, what's really gonna be good for them as humans. And do it on the principle like you would've done like any kind of good business in the past where it's like, if we really serve people well, they'll keep coming back rather than if we, if we manipulate them and get 'em addicted. [00:18:49] Um, Then they'll keep coming back. Um, and I do think like there's some challenges in that for certain types of business models where the business models are [00:19:00] inherently based on that principle. Um, you know, some of the social media giants for example. It's like that's I. That's what they're built upon. But on the other hand, I think the vision we're trying to create is that if we actually created beautiful online spaces that treat people well and that they love being in and where they can build real, meaningful connections with other human beings or, or have space to just explore and learn things and, and enjoy things kind of on their own terms that. [00:19:30] Okay. They might not necessarily like, be able to compete head to head with, like Facebook for example. Um, on, but they're not trying to compete directly with Facebook. They're giving people an alternative. They're giving people a choice. It's like, go, you know, go and spend your time here because it respects you and it's a great place to be rather than go over there where you're being exploited. [00:19:49] Um, so yeah, it's so like we are, we are not, I don't think we're ever gonna be, be in a position where we can say, look, hey, look, we've got this solution, but I think we can let help with that [00:20:00] conversation of exploring the principles and trying to embed them into some of our own work and trying to like, You know, experiment with them and see what works and see what doesn't. [00:20:08] Sarah: And don't you think the change is gonna come from bottom up? Uh, not from the big ones. You know that they're not gonna change anything because their model works. It's exactly, it's not scarcity, uh, and addiction like you said. And so why would they change anything? Because the money keeps coming in. So they're not the ones who are going to change. [00:20:28] It's, it's the smaller ones and also, Us, the clients, the customers who are just fed up, uh, with being abused and manipulated. [00:20:38] Tom: Yeah, exactly. It's like the big tech companies have nothing. They have nothing to gain and everything to lose by, like, doing things in a more humane way, I think, which is really sad. [00:20:48] And I think it's a kind of, probably a reflection more of the broader mm-hmm. Structure of our society and economy. Um, but equally like we have a, we do have a lot of [00:21:00] personal. Like power over our own destiny. Like we're not actually like hooked into any of these things. Like we can choose to go wherever we want on the internet. [00:21:07] And um, and I think if people offer really humane alternatives, then hopefully, like a growing kind of number of people will start looking at those and thinking, yeah, okay, this feels like a better place to be. Totally. [00:21:24] Sarah: And, and I think what I've actually seen in the marketing world is that, Even small, uh, companies, one person companies, entrepreneurs, since the only models we had were the big. [00:21:39] Tech companies and the, you know, the, the ones that are basically manipulating everybody. This became the going model. Yeah. Everybody started using, even on the very small business level, using the same kind of, uh, you know, scarcity and, and manipulative approaches. Yeah. So over the last 20 years, um, [00:22:00] This just became the norm, right? [00:22:02] That, yeah, it was just a given. If you were in business, that's the way you had to market and, and, and use technology and, and, and all that and all actually all the tech that I'm using in my business, you know, where I'm trying so hard to create a humane business, the tech, uh, so I'm talking like shopping carts or, or e-learning programs. [00:22:26] It's all built on non-human, uh, principles. Yeah. It's all built on the idea. Let's get as many people in and seldom our crap. Yeah. [00:22:37] Tom: Basically. [00:22:38] Sarah: And it, and it's just really hard to actually use technology and yet doing in a, doing it in a humane way. Yeah, yeah. Yeah. It's really, really hard. [00:22:49] Tom: I think one of the sort of, I guess sort of classically, one of the. [00:22:54] The, the alternatives to that kind of hyper commercial model has in the, in the digital [00:23:00] space, has been the open source world, which is mm-hmm. You know, people building things with people for the people, um, and largely giving them away for free so that everybody can benefit from them. And I think that is probably where, like the solutions will come from. [00:23:15] Um, I understand. Mm-hmm. But, but as you sort of. Highlighted, like even some of those things have gone more in that kind of commercial direction just because that's the way things are done and, and some of those open source projects, as brilliant as they might be, have some sort of like commercial affiliation that sort of funds some of that community work. [00:23:36] And so the way that the projects are led has a bias towards like feeding that like kind of. Parent company or, um, whatever it might be, right? But, but I do think like that the, in pr in principle, the sort of the open source world is probably like the best, um, [00:24:00] place to, to get like a groundswell of, um, kind of bottom up change. [00:24:07] Sarah: I agree. Because it's also. You know, it's the people with the same values who come to create the solution and just give and, you know, know and trust and somewhere the money will come from. Yeah. But it doesn't mean that I have to exploit, um, uh, clients or, or potential, uh, customers. Yeah, [00:24:27] Tom: exactly. Yeah. [00:24:29] Sarah: So, so far we've talked about basically, uh, the win-win of the, the client and the seller, right? [00:24:38] Um, What I talk about and also what you were talking about is also, uh, a third win, which is the win for the planet. Yeah. Um, so talk to us how a humane web, and then maybe you can also talk a little bit about, um, web design, because that's also, uh, part of your expertise. Where is the [00:25:00] planet stand right now and how do we make it a winner as well in this [00:25:06] Tom: equation? [00:25:07] Yeah. So the, the environmental aspect is uh, something that's sort of, I think been left out of the conversation in the digital world largely until quite recently. And, and I think that's probably for a variety of reasons, partly because digital technology is relative relatively new in terms of its impact on our lives. [00:25:28] Um, but also because a lot of the environmental impact is sort of out of sight and out of mind. Um, You don't have like a chimney or an exhaust pipe on your computer and you know, it's sort of, it, it's a lot of, it's behind the scenes and we use terms like virtual, um, and the cloud as if like, the internet doesn't really exist, but it, it is a huge physical system. [00:25:52] You know, telecoms, networks that span the entire planet, um, satellites in space, like thousands of huge data [00:26:00] centers around the world. Billions of devices connected to the networks. So, If you take it as one big machine, it is the biggest machine that humans have ever created. And, and it consumes a huge amount of electricity. [00:26:13] You know, roughly the amount of electricity is the whole of the United Kingdom. Um, if you took it as one thing and the United Kingdom is like kind of one of the 10 biggest economies in the world. So that's, that's pretty crazy when you think about it. And. When you, uh, when you put that in terms of carbon emissions, which is essentially the emissions of producing all of that energy, um, it's, it's estimated generally somewhere between two and 4% of global carbon emissions, which is a lot because like aviation, which a lot of people think, you know, aviation's a serious problem, which it is. [00:26:49] Aviation is about 2% of global cognitions. Global shipping is about 2%. Um, I think steel is about, steel production is about 7%. So when you put, [00:27:00] you know, put that in context of basically the internet being somewhere in the range of two to 4%, um, and growing rapidly, especially with like the advent of, of, of AI and machine learning. [00:27:10] Um, it's, it's something that needs to be talked about. Um, and it hasn't really been talked about much until like the last two, three years really. Yeah, that's [00:27:25] Sarah: completely how I feel. I feel like this has just, yeah, probably emerged. Three years ago for me, where before I was like, well, I'm a virtual, you know, business owner, so I don't create any, any kind of problems. [00:27:40] And, and then starting to realize, okay, so, you know, there's all these different players that actually do, uh, impact how much carbon emissions I have. And, and you know, this was a, a whole. Transitions switching to, uh, a green or a greener host and, [00:28:00] and like making my website lighter and still working on that. [00:28:03] It's, it's like things that. You never think about just uploading, you know, two megabyte pictures on your website. Yeah. And then when you start to realize, wait a minute, they have to be hosted somewhere. And the, uh, and the server obviously runs on electricity, so every time you know this, this is creating carbon emissions. [00:28:24] So, so yeah. Tell us about ethical, um, you know, web design. Like what, what does that. Kind of just maybe a few really pragmatic tips that people can do right now to Yeah. Work on their website on, or at least become aware of that. Yeah. [00:28:44] Tom: You mean specifically from the environmental perspective? Yeah. Mm-hmm. [00:28:47] Yeah. So I mean, I think the, the, the way I find most helpful to think about it is that there's, there's a lot of waste on the internet. Um, And waste isn't good for [00:29:00] anybody, like any form of waste. And, but specifically in the internet, that waste generally is if you're wasting data, then you're wasting, you're wasting energy, um, which is bad for the environment, but it also has other. [00:29:14] Kind of commercial impacts and user experience impacts and so on. But that waste can come in a number of forms. Like first of all, like you just mentioned, you know, like having files that are just unnecessarily large, like image files, video files that are either like, maybe they're not required at all, but even if they are required, maybe they're, um, which is larger than they need to be, maybe they're, um, they're not optimized well, maybe they're not in like the most efficient file format. [00:29:42] Um, so. Looking at things like that. Um, things like tracking scripts. Tracking scripts can like be more, they can use up more data sometimes than like an entire, the actual webpage that you see. The stuff behind the scenes. And this comes into like the humane aspect as well. [00:30:00] The stuff behind the scenes that's like harvesting all of your data. [00:30:02] Um, they can actually be more code in there than there is in the actual, like, visible webpage that you're viewing. [00:30:09] Sarah: So you mean like Facebook pixel tracking, that kind of stuff. [00:30:13] Tom: Yeah. All that kind of stuff. All that kind of like ad personalizations, advert, you know, advertising scripts and mm-hmm. Things like that. [00:30:20] Um, wow. And the, and, and, and that's, I, I think that's kind of an interesting one to think about because it's, It's using energy in a number of places and not for your benefit. So you've got basically, like the advertising scripts have to be stored somewhere, like in a data center. Then they have to be sent over the internet, which uses energy to get to you. [00:30:43] Um, then they use energy on your device, which is your electricity that you paid for, um, to like spy on you or manipulate you by like, you know, manipulating the content. Um, and then they take the data, they. They've, they've [00:31:00] harvested about you and then use more energy to ship it back over the internet where it gets stored and analyzed in a data center. [00:31:06] Um, so, so like things like that where there's like, I mean things like that. There's a, there's a, there's a, there's a relationship between the environmental and there's like human aspect. But I think if you're designing something, actually being really mindful about tracking scripts is really important. [00:31:22] Cuz sometimes a lot of websites aren't even necessarily doing it. For good reasons. It's just like, oh, I've got a website so I'll stick Google Analytics on it. Um, and Google's really benefiting from that by getting all of that data. But you might not even, some people don't even really look at that data. [00:31:37] So I think things like that are good to think about. Also, from the environmental point of view, like where you host your website, you mentioned moving your website to a hosting provider that has a commitment to powering their data centers with renewable energy. That's kind of a. I'm not gonna say it's an easy win because depends whether like [00:32:00] how easy you find it to actually migrate your website, but um, usually they really help you with that. [00:32:04] Yeah, they normally it will help you like at do the migration. So it can be, it can be a low hanging fruit to reduce the environmental impact. Um, and I think just from a content creation point of view, just sort of being mindful about, um, like creating. Easy user journeys for people so they can find what they're looking for easily not creating unnecessary content, um, just for the sake of like search engines, for example, but actually making sure that your content is really tailored to humans and, and, and you're not doing things like putting in images of like just, um, like stock photography of people pointing at a whiteboard because you feel like you need to fill a space on the page. [00:32:47] You know, just be really mindful about. Like justifying the existence of everything. Um, if you can justify why it's there, then, you know, great. Um, but if you can't, then, um, obviously if [00:33:00] in doubt, leave it out. Um, it's sort of a simple mantra to the identifying and eliminating waste. [00:33:08] Sarah: It's so interesting because basically also here you're saying, let's go back to simplicity and, and basics and. [00:33:15] You know, simple design rather than cluttered, obnoxious, you know, too much content design. [00:33:22] Tom: Yeah. Yeah. And, and I think that's e just sort of, again, going back to the human perspective, that can be much easier on the mind as well. Yeah. Um, it's [00:33:31] Sarah: relaxing. It's more relaxing, right. Than Yeah. Having much content [00:33:37] Tom: on it all the, all the time. [00:33:38] Exactly. I think, you know, there's a lot of problems with just sort of overstimulation, um, On the internet. So, so I think that there's a, again, another synergy between sort of designing for the environment and designing for humans there. [00:33:52] Sarah: Yeah. You, uh, just a minute ago, you, you kind of addressed ai, uh, [00:34:00] And, and I, um, there's another great article that you actually published with a conversation between you and chat c p t about, um, the impact of ai, uh, to the environment and, and social, uh, impact and all of that. [00:34:17] Um, yeah, tell us a little bit about that. Uh, in, in, just in general, how AI impacts all of what we just [00:34:26] Tom: discussed. Yeah, so I, it was, I thought it would be really interesting just to sort of a ask an AI about the potential risks of AI and see, to see what it came back with. Um, I thought maybe I'll learn something, maybe it would teach me something. [00:34:44] I don't know. Um, maybe it will be biased. Um, um, I was actually like sort of pleasantly surprised that its answers seemed quite thorough and quite. Quite honest, um, in identifying that there is [00:35:00] like potentially a huge energy cost to AI in terms of just how much computing, um, power it needs, um, both to train the models and run the models. [00:35:11] Um, I think it gave me a figure of to train G P D three required, I think 500. CPU years, which is effectively like running a cpu, running a, running a computer for 500 years to train one model. Um, so it was, it was quite honest in, in that it did also highlight that there's potential benefits, um, from an environmental point of view. [00:35:33] If you can use that AI then to help humanity solve. Environmental problems and make other things more efficient, which I think is absolutely true. Um, but it also highlighted that the flip side of that is that it's all about what we choose to do with it. Like you could choose to use AI to like, to, to extract more fossil fuels from, from the ground, which is what the fossil fuel companies are using it for. [00:35:57] Um, and in fact, there was a big conference, I [00:36:00] think run by Amazon. Um, Specifically about that, like inviting all the fossil fuel companies to, to see what, how they could, how they could like, fi, discover and extract more oil. Um, wow. So, so that, that's kind of interesting that it, it like chat, G B T itself highlighted that. [00:36:19] Um, but then it also, like I asked it about sort of social impacts and it did, it did sort of, Quite honestly, like, explain that like, yeah, there's potential risk to people's jobs, um, in terms of being replaced by ai. There's risks of bias. There's risks of, um, big temp big tech companies, um, having more and more power because essentially like whoever has control of the AI has more power over a society and the, and the potential to like manipulate public opinion and, and potentially even influence democracy, which is something that it did. [00:36:57] Bring up. So, um, [00:37:00] yeah, I think it was quite well rounded I felt, in terms of what it highlighted. And of course, it's not really a, it's not a person. And that's the thing that it's like really hard to like get your head around when you start doing something, like trying to have a conversation with it. It's like, well, hard to like [00:37:13] Sarah: it or dislike it, you know? [00:37:15] Yeah, [00:37:16] Tom: right. I've, I've set myself a rule that I'm like, when if I did, you know, like when I did that, To not say thank you cause it sounds really simple, but as soon as, but you ask a question and you get an answer back that sounds like a human wrote you a message back. Right. And it's really easy to slip into that thing of thinking there's a person on the other side when there's not. [00:37:37] Um, and I don't know if you've seen the film X Mcna. Um, I haven't. It, it's, it, I mean, I think it's, I only watched it earlier this year because it sort of felt like this is the time in history where, The science fiction is suddenly catching up. Yeah. Like, like real life is mirroring science fiction and [00:38:00] Yeah. [00:38:00] It's, it's a film about, and like an, an AI that's been developed and um, and humans building relationships with it and the, and the boundaries between what's human and what's not being blurred and how that. That's a slippery slope, basically. Um, I won't spoil it for you, but Okay. But I, yeah, it's a, i I, it's a, it's a fascinating and very well made film, um, on this topic. [00:38:30] Yeah, [00:38:31] Sarah: I'll look it up and I'll definitely link to, to that article, the interview with, um, chat G p t, um, as we're kind of. Coming to close here. I I'm, I'm just, I always feel like, oh, so it's such a heavy topic. Right? And, um, when we started recording, um, offline, I told you I tried just to focus on the positive things. [00:38:58] So let's, let's do that [00:39:00] here as well. How do you see the future of Humane Web and, and what can we do to, you know, kind of counter effect the big tech and. The big companies and, and even if it's just in our own little bubble, but at least we're creating that vision and who knows what will come out of it, but at least we're living in that vision already. [00:39:25] What can we do? And, and then Yeah. Uh, from there, how do you see it evolve? Yeah, [00:39:30] Tom: sure. I, I think the main thing we can do is first, first of all, like stop and think about like what we. What we need as humans and how the technology can serve us, rather than the standard model now, which is sort of like, how do, how do we serve the technology? [00:39:49] Um, and you, you know, you spoke about it earlier about how. We go down this route of like, now there's like an established model of like how the [00:40:00] internet works and how the business models on the internet work being like those big tech companies. And so there's just a natural inclination to mirror that and just copy it. [00:40:10] And I think the, the best thing we can do is actually just stop and think, look inside ourselves about like, what would it look like if it was really serving my needs and serving the needs of of others. And actually just have the confidence to try to do things differently and not just copy the, kind of the standard template of how things are done these days. [00:40:32] Um, and I think if more and more people do that and. And importantly, more and more people share that and tell the story of how they're thinking about it and why they're doing things differently. Um, I think that's really powerful cuz then it can create that sort of like ground up change. Um, both in the, the way that people are thinking about the internet as well as the way that people are interacting with it. [00:40:58] Sarah: Yeah, 100%. [00:41:00] And, and that's definitely what we're trying to do here, and I know you are as well, and, and. You might think, because what we're seeing is the big tech everywhere, right? Mm-hmm. But the more you kind of are in these circles, the more other little circles you discover and you're like, wow, there's actually people like us everywhere. [00:41:21] Yeah, exactly. So that always gives me hope. I'm like, well, two years ago I didn't know about Tom Greenwood, and now I know that you've been working on this for years and years, and so. You know, there's, there's millions of us and that, that gives me hope. So I, I, uh, I couldn't agree more with you to just kind of. [00:41:41] You said stop and, um, kind of step into the confidence of doing things differently. And I think yeah, that is key because it is scary to, you know, not do what everybody else is doing. Um, So, yeah, if, even if it's just, you know, for your website, [00:42:00] and that's where again, uh, I'm gonna go back to my website and, and check that I don't have any kind of tracking code in there because Yeah. [00:42:08] I, I don't need it. Right. So, um, definitely, uh, yeah, [00:42:13] Tom: to start exactly, start from where you are and, and, and ask yourself questions about like, what it is that you are doing. If you are creating things on the internet, um, and. And just see where it, see where it leads, see what other people are doing. Yeah. Um, I mean, even on the tracking script one, like there are alternatives. [00:42:32] Like there's one called Plausible, for example, um, which is like, it gives you some data about how, like how many people are using your website, what, like what countries they come from, what web browsers they use, what pages they visit. But it is completely anonymized. It's very, very lightweight, energy efficient. [00:42:51] Um, Script. So there are some like kind of, there are alternatives to some of these like big tech [00:43:00] solutions that are actually trying to balance the sort of the human and the environmental side as well as providing some useful functionality it for when people do need it. Um, yeah. So yeah, it's worth looking for those as well. [00:43:12] Thank [00:43:13] Sarah: you. I, I would really encourage listeners also to sign up to your newsletter, so please share with us where people can find you and your newsletter and all your other good work. [00:43:24] Tom: Yeah, sure. So the newsletter, I'm, I'm very excited. This, um, just past 6,000 subscribers yesterday. Um, it's, it's called Kii Green. [00:43:34] Um, if you Google Kii Green Newsletter, you, you should find it. Um, and, and it's basically a monthly newsletter about like, Greening the internet, um, but in a very holistic way. So, you know, we talk about things like humane web as well. Um, and we started it about three years ago thinking that nobody would be interested. [00:43:53] So to suddenly like now be like, oh wow, there's like 6,000 people subscribe to this. That for me is like a source of optimism. [00:44:00] Um, again, that that [00:44:01] Sarah: means that there's all these people everywhere, right? And saying, yeah, me too. I'm in. [00:44:06] Tom: Exactly. Mm-hmm. Exactly. The, the, like, I think sometimes we. We don't realize that there's a lot of people out there that are thinking like we are thinking, or, or maybe they're thinking differently from we're thinking, but they're like, they really care about making things better. [00:44:20] Um, and we just don't know that they're out, they're out there. Um, right. So when we have things that kind of bring these voices together, I think that's really powerful. Mm-hmm. Um, so yeah, so the Curiously Green Newsletter, um, I mean, you can find me on LinkedIn, that's Tom Greenwood who runs Whole Grain Digital. [00:44:36] There's lots of Tom Greenwoods, but I'm, I'm, I'm that one. Um, And I also have a, um, I also have a, a personal newsletter about sustainable business on CK called Oxymoron, um, which you can look up on ck Um, yeah, so I guess they're the. They're, they're the key places to find me. And you have a book, right? I do have a book, yeah. [00:44:59] Yeah. I always [00:45:00] forget to mention that. Yeah. There you go. So I always have a book, um, about sustainable web design called Sustainable Web Design. Um, you can, you can get it direct from publisher, uh, which is a book apart.com, or it's now available as of about two weeks ago in a lot of bookshops. Um, so you could find it on Amazon and other kind of online bookstores as well. [00:45:22] Sarah: Wonderful. Thank you so much for sharing that. I always ask one last question here to every, uh, guest, and that is, what are you grateful for today, this week, this season? [00:45:36] Tom: To be honest, I, I am grateful for the fact that like we live in a world where we can have these sorts of conversations. You know, like we have the freedom to think and, and share ideas and, you know, even if not everything is. [00:45:52] Perfect. And not everything's always trending in the direction we wanted to. Like the fact that we have the opportunity to try and like do [00:46:00] something about it and connect with, with other people. Trying to do so is, is, is a wonderful thing, um, which I'm very grateful for. [00:46:09] Sarah: Yeah. I agree and I'm grateful for the work you are doing and and your team, so [00:46:17] Tom: thank you. [00:46:17] Sarah: Let's keep it up. Yep. So much. Thanks so much for being here, Tom. I hope you feel motivated and I. Inspired to create a humane web together. I highly recommend you sign up to Tom's newsletter. You'll find that@wholegraindigital.com. You can also, as Tom suggested to connect with him on LinkedIn. You find the show notes of this episode@humane.marketing slash 1 67, and on this beautiful page, you'll also find a series of free offers, such as my Saturday newsletter, the Humane Business Business Manifesto, [00:47:00] and the free gentle confidence mini course, as well as my two books, marketing like we're Human and Selling like we're human. [00:47:08] Thanks so much for listening and being part of a generation of marketers who cares for yourself, your clients, and the planet. We are change makers before we are marketers, so go be the change you want to see in the world. Speak soon.

Tom Krazit, Editor in Chief at Runtime, joins Corey on Screaming in the Cloud to discuss what it's like being a journalist in tech. Corey and Tom discuss how important it is to find your voice as a media personality, and Tom explains why he feels one should never compromise their voice for sponsor approval. Tom reveals how he's covering tech news at his new publication, Runtime, and how he got his break in the tech journalism industry. Tom also talks about why he decided to build his own publication rather than seek out a corporate job, the value of digging deeper for stories, and why he feels it's so valuable to be able to articulate the issues engineers care about in simple terms. About TomTom Krazit has written and edited stories about the information technology industry for over 20 years. For the last ten years he has focused specifically on enterprise technology, including all three as-a-service models developed around infrastructure, platform, and enterprise software technologies, security, software development techniques and practices, as well as hardware and chips.Links Referenced: Runtime: https://www.runtime.news/ TranscriptAnnouncer: Hello, and welcome to Screaming in the Cloud with your host, Chief Cloud Economist at The Duckbill Group, Corey Quinn. This weekly show features conversations with people doing interesting work in the world of cloud, thoughtful commentary on the state of the technical world, and ridiculous titles for which Corey refuses to apologize. This is Screaming in the Cloud.Corey: This episode is sponsored in part by our friends at Chronosphere. When it costs more money and time to observe your environment than it does to build it, there's a problem. With Chronosphere, you can shape and transform observability data based on need, context and utility. Learn how to only store the useful data you need to see in order to reduce costs and improve performance at chronosphere.io/corey-quinn. That's chronosphere.io/corey-quinn. And my thanks to them for sponsor ing my ridiculous nonsense. Corey: Welcome to Screaming in the Cloud, I'm Corey Quinn, and people sometimes confuse me for a journalist. I am most assuredly not one of those. I'm just loud and have opinions and every once in a while I tell people things they didn't already know. That's not journalism. My guest today, however, is a journalist, Tom Krazit, is the Editor in Chief of the just launched Runtime. Tom, thank you for joining me.Tom: Thanks, Corey. It's a long-time listener, first-time guest.Corey: We've been talking for years now and I'm sort of embarrassed I haven't had you on the show before now. But the journalists has always felt, to me at least, like they're a step apart from the typical, you know, rank and file of those of us working in industry. You folks are different from us, and inviting you all just feels like a faux pas, even though it's very clearly not. Well, how did you get here, I guess is the short version. I know that you're at Runtime, now; you were at Protocol until its demise recently. Before that, when I first started tracking you, you were over at GeekWire. Where do you come from?Tom: [laugh]. Well, I've been doing this for 20 years, which is a long, long time, and it's amazing how much has changed in that time. I started off doing consumer stuff, I was covering Apple during the launch of the iPhone, I was covering Google as they sort of turned into the Borg. And then I joined GigaOm in 2012 and I joined them as an editor. And it became pretty clear that I needed to learn this enterprise stuff real fast because that was like the largest part of GigaOm's business at the time.And so, I kind of just threw myself into it and realized that I actually liked it, you know, which I think is [laugh] hard for some people to understand. But like, I've actually always found it really interesting how these large systems work, and how people build in a variety of ways based on their needs, and, you know, just the dramatic change that we've seen in this industry over the past ten years. So, you know, I've really been doing that ever since.Corey: There's a lot to be said for journalism in the space. And I know a lot of tech companies are starting to… well, that's starting. This is, I guess, a six-year-old phenomenon, at least. But a lot of these small companies were built, and well, we're just going to not talk to the press because we've had bad experiences doing that before, so we're just going to show instead of tell. And that works to a point, but then you hit a certain point of scale where you're a multi-trillion dollar company and, “We don't talk to the press,” no longer becomes tenable. With success comes increased scrutiny, and deservedly so. I feel that there's a certain lack of awareness of that fact in the tech industry versus other large industries that have come before.Tom: I think it's always important to remember how, like, new a lot of this really still is, you know, when compared to, like, other American industries and businesses. Like, tech as a discipline, you know, it's only really in the last ten years that it's been elevated to the extent of, like, sports, or, like, a top-tier news category. And so, I think a lot of people who make those decisions, you know, grew up in a different environment where, you know, you didn't really want to talk about what you were doing because you were worried about competitive things or you were just worried—you wanted to have a ground-up story. And like, yeah, the world is very different now. And I think that, you know, a lot of companies are starting to get that and starting to change the way they think about it.I mean, I also would argue that I think a lot of enterprise tech companies see better value in running ads alongside golf tournaments than actually talking to people about what they really do because I think a lot of them don't really want people to understand [laugh] what they do. They want them to think that they're, you know, the wizard behind the curtain, solving all your digital transformation needs and not actually get into the details of that.Corey: I used to think that I was, as an engineer, much smarter than any of the marketers who were doing these things that obviously make no sense. Like, why would you have a company's logo in an airport for an enterprise software ad, but no URL or way to go buy something? Aren't those people foolish? Yeah, it turns out no. People are not just-fell-off-the-turnip-truck level of sophistication.It's a brand awareness story where you wind up going in and pitching to the board of some big company someday and they already know who you are. That's the value of brand awareness, as I've learned the fun way because I accidentally became something of a marketer. I have this platform—Tom: [crosstalk 00:04:46], Corey—Corey: In the newsletters, but—Tom: Come one. You're totally a brand. You're a brand.Corey: Oh, absolutely. And breakfast cereal.Tom: [laugh].Corey: But I was surprised to realize that people not only cared about what I had to say but would pay me cash money in order to have their product mentioned in the thing that I do. And, “Can you give me money? Of course you can give me money.” But it was purely accidental along the way. So, I have to ask, given that you seem to be a fan of, you know, not starving to death, why would you start a media company in 2023?Tom: Uh, well I needed to do something, Corey. You know, like [laugh] [crosstalk 00:05:22]—Corey: You had a bright career in corporate communications if you want to go over to the dark side. Like, “I'm tired of talking to the audience about truth, I'd rather spin things now because I know how the story gets told.”Tom: I mean, that may come down the road for me at some point, but I wasn't quite ready for that just yet. I have really felt very strongly for a long time that this particular corner of the world needs better journalism. I just, I feel like a lot of what is served up to the people who have to make decisions about this incredibly complicated part of the world, you know, it's either really, really product-oriented, like, “So-and-so introduced the new thing today. It costs this much and it does these three things that they told us under embargo,” you know, or you get, like, real surface-level coverage from, like, the big financial business publications, you know, who understand the importance of things like cloud and things like enterprise software, but haven't really invested the time to understand the technological complexities behind it and how, you know, easy narratives don't necessarily, you know, play in this world.So, there's a middle ground there that I think we at Protocol Enterprise found pretty fertile. And, you know, I think that, for this, for Runtime, you know, I'm really just continuing to carry that work forward and to give people content they need to make decisions about using technology in their businesses that business people can understand without an engineering degree, but that engineers will take a look at it and they'll go, “You know what? He did that right. He did his homework, he got the details right.” And I think that's rare, unfortunately, and then that's a gap I hope to fill.Corey: Something that really struck me as being aligned with how I tend to view things is—to be clear, our timing is a little weird because to my understanding, the inaugural issue is going out later today after we record—Tom: That's correct.Corey: But that would have already happened and have landed in the industry by the time people listen to this. So, I'm really hoping, first off, that the first issue isn't horrifying to a point where, “Oh God, distance myself from it. What have I done?” But you've been in this industry enough that I doubt that's going to be how you play it. But I am curious to know how it winds up finding its voice over the coming weeks and months. Even when you've done this before, as you have I think that every publication starts to have a different area of focus, a different audience, and focus on different aspects of this, which is great because I don't want to see the same take from fifteen different journalist publications.Tom: Totally. I mean, you know, I think a lot of what Protocol Enterprise was, was my voice and, you know, how I thought about this industry and wanted to bring it forward. And so, I think that, you know, off the bat, a lot of what Runtime is will be similar to that. But to your point, I think everything changes. The market changes, what people want changes, I mean, like, look, just the last six months, the rise of all this generative AI discussion has dramatically changed a lot of what software—you know, how it's discussed and how it's thought about, and those are things that, you know, six months ago, we were talking about, maybe, here and there, but we certainly weren't talking about them to degree than we are now.So like, those changes will happen over the coming months. And you know, you just have to sort of keep up with them and make sure—my job is to make sure I am talking to the right people who can put those things into context for the people who need to understand them in order to make their own decisions. You know, I mean, I think we talk a lot about the top-tier decision makers, you know, of companies who need information, but I think there's, like, a whole other, I don't want to call them an underclass, but like, you know, there's a lot of other people within companies who advise those people and who genuinely need help trying to understand the pace and the degree to which things have changed and whether or not it's worth it for them to invest, you know, hundreds of thousands, if not millions, of dollars in some of these new technologies. So, you know, that's kind of the voice I want to bring forward is to represent the buyer, to represent the person who has to make sense of all this and decide whether or not, you know, the sparkly magic beans coming down from the cloud providers and others are really what it's cracked up to be.Corey: The thing that really throws me is that when I started talking to you and other journalists where you speak generally to a tech-savvy audience, but for whatever reason, that audience and you by extension are not as deeply involved in every nuance of the AWS ecosystem or the cloud computing ecosystem as I am. So, I can complain for five minutes straight to you about the Managed NAT Gateways and their pricing and then you'll finally say, “Yeah, I don't know what any of the words Managed, NAT, or Gateway mean in this context. Can you distill that down for me?” It's, “Oh, right. Talking about what I mean in a way that someone who isn't me with my experience can understand it.” I mean, that is such a foreign concept to so many engineers that speaking clearly about what they mean is now being called prompt engineering, instead of, “Describe what you want in plain English.”Tom: Yeah. I think that's a lot of what I hope to accomplish, actually, is to be able to talk to really smart engineers who are really driving this industry forward from their contributions and be able to articulate, like, what it is that they're concerned about, like, what it is that they think is exciting, and to put that into context for people who, you know, who don't know what a gateway is, let alone, like, any of [laugh] those other words you used. So, you know, like, I think there's a real opportunity to do that and that's the kind of thing I get excited about.Corey: I am curious, given that you are just launching at this point, and you have the express intention of being sponsor-supported, as opposed to a subscriber-driven model, which I've thought about a lot over the past, however many years you want to wind up describing I've been doing this. The problem that I've got here is that I have always found that whenever I'm doing something that aligns with making money and taking a sponsor message and putting it out to the world, how do I keep that from informing the coverage? And I've had to go a fair bit out of my way to avoid that. For example, this podcast is going to have ads inserted into it. I don't know what they are, I don't know who these companies are, and that only gets done after I've recorded this episode, so I'm not being restrained by, “Ohh, have to say something nice about Company X because they're sponsoring this episode.” It stays away.Conversely, if I want to criticize Company X, I don't feel that I can't do that because well, they are paying the bills around here. You're still in a very early stage where it is you, primarily. How are you avoiding that, I guess, sense of vendor capture?Tom: You have to be very intentional about it from day one. You have to make it clear when you're talking to sponsors from the business side where the lines are drawn. And you have to, I think from the editorial side, just be fearless and be willing to speak the truth. And if you get negative reaction from sponsors over something you've said, they were never going to be a good long-term partner for you anyway. And I've seen that over the years.Like, companies that get annoyed about coverage because they're sponsors are insecure companies. It's almost a tell, you know, like when you attempt to put pressure on editorial organizations because you're a sponsor and you don't like the way that they're covering something [laugh], it's a deep, deep tell about the state of your business and how you see it. So, like for me, those are almost like signals to use and then go deeper, you know? And then, you know, I do think that there are enough companies that feel strongly about wanting to support the kind of work that I do without impugning the way I think about it, or the way I write about it. Because I mean, like, there's just no other way to do what I do without pulling punches.And I think you would agree, you know, in terms of what you do, like, the voice that you have, the authenticity that you have, is your selling point. And if you compromise that, people know. It's pretty obvious when you are bending your coverage to suit your sponsors. And there's examples of it every day in enterprise tech coverage. And you know, I feel like my track record speaks for itself on that.Corey: I would agree. I don't like everything you write. That's kind of the point. I think that if you look at anyone who's been even moderately prolific and you like everything that they're writing, are they actually doing journalism or are they catering to your specific viewpoint? Now, that doesn't mean that well, I don't like this particular journalist. It's, well, “Oh, because you don't agree with what they say?” “No, because they're editorially sloppy, they take shortcuts, and they apparently peddle misinformation gleefully.”Yeah, I don't like a lot of that type of coverage. I've never seen that from you. And you've had takes I don't agree with, you've had articles that I thought were misleading at times, but I've never gotten the sense at all that they were written in bad faith. And when I run into that, it often makes me question my own biases as well, which is sort of a good thing.Tom: I mean, it's really tough because there are people out there in journalism and media who are operating in bad faith. Like, there's just no… there's no other way to dance around that. That is a fact of life in the 21st century. And I mean, all I can really do is do what I do every day and put it out there and, you know, let people judge it for what it is. And you know, like, I feel like, I have a pretty strong sense of what I will, you know, what I'll cover and how I'll cover it and where I'll go with it, and I think that that sort of governs, you know, every editorial decision that I've ever made. For me, there's just no other way to do it. And if I get to a point where I have to make those compromises in order to have a business, like, I'll just go do something else. I don't need this that much.Corey: When I was starting the Duckbill Group, one of the problems that I had was—it's hard to start a company for a variety of reasons, but one that is not particularly sympathetic is that everything is hard when you're just starting out. You don't know where any business is going to come from if it ever does. And at any point, I looked around, and I have an engineering skill set and I live in San Francisco, and I look around and say, it's Wednesday. I could have a job at a big tech company for hundreds of thousands of dollars a year by Friday if I just go out and say yes. And it's resisting that siren call while building something myself that was really hard.You have that challenge as well, I'd have to imagine because there are always people that various companies are looking to build out their PR and corporate comms groups, and people who understand the industry and know how to tell a story, which you clearly qualify, are always in demand, regardless of the macroeconomic conditions. So, at any point, you have the sort of devil on your shoulder saying, it doesn't need to be this hard. There's an easier, more lucrative path instead of struggling to get something off the ground yourself. Do you find that that becomes a tempting thing that you want to give into, or is it, “Mmm, not today, Satan?”Tom: The latter. I mean, I've had offers from companies I respect and from people I would, you know, be happy to work with under other circumstances. But I mean, I sort of feel like I'm just wired this way. And then that's, like, what I enjoy getting out of bed every day to do, is this. And, you know, like, it's not to say that I couldn't find, long-term, some kind of role inside one of those types of companies that you just mentioned, but I'm not ready for that yet.And, you know, I think I'd bring more value to the industry this way than I would jump in on some pre-IPO rocket ship kind of thing right now. I will say that, like, a lot of this business is a young person's game, so like, that equation changes as you get older. I always tell everybody that, like, journalism over the last 20 years has been, like, one of the slowest-moving games of musical chairs that you'll ever play. And, you know, I've [laugh] been pretty lucky over the past number of years to keep getting a chair, you know, in every single one of those downturns. But, you know, I'm not naive enough to think that my luck would  run out one day either. But I mean, if I build my own business, hopefully, I can control that.Corey: There are a lot of tech publications out there and I'm curious as to what direction you plan to take Runtime in, given that it is just you, and you presumably, you know, sleep sometimes, it's probably not breaking news with the first take on absolutely everything, which just, frankly, sounds exhausting. One of the internal models we have here is the best take, not the first take. So, where does your coverage intend to start? Where does it intend to stop? And how fixed is that?Tom: Well, at the moment, you know, what we really want to do is tell the stories that the herd is not telling. And you know, we're making a very deliberate decision to avoid a lot of the embargoed product training—I —I don't know how many of your listeners actually know how the sausage is made, but like, so many PR departments and marketing departments in tech really like to tell news through these embargoed product announcement things. And they'll email you a couple days ahead of time and they'll say, “Hey, Tom, we've got a new thing coming up in our, whatever, cloud storage services area. You know, are you interested in learning more under embargo?” And then a lot of people just say, “Sure,” and take a briefing and write up a story.And like, there's nothing inherently wrong with that. It is news and it is—if you think it's interesting enough to bring out to people, like, great. There's a lot of limitations to it, though, you know, in that you can't really get context around that story because you sort of by definition, if you agree to not tell anybody about this thing that the company told you, you can't go out and ask a third-party expert what they think about it. So, you know, I think that it's a way to control the narrative without really getting the proper story out there. And the hook is that you'll be first.And so, I think what we're trying to do is to step away from that and to really tell more impactful stories that take more time to put together. And I mean, I've been on all sides of the news business and when you get on the hamster wheel, you really don't have time to tell those stories because you're too busy trying to deal with the output you've already committed to. And so, like, one thing that Runtime will be doing right off the bat is taking the time to do those stories to interview the people who don't get talked to as much, who don't have twenty-five PR people on staff to blast the world about their accomplishments, you know, to really go out and find the stories that aren't being told, and to elevate the voices that aren't being heard, and to shine a light on some of the, you know, more complex technological things that others simply don't take the time to figure out.Corey: Well, do you have an intended publication schedule at this point or is it going to be when it makes sense? Because one of the things that drove me nuts that I would go back and change if I could is Last Week in AWS inherently has a timeliness to it and covers things over a certain timeframe as well. I don't get to take two weeks off and pre-write this stuff.Tom: Yeah. So the primary vehicle right now is an email newsletter for Runtime and that'll come out three times a week on Tuesdays, Thursdays, and Saturday mornings. You know, I'll also be publishing stories alongside those newsletters. That will be a little more ad hoc. You know, I'd like to have that line up with the newsletters, but you know, sometimes that's not, you know, a schedule you can really adhere to.But the newsletter is a three times a week operation at the moment and that, you know, is just basically based on—you know, at Protocol, we did five times a week with a staff of six. And that was a big effort. So, I decided that was probably not the best thing for me to tackle right off the bat here. So, one thing I really would like to do with Runtime is to get back to that place where there's a staff, there's beat reporters, there's people who can really take the time to dig into these different areas, you know, across cloud infrastructure, AI, or security, or software development, you know, like, who can really, really plunge themselves into that, and then we can bring a broad product to the market. You know, it'll take some time to get there, but that's the goal.Corey: How do you intend to measure success? I mean, there's obviously financial ways of doing it, but it's also one of those areas of, like, one of the things that drove me nuts is that I'll do something exhaustively researched that takes me forever to get out, and no one seems to notice or care. And then I'll just slap something off eleventh hour, and it goes around the internet three times. And I always find that intensely frustrating. How do you measure whether you've succeeded or whether you failed?Tom: Well, I mean, welcome to the internet, Corey. That's just how it works. I think I will be able to measure that, you know, by how sustainable of venture this is, and like, whether or not I can get back to that point where, you know, we can support a small team to do this because I, you know, I sort of feel that that's the best—that's really what this part of the world needs is that kind of broader coverage from subject matter experts who can really dive into things. I mean, I know a lot about a lot, but I can't spend all my time talking to security people to really understand what's happening in that market, and the same for any other, you know, one of these disciplines that we talk about. So, you know, if a year from now, I come on this show for the one-year anniversary of the launch, and we've got sustainable runway, we've got, you know, a few people on board, I'll be thrilled. That'll be great, you know?And like, one thing that I think will really be helpful, for me, at least in terms of determining how successful this is, is just how things travel, and not necessarily like traffic in terms of how things travel, I think that's an easy trap to fall into, but whether or not you know, the stuff that we write about is circulating in the right places and also showing up in the coverage that some of those broader business financial publications actually wind up doing. You know, if you can show that, like, the work you've been doing is influencing the conversation of some of these topics on a broader national and global scene, then for me, that'll be a home run.Corey: Taking a step back, what advice would you give someone who's toying with the idea of entering the media space in this era, whether that be starting their own publication or becoming a journalist through more traditional means? Because as you said, you've been doing this for 20 years; you've seen a lot of change. How would you get started today?Tom: It was a lot easier. It was smaller. It was just a much smaller industry when I first started doing this, and… there wasn't social media. The big challenge, I think, for a lot of people who are just starting now and trying to break through is just how many voices there are and, like, trying to get a foothold among a much, much bigger pond. Like, it was just a much [laugh] smaller pond when I started, and so you know, it was easier to stand out, I guess.I started in the trade magazine world; I started with IDG and I started—you know, which is a real, great bedrock system of knowledge for people to really get their footing in this industry on. And you know, you can count on many, many hands the number of people who started at IDG and have gone on to, you know, a very successful tech and media careers throughout. So, you know, for me, that was a big, that was a big thing. But that was a moment in time. And like, you know, the world now is so different.The only thing that has ever worked, though, is to just write, to just start, to just get out there and do what you're doing and develop a voice and find a way to get it to the people who you want to read it. And you know, if you keep at it, you can start to break through. And, like, it's a slog, I'm not going to pretend otherwise, but yeah, if it's a career you really want to do, the best way to do it is just to start. And the nice thing about the modern era, actually is, like, there's never been easier ways to get up and running. I mean you look at like things like Substack, or I'm using Ghost, you know, like, the tools are there in a way that they weren't 20 years ago when I started.Corey: Step one: learn how to build a web server is no longer your thing. No, I think that that's valuable. One of the things that I find at least is people are so focused on the nuts and bolts, the production quality. People reach out to me all the time and say, “What microphone should I get? What my audio setup should I use? What tools should I do for the rest of this?”And it's, realize that it doesn't matter how much you invest in production quality; if the content isn't interesting and the story you have to tell doesn't grip people, it doesn't matter. No one cares. You have to get their attention first and then, then you can scale up on the production quality. I think I'm on generation six or so of my current AV setup. But that happened as a result of basically, more or less recording into a string can when I first started doing this stuff. Focus on the important part of the story, the differentiated parts.Tom: The best piece of advice, I got when starting Runtime was just to start. Like, don't worry about building a perfect website, don't worry about, you know, getting everything all dialed in exactly the way you want it. Just get out there and do the work that you're doing. And it's also a weird time right now, obviously, with the [laugh] the demise of Twitter as a vehicle for a lot of this stuff. Like, I think a lot of journalists are really having to figure out what their new social media distribution strategies are and I don't think anybody's really settled on anything definitive just yet.So, that's going to be an interesting wrinkle over this year. And then I think, you know, there's also still a lot of concern about the broader economy, you know, advertising is always one of those things that can be the first to go when businesses start to look at the bottom line a little bit more closely. But those things always come around, you know, and when the economy does start to get a little bit better, I think, you know, we've seen a little bit more, maybe [unintelligible 00:26:28] of the market over the last couple of weeks, you know, with some of the earnings results that we've seen. So, you know, like, I mean, those are famous last words, obviously, but I think that looking forward into the second half of the year, people are starting to get a little more confident.Corey: I sure hope so. I really want to thank you for being so generous with your time. If people want to learn more, and—as they should—subscribe to see how Runtime plays out, where can they find you?Tom: runtime.news.Corey: Excellent. We'll, of course, put a link to that in the [show notes 00:26:54]. I'm really looking forward to getting the first issue in a few hours myself. Thanks again for your time. I really appreciate it.Tom: Thanks, Corey.Corey: Tom Krazit, Editor in Chief at Runtime. I'm Cloud Economist Corey Quinn, and this is Screaming in the Cloud. If you've enjoyed this podcast, please leave a five-star review on your podcast platform of choice, whereas if you've hated this podcast, please leave a five-star review on your podcast platform of choice, along with an angry comment telling us that your company's product is being dramatically misunderstood and to please issue a correction.Corey: If your AWS bill keeps rising and your blood pressure is doing the same, then you need The Duckbill Group. We help companies fix their AWS bill by making it smaller and less horrifying. The Duckbill Group works for you, not AWS. We tailor recommendations to your business and we get to the point. Visit duckbillgroup.com to get started.

Did you know we have rainforest right here in the UK? Visit magical Bovey Valley Woods in Devon with us as we walk alongside a babbling brook and over a Tolkien-esque stone bridge among trees dripping with lichens and mosses and learn all about it. Site manager David Rickwood describes the features of UK rainforest, some of the fantastic species that live here and why this habitat is so important as he takes us on a lichen hunt, shows us an otter holt and much more. Find out what a rapid rainforest assessment involves with Tom, and meet Eleanor who is working hard to create a powerful alliance to protect rainforest in the South West. Don't forget to rate us and subscribe! Learn more about the Woodland Trust at woodlandtrust.org.uk Transcript You are listening to Woodland Walks, a podcast for the Woodland Trust presented by Adam Shaw. We protect and plant trees, for people, for wildlife.  Adam: When most people think about rainforests, they're imagining the tropical, densely overgrown jungles of, well, mainly of our imagination, because so few of us have actually been there. But what they don't think about is the rainforests of places as close to home as a Devonshire cream tea. And that's what's so shocking because Devon and some other parts of the UK have in fact some of the most important temperate rainforests the world knows. And it's shocking not only because it's a bit of a surprise that we have these rainforests, but we've not really been taking much care of them. The ecologist Dominic DellaSala said that today's European rainforests are mere fragments, a reminder of a bygone era when rainforests flourished and they're now barely hanging on as contemporary rainforest relics. Well, I'm off to see, well, I hate to describe it as one of those relics, but one of those jewels that remains with us in Devon to see what a British rainforest looks like, why it's important, and what's fun about it.   Well, I've come to Bovey Valley Woods, which, unsurprisingly, I suppose, lies in the valley of the River Bovey on the South East side of Dartmoor National Park, and rather close to Newton Abbot. You might have heard of that. There are lots of trees and there are lots of wildlife here, brimming with spring migrant birds, so we might come across the Dartford warbler, the brightly coloured kingfisher or the pied flycatcher, which arrives from Africa each spring to breed. We might come across some rather tiny hazel dormice, which I understand are here as well. I'm not here at night, but apparently if you are, there are lots of bats which hunt on the wing. And of course there's the Dartmoor ponies, which graze in the wildflower meadows around here, but we are planning on heading into the wood itself.  David: My name is David Rickwood and I work for the Woodland Trust and I'm a site manager here at Bovey Valley Woods.   Adam: Well, just describe to me sort of what we're looking out at now. We can, I can hear a stream somewhere nearby. So there's clearly that down in the valley, but describe what, what's going on around us.  David: Yeah. So we're on the eastern edge of Dartmoor. There are 9 river systems that rise on, on Dartmoor. They carve these kind of deep valley systems off the edge of the moor. So a lot of people, when they imagine Dartmoor, they're thinking about the big open expanses of the moorland, but actually all of these river valley systems are where the concentrations of ancient woodland and temperate rainforests sit. You know, they have this kind of ambient temperature all year round, so we don't have these extremes of heat and cold. And they provide those kind of perfect conditions really.  Adam: Yeah. I mean, when one thinks of Dartmoor, it is those, those bare sort of rather dramatic landscapes. But you were saying hidden in the creases around those are these, these rich temperate rainforest environments.  David: Absolutely. You see so although people think of the open moorland of Dartmoor and the high moor, actually, a lot of that biodiversity and a lot of the diversity is around the edges in these wooded valleys. So woodland bird assemblages is particularly important in this part of the world, so species like pied flycatcher, wood warbler, invertebrates like blue ground beetle, and, of course, all of these lichens, mosses and liverworts that are, you know, in these sort of niches in these temperate rainforests.  Adam: Right, so we've jumped into this discussion about rainforests. And we're in a temperate rainforest, but I'm still not sure what a temperate rainforest is, because it conjures up this image, sort of, of jungle, doesn't it, of hacking back dense forestry, of the Amazon, of sort of Victorian explorers, that's not the environment we're in, which leads, I think, me to a confusion, I think lots of people are confused about what it is we're talking about. How would you define a a rainforest?  David: OK, so in visual terms, a lot of the trees around here have what they call epiphytic plants. There's things growing on the trees, there's things growing on the rocks. There's things growing on other plants and you get this lush abundance of particularly mosses.  Adam: Yeah. So sorry, the epiphytic, it means it's living on it, but it's not actually taking its energy from that. It's quite a beneficial relationship?  David: Yeah. So if you were to go and look at a tree branch in, say, central London, you're not going to see it carpeted in mosses and lichen. So here the air quality is very high and so you get this abundance of of plants growing on other plants. And because it's so wet, moist and damp throughout the year, those plants can survive actually quite high in the canopy.  Adam: So the sorts of things that you're seeing in a rainforest are lichens. The trees aren't particularly different from trees you'd see elsewhere are they? The oaks and all of that. So it is, lichens are a big identifier and the amount of rain presumably?   David: Absolutely yeah. So we're we're talking about sort of 200 days a year where rainfall is occurring in some form that might actually be cloud, just wet mist, not necessarily pouring down with rain. And we're also talking about rainfall in excess of say 12 to 1400 millimetres a year.  Adam: And we're very lucky that we're in a rainforest and it's not raining. Well, it's lucky for me. So now this is a tell me about this piece of woodland itself.  David: And we're right on the edge of the moorland. And so the woodland here is gradually creeping out onto the edge of the moor, and it's spread out from these kind of core areas in the valley. Now, that's brilliant in terms of renaturalising the landscape. But actually it can be quite problematic for some of the species in temperate rainforests, so in particular on this site here we've got lots of very old veteran trees and ancient trees that grew in a landscape that was a bit more open, had a lot more light. And it's those trees that often have some of these really key species assemblages on base rich bark or what they call dry bark communities. So it's all quite niche in terms of the conversation. But those trees are really the stars in this valley and so whilst we're kind of managing the woodland here, we need to give, you know, conscious effort to kind of manage around some of those key areas.  Adam: So look, let's go off into the woodland, but just to tell tell me a bit about what we're gonna see the plan for the day.  David: OK. So the plan for the day is we're going to just walk down this track here and we're going to drop down to a place called Hisley Bridge and that crosses the River Bovey. And that in itself is a very enchanting and beautiful place, and I think probably some of this mystery around temperate rainforest will start to fall into place when you see that.  Adam: Well I tell you what, let's go, let's go off before we, before we go off on that adventure just, just pause for a moment to listen to that babbling brook. So we're talking about this rainforest in recovery or trying to build a rainforest here almost. How delicate is this environment?  David: It's interesting, I think probably in the past five or ten years, I think we've become increasingly aware, particularly through working with partners like Plantlife, actually how vulnerable these sites are and, and how the changing climate is going to be a real threat to sites like this. And whilst we're doing our best in terms of managing the site and trying to restore it and trying to create the right kind of conditions, there are some aspects about climate that we cannot manage. And so resilience is really this much sought after objective and I think on a site like this, it provides an interesting template because over the past 100 years this site has kind of spread out into the wider landscape. That expansion has created an element of resilience for us.  Adam: I'm not sure I fully understand, you're saying there is some resilience because of the expansion of it, but well, how does that create resilience?  David: So things like lichens, so so this, this site in particular is really important for lichens and Hisley Wood on the other side of the river is probably one of a handful of sites in England. As this woodland has expanded, it's allowed some of those species to actually move into the wider landscape. So instead of there maybe being 3 or 4 oak trees with a particular species here, there might be 100 oak trees with those species.  Adam: So the fact you've got more of them makes the whole thing more resilient, if something happens to one, it's not a disaster. Understood. So given, my feet are very wet, I I need new boots. Just just tell you if I'm grimacing, it's nothing to do with you. Oh, I was going to talk to you, but look at this. That is a bridge straight out of The Hobbit! Just, this is extraordinary! Tell me about that.  David: So this here is a historic bridge that would have provided the access to Boveycombe farmstead. So Boveycombe farmstead probably is mediaeval in origin, but the the structure that there's now is abandoned.  Adam: This is I mean just describe it, it's it's made of rocks and it looks so haphazardly done. It's straight out of, you do it in a film, isn't it? It's very high up, very slumped down. It is absolutely beautiful. I'm going to insist I take a photo of you on it. And and it's a lovely flowing river right underneath it as well.   David: Yeah so this is the River Bovey and about 200, 300 hundred metres upstream there's a confluence of the River Bovey and the Becka Brook. And these are sort of torrent rivers so they go up and down really quickly with the rainfall. So this area here and the bridge, in fact, at times becomes an island because the river comes up so high.  Adam: What where we are now, underwater?  David: Yeah so if you look at all of these stones, they're all water washed and you can see the sand from the riverbed that's been washed out here.  Adam: Oh, I can. Yeah, I can over there. It's amazing.  David: So coming here, you know, particularly in the autumn last year, November, December or the late autumn when we had a lot of rain yeah this was kind of underwater at this point. But these rivers are really important, or really important for things like salmon, spawning salmon, sea trout, yeah. So these, it's these kind of rivers that really would have had an abundance of salmon and sea trout in the past.  Adam: Do you still get some?  David: Yeah, we still get some now. And interestingly, even though it was super dry last July, the salmon numbers were the best they've been for probably 5 or 10 years.  Adam: I have many things to ask you, but we are gonna have to take a pause here as I take a photo. OK. Yeah. So the salmon, what other sort of wildlife have we got here?  David: So I don't if you can just look across the river there, but there's an oak tree and underneath the oak tree, the root plate has been hollowed out by the river.  Adam: Yeah, yeah, yeah. I can see that. Yeah, it almost looks like there's, it's nothing supporting that tree.  David: Well, interestingly it does flex up and down, but that actually is an otter holt. So the otters move through this area on a regular basis and we've got a great little bit of footage actually of a mother with two kits in there and they're in there for a brief while. But these rivers are really good and things like otters are a really good sign that the fish population's good. So there'll be dippers on the river here, kingfishers, grey wagtails...  Adam: I, I got distracted by the beautiful bridge, but it's all, what I wanted to ask you about, this is such a sort of, environment on the edge that you're trying to protect, but at the same time it's Woodland Trust policy to encourage engagement, people to visit. In this particular area and this particular circumstance, is that a very difficult decision because actually you're going, hold on a second, you do want people to engage. On the other hand, this is an environment which really needs to be left alone for a while. Do you feel that tension at all?  David: Yeah, that's, that is an ongoing issue and so, for example here, one of the things we try to discourage, and we do that by just felling trees or putting in what you might describe as natural barriers, is we try and discourage some access to the river in certain areas. For example, like dogs, so dogs and the otter holt etc is not a great mix. And then you've got species like dipper that are nesting in these tiny little, really, balls of fern and grass along the edges here. And it's very, very easy for both a person, let alone a dog, to just flip those chicks out of that nest.  Adam: A black Labrador just dipping into the river there. I mean there, there's this sense of, you know, sort of called honey pot, sort of attractions and that was an issue I think, particularly in Dartmoor, over lockdown, wasn't it, where it's, sort of places became overwhelmed and I suppose again there's a tension, isn't there on the one hand, they can get overwhelmed. On the other hand, if you manage that well it drags people to the big, famous place and leaves the quieter places on their own. So it's a 2 sided coin. Do you think that's a, a good argument or not? You're smiling at me, almost going, no, no, it's, talking rubbish, no.  David: No, on the contrary, I think we have got to learn to manage it. And I think there's a number of aspects to that. I think we can try and draw people away from areas that we consider to be more sensitive. I think we need to engage people and try and broaden everybody's understanding of what's important about these places because the more people that appreciate them, love them and understand some of the nuance, and it is nuance, the more likely you are to be able to protect these places in the future and you know, for them to be sustained.  Adam: We've got a lot of travelling to do and not much time, so let's cross the bridge and you're taking me to some, some lichen. Oh, God, I'm just tripping over there, OK, right. We're we're we're going lichen hunting.   David: We are going to go lichen hunting. Although this isn't actually the best example, but there you go. Can you see these? There are these little teeth.   Adam: Little teeth underneath the lichen, and so that's why that's called dog lichen.   David: Yeah, and that's, it's part of a group of lichens that that behave in that way and they use those to actually attach itself to the moss or the rock.  Adam: That's not the nicest lichen I've seen, it looks very crumbly to me.   David: It looks a bit dry  Adam: It does look a bit dry, is that how it's meant to look?  David: Well you know, obviously we've had a very long dry spell.  Adam: Now I've just picked up a stick and this is covered in the lichen I love, but what is that? Do you know what, do you know what that's called? Now you see, I'm sorry I've embarrassed you.  David: No, no.   Adam: No don't worry about it, you don't have to know every bit of lichen.  David: No, it's palma... something or other, parmelia that's it.  Adam: It's parmelia, parmelia you see the noises are from his lichen advisors. Parmelia, I think it's so pretty. It's nicer than jewellery or something, you know, I think that's very nice. So OK. So we're heading down the other bank of the river and where are you taking me Dave?  David: Well, we're going to head down to a meadow that was cleared of conifer about 20 years ago, and so that's where part of this site has been restored. But on the way, we're going to have a look at a big ash tree and an oak tree that overhangs the river and that has a particular type of lichen called the lungwort growing on it.  Adam: Horrible name the lungwort. And was that, tell me if this is true, that, was it the Victorians who gave them these names, oh no actually it would have been before that, wouldn't it? Because it looked like an organ and they thought it, therefore, it was medicinal. Oh, well, it looks like a lung, therefore, if you've got a lung disease, you should eat that.  David: Yeah so that's exactly what, what it was. So this one looks like the inside of the lung, so it looks almost like the alveoli of the inside and people thought it was some kind of medicinal kind of treatment for any kind of ailment.  Adam: We should tell people don't eat this stuff.  David: No, don't eat it and certainly don't cut it or pick it, because it really is quite a rare species.  Adam: And that's this?  David: Yeah so there's, there's, there's several little pieces on this tree here.  Adam: I must be careful because I'm right by the river holding my phone, my recorder and if you hear a big splash, that'll be me going into the river, right? Yeah. Also I don't want to tread on all the lichens. Yeah, go on.  David: It's this one here. Which is looking a bit dry and crusty at the moment. So this is the, this is the lungwort. But if you look carefully this is an ash tree and this ash tree actually is dying.   Adam: I was going to say is this ash dieback?  David: Yeah so this is one of the trees that really will probably succumb to ash dieback in due course, but this one, thankfully, is leaning into this really big oak tree next door and the lungwort has managed actually to migrate across onto the oak. Can you see there's some small fragments here? And further up there's more fragments. So this is where potentially the loss of 1 species may be quite significant for the for the lichens that are growing on it.  Adam: And do you get involved? Do you give it a bit of a helping hand and sort of pick one up and put it over on the oak? Does, is that a thing that happens?  David: So we haven't done here, but that kind of translocation approach is being practised in some areas, particularly where the sites are almost pure ash. So this site here, we've got a range of species that lungwort can probably actually grow on. So we probably don't need to go down that route yet, but on some sites it's really critical. So they are translocating it.  Adam: I love that, I go ‘pick it up and put it down' and you very neatly go ‘that's called translocation', but you did it politely, so you didn't make me sound an idiot, and I tell you what I can't, I can't, I want a photo of the lungwort, but I'm, I can't come over that close. I'm going to fall in, so I'll give you my phone, and you can take a picture. That way I won't be climbing all over the place. Well, joining us with our band of merry men and women is actually someone who's responsible for a lot of work behind the scenes and actually bringing people together to make projects like this, this rejuvenation of this temperate rainforest possible.  Eleanor: So I'm Eleanor Lewis and I am the South West partnership lead for the Woodland Trust.  Adam: I know one of the big problems with these projects is that the Woodland Trust can't, perhaps doesn't even want to do them by themselves, so actually bringing in local communities, other organisations is super important.  Eleanor: Yeah, absolutely. I think the enormity of the kind of crises we face in terms of kind of climate change and biodiversity and nature just mean that no single organisation can do it on their own. And we can be so much more powerful and have far greater impact if we join together and create kind of partnerships and work at a landscape scale. So that's a fundamental part of my role really is identifying those kind of opportunities and working with other organisations to basically amplify all of our kind of organisational objectives. So at the moment we're seeking to kind of establish an alliance for the South West rainforest, so that's everyone from kind of Devon Wildlife Trust, Somerset Wildlife Trust, the National Trust and then you've got kind of Plantlife, RSPB, there's too many kind of to name, but a really kind of good mix of environmental kind of charities, but also those kind of policy makers. So we've been having conversations with Natural England and the Forestry Commission.  Adam: So what are you trying to get out of that association?  Eleanor: I think there's a number of different things, so there is already an existing alliance in Scotland, the Alliance for Scotland's Rainforest and I think one of the key things that has demonstrated is actually the power of having a kind of a coherent communications plan and therefore having a kind of 1 voice that is coming from all of these organisations  saying this is important, this is under threat and this is what we need to do is a really kind of key aim of the alliance.  Adam: Well Eleanor, thank you very much indeed. I do, I mean, I really do understand that sort of better together spirit really does help to achieve amazing things, so best of luck with that. I'm going to go off,  Dave is down there and I can see he's he's joined by a colleague I think there, so I'm going to go back and join them. But for the moment, thanks, thanks very much indeed.  Tom: So my name's Tom, Tom Pinches and we're contractors and consultants who work in the countryside.  Adam: And you're brought in to sort of identify trees that, it's called what this rapid, it sounds very flashy, so it's like you're the SAS of tree men, rapid reaction force. What is it called?  Tom: It's called the rapid rainforest assessment   Adam: Right and what is the rapid rainforest assessment?  Tom: The assessment formerly known as the rapid woodland assessment, it went through a little bit of a rebranding exercise.  Adam: Right, so what is it?  Tom: So the keyword there is rapid, so it's basically a toolkit which was developed by Plantlife to to easily identify temperate rainforests. I mean, my role as as a consultant really was to work with the volunteers.  Adam: Right. So showing them how to use this toolkit.  Tom: Yeah. So in theory it can be used by people with with less experience of ecological surveys. But there is some nuance there which requires a little bit of, a little bit of knowledge.  Adam: And so what sort of things are you testing? What, what are the the characteristics you're trying to find to identify this, this temperate rainforest?  Tom: So it it can be quite difficult to identify habitats and and that's something which ecologists have been struggling with for a while because there's no single identifying feature. So historically it was done by identifying indicator species. In certain habitats you tend to get communities of of species which which you find in that habitat. The problem with temperate rainforest is that those indicator species are plants like bryophytes, lichens, liverworts, mosses, which are very specialist, not not that many people can identify them, but the other things you can do are identify characteristics of the habitat. So these communities of species tend to be found in certain certain types of places. So one of the things we were looking at was was the structure of the woodland. We were looking at the age structure. We were looking at the amount of canopy cover, so those things are really important in temperate rainforest.  Adam: OK, so that's really critical, so this isn't Amazon rainforest transplanted to Devon tea land. This is, it does look different from a a jungle type Amazon.  Tom: So absolutely so the similarity is that they both require high rainfall, which is why you find them on the on the western edge of the UK where there's a lot of rainfall.  Adam: OK. And I don't wanna get obsessed by this, but why is it important that we identify this as rainforest, it looks just a very nice forest to me. The fact whether we call it temperate rainforest or just a bit of forest, doesn't seem to me to be that important. Why is it?  Tom: I mean, so temperate rainforest is is an incredibly rare habitat. So you could ask, why should we be conserving any incredibly rare habitats, I think, as a as a society, as an as a, as a, as a population, we all agree that that rare plants and rare habitats should be conserved, and so it's really important to identify them in order that we can conserve them. You know, we talk about diversity, we talk about diversity of species, biological diversity, diversity of habitats. And each of those sub habitats have their own biological diversity, biological uniqueness, and it's really important that we that we can identify as much nuance within those habitats and within that biological complexity as we can. So we can kind of save as much as we can, that's sort of under threat.  Adam: And it's beautiful as well as isnt it.  Tom: It is, yeah, it's really beautiful. They're some of the, I think some of the most beautiful habitats in the country, certainly in the country, maybe even the world. Very Tolkienesque, you know.  Adam: It is, as we crossed that bridge, I said if you're making a film of The Hobbit, that's what you put in The Hobbit.  Tom: Absolutely. And and and and you know these are habitats that inspired people like Tolkien to write about woodlands.  Adam: There is something mystical about them, isn't it? They do feel sort of magical places, little weird stuff could happen like stories.  Tom: They feel they feel timeless and ancient, and that's because they are ancient right and that's why they're so important because they're so old and they're so ancient. You know these really valuable habitats they're there because they've had so long such a long amount of time undisturbed to develop the diversity that they have.  Adam: Well, that is a fantastic point to end on Tom. And we are right in the middle of the woods right now and I have a train to catch, so I've got to make my way out to this place. So Tom, thank you very much, of course, my thanks to Eleanor and Dave and even the birds, the trees, the muds and the rivers which have given us our wonderful soundtrack for today. Thank you for listening. If you want to find a wood near you be it a temperate rainforest or something a little less exotic even, you can find a wood near you by going to woodlandtrust.org.uk forward stroke find a wood that's woodlandtrust.org.uk forward stroke find a wood. Until next time, happy wandering.  Thank you for listening to the Woodland Trust Woodland Walks with Adam Shaw. Join us next month, when Adam will be taking another walk in the company of Woodland Trust staff, partners and volunteers. Don't forget to subscribe to the series on iTunes or wherever you're listening to us and do give us a review and a rating. And why not send us a recording of your favourite woodland walk to be included in a future podcast? Keep it to a maximum of five minutes and please tell us what makes your woodland walk special or send us an e-mail with details of your favourite walk and what makes it special to you. Send any audio files to podcast@woodlandtrust.org.uk. We look forward to hearing from you.   

Join us for an episode of virtual time travel to visit Hatfield Forest, Essex and explore over 2,000 years of rich history. As we journey through this outdoor museum, we chat to Tom Reed, a Woodland Trust ancient tree expert, and Ian Pease, a National Trust ranger, who explain why the wildlife and cultural value of these trees makes them irreplaceable. Discover why ancient trees are so important, what makes a tree ancient, how people have lived and worked with them through the centuries and the urgent need to better protect them. Don't forget to rate us and subscribe! Learn more about the Woodland Trust at woodlandtrust.org.uk Transcript You are listening to Woodland Walks, a podcast for the Woodland Trust, presented by Adam Shaw. We protect and plant trees for people to enjoy, to fight climate change and to help wildlife thrive. Adam: Well, today I am off to Hatfield Forest, which is the best-preserved medieval hunting forest in Europe, which has a very rich history stretching back, well, a very long time, some 2,000 years or so. Now, the forest itself is actually managed by the National Trust, but the Woodland Trust works very closely with them. In particular, the reason I'm going there is to look at and talk about ancient trees, their importance to people and landscape, and of course, how old you have to be to be ancient. Ian: My name is Ian Pease, and I'm one of the rangers here for the National Trust at Hatfield Forest. Adam: And so how long has your association been with this forest then? Ian: Well, it's getting on for 30 years. Adam: You're looking good on it. Ian: Thank you. Thank you. [Laughter] Adam: That's very cool. Now look I have met you by this extraordinary, well, is it a tree or is it two trees? Inaudible just describe where we are standing. Ian: So, we are standing just to the left of the entrance road as you come into the forest and this is a magnificent hornbeam, er and although, like you say Adam, it looks like it's two trees it is actually one. Adam: How do you, how do you know? Ian: Well, it's done what's called compartmentalise. So, what happens when trees get to this age –and this tree is without a doubt probably around 700 years old – is the heartwood falls away and you're left… Adam: The heartwood's in the middle? Ian: The heartwood, the heartwood in the centre falls away, and what you're left with is the living part of the tree, which is the sapwood and what you can see there is that what trees do, trees are very good at adapting when they get older. And they are generally very good at adapting throughout their lives. So, what has happened here is this tree has stabilised itself by compartmentalising, so sealed off these two halves to stabilise itself and you can also see what we call aerial roots starting to come down from the canopy which gives the tree the rigidity and strength. Adam: So, where is that? I can't see, let's have a look, what do you mean? Ian: Yeah, so let's have a closer look. Adam: I've never heard of aerial roots. Ian: You can see these structures… Adam: Yes, I see. Ian: …these structures are what we call aerial roots. Adam: Yeah, they do look like… but they're not in the ground, they're in the air. So where are they...? What function are they serving? Ian: Well, they're basically supporting the tree and what's happened here, this is an old pollard, so originally, they'd have been what we call bowling in the top there, and the roots would have gone down into that sort of composted material that was captured in the bowling, and as that's gradually fallen away that's what you're left with at the top there. Adam: So, these roots are supporting the tree as opposed to bringing it nutrients or anything? Ian: Well, they are supplying nutrients for it from this compost material… Adam: Oh, I see, which is still there. Ian: You can still see some of it there. What's happened obviously is as the trees aged, it's fallen through. Um and you can see the compartmentalisation on the edges there. A sort of almost callous effect. Adam: Well, amazing, well look I gotta get a photo of you by this which I will put on my Twitter account. Do you have a Twitter account? Ian: I haven't, but I've got Instagram and Facebook. Adam: I'm sure we'll put it on all of those things so you can see what Ian is talking about. Fantastic, well look, this is just the beginning. And you said it was the ancient way, the ancient tree way? The road? Ian: Er no this isn't the ancient way. This is, this is the vehicle accessway into the forest. But having said that Adam, there is stagecoaches who used to travel from the east heading to Bishop… sorry, heading down to London, would cut through Hatfield Forest to cut out Bishop Stortford. Adam: [laughter] Okay right. An ancient cut-through. There we are. Ian: That's it. Adam: There we are. Not quite up-to-date traffic news, [laughter] but if you're a time traveller, that's a bit of traffic news for you. Look, my first visit here, we've come on an amazing day, I'm very, very lucky. What would you suggest I look out for here? Ian: Well certainly if you go for a walk through… what I, what I sort of advise people to do is to go for a walk around the lake area to start with because that way as you go down to the lake area you go through the medieval landscape. And what's nice about the lake area is you've got the 1740s landscape, so that's the Capability Brown heart to the forest. He was employed here in the 1740s before the National Trust had the forest. It was owned by the Houblon family, and he developed, formed the lake down there and built a shell house next to the lake. So, you could almost go on a bit of a time travel, you know virtual time travel, by walking through this wood pasture where we are now amongst these stunning ancient trees. Take yourself into the 1740s and walk around the lake and then and then go from there. Adam: Brilliant. I'm heading off to the 1740s, what a fantastic bit of map reading that will be. Thank you very much, Ian. Really, really nice to see you. Ian: You're welcome, you're welcome. [Walking noise] Adam: Well, I'm just walking out actually, into a bit of open field here. Ooh look wild mushrooms… must avoid that. Don't want to trample on those. And beneath one of these trees is Tom from the Woodland Trust, and he is going to be my guide to the rest of this amazing forest. [Walking noise] Adam: So, Tom, I assume? Hi! What an amazing place, amazing place isn't it? Tom: An amazing place Adam, hi, nice to meet you. Adam: First of all, this is an unusual forest in terms of the Woodland Trust because it's actually the National Trust, but you sort of… this is a joint project or, explain the relationship? Why this is different? Tom: So, the National Trust and the Woodland Trust are both really passionate about seeing the protection of ancient and veteran trees, are interested in studying them and knowing where they are. So, when… we're here today because the National Trust and the Woodland Trust have been working together, well, for quite a few years actually, we've been working together to map ancient and veteran trees to our Ancient Tree Inventory. And also, in the past year and a half, we've also been working with the National Trust on a project called the Green Recovery Project, which was a Challenge Fund that we, both organisations, were working on. This was actually one of the sites, in fact, I was here just six months ago where I got to see first-hand some of the restoration work that was being done to some of these trees, some of the historic pollarded hornbeams for example. We got to see how they are now being managed and cared for here by the Trusts. Adam: And it is an amazing place. I mean we're lucky to be here on a great day. Oh! You can hear… we're near Stansted, so you might hear an airplane in the background there. Oh, but we've come out of this lovely, sort of, bit of woodland into this amazing open area here and it's, it does feel a very mixed sort of landscape doesn't it? Tom: Absolutely, I think if, if you're walking here with your dog or just on a fun day out, you might just think to yourself ‘ah this is a field or some nice trees here'. But actually, when you stop and look around you can see these living links to the past, and what we, walking through here is a medieval landscape where you've got a mixture of ancient trees, we can see some decaying oaks in the background over there. We've actually just walked past some large hornbeam pollards. So, these are trees that were working trees, hundreds of years ago that were managed as part of this landscape to provide timber for those who manage them, worked and lived in the area. So, to be able to walk past trees like that and, you know, to touch them – these living monuments – is just a real privilege. Well, we've got a mix here, we've got a mix of young trees, mature trees, ancient trees, and this area that we're stood on now is called, referred to as wood pasture because it was historically a wood landscape, where you had both a mix of livestock agriculture and also tree management as well. Adam: Well look, it's amazing just to our left there's two lovely trees, and I… I don't know what they are… but they're so lovely two people have stopped to take photos of them and I mean just a measure of how beautiful some of these, this landscape is. What… just a quick test… do you happen to know what that tree is? Tom: Yeah. So, we've got two, sort of, mature hawthorns there, so erm elsewhere in the forest there are actually some much older hawthorns… we have some ancient hawthorns here that would be several hundred years old. These are probably mature, probably over 100–150 years old… Adam: And they got lovely sort of red, red splattering over them. It just looks like someone's painted that, it's quite, quite an amazing sight. So, you talk about ancient trees. So what? What classifies a tree as ancient then? Because if [laugh] these were young and they're like 100 or something. So, what's ancient exactly? Tom: So, it's a great question. So ancient trees are those that are in their third and final life stage essentially. So, the sort of, the age at which we call different species ancient is different because different species have different life expectancies, and they have different growth rates. So, for example, if we look at yew trees, we make all those ancient from around about 400 to 500 years plus. If we look at hawthorn, for example, we would say they're probably ancient from around about 200 years of age. So, it does vary depending on which species you are referring to, but essentially the ancient phases, the third and final life stage… and very few trees actually live old enough to become ancient. It's only sites like this where the trees have been retained where, you know, these trees not been disturbed, they've not been felled, there's been no development here. So, these trees have survived in the landscape and been allowed to survive and that's why we can enjoy them today. So yeah, that's what an ancient tree is. Adam: And I mean, obviously there's almost a sentimental reason you, you don't want to destroy something which is 700 years old. But from an environmental perspective, do ancient trees offer the environment, do they offer animals something more than a younger tree does? Tom: Absolutely. I mean, I like to think of ancient trees as being like a living oasis for wildlife essentially. So, these are areas where you've got a huge variety of habitats both, you know, within like the tree structure, in the roots, in the canopy, even within like the heartwood and the hollows. So, ancient trees offer huge benefits for wildlife. Adam: But sorry, you're saying that's more… a 700-year-old tree would offer more environmental benefits than a 100-year-old tree. Is that what you're saying? Tom: Yeah, if you are comparing trees of the same species. Adam: So why is that? What is happening in that period that offers that benefit then? Tom: So, the reason really is owed to the decaying wood habitat. So as a tree ages, you get natural decay that's often caused by special heart rot fungi that can decay the tree. So, as it's standing it's decaying slowly over time, and by – that decaying wood – it kind of creates a load of microhabitats, so you get huge benefits for invertebrates. In fact, the site we're on today is one of the top ten sites in the UK for rare invertebrates because of the decaying wood habitats that are here. If you imagine a decaying tree with hollows and cavities and water pockets… imagine if you're an invertebrate, you know, you're such a small organism and you've got this huge ancient tree with all this variety of habitats. I mean you've essentially got… your whole world is in this tree, it's a whole universe of habitats. So, that's why they're important. Adam: So, it's quite poetic, isn't it? In its decay… the very fact it's decaying offers new life. Tom: Absolutely, exactly. So, they become, you know, just… they just transform into these oases for wildlife and it's owing to the decaying habitats that they have. Adam: And what's the oldest trees that you've got around here then? Tom: Yeah. Well, so some of these trees may well be in excess of 700 to 800 years of age. Adam: And are they yew? Because yew trees tend to last the longest don't they? Tom: Yeah. So, a lot of the oldest trees on this site will be pollards. So pollarding is where you cut the branches of a tree above head height. This was a historic, sort of, tree management practice – essentially the people who used to live and work here wanted to farm their livestock, and in order to make sure that they didn't, sort of, graze on the trees that they also used to harvest timber from, they were able to cut the tree above head height, typically above two metres in height. And what that does is quite two things. For the people managing these trees, it means that they can easily harvest the timber because in absence of power tools… imagine they were using hand tools and as the tree gets cut back it regrows into sort of finer, smaller stems that can be more easily harvested. Adam: And that's the sign of pollarding, isn't it? If you're a tree detective and you see these, sort of, small stems all coming up it's a sign it's been a pollarded tree. Tom: Absolutely, typically it will have, like, a fluted form cut around about two metres at head height and you'll see like a typical pollard knuckle, which is where you see all of these stems converging on the same point. But pollarding does actually bring some benefits to the tree as well and that's why some of the oldest trees here will be pollards because it has the effect of almost stabilising the tree. It means that the tree doesn't get too top-heavy and then collapses and dies. Instead, it keeps the trees more typically smaller and if they're regularly cut that keeps the tree in that stable form. So even the sort of the trees here which are, you know, extremely hollow, they look like, you know, how are they even still standing, because, like, what's supporting them? Because they're being managed as pollards. And then, you know, there are some sites where pollarding has stopped, you know, for example at Burnham Beeches is a site where you can see a lot of the pollards have not been pollarded for a long time and they've started to become top-heavy now, so and that presents a risk that you get greater wind loading and then they fall. So going back to what we were talking about the Green Recovery project that we are working on with the National Trust. And like I said, I was here six months ago, and we got to see some of the tree management here and we got to see some pollarding essentially. So, they were sort of cutting back the… some branches in the canopy to basically continue the pollarding management to try and replicate what was being done hundreds of years ago to make sure that these trees can survive for many years to come. Adam: Amazing that. Ian. Ian promised me some time travel. He pointed me towards the Capability Brown landscape. Do you know which way that is? Tom: Yeah, that would be straight back down the track. Adam: I was going to say, it's going the other way. Okay, but do you think we should head this way first? Tom: Yeah. Well, I mean, we can. We can go. Adam: I'm going with you. I'm going with you and will… I'm definitely going to see the Capability Brown later, but you lead me on. Tom: We can certainly make our way back there. Adam: So, tell me about where we're heading. Tom: So now we're just, we're walking through a sort of former medieval landscape. So, we've got a variety of trees here, we've got some oaks, we've got hawthorns, we've got field maples, we've got hornbeams. And if we're walking here, we can just see the sheer variety of trees in the landscape. So, when I'm walking through this landscape and I can't help but think about, you know, the people who were working here and living here and the way that this, the site, was managed. We can hear overhead planes are leaving Stansted Airport and I can only imagine what those people would have thought about that [laugh]. And it just, it just makes you think about the changes that this landscape has seen. And erm obviously the reason that we have ancient trees here is because this part of the landscape has remained unchanged. So, whilst there's been a lot of change around this site, this area has survived and that's ultimately enabled these trees to survive as well. Adam: Now you look after a lot of woodland. What separates this from lots of the other things that you've got an association with? Tom: So, I suppose what's really interesting about this site is that it's a former forest and then when we think about forests, people typically think about trees and they probably picture woodland, but actually… Adam: That's fair enough, isn't it? Tom: It's fair enough, but forest actually has a very different meaning in terms of the medieval sense. So, a forest was essentially an area of land that was subject to special hunting laws and these new areas were preserved really for the royals and, well, the royals and their sort of associates to hunt deer and enjoy riding through the landscape and they liked this kind of open landscape where the trees were kind of scattered. So, when you think of forests, like people typically think of dense woodland, but actually, it's more like this. It's big trees in a sort of sparse landscape where deer are allowed to run around, and the royals could be… were there on horseback sort of chasing them and hunting them. It was sort of a sport for them. And in a lot of sense, the commoners, if you like, were kept away from sites like this. An erm, but then the kind of, the legacy has been preserved. Adam: And it's interesting, isn't it, that because we think of these as natural places, they are natural places, that's what's important about them. But they're not unmanaged. It's not like the hand of man has not had a role in shaping this has very much been a man-made, a man-shaped environment. Is that fair? Tom: That's absolutely fair, yes. If I was… what's interesting when we look at ancient tree distribution more generally, there is a clear link between humans and where ancient trees are. So, for example, you might find ancient yew trees often in a churchyard setting, coz often…, well, ancient yews were respected by sort of earlier civilizations, the early Christians, even before that, the Druids respected ancient yews, which is why they've kind of been retained and associated with places of religious worship, you know, so there's always those kind of links between where humans have been and where ancient trees are now. And it just shows that really throughout history we've respected our trees, you know, other civilizations and cultures have respected these trees and you know, now we need to respect them too and continue their legacy. Adam: And I suppose one of the things that's striking for me is that although we are near Stansted, although it hasn't taken me long to drive from London, as far as you can see, you can't see anything. It's sort of trees for as far as you can see. It's a remarkable oasis in a rather heavily developed part of the UK. Tom: Absolutely. You know, to be able to come to this site only like an hour away from London is quite remarkable really, that places like this have survived. It's like a living outdoor museum almost. You know, you can go up to some of these trees, put your hand on them and these were the same trees that were being worked on over 500 years ago. You know… how many elements of nature can you say that about? You know, it's a remarkable privilege to be able to go and visit trees like that. That were managed hundreds of years ago. Adam: OK, now there is a suitable bench almost shaped fallen branch, so maybe we can head over there for a sit down and a chat. Tom: Sounds good. Hey, got some good sort of… at the top of the tree there, you've got something called retrenchment which is basically where the tree is dying back essentially. Adam: Right. Tom: So, over time like the canopy sort of reorganises itself. And then the tree kind of grows downward eventually. So, trees don't grow infinitely up and up and up, they tend to get… they die down and they get broader over time. Adam: So that's the sign of a change in its lifestyle… life stage sorry? Tom: Absolutely. Adam: So, we can see some sort of dead branches at the top that means it's coming into another stage, it's probably going to thicken out a bit. Tom: Exactly. Yeah. So, what I mean… what's happening essentially as the tree reaches a sort of theoretical maximum size… eventually, the tree can't transport that water from the roots. That kind of hydraulic action becomes limited. It can't pump water to the very top of the tree and so it, kind of, stops investing in those branches. It's grown to a good height, it doesn't need to compete with other trees around it, so it starts to reorganise itself. And those branches at the top start to die back and instead the tree invests in some of those like low… what were lower branches and they become more dominant, and the tree becomes broader in profile. The trunk becomes much wider as well. So, it's a typical sign of an ancient tree that they will typically have a large girth for their species. Like the trunk will have a large circumference for its species. That's like a key sign. Adam: Alright, look, this isn't… I can't quite sit on this one, but this is a very very pleasant place to stop. So, one of the big projects from the Woodland Trust is this Ancient Tree Inventory and I think you're sort of… you're in charge of that. So, what is that? Why is it important? Tom: So, the Ancient Tree Inventory is a citizen science project. So it's something that anyone can take part in and essentially what it seeks to do is to map ancient, veteran and notable trees across the UK to an online interactive map that everyone can, sort of, see, use, and enjoy. It started as a project called the Ancient Tree Hunt and essentially it was just to get ancient trees on the radar really, to get people inspired by them, to get people out there recording them. And in that project alone they mapped over 100,000 trees. But since then, it continued under the name of the Ancient Tree Inventory, and we're continuing to map trees on a daily basis. So, we have a network of volunteers around the UK who are more expert volunteers who are called verifiers, and what they are doing is going out and checking trees that members of the public have added. So, if people have been on a walk and have seen a big tree or a tree that looks like it's old – might be ancient, might be veteran – they add it to the map, that gets recorded as an unverified tree and then one of our volunteer verifiers comes along, they'll visit the tree and they'll assess whether they think it's an ancient tree or a veteran or a notable. They'll also maybe take some extra measurements of the tree, they'll check that it's been recorded in the right place and that the species has been identified correctly, things like that. Essentially what we're trying to do with the Ancient Tree Inventory, as well as raising awareness about ancient and veteran trees, is also, erm, our role in terms of research and understanding their current distribution. But also, from their protection point of view, the Ancient Tree Inventory is actually a really useful resource for the likes of people doing environmental impact assessments. So, we get a lot of requests for data from ecological consultants, from arboriculture consultants, even the local authorities that want to know where are the most significant ancient and veteran trees in their county or on a particular site, so that that can then be used to help inform, you know, planning decisions and, you know, we'd like to think that that is going to grow more that when, for example, there's a development or, you know, some sort of proposed change to an area that people will consult the Ancient Tree Inventory and they'll consider, sort of, changing plans if ancient or veteran trees are going to be harmed. We really just want to make sure that there is no loss… further loss of ancient and veteran trees essentially. Adam: And what sort of protection do ancient trees have? Do they have… like a listed building you get listed protection so you can't mess around with it. You can't knock it down, can't alter it. Does a 700-year-old tree get the same protection as a 700-year-old piece of brick? Tom: Well, I'm afraid to say the answer to that is no. So, none of the ancient trees, don't have any legal protection in the UK. As you say, some of our most treasured monuments and buildings benefit from scheduled monument status, but for ancient trees which may be of, at least the same age if not older, they don't have any protection. In fact, I remember on a recent visit to a churchyard where we went to see a really remarkable ancient yew tree, I think someone jokingly said at the time that the wood in the beams of that church are probably more protected than the wood in the trunk of that ancient yew tree. And that, kind of, really opened my mind to that whole debate on making that comparison between built heritage monuments and ancient trees. And we really want to see ancient trees be more considered as features of our cultural heritage, archaeological heritage, you know, they really are these living monuments and we need to look after them. Adam: Do you get a sense that public opinion is swinging in that direction to support ancient trees? Tom: Yeah, I think it is. I mean, you know, based on my role of working on the Ancient Tree Inventory, I've the fortune of speaking to members of the public about their ancient trees. And we do get lots of concern expressed to the Woodland Trust about, you know, what's happening to ancient and veteran trees in their area. But there is actually something that we're doing at the moment at the Trust which is our Living Legends campaign that launched earlier this year. So, we're actually making an attempt to gain stronger protection for ancient and veteran trees. We have a petition that's live at the moment and the campaign has a lot of different activities happening at the moment, but one of the headline things anyone can do is sign our petition where we're calling for stronger legal protection, for that to be reflected in policy so that there is basically legal protection to stop any harm to the trees. Adam: Okay. So, if someone's interested in being a volunteer and, sort of, adding to that inventory, how do they go about it? Tom: Yeah, so anyone can take part in the Ancient Tree Inventory. All they need to do is go to the Ancient Tree Inventory website where they'll be able to register, and they'll be able to create a free account. Essentially that means that when you sign into your account, you can just record the trees. The main things that you'll need to record are things like, you know, where the tree is so you take like a grid reference. Erm, if you can record the girth of the tree – so, this is the circumference of the tree – of the trunk itself… Adam: So, you need a long tape measure? Tom: Yeah, we typically suggest having a tape measure around about 10 metres where you can often get like a surveyor's tape from your local hardware store for example. And you can measure the trunk, normally about one and a half metres from ground level for consistency. You're really looking for the narrowest girth of this trunk. So, if the tree has like a big, sort of, burr, or if there's like a low hanging branch, then just record underneath it to try and get the narrowest measurement. So that… and that's essentially the most technical elements. If you can just record as well the species of the tree, whether it's on public or private land, do make sure to record some photos as well. The key things that we're really interested in looking at with a tree when we're assessing whether it's ancient or veteran is our veteran features or decay features. So, these are the kind of decaying wood habitats, for example, if the tree is hollowing, if the tree has decaying branches… so the tree behind me here has some deadwood in the top of the crown – this is what we call retrenchment. And any other kind of deadwood cavities, water pockets, holes, that sort of thing is all great to capture, both in the record itself, but also in the images too. Obviously, the more that people can tell us about trees, the more we know. And then it makes it a much more valuable resource. So, we always encourage people to submit as much information as they can. Adam: And if I mean like me, I'm very bad at spotting tree types. If you don't, if you see an old tree and you think I wanna record that, but I don't know what sort of tree it is, is that a problem or can you just go look, here's a photo, you'll probably know better than I do? Tom: Yeah. So, it is possible to record the species as unsure. It might be that you know that it's an oak, but you're not sure if it's pedunculate or sessile, so you can just record it as oak. We have a network of volunteer verifiers who are sort of ancient tree experts who will check… Adam: Check your homework for you. Tom: Yeah, exactly. Adam: And if you can't spot the tree type, there is actually a Woodland Trust app, isn't there? Tom: Yeah, that's right Adam, we have a… the Woodland Trust has a species identification app that you can use as well. The good thing is that for our ancient trees, most of the time they are actually native. So, the common native species are typically going to be, you know, oaks, beech, ash, hornbeam, yew trees. So, you know, these are species that most people are quite familiar with cause they tend to be native. Adam: We should do a podcast on that, sort of, how to spot the top five native UK trees. An idea for another podcast… you may be dragged back into this. Fantastic. Tom: Sounds good. [Pause] Adam: So, we've been walking through a beautiful sort of woodland glade, a very covered area. And what is typical of this particular site is that you do come out into so many different landscapes and so we've come out into this very open area, all of a sudden with this extraordinarily large lake. I think there's something suspiciously like a tearoom next door which might attract my attention in a moment… and a couple of seats finally to sit down. So, Tom, now… It's a beautiful place. I mean we're, we're... The weeds rustling in the wind, framing the lake in front of us… There's some ducks and some rowing boats and this is a wonderful place. But I… the feature here is ancient woodland, so is there a way of sort of measuring the value of a particular tree? Do you… is it very just sort of thumb in the air, sort of thing, in the wind… or is there a more scientific approach you can take? Tom: Yeah, I think there are lots of ways in which different people value their ancient trees and so one acronym we tend to use to capture, sort of, the main themes of why we value our ancient trees, can be thought of as ABC. So that stands for aesthetic value, biological value and cultural value. There is also historical value, which I'll talk about in a moment, but think about, sort of, aesthetic value and why our ancient trees are important, you know, can you imagine, sort of, walking through the landscape that we're walking today without the ancient trees? They do provide, like the character of this site, you know, walking and seeing these big hollowing living monuments – they're almost like sculptures. And, you know, not just on these sorts of sites, but if you think of what would our churchyards look like without our ancient yews? Or what would our hedgerows look like without those old hawthorn trees? Or what would our, sort of, the Highlands of Scotland look like without those, kind of remarkable lone standing-proud alders, and rowans and hollies that are like really typical of that landscape? So, because ancient trees form, like, a really important part of the overall character of our landscape that's one way in which we value them. The other way, of course, is biologically, so they provide immense habitat variety for wildlife and a single tree can support thousands of species and that's owing to the decaying wood habitats that they have. So as a tree ages it naturally hollows, starts to break down, you get hollowing in the branches, in the trunk, you get hollowing around the base of the tree – what we call buttressing. All of these create pockets and habitats and even microhabitats for wildlife, so it can be used by a range of organisms from birds to reptiles, to mammals like squirrels, badgers. For example, with birds, as well, owls will use them, they will actually use the cavities found in the canopies of ancient trees, they make their nests. Same for woodpeckers, which will use decaying wood to make their nests and bore for invertebrates. And of course, the invertebrates themselves – the opportunities provided to invertebrates by ancient trees is remarkable. There's a special term to describe invertebrates that depend on decaying wood, and that word is saproxylic. So, saproxylic invertebrates are those which depend on this decaying wood for a part of their life cycle. And then there is also the cultural value that we place on our ancient trees. Adam: So, that's the C. Tom: That's the C in our ABC. Adam: So, tell me about the cultural values. Now actually… that must be a hard thing to measure? Tom: Absolutely so, it's not always clear, in fact, that some trees you may walk past and not know that that tree has been, or you know what it's seen in its life and how other people in the past have interacted with it. For example, ancient trees in the churchyards, so it is often that you find ancient yew trees linked with former sites of religious worship because the… our early ancestors, the druids, and the sort of, early Christians had a… they saw, essentially, ancient yew trees as a deity, they worshipped them, they respected them. And as a result, those ancient yews persisted in that landscape. Adam: The cultural aspect, there's a cultural aspect, but there is also, it doesn't run from the alphabet [inaudible] ABC H, there's an H isn't there? A historical reference here, because these trees have been around for 700 years, 1000 years – kings and queens will have wandered under these trees, important decisions would have been made. Historic really, really historic decisions would be made. And under the boughs of these trees. Tom: Absolutely. And so, there are some trees around UK which we refer to as heritage trees that have… that we know have bared witness to some important historical moments. Or that well-known historical figures that visited those trees. For example, we have the Queen Elizabeth Oak or we have the Tolpuddle Martyrs' Tree which is thought to bear witness to the start of the trade union movement in the 1800s, and we have the Ankerwycke Yew that bared witness to the signing of the Magna Carta by King John, under that very tree. And it's still there today, a tree that is over 2,000 years old has, you know, such important historical values – irreplaceable in fact. That is probably the one word that we would like people to associate with trees – is the word irreplaceable. Because if that tree was to be lost, you would lose all of that historical reference. Adam: Fantastic. You know this site well, I mean you've come a long way to see me today, so I'm super pleased and very grateful for the guide. But I know you love this place, don't you? Tom: Absolutely. I need no excuse to come here. I think it just feels like walking back in history essentially. And there's just an amazing variety of trees. Yeah, I could just spend the whole week here. Adam: I think my family might miss me in a week, but who knows? They might not… they might not notice. But they're certainly not going to notice for the rest of day, so I'm going to take the rest of the day here. Thank you very much. Well, my thanks to Ian from the National Trust and Tom from the Woodland Trust but most of all, I suppose, thanks to you for listening. Now do remember if you want to find a wood near you, well, the Woodland Trust has a website to help. Just go to woodlandtrust.org.uk/findawood. Now you can find a wood near you. Well, until next time, happy wandering. Thank you for listening to the Woodland Trust Woodland Walks. Join us next month when Adam will be taking another walk in the company of Woodland Trust staff, partners, and volunteers and don't forget to subscribe to the series on iTunes, or wherever you're listening to us, and do give us a review and a rating. And why not send us a recording of your favourite woodland walk to be included in a future podcast? Keep it to a maximum of five minutes and please tell us what makes your woodland walks special. Or send an email with details of your favourite walk and what makes it special to you. Send any audio files to podcast@woodlandtrust.org.uk and we look forward to hearing from you.

In a recent Roofstock Academy webinar, we got an interesting question that we were unable to address during the session. The audience member asked for words of wisdom on the topic of being a beginner and your first property is operating at a loss. When is enough enough, and when should you cut your losses?     --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum and today I'm joined by my co-hosts…   Tom: Tom Schneider…   Emil: and Emil Shour…   Michael: and today we're gonna be tackling one of the questions we got from a webinar we did recently, as part of the Roofstock Academy recently did an AMA, which is an ask me anything, and we kind of re labeled it and ask Michael anything webinar, it was a lot of fun. If you missed it, we missed you and look forward to seeing you on the next Roofstock Academy webinar. But a question we got that we didn't have time to answer during the webinar is words of wisdom to share for the first year or two, when your rental operates at a loss. How do you know when to cut your losses?   We saw the question, we're like, man, this is a killer question. So Emil, I am just going to farm it out to you. Because I know you got really excited about it. What do you say to folks out there that have this experience or are thinking about investing in a property and this is a concern that they have?   Emil: All right, so I got excited about this because it's basically what happened with the triplex, right, I bought it in November. So the first year, November, November of 2020, most of 2021 was spent rehabbing the property, because I knew rent was under market. So you know, it's kind of in the middle of COVID, a lot of vendor issues just took us a long time to get everything done. So 2021 major loss, but now we're, we're good, we've got good tenants in there, I had to get a new property manager and we're at rents that actually, I think a little bit higher than the pro forma I had when I bought the place. So my first year too, was operating at a loss and now I feel like is going to be the true test of does the property perform. So that's my long winded way of saying, I guess it depends on how you bought it, like if you bought it turnkey, and it's operating at a loss for the first couple years. Maybe that's not the greatest time but if you bought it knowing, maybe you're gonna have to update things, you know, you knew like the roof was gonna go out sooner, some something where you knew these expenses, were going to come along, and it's fine, you know, it's going to be a loss originally. But then, hey, you're not gonna have to pay for that thing for a long time, right? You replace it and now you got a brand new age back or roof or kitchen or whatever it may be, so my answer is it depends on those factors.   Michael: Love the clear cutness, the directness, Tom, your thoughts man jumping in.   Tom: I think in making decisions, like you should try, like as much as possible to like, have it like already kind of like set up in advance. So perhaps there's like thresholds, you can kind of set on expectations? I mean, this might be a little bit like unrealistic for this scenario. So I'm gonna change my answer, I'm gonna say, I think, like, strategy wise, like, are you planning for like a longer, longer term buy and hold? Like, if that's the case, you know, the initial kind of like, upfront expenses, perhaps it's stuff that we're going to happen anyways, like, it was kind of like aging, what not. So I think it's, you know, having that kind of like, plan upfront of like, what your ultimate strategy is, like, let that inform these kind of decisions in the moment. I like that I kind of got two different answers there.   Michael: Yeah, I guess. Okay, so as a challenge to that, Tom, if I'm someone I'm buying turnkey, like Emil mentioned, and I'm planning, I plan and identify as a long term, buy and hold investor, but the first two years, just don't go my way. Don't you know, I have a couple more expenses than anticipated, so I'm operating at a loss. What should I do?   Tom: I think there's like a little more context. So like, where, where are your where's your value relative to? Or where's your, like, buy price versus the current, like, where are the values that like, could kind of go into that, I'd say probably a mistake. You need to also factor in like transaction costs, like let's say you were to like, sell and then ribeye like that should go into the calculus of like, what you're going to pay, you know, on the agent side, and just the friction of selling. So I think like that should go and count, so it's like there's, it's sort of a a lot of different colors to this painting of a decision and as detailed as you can be like of these different considerations should go into the process of you know, do you sell it or do you buy it? I mean, this is is like a great answer, because it's like kind of like asking other questions. But I feel like a lot of times like the best answers for this kind of stuff are asking additional questions that you should be kind of unearth before making that decision.   Michael: Makes a ton of sense, makes a ton of sense. Emil, I love your point about like, oh, is it turnkey or is it known that there's expenses that are going to force you to operate at a loss? Even if all of the things went well, like, you'd look at the numbers, you still put more money into it, then you got out of it? So that by definition, like it's a loss.   Emil: It's like, what are you expecting, right? Like, you know, I almost don't look at it as a loss on the renovation, it's almost part of my upfront investment. So let's say I spent 20, I probably spent about 20- 25k, repairing it, I'm not really looking at last year as a 25k loss, even though that is how it is on the like, profit and loss, whatever you want to look at it. I'm more looking at it like okay, here was my purchase price. I had add 25k, now, what is my return on that going forward?   Michael: Yep, I think that makes a ton of sense. So how do you think about like, knowing when to cut your losses? If you anticipating, hey, I'm gonna get this thing up to the triplex is a perfect example, hey, I'm gonna get this thing up to market rent, I spent the 20 25k on the renovations. I'm having trouble leasing it, I'm not getting the market rent I thought I was, do you say, well, let's cut our losses and run, I mean, how long are you going to hold on to that for?   Emil: That is a very good question and I wish I had a really good answer for that very good question. It's hard. It's like, are you in an appreciating environment, right? Like, like Tom kind of mentioned, if your property values going up, you're making money in a indirect way to potentially be able to sell later? Are you in a environment where the value is going down? Do you bought I don't even know if you're, if you're, if it's going down? Do you sell it then like or do you say, you know, right, I think in 10 years, I guess it really just depends on like, you're at this, this sucks and real estate investing, but like your gut feeling on what you should do, like, do you have a bad property manager? Do you not feel really good about the market? If you have a good property manager, and you feel really good about the market long term? You know, maybe you have more conviction and just kind of weather the storm and hold on for longer and see, like, how does it perform in years, three to five, instead of just determining you know, one or two years? I don't know.   Michael: I appreciate like that concept and I agree you to an extent, but I'm going to push back a little bit. Because I'm afraid that too many people's gut feel when you're in the thick of it is all doom and gloom and so when your renovation went over budget, and your property manager sucks, and, you know, your your property has been in foreclosure because you didn't recognize that your loan didn't get auto paid, like all these things are bearing down on you. I think it's really difficult, even if you're an appreciating killer market to see that you're carrying all these all these things on your shoulders, or on your back or wherever you're going to carry them and it's so hard to hold your head up high and see the greater good and so trusting our gut, I think can oftentimes make us lead us down the to make incorrect decisions.   Emil: Yeah, yeah, that's a good point.   Tom: Yeah, I guess to my original point, like humans are notoriously kind of can be very bad at making decisions. So like, as much as you can bake sort of a decision tree like upfront. With regards of like expectations on what kind of ranges where we hold cut bait, like, I think that's like a really interesting exercise, just so kind of in the heat of the moment, you don't have to put yourself at risk of needing to make decisions that could be like potentially a little bit emotional.   Michael: Yeah, I have this buddy and this is kinda like a stock market analogy, he set a stop loss limit on his stock at like the super low price and because he didn't want to lose any many more than that. So for anyone who doesn't know, basically, a stop loss limit is at the stock hits a certain price drops a certain price, it'll automatically show sell either all the shares or the amount of shares that you determine or $1 value determined. So that way, you kind of hedge your downside. Well, he did that and the stock price dropped one cent below, sold all his shares, and then skyrocketed back up, like way above and beyond where it was starting at the day and he was like, oh, my God, like this sucks. I'm like, yeah, dude. Like, why would you do that? That's not a that's not a thesis that I believe in. That's not something that I would ever do. I'm like, man, I'm going all the way down, if it's gonna go down, down, down into the ground, and I've done that before I wrote stocks to zero, which someone could say that probably wasn't the best decision but that's how I invest the stock market.   In any case, I think that so often we have these kind of dips like these, these lows and these highs in real estate is no different. Like, things can seem like they're really down in the dumps and they're going terribly and, and just sometimes you have to write it out and if you have the wherewithal like the mental fortitude, the wherewithal, the financial backing to be able to do that great, because the one thing we don't want to do is sell out of necessity, or have a fire sale because now we're being forced to sell. If I could recommend that anyone sell at any given time, it would be when it's ideal for them, or when they've set the kind of, they're able to dictate the terms under which they are selling. I think that puts you in a much more powerful position. I'll share an example just for my personal like, portfolio, I bought a property back in the day, it was an eight unit in the Midwest, I bought it for 305,000. The rent in place rent at the time was like 4850. So on paper, just like killer property and the expenses were just through the roof, a lot of deferred maintenance that I wasn't aware of a lot of like death by 1000 cuts type of ordeal, or just one thing after another after another after another was going wrong and the repair dollar amounts were stacking up and I'm like man, should I sell this thing should just get rid of it, I kept it and today the in place rents are like 7500 7400 over like a four or five year period, the rents are going up $3,000 a month and so now there are still some of these kind of miscellaneous erroneous pain in the butt maintenance items. But the rents have gone up so much that it really takes care of itself and so I think, Tom to use an analogy that you often say, real estate so often is going up into the right, from a value standpoint, and from a rent standpoint and so I think if you can hang on, even if you are operating at a loss for a couple of years, and it doesn't change your lifestyle, like it's not a massive, massive, massive loss hanging on can often get you through the worst of it. Now that's not to say never sell that's not to say never cut your losses and run but oftentimes, I think it can make sense to really hang on, especially just getting started because you might not know how beneficial that real estate investment could be over time.   Tom: Yeah, conservative underwriting another yeah, good takeaway and yeah, I totally agree that that's like I think like a short story, I like yours a lot better. But you know, I had a friend who bought and he like had a few issues like with, you know, rent collection were just delayed or in some, like maintenance came up and he like, kind of like panic sold and I was like, man, like, why did you do that? Like yeah, anyways, but yeah, fortitude. I like I like that and be kind of prepared for the for that kind of stuff in your underwriting, yeah.   Michael: Yeah, I guess that reminds me of like my very first property I shared it on on prior podcast episodes, but I just got absolutely hammered with my very first tenant, exiting, like leaving the property that to evict them, they smear human feces on the wall, but small claims court, like it was just such a whole ordeal and I remember, like one of the guys asked me, well, why did you keep investing and when I was too stupid to know any differently, I was like, I didn't know that it could, like that isn't the norm that those kinds of things can happen. But that's not traditional and so I think if I had stopped investing, or I had sold that property, I would have been definitely bummed because I actually just sold that property recently in a temporary one exchange, and it had doubled in value over the course of I don't know, eight, eight years, nine years, something like that. So I'm super thankful I held on to it, I'm super thankful I was too dumb and too green to know that I should have sold and so I think Tom, you made the point to think about the selling costs associated with selling the property and you're gonna pay like 6% to an agent, probably if you go through so I'm gonna pay 3%, so just for the agent costs there are often other costs and fees associated with it. So even if the property has appreciated, you still might be selling at a loss because of those fees associated with selling so I think you got to think long and hard about it versus what the potential upside is and talk to other people like talk to other investors in the area what they're seeing because like we mentioned it can be really hard to see the benefits and the upside when you're down in the in the thick of it.   Emil: Way better to like feel good about a property it's been doing really well and then you're like I think I'm ready to sell this then like you've just been you know, you've hit the hard part and you're like selling into that right before it potentially is just like going to do well for you.   Tom: This is another kind of shout out for like mentorship is like another big thing because like you know you might have like subjective getting some like subjective outside stuff like I mean I love that I can bounce this stuff off of Michael and Emil. So like getting mentors you know is up there I'd say like you know, making sure you're underwriting conservatively and then getting a second pair of eyes is really helpful.   Michael: Totally! What was, was't it Gandalf who said like it's always darkest before the storm or like or before the day I don't know something like you're again before the storm, like I get off impression…   Emil: Yeah, really good.   Michael: With that, let's get out of here. All right, everyone that was our episode. Thanks so much for hanging in with us, especially towards the end there was kind of touch and go. If you liked the episode, please feel free to leave us a rating or review. We love answering ama type questions. So if there's something that you want to hear more about or get answered on the podcast, leave us a note in the comment section and we'll try to get to it on episode. As always, we look forward to seeing you on the next one. Happy investing. Tom: Happy investing!

About TomTom enjoys being a bridge between people and technology. When he's not thinking about ways to make enterprise demos less boring, Tom enjoys spending time with his wife and dogs, reading, and gaming with friends.Links Referenced: LaunchDarkly: https://launchdarkly.com Heidi Waterhouse Twitter: https://twitter.com/wiredferret TranscriptAnnouncer: Hello, and welcome to Screaming in the Cloud with your host, Chief Cloud Economist at The Duckbill Group, Corey Quinn. This weekly show features conversations with people doing interesting work in the world of cloud, thoughtful commentary on the state of the technical world, and ridiculous titles for which Corey refuses to apologize. This is Screaming in the Cloud.Corey: Couchbase Capella Database-as-a-Service is flexible, full-featured and fully managed with built in access via key-value, SQL, and full-text search. Flexible JSON documents aligned to your applications and workloads. Build faster with blazing fast in-memory performance and automated replication and scaling while reducing cost. Capella has the best price performance of any fully managed document database. Visit couchbase.com/screaminginthecloud to try Capella today for free and be up and running in three minutes with no credit card required. Couchbase Capella: make your data sing.Corey: This episode is sponsored by our friends at Revelo. Revelo is the Spanish word of the day, and its spelled R-E-V-E-L-O. It means “I reveal.” Now, have you tried to hire an engineer lately? I assure you it is significantly harder than it sounds. One of the things that Revelo has recognized is something I've been talking about for a while, specifically that while talent is evenly distributed, opportunity is absolutely not. They're exposing a new talent pool to, basically, those of us without a presence in Latin America via their platform. It's the largest tech talent marketplace in Latin America with over a million engineers in their network, which includes—but isn't limited to—talent in Mexico, Costa Rica, Brazil, and Argentina. Now, not only do they wind up spreading all of their talent on English ability, as well as you know, their engineering skills, but they go significantly beyond that. Some of the folks on their platform are hands down the most talented engineers that I've ever spoken to. Let's also not forget that Latin America has high time zone overlap with what we have here in the United States, so you can hire full-time remote engineers who share most of the workday as your team. It's an end-to-end talent service, so you can find and hire engineers in Central and South America without having to worry about, frankly, the colossal pain of cross-border payroll and benefits and compliance because Revelo handles all of it. If you're hiring engineers, check out revelo.io/screaming to get 20% off your first three months. That's R-E-V-E-L-O dot I-O slash screaming.Corey: Welcome to Screaming in the Cloud. I'm Corey Quinn. Today's promoted episode is brought to us by our friends at LaunchDarkly. And it's always interesting when there's a promoted guest episode because they generally tend to send someone who has a story to tell in different ways.Sometimes they send me customers of theirs. Other times they send me executives. And for this episode, they have sent me Tom Totenberg, who's a senior solutions engineer at LaunchDarkly. Tom, thank you for drawing the short straw. It's appreciated.Tom: [laugh]. Anytime. Thank you so much for having me, Corey.Corey: So, you're a senior solutions engineer, which in many different companies is interpreted differently, but one of the recurring themes tends to pop up is often that is a different way of saying sales engineer because if you say sales, everyone hisses and recoils when you enter the conversation. Is that your experience or do you see your role radically differently?Tom: Well, I used to be one of those people who did recoil when I heard the word sales. I was raised in a family where you didn't talk about finances, you know? That's considered to be faux pas, and when you hear the word sales, you immediately think of a car lot. But what I came to realize is that, especially when we talk about cloud software or any sort of community where you start to run into the same people at conferences over and over and over again, turns out the good salespeople are the ones who actually try to form relationships and try to solve problems. And I realized that oh, I like to work with those people. It's pretty exciting. It's nice to be aspirational about what people can do and bring in the technical chops to see if you can actually make it happen. So, that's where I fit in.Corey: The way that I've always approached it has been rather different. Because before I got into tech, I worked in sales a bunch of times and coming up from the—I guess, clawing your way up doing telesales was a polite way of describing—back in the days before there were strong regulations against it, calling people at dinner to sell them credit cards. And what's worse is I was surprisingly effective at it for a kid who, like, you grew up in a family where we didn't talk about money. And it's easy to judge an industry by its worst examples. Another one of these would be recruiting, for example.When everyone talks about how terrible third-party recruiters are because they're referring to the ridiculous spray-and-pray model of just blasting out emails to everything that hold still long enough that meets a keyword. And yeah, I've also met some recruiters that are transformative as far as the conversations you have with them go. But some of that with sales. It's, “Oh, well, you can't be any fun to talk to because I had a really bad experience buying a used car once and my credit was in the toilet.”Tom: Yeah, exactly. And you know, I have a similar experience with recruiters coming to LaunchDarkly. So, not even talking about the product; I was a skeptic, I was happy where I was, but then as I started talking to more and more people here, I'm assuming you've read the book Accelerate; you probably had a hand in influencing part of it.Corey: I can neither confirm nor deny because stealing glory is something I only do very intentionally.Tom: Oh okay, excellent. Well, I will intentionally let you have some of that glory for you then. But as I was reading that book, it reminded me again of part of why I joined LaunchDarkly. I was a skeptic, and they convinced me through everyone that I talked to just what a nice place it is, and the great culture, it's safe to fail, it's safe to try stuff and build stuff. And then if it fails, that's okay. This is the place where that can happen, and we want to be able to continue to grow and try something new.That's again, getting back to the solutions engineer, sales engineer part of it, how can we effectively convey this message and teach people about what it is that we do—LaunchDarkly or not—in a way that makes them excited to see the possibilities of it? So yeah, it's really great when you get to work with those type of people, and it absolutely shouldn't be influenced by the worst of them. Sometimes you need to find the right ones to give you a chance and get in the door to start having those conversations so you can make good decisions on your own, not just try to buy whatever someone's—whatever their initiative is or whatever their priority is, right?Corey: Once upon a time when I first discovered LaunchDarkly, it was pretty easy to describe what you folks did. Feature flags. For longtime listeners of the show, and I mean very longtime listeners of the show, your colleague Heidi Waterhouse was guest number one. So, I've been talking to you folks about a variety of different things in a variety of different ways. But yeah, “LaunchDarkly. Oh, you do feature flags.”And over time that message has changed somewhat into something I have a little bit of difficulty to be perfectly honest with you in pinning down. At the moment we're recording this, if I pull up launchdarkly.com, it says, “Fundamentally change how you deliver software. Innovate faster, deploy fearlessly, and make each release a masterpiece.”And I look at the last release I pushed out, which wound up basically fixing a couple of typos there, and it's like, “Well, shit. Is it going to make me sign my work because I'm kind of embarrassed by a lot of it.” So, it's aspirational, I get it, but it also somehow [occludes 00:05:32] a little bit of meaning. What is it you'd say it is you do here.Tom: Oh, Office Space. Wonderful. Good reference. And also, to take about 30 seconds back, Heidi Waterhouse, what a wonderful human. wiredferret on Twitter. Please, please go look her up. She's got just always such wonderful things to say. So—Corey: If you don't like Heidi Waterhouse, it is a near certainty it is because you've not yet met her. She's wonderful.Tom: Exactly. Yes, she is. So, what is it we'd say we do here? Well, when people think about feature flags—or at this point now, ‘feature management,' which is a broader scope—that's the term that we're using now, it's really talking about that last bit of software delivery, the last mile, the last leg, whatever your—you know, when you're pushing the button, and it's going to production. So, you know, a feature flag, if you ask someone five or ten years ago, they might say, oh, it's a fancy if statement controlled by a config file or controlled by a database.But with a sort of modern architecture, with global delivery, instant response time or fraction of a second response time, it's a lot more fundamental than that. That's why the word fundamental is there: Because it comes down to psychological safety. It comes down to feeling good about your life every day. So, whether it is that you're fixing a couple typos, or if you're radically changing some backend functionality, and trying out some new sort of search algorithm, a new API route that you're not sure if it's going to work at scale, honestly, you shouldn't have to stay up at night, you shouldn't have to think about deploying on a weekend because you should be able to deploy half-baked code to production safely, you should be able to do all of that. And that's honestly what we're all about.Now, there's some extra elements to it: Feedback loops, experimentation, metrics to make sure that your releases are doing well and doing what you anticipated that they would do, but really, that's what it comes down to is just feeling good about your work and making sure that if there is a fire, it's a small fire, and the entire audience isn't going to get part of the splash zone, right? We're making it just a little safer. Does that answer your question? Is that what you're getting at? Or am I still just speaking in the lingo?Corey: That gets it a lot closer. One of the breakthrough moments—of course I picked it up from one of Heidi's talks—is feature flag seems like a front end developer thing, yadda, yadda, yadda. And she said historically, yeah, in some ways, in some cases, that's how it started. But think about it this way. Think about separating out configuration from your deploy process. And what would that mean? What would that entail?And I look at my current things that I have put out there, and there is no staging environment, my feature branches main, and what would that change? In my case, basically nothing. But that's okay. Because I'm an irresponsible lunatic who should not be allowed near anything expensive, which is why I'm better at stateless things because I know better than to take my aura near things like databases.Tom: Yeah. So, I don't know how old you are Corey. But back—Corey: I'm in my mid-30s, which—Tom: Hey—Corey: —enrages my spouse who's slightly older. Because I'm turning 40 in July, but it's like, during the pandemic, as it has for many of us, the middle has expanded.Tom: There you go. Right. Exa—[laugh] exactly. Can neither confirm nor deny. You can only see me from about the mid-torso up, so, you know, you're not going to see whether I've expanded.But when we were in school doing group projects, we didn't have Google Docs. We couldn't see what other people were working on. You'd say, “Hey, we've got to write this paper. Corey, you take the first section, I'll take the second section, and we'll go and write and we'll try to squish it back together afterward.” And it's always a huge pain in the ass, right? It's terrible. Nobody likes group projects.And so the old method of Gitflow, where we're creating these feature branches and trying to squish them back later, and you work on that, and you work on this thing, and we can't see what each other are doing, it all comes down to context switching. It is time away from work that you care about, time away from exciting or productive work that you actually get to see what you're doing and put it into production, try it out. Nobody wants to deal with all the extra administrative overhead. And so yeah, for you, when you've got your own trunk-based development—you know, it's all just main—that's okay. When we're talking about teams of 40, 50, 100, 1000 suddenly becomes a really big deal if you were to start to split off and get away from trunk-based development because there's so much extra work that goes into trying to squish all that work back together, right? So, nobody wants to do all the extra stuff that surrounds getting software out there.Corey: It's toil. It feels consistently like it is never standardized so you always have to wind up rolling your own CI/CD thing for whatever it is. And forget between jobs; between different repositories and building things out, it's, “Oh, great. I get to reinvent the wheel some more.” It's frustrating.Tom: [laugh]. It's either that or find somebody else's wheel that they put together and see if you can figure out where all those spokes lead off to. “Is this secure? I don't know.”Corey: How much stuff do you have running in your personal stuff that has more or less been copied around for a decade or so? During the pandemic, I finally decided, all right, you know what I'm doing? That's right, being productive. We should fix that. I'm going to go ahead and redo my shell config—my zshrc—from scratch because, you know, 15 years of technical debt later, a lot of the things I used to really need it to do don't really apply anymore.Let's make it prettier, and let's make it faster. And that was great and all, but just looking through it, it was almost like going back in time for weird shell aliases that I don't need anymore. It's, well, that was super handy when I ran a Ruby production environment, but I haven't done that in seven years, and I haven't been in this specific scenario that one existed for since 2011. So maybe, maybe I can turn that one off.Tom: Yeah, maybe. Maybe we can get rid of that one. I mean, when's the last time you ran npm install on something you were going to try out here and paid attention to the warnings that came up afterward? “Hey, this one's deprecated. That one's deprecated.” Well, let's see if it works first, and then we'll worry about that later.Corey: Exactly. Security problems? Whatever. It's a Lambda function. What do I care?Tom: Yeah, it's fine. [laugh]. Exactly. Yeah. So, a lot of this is hypothetical for someone in my position, too, because I didn't ever get formal training as a software developer. I can copy and paste from Stack Overflow with the best of them and there's all sorts of resources out there, but really the people that we're talking to are the ones who actually live that day in, day out.And so I try to step into their shoes and try to feel that pain. But it's tough. Like, you have to be able to speak both languages and try to relate to people to see what are they actually running into, and is that something that we can help with? I don't know.Corey: The way that I tend to think about these things—and maybe it's accurate, and maybe it's not—it's just, no one shows up hoping to do a terrible job at work today, but we are constrained by a whole bunch of things that are imposed upon us. In some of the more mature environments, some of that is processes there for damn good reasons. “Well, why can't I just push everything I come up with to production?” “It's because we're a bank, genius. How about you think a little bit before you open your mouth?”Other times, it's because well, I have to go and fight with the CI/CD system, and I'm just going to go ahead and patch this one-line change into production. Better processes, better structure have made that a lot more… they've made it a lot easier to be able to do things the right way. But I would say we're nowhere near its final form, yet. There's so much yak-shaving that has to go into building out anything that it's frustrating, on some level, just all of the stuff you have to do, just to get the scaffolding in place to write nonsense. I mean, back when they announced Lambda functions it was, “In the future, the only code you'll write is business logic.”Yeah, well, I use a crap-ton of Lambda here and it feels like most of the code I write is gluing all of the weird formats and interchanges together in different APIs. Not a lot of business logic in that; and awful lot of JSON finickiness.Tom: Yeah, I'm with you. And especially at scale, I still have a hard time wrapping my mind around how all of that extra translation is possibly going to give the same sort of performance and same sort of long-term usability, as opposed to something that just natively speaks the same language end-to-end. So yeah, I agree, there's still some evolution, some standardization that still needs to happen because otherwise we're going to end up with a lot of cruft at various points in the code to, just like you said, translate and make sure we're speaking the same language.Getting back to process though, I spent a good chunk of my career working with companies that are, I would say, a little more conservative, and talking to things like automotive companies, or medical device manufacturers. Very security-conscious, compliant places. And so agile is a four-letter word for them, right, [laugh] where we're going faster automatically means we're being dangerous because what would the change control board say? And so there's absolutely a mental shift that needs to happen on the business side. And developers are fighting this cultural battle, just to try to say, hey, it's better if we can make small iterative changes, there is less risk if we can make small, more iterative changes, and convincing people who have never been exposed to software or know the ins and outs of what it takes to get something from my laptop to the cloud or production or you know, wherever, then that's a battle that needs to be fought before you can even start thinking about the tooling. Living in the Midwest, there's still a lot of people having that conversation.Corey: So, you are clearly deep in the weeds of building and deploying things into production. You're clearly deep into the world of explaining various solutions to different folks, and clearly you have the obvious background for this. You majored in music. Specifically, you got a master's in it. So, other than the obvious parallel of you continue to sing for your supper, how do you get from there to here?Tom: Luck and [laugh]. Natural curiosity. Corey, right now you are sitting on the desk that is also housing my PC gaming computer, right? I've been building computers just to play video games since I was a teenager. And that natural curiosity really came in handy because when I—like many people—realize that oh, no, the career choice that I made when I was 18 ended up being not the career choice that I wanted to pursue for the rest of my life, you have to be able to make a pivot, right, and start to apply some of the knowledge that you got towards some other industries.So, like many folks who are now solutions engineers, there's no degree for solutions engineering, you can't go to school for it; everyone comes from somewhere else. And so in my case, that just happened to be music theory, which was all pedagogy and teaching and breaking down big complex pieces of music into one node at a time, doing analysis, figuring out what's going on underneath the hood. And all of those are transferable skills that go over to software, right? You open up some giant wall of spaghetti code and you have to start following the path and breaking it down because every piece is easy one note at a time, every bit of code—in theory—is easy one line at a time, or one function at a time, one variable at a time. You can continue to break it down further and further, right?So, it's all just taking the transferable skills that you may not see how they get transferred, but then bringing them over to share your unique perspective, because of your background, to wherever it is you're going. In my case, it was tech support, then training, and then solutions engineering.Corey: There's a lot to be said for blending different disciplines. I think that there was, uh, the naughts at least, and possibly into the teens, there was a bias for hiring people who look alike. And no, I'm not referring to the folks who are the white dudes you and I clearly present as but the people with a similar background of, “Oh, you went to these specific schools”—as long as they're Stanford—“And you majored in a narrow list of things”—as long as they're all computer science. And then you wind up going into the following type of role because this is the pedigree we expect and everything, soup to nuts, is aligned around that background and experience. Where you would find people who would be working in the industry for ten years, and they would bomb the interview because it turns out that most of us don't spend our days implementing quicksort on whiteboards or doing other algorithmic-based problems.We're mostly pushing pixels around a screen hoping to make ourselves slightly happier than we were. Here we are. And that becomes a strange world; it becomes a really, really weird moment, and I don't know what the answer is for fixing any of that.Tom: Yeah, well, if you're not already familiar with a quote, you should be, which is that—and I'm going to paraphrase here—but, “Diverse backgrounds lead to diversity in thought,” right? And that presents additional opportunities, additional angles to solve whatever problems you're encountering. And so you're right, you know, we shouldn't be looking for people who have the specific background that we are looking for. How it's described in Accelerate? Can you tell that I read it recently?Which we should be looking for capabilities, right? Are you capable? Do you have the capacity to do the problem-solving, the logic? And of course, some education or experience to prove that, but are you the sort of person who will be able to tackle this challenge? It doesn't matter, right, if you've handled that specific thing before because if you've handled that specific thing before, you're probably going to implement it the same way, again, even if that's not the appropriate solution, this time.So, scrap that and say, let's find the right people, let's find people who can come up with creative solutions to the problems that we're facing. Think about ways to approach it that haven't been done before. Of course don't throw out everything with the—you know, the bathwater out with a baby or whatever that is, but come in with some fresh perspectives and get it done.Corey: I really wish that there was more of an acceptance for that. I think we're getting there. I really do, but it takes time. And it does pay dividends. I mean, that's something I want to talk to you about.I love the sound of my own voice. I wouldn't have two podcasts if I didn't. The counterargument, though, is that there's an awful lot of things that get, you know, challenging, especially when, unlike in a conference setting, it's most people consider it rude to get up and walk out halfway through. When we're talking and presenting information to people during a pandemic situation, well, that changes a lot. What do you do to retain people's interest?Tom: Sure. So, Covid really did a number on anyone who needs to present information or teach. I mean, just ask the millions of elementary, middle school, and high schoolers out there, even the college kids. Everyone who's still getting their education suddenly had to switch to remote learning.Same thing in the professional world. If you are doing trainings, if you're doing implementation, if you're doing demos, if you're trying to convey information to a new audience, it is so easy to get distracted at the computer. I know this firsthand. I'm one of those people where if I'm sitting in an airport lobby and there's a TV on my eyes are glued to that screen. That's me. I have a hard time looking away.And the same thing happens to anyone who's on the receiving end of any sort of information sharing, right? You got Slack blowing you up, you've got email that's pinging you, and that's bound to be more interesting than whatever the person on the screen is saying. And so I felt that very acutely in my job. And there's a couple of good strategies around it, right, which is, we need to be able to make things interactive. We shouldn't be monologuing like I am doing to you right now, Corey.We shouldn't be [laugh] just going off on tangents that are completely irrelevant to whoever's listening. And there's ways to make it more interactive. I don't know if you are familiar, or how much you've watched Twitch, but in my mind, the same sorts of techniques, the same sorts of interactivity that Twitch streamers are doing, we should absolutely be bringing that to the business world. If they can keep the attention of 12-year-olds for hours at a time, why can we not capture the attention of business professionals for an hour-long meeting, right? There's all sorts of techniques and learnings that we can do there.Corey: The problem I keep running into is, if you go stumbling down that pathway into the Twitch streaming model, I found it awkward the few experiments I've made with it because unless I have a whole presentation ready to go and I'm monologuing the whole time, the interactive part with the delay built in and a lot of ‘um' and ‘ah' and waiting and not really knowing how it's going to play out and going seat of the pants, it gets a little challenging in some respects.Tom: Yeah, that's fair. Sometimes it can be challenging. It's risky, but it's also higher reward. Because if you are monologuing the entire time, who's to say that halfway through the content that you are presenting is content that they want to actually hear, right? Obviously, we need to start from some sort of fundamental place and set the stage, say this is the agenda, but at some point, we need to get feedback—similar to software development—we need to know if the direction that we're going is the direction they also want to go.Otherwise, we start diverging at minute 10 and by minute 60, we have presented nothing at all that they actually want to see or want to learn about. So, it's so critical to get that sort of feedback and be able to incorporate it in some way, right? Whether that way is something that you're prepared to directly address. Or if it's something that says, “Hey, we're not on the same page. Let's make sure this is actually a good use of time instead of [laugh] me pretending and listening to myself talk and not taking you into account.” That's critical, right? And that is just as important, even if it feels worse in the moment.Corey: This episode is sponsored in part by our friends at ChaosSearch. You could run Elasticsearch or Elastic Cloud—or OpenSearch as they're calling it now—or a self-hosted ELK stack. But why? ChaosSearch gives you the same API you've come to know and tolerate, along with unlimited data retention and no data movement. Just throw your data into S3 and proceed from there as you would expect. This is great for IT operations folks, for app performance monitoring, cybersecurity. If you're using Elasticsearch, consider not running Elasticsearch. They're also available now in the AWS marketplace if you'd prefer not to go direct and have half of whatever you pay them count towards your EDB commitment. Discover what companies like Equifax, Armor Security, and Blackboard already have. To learn more, visit chaossearch.io and tell them I sent you just so you can see them facepalm, yet again.Corey: From where I sit, one of the many, many, many problems confronting us is that there's this belief that everyone is like we are. I think that's something fundamental, where we all learn in different ways. I have never been, for example—this sounds heretical sitting here saying it, but why not—I'm not a big podcast person; I don't listen to them very often, just because it's such a different way of consuming information. I think there are strong accessibility reasons for there to be transcripts of podcasts. That's why every 300-and-however-many-odd episodes that this one winds up being the sequence in, every single one of them has a transcript attached to it done by a human.And there's a reason for that. Not just the accessibility wins which are obvious, but the fact that I can absorb that information way more quickly if I need to review something, or consume that. And I assume other people are like me, they're not. Other people prefer to listen to things than to read them, or to watch a video instead of listening, or to build something themselves, or to go through a formal curriculum in order to learn something. I mean, I'm sitting here with an eighth-grade education, myself. I take a different view to how I go about learning things.And it works for me, but assuming that other people learn the same way that I do will be awesome for a small minority of people and disastrous for everyone else. So, maybe—just a thought here—we shouldn't pattern society after what works for me.Tom: Absolutely. There is a multiple intelligence theory out there, something they teach you when you're going to be a teacher, which is that people learn in different ways. You don't judge a fish by its ability to climb a tree. We all learn in different ways and getting back to what we were talking about presenting effectively, there needs to be multiple approaches to how those people can consume information. I know we're not recording video, but for everyone listening to this, I am waving my hands all over the place because I am a highly visual learner, but you must be able to accept that other people are relying more on the auditory experience, other people need to be able to read that—like you said with the accessibility—or even get their hands on it and interact with it in some way.Whether that is Ctrl-F-ing your way through the transcript—or Command-F I'm sorry, Mac users [laugh]; I am also on a Mac—but we need to make sure that the information is ready to be consumed in some way that allows people to be successful. It's ridiculous to think that everyone is wired to be able to sit in front of a computer or in a little cubicle for eight hours a day, five days a week, and be able to retain concentration and productivity that entire time. Absolutely not. We should be recording everything, allowing people to come back and consume it in small chunks, consume it in different formats, consume it in the way that is most effective to them. And the onus for that is on the person presenting, it is not on the consumer.Corey: I make it a point to make what I am doing accessible to the people I am trying to reach, not to me. And sometimes I'm slacking, for example, we're not recording video today, so whenever it looks like I'm not paying attention to you and staring off to the side, like, oh, God, he's boring. No. I have the same thing mirrored on both of my screens; I just prefer to look at the thing that is large and easy to read, rather than the teleprompter, which is a nine-inch screen that is about four feet in front of my face. It's one of those easier for me type of things.On video, it looks completely off, so I don't do it, but I'm oh good, I get to take the luxury of not having to be presentable on camera in quite the same way. But when I'm doing a video scenario, I absolutely make it a point to not do that because it is off-putting to the people I'm trying to reach. In this case, I'm not trying to reach you; I already have. This is a promoted guest episode you're trying to reach the audience, and I believe from what I can tell, you're succeeding, so please keep at it.Tom: Oh, you bet. Well, thank you. You know this already, but this is the very first podcast I've ever been a guest on. So, thank you also for making it such a welcoming place. For what it's worth, I was not offended and didn't think you weren't listening. Obviously, we're having a great time here.But yeah, it's something that especially in the software space, people need to be aware of because everyone's job is—[laugh]. Whether you like it or not, here's a controversial statement: Everyone's job is sales. Are you selling your good ideas for your product, to your boss, to your product manager? Are you able to communicate with marketing to effectively say, “Hey, this is what, in tech support, I'm seeing. This is what people are coming to me with. This is what they care about.”You are always selling your own performance to your boss, to your customers, to other departments where you work, to your spouse, to everybody you interact with. We're all selling ourselves all the time. And all of that is really just communication. It's really just making sure you're able to meet people where they are and, effectively, bridge your point of view with theirs to make sure that we're on the same page and, you know, we're able to communicate well. That's so especially important now that we're all remote.Corey: Just so you don't think this is too friendly of a place, let's go ahead and finish out the episode with a personal attack. Before you wound up working at LaunchDarkly. You were at Perforce. What's up with that? I mean, that seems like an awfully big company to cater to its single customer, who is of course J. Paul Reed.Tom: [laugh]. Yeah. Well, Perforce is a wonderful place. I have nothing but love for Perforce, but it is a very different landscape than LaunchDarkly, certainly. When I joined Perforce, I was supporting product called Helix ALM, which, they're still headquartered—Perforce is headquartered here in Minneapolis. I just saw some Perforce folks last week. It truly is a great place, and it is the place that introduced me to so many DevOps concepts.But that's a fair statement. Perforce has been around for a while. It has grown by acquisition over the past several years, and they are putting together new offerings by mixing old offerings together in a way that satisfies more modern needs, things like virtual production, and game development, and trying to package this up in a way that you can then have a game development environment in a box, right? So, there's a lot of things to be said for that, but it very much is a different landscape than a smaller cloud-native company. Which it's its own learning curve, let me tell you, but truly, yeah, to your Perforce, there's a lot more complexity to the products themselves because they've been around for a little bit longer.Solid, solid products, but there's a lot going on there. And it's a lot harder to learn them right upfront. As opposed to something like LaunchDarkly, which seems simple on the surface and you can get started with some of the easy concepts in implementation in, like, an hour, but then as you start digging deeper, whoof, suddenly, there's a lot more complexity hidden underneath the surface than just in terms of how this is set up, and some of those edge cases.Corey: I have to say for the backstory, for those who are unfamiliar, is I live about four miles away from J. Paul Reed, who is a known entity in reliability engineering, in the DevOps space, has been for a long time. So, to meet him, of course I had to fly to Israel. And he was keynoting DevOpsDays Tel Aviv. And I had not encountered him before, and it was this is awesome, I loved his talk, it was fun.And then I gave a talk a little while later called, “Terrible Ideas in Git.” And he's sitting there just glaring at me, holding his water bottle that is a branded Perforce thing, and it's like, “Do you work there?” He's like, “No. I just love Perforce.” It's like, “Congratulations. Having used it, I think you might be the only one.”I kid. I kid. It was great and a lot of different things. It was not quite what I needed when I needed it to but that's okay. It's gotten better and everyone else is not me, as we've discussed; people have different use cases. And that started a very long-running joke that J. Paul Reed is the entirety of the Perforce customer base.Tom: [laugh]. Yeah. And to your point, there's definitely use cases—you're talking about Perforce Version Control or Helix Core.Corey: Back in those days, I don't believe it was differentiated.Tom: It was just called Perforce. Exactly right. But yeah, as Perforce has gotten bigger, now there's different product lines; you name it. But yeah, some of those modern scalable problems, being able to handle giant binary files, being able to do automatic edge replication for globally distributed teams so that when your team in APAC comes online, they're not having to spend the first two hours of their day just getting the most recent changes from the team in the Americas and Europe. Those are problems that Perforce is absolutely solving that are out there, but it's not problems that everybody faces and you know, there's just like everybody else, we're navigating the landscape and trying to find out where the product actually fits and how it needs to evolve.Corey: And I really do wish you well on it. I think there's going to be an awful lot of—Tom: Mm-hm.Corey: —future stories where there is this integration. And you'd say, “Oh, well, what are you wishing me well for? I don't work there anymore.” But yeah, but isn't that kind of we're talking about, on some level, of building out things that are easy, that are more streamlined, that are opinionated in the right ways, I suppose. And honestly, that's the thing that I found so compelling about LaunchDarkly. I have a hard time imagining I would build anything for production use that didn't feature it these days if I were, you know, better at computers?Tom: Sure. Yeah. [laugh]. Well, we do have our opinions on how some things should work, right? Where the data is exposed because with any feature flagging system or feature management—LaunchDarkly included—you've got a set of rules, i.e. who should see this, where is it turned on? Where is it turned off? Who in your audience or user base should be able to see these features? That's the rules engine side of it.And on the other side, you've got the context to decide, well, you know, I'm Corey, I'm logging in, I'm in my mid-30s. And I know all this information about Corey, and those rules need to then be able to determine whether something should be on or off or which experience Corey gets. So, we are very opinionated over the architecture, right, and where that evaluation actually happens and how that data is exposed or where that's exposed. Because those two halves need to meet and both halves have the potential to be extremely sensitive. If I'm targeting based off of a list of 10,000 of my premium users' email addresses, I should not be exposing that list of 10,000 email addresses to a web browser or a mobile phone.That's highly insecure. And inefficient; that's a large amount of text to send, over 10,000 email addresses. And so when we're thinking about things like page load times, and people being able to push F12 to inspect the page, absolutely not, we shouldn't be exposing that there. At the same time, it's a scary prospect to say, “Hey, I'm going to send personal information about Corey over to some third-party service, some edge worker that's going to decide whether Corey should see a feature or not.” So, there's definitely architectural considerations of different use cases, but that's something that we think through all the time and make sure is secure.There's a reason—I'm going to put on my sales engineer hat here—which is to say that there is a reason that the Center for Medicare and Medicaid Services is our sponsor for FedRAMP moderate certification, in process right now, expected to be completed mid-2022. I don't know. But anybody who is unfamiliar with that, if you've ever had to go through high trust certification, you know, any of these compliances to make your regulators happy, you know that FedRAMP is so incredibly stringent. And that comes down to evaluating where are we exposing the data? Who gets to see that? Is security built in and innate into the architecture? Is that something that's been thought through?I have went so far afield from the original point that you made, but I agree, right? We've got to be opinionated about some things while still providing the freedom to use it in a way that is actually useful to you and [laugh] and we're not, you know, putting up guardrails, that mean that you've got such a narrow set of use cases.Corey: I'd like to hope—maybe I'm wrong on this—that it gets easier the more that we wind up doing these things because I don't think that it necessarily has been easy enough for an awful lot of us.Tom: When you say ‘it,' what do you mean?Corey: All of it. That's the best part, I suppose the easy parts of working on computers, which I guess might be typing if you learn it early enough.Tom: Sure. [laugh] yeah. Mario Teaches Typing, or Starcraft taught me how to type quickly. You can't type slowly or else your expansion is going to get destroyed. No, so for someone who got their formal education in music or for someone with an eighth-grade education, I agree there needs to be resources out there.And there are. Not every single StackOverflow post with a question that's been asked has the response, “That's a dumb question.” There are some out there. There's definitely a community or a group of folks who think that there is a correct way to do things and that if you're asking a question, that it's a dumb question. It really isn't. It's getting back to the diverse backgrounds and diverse schools of thought that are coming in.We don't know where someone is coming from that led them to that question without the context, and so we need to continue providing resources to folks to make it easy to self-enable and continue abstracting away the machine code parts of it in friendlier and friendlier ways. I love that there are services like Squarespace out there now, right, that allow anybody to make a website. You don't have to have a degree in computer science to spin something up and share it with the world on the web. We're going to continue to see that type of abstraction, that type of on-ramp for folks, and I'm excited to be part of it.Corey: I really look forward to it. I'm curious to see what happens next for you, especially as you continue—‘you' being the corporate ‘you' here; that's like the understood ‘you' are the royal ‘you.' This is the corporate ‘you'—continue to refine the story of what it is LaunchDarkly does, where you start, where you stop, and how that winds up playing out.Tom: Yeah, you bet. Well, in the meantime, I'm going to continue to play with things like GitHub Copilot, see how much I can autofill, and see which paths that takes me down?Corey: Oh, I've been using it for a while. It's great. Just tab-complete my entire life. It's amazing.Tom: Oh, yeah. Absolutely.Corey: [unintelligible 00:36:08] other people's secrets start working, great, that makes my AWS bill way lower when I use someone else's keys. But that's neither here nor there.Tom: Yeah, exactly. That's a next step of doing that npm install or, you know, bringing in somebody else's [laugh] tools that they've already made. Yeah, just a couple weeks ago, I was playing around with it, and I typed in two lines: I imported the LaunchDarkly SDK and the configuration for the LaunchDarkly SDK, and then I just let it autofill, whatever it wanted. It came out with about 100 lines of something or other. [laugh]. And not all of it made sense, but hey, I saw where the thought process was. It was pretty cool to see.Corey: I really want to thank you for spending as much time and energy as you have talking about how you see the world and where you folks are going. If people want to learn more. Where's the best place to find you?Tom: At launchdarkly.com. Of course, any other various different booths, DevOpsDays, we're at re:Invent, we're at QCon right now. We're at all sorts of places, so come stop by, say hi, get a demo. Maybe we'll talk.Corey: Excellent. We will be tossing links to that into the [show notes 00:37:09]. Thanks so much for your time. I really appreciate it.Tom: Corey, Thank you.Corey: Tom Totenberg, senior solutions engineer at LaunchDarkly. I'm Cloud Economist Corey Quinn and this is Screaming in the Cloud. If you've enjoyed this podcast, please leave a five-star review on your podcast platform of choice, whereas if you've hated this podcast, please leave a five-star review on your podcast platform of choice along with an angry and insulting comment, and then I'll sing it to you.Corey: If your AWS bill keeps rising and your blood pressure is doing the same, then you need The Duckbill Group. We help companies fix their AWS bill by making it smaller and less horrifying. The Duckbill Group works for you, not AWS. We tailor recommendations to your business and we get to the point. Visit duckbillgroup.com to get started.Announcer: This has been a HumblePod production. Stay humble.

Investing $50,000 in real estate can go a long way toward creating a diversified rental property portfolio that generates strong cash flow, provided that you do it right. Today we are asking each other the question how we would invest this amount of cash. In this episode, Tom, Emil and Michael share how they would invest $50,000 in real estate if they were just starting out, and if they know what they know now. --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Emil: Hey, everyone, welcome back for another episode of the Remote Real Estate Investor. My name is Emil Shour and today I'm joined by…   Tom: Tom Schneider   Michael: and Michael Albaum.   Emil: And on today's episode, we're going to be talking about how each of us would invest $50,000 in real estate, and we're gonna frame it as what we would do with that 50k when we were first starting out, versus how we would approach it now, so let's hop into this episode.   Well, I can't ask what's on your guys's mind? Because we just went through that so, huh… Hmm. You know, I used to have this boss that every every meeting every week, he would come in and just ask some random question to avoid the like, so how's everyone doing? That was like, it's a good way to kind of start a meeting, get like really random answers from people.   Tom: You got an example of one?   Emil: He would honestly as a really weird, he's like a weird dude. But like funny, weird. Yeah, probably not suitable for this show. The ones I remember.   Michael: There was a my, my wife loves David Sedaris. And he does a masterclass and he talks about comedy. And one of the questions he loves asking people was, so when was the last time you touched a monkey? He asked him on this and they were like, oh my gosh, like, can you smell it on me, I was working with him earlier at the zoo today? And he was like, no way and it led to him like being able to go play with the monkeys at the zoo. Like and that's why you should always ask random questions.   Emil: He had asked like 400 people, and they all I never spoke to him again, but that one person…   Michael: The one was a big one.   Emil: Then he finally got to meet a monkey at the zoo.   Michael: Yeah…   Tom: Bad news man, getting a baby monkey and then growing up a lot of sad stories about …like ripping arms off. Anyways, sorry…   Michael: That's a… go hard left fast…   Tom: Yeah.   Emil: All right with that we're gonna hop in and talk about real estate. So the topic today is how do you invest 50k? I think this will be interesting. If Michael ever gets it together here.   Michael: Oh man…   Emil: How would you invest 50k If you know what you know, now, but you're just starting out. So take yourself back to you have your current mind, you're going back to when you first started. So how would you invest 50k? And then we'll talk about you're at where you're at currently, you're 50 grand, you want to invest in real estate? What do you guys? What are we all doing? So who wants to kick off? Going back to the past with 50k?   Tom: So, Tom's gonna go first. I would… So me with real estate investing, I really enjoy real estate investing, but I also really enjoy the kind of passive nature of it, more probably more than Michael and Emil, I think they're like, way more active. So I think this is going to be a good diverse range of responses to this question. So what I would probably do so I'd say there's there's two options, right For me, as I also really like single family off of multifamily, just a little bit less to do plus less turns plus XYZ. What I, I would see this as two options, I can either go to, to pick buy two properties in more kind of class C markets, not not as in like, negative, but like smaller markets, right? Talking about like, maybe Birmingham or buy or like Memphis?     Emil: We'll call it Tier 3, it's classy…   Tom: Sure, sure. Sure. Sure. So the my options would be to that or to buy one property in like a Class B area, you know, maybe a, you know, Atlanta, Raleigh, you know, Dallas, one of those guys and where I am right now, if I had 50k, I'm still trying to deploy as much capital out there. I would get debt for sure. I would, I would max out my debt on it. You know, I … we know well, being conscious of not getting over my tips, making sure that my income could support my debt coverage. But I would probably, I'd probably got two properties in one of those smaller markets. But you know, I might have a old fishing pole in the water on some of those larger markets. If something were to come up, I'd cast a wider net, you know, it's a busier acquisition time. So that's why we deployed by SFR, I would look at those smaller markets max, loan to value most of it… That is what I would do, went a little bit long didn't it… Ehmm, yeah. Done…   Michael: Love it. Would you buy… Would you buy both in the same market? Do you think it would use spread them out? Peanut butter spread, as they say…   Tom: I would probably buy them in the same market. Again, like so important to that to develop a thesis when investing in me is a little bit less overhead. So just using a single property manager, you know, doing that work and finding the right property manager, maybe having them help me out on the acquisition side, as far as evaluating neighborhoods and whatnot. So yes, it's a market. Good question, Michael.   Michael: Love it, love it, love it.   Emil: So, Michael, what would you do?   Michael: I think I'm taking that 50,000 and like Tom gonna go get some debt. But I am probably going to go buy a multifamily building, something a little bit bigger that I could, you know, really, really scale with. And it's probably going to be a little more turnkey, because having done the whole multifamily value, add thing, it can often be a lot more expensive than first anticipated. So something that's, you know, relatively easy, stable. That's why you may go to but in close second, what I'm also going to be considering is going and using a 15%, down DSCR loan and going to go purchase a short term rental, which would probably be a single family out in one of those vacation markets that are out there. But I think it can be a really, really, really great use of cash to generate quick income to then go to buy additional properties.     Emil: Michael, for anyone who doesn't know, what is a stable multifamily property, what does that look like?   Michael: Yeah, it's something that has, it's really good question. First off, it's something that has probably already been rehabbed, either extensively or lightly, doesn't have a whole lot of deferred maintenance, rent is probably going to be pretty close to at market rent. So I'm not going to feel the need to, to get new tenants in place when their leases are expiring, because they're already up at market rent. Just something that has been taken care of, or well maintained. Doesn't need a whole lot of CapEx.   Tom: Short term rentals are interesting. How do you find your overhead as an owner relative to your multifamily single family versus long term versus short term rental? Do you find it pretty similar? I would imagine that there's obviously range like there's variants with each of them, but just general ality generally speaking…   Michael: Yeah, it's a big range and it so depends on like my older vintage multifamily, it's gonna be a little bit even less than some of the expense ratio on that just because that has a lot more maintenance, regular, recurring maintenance type issues. On newer single families, comparing across the board to long term versus short term, short term is definitely more expensive from an expense ratio standpoint. But the income generated is still stronger. And so from a cash on cash return, it's it's still performing quite quite well.   Tom: I bought this as a metric, number of times you as an owner, you have to like make a decision or get involved.   Michael: Oh, see, short term versus long term?   Tom: Yeah, yeah, I would think I mean, I would assume short term rental, like there's a little bit more overhead as an owner. Is that wrong?   Michael: Yeah, I don't think that that's, I would say that there is more on the front end. So like we were involved in the decorations and decision making process around what amenities to include, but from a day to day…   Tom: … FF&E and OS&E those are some acronyms, Michael…     Michael: What's a OS&E?   Tom: Oh, OS&E is operating supplies in equipment, and FF&E is furniture, fixtures and equipment.   Michael: Ahhh!   Tom: No big deal, just drop an acronym…   Emil: A unit count into, what's going on here?   Michael: Yeh, sounds like an accounting term.   Tom: I know about luxury man.   Michael: You're just steeped in luxury. But no, I would say other than that. It's pretty much about as hands off as as long term if not more. So. I've really I've made very few decisions, I've been involved in very few of the conversations, we're looking at converting the garage into additional space so that of course, there's a lot more involvement in but that would be the same as if I was doing some kind of rehab work on a long term rental.   Tom: I heard a great story a description of short term rentals as comparing them to fire trucks and that they're constantly getting turned and washed like a fire truck has been around but oh, it gets it gets a fresh wash every time it goes out. So like while you might think it's a you know, getting beat up a lot it perhaps it is but it's it's getting a lot of Washington. It's like a fire truck. I don't know. I like that.   Michael: Yeah, I think I mean, I think so and it's getting eyes in it every turn. So the festering kind of long term deferred maintenance stuff tends to not be again, for my experience as big of an issue because there's people constantly putting eyes on stuff. And if there's an issue you'll hear about it immediately. Like these tenants are going to tell you because they're paying good money to be in these places. Hey, this is an issue you need to fix it.   Emil: Are you is your short term rental being professionally managed, do you have a property manager?   Michael: Yes, yeah, I'm a full service property manager, I definitely pay for it. But I'm not. I'm not at the point where I can set, you know, neither myself or my wife or I are at the point where we have enough time to be able to learn how to do that remotely for this particular property. And you know, if anyone listening is interested in learning more about short term rentals, we did a podcast episode with Avery Carl, which was a phenomenal episode, in my opinion, where she talks all about the short term rental market, and short term rentals in general and things you need to be aware of, if you're going to get involved in this space.   Tom: Did you pencil… Emil needs to give his answer, but just really last question I have on that… Did you pencil it as a longer term rental as well, just to like, see what…   Michael: I did. And it doesn't work. And so I had to always take in the opinion that it has to work as both because if something changes, I don't want to be stuck holding the bag. And after extra chatting with Avery about the short term rental market, this is out in the Smokies. She was like yeah, but the thing of it is, is the regulations aren't going to change out there. Like it is such a through and through short term vacation rental market, that she is not concerned with it being the next Santa Monica or Santa Monica, city regulators come in and say I can't do Airbnb, because it's always been short term rentals. So that's given me a lot more comfort to say, okay, I'm okay, kind of taking that leap of having it only makes sense as a vacation rental?   Emil: Well, I had one final question. I asked Michael about the third party property manager because I, what I really want to know is how does your time commitment with a third, like you have property management and on a long term and a short term? How does your monthly time commitment in terms of speaking with your property manager being involved? Like how, how much more time is it with the short term compared to long term, if any?   Michael: You know, I have probably spent less time with the short term manager than I have with long term management. I was so impressed by this company, they've been awesome and they're just like really good at what they do. And I think that universally speaking, that's kind of what I would expect in the long term world as well, I have my that one of the best property managers I have is up in Alaska, I hear from him, like once a quarter, unless we're just calling to check, you know, checkup and chew the fact sort of thing. So if a property manager is good at their job, you really shouldn't hear from them, in order for you to make decisions, they could update you and tell you what's going on and this and that. But from a decision making standpoint, if I have to hear from you and talk to you regularly, like it's probably not going very well. Right Emil how would you spend in those 50 G's?       Emil: For me, if I'm just starting out, and I want to invest in real estate, I'm, I like single family as a first starting point. And we can debate this later on a showdown. I think single family is a good way to get started, I think having one tenant, one unit to worry about just a lot less hectic. And so I'd start with a single family, I would want to do a tier two city, somewhere where the climate isn't so severe, right? Like I have properties in Indianapolis and every winter, I'm like, man, our pipes gonna freeze and explode. You know, you hear all those stories. Usually, if you have a tenant who's there, like they're running the water, and that doesn't happen. But you know, if you have a turn in the winner, always think that could happen. So I choose something with a little bit less harsh climate, just because it's going to keep everything solid for a little bit longer. And I'd probably just use it on one property to get something a little bit better, ewe just talked about on a different episode, six things we wouldn't do, again, six mistakes and for me it was buying a really cheap property on the… in the beginning, I get something a little bit nicer, less headache, you know, newer build, that's just going to be an easy learning process for me, because the first one isn't going to be the make or break. It's really you're just like learning how to deal with real estate how to deal with the property manager all this stuff. So having it be something that's going to be better long term is what I would prioritize.   Michael: Are you okay, accepting less cash flow?   Emil: I wasn't in the beginning and on the other end of it now, yes, you should like it's not going to be a huge difference. You think it will be and you know, excel math will tell you different but it's a different story. I think when you get into it.   Michael: How much cash flow, how small of a cash flow are you willing to accept and still consider it cashflow positive?   Emil: For me like even like if you're being conservative, right, like not going oh, best case scenario, right? You're ending up with like at least $50 of cash flow a month right? I think that's a good place to be at least obviously, I…   Tom: Got to beat inflation, got to beat inflation.   Michael: Beat it back with a stick…   Emil: We don't, you know, we're just talking about cash flow and again, these this isn't going to be a make or break for you. You're trying to learn and you're trying to grow. You also have equity building right in a better property that's going to be more dollar like appreciation. 10% appreciation on something that's $250,000 Verse $100,000, you're gonna make more than that equity anyway, right? It's appreciating, it's a higher appreciation.   Michael: So you're sticking to one, one property… One more expensive property?   Emil: Yes, yeah.   Michael: Alright.   Emil: Not even just expensive to be expensive just better quote like a turnkey, nicely done property that I'm not going to have a ton of headache right out the gate.   Michael: Well, there you have it, ladies and gentlemen.   Tom: It's been a few seconds on zero scape, just installed some fake turf on my backyard. It's killer man.   Michael: Is it good?   Tom: Yeah, yeah. And then like if leaves come on it you get the power washer. And just like my my own little zen…   Michael: What about dog puppies?   Tom: That's a thing. But you know, that's where the power washer. And also that's where gates like preventing the dog to go out there. Come in…   Emil: Anyway, anyways, you could also have a dog like mine who we have we have turf in the backyard too. It's like turf in concrete. And he is afraid of it doesn't like walking on turf. So he makes us take him out in the front yard where there's real grass to go. So that's fun.   Tom: He is natural… Michael: Some… double apply.   Emil: He's a purist. He's got a good taste.   Tom: Good for him.   Michael: So Tom, are you saving some of that 50,000, so you can install zero scaping in this investment property?   Tom: Yeah, probably. I mean, the right warranties are in place with the Zero Escape. You're like basically making money when you install it, so…   Michael: Are you, are you working on zero escape installation side hustle?   Tom: I am yeah, I got a, I got a, I got some, I got some hints.   Michael: You need a guy, I got a guy…   Emil: Probably not that awesome on a rental property. Like the ROI on that is, is not great.   Tom: Nooo, problem.   Michael: Depends on who is paying this utilities though…   Emil: Yeah…   Michael: If you include these utilities in your bill…   Emil: It's your tenant.   Tom: Oh…There could be markets Emil, before you jump the gun. There could be markets with it makes a ton of sense, Las Vegas, Arizona…   Emil: I prefer talking generalities, we're not getting into nuance on this on this podcast, sorry…   Michael: I thought you only spoken absolutes.   Emil: That's it, that's it…   Michael: Now you're speaking in generalities. Man pick one Emil.   Tom: Yeah.   Emil: Ehmm, absolute is what I met. It's not... Moving on. Alright, what do we do with $50,000 now? If $50,000 is now, in your investing career, what are you guys doing? You're not a beginner, you're at your stage now, so what's next?   Tom: I am making the transition to getting some multifamily, you know, I don't know, I don't actually know short term, Michael's got me hyped up on some learn a lot more about short term, I don't know. I'm all over the place right now. This is what I'm gonna do, this is what I am gonna do actually, I'm going to set up a coaching session with Michael and we're going to go through some options and get to the root of it. I swear to God, that's like the real answer, right.   Emil: That is actually a very solid strategy. Alright, Michael 50,000, I feel like I know where you're, where you're putting money, but if 50,000, where's it going?   Michael: Yeah. Now in today's world, I'm probably splitting that. Truth be told I'm probably do you like for sure a short term rental 50% down DSCR loan, and then I'll probably wait half or two thirds and then I'm taking the other half and I'll probably park it in a syndication to be perfectly honest and just kind of enjoy the passivity that syndications provide. It's, we've been doing a lot of podcasts recently and had a lot of passive investment experts on talking about benefits, pros cons of passive investing, and I'm like, huh at this stage of my career, it's definitely sounds interesting. My back's already, you know, a little tired from from caring so much. So I'm ready to slow down a little bit and just kind of enjoy the fruits of the labor.   Emil: Nice, yeah. I'm sagging into what I'd do, I'm right there with you. So I like that I have nowhere near the amount of units like you, right that I own directly, I have six units. I think that's perfect for me and where I'm at right now, I would put $50,000 honestly, either in a REIT or yeah, in a in a private deal or something like that. Something where I'm going to be completely passive. Just given we've got two little kids, we got the six units again, that we own directly and that takes off takes up enough time and you know, business I started a year ago that's taking up a lot of time as well and attention. So I'd be looking for something passive to pocket.   Michael: I love the fact that Emil, you mentioned that you have like little kids and so you're kind of at this stage in your life where the active hands on direct investment isn't a great fit for you. But that could easily change and so you go park your money and one of these indications. Hopefully it doubles or better in a couple years' time and then you get it back and you get to decide okay, well what I want to do next I want to continue the passive route now maybe the kids a little bit older, you have more time on your hands to do something else. So I love it. I think it's, it's such a good point that there's like seasonality to this whole investing thing.   Emil: Yeah, it's not like, I'm done direct investing. It's, I'm done direct investing right now. Like, we have what we have, we're good, we're not getting rid of those and it's time for a different strategy. But you know, life changes, maybe you have a windfall, whatever, and you're like, now I'm bored. And I want to go do something more challenging and I'm gonna go do some, some value add stuff myself, maybe even like, in a market closer to me, or what did you know there are just so many different ways you can take this and it's not like those strategies you start with is going to be the strategy you end with.   Michael: Mike drop Emil out.   Emil: Don't listen to me, I don't know what I'm talking about.   Michael: That's great, man. I love it, I love it… Should we get out of here?   Emil: Yeah, let's do it.   So thanks, everybody, appreciate you tuning in for another episode, hope you got some value out of this one. And as always, please leave us a review or subscribe if you're watching on YouTube. We love seeing that number go up, it boosts your ego and it keeps us coming back every week. So we'll catch you all in the next one. Happy investing.   Michael: Happy investing.  

James Wilcox is a Real estate investor out of Central Kentucky, a Stessa power-user, and host of the YouTube channel: https://www.youtube.com/c/REIJames In this episode, James shares his investment journey, his strategy, an insider's view of the Central Kentucky market, and some tips on being an effective real estate investor. --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Tom: Greetings, and welcome to The Remote Real Estate Investor. On this episode, I'm joined by James Wilcox, who has been investing since 2012. James is a buy and hold investor in Kentucky. And he is a power user on the stessa platform. Alright, let's get into it.   James, thank you so much for joining us.   James: Yeah, thank you so much for having me. I'm really excited to be here and share a little bit of my real estate investing knowledge and journey with all your listeners.   Tom: Awesome. I'd love to go back to the beginning. But before we do that, let's start with one of your best days as a real estate investor. So can you think of a day that stood out like, Wow, it's so awesome being a real estate investor XYZ happened? That'll be my opener, upper question.   James: Yeah. So I mean, that's a really great question. And, actually, I've had a lot of great days, but I really want to focus on like, my best day was also probably my worst day possible, during my whole journey. So a little bit kind of background on that I purchased my first property back in late 2012. And through that process, you know, everybody's got to work with contractors and kind of get the property back up to snuff, so to speak, this one had a lot of deferred maintenance on it.   So I did some of the work myself, but I had to call in a GC to do like some more of the heavy lifting. And like we redid the foundation and stuff like that things that I couldn't personally do. And I'm not really a big, super good handyman, I might know how to do it, but making it go from my brain   Tom: Know enough to be dangerous   James: for my brain to the hand, you know, it gets mixed up a little bit. But so I had hired someone to come in and do some of those things. And whenever we got toward the end of the project in 2013, they had kind of basically skipped out on a lot of the punch list items. So I was left with a property that was you know, probably like 80% done of where I wanted it to be. And so I work a full time job. And at that time, you know, like I said, I'm not super skilled at handyman type stuff. And so I'm going over there, you know, after five at night, and also working when I can on the weekends and stuff to try and get this property back up and back on the market at the time we had wanted to sell it ended up becoming a rental. And that's kind of how the journey got started.   But I'm over there and had no power on at the house, and no lights or anything. So I'm sitting there basically, like late at night trying to get things done, I'm sweating, because there's no HVAC on anything like that. And I just just Yeah, really, really frustrated because I had this giant punch list of things to do. And it just seemed extremely overwhelming.   So I just took them in and just sat down. I won't say that I shed a few tears. But it definitely got very emotional because it just felt so overwhelming have so many things to do. But right then and there is when I decided that I wasn't going to give up. And then I was going to get this across the finish line. It did take a little bit longer. But that's when I decided that real estate investing was for me because of the challenge of it. And that's why I ended up being my best day because that's the day that I chose not to give up.   Tom: I love it. So you kind of came into it, you know, and then really kind of got put in the burner and tough situation with the property need a lot of work and just committed to it.   James: Yeah, trial by fire is definitely how I've succeeded.   Tom: I love it. So now kind of going a little bit backward. What How did you initially get into real estate was it? Did you have friends or family or I'd love to hear about how your initially got going into the into the space?   James: Yeah, so I had no real estate background or no real direct family that was involved in real estate. my story's a little bit on the sadder side. I had had my father passed away when I was a senior in college. And we had always lived with my grandmother. And she ended up going downhill soon right after that. And so she had passed away that put me next in line for her home. And even though there was, you know, some debt to pay off and things like that some medical bills and things such I did end up sharing half the house with my uncle.   My uncle has also had health problems at the time too. So I just felt like at the time it was such a burden on him to try to figure out what to do with this house that had just seen a lot of deferred maintenance. My grandmother did not like people coming over and fixing things you know and stuff and that was the house the first property. And so I ended up buying out him we agreed on a price and since I own half I gave him you know, a portion to buy out his house, so I did own a home, you know, free and clear, but it wasn't exactly the best quality home by any means.   So whenever I started doing that he did some napkin math, you watch HGTV, oh, it's fine, you know, throw some paint, you know, rip up these nice gold, shag carpets, you know, and do all that and just put it up on the market and I'll make some money. Well, that didn't, you know, obviously pan out really well. And you heard a little bit of that background of that story with some GC problems and the project taking way longer than I needed to, you know, the yard got so high that I was getting letters from the city, you know, and I had to go over there and mow it and is basically up to my shoulders and things like that and, you know,   Tom: Just grow a corn maze.   James: Yeah, yeah, it ended up being just, you know, a big long process. But because of that trial by fire, I ended up keeping pushing forward with it. And I did get the property back up into a shape that I was happy with. And once I did the actual numbers on it, and had someone a real estate agent, come look at it and stuff. At the end of the day, it looked like I was gonna maybe breakeven on it, and probably lose a little bit as well. And someone else had come up to me and was like, well, you should rent it out. Because the market over here, there's always demand for rental properties and stuff. And he's like, okay, yeah, well, that kind of maybe kind of fits more my personality anyway, because we don't really do a whole lot of flipping, you know, it just makes my stomach turn, trying to figure out what first time homebuyers want, you know, and paint colors and tile and all these types of things, you know, I like clean and functional, but still looking nice and stuff.   So I was like, well, I'll try that for a little bit. And I ended up managing that property from a distance, since it was in a different city than I lived in for a little while. And when I got that first rent check for my first renter in the mail, because that's how we did it back then. And it was just amazing feeling it was just like, man, I didn't do anything this month, and I actually got a check. You know, I own the property at this point, you know, free and clear and everything like that. So it was really great. And it just took off from there.   Tom: That Mailbox money. So that's a that's incredible. So you you inherit this property and buy it out. And you know, it's great with real estate, you now have options, having options to either sell or to buy or sell or to keep it as a rental and just identify that as a better hold property. How quickly Are you know, what was your kind of next step after getting that initial property check in the mail? Was it oh, you know, this is pretty awesome, I want to add some more properties. I'd love to hear how it evolved from you kind of strategy and all that good stuff.   James: Yeah, so that first property is always going to be your hardest. And that one took, you know, several years to pretty much get lined out from the actual purchase to the rehab to actually even getting it rented out. And I had kept that same tenant for a little while. And then they ended up leaving and I gotten another tenant and kind of did on my own more or less for that for a little while a couple of years. And during that time, I consider that kind of more when I started to delve into more the background and the education trying to work out to improve my processes and things. And I'd really dug into it a little bit when I first purchased the property. But whenever it was me being on the front lines, being the property manager, I knew I really needed to step up my game, then, but I had always been a fan of bigger pockets. And I've been on that website for a very long time. And I've been a permanent member for a very long time as well.   And So basically, during those couple of years of me being the property manager, I really took the time to read a bunch of books. I mean, I've read probably every single one of them out there, or listen to them through audible and stuff. And then I browse the forums, you know, on bigger pockets, you know, anything, I can find YouTube and stuff to make myself a better real estate investor. And then so once those couple of years have passed, and I felt a little more confident that I knew a little bit more, that's when I pulled some money out of the properties or that property and then went on to buy a lot of more small multifamily. And that's really what we focus on right now. You know, duplexes, triplexes four-plexes type stuff?   Tom: That's fantastic. Yeah, love the BiggerPockets communities is a great resource for for folks. I'd love to hear about your use of Stessa. So having a couple of properties. When did you first hear about it? You know, how do you use it? Why do you use it love to hear you just kind of talk about your relationship with that software?   James: Yeah, Stessa has been great. Back when everybody first get started, you have no accounting whatsoever.   Tom: Back of the napkin Yeah,   James: So I just started out, you know, just like everybody else with no accounting whatsoever. I did switch over to kind of using Excel a little bit for a while trying to keep track of you know, the rental coming in expenses, stuff like that. But I'm a very data driven visual type person. So I love charts and graphs, and everything and tracking everything possible. So then at that time, I had switched over to an online software that was much better at tracking metrics, and kept me a lot more organized. I'm not in actually a very organized person, my wife will definitely tell you that I have a bunch of paperwork, I keep tons of paperwork on stuff just because I like having the, the physical and the data but…   So that property management software, it had property management and kind of the accounting built in. It's called rentec. Direct. And back then it was very, they've had a refresh since then. But there was very old school feeling like it provided you with a lot of tools and bells and whistles, but it just just looked really old. I did, I did like it, it was something I paid for, you know, a small bid monthly for. But I did want something a little bit more visual, something that I can also import the data into, like using Excel. And I was spending a lot of time still in that program. Typing all the transactions in manually. And I didn't like that, because it was taken a lot of time to do that. And back in 2017 is probably when I switched over to Stessa and started, you know, importing the data and more trying to automate things a lot more. And it's been great ever since then for that.   Tom: Awesome. That's great. I'd love to you know, you talked a little about doing property management yourself. Are you still managing your properties? Or have you you pulled in some some third party property management lift that burden?   James: Yeah. So that very first property is the only one that I actually property managed myself. Once we had graduated up and started buying those small multi families that we do now. I immediately switched over to third party property management, and the fun story of how I actually decided to do that. So I Live in Lexington, Kentucky, which is central Kentucky, and that property was in Mount Sterling, Kentucky, and that's about a 45 minute drive one way it was, you know, where I grew up and everything like that, but well out of the way whenever there was, yeah,   Tom: Little out of the way.   James: Little out of the way 45 minutes, you know, mostly Interstate, but to get there door to door. And with you being the property manager, sometimes you're the one going over your boots on the ground, you know, you're solving problems and fixing things. So I had had a tenant call me in the winter, and they said we can't get the heat to work. So anybody who's been in property management knows that. If the heats not working, and it's cold outside, that is the number one red flag priority you need to address that.   Tom: Yeah safety.   James: Yeah absolutely. So like 100%. Let me go come over. I'll be over there. 45 minutes, drive all the way over there. I look at the thermostat. It's that cold.   Tom: Oh, geez.   James: So I went over there, flip the switch to heat, it turned on immediately start heating up the house, so and then. So I was like, Oh, man. So I got back in the car. And I'm driving all the way back 45 minutes, you know, cold outside snow and all that type of stuff. And it was just like, yeah, I need to get property management. That was the moment that I decided that because I like that is not worth my time. And I ended up getting another tenant and they had called me, you know about that? Around the same time, too. And I told them, I was like, yeah, that thermostats a little tricky. Like, you just need to switch it from cold heat. And that'll solve it. And sure enough, it was at least I learned my lesson, you know, but it did take me a little while to find a property manager that I felt like I could trust over there. And I went through even a couple property managers throughout our career in real estate investing, but the ones that we have now, I'm super happy with. Tom: Yeah, I think that's something you know, in in using third party property managers, oftentimes, you know, at some point, you know, it might make sense to look around. If it's not, you know, meeting what you're looking for. Would you give any advice in selecting a property manager in your, you know, experience and having interviewed and selected and then re selected property managers?   James: Yeah, absolutely. your property manager is going to be by far, I think, the best key person on your team. So you really need to have a great property manager, whether you're investing out of state or investing locally, having the good boots on the ground, and someone who's got great systems in place, is definitely going to be a key to finding a great property manager. I think probably one of the best things that when the interview in property managers is to really see how many properties they do manage, and what various types of properties that they do manage. Are they mostly A class single family, or are they large multifamily, maybe they only do apartment complexes and find the one that's going to fit best with you.   Really a good property manager is going to have great communication with your tenants and with you being the owner. And anybody who's got great systems in place, you know, we're going to do a counting, we can send it to you PDF, Excel, you know, you're going to get it this time of the month. You're going to get your deposits this time of the month. You know, ask them about everything that they do on the day to day, and if they got good answers to those questions, they're probably going to beright for you.   Tom: I love that in just in wrapping up the same type of properties that you have and making sure that they can they have experienced them, you don't want to be the the test dummy into it. Kind of a related question. I'd love to. I'd love to give your hear your feedback. Looking back. What's one thing that you wish you had known when you first started investing in real estate?   James: Yeah, so my number one   Tom: What's a tip that you would give the 2012 version of yourself, but what would be the tip?   James: Yeah, so whenever I first got that property, as working on it, and stuff, I really treated it more as a hobby. So it was just kind of like, Oh, yeah, I'll go over there, you know, knock out a few things are, I'll work on it on the weekend, it's like, that was a mistake, I needed to treat it like a business from day one. And I needed to know that, with that property being vacant, it's costing me money, you know, and I need to really get the ball moving on that. And if it means me not being the person doing the boots on the ground, doing the work, you know, changing out the light switch covers, doing electrical, or cleaning, and all that type of stuff, and just paying the extra money and hire someone else out to do it, if they can get it done that much faster, is gonna be better on your profit margin.   You know, like, it's, especially with single family, it's a lot of feast or famine. So if that property's rented out, and there's no problems, no repairs, things like that, you're good, once it's vacant, and your vacancy rate, you know, is 100% on that. So it's like, you really need to get those turned over quickly and get them re rented back out and where I'd kind of him hauled around about on it and treated it more as a hobby and just like something I did in my spare time, which is fine. I think everybody needs a side hustle and things like that to motivate them. But if I treated it like a business, from day one, I would be so much better off and actually having, you know, better accounting, being a great part of that too, you know, and not just having horrible accounting.   I, tax time was always horrible for me. And only recently, in probably the last five years or so do I feel like I've gotten in a really good space? And stessa? You know, would be definitely big key to that. But I would spend tax time, you know, always file for extensions to get more time. And then you know, it's been just hours and hours and hours of going through receipts and   Tom: Digging it up.   James: Yeah, yeah, I tried to go through it all. And it just was not not good experience and even West. So like how you are there's other programs too, that do that where you can take a picture of the receipt, and it scans it in. Like that's so he, I feel because like a lot of those papers and receipts and stuff after a year like the inks disappeared on it. Good luck going back trying to figure out what that was, or which property it went to, or even how much it was or anything like that. So definitely treat it like a business from day one.   Tom: James, how important would you say the the social aspect and what I mean by that of real estate investing is like mentorship, mentoring, I don't know that you're a part of any masterminds. But I'd love to hear kind of your thoughts on I know, the general the importance of having a community as an investor.   James: Yeah, I think community is super important. And that's why I'm so actively involved here in central Kentucky, and developing other real estate investors. I help run a local organization here, that meets through Facebook and doing local meetings. And we do try to do them once a month. You know, this is COVID time. So some of the in person meetings, you know, aren't happening. But I have done a lot of live streams throughout 2020, especially over different topics to help educate people on various topics with real estate investing.   I'm also president of a nonprofit landlord organization back in Mount Sterling, Kentucky as well. So with being so involved in local community, I cannot stress how important it is for you to surround yourself by those that are like minded and those that are willing to help you.   I had a mentor when I first started, he was a local commercial broker. And they were the large commercial broker here in Lexington. And I started working with him back when I was thinking about buying into the small multifamily and stuff. And he really told me that whenever we were successful, that we needed to pass that on to others. And I've definitely tried to keep that close to heart and tried to stick with that. And that's why we're so involved in trying to help others teach them how to be successful in real estate investing as well. But I think just if you can find anyone locally, that is a real estate investor, they will definitely talk your ear off and be more than happy to share information with you and try to educate you because we all feel pretty much in this community that real estate investing. And buying properties are what's going to help set you up long term. And especially it's going to be great for your own retirement and personal wealth generation.   So we're just having an abundance mindset, especially here in central Kentucky and in our group. So we're more than happy to share with you, anything to help you to be successful and I guarantee there's so One near where you are locally anywhere, that would be more than happy to do that as well. So you need to go find those people.   Tom: That's fantastic. And I, you know, I think one of the being involved in some mastermind and mentorship groups, I think it's, that's one of the best ways is to learn it is to teach it, you know, and talking about it and thinking through and it's a, it's a sanity check. It's an accountability aspect. On some of the meetups. I'd be curious, like, what are some of the topics that you guys discuss at the real estate investing meetups?   James: Yeah, so our group is definitely the core of it is for networking. So a lot of the Facebook group example is contractors, local vendors, things like that real estate agents, wholesalers, real estate investors that are buy & holds like myself, short term rental property managers, you know, short term rental investors, things like that. So we cover various topics, it can be anything from having the police department come out or fire department and give you you know, public safety type things that you can do in your properties.   We do like a short term rental one every year that I have a panel, I usually try to get several people from various types of short term rentals, whether they be building their own homesteads, you know, and glamping, and tree houses. And then we have Red River Gorge nearby here that has a lot of cabin rentals, but I do some myself. So I do urban rentals, mostly like city focused ones. We've had wholesaler meetings, we've had real estate agents on home inspectors, you insurance. And basically anything that you can think of that has to do with real estate in any way, shape, or form, probably at least covered at once.   Tom: That's awesome. That sounds like an awesome community that you have in central Kentucky. I'd love to hear you kind of speak to the central Kentucky market. As you know, this is a kind of a national audience. You know, what would be your you know, Top Reasons to invest in central Kentucky.   James: So I'm in Lexington specifically. And I think Lexington can be a really great market, I work with a lot of out of state investors, you know, just given them advice as well. So I'm glad that you brought that up. I think Lexington in particular, and central Kentucky in general, can be a great market just because our price points are a lot lower. I know some people are probably listening here from California and stuff. So like your your dollar can go a lot further here in general.   Also, with us being the intersection between 75 and 64 split. Lexington itself is a good place for businesses to start up, because they can get on the interstate and go north to south, east to west very easily. And Lexington in particular, I think is a very strong market. We do have we are a college town. We're a foodie town, we're actually voted as one of the best entrepreneur cities in the country. Easy for startups and things like that. So I think that Lexington it has something very unique about it that you don't find in any other city really in the US and that we have what's called an urban service boundary, which is basically the area outside of a circle of the city cannot be developed without consent from the city.   So basically, if anybody that's familiar with Kentucky, and Lexington, there's probably a couple of things that come to mind. And it's basketball, bourbon and horses. So in a way for us to protect our natural resource of the land for the horses, for the city boundaries itself to expand, they have to get authorization to do that. And they only look at that every five years. So land becomes a little more crucial here in Lexington.   So it's kind of got built in appreciation in a way. So right now we're not looking at expanding the city boundaries. So the city is working itself on what's called infill, so basically vacant land and stuff that's within that city sector and they're looking to develop and stuff so if you own any basically a home anywhere in Lexington, since land is at a premium, you're going to have some built in appreciation just right on top of there much less the market itself.   Lexington if anybody's familiar with Kentucky in general, most of the jobs are in Northern Kentucky near Louisville, Cincinnati area or in central Kentucky and then you'll have some out west and kind of the Bowling Green Viduka area. But Eastern Kentucky itself doesn't provide a lot of opportunities for a lot of people. It can be like a lot of one stoplight towns are kind of poor town. So a lot of the younger people do tend to want to kind of move away from those areas and they usually end up kind of in that first stop in the central Kentucky area.   Georgetown itself is this Sitting next to Lexington is the fastest growing city in Kentucky by far, population wise. It holds a Toyota being a big manufacturing job there. Basically every Toyota that's coming off the line is coming right here from Central Kentucky, to Lexington, Georgetown Frankfurt, Louisville area, they're kind of all on a strip, you know, going to the interstate there. And with Lexington being right next to Georgetown. You know, Central Kentucky is just hot as can be.   Tom: Yeah, I mean, universities, blue chip companies. Would you say Kentucky is fairly investor friendly? You know, I don't know, it's a term that's thrown around. But as it relates to, you know, landlording laws and taxes and all that.   James: Yeah, I would say Kentucky definitely in general is very landlord friendly. It's very investor friendly as well, you know, our taxes aren't near as high as places like New York, New Jersey, California. So we're definitely very positive on that. So Lexington itself got a great diversity in the job market as well. We got high amount of jobs and health care education with UK and a lot of the universities that are around to you. And high tech jobs to like we have Lexmark headquarters here. We got Valvoline headquarters here. And then Toyota, like I said in Georgetown as well, and we have tons of manufacturing and stuff jobs. And then you also have the farming jobs too, as well with when it comes to the horse industry means that it like a king land or on the horse farms themselves.   So I think that makes Lexington and central Kentucky just in general, just a strong market, just from the job perspective, either.   Tom: Awesome.   James: I want to give like one more tip, just for anybody out there. So I think there's four things for you to be successful in life. And that could be in real estate, investing your work or anything like that. And so I call it so you want to be the GOAT, right? The greatest of all time, everybody knows that. So there's those four things and those four letters there that I really want to drive home. So G, you got to have grit you got to power through whenever times are tough. And that's something that I've learned about that that best worst day ever, you know, that grit   Tom: In the dark with a big punch list?   James: Yep. Yeah, you just gotta power through sometimes. And sometimes life's gonna hand you just a bad hand, and you just got a pat on the through. So that's the one key thing that you need to keep going, you know. O, you got to have opportunity recognition. Whenever there's opportunity that's presented to you, you got to really know your numbers, and know exactly when Lady Luck is kind of smiling down on you. So being able to know for real estate, knowing your market, knowing your price points that you need to hit. Just that opportunity recognition is so key for you to be successful.   And then A, you got to take action. One of these days, you can even read as many books as you want to read as many forums, but in the day, you got to jump in the deep end. You know, you got to crack some eggs to be successful and you got to take that action.   And T,  you got to do training. You always got to be re educating yourself. Keep learning something new, and keep training yourself to be better.   Tom: James, I love that. Did you come did you come up with that acronym?   James: I did. I did.   Tom: That's really good. We're totally gonna reference you but like, give the James James Wilcox. GOAT acronym. That's fantastic.   James: Appreciate it.   Tom: Yeah. Awesome. And one last time where can people reach out to you watch on YouTube, all that good stuff.   James: Yeah, so I have a YouTube channel. It's called REI James. So basically the acronym real estate investing James, and you can also reach out to me on Instagram at ReiJamesWilcox.   Tom: Awesome. Thanks, James.   James: Hey, thanks very much. Thanks for having me.   Tom: Thanks again to James for joining us today and telling us about Central Kentucky, his story, how he uses Stessa. If you enjoyed this episode, please like subscribe, all that good stuff and as always, happy investing.

Author of Happy Ever After, The 7 Dollar Millionaire, joins us again to shed light on the complex world of personal finances. He shares tips on getting started, saving money, and aligning your goals with your family to work your way to financial peace of mind one step at a time. --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The remote real estate investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: Hey, everyone, and welcome to another episode of the real estate investor. I'm Michael Albaum, and today I'm joined by my co host,   Tom: Tom Schneider.   Michael: And with us we have a very special repeat guests, the 7 Dollar Millionaire, if you recall, he wrote a book that we had him on chatting about Happy Ever After. And today, he's going to be talking to us again about personal finances, some things you can do to get started, as well as how to talk to your spouse or significant other or partner about personal finance. So let's get into it.   Michael: Awesome. Mr.7 Dollar Millionaire, thank you for joining us again, we so looking forward to recording with you.   7 Dollar Millionaire: It's a pleasure. Thanks for having me back on that says, this is a first for me. No one's ever invited me.   Michael: Well, hopefully the first of many. So how have you just curious how are things out in Singapore?   7 Dollar Millionaire: Things are just improved. Yesterday, we had like a mini re lockdown. So they call it circuit breaker here for about a month. Because there was a bit of a spike in cases. But that ended yesterday. The big change is very little apart from Oh, you're now allowed to go to restaurants, their restaurants are all closed. That's pretty much it. Gyms are kind of reopening slowly, that kind of stuff. But yeah, that was that was nice. It's nice to kind of go and get a meal somewhere, you know. But otherwise, it's you know, as with a lot of Asia, they're taking that kind of minimal risk approach to it.   So I mean, even when there was a spike, it was like 100 cases a day. 5 million people, right? I mean, it's still a very low number.   Michael: Yeah. But everybody in your world is healthy and safe.   7 Dollar Millionaire: Oh, yeah. Thanks. And you guys are on good.   Michael: Yeah, we just chatted with some family friends of ours yesterday, and they are double vaccinated. But she and her daughter just got his tested positive. So she had a breakthrough case. So she's feeling pretty crummy at the moment. But I'm hoping that she's hoping she's not going to go to the hospital or anything like that. So the breakthrough cases don't seem to be as severe as the unvaccinated stuff.   7 Dollar Millionaire: Fingers crossed. Yeah, fingers crossed. touchwood. Right. That's that's the big hope. As long as it stays like that we can live with it. Right?   Tom: I have a friend who had a breakthrough case who's also vaccinated. And he's got a wife and three little kids and his wife and three little kids didn't, didn't catch it. So he's hanging by himself. And you know, I feel much more for his wife, who's managing a house full of Toddlers and Babies versus him who's just hanging out at their their lake. Well, he's men. He's on the men. He's feeling much better. But it's Yeah, really.   7 Dollar Millionaire: Did she get did she get like a second opinion on that? Right. Yeah.   Michael: Thank goodness.   Tom: Yeah. Doing recovering. Well, good, good.   Michael: Well, Tom, it's it's funny as the wrong word. But interesting. This kind of segues nicely into what we want to chat with the 7 Dollar Millionaire about today. Again, circling back and talking some more about personal finance. But a question that I have is, so often people have these target goals in mind, and whether that's net worth or cash flow monthly annual basis. But that's so often based on today's needs, for their whatever family is currently in the picture. And I've got to imagine that changes over time. And so as someone who doesn't have kids, I don't have a really good sense of what kids costs, it could be 20 bucks a day, it could be 100 bucks it you know, I don't have a good sense for that. So how do you recommend folks think about not only their cash flow needs for today, but also for their future selves, as they continue to age but also as additional family members may enter the picture?   7 Dollar Millionaire: Yeah, I mean, it's a it's a there's no right answer, right?   Michael: I mean, I mean, oh, well, then we can we can we can cancel the show. We're done here.   7 Dollar Millionaire: There's just no single one right answer. I mean, the first step with the first answer to this is actually just taking the first step start actually doing some work, right. I think I was working recently with talking about how you make all the progress in personal finance. And a lot of people are discouraged because they think they can't come up with an answer. And it's like painting, right? The first blob of paint on the on the canvas doesn't look like the painting You can't expect it to you go put it on, put it on, put it on. Only after a long time does it actually start to get to the real picture, and it's the same, it's exactly the same with this. You just got to start doing the work. And starting doing the work is actually working out what you want your kids to be like, what kind of life you want to live with them where it's going to be, and the kinds of expenses you're going to have.   So you can roll that stuff out pretty easily. I mean, so For me, because I was an expert, I had to put my kids in international school, there's some serious education expenses. You know, it's like the, for me, when my kids went to college, they got cheaper. I mean, that doesn't happen very often, right? My kids got a lot cheaper when I was paying for them to live in a foreign country, flying them backwards and forwards and paying college fees, they were cheaper than the local education costs for me.   So that's how individually these things can be right? I mean, you just have to do that. So you have to look forward and you think, okay, and I'll give you perfect opposite example, really good friend of mine used to live like five floors below where I had seen the apartment block right here. He's got for various reasons, he ended up with like, kind of one of those joint families who so like, five kids under the age of five, you know, bizarrely, and really bonded, situated,   Tom: Yeah, Brady Bunch situation.   7 Dollar Millionaire: And he's, he's like a, he's a fund manager, based in Singapore. And he worked out that he could actually, it made sense for him to quit his job and move back to California, because paying for five kids in local education system here, when you know, that, and everything else, it's cheaper to move to a place with a good free education system and have a normal job rather than trying to have a high paid job and pay those kinds of costs.   So that's how individual all of these kinds of decisions get to be. The first thing is just to sit down and, and dream a little, right, exactly. Who do you want your kids to be? And how do you want to live with them. And because a lot of the costs, like your actual food costs, it's not a big deal, it's really not going to be an enormous deal. So the basic, you know, adding one bedroom to the house may or may not be a big deal, depending on on where you're at. And then after that is things like education and flying, holiday is right, they do cost literally an extra person on every single thing you do, when you start and that's times 20 years, right?   So there's, there's some, there's a lot of extra costs on that kind of stuff. And it's really just sitting down and working out those kinds of things, and those kinds of budgets. And then as you move closer, closer towards the end, you'll realize exactly what is going on, you'll get a much closer impression. But as always, it's just start, just sit down with a piece of paper and just go, Okay, I think it could be this, and then find out the extra information that you'd actually need. Because it can be a scary amount, or it can be really, if someone for someone like me, that was having to pay man it was 15 years of 14 years of school fees. I don't want to think what that was, you know, really, I definitely don't want to, you know, PV it, I mean, that's just insane amount of money. But you know, had to be done for In my case, if you don't have that you don't need to put it in.   Tom: I love that analogy of the paint, and it just kind of evolving a little bit over time. As far as, you know, practically getting the paint down, would you recommend a model where, say this is in Excel, and each row is like a year, and then, you know, perhaps there's some different sort of expenses within the different rows, or it's just like a really kind of basic form of that is that sort of a rough construct is, and I'm sure it's you know, could be a little unique for everyone. But that's immediately where my mind goes is seeing in that sort of a model.   7 Dollar Millionaire: That's definitely where I think you move it, I actually like to do a pen and paper to start with, I think there's a, there's kind of a free flow, when you're actually kind of sit down with pen and paper and just as scribble stuff out. I've even tried doing it on my iPad with you know, like the sketch but it doesn't work as well, there isn't that sort of connection, which sitting there with a piece of piece of paper and a pen for 10 minutes, and just sort of scribbling out the bunch of the cost because we're all prepared to be kind of messy on a piece of paper, right, and we can just draw in things and loop them around, that connects to that, scribble that out and need this.   And then once you've got probably only 10 minutes in, you can move that to a spreadsheet, seven or eight lines, seven or eight lines is going to get you most of the way to the kind of things you're thinking about.   Michael: And Tom, I'm curious not to put you on the spot here in the hot seat but having a young child is this an exercise that you went through with your wife and was this conversations that you had prior to the little one arriving?   7 Dollar Millionaire: You know, I was actually so I'm in my mid 30s now and when I was in my mid 20s and early 20s actually was way more active about kind of performing out like 20-30 years in advance so I actually had to pull back the old spreadsheets pain analogy I think it's probably time to have another round I love these interviews with you 7 Dollar Millionaire I literally after our last call that we had I went and totally redid all my you know auto deposit into my investing and I already have some immediate action items from from this one. So just to kind of go back I was I not not so much with these with with my current kid but I think it's an exercise to go revisit some work that I did in my mid 20s.   7 Dollar Millionaire: It's always good to know right? It's also good to know how good you are at modeling. Where you make mistakes and modeling, I mean, we we professionally we do that. And it's you know, you can be miles out. But if you actually, I mean, there's a company modeling, we're actually modeling like an investment will have various inputs that we can that we can change them to go back and you look and go, Oh my god, I was miles out, but then you realize that one of the inputs was x, y, zed, which turned out not to be remotely true. So you can, okay, then change that. And sometimes it kind of comes back to closer to reality. So all these things are really, really important to actually just understand how well you model because it's not like you have to stop modeling, or you never stop acts.   And modeling is like, it sounds like it's too specific to what we do. But we're all forecasting all of the time. Now, my favorite analogy for forecasting and how we're all forecasting all the time, is we all pretty much expect chairs not to break when we sit in them, right?   I mean, even some of my weight, I don't expect the chair to break when I sit in it. But I pretty certainly if you if you sat on three chair, three different chairs in a row, and they broke every time, that fourth chair, you'd be like pushing it scratching it thinking, Okay, is this thing solid, you'd have lost all your trust in chairs, that's just forecasting. It's just natural forecasting. We do it all the time. And so knowing if you're good or bad at it is a is an amazing life skill.   Tom: Do you find that most people are overly optimistic when forecasting I guess you could apply this to business or to kind of personal? I'd love to hear your kind of thoughts on, I guess human nature and in applying forecasts and ways to beat yourself and be better at it.   7 Dollar Millionaire: Yeah, I honestly, unfortunately, it really it is really bad answer. But 50% of people are better than average. And there's no other way of looking at it. I think the key is most of us aren't doing it particularly consciously most of the time. And so sense of like actual aware forecasting and awareness of how optimistic or pessimistic we tend to be. Pessimists, I mean, pessimism is one of the reasons that overcaution is what keeps a lot of people out of the markets. Right. And because they think of it as markets, right, they don't think of it as I'm working. I'm living in this economy, and not being in it with my capital is essentially an enormous risk that this economy is going to crash and burn. I'm literally taking that investment option. And not seeing it that way keeps them out because they view it as being very, very high risk and pessimistic because they don't understand it enough.   Let's throw some analogies around that's just like being in the dark, right? It's just being in the dark, you can walk out into your hallway with no light, and you can't find your way along the hallway anymore. Right? That's, it's it's still there. Everything's exactly where I was people without the education. I mean, we're moving back into financial education, right. It's what keeps people out. It's they're unsure, they're in the dark. And that's why I think creates most of the pessimism and overcaution around it.   Yeah, there's a bunch of people who, too, you know, too optimistic, too. But that's what I mean. I tend not to mind it when when investing, I don't engage over optimism. But when I'm doing things like a little bit more entrepreneurial, then yeah, I shoot for the moon. There's just no point right? or shoot for the stars even then you get the moon there's no point not being no point starting an endeavor without thinking it's going to be amazing.   Michael: Yeah, I love that analogy about being in the dark. I wonder though, your take on, when people have gotten out into the hallway realize that it's not that scary. Or maybe they've gotten a little flashlight, it a little bit of education, they understand. And now they think, Well, I know everything. And so how does that that little bit of education, a little bit of knowledge, not get overblown, and a bit turned into overconfidence, where now you are taking risks, well beyond your your light beam, so to speak.   Tom: Great point, Michael.   7 Dollar Millionaire: Yeah, it, it's it's actually why I think it's so important. This gets taught in schools. And, you know, there's, there's a bunch of different sides on this. But it's, that's why, you know, why are we confident reading? Right, we're confident reading because we've been taught it at such a young age, right? This is this is how we have that kind of confidence. Why are we not confident in a foreign language? Because we weren't taught it. We don't know any of the words, we don't know how this thing's put together. And we need that it's, it's about having that broad underpinning to what we do, and it's why it needs to be taught in schools because any other way, you're coming in at some random entry point, right?   So some friend tells you the you know, you should trade options on Robin Hood because I made x, y, zed and then you kind of get in there and you learn a little bit about it. Maybe you have like some Beginner's luck and you do quite well. That's now your little wheelhouse. It may just may be a good wheelhouse for you. It may be a terrible one. More likely the second option, right. So that becomes your think that's what you need that we need the education to make sure we get a little bit of light in all areas.   I mean, I'll give you a perfect example for this. I so the CFA exams Chartered Financial Analyst. I'm not one I did level one.I got way too busy to do levels two and three, my first daughter was born like immediately after getting level one. And level one even just shows you the entire spectrum. So you kind of you get like a beginners entry level on everything. And that's like, you kind of you know where to come back to later. Right? If I need to calculate a bond price, I can't do it off the top of my head, but I know where to read. I know where to look. And then I'd know how to do it. And that, obviously, that's a little bit specific for most people. But that kind of general entry level stuff is I think, you know, what's needed otherwise, you do end up with the flashlight, or moving from analogies. Under the under the street lamp looking for their keys, right?   You know, the stories like, you know, and the guy's looking for his keys under the street lamp and a piece of wedge, you lose them over there. So why are you looking here? Well, this is where the light is, right? That's it's so important to just have like a basic level of light.   Tom: To know what you don't know. Definitely.   Michael: Yeah, that's Yeah. I'm curious to know, in your opinion, if someone is looking to invest in the next 12 months, they're looking to get educated and wanting to get involved, whatever investment class they deem is in their wheelhouse, where should they be keeping those funds? Should that be something that they're investing the whole time labeling? And, you know, dollar cost averaging? Or should they kind of wait till they have enough funds to do something with curious to get your thoughts?   7 Dollar Millionaire: Okay, well, always dot dollar cost average, unless there's like a ticket price that, you know, makes that unavoidable that you have to go in single level, like, like some kinds of property, right, where you have to have a certain amount of downpayment, and that's the minimum you can get involved. The great thing about other asset classes is you can dollar cost average in the tiniest amounts. And you always should, I mean, cuz, you know, you can't predict the future, you don't know if it's gonna go up or down, right. So you should try and remove as much of that risk as possible. And dollar cost averaging is the is the free way of doing that.   Michael: Right.   7 Dollar Millionaire: So right, so always dollar cost averaging, I think there's a one thing that I quite like is what I think of it in my head is like a reverse ladder. So you know how you have ladders on fixed deposits, time deposits, whatever they call them. In the US, you know, where you can get kind of get like a little bit more return, if you lock the money into a deposit account for longer, let's say three months, six months, whatever it is, and you stagger it in. So you put in like a sixth this month and a six the next month, and then you do that over six months. So you got the money, you got access to six of the money every single month, you can put it put it into those and then actually dollar cost into the thing you're putting it into. So you can sort of you're still making a little bit of money doesn't have to sit as pure cash. Right.   Michael: So so go get six CDs.   7 Dollar Millionaire: Yeah, exactly.   Michael: on six month intervals. And okay, gotcha.   7 Dollar Millionaire: Yeah, exactly right. And then you can just plug it straight in. And you might only be making like an extra, like a few bucks. But this is how you make money, right is by it's like that little extra, which for no risk, right? That's always the key a little bit extra, no risk is better than a lot extra for a lot of risk. So just that just that small, those small moves are always useful.   But I think also one of the other things to do is depending on the asset class, if if what you're doing, if the cash you've got is a long way away from the asset class, then it does make sense to have some kind of hedge if it's possible. So I mean, I think one of the things often is say, like, being able to put some of the money into a REIT in advance of buying a property.   So let's say if there's like, if you're going to buy property in New York for some reason, then there's a new york rate, if you can do enough analysis around that read to understand it's like, oh, this is, this is pretty similar, this should go up when my property goes up, it should go down when my property goes down, you can at least put some of the money as you're building towards that downpayment into the REIT and then hedge out a little bit of that extra risk. Because, I mean, the risk on property is nearly always, everywhere in the world, the government prints more money, right? I mean, properties actually don't…   Micheal: Inflation.   7 Dollar Millionaire: Yeah, well, yeah, properties don't often go up in value, your money goes down in value in terms of property, right, that's what actually happens. So actually, removing that risk is is is useful. So I'd always think through these ways, rather than thinking, yeah, just chucking money in now. Just steady push it in steadily as it's just if you can, if you have the patience.   Tom: That's a that's a good discipline. I mean, it kind of related as an act of discipline I can think of like going to a, like a kiss going to Las Vegas or something and playing blackjack and it's like, oh, do I push it all in on one hand or do I slowly and you're gonna have a better time to her a little bit slower. I guess that kind of really kind of relates to having fun at the casino versus having fun at.   7 Dollar Millionaire: It is a good point because I do the exact opposite. I really don't like being in casinos and when I'm forced to go to them, I put it all in on one hand and literally   Michael: Walk away.   7 Dollar Millionaire: Just like get this over and done with either make a lot of money on one hand, or we are I'd leave and have a better time than I would do by sitting at a blackjack table, losing money steadily.   Michael: I love how you knew kind of exactly where I was going with the question with regard to property investment. Because I mean, Tom you were in a similar situation with regard to you had some cash or cash out refinance, you were looking to deploy it. And in the meantime, you were thinking about putting it in the market, and I think you ultimately did. And then there was some fluctuation in the market. And you're like, Whoa, this is not this is not feeling good. So you pull back a little bit, right?   Tom: Yeah, yeah, just, I think like within, there's more, like risky allocations, and then safer allocations. And I think, being cognizant of kind of which risk profile I was investing, versus the strategy I initially did was go running up to the blackjack table and throwing it all down. And, you know, thankfully, didn't get getting didn't get burned too bad. But, you know, stepped back away and left the casino and invested in a nice asset allocation that was comfortable for the time horizon at which I wanted to spend it. So..   7 Dollar Millionaire: That's I mean, that's, that's, that's also the other point is actually nothing wrong with taking a second most important thing of investing is actually understanding your own psychological needs, because you can't invest against them. It's really, really hard to actually invest in a way that you don't think is correct for you. So taking too much risk. And just I mean, I don't have sleepless nights with what I do for a living. Because I don't invest in a way that is wrong. For me. I actually feel like I understand what I do. Whenever I hear people like they have sleepless nights like that's because your style investing does not match what you actually believe. I mean, that just can't be. That can be the only reason I think what you did, there was smart.   So the only way I've done this in the past is that I buy I bought properties in the past in, in foreign countries I have bought in Singapore, once I buy in the UK, I bought in Japan, I bought in Australia, one of the things when I know I'm going to do that is I immediately switch the money into that currency. If I think it's cheap, I think it's expensive. I don't.   But I try and you know, work because current currency, and I do sometimes take a view on the currencies. So you know, but that's it's that kind of move. So for example, I think I kept I think I kept just cash in a deposit in Sterling for about three years before I bought a property there because I wanted to take away because it was cheap. And I wanted to remove the currency risk, that it would get more expensive at that particular time. Basically, the moment Brexit happened and the pound and the pound collapsed, I put money into Sterling, because I knew I'd be thinking about buying a house not long after,   Michael: I think I've mentioned this to you in the past, Michael, but I really took it on the nose with the currency exchange because I bought a place in Portugal. And it was right around February, January, when we were looking at doing a transaction and the dollar against the Euro was like 94 cents. And it has just continued to climb and climb and climb. And so this is going to be great. This is going to be an equal transaction, by the time I go to actually pull the trigger. And so I waited, waited, waited and then COVID hit and the dollar just tanked. And I really got taken to the carwash on that one.   So I think that makes sense is if if you if you know what it is today, that's worth something and how you feel about it, I think is also important, but also a bird in the hand is worth two in the bush.   7 Dollar Millionaire: Well, it's it's actually a lot of these things is understanding future liabilities, and not just your existing liabilities, but your future liabilities. And that's one of the ones like with kids, right? You're going to have these are future liabilities, you've got costs down the road. And if you know that you've got, you want to have a place in Portugal, then if you think the currencies pretty decent, and you know, you don't have a view either way, you can just put that money into into euros immediately and just remove that risk, right, there's no risk now. Right?   If that money wa s just gonna sit, and you could have it in euros doing something else, I mean, you can still take another risk on top of that, but at least you've closed off that currency risk. And currencies, they move around a lot. I mean, there's, you know, within like a two or three year timeframe, they can really shift. And that's a risk that's nice not to have or even potentially gain you can make rather than, you know, taking that huge risk.   Tom: So backtracking Just a minute, a little bit ago, you were talking about if you were to evaluating buying property in New York, and you know, parking it into a REIT in that space. I never and then you know, you can research that read I never thought of that, because they're sort of there's this is, you know, primarily single family rental investors. There are single family rental REITs out there. And is the idea to maybe to to learn more about that specific REITs that you're going into that asset class like to benchmark what kind of returns you what are my totally hearing this on a different?   7 Dollar Millionaire: I think you know more about the US property market than I do. So I'm, uh, yeah, you're probably hearing things I don't know, all I mean is is as close as you can remove risk, I'm not talking about actually   Tom: Sure getting as close.   7 Dollar Millionaire: Yeah, the closer the asset thing, the asset class you're going to buy, you're removing as much risk as you possibly can. So if it's in similar geography, in a similar asset class in a similar geography, it still may not correlate, and there's nothing you can do about that there may be a problem with the REIT, and there may be a problem with a manager and maybe a problem with something else. But if you're going to buy commercial property in New York State, if you can find a commercial property right, in New York State, yeah, then maybe maybe there'll be reasonably correlated, and you're taking a risk there, that, you know, there's no reason for cash to be correlated to it, there's definitely no reason for any other asset class to be correlated to that thing. So just a little bit of work and probably find you, okay, what's the new what's the New York State REIT, which ones are similar? Bang, okay, that one might reduce my costs and reads tend to pay pretty good dividends as well. So you actually could get paid out while you're doing it. So the return could be stronger, while being more correlated. And that's kind of all you're aiming for. with that.   But I mean, I'm gonna say as well, I don't know, if I mentioned on last couple of one of my it's a small family single, you know, real estate, is actually just such one of the best asset classes to be in as an individual. Just because it's not not something that big corporations do particularly well. And that's where it's sort of maybe steer clear of big corporations tend to do big properties very well, right. It's just like one guy making a decision pushes a button, and then the whole building does x, y, zed, right? Whereas when you look at what we all live in, so small fixer uppers, those single unit setup takes an enormous amount of management to run as a business.   So that's one of the reasons I love real estate as an asset class is because the world's capital is not trying to jump into this, right, it's just individuals doing the thing they do. So we can have an advantage. But within the REIT, maybe less if you get too specific, too granular. And I just sort of aim, you know, and the other thing would be to not get into to smaller thing, right? You want it to be liquid, you want it to be well traded, you know, one reasonably well known   Tom: That makes sense definitely.   Michael: Makes a ton of sense. I'm curious, Michael, do you have generic guidelines or principles when you're teaching, you know, financial education to folks around how much of someone's paycheck or how much someone's net worth should be broken down and spent on the different typical categories? So housing, or transportation or food entertainment? Do you have a pie chart that you that you utilize?   7 Dollar Millionaire: No. I mean, there is one, right. There's the 50 30 20, that is commonly used. And it's a great starting point, I actually think the 50 30 20 is a great starting point. But I think there's just too many examples of people who do way better than that, than I do. You know, you don't want to set the goalposts too easy, right? You know, you just come across people who are saving half or even three quarters of their of their income, and you don't want to tell them, You should save 20 it's similarly right, you know, it's just like, but the only one I really use is like, never go above like a third of your income on property.   And I think if you can keep it below that number, pretty much everything else starts to slide with it. Right? You start your cut, a lot of other costs are gonna be I mean, so in the book Happy Ever After I use 50 3020 as a starting point, but then say, Well, yeah, you know, but what if you could do 30 30 10? Right, you know, 30 30 30 30 30 40, because it would be, because 30 30 10 doesn't add up great. But if you can keep those costs down, all of those extra the 1530, way below those numbers, you're adding up to a much higher number on the 20. And that's the thing, I think, to use that 50 30 20 is a great thing to say to someone who's saving zero, or 5%.   Tom: Sorry, just to clarify the 5030 is 50% is your needs housing, grocery grocery, all that 30% is the ones and 20% savings. Is that the?   7 Dollar Millionaire: Yeah, that's right. Yeah, that's, I mean, it's not that I didn't invent that. I think that's a standard financial personal finance tool. And, you know, as as with the glob of paint, right, it's a great job of paint, unfortunately, it's kind of it sounds to 20 20% is gonna have you if you did it from the age of 20 20% is going to have you retired somewhere in your 60s. It's not amazing, right? That it's it's, it's better than not, but it's it's not amazing, and that's where I wouldn't want to see it to see us as I try to use it just as a general this is dob of pain. 20 is great, but if you want to do better, you should aim for better.   Michael: Yeah, that makes tons of sense. And I think that's great. I love I love that dob of paint analogy. I think it makes so much sense. I'm a very visual person. So that that resonates with me.   7 Dollar Millionaire: Cool. That's good. That's really good. Because it's because I wrote it for for a new book I'm working on. So I'm glad it works. I'm trying it out with you guys.   Michael: Are you really writing a new book?   7 Dollar Millionaire: Yeah, yeah. This is actually the first morning in about three weeks I am, I've got up to talk to you guys instead of getting up to write. But I've been writing to non stop for last three weeks.   Michael: Awesome. Can Can we get a little preview as to what it's about?   7 Dollar Millionaire: Yeah, it's it's an attempt to combine Zen mindfulness practice and personal finance. So I'm trying to map I'm trying to get that Venn diagram. I feel at the moment, those Venn diagrams are like, here, I'm just trying to merge them. But in many ways, I feel that they merge really easily. It's like, you know, it's what is tracking what is tracking your spending, if not being mindful of what you're doing?   Right. I mean, you sit down and journal but journal your expenses, right actually know what you're doing in life, I actually think they they align quite neatly, I just haven't seen anyone do it before. And, and I, one of the things I've realized more and more about personal finance is that the SEC, the same five or six things, we all need to know how to do the basics. But we need to approach every person in a slightly different way to get those five or six things in. Once you're in, you'll learn them really fast, but you need to get in.   And that's why I sort of just occurred to me will be a fun thing to do. So yeah, I need it to be fun. As well, I need to actually want to be able to, if I have to get up at six in the morning, I have to want to   Tom: Yeah, big, big mindfulness fan, I try and do have a personal retreat every year. And man, I can just see how a lot of those concepts of just being present is so relevant. And you can basically apply it to anything and it's so natural into, you know, the currency that, that our resources that we live off of its camp can't wait for it to talk more about it and for it to come out.   7 Dollar Millionaire: Cool. Well it come at it. Well, if I finish it, it should come out next year. That's exactly what it is. I mean, it is this sense of in every place in our finances, if you're not aware, they take control of you rather than the other way around. And if you can be aware and mindful of what you're doing. So even to the standard market to you over emotional, are you under emotional, you know, how are you what's actually going on in you, that is making you do things that are not to your benefit and understanding those things are such important drivers and in the in the space. So addressing all those things. Equally, what's quite nice is I feel like I can recycle the some of the Happy Ever After book as well, because the middle of the middle bit of this book is a man being the same steps mission, money income saving, spending, investing, owning now those steps.   And so rather than to using sort of like the fairy tale, we sort of really creating a path. And as with so many things on sort of mindfulness, this is a path, you have to understand the path and now you hear whether the dob of paint was coming in, right? Don't get upset that you don't know where you're at, you're just putting a dob of paint is just the first dollar painting this will build. And that's Yeah, that's why I'm so happy like the analogy cuz it's right up the front.   Michael: Oh, this is great. I'm very excited to read the book. I want to shift gears here a little bit. And I'm curious to know if you have any tips or tricks or guidelines for folks to have these types of financial, personal financial conversations with a spouse partner significant other, because so often I hear in the Roofstock Academy is Hey, I'm all on board for real estate, but my husband isn't, or my wife isn't or my partner isn't interested? How do you bring them in in a productive way?   7 Dollar Millionaire: Yeah, it's hard. And you know, you, it's okay, we're gonna get back to the mindfulness, but just for a second, and I'll come back to this, right, because   Tom: It's all part of everything   7 Dollar Millionaire: You have to know is that you, you can only affect yourself, you can't create change outside yourself, you can only create change inside yourself. So you, you can't force a partner to come up to your speed when you want them to. So that's the number one understanding. So you got to be ready for them to not be prepared to do this.   The second thing is, it's why I wrote the book is for the original one happy ever after it was to outsource a lot of the conversation with this time, but that time with my daughter to paper, get her to read it. So I don't have to go through an enormous amount of the background of how this works, right? It I can just imagine it. When I realized my daughter didn't know anything about money. I was like, I've got a teach her this stuff. I don't want to spend every weekend for the next year having daddy daughter money lectures, because that's just you know, it's wrong.   Right? So but if I write her book, she can read it in their own pace, and we can have those conversations and she's already up to speed. Right? So to get some level of outsourcing so to encourage, could you read this book, have a look at this, what do you think about this, and then let the person do it in their own time. So they'll come up to speak because again, we go back to that you can only change you they have to change themselves on on their timeframe.   I think the other thing is too, sometimes it's useful just to have like a group budget as a track as a family exactly where all the money goes. Because that That, to me is like, is the starting point we're spending money on on these things. And you know, if there's any dispute, it's like, let's get the, let's get the receipts out, this is actually exactly where all our money went in the in this period. Because I think that's the, I think it's very difficult to jump from an investing mindset. Jump to it, without going through saving. And you have to warn you that that requires understanding your spending.   So those two things combined to be like, okay, we understand that what we're saving and what we're spending, okay, now we can invest our asset class, we can we can move on to as you said, How do I get my spouse to think about real estate, they're probably not thinking about it, because they're not probably not thinking about the saving and spending, the moment you think about your, I'm going to give up this spending to save the money, you tend to get a lot more interested in how much money that money is going to make for you. So you tend to get a lot more interested in the asset class. So I that's why I do see these things as being a 1234. And then you can get them interested in the asset class.   Tom: Maslow's hierarchy of conversations to have with your significant other. Yeah, it's, so this is a one would be, I guess, spending, saving, and then more offensive investing that I understand this kind of triangle correctly.   7 Dollar Millionaire: Okay, I will never allow spending to go in front of saving savings by okay. It's in the dictionary in the book in life saving comes first, right? Get the saving done first. And the saving is how you top up your yield. So the safe spending is cutting down on your spending is how you top up your savings. Right? Did you put the put the savings away first.   But yeah, and then once you've got savings, you need to do something with them. And so the thing you do with them is what asset class and then you can have those conversations. But if the person isn't engaged in the saving, right, then they're probably saying I don't want to invest in real estate, because actually, I'd rather be spending the money on a car.   And you've got to move the people have got to be with you on those steps. And it's, if then if they haven't got those fundamentals like Well, yeah, we could buy the car, but these savings will double in 10 years time and quadruple in 20, et cetera, et cetera. And then we'll be setting we can have as many cars as we want, if that's your thing. But let's just actually understand our priorities today, and where we want to be with that.   But I do think it's really important not to make that a face to face conversation too often, unless you're both open to that and let that someone like me, let an author let a book, let a TV show, do the heavy lifting, right? I mean, and then then have the conversation subsequently.   Michael: So for anybody listening, needing to broach this subject with a partner, spouse, you can either go get Happy Ever After by 7 Dollar Millionaire, that's great.   7 Dollar Millionaire: I couldn't have said it better myself. Love it, love it.   Michael: I know you're not really familiar with the US system of Roth versus non Roth, but we can talk about it in a higher level discussion. And so in the US, we have Roth and non Roth retirement accounts. A Roth is simply you pay the tax on the dollars that you invest on the front end, and then you get tax free growth and distributions on the back end, versus a non Roth is you get a tax benefit of reducing your taxable income today, it grows tax deferred, and then when you go to remove those dollars, it gets taxed at that point in time. Do you have a sense for pros cons, how people might be thinking about this?   7 Dollar Millionaire: The only thing that go into there is I'm assuming there are some other sub clauses in terms of what your access to the money in the intervening periods? Right? So I'm guessing from what you've said, that the one where you get, like, you pay tax now and you'd be don't pay tax on on the eventual money. You can only take it out on a certain date. And if you take it out between those dates, I'm assuming there's some kind of penalty as the as the price of actually getting a tax tax, tax free later on, are tax exempt.   Whereas the other one sounds more like well, if you know, you're actually if you're not being taxed on the money that goes in that's probably fairly similar. But I'm guessing it's probably a little bit freer money in terms of you can probably access it at any point in time.   Tom: The big gating factor between the two is there's limitations on who has access to use a Roth, this one that's taxed up front, and that your income needs to be under a certain level.   Michael: But the access to the funds are fairly similar in that you pay a penalty on both if you remove them before your retirement age. Yeah, yeah, I mean, I think if you can afford it, you probably want to put the money away that you can take it out later tax free. That to me sounds like you know, because then you, hopefully if it's a long period of time, and it compounds reasonably well, that's a bigger number than the money you're putting in. And that's how the only thing I could think of that. Honestly, these things is weighing me up. I people make tax codes way too complicated.   It's just like they make tax codes complicated. And then don't teach financial literacy in schools. The idea of this is beggars believe, right? The problem with making them complicated is very often, it tells people like, it's like, we go back to a dog with pain, right? We go back to our dob of pain, someone is telling you, I need you to paint the Mona Lisa, and you've never painted before, you're scared to put the first piece of paint on, you won't, you'll just, you know, you'll have you'll kind of you'll have like a punk rock moment, and you'll toss the canvas and break it on the wall and walk out the room.   That's what everyone does. Everyone's just like, this is too hard. I'm not doing it. And so you stop people actually getting involved. So I am going again to run again, all of these systems are way too hard. The correct answer is save them money, one of those will be doing deep, it will be better than none of them and don't over stress it.   Personally, I probably go to have the tax deferred later. Because I want the money to compound my age, that's probably wrong. Because I'm you know, I'm probably begin taking the money out in 10-15 years, so might not compound that much. And I might be better off actually having more money now. And I suspect that's where the differential is. That's probably where, you know, that's where the delta is on that. But God, I mean, that's just way too hard. Sorry, not telling you off it. But it's way too hard a question to put to someone who probably has very minimal financial literacy, I could probably work out what the right answer is with a spreadsheet. That means it's a really bad policy to be offering people. Sorry to criticize your country.   Tom: I like it.   7 Dollar Millionaire: Okay, good.   Tom: My wife's a tax attorney and keeps keeps busy. Yeah, moving tax code.   7 Dollar Millionaire: Oh man. It's actually it's actually also one of the reasons why, you know, the financial literacy thing is so important, because you can't trust governments with this stuff. In the we all think that everything we experience from childhood has been around forever. The reality is, before the Second World War, most people were dying around 65 70, they did not get a pension because they didn't need it. They were literally going to last maybe four or five years after they after they finished work, they would expect to work to death. And only after the Second World War, do we get this mass input of pension schemes? And which is why in lots of countries, they're just paid out of government revenues. And I'm not saying that's necessarily a bad thing. But it does. What it means is it's not necessarily going to be around forever. Tax codes aren't around forever. And it's one of the things that I worry too much about putting too much time into worrying about tax codes. Because by the time you take the money out, you'll have been through five different tax codes. It will all have changed so many times that if you try to think long range about tax, you're doing the wrong thing, because the risk on that is enormous.   Michael: That's such a good point. I think so many people hear about Taxco changing scramble to do whatever they can. And then next president next administration comes around things change scramble to do what we can and then you know, over and over and over again.   7 Dollar Millionaire: The people that make the money are Tom's wife. They make all the money!   Tom: She is just there, interpretating whatever, whatever comes out. Yeah,   7 Dollar Millionaire: Yeah, exactly.   Tom: It's good for the Schneider family. It's good for them.   Michael: That's great. Well, I think we just got to wrap this up, Tom, any other questions for the 7 Dollar Millionaire?   Tom: No, I love it. I think of all of our podcast guests. I never have more like impactful like meaningful, like things that I go off and do after the episode. So I really appreciate you coming on super excited about the book coming out.   7 Dollar Millionaire: Yeah, thanks very much for that. It's, it's, um, I'm really excited about it, too. It was the publishers Wiley to appeal to published happy ever after. And they, they asked me when I kind of that they were actually publishing happily ever after they said, do you want to do a follow up? And I was like, No, no interest. The and it because I took that to mean that did they want me to write teaching my daughter how to invest properly, and not as a cop out? That's just too complex.   You know, the reason I write what I write is I'm interested in getting people off the ground up to being able to understand other books. I'm not interested in the other books, those are all great. They've already been done, you know?     And then, you know, while he was coaxing me and saying, Well, no, we have this book series called “The Little Book of“ Series, which like the Little Book of Common Sense investing is written by John Bogle. And I'm like, kidding, right? I get to write a book in series that that goes in. And actually the bigger one for me was actually The Little Book valuation is by Aswath Damodaran. Who, I don't know if you guys know him, but in my industry, he's a god.   Aswath Damodaran book bbout this thick on on, it's just got damodaran valuation. And it's got every way of valuing everything ever. And it's the Bible for my industry. Everyone's got a copy everyone's read it cover to cover. It's literally and it I mean, it's dense. He's I think he's a, he's a professor at NYU stern. And just like, super clever guy. So he wrote the little book of value valuation. And they're asking me 7 Dollar Millionaire if I want to write one of those. So I thought I've got to think about it. So just like so thinking about it. And I was like, still didn't want to write a follow up on investing. Now, I did literally woke up one morning, I was like, the little book of Zen Money. And just that the title just runs so nice. I was like, Yeah, okay, what, what can I do with that, and I was like, then the subtitle came to my head was like, okay, a simple path to financial peace of mind.   Okay. And literally, I'm writing the thing, first word to last word and like, not how you should write, you should break it up into bits. And Right, right, like the middle first, and then the end. And then the beginning. And I'm literally going from the title. And the last word, all right, will be the kind of the end. And just going that direction, because it just makes sense to me all the way through.   Tom: Yeah, it's there already. just pulling back.   Michael: Yeah, gotta get it onto paper.   7 Dollar Millionaire: I stay away from the other analogy. But the other analogy is chipping blocks off the stone, right to make a sculpture. That's what I'm doing with this one. It's there. It's already there. I've just got to find it. enough fun. Yeah, I wake up every morning and get at it part from today, when it's fun to talk to you guys instead.   Tom: Yeah, I mean, one of the takeaways also for these conversations is like, you know, this 80-20 principle where, you know, you get 80% of your value from 20% of the work and that last 20%, like, that's where it gets, like overly complicated moving targets, you know, anxiety, all that stuff, but just getting up and getting that initial blob of paint? I mean, I feel like I'm probably repeating a lot of the conversation, but it's a really powerful one.   7 Dollar Millionaire: Exactly. I mean, you know, it's it really is that that first move separates you from everyone who's not investing, who's not saving. That's it, right that if you were the stat or last year, it was ended. 2019. Right there, 61% of Americans didn't have $1,000 in an emergency fund.   Just having $1,000, that puts you already in the top 39% of the richest country in the world. That is already that that's the 80 20 rule right there. They're taking their money and opening an investing account, bang, you're probably in the top 10%. Right. And taking those actions is what moves you along these things all the time. That's why is is so important.   Yeah. It's the problem, as you said is, someone tells you, you should invest. Oh, and you should invest in this. So what you know, that's just way too complex. It should just be you should save, you should invest, and probably, you know, VTI just go there. He can be a while before you find anything else. So you can overcomplicate it later when you're ready to overcomplicate it, but to start with just go there.   Michael: Love it.   Tom: Love it. And VTi is the vanguard index fund. That's just kind of just blankets. The economy beautiful. Yeah, big fan.   7 Dollar Millionaire: It's, it's the it's the biggest economy in the world. It's the top 500 companies in the biggest economy in the world. You know, when we if you live off grid, you're not involved in the global economy. Fine, right. But that's like naught point naught naught 1% of us that's discussing this properly off grid. The rest of us are buying stuff to live our off grid life anyway, we're in the economy. That's that the most natural hedge just by that.   Michael: And the folks that do live off grid probably aren't gonna be listening to this podcast on their iPhone, in the middle of nowhere wherever they live off grid, so I don't think we have to worry about them.   7 Dollar Millionaire: They probably are.   Michael: Living off grid with faster Wi Fi than any of us.   7 Dollar Millionaire: Exactly.   Michael: Awesome. Well, $7 millionaire Always a pleasure to have you on thank you again for hanging out with us and bestowing some wisdom. And like I mentioned, and I mentioned very much looking forward to the book when it comes out. I know I'll be getting it. We will both be getting it I'm sure.   7 Dollar Millionaire: Excellent. Well, thank you very much. It really it's always a pleasure. Really good fun. Thanks, guys.   Michael: Awesome. Take care. I'll talk to you soon.   Alright, everybody, that was our episode a big big, big thank you to 7 Dollar Millionaire always such a pleasure chatting with him. Tom, I know you and I get so much value out of our talks with him and after all of our conversations, we have going making some changes to our own personal finance realm. So very excited to do that yet again. If you'd like the episode, please feel free to leave us a rating or review wherever it is just in your podcast. If you're checking this out on YouTube feel, feel free to hit that like and subscribe button. And as always, we look forward to seeing on the next one. Happy investing.   Tom: Happy investing.

Ep 9 - Theory Bites 2: Youth Liberation & The First PrisonWe've got another short Theory Bites! First we discuss Youth Liberation - (I)An-ok Ta Chai, 2004, and then First Prison - William Gillis, 2018 Case Closed / Detective Conan (video)Flanders' Parents (video)Dead Poets Society Dad (video - was that last episode?)Rutger Bregman Real Life Lord of the Flies (article)Angelica's Last Stand (paywalled video)When schools become The Lord of the Rings (tweet) https://www.worksintheorypodcast.com Twitter: @workstheorypodInstagram: works.in.theory Produced, edited, and transcribed by Allyson https://www.forestfreeter.comTheme song by http://woulg.com/Transcript:Works in TheoryTheory Bites: Youth Liberation and The First PrisonElysha: [00:00:00] Hello, and welcome to another Works In Theory - Theory Bites. I am Elysha here from Works In Theory Podcast, and I am here with Tom-Tom: Tom!Elysha: And Nate. Nate: I'm Nate. Elysha: Yes. I don't know why we wanted folks to say their own names, but I did. And they did it. And I love that. So thank you. Nate: Yeah.Elysha: We're going to try and smush two articles together today for this one bite. So this is big bite or two small bites. Both of these articles came from the anarchist library dot org. Which is sort of a loosely moderated library, archive of different anarchist texts. And I wanted to mention that because they're a great resource. If you're interested in browsing around for yourself,Tom: But you shouldn't have to, our podcast is all you need. So don't worry too much [00:01:00] about that.Elysha: Yeah, but just, just so that, you know, the tool is out there, you don't need it. You don't need you. Didn't, it's fine. But like it's, anarchist library dot org, and I just really wanted to mention it for these two texts because, the authors of these, you may not have heard of in the same way that you've heard of Emma Goldman.So we've got two pieces here. I'm really not sure what order we're going to do them in, but we've got one by William Gillis, which is called The First Prison and one by (I)An-ok Ta Chai, which is called Youth Liberation. Nate: So I say, let's start with the youth liberation piece. Both because it's written earlier it's from 2004 versus the other one is from 2018. And because it's a little shorter.Tom: Yeah. So the the premise of this one, the kind of question that I think I took out of it was we treat adults as infallible and self-sufficient children are incapable. But like, is that true? And are we just conditioning children for subservience to the state capitalism, other forms of control? Or [00:02:00] should we treat them with mutual respect and treat it like any other issue, any other anarchist position?And it's similar to the Goldman piece, but I think it's it's got some distinctions. For one thing, I think it's a little more extreme.Nate: Yeah, for sure. Yeah. In fact, you keep saying children, but the author actually would prefer that we say kids.Tom: Oh, you're right!Nate: Yeah, they bring up the fact that children sort of has like a connotation of like "childish", of like, "less developed" you know, just like built right into it. And even though the piece is called Youth Liberation, they said youth tends to refer to teenagers, which is, you know, generally correct.And so what they're talking about as a, gerontocracy like just an overall system of like hierarchy in which adults have domination over kids. Elysha: The piece kind of opens up, asking the question of: how are people in society treated? And you can tell a lot about society based on how they treat their children and they're elderly. And I feel like we're kind of at like, [00:03:00] an era of reckoning with that, at least around here, we had so much trouble with like care homes for elderly people through the pandemic and schools brought up their absolute array of challenges as well.And you know, not all of those are specifically rooted in like how we treat children, but kind of they are. And the idea that yeah - what we're talking about here, that kids are entirely dependent on those structures and require that control that like you have to go to school, you have to decide every aspect of their lives and it needs to be within the structure.Maybe our, all of our lives would be a lot easier if we were a little easier on like those early years. Nate: Yeah, definitely. And you know, you bring up this idea that kids according to our society, like need to be controlled need to like, not be able to make their own decisions because they're dependent, you know? The other says it's an often [00:04:00] unspoken notion that adults are omniscient or infallible or not dependent on help and support while kids are.Which of course is not true. Right? Like adults make mistakes all the time, just like kids do. But we don't base any sort of specific hierarchy over adults that way, like, I thought this was kind of interesting food for thought. The other says:"It all becomes apparent if one reflects on how it proposition to systematically dominate people who are physically ill, injured, ignorant ill-informed, or intoxicated, all of which are also temporary conditions like childhood that would be universally laughed at and dismissed."I guess the idea here is the same arguments that say kids, you need to be dominated. Could also be used to say that injured, ignorant or intoxicated people need to be dominated because, you know, they can make stupid mistakes or they are not infallible or omniscient. But of course we wouldn't say that it's right for those people to be dominated. Tom: Yeah. If we didn't let intoxicated people have free will, we wouldn't have much of a government, [00:05:00] I think. Elysha: Or a lot of art. Tom: That's true too.Nate: It's interesting you bring bec ause we talked about this a little bit offline, but when I was reading this part about the idea that we wouldn't let adults who are, you know, in some way in capable of making their own decisions, we wouldn't let them be dominated.That's actually not exactly true. You know, and I brought up the, the whole Free Britney thing with Britney Spears and her conservatorship. Like the whole idea behind that is that she is not, you know, for whatever reason able to make her own decisions. And therefore, like there are other people who are legally able to dominate her and make decisions for her. The whole Free Britney Movement is the idea that we recognize that's wrong, that she is able to make her own decisions and she should be allowed to make mistakes just like anybody else. But it's all premised on this idea that she's somehow more childlike, you know? And that brings in this idea that, that like, well, why is, why is that accepted for children? You know, I think a lot of the arguments for Free Britney would use [00:06:00] language like, "Well, she's an adult. She can make her own decisions." But like children can make their own decisions too.Tom: Yeah. And like, this comes up a lot with acting, especially where, like children are often taken advantage of by parents and by agents or whatever. They work them a lot and make a lot of money off with the kids and the kids don't see any of it. And usually end up kind of wrecking their lives because it's very traumatic to kind of like have that duality of life where you're seen as a superstar that doesn't make any money and has no will.Nate: Yeah, exactly. It's hard to imagine that these kids would be any worse off if they were allowed to make decisions themselves.Elysha: No doubt. Tom: I have a quote here:"The domination of kids breaks the wills of people and inserts authoritarian programming, so that they can later reproduce situations such as the state capitalism and gerontocracy when they get older themselves."Nate: Yeah. A hundred percent and yeah. So I don't know how you, you all feel about this. Like how much you agree with the idea of youth liberation. You [00:07:00] know, I think I do agree with it and it's broad terms. I don't think I agree with everything we were going to talk about in both of these pieces. One point that the author makes towards the end, which I think is salient and worth keeping in mind is that like these kinds of things that seem really natural, these like hierarchies that seem really natural are like exactly the type of things that as anarchists we should be questioning. Cause every hierarchy at some point was considered natural.Tom: They say:"Youth liberation is not a new idea, a lot of people have written about it and articulated it in different ways. There are already a number of people out there practicing, or at least trying to practice autonomy, respecting ways of relating with kids. With this being the case, it only makes sense for anarchists to have youth liberation fully integrated with the rest of the anarchist perspective, gerontocracy needs to be right up there with capitalism, the state patriarchy and white supremacy as institutions of social control that as anarchists, we aim to destroy."Elysha: Can we spend this into a discussion of one of those other institutions of social control - the piece by William Gillis that we're reading is [00:08:00] called The First PrisonNate: I think it's time to move on to that one.Elysha: One of the main points that we wanted to highlight is the idea that adult supremacy, gerontocracy, paints itself as a kind of meritocracy, you're only denied political agency because you don't yet have mental agency, but there is no mechanism, not a single one under adults who primacy whereby a six year old might prove qualifications to obtain their freedom and equal status.So in this world that we live in, there's nothing a kid can do to prove to you that they deserve to make whichever decision is that you're withholding from them. The only way to do that to gain that freedom is to graduate away from childhood turn 18, turn 14, turn 16, turn 21, whatever the arbitrary number is that all of a sudden means that yes, we can finally make those decisions for ourselves out of nowhere.And this is probably like tying back into some of the other conversations we've had [00:09:00] of not being given the tools of like critical thinking and like that decision making, like that first taste of freedom is like, just when your ID says that you are old enough.Nate: Yeah, or well, and Gillis says in his mind, it's actually that you, the reason the teenagers are given autonomy is simply because they're now big enough to fight back. They're big enough to beat up their parents. Elysha: They can band together for resistance and physically overwhelmed their masters. Would you say, would William Gillis say. Nate: Yeah, exactly. Yeah. Which is interesting, you know, like, and this. Did give me pause. You know, when you think about it, like it is obviously, if you were to try to explain youth liberation to somebody who'd never heard about it, I think one of their first responses would be something like, "well, you know, kids just aren't smart enough or aren't mature enough to make their own decisions."And then, you know, if you come back, could a child do to prove to you, they were mature enough? Like, would you accept some proof from a six-year-old that they were mature enough to make their own decisions? And, you know, I certainly can't that go, [00:10:00] but that would be so.Tom: That's one of the, I think the major premises in this article is about, you know, if you were suddenly transformed into a child, it's a very like Detective Conan, anime sort of premise of like, if you were a kid, would you suddenly be able to convince people that you know enough to do things without them controlling your life and - probably not, but I don't know. I found it interesting that as time went on, we went from a hundred years ago to, you know, 2004 to now 2018 in this one, it has gotten more and more - I mean, like of course we have cherry picked, we just gotten three articles, but - it just got more extreme sounding. Maybe it's something to be extreme about. Like, it's been a hundred years since Goldman wrote, you know, about the child and its enemies. And we're still basically dealing with the same question: at what point do we treat children like people or sorry, kids. I keep doing that.I honestly think that (I)An-ok Ta C hai made [00:11:00] a pretty good point, that we use children as a derogatory kind of word. So I've been really trying to think about like, should I, maybe I should exercise that from my vocabulary and just say kids.Elysha: Yeah. I'm probably not gonna like fight people over it, but I think it's definitely worth considering just because of how powerful, like the words that we use and their connotations are. Right. The idea of like childish and all those negatives. But it sort of painting the idea of like lacking that autonomy, lacking the good sense to be able to make decisions. And that is "childish," like trying to separate those from the young human individuals in question. Nate: From the kids. Yeah. Yeah, totally. And actually I think Gillis even sort of expands on that a little and, and adds a little bit more weight to that argument. He points out that like all hierarchy is like, whether it be white supremacy, patriarchy, et cetera, like they're all sort of premised on this analogy of the oppressed class [00:12:00] as childish, you know, as more childlike than the oppressor class.So, it's built into the very language of all hierarchies.Elysha: We talk about, you know, what is the root of like injustice in our society. And there is not one that is how it got to be. It gets to be so pervasive. Like just all the different layers that we all get fucked around in the world. And like, yes, absolutely age is one of those.And gerontocracy is one of those right alongside, obviously with different historical weights, of you white supremacy and the other ones that you mentioned, patriarchy.Tom: Yeah, there's a quote in this piece that says:"Every hierarchy, every abuse, every act of domination that seeks to justify or excuse itself, appeals through analogy to the rule of adults over children. We're all indoctrinated from birth in ways of, "Because I said so." The flags of supposed experience, benevolence, and familial obligation are are the first of many paraded through our lives to celebrate the suppression of our agency, the dismissal of our desires, the reduction of our personhood. Our whole [00:13:00] world is caught in a cycle of abuse, largely unexamined and unnamed. And at its root lies our dehumanization of children." Nate: And I think that sort of brings it back to what I mentioned earlier about this sort of like seeming natural, this like hierarchy of adults over children seeming natural. Opponents of this idea of youth liberation might point to like non-human animals, and be like, well, look like every, every species has adults or at least mammals have adults that in birds have adults that take care of children or that are like in charge of children.And I think that, like, that kind of puts me in the mind of, of Bookchin's argument: the hierarchy is different than having different roles. So like, yes adult bird has to feed and teaches children how to fly, but in no sense, does a dominate the baby birds, does it like tell the baby birds what to do.And so I think that we can use that notion of hierarchy as being like, sort of like a systemic thing an institutionalized thing to dispense with the idea that somehow the [00:14:00] hierarchy of adults over children is natural.Tom: Yeah, but appeals to nature- they don't do it for me. So like, even, even if you're able to be like, yeah, but the mama bear, I don't know, puts their cubs to bed at 8:00 PM. I'd be like, I don't care. Like mama bear, can't speak. I need to talk to humans about human things. This also is a pretty I think contentious essay when we talked about it, we were a little, like, some of this maybe is, is advocating for a position, but not giving a lot of evidence as to why I think. And for instance, there was a point in it about the cool aunt and I think we all had kind of, some questions about that. I don't actually have anything written. Does anyone have anything written about.Nate: Well, Hey, let me let me find the quote here so we can give the listeners some context. Gillis says:" The cool aunt, the preschool teacher functioning as an aid relief worker to come briefly to take selfies with you as a prop. They're not co-conspirators, they're the incomplete flotsam, the corpses of children who tried to make it over the finish line intact. Incomplete insurgents into adulthood were worn [00:15:00] down and forgot that mission. They're not undercover children, but the warped remains. Poorly formed adults perhaps, but adults still."He's talking about, people who try to give children more agency, I guess, or try to like respect children more. Yeah. That's not cutting it for Gillis. But like you said, Tom, I'm not exactly clear on why. Elysha: Yeah. Or like what, the alternative is that Gillis wants from us. Nate: Yeah, what would be a complete insurgent or an undercover child. Elysha: Cause there is definitely a gap there that needs to be bridged. Because like we are told like we've been talking about here, like all of these experiences in childhood. Lead us to then reproduce that gerontocracy that same like hierarchy of adults over children.And, you know, the idea here that even the cool aunt, who's trying to show up for you. Like they're still not doing it. And I get like the impulse to be combative at [00:16:00] that, but it doesn't really provide any sort of like, ideas of like how we can make that better. It's just "this sucks." And like, "they're not here for you and no one's coming to free you."Tom: Is the only real solution here that this cool aunt, or this person should like take you from your parents and be like "here's a hundred dollars on a car, have fun. Your life begins now." Like, what is, what is the what is it, the inclination, what are we supposed to do with that feeling? It paints a good picture of, you know, there's the uncle that smokes weed or whatever. And they're cool. They're not real strict and they're not whatever, but at the end of the day you have to go back to your parents. And so I guess they're not liberating enough, so, but I don't know what it would be. And maybe Gillis is just pointing out that these things exist and they're not contradictory to what I'm saying.Nate: Yeah, for sure. And you know, maybe it has something to do with, like, if we're [00:17:00] taking, Gillis' worldview at its word. Because it's so systemic because like we live in a adult supremacist society, a gerontocracy like adults can never be totally complicit because they can always if push comes to shove, resort to ordering children around.But yeah, like, I don't know, that's it just seems like a bleak picture. Like can there not be a John Brown of adults for children? I don't know. So what do you all think about this idea of youth liberation and everything we've read in these two essays and the Goldman piece? Tom: I think it's really gotten me to think a lot about it. Of course I don't have children, so it's hard. I can't put anything to practice. I can only be the cool uncle or whatever which I've been trying to be. My, my partner is doing better than me, even there you know, telling their brother stop yelling at your kids.But I don't know, the main issues I see with this is that it's kind of like a chicken and the egg thing of like, well, how do we get to a point of youth liberation without fundamentally changing all of society? [00:18:00] But how do we fundamentally change all of society without changing now that you're liberating you with? Right. Nate: Yeah, definitely. You know, and I think, I, I agree with you in that, like it's given me a lot to think about. And as I mentioned, when we were talking about the first piece, I think that we should be questioning things that seem natural, hierarchies that seem natural. And I think that there's definitely an amount of adult supremacy in our society.Maybe the answer is something that we talked about in the Dewey episode. That idea that like adults have had more experience and that can guide children while still letting children make the decisions themselves. I don't think it's oppressive to stop somebody from touching a hot stove, right?Elysha: Something that I've been thinking about a little bit is so, near me, there is a Land Back camp. Some of the local indigenous folks have come together and reclaimed some land. There's just so much that they are learning and some of it they are sharing. I heard a really wonderful [00:19:00] conversation about the ways that youth leadership emerges in their land back camp and how really, it feels like it comes down to just giving everyone involved the space to be themselves and just, you know, treating everyone as humans, treating kids as humans because they are, and they have agency and they have ideas and they have passions.A lot of like beauty and like new ceremony and stuff, has come out of teenagers who have proposed ideas for action to everyone and like just the power that comes out of that. I think that Indigenous resistance movements like from what I've noticed, like they do a great job of centering youth as the future. Nate: And just like acknowledging that I good ideas can come from youth, right. You know, there may be some things we know better than kids, just because we've been around longer. But in a sense, this is like that old thing of like, deferring to the boot maker in [00:20:00] the topic of boots.Right? To tell a kid that doesn't know that a hot stove is going to burn them, not to touch a stove isn't being oppressive. Just like plumber is not oppressing me when he tells me how to do something with my plumbing. And what we just have to be careful not to. Turn that into an idea where we always know better than kids in every circumstance, but like you were saying, Elysha acknowledged that kids can teach us things too.Elysha: And there are definitely things that can come with experience. If we're specifically talking about this Land Back camp experience, there are youth there that probably don't know a lot of the traditional, like land skills, like, building shelter and like keeping fire and that kind of thing.That all needs to be taught as well. You're not oppressing people by sharing what, you know, in that way. It's kind of just how building those relationships work. Tom: You know, I was trying to think of like, when did we show respect to kids? When do we treat them as adults? And it's usually when they do something for, I'm going to say [00:21:00] capitalism? Like, you know, they invent something, they, make some progress, some invention or some science thing. I understand that science is not directly capitalistic inherently, but it's kind of like it's in service to it right now. And so, much of what we see of kids as being like, you know, good work is usually you're doing, you know, something that we expect from adults.Nate: Or like,, I don't know, on a more positive example, like Gretta Thunberg.Elysha: Yeah, yeah, absolutely. Tom: Which once, once that started you know, kind of bucking against the system, she got a lot less play time. Right?Nate: Definitely. And even that though, like, and this is something that Gillis points out when he talks about "how would you be able to prove yourself?" If a kid somehow like does prove to be incredibly intelligent, skips a bunch of grades and goes to college as a kid, you know, it's like, they're just treated as like precocious, but like, it's not like they get autonomy.It's not like their parents don't get to make decisions. Tom: There's a [00:22:00] really great episode of Rugrats if you've ever seen that that show or that episode where angelica starts a lemondate stand, but like as a capitalist and then the workers basically rise up unionize, start their own stand, like make it a worker co-op. It's really incredible.Speaking of kids working, that's a very dangerous topic maybe to bring up. But I think it's, you know, it's not in any of these pieces, but it's something I think we talked a little bit about and I've been just thinking about it a bunch.When can kids work? What is child labor? We don't bat an eye at Bob's Burgers really, cause it's a family affair, and it's a cartoon. But like that's allowed, right? Like kids can work for their family. I think under the normal age of legally working.Nate: Yeah. And so it like brings up this question of like, would youth autonomy, would youth liberation mean that like kids were free to be wage slaves? But I think, you know, we talked about this a bit offline. I think that, like, what's interesting about that is it sort of like brings up the [00:23:00] libertarian argument of the, you know, the sort of lie that when you become a wage slave, like you're somehow entering into like, like you're, you're choosing to enter into a contract. That you're like, you know, like making a free choice to, to become an employee. It's sort of reinforced by the idea that we don't let kids do it. Well, kids can't become wage slaves because that's a mutually agreed upon contract. And only like adults who are able to make those sort of decisions can become wage slaves.But maybe the answer is just that all work is exploitative, whether it's with adults or with children.Elysha: There's a lot of work that we do that's not really considered work though. Like if we're talking, talking about like, what does it mean for kids to work? We were talking about this a little bit too, and I don't know if it gets too spirally, but like what qualifies as work and what work is appropriate for kids? Tom: And like, I can see if, if you take out the, the need to make money to survive, that opens up a lot more of the dialogue- how do we [00:24:00] determine what's appropriate? And it's kind of interesting because he would still end up with, you know, the parents would probably have some amount of a say over what kind of jobs or what kind of work that a kid would do.But you'd also wouldn't require it, right? It would be a lot easier to figure out, I think those kinds of thorny areas of, you know, what is appropriate, what is not, because it would just be kind of obvious. It'd be like, well, look, this is very difficult work. It's dangerous, children shouldn't be doing it. You shouldn't make your children do it. There's no reason to do it because we don't need money. You know, you're not doing it for a profit or whatever. So it just takes away a lot of those incentives to make people do stupid, bad things at an earlier age.Nate: Yeah, the idea being that is wrong to make kids work because it's wrong to exploit them, to force them to do something they don't want to do. But then like, it's okay to exploit adults. It's okay to force adults to do something they don't want to do, but maybe, we just shouldn't be forcing anyone to do anything they don't want to do.Tom: Thinking about, you know, the inverse of this, what happens with [00:25:00] youth liberation and the common conception I think of what that looks like is something like Flanders parentsin The Simpsons where it's just like, "we've tried nothing, we're all out of ideas."Like they don't know how to raise their child, they don't do anything. And I think that can be something that can be done, but I don't know, like where, what is the middle ground? Is it actually true? Like as someone, without kids, I don't know what it would be like to not punish children or to punish children.Right. Like, I don't know the actual material consequences of what happens when I make a decision based around my own personal belief system or whatever. Like does it play out? And that's the thing that I think is missing from these essays, maybe. And I don't have a clear understanding of what it is. And that's, I think again, like what the Dewey book was trying to get at was more structure around that.Nate: Yeah. So you're saying the popular conception would be, well, if we don't force kids to do stuff that just kinda like run wild and [00:26:00] be like terrible little brats or something.Tom: Yeah, Yeah.Nate: Again, like with us not having kids talk to say whether that's true or not, but, I think that, especially like in the Goldman piece, she talked about, well, no, like children are humans who can come to their own conclusions of what's good and bad.And, you know, I think that these authors would, would say that that's not the case that letting kids do what they want is not going to lead to total chaos. And like you said,in Dewey, he says we can guide kids and use our experience to suggest to them what might be the best experiences to have.But that doesn't necessarily have to be the same thing as forcing them to do what we want them to do.Tom: Yeah, not to answer my own question, but there was that Lord of the Flies article, which I'll link in the show notes, but where, you know, a lot of people look at Lord of the Flies as an example of what would happen if kids could do whatever they wanted. And that it would just be like just terrible tribal chaos, basically.When really it just ends up being like trying to do the right thing, do the best thing as you can. Nate: Yeah. And she was saying something like, you have to [00:27:00] basically this argument that we've been talking about, that you have to like force rules on kids or else it's going to be Lord of the Rings/Lord of the Flies.Tom: But always trying to steal your precious.Nate: Yes.Elysha: It was a bad tweet, but we could link that in the show notes too. Tom: Yeah, I'm good. Elysha: All right. Well, we did it. Thanks for making your way through another Theory Bites with Works In Theory Podcast, and we will be back when we're back! See acast.com/privacy for privacy and opt-out information.

We're trying something new this month! Today's episode is about youth liberation, and Elysha, Nate, and Tom discuss Emma Goldman's The Child and Its Enemies.Check out our website: https://www.worksintheorypodcast.comCome by and say hello!Twitter: @workstheorypodInstagram: works.in.theoryProduced & edited by Allyson https://www.forestfreeter.comTheme song by http://woulg.com/Transcript:Works in Theory - Theory Bites - The Child And Its Enemies[00:00:00] ELYSHA: Hello, and welcome back to Works In Theory Podcast, we've got a new section that we're trying out on the show this week. We're calling Theory Bites because it bites, but they're also small. We're going to be doing shorter essays and articles rather than entire books to try and give you a little bit more variety and us a little bit more variety in the show that we're putting on.So, we're hoping that these theory bites can be enjoyed on their own or as part of a well-rounded meal with some of the longer Works In Theory episodes. As usual, I'm Elysha and I'm here with Nate and with Tom.TOM: Hello!ELYSHA: And today our first Theory Bite is on an essay by Emma Goldman called The Child And Its Enemies.TOM: Yeah, this is written in 1906. And I thought it was really good. It had a lot of really just well-written like the language that Goldman uses. You can tell that Goldman writes, [00:01:00] right? It's not It's not a strictly, in service of getting a point across, but it's done really well.NATE: Yeah, definitely. I don't know if it's just people wrote better back in like the 19th century or something, or if she's in particular a good writer, but yeah, it was really a joy to read. It makes me look forward to reading more Emma Goldman stuff. ELYSHA: I think there are plenty of writers who wouldn't be looked at with such praise by at least me from the early 1900s. So I think Emma Goldman is a great writer. NATE: So the piece again is called The Child And Its Enemies. This is going to be the first of a couple of pieces we're going to read on the general topic of youth liberation and very early on, she's got a quote that sort of like sums up her thesis in this she says: "Is the child to be considered as an individuality or as an object to be molded, according to the whims and fancies of those around This seems to me to be the most important question to be answered by parents and educators."And so that's sort of, where she's going to be going with [00:02:00] this. The idea is she's obviously going to come down on the side that like children are human beings. They have, you know, their own intrinsic drives. They have their own personhood and autonomy and a lot of the institutions of our society, especially the school try to. Turn the child into an object don't they don't treat the child as a person, but as a commodity or again, an object. ELYSHA: And not just any object, but one who needs to fit within the restraints and respectability of that social era and society.NATE: That's right. She says, "Every institution of our day, the family, the state, or moral codes sees in every strong, beautiful, uncompromising personality, a deadly enemy."ELYSHA: Yeah, that's a powerful line for sure. Bringing back the idea that education isn't benign. It's not just about teaching basic skills like reading or math or whatever else you [00:03:00] learn in school. It's a very critical piece of our like formation as young people and our experiences in school. The way that these skills are presented, the way that like our aptitudes or whatever are measured or like the way that we're treated in school makes a big difference. Probably in how the rest of our life goes.TOM: Yeah, there's a lot of you know, talk from people about children and their future. And like, this is when people are molded and when they're most like when people get their most I guess are instilled with ideas. Right? But we don't really talk about that we structure things in a way that really puts people in a certain direction of, obeying and not questioning which again, every time I say these kinds of things, I feel like I become the conspiracy theorist, but it's, I mean, it seems very obvious like that you know, [00:04:00] school is, is largely not about trying to figure things out. It's about trying to memorize and regurgitate what other people have figured out. Whether or not that's true for all of those things is why now there's a big debate about critical race theory because the right is, is very upset. I'm going way, way, tangent. This is nothing to do with 1906.ELYSHA: It doesn't have to, we don't live in 1906. We're looking at this through 2021. In fact. To just give ourselves away. Cause I have no idea when this is actually going to be released. It is July 11th, 2021.Kind of tying on into that, because the idea that school is where we go as young people and young people on the whole are very, very curious and excited about the world and like interested in making their mark on the world or with the world. And the quote here is:"...when with [00:05:00] large wondering innocent eyes, the child wishes to behold the wonders of the world about it in the schools and in the family life and whatever quickly lock the windows and doors and keep the delicate human plant in a hot house atmosphere where it can neither breathe nor grow freely."NATE: This is just turning into a string of quotes, but at the risk of that, here's one more: "...every effort is being made to cramp human emotion and originality of thought in the individual into a straight-jacket from its earliest infancy; or to shape every human being according to one pattern; not into a well-rounded individuality, but into a patient work slave, professional automaton, tax-paying citizen, or righteous moralist."And so sort of what all of this is getting at is this idea that the school was being used to take, like, what is, this sort of innate like Elysha, you were talking about the innate curiosity, like originality like self-directed learning of a child and [00:06:00] squelch it and put it into a certain mold. Create, you know, citizens of a capitalist state, basically. ELYSHA: Yeah. And it's kind of like Tom was saying, it makes me feel like a weirdo conspiracy theorist sometimes too, because it is just like, school is just so foundational to the way that we're brought into the world. You are a very young age and you go there for many hours a day and reading pieces like this, that really speak to the idea that the state and those who write the curricula, they're looking to. Give folks the skills that will allow them to participate in society in the way that is like clean and easy and simple and to their whims. They want you to be able to do basic math or be literate and then go on to, I mean, in our recent sort of generation, we go onto more education and more education [00:07:00] because that's all of a sudden, a very big deal, but more in the era that our piece is written in education wasn't a K-12 sort of thing that everyone did for up until you're 18 or whatever it is, but you would get the education that is mandated and then go off and get a job or have more kids and just live within this like tightly curated and restrained...NATE: Yea, absolutely. TOM: This piece sort of goes in all directions. It kind of hits every place. Especially I thought the railing against leftist, like railing against radical parents. Like here it says: "Radical parents though emancipated from the belief of ownership and the human soul still cling tenaciously to the notion that they own the child, that they have the right to exercise their authority over it. So they set out to mold and form the child, according to their own conception of what is right and wrong, forcing their ideas upon it with the same [00:08:00] vehemence that the average Catholic parent uses."There's a whole kind of area at the end where Goldman talks about you know, you're basically doing the same thing that everyone's doing, but you know, the problems that you see in other people you're exhibiting them yourself. Your child can regurgitate and they know the names of radical leftists or whatever. That doesn't mean that they agree with it. And it doesn't mean that they're not going to just, you know, become reactionary basically later because you have basically forced them to believe a thing. And I, I thought that was a really good call out.NATE: Yeah, for sure. Yeah. And so like taking a step back for a second, she is like, you know, the piece is called The Child And Its Enemies. It's not called the child in school. And so part of what she's talking about is that it's not just the school, but even like the family, the family itself is, is acting in this sort of way to not allow the child to develop of its own accord, but to, to mold it in a certain [00:09:00] direction, again, like as if it's an object to be molded, not like living, breathing one of my favorite lines in the whole book she says:"Scriptures tell us that God created Man in his own image, which by no means has proven a success. Parents follow the bad example of their heavenly master. They use every effort to shape and mold the child, according to their image. They tenaciously cling to the idea that the child is merely part of themselves, an idea, as false as it is injurious."We hear that and we're like, oh Yeah. you know, I, I know for my part, at least my parents were Catholic and obviously they tried to raise me to believe in Catholicism and things like that. But you know, she wants to make sure that we're not just thinking, this is an aspect of like conservative or religious parents, but that, you know, just parents of any stripe, including radicals, who, by trying to force their child to be a radical, they're doing the exact same thing. Even if we might believe it's in a better direction or something.ELYSHA: I feel like I can throw back to our Dewey episode because that one is already released into the ether. [00:10:00] And in that we talked a lot about the importance of learning. To use tools versus learning to memorize facts. And tools like critical thinking skills that you can make your own judgements that, you're setting like a solid, and this is where I'm obviously still like biased towards like, people are good and what we need to do in order to establish like a good, like moral baseline is instilling values about sharing and mutual aid. And those are things that, you know, ideally it doesn't super matter if your parents are voting on what one end of the spectrum or not like the idea of, learning to see the world and make your own decisions that like, ideally against where the like leftist bend is.We're doing that for the good of, not just ourselves, not just immediately, but like [00:11:00] everyone that we possibly can without overwhelming the kid, obviously, because kids can get very overwhelmed. It's not about memorizing facts. And I think that, in this piece, Emma, Goldman would agree with that, is that like the radical parents just cause it's like, you know, or you feel like, you know, the right way to do things like every parent or teacher or like person in authority, feels like they know the right thing. And that's not always the case. And like maybe the right thing could be helping your child to bloom.NATE: Yeah, absolutely. Yeah, I like that you bring up Dewey, because I think that this sort of dovetails with that really well in the sense that what she's talking about is that sort of like more democratic, more like self-led learning, right. Where it's not even necessarily about what the content is, it's about letting the child discover it themselves.TOM: Yeah, there was that part in here where she said, do your own research -it's a little frustrating because that has become such a cliched nonsense phrase.ELYSHA: To reframe [00:12:00] that discovery is the fun part.NATE: Yeah, So continuing on this idea of like self-directed learning and democratic learning. I want to once again, quote at length here, I think it like makes a very good point because, Elysha, what you were talking about is this idea that obviously we, you know, especially as leftists, we want to sort of direct the child to be like what we think of as a moral person to do the right thing.And it might sound strange to say that well, by trying to force the child to do the right thing, you're like still forcing the child to do something. And I think that she has like an interesting answer to that. So she says :"The terrible struggle of the thinking man and woman against political, social, and moral conventions, owes its origin to the family, where the child is ever compelled to battle against the internal and external use of force. The categorical imperatives: You shall! you must! this is right! that is wrong! this is true! that is false! shower like a violent rain upon the unsophisticated head of the young being and impress upon its sensibilities that it has to bow before the long [00:13:00] established and hard notions of thoughts and emotions. Yet the latent qualities and instincts seek to assert their own peculiar methods of seeking the foundation of things of distinguishing between what is commonly called wrong, true or false. It has bent upon going its own way since it is composed of the same nerves, muscles, and blood. Even as those who assume to direct its destiny. I fail to understand how parents hope that their children will ever grow up into independent self-reliant spirits when they strain every effort to abridge and curtail the various activities of their children, the plus in quality and character, which differentiates their offspring from themselves and by virtue of which they are eminently equipped carriers of new invigorating ideas.A young, delicate tree that is being clipped and cut by the gardener in order to give it an artificial form will never reach the majestic height and the beauty as when allowed to grow in nature and freedom." I think what she's saying is so we might be like, 'well, we gotta like, make sure the child grows up to like, believe the right thing and be a good person.' But what she's saying is that like, well, the child's a human being just like [00:14:00] you, it's capable of coming to these conclusions of what's good and what's right on its own.And in fact, you may right. And trying to like clip the tree into a certain shape. You may actually be curtailing it. It might be possible for the child to rise above even beyond what you think of as like the good and right things that you know. And by, you know, trying to force it into that mode, you're potentially curtailing it.ELYSHA: I think it's very well known at this point that none of us actually like have children closely in our lives. But I think something that I've really tried to develop more in like dealing with kids is the fact that, they are absolutely human beings and like, you're not going to, you know, it, it, doesn't, it's always funny to see folks who like super don't have any experience with kids and they're just, they walk up to like a four year old and like, Hey, what's up bud?And then Buddy's like, 'I got new shoes." That's not meeting the kid necessarily where they're at. You don't [00:15:00] have the same structures and formalities in conversation and in navigating the world with a young kid, as you do fellow adults often. I just feel like a lot of the time, like less is more in pruning a tree. You don't need to sit there and lecture at length about whichever, like moral thing you are trying to instill whatever value it is that you're trying to like share. NATE: I think you're exactly right. That it's like, if you just treat them as human beings, then you're on the right path. You don't need to, force them or mold them in any sort of way or talk down to them or act like they don't know what they're talking about or what they're thinking. ELYSHA: Yeah, because kids know about freedom and they know when you're trying to limit them and they push back against that. That's like all they do. And it's great. And it's a matter of navigating and negotiating that as like you both [00:16:00] develop in the world that you currently live in. Kind of on the same idea of how challenging it is in the ways that we have, or I have anyway, like being conditioned, how challenging it is to take that step back and let people explore things on their own. It says here just after that quote about radical parents and like trying to just still be forcing this morality on people:" What is more astonishing is the fact that parents will strip themselves of everything, will sacrifice everything for the physical wellbeing of their child. We'll wake nights and stand in fear and agony before some physical ailment of their beloved one, but will remain cold and indifferent without the slightest understanding before the soul cravings and yearnings of their child. Neither hearing nor wishing to hear the loud knocking of the young spirit that demands recognition.On the contrary, they will stifle the beautiful voice of spring of a new life of beauty and splendor of love. They will put [00:17:00] the long lean finger of authority upon the tender throat and not allow vent to this silvery song of the individual growth of the beauty of character, of the strength of love and human relation, which alone make life worthless."TOM: I felt at that point that Goldman was kind of saying, you know, I don't think that parents are monsters that are doing these things. They're kind of just doing what society says we should do. And like they care for their children. Right. But, they're not caring. Like most parents take it to the you know, well, as long as I'm protecting the child, as long as I'm, you know, feeding them and housing them and clothing them, then like, I'm a good parent. That's basically like all you gotta do. But then, you know, controlling children nobody really talks about that.When people do talk about it, it ends up being dismissed as like,....ELYSHA: Because children to be objects, right. Like their property. And we're still fighting against that basic notion.TOM: But I liked that Goldman kind of [00:18:00] laid out a little bit of sympathy, I guess, for parents like that they, that Goldman understood that. It is somewhat conscious, but it's not a conscious, like malevolent effort.NATE: At the very end here, she likes sort of takes the tact where she's not even as much, well, like you said, she's not like beating people over the head being like, you're doing this wrong. You're bad people for doing this, but she points out that like, if you try to do this, if you try to direct your child in any direction, whether it's toward religion or toward conservatism or toward socialism, you run the risk of the child, just like rebelling against you to rebel against you. And basically just like producing the exact opposite of what you're trying to produce. And so you might as well just try to give them free rein anyway, and, you know, set a good example. ELYSHA: Yeah I love that. Setting a good example is just so powerful and like trying to take the do-as-I-say-not-as-I-do approach is probably how you get kids or anyone to just do the exact opposite.NATE: Yeah. ELYSHA: I mean, not that doing the exact opposite of what you're told [00:19:00] is always a negative consequence, but generally speaking.NATE: Oh, no. In fact, she says when talking about kids tending to do the opposite of what they're told, she says:"Such a condition of affairs may be very painful to the parents who wish their children to follow in their path. Yet I look upon them as very refreshing and encouraging psychological forces. They are the greatest guarantee that the independent mind at least will always resist every external and foreign force exercised over the human heart."It's almost like , this tendency of children to resist being controlled is like a guarantee that like, there's always going to be like a spark of freedom in humanity that you're never going to be able to really like beat people down to create a totally like compliant populace because every new generation that's born is going to be filled with children that hate to do with their parents tell them. ELYSHA: Youth stuff is just wonderful. And I'm always hopeful for the future largely because of the work of youth. NATE: Yeah. The children are the future. ELYSHA: Cool. Hey, that sounds like a great natural conclusion to this very first Theory Bites episode. [00:20:00] NATE: Yeah, absolutely. If I can, I'm gonna end with one more Goldman quote at the very end of the essay, she says:"If education should really mean anything at all, it must insist upon the free growth and development of the innate forces and tendencies of the child. In this way alone, can we hope for the free individual and eventually also for a free community, which I'll make interference and coercion of human growth impossible." ELYSHA: Thanks Nate. And thanks for being here for our very first Theory Bites. Again, we are hoping to release these ones kind of in between our main episodes, but as we're figuring all of that stuff out, you'll probably just see this pop up as one of our monthly releases, but we really appreciate you being here for what is effectively our first attempt at podcasting. And we're hope you're having at least almost as much fun as we are.,We'll see you next time or you'll hear us next time. Or however that goes.TOM: We will see you, but you will not see us. That's [00:21:00] how it works. So don't worry.ELYSHA: Exactly. Surveillance. It's everywhere. See acast.com/privacy for privacy and opt-out information.

Mindy Jensen from BiggerPockets joins us to share personal finance and self-management tips, strategy considerations, side hustle ideas, and what it is like to be a female investor in a historically male-dominated industry.    --- Transcript Michael: Hey everyone. Welcome to another episode of The Remote Real Estate Investor. I'm Michael Albaum and today I'm joined by my co host,   Tom: Tom Schneider.   Michael: Mindy Jensen from BiggerPockets is joining us today. And she's going to be talking to us today about some personal finance tips for those of us who are just getting started, as well as what is it like to be a female investor in this space, and some tips and tricks and takeaways for all of our listeners. So let's jump into it.   So Mindy Jensen, thank you so much for taking the time to hang out with us today. I was telling you before we start recording, I am a total fanboy. I'm all giggly today. So thank you, again, for hanging out with us.   Mindy: Well, thank you for having me. I love talking about real estate.   Michael: Awesome. Well, you are in the perfect place to do so. So I know all about you, because I'm a big fan of your podcast, the BiggerPockets Money Podcast that you and Scott host. But for all of our listeners that might not be familiar with you can you give us a little bit of background on kind of who you are, where you're from, and then how you got your start with real estate?   Mindy I was born in a small town in Southern Illinois. And then I moved and moved and moved and moved and moved and moved and moved and moved. And I'm in my 28th or 29th house now, which is actually really relevant to the story. It sounds like a boring, I was born in a small town. And I have never lived in a house for more than six years in my whole life. And I just sold that house that I lived in for six years in January. So it's been like, we move all the time.   And that is really key to my preferred method of investing in real estate, which is called the live & flip, you buy a very unattractive house, you move into it as your primary residence, you fix it up while you're living there. If you live there for at least two years as your primary residence, it is tax free growth, when you sell it, you pay no taxes up to $250,000. If you're single, and up to $500,000, if you're married, I now have a new goal to actually pay capital gains taxes on my flip, I want to get to the point where I have to pay because I've made so much money, which is a very real possibility given our current market, the fact that I got this for a steel and a half, and we're doing a lot of work to it.   But in general, I live in flip. I love real estate. I love talking about real estate. And yeah, I'm a mom of two girls and I live in Colorado.   Tom: Awesome. I love the live in flip strategy. I think I would like you know, with these types of strategies, you know, you have to be very much on the same page as your partner so and I don't think it would fly as much but I'm curious in you know doing this strategy like how big of a renovation Have you done with a live in flip flip Have you done like, you know, like basically camping in in in studs, the ground? Or do you like have some sort of limitation on how big of a project it is?   Mindy: I have limitations now sold this is it's actually a really, really great example of like how big you can go, I have popped the top twice on houses. That means adding a second story, I will never do that again. Because I'm too old for that garbage. It is a lot of work. And when we were popping the top on our most recent house, my youngest was three years old, my oldest was six years old. We at one point had the washer and dryer in the kitchen with holes dug into the kitchen tile floor, which was gross anyway, we're gonna change it anyway.   We we drilled holes in the floor so we could put the out pipes and the water supply pipes into the crawlspace. And the rest of the house was walled off, or it was plastic tarped off because we were building the the addition and the second story.   So in the cold of Colorado, that's really not fun. And we were sleeping in a bedroom with our two children. And my father in law was sleeping in the other bedroom because he's an electrician, and he was helping us rewire the house. We took it from 60 amp service to 200 amp service and basically just rewired the whole thing. When you take it to the studs you can do that. So it was a big undertaking. We there's not a wall in that house that we didn't touch. But why would somebody choose to do this?   Well, I bought it for $176,000 I sold it for $598,000 and I put about $100,000 into it so you do it for the money.   Michael: Wow.   Tom: That's incredible. And the two years so the the tax.   Mindy: This match tax. I guess one more? Yeah, zero. It's incredible. My other specific to the live in strategy, or do you think back on some of the houses on the ones that got away like Oh man, I wish I was still in that? Or is the upside of kind of going through the process and getting those rewards does that, you know, just kind of smooth it over. You're like okay, I'm excited to be on the next one, you know, or do you ever like kind of fall in love I guess and you know, what's the name of the show? Love it or list it you know?   Mindy: Oh Always list it, always list it. And this is actually so I am a real estate agent. And I don't understand the concept of falling in love with the house. There's what is there like 40 million houses in America or something that houses in America, there isn't just one perfect house for you.   Michael: Yeah, totally legit.   Mindy: There's not just one perfect house, there's always going to be another house, that's going to be great for you. So I have never fallen in love with a house. We did have one house that we brought our two children home from the hospital and after they were born, that's really sweet. But the taxes on that house when I sold it for $17,000 a year. Oh, Wisconsin, super high tax bracket. So that I don't miss that at all. I mean, my, my current mortgage payment was my monthly tax only payment on that house. That's ridiculous.   Michael: That's crazy. I think that the saying goes the deal of a lifetime only comes around about once a week. So there I couldn't agree with you more Mindy.   Mindy: You know what the house that I just told I pointed to where it is, it's it's on the other side of town, that house that I just sold was the deal of a lifetime, but the one I'm sitting in now is going to be even more the deal of the lifetime. So yeah, you can find a good deal anywhere.   Michael: So I really want to dig in to two specific topics with you today, because I know that you're an expert in both. One, I would love to get some personal finance tips from you, for folks that are just starting their real estate investing journey I live in flip could absolutely be one of them. And then I also want to talk to you about what it's like being a female investor in the space. And I know that you've got experience again in both those areas. So if I am just starting out, and…   Mindy: I do I have like a lifelong experience, lifelong experience as a woman. So just starting out in real estate, buy low and sell high is kind of the the Pat answer. But really, if you are looking to get started investing in real estate, you need to be educated, you need to know what it is that you're going to do with your investment.   And it seems so easy to be a landlord. But there's a lot of things that you need to know if you want to be a landlord. And if you don't know those things, you are going to mess up and you are going to lose money. And you are going to, in some cases hate your life. I know when you don't know that you should screen a tenant. And you don't know that a 400 credit score is not indicative of a person who is going to be paying you on time every month, you might rent out to somebody who has a 400 credit score, you didn't know because you didn't even run it and you let them move into your house. And they trashed it because they are bad tenants. And you didn't know that because you didn't call it their past landlords and you know, their kids wreck the house and you didn't know they had kids because you didn't screen them.   There's, there's a lot of things and not that you shouldn't rent to people who don't have kids. I'm not advocating against fair housing laws, you need to know who's living in the house. And when you rent it to Michael and Michael doesn't have doesn't say, hey, I've got 17 kids, you know, you come into occupancy, you had a bit against occupancy issues. And you know, or Michael brings his brother Tom, and Tom brings his friend Joe, and then there's 76 people living in your house and you're like, wait, why is it trashed?   I'm not surprised at all. So, if you want to invest in any type of asset class, you need to do your research and if you cannot explain how you are going to invest and and how somebody should be investing in that particular asset class, you should not be investing in that asset class. I'm not in but Bitcoin. I'm not in crypto because I don't understand it. And this is not an invitation to send me an email to explain it to me. I don't want to know.   Tom: Michael's a big, big ferret guy, I wouldn't rent to him because, like,   Michael: Tom!   Tom: It's cute, he's taught them to do these tricks that he showed us, but big…   Michael: Tom, time out. It's chinchillas.   Tom: I think we segued…  Michael, I think we're okay. Chinchillas apologies.   Mindy: I'm gonna jump in here and say, OMG , I would never read to somebody who had ferrets because ferrets stink.   Tom: Michael apparently likes it. Sorry chinchillas.   But okay, getting back on the rails. Mindy, you know what I love my like takeaway from what you're talking about is just having your eyes wide open of like going into risk. I think like with any type of investment that you're doing it be it crypto real estate. Successful investors, they are cognizant and intentional about the risks that they're taking, be it who you're renting to be it the property condition and like what your capacity is, so just love that as like a takeaway on this episode of of intention with risk and eyes wide open in education and filling that gap.   Mindy: Well, that was a better way to say it.   Michael: No I prefer the 76 circus family.   Mindy, a question for you kind of in that same vein. And so we have the education side of things at the Rootstock Academy and I love that you brought up education totally unprompted. I just want everybody to know that we didn't prompt Mindy with that. But how do you draw the line between getting educated, and knowing when enough is enough to then jump in or dip your toes because I know that's something that I struggled with, I spent about two years self educating before ever doing a real estate deal. And even I'm still learning and I was 10 years ago, I'm still learning every single day. So how do you feel like you're you have enough to be dangerous to then go do something with without getting analysis paralysis?   Mindy: Well, started young is really great. Because when you start young, you feel like you know everything, and you don't feel like you need to do all the research. And that's how I got started. I just knew everything when I was 26 years old.   I do like that you said, you know, analysis paralysis. And at one point, do you do you stop educating? You need to be able to understand what you're doing? Hey, how do you invest in real estate? How do you rent out your house? Oh, you know, you just put it on Craigslist.   That's not enough information. You need to learn how you rent out a house. How do you screen a tenant? How do you buy a house? How do you collect rent, like there's a lot of things that you need to think about? Before you just buy a house and throw some people in it. You're providing housing for somebody, you're giving somebody a place to live, you need to know that it's a safe place to live. It's a habitable place to live. And you need to know that they're going to pay you rent.   I mean, once you can start explaining it to other people, I think you've done enough research. You'll always continue to learn, you will always continue to refine and hone in Hey, it turns out I don't want to rent to Mike that has 17 chinchillas. I want to read to Tom who has four little dogs because I know that big dogs cause disasters or I'm not going to rent to Tom anymore because his cats poo. That was not a pleasant experience.   And you know, you will always,  you will always continue to learn. Yeah, that's sometimes cat spray. But being involved in a community that continues to help each other out, is really the best way to go about it. I mean, BiggerPockets is a community of real estate investors helping other real estate investors learn how to do it explaining from experience that, you know, renting out to the chinchilla farm isn't the best choice. Or, you know, renting out to 17 guys who just turned 18 years old in your four bedroom house is probably not going to have the best results.   Yeah, and you're not discriminating, you're just being smart about your your applicants. But even how you find applicants is going to be something that you learn through asking other people.   Tom: Like synthesizing along with the education piece is like community is like such a huge piece about, you know, a really important aspect and feeling comfortable to make that jump, I think and Michael was was talking about just because investing in real estate can be difficult, right? You're right, you know, pop in the top and in Colorado in the winter, you know, having that community of people to one from the education standpoint, but to just as the either, you know, feedback loop or helping, you know, continuing to move forward. Kind of the combination of the two are is really important. And yeah, love BiggerPockets. This is a fantastic spot of that community aspect.   Mindy: Yeah, it's my favorite website on the whole planet.   Michael: I love that. You mentioned the community aspect of things. Because I think so many investors, especially those who are just starting out think that going from due diligence to then you're the first acquisition is that's it, I bought the property now I'm done. It's like, Well, no, now the work actually starts now you own the property. Now you really need that support for the ongoing stuff, not just from the due diligence acquisition.   Mindy: Yes, and this support is really important because sometimes there's not really much you can do. But having somebody to commiserate with is really helpful. But as you're in there talking to other investors, you pick up little tips. One of the best tips I ever picked up for screening tenants is to after they have seen your home, you walk them to their car, you just walk them out and you know, chat, whatever. But while you're at their car, you give it a little peek. Oh, look at that. I can't even see anything in there because there's garbage and wrappers up to the tops of the windows.   You don't want to rent to that person because they how they keep your their cars, how they're going to keep your house and you don't want to go into a completely trashed house. unless that's your thing.   Michael: And teach the road, no judgment, no judgment. I've heard of another similar tip of doing a FaceTime interview with prospective tenants and having them give you a tour around their current living situation.   Mindy: That's another really great tip, because then they're not really expecting to do a tour so you can see how they truly live. And this isn't to discriminate against people who might be slightly untidy, this is to prevent people who will not treat your property with respect from moving it.   Tom: Canary in the coal mine. One thing I love about these episodes is they're there, they can be very self serving. So I have a very self serving question for you. And this is, I guess, for broader people, or as well, if let's say I'm saving up for downpayment on the next acquisition to buy an investment property. What are your thoughts around like, where to hold that money? You know, or I'm going through a cash out refi and going to have a big chunk of change coming in them and to be using for these acquisitions? What do you think about holding it in a cash cash position versus putting it into an ETF or a CD? Or I'd love to hear your your thoughts on that. I mean, a lot, a lot, a lot there.   Mindy: A lot there. But it comes down to what is your risk tolerance, if you have just happen to have a big chunk of change from a cash out refi and you're looking for a property? How comfortable are you with that dollar amount dropping in value. So if you can't, if you need the $20,000 for your down payment, and you don't have a way to replenish that $20,000 easily, I wouldn't put it into an ETF, I wouldn't put it into the stock market at all, I would put it into a high yield savings account, which is only in air quotes, because they're currently at like point 5% or something.   You could maybe put it into bonds, I wouldn't bother with that. If it was not going to be a super long term play like two or three years. If you're going to get it in like three or four months, I would just put it in the cash account, your job is not to grow that, you aren't going to grow that in any significant way. You're not going to put it I mean, you could put it in Bitcoin and watch it go up super a lot. But did you see what happened with Bitcoin? This week? Wasn't it like? Didn't it drop like $30,000? or something? I don't I don't invest in bitcoins.   Tom: Crushed. Yeah, so I just put a very little amount and I've and I've lost, I've lost half of a very little amount.   Mindy: So how would you feel about your $20,000 that you put in Bitcoin because it's a sure thing, and then all of a sudden, now it's $10,000. And you're like, Oh, my money's gone. I don't like to lose $1. So I don't like to be really in really volatile things. I'm mostly in index funds, I have a few tech stocks, and you know, real estate, but I wouldn't put it into anything that that is volatile when you're looking to use it within the next two or three years. And even then, with two or three years, I'd be in like bonds, which are fairly safe, they're not even really growing that much. Your job is to protect the money.   Michael: That makes total sense. I guess that's a really great point in talking about like, your job is to protect that money and to go make that investment in the real estate. And don't worry about everything else. That's just noise if you're trying to grow it and grow it, but focus on the task at hand Don't get distracted. So no more Dogecoin betting Tom, enough is enough.   Tom: I know. And also just a point I want to clarify. Michael is not a ferret guy. I was being silly. Yeah, yeah. The guy didn't realize he clarify.   Michael: Yeah.   So Mindy, you've got some really great insight into a lot of folks his financial purview, I'll call it and so in terms of side hustles, when people are just starting out or looking to grow some additional cash positions to invest in real estate, what have you seen be really effective in terms of side hustles?   Mindy: There is this thing called a signing agent. And it is more towards the west coast of the country than the East Coast. It's four not attorney closing states but title company closing states and notary closing states, you are essentially walking somebody through the closing process and watching them as they sign their name on all the mortgage documents and all the closing papers.   And this is an amazing side hustle because you get to if you have attention to detail, and if you don't, don't even bother, but you get to read mortgage documents over and over and over and over. Again, you're reading the contracts, you're seeing all these things, it's a great way to learn about the process in general. And you make 150 $200 a closing, a closing takes what an hour, you can do those all throughout the day, if you have time during the day, when people are working is not when they need you, it's when people are off work. So nights and weekends.   If you're willing to work nights and weekends, you could make a good chunk of change. I've seen people making, you know, $2,000 a month, just on this little side hustle, and they're not even really spending that much time on it. The cost. The barrier to entry on this is a box of black ballpoint pens, a box of blue ballpoint pens, and a really good printer. And I think it has to be a laser jet, not an inkjet.   It's like a less than $1,000. And you have to be a notary. So you have to go through your state's notary process. I'm not one. So I don't know. I don't know all the process about it. But we talked to a guy who runs a school that that teaches people how to do this and teaches them how to get the jobs to be signing agents. And if you're really good, if you don't make mistakes, people will continue to request you because you're really good.   Tom: Gosh, I love that tip. I feel like I've seen so many like clickbait articles of like passive income. And this is like the one of the best ones I've ever, I've ever heard. I looked into the notary getting that I have a competition with a friend on who can get the most certifications. And this is one and it's not that I think it's like in the state of California where I live, it's like an afternoon of work. Or it's like a certain number of hours. And there might be a test and there's like a low oil, loyalty oath or something like that. So Mindy that's fantastic example of a great side hustle.   Mindy: I got another one. Let's hear it. Yeah. Okay, another attention to detail. I am a real estate agent, I also have a full time job. So I do not have time to double check and triple check all the things in my contract. After we're, you know, I write up the contract for my clients, we get under contract. There's a lot of dates and deadlines, a lot of dates and deadlines. I would just be crushed if I ever allowed my client to miss a date or deadline. And yes, the buyer should be aware of all the dates and deadlines, they should have that upfront. So they're not missing it either.   But I pay somebody who is called a transaction coordinator, I pay her to help me. Remember all the deadlines helped me keep all the deadlines helped me. She files my paperwork with my company so that I get paid, she submits it to the title company. So I get the check at closing. It's called the transaction coordinator, I pay her $400 per transaction. I did 15 transactions last year. And I'm not a busy agent. So you get in with a busy agent who's doing 40-50 transactions a year, you can make some big money.   And it's like an hour of work. It's probably not an hour of work. Maybe she spends, I don't know, five or six hours on my entire transaction from start to finish. She's got it down. I sent her the information. I introduce her to the clients, and then she just sends us an email. Hey, just reminder. I mean, I'm helping people buy $500,000 houses. I'm not going to let you miss a deadline. I would much rather pay $400 to somebody who double checks that I'm not missing deadlines.   Michael: That's such a good tip.   Tom: How would you market yourself as a transaction coordinator in like getting that type of business? I'd love it. Yeah. Just reaching out to agents?   Mindy: Yeah, I would absolutely reach out to agents go to every agency in the city and just say, Hey, I'm an agent, or I'm a transaction coordinator. I'll do your first transaction for free. This is how much I charge. This is how great I am I you know, I set it all up. I do all these things, whatever. It's not that hard. I want somebody as a backup because I am really good. But if I missed the deadline, I would just feel terrible forever. So I want somebody to help me do all the things. Yeah, if you want to go to like literally every agent, if you have one agent client, you will get a lot more because I'm going to tell everybody that I know how great Lacey is. Lacey is great.   Tom: Shout out Lacey.   Michael: That's fantastic. I love that. I love that tip. Because again, that's one of the things that's like in the real estate ecosystem. So you're getting exposed to the to the market to the industry, and you're making money. I think that's awesome.   Mindy: You're learning contracts, you're learning lenders, you're talking to home inspectors and title companies and you're really touching every part of a transaction. She's involved in every part of the transaction, and she sees all the things. So she actually did used to be an agent and said that she prefers transaction coordination.   Michael: So in flipping the narrative a little bit, so that those are some great side hustles that folks can do to help generate some additional cash for their savings for down payments or for investing. What are some of the pitfalls or traps that you've seen new investors fall into?   Mindy: Not being well capitalized, when you buy a house, something will break, I guarantee you, there are very few guarantees in life, it is a guarantee that when you buy a house, something will break, the cost of that repair is inversely proportionate to how much money you have in your reserve fund. If you are very well funded, you get like a broken light switch cover or something. But if you don't have a lot of money, all of a sudden your AC goes out, and it's 105 degrees outside, or it's 30 Below and the furnace breaks.   Something will break. And if you don't have money to pay for it, you shouldn't be buying a house.   Tom: Do you have a rule of thumb on reserves?   Mindy: I really like $10,000, To start off with, like per property rather than?   Michael: 1 million dollars.   Mindy: 1 million dollars. Yes per property. And that is, it's you know, it's a rule of thumb where rules of thumb are like give or take, I have a good paying job, and very low expenses, so I can cash flow, anything that comes my way, I don't have any reserve fund. But I also am able, you know, I have a great line of credit, I can just, if I need a roof, and for some reason my insurance company isn't going to pay for it, I can go and find the $15,000 to put a roof on my house, if you don't have any money in your reserves, you're going to really be hurting and you have to have a roof and you can't not have a roof.   $10,000 is a good place to start. And then I would continue to add to it at a rate of approximately 1% of the purchase price of the house per year. Once you get to like $20,000 I'm trying to think what would cost more than $20,000 to repair on a house right now. And you know, prices have gone through the roof with COVID. And all of the crazy supply issues that that we're having right now. So maybe $20,000 is going to be a better bet. But you know, if you're replacing stuff, it's probably not going to all break at once. And it's probably not going to cost you more than $20,000.   And yes, that is per property until you get to a certain point, like if you have four properties that are in relatively good condition. Oh, condition is another thing. Like if you have a brand new build, you probably don't need $10,000 in your reserve fund. But if you have, you know, a 1950s build, you should probably go $20,000 in your reserve fund unless it was just all you know, remodeled and everything's brand new.   Tom: Yeah, one thing I love about that response in it as well as is there's you know, it's it's dynamic, right? If it's a newer house, or if you have a big line of credit, like it's not real estate and all this it's not one size fits all, there's, you know, strategic considerations on where you're at and, and the property, all of that good stuff.   Mindy: Yeah. And it comes down to like, what kind of financial position Are you personally in? If you're well funded personally, you'll be probably okay. But you know, with COVID when they did them, eviction moratoriums that people stop paying rent, there were owners of four plexes and eight plexes that had 90% of their tenants not paying rent, I guess that doesn't work in a four Plex that would be 75% of their tenants not paying rent, how are you going to pay the mortgage on your house if your tenants aren't paying your rent? And if you don't have six months of all the payments in an account, you need to be getting six months of all the payments? I mean, how long has the eviction moratorium been going on? Like 10 months or something? And it's supposed to schedule through like, is it September? That's the student loan one. Maybe it's the end of June or July? I don't know…   Michael: I think it is September?   Mindy: Yeah, it's fluid with all the different states. But it's, that's a significant amount of time that your tenants may not be paying rent.   Michael: Yeah, that's a great point.   Tom: You touched on an item that I think is super relevant to current conditions, talking about price of materials talking about, you know, just kind of a dynamic market. I'd love to hear has your strategy evolved at all like with the cost of materials going crazy and with like appreciation going nuts on these houses? Or you know, is it as had been pretty consistent through the different market changes that we're seeing?   Mindy: COVID changed my strategy in that we were going to turn our former primary residence into an Airbnb. And when that got shut down, we decided we would rent it out long term. And after we saw all the appreciation going on, we said you know what, I don't really have time right now to go and run an Airbnb. I'm really, really a control freak. So I'm not going to pass that off to somebody else. Let's just sell it be done with the house and move on.   We were incredibly fortunate. We bought all the supplies for many of the projects around the house right before COVID hit. So all the wooden studs for the basement we bought at 2019 prices, not 2021 prices, which is four times as expensive. We've did a whole a big deck edition. And we bought those. They arrived on March, I think March 9, all that stuff arrived. So we like right before they shut down the entire country. We bought all these all of our supplies.   We're building a shed, and my neighbor is doing a renovation, and it's throwing away studs from the 60s. Why would you do that? So I'm going through the dumpster and I'm grabbing those studs, and I'm putting them in my garage. And now I have a new goal. I'm going to scavenge all of the supplies for my shed. And my neighbor's fence got knocked over with the snowplow. So they're building him a new fence. And we're the weirdos that are always working on our house. So he asked us if we wanted his his old fencing materials and his old cedar two by fours and his old cedar four by fours like, Yeah, I do. Because even if I can't use them in the house, I can, you know, he's like, I just don't want them to get thrown away, like I can put them to use.   Tom: What a win win that's brilliant.   Mindy: But I'm not planning any more big projects right now because it's so expensive. And I mean, you can't even go into the store and find two by fours sometimes and plywood. And it's we're doing a lot of painting now, instead of building. And I'm not sure when we're going to change back to building.   Michael: Smart.   Tom: Writing the plan in pencil. That's awesome. I love that that response is cool, because there's like multiple zigs and zags just based on what's what's going on.   Mindy: But if you're not dumpster diving, you need to start it's like construction dumpster diving, don't go to the back of like Whole Foods or something but or maybe. I mean, they throw away a lot of good stuff too. But if you're walking around your neighborhood, and you notice that your neighbor is doing some work peek inside, if you can skip buying 52 by fours because your neighbor just threw a bunch away. That's just that's just smart.   Plus, they're from the 60s so they're straight. I mean, they were sitting outside on the deck and it got wet. And then they still didn't bend and now you get a two by four and it bends before you can get it home. Sorry, I digress.   Michael: You look at it wrong. And it's a warped. Yeah. I was gonna say Tom and I were chatting the other day, and I'm doing a massive redevelopment project. And that budget has just got eviscerated because of the wood prices and other materials. And it's just it sucks. Like, I'm in the middle of it. And there's no way around it.   Mindy: Yeah, I have seen new builds where the buyer put the deposit down and sign the contract. And okay, we're going to start building in March, April. And the builder comes back and says, Okay, now it's going to cost $30,000 more, because wood went up so much. And if you don't want to pay that we understand, we'll refund your money. I've got a line of people waiting to buy this house at the $30,000 additional price.   So what do you do? Do you say yes? Or do you get your money back? I mean, the next house isn't going to be any cheaper.   Tom: It's all just rising so quickly related on the materials costs. I had some read to replace a deck in my house, and we ended up using this bamboo composite and it actually turned out really great. I was a little concerned but our contractor said he had used it on a couple of projects, so shout out bamboo composite decking.   Mindy: Oh, I haven't heard of that before.   Tom: Yeah, it's I think Momo MooMoo booboo, I forgot the name of the exact the name of it. Mozu it might be. But anyways, waterproofs, warranty, all that good stuff. This episode is not brought to you by but we're going to market it anyway.   Michael: Let's shift gears here, Mindy. And I would love to chat with you and get your thoughts, insights, opinions on being a female investor. And what that's like, in what seems to be often a male co opted space.   Mindy: Yeah. So it makes it really easy to that people. It's really easy to decide who I want to work with and who I doubt and it's based on how they treat me. I am not necessarily the only woman in the room, but I'm frequently one of just a couple. And if you you know when you're dealing with contractors, if you call me honey, I'm not working with you, sweetie, baby. Tell me what you need. Tell me what color you want. I don't have a lot of self esteem issues. So if you don't want to work with me, because I'm a woman, I don't care.   I know a lot of people who will work with me because they have this is 2021 Why is that even an issue? But it can be an issue for, you know, for people who aren't as obnoxious as I am. But I want to invest in real estate. So I'm going to and if you don't, if you don't want to deal with me, that's okay, I'll find somebody else who will.   But what is it? Like? It's gotten a lot better. I think that there is a lot more understanding that women are investors. I mean, we're just investing we're not I don't have to lift up the house, I don't have to, you know, use my muscles to do things. So it's like, there shouldn't be any difference. But there are, and I got big muscles. So yeah, it used to be a lot different. But now it's changing.   Tom: I guess, one kind of follow up. Final question related to that. Do you have any advice or recommendation for female listeners who want to become active involved in their area?   Mindy: I am going to go back to the advice that I gave in the beginning and educate yourself. When you come in knowing what you're talking about. People will listen. And the you know, it's okay to ask questions, but ask them in an intelligent manner. And do research in advance to see if you can answer your own question. But there's, you know, there's a lot of nuances in real estate, you can absolutely ask questions based on the nuance.   But hey, how do I get started? Is not the best question to answer to ask, what are the benefits of this strategy versus that strategy is a better way to go? doing a little bit of research, you know, understanding that there are differences and doing a little bit of work on the front end will get you better answers and more people who are willing to talk to you.   But there's a lot of self education, you can do YouTube channels, podcasts, books, blog posts, people are talking about real estate investing right now. And it's like the cool thing to do. And if you want to be a real estate investor, why do you want to be a real estate investor? What do you hope to get out of it? You know, ask yourself all of those questions, and then just jump in.   Tom: Love it. Michael, do you have any other questions? Or is it a good time to jump into some quickfire questions that we have?   Michael: No, Let's jump right in the quickfire? That sounds great. Perfect. All right. All right, Monday, so I'm gonna ask you a series of 10 questions. These are either or questions. Just kind of like a quick, quick response. Are you ready for some quickfire questions?   Mindy: Hit me.   Tom: All right. Consolidation or diversification?   Mindy: Oh, diversification.   Tom: High property taxes, or high income taxes?   Mindy: Oh, I don't like either of those. Um, I would say high income taxes, because there are ways to shield the income taxes. And there are ways to reduce your taxable income, whereas they're your property taxes, just your property tax.   Tom: I was going to let you get away with neither are you going but your answer ended up being much more interesting. Good one. I like that. All right.   High rent growth or low vacancy.   Mindy; Ooh. Oh, right. Yeah. turnovers their profit killers. So yeah, low vacancy, I guess. No, I like these questions.   Tom: I know. That's what that's why they that's what they call it the hot seat. All right. Next one. Cash Flow or appreciation?   Mindy: Cash Flow always because you cannot predict appreciation unless it's forced appreciation. I like forced appreciation more than cash flow. But you didn't say force you just said regular.   Tom: Yeah, I think you could take any flavor of that.   Mindy: Oh, then forced appreciation.   Tom: Excellent. Debt or equity?   Mindy: Equity.  No, well, no debt or equity?.... debt right now because it's so cheap. Yeah.   Tom: Yeah. I love it. Love it. Love it. All right. Next one single family or multifamily?   Mindy: I've always done single family, but I see the appeal of multifamily.   Michael: Alright. Alright, so, right.   Tom: All right. Yeah. local or remote investing?   Mindy: Ooh, I prefer local but I've done both. I just like to be there.   Tom: I think I know the answer to this next question, turnkey or massive project?   Mindy: Massive project.   Tom: All right, final three questions we're going to these are a little bit outside of the real estate box.   The midnight oil or the early bird worm?   Mindy: Oh, early bird worm. I go to bed super early but I get up early to early bird.   Tom: Early bird worm, me too. Alright. text message or email?   Mindy: Oh, email because it's illegal method of notification and text message is not.   Tom: Good. And the final question here, all of your answers are like really thoughtful like good, really great responses we've had like, I've learned I usually it's like I'm not learning things on these hot seat but like this. Alright, mini the final one. Olive oil or butter?   Mindy: Oh, wow, it depends on if you're doing high heat cooking. Butter will burn olive oil is a high heat oil. If I'm putting it on a muffin, it's butter.   Tom: Alright, butter. Butter. It is Yeah. You not only survived the hot seat, you thrived. That was fantastic.   Michael: I'm just picturing an olive oil soaked muffin.   Tom: Dude, olive oil cake. It's a thing. It's a thing.   Mindy: Oh, really? Yeah, I made brownies. Once I made it. I didn't have any oil. So I use olive oil and it did not taste good. I mean, they were brownies. They were still okay, but you could taste the olive oil with Yeah, that's really good to know.   Tom: Thank you so much Mindy for coming on. I love these. I love these episodes, because it's kind of self serving and just learning a ton. Really appreciate your time coming on.   Mindy: Well, thank you for having me. This is super fun. I like that hot seat. Actually. I just didn't like that one question.   Tom: That was the best Hot Seat I think we've we've had like over 100 episodes and…   Mindy: Oh, I was gonna say what is this episode two?   Michael: That's great. No, that that was that was by far the best one. Really? Thank you so much for taking the time for hanging out with us and helping educate. This was great.   Alright, everybody, that was our episode a big big, big thank you to Mindy. That was a lot of fun bar none best quickfire answers we've heard on the show to date. So for all of our future guests, that's a challenge to you to top Mindy's answers.   Hope you enjoyed the episode today. If you would like please feel free to give us a rating review wherever it is. Listen your podcast. If you're checking this out on YouTube, please feel free to subscribe to the channel so you get all the most up to date episodes as they come out.   Again, thanks for listening and happy investing.   Tom; Happy investing

Sometimes closing on a deal is not so straightforward. Michael shares a nightmare closing scenario and we discuss how to mitigate struggles like these to stay on schedule, saving time and money. --- Transcript   Emil: Everyone, welcome back for another weekend wisdom edition of the remote real estate investor. My name is Emil Shour. And today I've got with me,   Tom: Tom Schneider,   Michael: and Michael Albaum.   Emil: And we're going to be talking about what happens when your closing goes sideways. So Michael recently had a refi on a triplex he owns and had some some challenges arise. And we're gonna just put them in the hot seat, learn what happened and learn how he deals with it. So you guys can get some tips and takeaways in case this ever happens to you down the road. So let's hop into this one.   Alright, Michael said, set the stage for us. What what happened on this refi on your triplex.   Michael: All right. Step back in time with me to December of 2020. So that's what I started this whole process. And my wife actually found this awesome lender out in the Midwest, they could land on this property that I owned inside of an LLC. And I was like, great, this is awesome. So we got the ball rolling. He got a couple different quotes. For me. He was a mortgage broker. That's what he did he so he wasn't the lender specifically. So he found a lender that was going to work. We said, Great, we got the ball rolling, we got the application process started.   And then they said, Oh, you're doing some rehab work. So they went out for the appraisal, that's when they learned learned, quote, unquote, about the rehab work. And I was like, I told you about the rehab work. And they said, Oh, well, we can't we have to go back and do another appraisal once the work is done. So keep us posted. I'm like, oh my god. So that slowed things down to start, then we were supposed to close. And they said, Oh, you filled out some paperwork wrong. Yeah.   Tom: Did you get charged for like a chip chart trip charge for the appraisal? appraisal.   Michael: So I got a second charge for the appraisal, which they didn't tell me about until the closing statement showed it. It was only a couple 100 bucks. But I was I was still a bit frustrated, because they didn't like tell me that. And I should have assumed like, of course somebody has to travel to go do these things. But also at the same time, it seems a bit frustrating that they said oh, here's the price for the appraisal when they quoted it to me. And then the final amount being taken out at the closing is different, because they charged more for the appraisal example back second time, which they should have done because they knew about the construction. So that was a bit frustrating.   Tom: Was the construction like really significant.   Michael: It was a total remodel of a unit of the biggest unit in the in the triplex so fairly.   Tom: King unit.   Michael: Yeah. Yeah. So yeah. So then they tell me Oh, by the way, I know we're pretty close to closing, but you filled out some paperwork wrong. So on my statement of information to the Secretary of State of California, I put that the LLC was member managed. But when I initially filed and made the LLC, I put that it was manager managed. So those two documents didn't align. So they said, Oh, you got it, you got to change this. And I was like, all right. We should we're done about this earlier, but whatever. So I did that and filed an amendment with the Secretary of State, it really wasn't a big deal, like 25 bucks to do to do it all online. Good to go. Great.   So now fast forward, the closing has already been delayed. They finally got through the re inspection of the property, as well. And they say, oh, by the way, this same issue happened in Alaska, where the property is, is physically. So you need to update that as well with the the secretary of state or change the operating agreement. I was like, why didn't you bring this up when you were scanning the documents that you had for California a month ago? Like a So anyway, to file an amendment, the Secretary of State of Alaska was much more difficult. It wasn't able to be that online. It was a whole process. And then I didn't get verification that it was accepted and approved. Until 18 business days later, was there a timeframe?   So I said I can't wait 18 more days to close this thing. What options do we have? And they said, Oh, we can close load in your personal name. So I say Great, let's do that. And they said, Okay, well, now because it's gonna be a person's name, you have to click claim it out of your LLC and into your personal name. I was like, You got to be kidding me. So I quick claiming that out of the LLC into my personal name. And they said, Okay, yeah, now we're clear to close. So they reached out to the title company, and the title company was unresponsive. So then I reached out to the title company, the title, the closer I reached out to their manager, and everybody was giving me the runaround. Oh, we need more documents from the lender, and the lender saying, Oh, we need we gave everything to title. It's in title's hands. So days and days, days, this Thursday went on for like a week of trying to coordinate this thing with the title company.   The person who the lender had on my case on my file was on the East Coast, but the title company was on the west coast. So there was several hour time difference. I mean, it was just like, the amount of people that got added to the emails each day grew exponentially. And I think Like the final set of emails, there were 12 people CCD on this, like it was a joke. Like they just couldn't get it. Right. So the loan finally funded this Monday, this past Monday, yesterday. And on Thursday, I think I got an email saying, Oh, we hope that this is from title, we hope that the lender wires over the money by Monday. And I wrote back and I was like you hope in a nicer house like you hope I was like, stop hoping and get this done? Who need to take responsibility for this? The lender has told me they've already sent you the money, where is it? When or when should I be expecting it? Please do not respond with you hope. I would like a plan of action going forward and someone to take responsibility, and I was nicer about it. But that was the gist of it. And that was the inner dialogue I was having in my in my head.   So somebody wrote back to me, they said, We're so sorry for this confusion. It will be in your account Monday morning. And I say, Great. Thank you for the confirmation. I look forward to seeing my account Monday morning. So Monday morning rolls around, the lender emails me and says, Hey, confirm with us when you receive the funds. I said, Great. No problem. We'll do 10 o'clock rolls around no funds. 12 o'clock rolls around no funds, but as they're…   Emil: Keep hitting refresh.   MIchael: Yeah, refresh. I was like, Hey, you told me is gonna be my account. Monday morning. I know, we're in the same time zone. There's nothing here and there's nothing pending What's going on? And they said, Oh, it should be there. And I said, well, it's not. So there's a lot of money out in cyberspace that you need to figure out where it is, and tell me when I should be expecting it. And they said, Oh, we are our servers have been slow. You know, I did it personally, it should be there.   So then finally, about two o'clock, it shows up. And I say Great. Thanks, everybody. This was ridiculous. So that was a really long winded way of basically going through what was a nightmare close, and a lot of takeaways that I had from this and other closings that have gone semi sideways, as well as that you really have to be your own advocate so much of the time, just because the lender says they're working on it doesn't necessarily mean that they are or just because the title company says they're working on this. I mean, they necessarily are. And so don't assume I feel silly saying this, but like, Don't assume that people are going to do the things they say they do. You really have to follow up with them and really be the driver, and also making sure that everybody's communicating. At no point should I have had to step in to email, both the title company and the lender on an email together and say, hey, why aren't you communicating better? Why am I the intermediary for my own loan? This is ridiculous.   Tom: Michael, not a not a big hope guy just doesn't really believe in hope, it's just kidding. I'm just kidding. That's pretty funny. I hope it funds. Okay. So yeah. Yeah, question for you here. So did you select the title company, or did the lender select the title company? You obviously selected the lender?   Michael: Here's the here's the funny part. So I wanted to use Spruce Title, who we use a lot of Roofstock. And I have a personal relationship with we had them on the podcast. They helped me do some things in Southern California to do a quitclaim deed, which was awesome. And so I said, Hey, Spruce, can you do this? And they said, you know, we really don't do a lot of business in Alaska, we would prefer to have your lender, your lenders title company, do it whoever they use, but when in a pinch, let us know we can we can try to be of some assistance. So I thought that we were lined up. I thought we were using spruce. It wasn't until push came to shove at the end of this when they told me Oh, we're using this other our title company that we use a lot. And now I'm sitting here scratching my head, looking at hindsight, being like, Are you freaking kidding me? This is the company that you chose over mine, are you insane, so it was just really frustrating. It was really frustrating.   And then I also asked him, I was like, both the lender and the title company. So you're really going to charge me full price, you're really going to give me all these fees, and everybody keeps giving me the runaround Oh, well, it's the other company that's causing the delays. So you know, our fees are set. I said, Man, this is just unbelievable. So I don't think I'm done fighting that battle yet. More so over principle than anything else. I mean, the fees were not exorbitant. I think they were, you know, reasonable for what I got. But still to make me have to jump through all these hoops at the 11th hour to make me have to do all the communication and I'm like, Am I doing your job for you at the end of the day? Come on. This is This is ridiculous.   So and then not the lack of response, I think is what really gets my go. It really grinds my gears. When people are asking for things that need to happen in a timely manner and just lack of response and I get people are busy, but some acknowledgement of Hey, we're working on it. I mean, Emil, you and I talked about this all the time you sent me an email, it's crickets. If you can't get to it, just acknowledge that hey, won't get to it'll tomorrow. Or hey, we'll get back to you in a day, whatever. Something to let me know that someone on the other end has put eyes on this or is as has a pulse at least.   Tom: Are there other little tricks you do within your emails when you're responding to them like Hey, are you the right person to contact for this like Basically like having them, like accept ownership of whatever that like specifically. I mean, that's that's brutal Michael, that you had to kind of jump in and quarterback, you know, between these these two companies, but I love it. Do you have any kind of pro tips like on writing these types of emails? I mean, one of them, I would just chime in with, you know, be direct, but don't be a jerk. But is there any other kind of like thoughts you have in being proactive with email, which I think is like the right thing to do? And you can see that it's like, getting a little bit off kilter?   Michael: I think that's a really great tip that you offered almost in your question of Hey, asking, Are you the right person?   Tom: Thanks Michael.   Michael: Yeah, absolutely.   Tom: So I threw it off the backboard and just dunked it.   Michael: We read it the Roofstock Academy book club, a book by Chris Voss called never split the difference. And he talks about if you're not getting responses to emails, a way that you can write in the email is, have you given up trying to assist me in resolving this problem, or something to that effect? It's like, a little harsh, but   Tom: That sounds a little harsh. I like it. I like it.   Michael: It is it is a little bit harsh, but also how many times you're going to bang your head against the wall with somebody who's not responding to your emails, or phone calls, or any kind of other communication? That's kind of the the question that needs to be answered. Hey, are you are you done talking to me? Are we just giving up here? And so I've only done it a couple of times, and it tends to work pretty well. I've been cc on an email where that was sent. And I was like, hey, that seems pretty harsh. Not sure that was appropriate. So I would definitely make sure it's a last ditch effort. And, you know, there are ways to word that in a more light hearted manner. But I think absolutely, oftentimes, it is justified. I didn't come to that at this. But I think that that's a really great tip of Hey, asking, Are you the right person for me to be talking to, and then also see seeing anybody and everybody that can help?   So managers, managers, managers, because so often, if the chain isn't consistent, things get lost in the email thread. And so adding people and subtracting people mid thread is difficult. So I'd say just make sure everybody is on on the train and communication with one another from the start. And that's helpful.   Tom: Yeah, I'd say one thing too, when you're adding, you know, more and more people on email, I think sometimes people could see a lot of people in email and like, think like, Oh, this isn't necessarily me. So like, within the body of the email, you know, if there is a lot of people on it, I'll do an  @ Michael album, like or @ whoever you're talking to, just because sometimes if you you're looking at an email, and there's a dozen people on you'd be like, oh, somebody else is gonna pick this up totally. So you know, use that kind of wider spray, but then use the little, you know, direct shot within the within the body of the email.   Michael: Such a great point, such a great point.   Emil: So to summarize, the big takeaway, I think, here is that the buck stops with you, you kind of have to, like you have to quarterback the whole thing, right? Is that the big takeaway, that you should own the process? As much as you can?   Michael: Yeah, well, I think you should be, you should be ready, willing and able to quarterback the process should you need to, I don't think in 90% of the instances, this doesn't happen. And things go smoothly in the title, company and lender work cohesively together. And you sometimes need to nudge people along and make sure everybody is talking and playing nice, get in the sandbox. But I absolutely do think that if you are going to play in this space, you need to be willing to be able to do this kind of stuff. Because this stuff happens clearly.   Emil: Right? I wonder if this is more of a refi thing, because I had the same thing on my Indy refi, where I had to do a lot of communicating between lender title and even like mobile notary, I had to set it all up and like coordinate with everybody so that docs were getting to the right person at the right time so that I could sign and everything. So I don't know if it's a refi thing, or maybe that's just coincidence that both of us have had this experience with refinances, but yeah, interesting.   Michael: It's so funny, you mentioned that, I mean, I totally forgot that part of the story. So at the end, at the like, the 11th hour, the title company finally gets back to me says, oh, we're gonna schedule a mobile notary. And what's your address? And we're going to hit the mobile notary and they'll come out and do sign docs. I said, great. That's awesome. This is my address. And I was actually out in Colorado at the time. So this was I don't know, like, noon or two.   And I was like, it's getting late. So if I need to go to the local notary store, let me know they said it and I will schedule mobile notary so great. This is we'll get back to you when we have something that's perfect. So, five o'clock comes and goes six o'clock comes and go seven o'clock comes and goes, I don't hear anything from anybody. So I called her love to message their offices, of course close as an emails, Hey, didn't hear from you or isn't mobile notary. Nothing happens so I was like great. And in the morning, we were headed out to Utah to the National Park making our way back to California. So I get this call at like seven o'clock. And this guy's like, Hey, I'm Have a mobile notary, are you? Are you still okay to sign? I'm like, No, dude, I'm on my way out of town driving to Utah. Like, no, he's like, I got an email last night. I didn't see it. Can I? Can I be there in 20 minutes? I'm like, Yes, fine, come in 20 minutes. So he signed all the paperwork knocked it out. I was like, Oh my god, everybody's dropping the ball.   Emil: There's a lesson there. And that and this is something I've learned recently, if you're a remote investor, which if you're listening to this show, you most likely are, you're gonna have to deal with mobile notaries all the time, you can't, you can't sign in person typically, right? Because your lenders not local or whatever it is, find a mobile notary near you and add them to your team for anytime you have closing Doc's like, I use the same person now he lives, I think five minutes away from me, I coordinate with him, him and I like know each other now, and it's so much easier to handle that stuff and make sure they're in the loop when you know the person and you use them over and over again. So that's something I recently started doing.   Michael: I was in Tahoe, Nevada, on vacation, and I had to sign something and they're like, oh, it has to be a California notary. I was like, Oh my god, are you serious? So I had to drive across the state border and then look up like a mobile notary and find them and they were like you coming to me I just broke my back like, Oh my god, what is going on?   So I think there's other takeaways just be flexible, be versatile, you know, be willing to flex a little bit because not everything is going to be the same as it was in prior closings. And especially with the remote aspect, things just are different. So be aware of that and be willing to Yeah, to just be flexible.   Emil: And things don't go smoothly. We try to hammer that point home right? You got to you got to be ready and accepting of the unexpected because that's kind of just real estate and especially with just lenders and closing and docs and all this stuff. It never goes according to plan smoothly, at least from my experience.   Tom: Be comfortable being uncomfortable.   Michael: Yeah, that's it.   Emil: Alright guys, any any final words before we wrap this one up?   Michael: Just be in constant communication with everybody who's involved?   Emil: Yep. Alright everybody. Thanks for joining us on this weekend wisdom. We will catch you all soon. Happy investing,   Tom: Happy investing.   Michael: Happy investing.

My guest today is Tom Seery, founder and current Executive Chairman of RealSelf, the leading review site and marketplace for cosmetic surgery. This is Part 2 of the interview where Tom explains the tools he used to build and grow the RealSelf business into the largest site of its kind in the world. Subscribers also have access to yesterday's interview where we explored Tom's career path that set him up to found RealSelf.You can also listen to these interviews in your podcast player of choice: Apple, Sticher, TuneIn, Overcast , Spotify. Private Feed (for premium episodes).TranscriptEdward: This is Marketing BS. This is part two of my interview with Tom Seery. Today we're going to explore how he grew RealSelf from scratch into the leading cosmetic surgery marketplaces in the world. Tom, can you start by describing what RealSelf is. Tom: RealSelf is obviously a website. Maybe it's not obvious—realself.com. It is a resource that enables people to find information that is related to cosmetic procedures. Cosmetic treatments ranging from botox to cosmetic surgery, and to find bulk information about what those treatments are like and to find a doctor or a clinic near them or relevant to them and map that up to booking an appointment. Edward: You came from Expedia immediately before that. Was RealSelf pitched as a TripAdvisor for cosmetic surgery?Tom: Did you hear that from me before? Because that's pretty good. In my original pitch, I actually looked at the deck recently and I literally said it's a TripAdvisor for your body, face, and smile. That just seems to really help people get quickly to oh, okay, what does that mean? Then, it will lead to describing what you mean: body, face, and smile. What I mean by that, by the way, is millions of people in the US and hundreds of millions globally have explored, continued to be interested in whether they should move forward with a cosmetic procedure. Thankfully, they're very thoughtfully considered purchases because while the return policy stings in some of these things. It's pretty permanent in many cases. It's modifying your body, your appearances, it's taking some risks, and it's financially a big deal. I know you've had a background in big purchase decisions. This is up there with home buying, getting married, and having kids. It's that level of thought and consideration. Edward: The fact that it's a high priced point, permanent, and rare, is what makes it different from the hotel space and what TripAdvisor is doing? For many people, travel and hotels are also very expensive, but it's not as permanent or life altering. How is RealSelf different from TripAdvisor? Tom: TripAdvisor, travel is still a very important intimate experience. Where you go with your family or you personally where you stay, where you sleep, where you take off your clothes, where you take a shower, where you spend your limited time off or time away is a big deal. That's the magic of what TripAdvisor tapped into, is that people actually want to dispense of all the risks that go to making the wrong decisions associated with that. But it's still ephemeral. It's a transaction that you get over. You get a bad hotel experience, you can laugh about it. But when it comes to a cosmetic procedure, that's just not a really acceptable outcome. You don't want to be in a place where you've made a wrong decision and suddenly now, you're facing a consequence of looking “botched” or just an outcome that you just hadn't expected. You want your expectations delivered on. Edward: I guess it's much more risk averse when you go into cosmetic surgery than when you're booking a vacation. How does that risk aversion play into the design of the actual website and product?Tom: Yeah. It is absolutely. Risk aversion is a good way of thinking of it. Or wanting to have not just 5 answers to questions, but 500. When we talk to people who routinely use RealSelf and what our value proposition is, is that we want to have answers to all of your questions. The best way to get you answers is not just Q & A, in which we have millions of answers from doctors, but actually learning from others who've had these experiences in an authentic way. We have hundreds of thousands of stories told by real people with photos, with video of what it's like from start to finish. Including people who've decided not to do things. It's that kind of level of authenticity and trusted exchange of information that enables a person to make an informed decision. Edward: So it's very important for RealSelf then to collect not just reviews, but detailed intensive reviews that go into far more detail than a book review in Amazon. Tom: Yeah. The star rating is not the point. It's the story. Story telling associated with these procedures is what differentiates RealSelf from Google, Yelp, and others and that. People tell their stories overtime, updates, and like I mentioned, imagery and photos that shape the journey. The entire journey a person goes through from start, to recovery, to living their life, and what it's like afterwards. That created the concept of having people not just tell their story, but say, was it worth it or not? We created the Worth It index. That's people yes, it was worth it, or no, or I'm not sure. We count those up and now we have rankings of every procedure by its Worth It rating. That's become, in our industry, a very powerful vehicle for identifying patient's satisfaction and customer satisfaction. Edward: How do you get users to do that? How do you get a user to invest the time and effort to go and do that whole tracking process?Tom: The motivation for a person on a platform is perhaps different than others. When we've dug into that and listened to our audience, members, and community members, why are you doing this? Are you trying to get back at your doctor? What's the reason? You have extra time on your hand? The motivation in our audience is typically women who are posting. Women have this tendency to want the world to be a better place and help, have more of a community view. They said, because this person was doing it before me and helped me so much, I wanted to also contribute and make it easier for the next person. There's a lot of negativity in the internet and things like RealSelf and that motivation point to the beauty of the internet and just how incredible people can be in terms of trying to make the world a better place and its own place. Edward: How much time and effort are you guys spending internally to go and facilitate that, or do you make it possible then just let it flow in?Tom: Yeah. The [...] problem is a real issue when you're starting a community. Bill Gurley from Benchmark visited my office—and I say office because it's a room with three of us in it—when it first started. And he said what you're doing here to start a community is something that larger companies would never do. It's like building a fire when you're camping, he described it as. It takes a lot of discipline. You don't just throw a log on and say, okay, then pour some gas on and hope it just catches fire. You have to actually start with kindling and you get the right conditions. It has to be dry enough. You just have to be nurturing. In the early days, getting that early kindling required things like convincing people to share their stories on the platform. The way I found them was things like YouTube, and like who's willing to share already about their procedures and experiences on YouTube and say, hey, would you come over here and also post. That worked. But what moved from there and captivated more conversions and postings was controversy.That's why I created the word that writing is a binary yes or no. I don't know how to say this in a way that hopefully doesn't sound manipulative, but it does force people to pick a side. When you have two sides and when you have two sides and something it does usually create conversations. It was not worth it, it was worth it, and then people debating that led to more and more engagement.Edward: And then once it gets going, do you have to do very much at all? The team today, now that you're 14 years into the business, did you worry about other things and just let that part run?Tom: It certainly is not as intensive of effort. I don't know, flywheel. I know you're very science based in marketing. I hate to use the term flywheel. It certainly has some elements of network effect where you're saying more begets more and it self serves. But it does require nurturing and a lot of community guideline renforcement. There's no shortage of actors out there who want to post things or trolls who want to take away from whatever it is otherwise are great experiences online.Edward: That's the consumer side. What about the doctors? How do you build the marketplace on the doctor's side to get them engaged?Tom: Doctors are a really interesting group of professionals. I really didn't know how they thought and what was important to them until I started the company and started learning and talking to them. They're very much, as you would hope from your physician. You walk into your doctor, you don't want them to say, hey, I just got this new thing in yesterday, can I inject you with it? What do you think? You want to try it? You're like, woah, wait. They're cautious by nature, they're scientists. They want to see proof points, data, and research around something. As well as they are very much intrigued by their peer size. They tend to have what are called key opinion leaders who they look to whether it's a journal writer, people have written journal articles and authors or speakers at conferences. I centered on that. In the initial days, I really focused on getting myself on the podium as a starting point and also forging relationships with those key opinion leaders was another part of my strategy. Edward: Has that changed over time then too? At the beginning, you had to do those things the same way you needed to go and use the kindling on the fire on the user side. Now that you're 14 years into the business, has recruiting doctors changed? Or is it somewhat kicking into more podiums?Tom: Yeah, with the pandemic, definitely the podium has been collapsed to a digital experience and the digital conferences really aren't working for reaching to audiences. I would say that the environment whether I like it or not has changed and maybe forever changed, we don't know yet as of this recording. But it certainly comes to fruition where you realize that your target customer, they don't necessarily follow the same dynamics as the way the industry is structured. We find that we're most relevant to practices that are in growth mode, for instance. They really do want incremental patient acquisition in value that they tend to be a little bit more youthful, doctors who grow up with technology tend to adopt it more readily. Other factors like making it a typical customer acquisition where it's maybe not that individual is who is on the podium at the top of their career.Edward: Tom, how does RealSelf monetize? How does it actually take that two sides of traffic and turn it into cash?Tom: We sell advertising to our doctors and the subscription add product. We've tried to keep it as simple as possible after listening to doctors and realizing they have no time. One thing that doctors can say over and over no matter what specialty you speak to is they are time starved. They didn't go to school to learn how to be marketers. They want something that's simple. This idea of bidding on platforms like Google AdWords or Facebook, yeah they could outsource it. But generally, they needed something simple. So we created a pretty simple ad product that they could be for instance, featured for a procedure like say, surgeon here in Seattle could be featured on the platform for setting the number of impressions for rhinoplasty. And they would pay a flat monthly amount for that no matter what it did for performance. Though I think guarantee is the number of impressions. That model has been around with us for many years and we're looking at the next stage of the model moving to a more performance driven approach. Edward: It's interesting. There are some marketplaces out there like hotels, like Expedia, that monetize so well, where the aggregators monetize so well that the providers are basically pushed out on the search. Have you searched for hotels in Seattle? The paid results are Expedia, Booking.com, Hotels.com, followed by tiny little marketplaces you have never even heard of. Marriott and Westin aren't listed there at all.But if I searched for cosmetic surgery in Seattle, the results are all individual doctors. I don't see RealSelf or the paid results at all. Why the difference?Tom: We do some paid work in targeted ways. But there are certainly not inherently built transaction models that the industry doesn't have like a model by which, oh, if you deliver a patient to me, I will pay you X. In fact, in many cases, in many states, that's against the law. This idea of your doctor getting paid for referring you to a specialist would be seen as quite concerning. There's a lot of regulatory reasons for that and just an industry that's very cottage-y. We have individual practices that we work with small practices, small businesses and they just don't have a common standard way to either aggregate their supply of spaces of their schedule nor a common understanding of how to “sell” that or fill it. This idea of inventory is something that just doesn't exist in the market as well. It's a very challenging space to monetize because of both technology and limitations as well as a lack of precedence on how transactions should be monetized. Edward: Tom, what do you think is driving that? Because it's not just RealSelf. If I look at Avvo in the lawyers space or Yelp with restaurants, we see similar patterns where the restaurants or the lawyers or the cosmetic surgeons are fine paying a lot of money to Google. But then the individual websites aren't set up with the paper click model, aren't set up with these auction models. Why are these doctors willing to do the auction model on Google but not on RealSelf? Why is it too complicated on RealSelf, but simple enough on Google?Tom: Yeah. I think I'd take exception with your observation in that. Let's say if you've talked to most of our customers, very few of them actually advertise on Google and if they do it's through their web vendor and it's just a couple thousand dollars thrown at it. There's no sophistication put around it. Web vendors, it's easier for them because they can make a little bit of money with the markup and they can self manage the campaigns. In some ways, inadvertently, we have cut out their technology team, their web vendor, and they don't have an easy way to work with us and they do have an easy plugin for these other platforms. That may be an oversight on my part. I don't quite know over time, I'll maybe reflect and understand that. But generally, our customers don't, I say this without any disparagement because it's more from a place of empathy. They don't really know how to measure ROI and the customer's journey to them is a very convoluted one. If you want to look at complex purchase paths, boy, our space would probably be up there on the top 10. We would use real estate easily in terms of how many touch points it takes and information where it comes from and how long a person considers and what influences them. This idea of simply ranking better in a directory is pretty attractive to doctors. Okay, I want to be number one on Google. Why? Because I think a lot of people use Google. That's about as simple as it gets in terms of how those models appeal to doctors. Ours is more influence driven and influencing consumers with content and also rankings. But it's just more nuanced and requires them to pay more attention and take more time. Edward: What gets RealSelf to grow more? Do you need to sign up more doctors and get them more interested in advertising or do you need to get more consumers interested using RealSelf to make their decision?Tom: Yeah. We need people like you to help sell for that. No, it's a two side marketplace. You need a network to grow on the supply side and in our place, it's served like a three side marketplace. We need brands to help facilitate these brands. They are the ones who have most of the margin, like botoxes of the world who need to help support the ecosystem of consumer education and conversion. Certainly, a growing, engaged audience, and high quality intent. Getting marketplaces is a work as you have experience is really tricky because you got to get those all right. I think the most important strategy for us is where you and I have talked about years ago, so you'd probably shake your head like you're still doing this? It's like, we still need to think of how over time RealSelf moves what I would describe as a passive model where it's impressions driven to direct driven which is performance oriented. Where we're getting paid when something happens. Something closer to the transaction. That can be regulatorily supported and approved. Edward: It's tough though. As you described, when you're in a business where so much of the influence happens so early in the funnel, it's so the value you're creating as early in the funnel to get credit for the revenue it's generated at the end of the funnel. Tom: 49% of our audience members who found a doctor in our platform go to the doctor's website to book. According to our last survey. I mean, if that's not leakage, I don't know what it is. Edward: Tom, thank you so much for being here today. Before you go, tell me about your quake book and how it changed the way you think about the world.Tom: I really appreciate you having me on your show and I'm a huge fan of your postings and way of thinking, of course. It's kind of in line with your BS, of like let's look at things closer and let's look at it from a data driven view. Mine is not a book. I read many years ago, I should probably get a date on this, but it was probably ‘92 or something like that. I was very fearful of what was happening, at that time, the biggest health concern was HIV AIDS. It was very much seen as unknown, anybody could get it no matter what you did. I was very concerned, as I was single, college graduate, dating, very fearful of contracting AIDS. It wasn't until I read an article in the Wall Street Journal, it laid out in really clear terms the probabilities and the real data around the risk levels of a sexual male to contract HIV AIDS. It just really helped me understand, you have to go beyond the headlines, you have to dig into hype and really dig into the math to understand something as important as your own health and safety. Just like you do with your show here and your writings. I think I had an early experience with that that helped shape my approach to lots of things in life and business. Edward: Tom, thank you so much. I really appreciate your time today. Tom: It's fun to leave the show talking about AIDS. Edward: On that note.Tom: Thanks for letting me end with that. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit marketingbs.substack.com

My guest today is Tom Seery, founder and current Executive Chairman of RealSelf, the leading review site and marketplace for cosmetic surgery. This is Part 1 of the interview where we explore Tom's career and how he found himself founding RealSelf. Tomorrow we will explore how he grew the RealSelf business.You can also listen to these interviews in your podcast player of choice: Apple, Sticher, TuneIn, Overcast , Spotify. Private Feed (for premium episodes).TranscriptEdward: My guest today is Tom Seery. Today we cover Tom's path to founding RealSelf, Drexel, University of Washington, and Expedia. Tom is now Executive Chairman of RealSelf. I'm really looking forward to this conversation. Tom, you were only a Director at Expedia when you left to found RealSelf. How did that happen?Tom: I really appreciate being on your show. I'm laughing because I think you're already disparaging me saying I was only a director. Being a director at Amazon is a big deal, but in Expedia, it is probably not as significant of a hurdle.I left Expedia feeling like I had been there for a long enough time to be empowered to go do my own thing. I don't know where you went to college, but I was in college and there were always these individuals who never graduated. They were six-year students or five-year students. What's wrong with you? Why aren't you graduating? They're actually the smart ones. Why would you want to leave this little cocoon of wonderfulness, at least at my school? I kind of started feeling that way after six years at Expedia. I think I've got the learnings I need and the vision to go start my own thing. Filled with that and a lot of naivetés, I decided to forge my own startup and go down that path.Edward: How do you get other people to trust you with limited experience? You obviously raised a lot of money for RealSelf. How do you do that when you don't have a lot of experience? I guess you had more than a lot of those kids doing it straight out of college?Tom: The power of storytelling, my friend—vision, power of persuasion. Part of a startup is you're always selling. You're selling a vision, you're selling an idea that's bigger than yourself. You're trying to convince people to leave perfectly great jobs at companies that are in this region to do something crazy, join a startup, and get paid less than the market rate.Edward: What skills that you already have to go into that job as CEO? You did spend a lot of time at Expedia. What were the important skills you developed along the way that you had going into that job?Tom: When I'm asked this question of what was the enabling force that really got you to a place where you did this? I think it's this level of confidence that I had built in myself. I do say there's a little naiveté, as I say to that, which is maybe some blind ambition and mixed in. You do have to have a very confident perspective and feel really good about your ability to take something from nothing, to do something bigger than yourself. That confidence mixed with the ability to help people distill down specific things that need to be done and work through ambiguity is a soft set of skills, I guess.While there's a lot of amazingly intelligent people I've worked with and individuals who are much more talented than me in specific areas, I think having that range and that capacity to lead through uncertainty is perhaps one of my strengths that I've been able to tap into.Edward: What were the most important skills you were missing when you took that job that you had to develop quickly?Tom: Well, I could list all sorts of things I didn't have. I would center the most around how—it's sort of an order of operations in seeing things and never having seen these things before. I didn't know what to do, what order, and a lot of guesswork.Part of that was also, who do you hire at what stage? What is the skillset? The tendency of a startup is we should be selling something. Okay, Mary, over there. Why don't you pick up the phone and start selling? You just take somebody who's got maybe a little bit of extra time and say, why don't you go do this thing? Not recognizing their skills. There's talent, there's the discipline that's associated with driving sales. I think there's that lack of understanding of how to match the activities to the right people with the right talent and then doing things in the right order. I think there was a little bit of unnecessary chaos in the early period of trying to do a lot of things in a swirl as opposed to in a methodical way. Then, not raising enough money. That also accompanies all of that.Edward: Now, let's go back to the path that got you there. I'm a big believer that the experiences we have when we're 12-14 affect our entire lives. What were you passionate about at that age?Tom: My next-door neighbor, Heather, was one of my passions. She wasn't very interested in me, but I was very interested in her. In fact, I taught myself how to disco dance—that's how old I am—just so I could maybe catch her eye. It didn't work so much.My passions as a kid were across your typical youth of beyond the sports and all that kind of stuff, I was fascinated by commerce. My teacher was a coin collector and one day brought in part of his coin collection. I just became obsessed with coins. I would go to the bank and exchange $10 for a roll of quarters so I could look through every quarter to try to find one that was more valuable than $0.25.The bank teller got to know me because I would do this cycling of coins and building my collection. To this day, my little kids just found my coin collection the other night, actually. They're like, what's this? I'm like, it was some obsession I had, but it's pretty cool. It's all laid out there. There's a lot of stuff. It's still not very valuable, by the way.That desire to find a little bit of an edge or an unrealized value was something that must have been something that was more innate or inherent in my mind in the way I was built and designed by my family, my parents, or my DNA.Edward: What about relationships with people? How is that happening when you're at that age and how did that affect you?Tom: It's interesting. For me, there has been a lot of reflection on why I am who I am today, and what are those shaping factors? I'm reflecting on that because as a parent, as you realize how you are creating the world that your child sees in many ways and how they approach it, at least. I'm consciously trying to make sure my children approach life in a very kind and open-minded way. As a kid, I had very supportive parents, but they were busy. I was a latchkey kid, as they said in the 1970s. My mother worked, and I clearly needed more attention than I was getting at home. My old neighbor once told me that what was unique about me as a kid was I was always in somebody else's living room. I was constantly in somebody else's house. They said they believe that I was doing that because I was looking for additional nurturing. I went out, got it, and found it. I think this idea of connecting to people was just something—in an unknown way to me at the time—I did for sustenance and survival, if not development. Relationship building is something I actually love doing. It's been very important to my business at RealSelf, which is focused on doctors, and they're very relationship-driven, like in many industries. It's one of my superpowers.Edward: Let's jump ahead. You graduated college and how did you start your career?Tom: Well, my actual first thing out of college was to work for a congressman in D.C. where I drove him around to fundraisers. I learned that politics is really just more about raising money than anything else. It made me less interested in the world of politics. Plus, it was funny. Back then it was very polarized. There would be parties for the Democrats and parties for the Republicans. You didn't want to mix the two. It just turned me off. I ran across an individual from a company that was a computer company in Philadelphia called Unisys. That's still around. They were doing some weird stuff around environmental remediation of old manufacturing plants. Unisys was UNIVAC, Sperry, Sperry Rand. If you have seen a typewriter—for your audience members who know what that is—it's the Remington typewriters, as an example. This company goes way back to the 1800s. They had lots of facilities that were closed, shuttered, Superfund sites, and they needed help on assessing the risk associated with those but also managing them. That was my first job working for Unisys as an environmental administrator, consultant, project manager.Edward: What did you learn there? What did you pick up doing environmental science that you took later into your career?Tom: While I was there, I decided I needed to get more analytical rigor to the approach and that's something that probably, hopefully, has sat with me through business as well. You need frameworks and models for approaching complex problems like what to do with a massively contaminated facility. I learned—both by going to school at night and getting my master's in environmental science, but also in the role—how to use a science-based approach. And then use that science and data to persuade organizations like the EPA that we were doing the right things and that our approach was right. There's a lot of negotiations, working with lawyers through litigation with multiple parties. Also, just owning my own portfolio of problems that I got to manage pretty large budgets around what's pretty fulfilling as a pretty young professional.Edward: What about the soft side, Tom? Things like the corporate hierarchy, corporate vision, and mission statements. Did you take anything away from your time there? I heard you had a fancy office when you first started.Tom: Yeah. Unfortunately, this might say negative things about my personality type. I hope not. One of the things that my colleagues would tease me about was I just didn't like the idea of working in a cubicle. I noticed that the most powerful people in the company had offices, and I wanted one too, even though I didn't deserve one.I found an empty closet that was the janitor's closet—literally mop buckets, mops, brooms, and stuff like that. Somehow I got a desk and moved in there. My buddy helped me lift it. I ran a phone cord through the ceiling, so I had a phone, and I just set up shop. No one said anything. I even put my name on the door.I would say I'm the kind of employee you don't want to hire. I didn't follow the way things are supposed to be. I guess that was an early sign I needed to be an entrepreneur, write my own ruleset, and set up things so that I'm successful. As the company I was at was a huge corporation with something like 110,000 employees when I began. When I left, it was about 45,000. I went through this incredible amount of bloodletting of employee layoffs and depressing environmental situations. Meanwhile, you'd walk down the hallway. There'd be these signs and slogans saying, our company values and what we stand for. I got a jaundiced view of how those really meant. I'm really excited for our team today at RealSelf abiding by leadership principles that are similar to those you see in Amazon where they actually help individuals recognize these are what behaviors we encourage, evaluate, and reinforce in our day-to-day. That seems to be much more materially helpful and less check the box, we got it done for the required values, and so forth. That's been my approach.Edward: Tom, what made you move to Seattle? What was the driving factor that got you off the East Coast and came out here?Tom: The janitor took back his office. I'm sure the janitor was like, what the hell is going on around here? It's funny. Edward: Maybe he took a cubicle. Tom: Yeah. He's like, okay, these cubicles are way nicer than this little windowless room. In college, one of my friends grew up in Seattle. I was amazed by how he wanted to go back to Seattle after he graduated. For me, I grew up in a small town where everybody leaves and doesn't go back. I was just like, what's up with this Seattle thing? I had visited as well. What really triggered my desire to make a move west was I was reading The Wall Street Journal in the lunchroom wearing a tie, of course. You wear a tie to a computer company job. The article talked about admins or secretaries—as I recall in the past—at Microsoft who were retiring at age 30, 31, 34, and buying second homes at the San Juan Islands. I was just amazed. How is that possible?They talked about how they had stock options. I didn't know what that was, so I had to look that up. Once I read what a stock option was and what it meant in terms of a company really valuing you as an owner, not just a dispensable employee, I realized I was a sucker. I was in the wrong space. I was in the wrong industry, the wrong size company, stage, and region. I literally told my girlfriend—who is my wife now—I'm moving to Seattle, you want to come? We jumped in my Honda Civic, drove cross-country, and got here. I have been here for over 20 years. Edward: Tom, what were the biggest failure points in your career? Where did things not go as expected?Tom: The biggest failure—the one I can't get over—is when I worked for Expedia, I recognized an opportunity that exists in the market to create a private label business. I pitched my boss on this idea of creating a way to power, say Alaska Airlines could have Alaska Hotels that we power behind the scenes, powered by Expedia. I created the concept, I named it, and I worked with the team to get it launched. Then, our divisional heads said, well, would you like to lead it? I said, gosh, no. I'm just the idea guy. I'm just here to enable others and just to help things grow. I don't want to be the leader of that. I would say that was huge. He actually said to me later that it was a big mistake too that I didn't step up. I reflected on that, why didn't I seize on that? It goes back to that sort of janitor's office that I had where I really didn't play the game well. I didn't really understand how things worked inside corporations and how you move ahead (so to speak).I just didn't do well in that environment, as I probably could have if I really learned how to seize those opportunities, career growth, and so forth. I look at that as a big miss, but I'm not harboring any more than it's just learning in life.Edward: What did you learn from that? Did you learn basically that, hey, maybe I should work for a big company, I should go start my own thing? Or is there something you take away from that that helps you run a company better?Tom: Actually, I learned that I am an entrepreneur. I do have the ability to see things that others don't. I do have a way to galvanize individuals to go and create something from nothing. What I needed to prove was that I could actually then drive. That was what led me to start my own company.It was, okay, now I can take it to the next step, which is to do things and also not be encumbered by having to report to somebody, have to get a PowerPoint presentation done, and just actually have degrees of freedom to express things in my way. I learned over time the team's way, but initially, it's a pretty selfish endeavor to start up a company.Edward: Tom, what are your productivity tricks? What do you do to be productive that most people don't do?Tom: I should never write a book on that. When you read that productivity, I don't read the books but the blog post that you can see about, here's all the things you should and shouldn't do. I kind of do them the wrong way.I'm actually my most productive self when I'm under the gun when I have one minute left, and I need to get something in. Our CFO can attest to this, I'm not a very good longitudinally long-term planner. I respond well to pressure. An example of that which would drive, by the way, team members crazy, I would be doing a presentation at a major medical conference. Right before I was to go on, I would pull up my slides and change them as I was preparing to plug in my laptop and display.As of 15 seconds before I was to present in front of several hundred doctors, making adjustments on the fly. I loved it. It led to better outcomes.Edward: The number of conferences I speak at that I asked for the slides four or five days in advance, I just don't know how people do that. I do the same thing. It's very hard to not want to change them at the last second.Tom: I always say you don't know me then if you think I'm going to get slides done four or five days in advance. It's just not going to happen.Edward: Tom, this has been fantastic. We're going to pick this up with talk about RealSelf. This is a public episode. 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In today's podcast we're going to explore the key elements of cyber security that you just can't ignore. And for that topic, we've got a guest I'm really excited about: Maribel Lopez. She is a founder and Principal Analyst at Lopez Research focused on digital transformation. In this podcast, we aim to dig into important aspects of cyber security, which can often be highly complex and intimidating and break them down to make them more understandable. We aim to avoid jargon and instead use plain language for thought provoking discussions. Every two weeks, a new podcast will air. We invite you to reach out to us with your questions and ideas for future podcast topics. I'd like to introduce my cohost, Camille Morhardt, Technical Assistant, and Chief of Staff at Intel's Product Assurance and Security Division. She's a co-director of Intel's Compute Lifecycle Assurance, an industry initiative to increase supply chain transparency. Camille's conducted hundreds of interviews with leaders in technology and engineering, including many in the C suite of the Fortune 500. Camille, welcome today.   Camille: Hello, Tom, how are you doing?   Tom: I am doing well. So for those of the audience here, our first segment in each podcast is called Security Matters, where we discuss items that have caught our eye or peaked our interest in some way. So Camille in our very first podcast, what's on your mind for today's Security Matters segment.   Camille: What I'm interested in is really what is a security mindset and is it something that can be developed? So just to explain that a little bit, I'm thinking, I hear terms like, “Hey, this company has security in the DNA of its organization.” Um, and then I hear, “and that company really treats security, like a check the box exercise.” So what I'm wondering is if a company hasn't organically developed this sense of security in the DNA, is it possible for them to get there?   Tom: Interesting. So what do you mean by “security in the DNA?” I think that seems like a, one of those buzz terms that might mean something different to whoever you talk to?   Camille: Yeah. To me “security in the DNA” means that there's no question in anybody's mind within the organization or anybody who encounters the organization that security is always at the forefront of anything anybody's doing. And it's always something that is held in high regard. So it's never something to be dismissed. So for example, like I can tell Intel, uh, to choose a slightly different topic: safety. There's never a question. Safety is always top of mind for everybody to the point where it borders on the ridiculous, right? You can walk up a stairwell at Intel and it says “Are your hands free? Be sure you can grab the railing,” you know, “get a cup holder for yourself.” Or even “it's summer time, but sure you've got sunscreen on. It overflows to beyond what's even reasonable, right? There's no question that matters.   Tom: No, I laugh. Because I've seen those signs. So it is absolutely built into the culture.   Camille: And I think beyond that, there's no question that say any executive you might happen to find in the stairwell is also following that behavior.   Tom: That’s right.   Camille: So it's not something that people preach and then it only grassroots; it's really embedded top to bottom in an organization. And anybody new who comes in, you know, quickly realizes that it's not a joke.   Tom: Right. And I think that's true on a safety sense, but we started off with security. So what would that look like? If security were to the same extent that safety was built into the way everybody thinks, what would that look like?   Camille: I'm not sure that you can guarantee security in the same way that you can guarantee safety. So in other words, you have a controlled environment in many safety situations. Let's say not probably if you're driving down the road or something, but if you're operating a manufacturing facility, you've got a pretty controlled environment. You can make sure that people are never walking where a robotic arm is swinging or something like that, right? When you talk about security, particularly in the compute space, you're by definition, you're releasing that product out into the ethers and then one step worse, you're connecting it to the internet. And if you're not doing that, you're probably not leading on the sophisticated end of things anyway, right? So if you want to be, you know, internet of things, or even just generally operational these days, you're connected to the internet to some degree. Well, how do you guarantee that? Because there's no perimeter security, right? You can't lock the door and everything's safe. You are accessing the outside world. So how did you go and do that?   Tom: It's a bit, not almost, non-deterministic like it's a never ending and journey with regards to security in that sense, like how paranoid do you need to be? What are the threats that you are concerned about? And it seems like that list would be at least always evolving, if not, never ending.   Camille: So how, how do you get your organization to put security first if it's not doing it already?   Tom: Well, I think, you know, you're raising a good question. There's no single answer for sure, but I think first and foremost, people have to realize security is everybody's business. It's not the security team's job to keep the product safe. It's everybody's job. It starts from initial product inception all the way through manufacturing and even out into the customer real world. And then the other element I think is, yeah, maybe, you know, the stick approach, you know, the keratin stick, the stick approach is just, dollarize what happens when you're not secure and what happens to your brand reputation and what happens to, you know, the costs that you incur as a company they're significant. Camille: I like it. So submit your, your budget of “I'm going to need this much money because we've had a breach.”   Tom: Yeah.   Camille: As opposed to…   Tom: Yeah, write the headline the day after the breach, and that might motivate people. This is a good topic. We should talk about security and what people should be thinking about and maybe what isn't so obvious. I think that's the podcast for today. Let's, let's go with that as a podcast.   Camille: Sounds good. Tom: In today's podcast we're going to explore the key elements of cyber security that you just can't ignore. And for that topic, we've got a guest I'm really excited about: Maribel Lopez. She is a founder and Principal Analyst at Lopez Research focused on digital transformation. Maribel Lopez founded the Emerging Technology Research Council, which is a community of business and technical leaders in Fortune 1000 companies focused on driving innovation and business value with mobile and other emerging technologies. So welcome Maribel.   Maribel: Thanks, Tom, excited to be here.   Tom: Could you tell us more about this research council?   Maribel: The research council is a group of technology leaders. They come together to talk about best practices and deploying technology. Some of it's emerging tech, but some of it's tech we've talked about a long time that just continues to change.   Tom: That's interesting. So, you know, in today's topic, I mentioned earlier, we wanted to talk about the items about security that people just can't ignore. I wonder if you could talk a bit about the overall security landscape.   Maribel: I think one of the things that's really interesting about security is that I look at it as a layer cake. There are multiple layers of security that you need in an organization. And sadly, there's no one-size-fits-all. You have to basically block and tackle every single layer of that. And we hear that from the customer base. They're continually asking us, “Hey, do I need to deploy this? Should I be looking at that? There are all these new tools. I don't know which ones I should really be diving into. What do you think.”   Tom: Can you say more about how customers view just standard security?   Maribel: I think they want what everybody wants. They want a silver bullet. They want to just throw in one tool, it'd be one and done maybe two and done. But if you look at the average corporation, there's somewhere between 40 and 80 security tools. There's definitely a sense of fatigue, particularly as we continue to get more and more new threats that seem to have an never ending set of tools. It's like how many security widgets is enough already?   Tom: Uh-huh. No, I, I definitely myself, in talking to customers, run into all the time, the, just the complexity of how one security tool impacts and influences another security tool. And just keeping that as you call it, the layer cake upright is a huge challenge.   Camille: Hey Maribel, it’s Camille here. So is it just networks that we need to be concerned about or also in points?   Maribel: Actually, that's a great point, Camille, because you know, the, one of the other real security challenges we've seen--particularly as people have gone to remote work--is this concept of aging PCs devices that don't have a trusted security stacks on them. They could be tablets, they could be PCs, it could be mobile phones. So really the end point has become very wide open and open for attack and compromise.   Camille: Do you have advice for companies now everybody's working from home, how they can boost security in those home environments?   Maribel: Yeah. So the first thing I think we have to figure out is are they using personal hardware or not? Is that hardware compromised? Because let's just say you give somebody a VPN and they're tunneling into your network, but their actual machine is compromised. You've just let somebody into the network inadvertently. So. finding ways that you can test the health of the device, finding ways to manage devices that are personally owned, but in a way that you can separate the corporate data from the personal data, I think is one of the low hanging fruits. And then hopefully getting to the point where you actually have hardware that you provided to your employees that you know, is safe and secure and that you can manage and having that ability to manage. But I think the other thing we have to think about as patching in general, Just making sure that everybody's machines are passionate up to date. And then finally, I'd say we forgot about security training. A lot of people were sent home very quickly and they just didn't have that set of best practices of knowing not to click on links or other things. Particularly a lot of people are getting caught in the early days with the concept of, you know, click on this link to hear more about COVID and what it means for you. A lot of machines were compromised that way.   Camille: So there's depth, right? And then there's also breadth, which we may not have considered so much in hardware until recently. True? I don't know, Tom, are you seeing product portfolios starting to address system health after manufacturer, after we ship?   Tom: We have. Actually, what we're seeing is a realization that a device has multiple phases over its existence. It has really the build phase, which there's a lot of focus on the build phase. And then there is a transfer phase when a device moves from its manufacturing location to ultimately to the user of the device; then there's the operate phase; and then finally the retirement phase. And security means something different in each of those phases. And so we're starting to see customers. Paying attention to what kinds of capabilities does the platform you need to be able to support in order to stay safe in these various ranges? Like for example, understanding has the device been tampered with before you provision it and put it on your network? And increasingly we're seeing companies work in this case with Intel to do that. Another area is around IOT. The devices don't have users attached to them. So they sit on a telephone pole or in a factory somewhere; they don't have a human sort of managing them and looking for anomalous behavior. And so IOT is a whole category of use cases that is very much concerned about physical security, because somebody can tamper with the device physically and just making sure that the device is operating the way we would expect it to be. So Maribel, I wonder what kinds of protections are you seeing customers implement on IOT besides the ability to update?   Maribel: Yeah, so the first thing I think we have to actually do very basic things, like change the names, change the passwords. Well, let's just assume you did that. What would you be looking for next? You'd be looking for, you'd be looking for encryption. What's the behavior of that device intrusion detection and make sure that that bias hasn't been compromised and taken over and being used to send traffic that it shouldn't be sending. So those are a few of the things that we've been talking to people about is like go the first mile, but then go the second and the third to make sure that you’re really assessing the behavior of those devices and understand what they should be doing and then understand what they are doing. And if there's a difference between those two, make sure that you're turning on the right kinds of security stacks to make sure that those devices don't get compromised or remediate them if they have.   Camille: What risks should companies be looking at in their supply chains that they might not be tuned into right now?   Maribel: Great point, Camille. I mean, the supply chain is sort of the initial thread factor before it's even at the person. So when we talk to people about the supply chain, it's important that you understand several things. First is like, what are the components within that supply chain? And can we verify that those are actually the right components--that they've been signed by those individuals saying, yes, this is the component. It's the right component. The second one that we need to think about is your suppliers themselves. They could be compromised. And if they have your data, then that compromises you. The third we should be looking at is I know, particularly now--while there might be hardware shortages or where there might be some sensitivity to budgets--we see organizations starting to buy in different channels that they might not have purchased in before. And they in fact might be getting counterfeit hardware. You know, there have been examples, many examples of, for example, networking equipment that people saw that they were buying a specific brand of networking equipment, but it turns out that they were buying a very compelling fake. And imagine that, you know, in the deep part of your network, you have hardware that is not the right product. What could that do if somebody put software that to take over your network, steal all of your data? So you really have to think on a component level. Or if you're purchasing who you're purchasing from and being able to validate that that whole system is the whole system that you bought or validating specific components of it. So there's a lot in the supply chain that I think we have to think about that we didn't necessarily consider before.   Tom: So I, I wonder if maybe we transition just a little bit here and look now into the future over the next several years. I wonder if you could talk, maybe a little bit about some of the major shifts you expect to see over the next year or two.   Maribel: Well, I think the big shift that we've been talking about for a while now, but has not really permeated into organizations is around this concept of “zero trust.” And so this is where you're doing a user behavior analytics or in the user could be a person or it could be devices, but think about creating a profile of what your known behavior is and then being able to say--using machine learning and deep learning--saying that behavior we're seeing now, it doesn't look like normal behavior for that user, for that entity. What should I do now? Well, usually you want to quarantine that person or thing, and then do some security checks to see if she'll allow them back into the network. That concept of what normal user behavior is, is a bit topsy-turvy in a world where people are working remotely or even worse they're going back and forth between work and home, some other place. So when that happens, predicting what “normal behavior” looks like can be difficult, but that zero trust concept seems to be where we're going right now.   Camille: What are some of the issues that IT departments might be facing right now, as people are struggling to figure out how to get things set up in a kind of unusual environment quickly?   Maribel: So they've had a couple of challenges. One is obviously figuring out how to support remote work, you know, how do we get devices into hands? How do we VPN clients scale? Do we want to do things like virtual desktop so that we can have better security? How do we think about that whole portfolio then? Then I think we're going into a secondary layer of when we're starting to think about zero trust or when we're starting to think about connecting more devices, how do we construct roles? How do we construct policies around those roles? What looks like normal behavior? And then I think we're also looking at, I need intelligent hardware that has intelligent software so I'm not drowning in alerts. You can see a world where people are drowning in alerts continually, particularly with more tiny devices, sending lots of information. So we're now being tasked with finding solutions that will be more predictive and prescriptive on behalf of us and say, “Hey, I think there's a problem that might be happening here. And here's what you should go look at to see if there's an actual problem.” So we talk about automation, but we're not necessarily automating the human. What we're trying to automate is getting the right information to individuals so that they can act accordingly.   Tom: Yeah, I think there's also the other element on top of that, which is the experience from the user standpoint has to still be good because if it isn't good, we've known for years and years now that employees will go around the IT solution and effectively sort of create their own platform, their own set of how they get things done maybe as like a shadow IT problem.   Maribel: Yeah, we're seeing shadow IT. Shadow IT is real. And what I think it really gets to is that user experience part that you talked about. So now I think the imperative for business leaders is to say, “Hey, we know that people are going to be using a set of their own solutions. Let's make sure we know what they're using. Let's make sure that we protect the data that shouldn't be in. Say some. Third party documents, storage that shouldn't be in some third party, email client.” Really, it's also one of the things that I think is so important about the postcode world work. We have an understanding and a need now to say, “we have to support multiple platforms. How do we do that in a secure way?” Because we also have the data imperative where we have to make sure that we've secured the data because. There are penalties around that there's regulation around that. And we have to be able to marry the user experience and the regulation and the security   Tom: To me, this seems like we're just at the beginning of a fairly significant transition when you think about security forced into it in the near term and COVID, but we'll likely in my opinion, at least continue on behind that.   Tom: Let's, let's try to have some fun now and talk a little bit about what do you think are some of the things that you just cannot wait to get away from now in this current COVID-19 scenario? And then I'm going to follow it up--I'll just tell you right now--I'm going to follow it up by what are the things that you hope to preserve that were maybe some surprises from having to work from home or all the other things that we're doing with COVID?   Maribel: I think we need to have a more balanced meeting where it's some video audio, and sometimes it just might be some messaging cause you don't need to see anybody that day (laughs). So that’s one. You know, on the security side, one of the things. I don't think we'll get away from that we're sort of forced into, but maybe it was a good force. And that's the concept of, he's got to check the settings on everything. So things like we saw in the video conferencing area, where we had, you know, video bombing, so to speak, where people were coming in and where it's supposed to be coming in. There's a lot more sensitivity now of making sure that you have your settings. Right. And then when things update, your settings are still there. So things don't turn on automatically or you've put in the right security so that people can stay out of your meetings. Things of that nature, I think are good. Tom: That's a good list. I have a couple of things, myself. One thing I can't wait to be done with at some point is the fact that every time I dial into either a video meeting or now audio meeting or whatever, my computer cannot remember what audio and video device, it thinks it's talking to, it just drives me crazy. Like, why can't we solve this problem? It seems like such a solvable problem. And then the thing that I really, really love about this time is I don't have to drive to work. I love that video for me is, yeah, it's a substitute for actual face to face contact, but I have a hellacious commute and I love the fact that I don't have to do it. So Camille, you have anything?   Camille: I think we're going to see more and more communications or interaction, style apps emerging--both for fun. Um, and also education and also work related. Everybody's got this issue with video. So what kinds of interesting things are we going to see emerge? So I'm very much looking forward to that. And I'm also concerned as Maribel said that we are able to make sure we have, we maintain privacy and appropriate security and confidentiality with those new emerging apps.   Tom: The one thing's for sure is that we won't be going back to the way it was pre. COVID-19 there's definitely going to be changes. So with that, I think we can draw this podcast to a close I'd like to thank Maribel for joining us. Your insight today was great. I think it gave us a perspective on customers and, and in particular, some of the things that people aren't necessarily thinking of when they think about security. So Maribel, thank you again for joining us. Maribel: Thank you. Tom: We invite people to please subscribe to our podcast. It is going to be published on an every two-week basis. So we'll have topics that are relevant for cyber security coming to you every two weeks, a subscribe, wherever you get your podcasts, and we will see you next time.

In this episode Tom and Emil go head to head to debate which investing strategy is superior, local or remote investing.    --- Transcript   Michael: Hey, everybody. Welcome to another episode of their moat real estate investor. I'm Michael album. And today I'm joined by my usual hosts,   Tom: Tom Schneider   Emil: And Emil, The Real Deal, Shour.   Michael: Ooh, I love that self-proclaimed nickname. Love it. And today we're going to be doing another show down. We've got a lot of feedback from our listeners that showed on episodes were well received. So today we are going to be debating the pros and cons of remote investing versus local investing dunked on done. Well, guys, let's jump into it.   Emil: That was actually a nickname that someone I went to college with gave me.   Michael: Okay. So it wasn't self-proclaimed.   Tom: Emil, The Real Deal.   Emil: We were in the same frat and we had like boxing night and…   Michael: that's so good.   Emil: He introduced me as Emil, The Real Deal!   Michael: I would never go on a boxing match with anybody that had that intense of a nickname.   Emil: Those people went down. Went down hard.   Michael: Okay. So for any of our new listeners out there, my name is Michael Albaum and I'm the head coach with the Roofstock Academy, Roofstock's education arm, and Emil, do you want to tell us a little bit about yourself and who you are?   Emil: Yes. My name is Emil Shour. I work on the marketing team here at Roofstock, which if anyone's not familiar, it's a marketplace where investors come to buy and sell single family rental homes. And so I work on the marketing team. I actually invested through Roofstock's marketplace before I was employed here. And now I have the joy of getting to spread the word.   Michael: So you're drinking the Koolaid.   Emil: That's right.   Tom: An evangelist!   Michael: That's right. And Tom, who are you my friend?   Tom: That is a deep question.   Michael: Start at birth!   Tom: Start at birth. So I am an investor. I'm a California broker. I work here at Roofstock on the investor education team. I initially worked at one of the very first publicly traded REITs, doing single family rental, kind of in the wild West of 2009. And then our CEO went and was a co founder and starting Roofstock. So I jumped over and joined him at Roofstock on the product side and the operations. And now, as I mentioned on the investor education side.   Michael: Awesome. Love it.   Tom: Before we get into the meat of the episode, a quick announcement as usual, this episode was brought to you by Roofstock Academy. Roofstock Academy is Roofstock's education program to get you to the next level. We include over $2,500 worth of marketplace credits on demand lectures, one-on-one coaching group coaching, all kinds of benefits. And we have this new benefit that we put together that Michael is leading it's our book club.   Michael: Within the Roofstock Academy, we actually do a monthly book club. We get together and read the same book over the course of the month that has some takeaway, some motif, some applicable things to real estate investing. And we get together at the end of the month and we have a chat about it. And cause now it's COVID, we're doing that all virtually, but hope to be able to do that in person at some point down the road. And this upcoming months book club book is Michael Uber's, one rental at a time. And as an added bonus for this month book club, we're actually going to have Michael Zuber on that call with us as kind of a fireside chat. And as we're going to be discussing his books, we get to hear it from the source himself about some of the reasons he wrote the book and some of the takeaways from the book as well. So now is the opportune time to join the Roofstock Academy roofstockacademy.com. So you can join us for that monthly book club and take advantage of all of the other advantages the Roofstock Academy has to offer as well.   Emil: For people who aren't familiar with Michael Zuber, he's been on the podcast twice. Good friend of the podcast episode 11 was the first one we had with him, the power of four rental properties and how it can change your life. And most recently, I think we, we dropped an episode with him this past week called how Michael Zuber Quit His Job On a Whim After Achieving Financial Independence. So if you're not familiar with who he is, go back and listen to those episodes. He's a super, super smart guy he's been investing for. I think 20 plus years. Now he knows a lot and has a really, really awesome message for other investors.   Michael: So today for our shutter and episode, we're going to be taking two sides of this argument and splitting it up a meal. Why don't we give you remote? We'll give you a remote and Tom, you're going to have to defend local investing.   Tom: Yeah. A classic episode, a classic discussion for the remote real estate. We're going to, you know, try not to be too biased…   Michael: But it is called The Remote Real Estate Investor,   Tom: But it'll be fun. It'll be fun. I don't know. Yeah. It's fun going to the other side of the table. So..   Michael: I think it's important to address and acknowledge both sides of any topic of any discussion because it's two sides to every coin and there is no one size fits all approach, even though remote real estate investing is far superior, but we're going to get to that in the episode. So a meal, would you like to go first or second   Emil: I'm game for either Michael?   Michael: Okay.   Emil: You're the moderator.   Tom: Go first Emil. That way I'm giving you a heads up. I'm handicapping you alright,   Michael: Emil, the floor is yours.   Emil: All right. So I have three points I want to hit here. That Tom is going to have a very hard time rebutting. So the first one is that with remote investing, you buy where it makes sense. So if you're a local investor, you're looking around at your local market, you're geographically constrained to just the deals around you. So if you live in Los Angeles or the Bay area, like we do, prices have gone out of control. Prices have gone up a lot and rent has not been able to keep up with that. So in certain markets, it's very hard to find cash flowing properties, unless you have a lot of money, put a lot of money down. It's very, very hard to make those work. There's still good markets. It's just harder to make the cash flow work. So when you're a remote investor, you buy where it makes sense.   You look at different markets, you look at where deals are, where the fundamentals are good and you invest there. You're not geographically constrained to only where you live. You go to where the deal is. Makes sense. The second point I want to touch on is you get to build a team instead of doing everything yourself. I know personally, if I was investing locally, I would want to do a lot of things myself, instead of relying on other people, finding the right team. And I think that's an advantage in building a team because these people are professionals. I'm not, I'm not a professional property manager or inspector any of these things, but being the person I am and liking control, I feel like I would try to get my hand into too many of those things. Whereas when you're remote again, you have to rely on the fuel.   You have to build a team. And so I think that's one of the advantages of going remote is you're required to build that team of professionals. The last one I want to touch on before I get on the floor is I think with remote investing, it's a lot less emotional and more about the numbers. I think when you go and view properties all the time in person, it's hard to ignore some of the blemishes that you bring to the property, right? You have some bias. You're like, Oh, would I live here? And with rental properties, especially for cashflow, that's not what matters. It's do the numbers make sense in a market that I like. And is this an area that I'm comfortable with? The risk it's not about is this somewhere I could see myself living. And I think if you're doing the local investing, you bring a lot of that emotion in looking at a lot of the properties you look at.   Michael: Wow. Tom, come back from those man.   Tom: I like it. I'm so confident. I'm going to slow roll a little bit. I'm actually just going to compliment a couple of your points before I stepped back and do the fade away three while kicking my leg out for you to run into it for me to get an extra free throw. So yeah.   Emil: Okay. James harden.   Tom: Okay. So to honor my comment there, I love the point about how it allows you to not kind of get in your own head and just be super data-driven about it, but okay. Onto the good stuff, I'm a good stuff. So investing local is definitely the way that you want to do it. So I think the first point that I'm going to make, which could be the most relevant is you're never going to know a market better than your own market. And me personally, I've been studying the market since I was about eight years old. I'd go to Safeway, I'd get the homes and land magazine. And I would just study comps. And I had this long trend of analysis. I know the different markets, different property types, how they're trending. Heck I even know the agents, right? The Kerses family out here, great agents. So you're going to know a market a lot better just from, you know, kind of hounding your local Zillow or Redfin or whatever. Basically the adult version of the homes and land magazine from the Safeway. All right. The next point is, man, what value is it to be able to touch and feel the house, you know, to go up to the house and touch the walls and kind of like smell it. You can't do that remotely. And one of the reasons people like investing in real estate is because it's a tangible asset. It's, it's something, you know, you're not buying some future of gasoline because the price of crude is low.   You know, it's an actual asset that some people actually use using by doing it remotely. You're kind of getting away from that. You're getting away from that touchy, feely wonderfulness of buying a house that you can actually see and walk into. And you know, you get out of the ethereal, if I steal a word from Michael here, it's a nice to the realleal, so, you know, you're being there. So that's number two is the tangibility of it, of actually being there, getting to go see it. It's pretty awesome. And lastly is you're not going to get taken advantage of, you know, doing things over the phone. You're going to have these quick talking sharks, selling you snake oil and all kinds of trouble. So I like to shake somebody's hand or I guess nowadays is you do an elbow bump of, you know, getting, if I'm going to do business with somebody, I'm going to want to get to know them.   I'm going to want to look them in the eye and touch elbows or whatever we do now with COVID and you can't do that in zoom. It's just super awkward. So there you go. That's why you want to invest locally.   Michael: So, Tom, what would you have to say to some of the meals points that he brought up?   Tom: All right. Let's do it so well, I, I quite agree with a lot of appeals points. I totally agree. I mean, I don't want to waste my, you know, momentum for when we switched sides of the argument, but there is a lot of limitations on only looking into your own area, but you know, just when we say local, that doesn't mean you have to do everything, you know, within five miles of your house, roll it out a little bit further, you know, go 30 miles go a couple hours. So we were talking before the episode where we were talking about our experience with local investing and I have done some stuff working for fun, not with my own money, doing local investing, but Michael has invested locally. I would consider, you know, within that three hour range that kind of counts as local. So to address that point about, you know, not being specific things in your area, you know, rollout the distance, the radius, spread it out a little bit further. You can still do things locally. You know, if you're uncomfortable going 2000 miles away go 200 miles away like within striking distance. So that would be my point number one.   The point number two, about being comfortable about using other folks is, you know, it's a muscle and if you're uncomfortable, you know, going a hundred percent building a team, that's okay. Just kind of pick points and spots and build that muscle of getting trust in getting good at letting go of things. And honestly, that's a big problem. I know for a lot of people, especially investors who are pretty generally pretty type a kind of go getters is to consciously make an effort of letting go of certain aspects of the business. So you can focus on where you have higher ROI.   Michael: I've got a question for you, both that you both kind of touched on Amelia, you mentioned that if you're going to invest remotely, that you can't go see the property and that that's difficult to do. And Tom, you mentioned, you know, being local, you're able to go touch and feel and see the property, but couldn't someone who's investing remotely still go touch and feel, see, and smell and taste. I think you included in there, the property,   Tom: If you're good, you will.   Emil: That's right. Always want to lick the walls before you sign those docs.   Michael: Check the lead based paint disclosure before licking the walls.   Emil: Correct. Actually, I think the right thing to do is to lick it, to make sure that there isn't lead.   Michael: That's right.   Tom: It's your tongue turns blue then…   Emil: Trust the verify.   Tom: No, you're totally right, Michael. I mean I've for some of the house that I've bought, I've seen them, but for most of them might have nod and what the ticket is, is having an inspector because honestly, if I go to the house and my ability to assess, you know, issues is not going to be better than an inspector who like does this professionally. So, you know, having the idea that, Oh, me going out there, I'm going to be able to do a better job than some inspector is a little bit of a stretch. So, you know, having confidence in the credentials and you know, where these inspectors are coming from, and then also looking at their homework. So like when an inspector goes and does an inspection on a house, they're filling out a super thorough report on what was identified. And that is including pictures and descriptions and as well as adding any followup items that are on there. So I'm not really sure where I'm arguing on this. I got, I got going, but you know, to the point, like I think it's, yo u know, going to see the property before buying it, you could totally do that. Even if it is remote, you know, there's no reason why you couldn't do it. And it makes you get comfortable to be able to get in the game. You know, that's an expense that you can use as a writeup. I'm not a tax professional, but for that in there,   Emil: Thank you, Tom, for further arguing my remote point but no, I think you're right. I think you can, like, let's say you put an offer on a property you're in escrow. You can go visit that property, put some eyes on it, make sure everything looks good. Yes. You know, I rely on pictures and video and things like that to like before the offer process. But I actually want to make that part of how I operate going forward. Obviously with COVID, it makes it a lot tougher, but the markets I invest in, I want to be visiting those more regularly. I haven't at all, but I want to be. And I think it makes a lot of sense if that makes you more comfortable go visit the property before you finish escrow.   Tom: Yeah. I think I personally kind of like Seesawed a little bit on like, you know, needing to be in the market where kind of when I was in it, I think it was really important to go and check it out, to go in the other way of seeing like, nah, you don't need to see it at all. I think it's been to find a happy balance. Like if you buy a property and it hits those check boxes that you're looking for with regards to population and schools and other kind of local dynamic economy, like great. I think it's some people need to be comfortable by taking a look at the market. Great. Go be comfortable and do that. Just know that, you know, there isn't necessarily a one size fits all answer.   Emil: Yep. And one last thing you mentioned being local, you know, your market way better than being a remote investor. I think that's true. I think that that'll always be the case you live there, you just, you know, what's happening. One thing I really trying to do though in the markets that I invest in is like get more ingrained in local news outside of just real estate. So I'll set up Google alerts and get the top things happening in that city to just like better understand what's going on. And I think this is where talking to your property manager regularly, again, visiting those markets regularly doing drive-through of different neighborhoods. It's just going to get you better and better at these different markets.   Michael: That's a really great point Emil. I'm going to piggyback off what Tom said. I always talk in the Academy with members about if going to the market is what's stopping you from investing then by all means go, but you'll have to kind of face the reality of everybody has personal biases and you're not going to be able to unsee undue, unexperienced, the things that you see and do and feel, and experience in that market for better or for worse. And so the ideal scenario is you pick a market that has good numbers, has good metrics and you go see the property and you love the property and you love the market, but that's not always the case. Just like you said Emil is that it doesn't necessarily matter how it makes you feel because you might not be living there. If the numbers make sense and the facts are there to support the market, it could still be a great investment independent of the fact of whether or not you enjoy it. And so if you go somewhere and think, wow, I would never live here. I don't want to invest here. Now we're mixing emotion into the decision making process, which can really be dangerous. And so if we can go with the guys of understanding that it doesn't really matter how I feel, if I feel great, that's kind of a cherry on top, but I should still be willing to invest. Even if it doesn't make me feel good. That's something to think about.   Tom: That's a great point. I mean, so much of this is an introspective exercise where it's like, okay, what do I need to do to know that, you know, I feel good about investing in this area. And I think it's a great point, Michael, that it comes to a point where you need to be a little bit just focused on the numbers. But if you know that you're going to need to kind of touch it and take a look just at the market in general, then there's no reason that you can't do that. And I like the happy balance of, you know, if there's a market, you know, going to take a look at the market and not necessarily, if there is a property to look at great, go look at a property, but you don't necessarily have to look at the one that you are investing in, but you have like a general kind of taste of the area. If that's something that's important to you, there's no reason why you can't do that. But to Michael's point, like at the end of the day, the numbers are really what carry the day trust in the process.   Emil: All of us kind of agree that the numbers, aren't the only thing that drive us, right? If it's like awesome cabaret cash on cash, but it's in a really rough neighborhood where we don't see that neighborhood turning around or whatever it is. I don't think any of us would invest there just because the numbers on paper look really good. There's a lot of other factors that we also take into account as well.   Michael: Yup, absolutely. Alright. This was really great. And I want you guys to flip flop, Tom, why is remote investing far superior than local investing in meal? You've got to defend because you got to go first, last time. So now Tom's on the offensive. Fight!   Tom: Emil, welcome to 2020. The world is your oyster. Get out of your little hole, get your head out of the sand, you Flamingo is that the animal does the…   Michael: Ostrich.   Tom: You're, you're being an ostrich. And you know, there's been some advents in technology that has allowed us to invest remotely. One of them is cloud computing that allows for you to have access to incredible amounts of data outside of your backyard. So cloud computing, that's one, the other is, uh, mobile phones. Uh, there's all kinds of cool technology that didn't exist before that Roofstock leverages and other, you know, potentially brokerages. Um, have you guys seen, have you heard of the 3d walkthrough? Right? So inside maps, Matterport, very cool companies that allow you to basically walk through the house as if you are there. Not only are you being more psychogenic, you're just working smarter, not harder. So you're able to check these houses out at a really in depth level without needing to go there. You're saving gas mileage. Think of, you know, you're being green, okay. Cloud computing, tons of data, cheap data on markets and evaluating other markets. Number two, mobile applications, mobile devices. And with that is the ability to have these really cool 3D walkthroughs to have a proliferation of inspections available. I know at Roofstock we use some cool mobile phones in using for our inspection capture leading to my third point, this ecosystem, right, that has developed around companies. So one such as Roofstock that basically does all the work ahead of time. All the benefits you would get from local investing in that, you know, being able to find these local partners, you can do really easily through platforms like Roofstock, which will connect you to all the partners that you need.   Be it insurance, be it in lenders. Now I'm not saying you can't use that same grit that you would be using locally, remotely. You should still apply that and apply it in a very diligent way, but all the drawbacks of doing it remotely that used to exist no longer exist, just because of the way the technology has advanced the way the cool companies like Roofstock has advanced. And the proof is in the pudding. I know just off the top of my head, I think there's been, you know, over over $10 million of transaction within the Roofstock Academy community, over $2 billion worth of transactions on the Roofstock community. So the proof is in the pudding. It's, you know, if you're not doing it right now, Emil, remotely investing you're behind. So, so get on the train.   Michael: Tom, what do you have to say about the interwebs, the online, the www online's making remote real estate investing easier?   Tom: Uh, you mean the connected tubes?   Michael: Yeah,   Tom: It honestly it shrinks the world. It's fantastic. And the big value points I think in there is just access to data. So being a data driven investor, I want to know what are some reputable sources for evaluating the local schools. I want to do a walk around on that block. Oh, wait a minute. I, can I go to Google maps and do a little walk around? That's fantastic. And honestly, again, you get a pretty good taste of, of being able to do it that way and getting the curb appeal and all of that good stuff. So the internet, I mean, it, it honestly would not be possible without it, but just as we've, since we've come so far since AOL and 56K modems or whatever, it's like, you know, on my phone, I could do a diligence on a property that honestly, the top private equity or top real estate investment companies could do it, it would cost them thousands and thousands of dollars to do on an individual property that I could do for free, just on my mobile phone while I am walking in my living room, in a local area. So the cost of doing the kind of diligence at an incredibly thorough level has gotten so cheap and so accessible. That there's just no question that remote investing is here and jump on board toot toot. Get on the train toot toot.   Michael: Alright Emil, you need some ice. Are you feeling okay? Are you ready to start swinging back?   Emil: I'm ready. You know what? I think Tom just convinced me to become a remote real estate investor. You opened my eyes. Michael: You didn't know this other world existed.   Emil: I had no idea about this, what podcast are we on?   Michael: Someone get this guy, a mobile phone.   Tom: Yeah get him a mobile device connected to the internet.   Michael: To the interwebs.   Emil: All right. I'm going to try not to rehash too much of what Tom mentioned. Hold on. Let me get my dog to shut up, one second. Zeke!!   Tom: So Mr. Michael Album, I hear you are doing some remote investing to the extreme. I've been following you on the Twitter world and yeah.   Michael: That's… No one should do that. That's a scary thing to hear.   Tom: Yeah. Doing remote in the United States is one thing, doing remote on the, across the Atlantic?   Emil: Portugal! Michael: Going very far East, stopping once I hit Europe, I'm actually currently investing in some properties in Portugal. There is something called the golden visa that I'm looking to take advantage of. And one of the ways to get a golden visa, which is basically permanent resident status, and then ultimately a passport after a five year period is by investment in the country. And so that can take the form of a few different ways. And so one of the options is investing in property. And so I'm looking to actually flip a property right now and then purchase a property for a long term buy and hold to get me access to that golden visa.   Emil: [sings] You go the golden visa, you got the golden visa. It's made up, it's fairy dust that someone sold Michael   Michael: And so you, Oh, that's right. That's right. Yeah. Speaking of buying snake oil.   Tom: Was this specifically for the golden visa.   Michael: It is, it is. So the returns are not anywhere near as attractive as what you can get in the States. And so the fact that you can buy an investment property and have it generate some kind of return is really a cherry on top. The real premise and the real Genesis is to get a golden visa and ultimately a second passport.   Tom: Wow.   Michael: So just being able to travel work, live, receive healthcare in the EU, any of the EU countries essentially for free. And so having the benefits of an, of an EU citizen and potentially be an EU citizen after five years.   Tom: Wow. So you would be a Portuguese and an American citizen. Yes. Very cool. Yup. Nobody knows any Portuguese out there that wouldn't mind tutoring me a little bit. I would love the help because I am pretty useless.   Tom: Portuguese is a difficult language. I went to Brazil for a little bit and Holy moly. I do not. Yeah. It was a…     Michael: It's so foreign and it's so fast.   Tom: Obrigado!   Michael: Yeah. Yeah. That's right. That's thank you for anybody listening. Nobody got it. Alright. Emil you're ready to punch back?   Emil: Alright. Knowing your market. I think that's a big advantage. If you're local, when things happen, you can go visit. That's another big one. The other three I wanted to mention are I think it's a lot easier to project manager rehabs. A lot of times when you're, you're doing a rehab or any type of any type of rehab from distance, you're trusting a lot of people project managing it. Isn't the easiest. Sometimes property managers will do it for you. It's a service they will provide. Sometimes they don't, but you're relying on pictures to kind of make sure each interval of the rehab process is happening. And a lot of times the little details are harder to see through pictures or anything, right. You want to make sure that it work is done right. And I think when you're local to be able to go and see the work that's being done, it's a huge advantage to make sure the little things weren't skipped or things that show up in picture that look okay, but you actually view it in person.   You know, the paint is splotchy or things like that. You can verify those things in person, much easier to do when you're local. The other one is this kind of ties into knowing your market, but where you live and where you are locally, you, you probably believe in that area. You probably believe in that economy. That's probably why you're there. You have a job, whatever it is when you're local, you probably have a sense that this area is going to do well for years to come. And you're trying to ride that wave of appreciation. Whereas when you're going remote harder to know all those things, you don't live there. You're not living and breathing and in that place and knowing what the local economy's doing. So I think when you're a local, you just have a better sense of is this place on the rise? I think most people live somewhere where you think things are going well. So that's another advantage to local, I would say. The last thing I talked about building a team, when you're remote, you have to build a team. I think when you're local, you build a team too. People will find your deals, property management, all those things. But the advantage of when you're local is you can actually go meet those people face to face, interview them a lot easier than when you're remote and you're just calling people. There's less of that personal connection. And I don't know when you meet people in person, you take them more seriously. They take you a little more seriously, not always, but I think it's actually easier to build a team when you're local. You do it for remote and local. And I think it's just easier to local. And that's it. Tom, go ahead.   Tom: Alright. Last couple of points I'll make on yours. You know, talking about investing in a market that you kind of believe in, you live in something we've learned over the last, I don't know, 30, 30, 40 years of investing is diversification is key. And a lot of people, their biggest investment that they make is going to be the house that they own and live in. And if you're making your biggest investment, obviously in an area that you live in, cause you live in it, why would you, you know, basically just double down on that same area, when you can diversify a little bit and put that money to work in an area that, you know, there might be some correlations with the economy because there generally is, but is subject to other upside and other kind of benefits. So being able to place your chips around. So instead of owning multiple houses in the same area that you live in already, where you have your biggest investment, the benefits of mixing it up and putting it into a different area, there's lots of value to diversifying that play.   Michael: Would you say Tom, that you would peanut butter spread the risk?   Tom: I love peanut butter spread. So my wife has started getting groceries from this place called Thrive Market and they have peanut butter in a spreadable packet. Pretty sweet.   Michael: Different than Justin's?   Tom: I don't know if it's Justin's I don't think it is, but anyways, it's not in a jar. It's like toothpaste packets. It's like toothpaste   Michael: Just on the go packs. Those things are great. Yeah.   Tom: I think I'm kind of violent about it. Cause I like burst a hole, like in the side. So peanut butter spread the risk, right? Just like spreadable peanut butter. You spread it apart. I guess the last kind of general point that isn't necessarily arguing to one way or the other remote or local investing is with all of this. It's not a one size fits all. I think all of us agree that, you know, while there is a little bit of unique requirements for investing remotely, ultimately the different types of returns it gives you access to and the diversification it gives you access to is it's worth that little bit of overhead. And as we mentioned before, then this episode, there's, there's different ways that people can get comfortable in different areas. For some people, they just get it right away and they can jump right in and invest.   And that's awesome. That's great. For some people they want to be a little bit more hands on and go and visit the area, perhaps even talk to property managers and that's okay too. Just kind of know where you sit and know what you need to do to get there either to move forward with an investment or to move on to some other type of investment. So I'd say as a theme in this podcast and real estate investing in general, have a bias for action of getting yourself into a position to either make the investments or to move on. Let's see the last little recurring theme that I think probably talk about every other episode is, as a remote investor, there really is no one as important as your property manager. So even if you're doing it locally too, and using professional property manager, your investment is gonna live and die by how well someone's going to be able to manage that for you and get, at least if you're not self managing and using professional property manager. So, you know, it doesn't matter if you're doing remotely or locally, but you know, especially if you're doing remotely, since you're not going to be able to visit the property that often do not sleep on the work that it takes to assess and qualify a property manager because you know, buying right can take you so far, but ultimately, you know, winning the operational metrics and keeping your overhead low is going to be on getting a good property manager. Who's going to keep that property occupied. So those are my final tidbits on it.   Emil: Well done. I know I don't get a rebuttal, but I thought those were all very strong.   Michael: I thought you both had strong points nicely done to you both. I'll share a little bit.   Tom: I'm excited for the Michael tidbits.   Michael: I was just going to share that I've done some, you alluded to it previously, Tom, but some quote unquote local investing. It was really, my first investment was down in Southern California, which we talked about on a previous episode, but I couldn't fathom investing remotely or out of state or really at much of a distance just because I was so green. So new to this space, you know, Roofstock wasn't around this whole education piece for a, Roofstock Academy wasn't around. And so that's all I knew. And so it was about three hour drive away from my grub. So it was semi local and I went and touched and toured a bunch of properties and met with my local agent who is a family friend who is also my property manager. So to Neil's point, we could touch a shake, hands, have visual rapport, physical rapport, which I'm kind of old school in that regard.   I would always prefer that. I think it's much more meaningful than the remote over zoom or over the telephone. And so I was able to be very hands on with that investment. And it's gone really well, given a long enough time horizon for anyone who listened to that first episode where it just like that property has been through several road bumps, several hiccups and speed. So the fact that it was local did not have any bearing on how difficult it was as a first property. It did not have any bearing on how bad or how sideways things could go. And that's been by far probably the worst experience I've had with any of my other investments. And so you can have good people and bad neighborhoods and bad people in good neighborhoods in local markets and at distance markets. So it's, you know, again, I think we said it before, it's not a one size fits all.   You just, every investor has to figure out what makes the most sense for them and Tom, you were just touching on it. I think if you need to baby, step your way into investing and start local or semi local, do it. If that's what it's going to take for you to start getting into the real estate investing arena, you know, start where it makes sense for you. Some people have no problem letting go of control and just doing it at a distance and setting up a team and kind of taking a back seat so to speak. But if that's not, you figure out how you operate as a person and figure out what's going to make the most sense for you. And then just go do it.   Emil: So for anyone who was curious about Michael's first deal, we covered that in episode 12, Here's What Our First Deal Looked Like and How They're Doing Today. That was the name of that episode. But I think, you know, the, the main theme, I'm glad you touched on that is there's people who are successful doing both right. There's people who are just local investors in expensive markets who are doing really well. People who just do remote investing, who are doing really, really well. And there's some people who do both, right. They do some local, some distance. And I think that's like the main thing we want to highlight. I don't think one is necessarily better than the other. It kind of just depends on your situation. And I think there's people doing well and doing both,   Michael: I think I want to just double down on that statement Emil. It is so dependent on who you are as a person and where you live. Because if someone's living in the Midwest right now, listening to this, so like I'm surrounded by deals. Why would I ever go remote when there's tons in my backyard, us being all Californians were, you know, semi-forced to go remote and you know, forced to go invest at a distance. So if that's not, you don't think that, Oh, I have to go invest remotely because of everything they talked about in the podcast, maybe, you know, our remote is your local, Oh, that's a trademark, Michael Albaum,  July 28, 2020.   Emil: Our remote is your local.   Michael: Yeah. So just go find where the deals make sense. I think is the one of the biggest takeaways because they could be read under your nose and you might not even know it because you're so focused on remote. I absolutely looked at local as a first opportunity semi found it and then how to go remote after the fact.   Michael: All right guys, I think that was a great rap battle for remote versus local investing. And before I let you guys go, I've got the question of the episode for you. Are you ready?   Tom: Let's do it.   Emil: Always. I'm rabbit, baby. I'm winning this rat battle.   Michael: What's your favorite breakfast cereal and why?   Tom: I'm ready.   Michael: Tom go. It's called Magic Spoon. It's not made with normal sugar. It's made from the sugar of raisins. So it's actually being promoted on a lot of podcasts. We're not being paid to promote magic spoon here. We have no affiliation with any royalties, but we're not opposed to it. And so magic spoon is basically children's cereal for adults. It is delicious. It doesn't have carbs. It's full of protein. What's great about not being, you know, I could just kind of say, say the good things about it and not necessarily have a check, a reference check on it, but it's, it's really good. Magic spoon, peanut butter. It's great raisin sugar.   Michael: So if it doesn't have carbs, like what is it like, what is it made of?   Emil: Fairy dust.   Tom: Magic spoon.   Emil: I've heard of that. It's expensive. It's not cheap.   Tom: I can't believe how expensive it is. Don't get me going on that.   Michael: There was this like frozen yogurt place that came out. I don't know. Maybe this is like going back 15, 20 years and kind of dating myself. But it's got like golden spoon, in Southern California, but I like the name gives you no indication of what the thing is. Like you would never think that's an ice cream place because it's called the golden spoon. Am I the only one that thinks that, sorry, golden spoon… If…   Tom: Spoons got range. Alright Emil, how about you, favorite cereal?   Emil: Does granola. It's like a granola cereal kind of thing. It's called Autumn's gold. I found it recently a Costco and it's like all nuts and cinnamon. So kind of same deal. It's paleo. No carb. I try to eat paleo during the week, at least. So that's probably like the only cereal these days I eat. But if we're, if we're aligning the clock, favorite cereal growing up, it's gotta be them Lucky charms, man.   Michael: They're always after me Lucky charms.   Tom: Are you a guy who eats non marshmallows until the very end? And then you just go all marshmallow.   Emil: Is there any other way to eat Lucky Charms?   Michael: I don't trust anybody that eats Lucky Charms any other way?   Emil: Yeah.   Tom: Yeah. And remember that like promotion. They are like, oops, we made a mistake and just marshmallows, man, that person on the factory line. What a moron!   Emil: Or a genius dude. He sold so many Lucky Charms boxes and he was promoted to like vice president.   Tom: VP of product.   Michael: That was like Playdo. Wasn't that? A mistake invented by mistake. So many of the greatest things.   Pierre: Sticky notes.   Tom: Sticky notes.   Michael: Yeah. There you go. Alright, Pierre, what's your favorite breakfast cereal? And please don't say like the last pizza episode. I don't like breakfast cereal.   Pierre: Well, okay. I don't eat breakfast cereal for breakfast. It's more of a dessert. If I'm going to eat cereal, it's going to be before bed.   Michael: I don't always eat breakfast cereal, but when I do it before bed.   Emil: I'm with Pierre man.   Tom: I like that tip. I like that take, unless it's magic spoon. Go ahead.   Pierre: Hmm. Chocolate granola, chocolate hazelnut granola.   Michael: Nice, particular brand?   Pierre: Oh man. It doesn't matter, really. I was raised on coupons, so whatever's on sale.   Tom: Michael, you got one?   Michael: You guys are all healthy. I'm like cocoa puffs fan. I like my milk, but I prefer it to be chocolate. So that's really all it is. It's just a vehicle to get more chocolate milk. I don't really care how it tastes.   Emil: That is true. Just gives you chocolate milk at the end.   Michael: That's right.   Tom: I had a roommate, shout out to Carson Mobly. His, uh, he had this quote about food is just a vehicle for sauce.   Michael: I've always felt that way about carrots and celery. It's just like, how do I get bar ranch into my mouth in a faster, more efficient way.     Tom: It's just a vehicle for sauce.   MIchael: That's great. All right, everybody. That was our episode. Thank you so much for listening. If you liked the episode, feel free to give us a rating or review wherever it is you listen to podcasts. Also feel free to subscribe so that you get the most up to date episodes automatically downloaded to your listening device. We look forward to seeing you on the next one. Happy investing!   Tom: Happy investing.   Emil: Very formal, happy investing.  

In this episode, Tom and Michael chat with Matthew Whitaker from GK Houses about what it takes to have effective property management and how investors can set themselves up for successful relationships with their PMs.   --- Transcript   Michael: Hey, everyone. Welcome to another episode of The Remote Real Estate Investor. I'm Michael Albaum. And today I'm joined by Tom Schneider and Matthew Whitaker with GK Houses, Matt and GK Houses is one of our preferred property management partners at Roofstock. And so we're going to be talking to Matt today about what it's like to be a property manager. What are some things that we as investors can do to make their lives easier? And give us a little bit of insight into what a day in the life of a PM looks like. So let's get into it.   Theme Song   Michael: Matt Whitaker. Thank you so much for joining us today. Really, really appreciate you taking the time to be with us. How are you doing?   Matthew: Yeah, I'm doing great. I'm excited to be here and excited to do this with you.   Michael: Awesome. And you're down in the Southeast, right?   Matthew: I am. Yeah. I'm in Birmingham, Alabama. That's where our corporate office is and we're in eight different markets. So we're in three markets in Colorado and then we are also in Birmingham, Nashville, Atlanta, Chattanooga, and Little Rock.   Michael: Awesome. Awesome. And for those of our guests who might not know you, can you give us a little bit of background about yourself on GK houses, help everyone get to know you a bit?   Matthew: Yeah. I'd love to some, the CEO of GK houses. I started it about 13 years ago during the last recession. And during that kind of, 07, 08, 09 time when the market crashed, I owned about 30 rental houses at the time and had a hard time selling those once the market crashed. Most of those were in the low to moderate income world and the ability to sell that went away. And I started a property management company, converted all those 30 over into rentals and was able to get some of my investor buddies to also let me manage them. So I got up to about 70 houses pretty quickly, and that was kind of how I lasted through that recession through 08, 09, 2010 was by managing homes in about, we also were selling homes. So we were doing some turnkey stuff at the time, kind of original before it was very popular. And, but in 2013 we really started off focusing on the management business. And we decided at that point we managed about 250 homes right here in Birmingham. And at that point we decided that we wanted to get to 25,000 houses under management. And so we've been growing that ever since 2013. And today we manage somewhere around 26, 2,700 homes in those eight markets that I talked about earlier.   Michael: Great. And did you have any personal management experience in the real estate arena or did you go straight from owner to manager?   Matthew: I always swore I would never be a property manager or a real estate agent…   Michael: You're in good company.   Matthew: And a lot of companies did that same thing. Yeah. And so never, never say that to yourself, but now I'm a real estate agent and a property manager. And so I managed my own homes. So I had been doing it ever since I first got started, even my first house I ever bought, I still own, and I have rented it ever since. And that was a disaster story. So it's amazing that I'm in the property management business. So yes, I did have a little bit of management experience. I had been in the buying and selling business for about seven or eight years. So I was very familiar with what a manager did. I had some other third party managers that manage some homes for me for some time and found all the things that I didn't like about a property manager. And so I decided to just do it ourselves, with GK Houses.   Michael: That's great. I love that. You've got that personal experience that you did it for yourself and then went into business, helping other people do it because it just shows that you understand the business kind of from the ground up, which I think is so huge. And you're able to treat the rentals as if they were your own.   Matthew: Yeah. There's nothing that replaces knowing what it's like to have a $500 bill come through, or a $2,000 air conditioning, a replacement come through where you're expecting that cashflow to pay the mortgage. And now all of a sudden you've got to figure out some other way to pay that mortgage. So it definitely gives us empathy for our owners. And that's something that we've tried to communicate and teach to the team members that work for us is, you know, and I'll often say to them, what if on Friday you found out that I was going to pay you $500 less with your paycheck. And they, you know, that would be disappointing to them if it was a surprise. And that is the same surprise that we were calling up from time to time. And unfortunately having to deliver bad news to owners because inevitably things are going to break when an owner buys a rental house they're in business and you're going to have expenses for that business. And so we've learned a lot over the years about having reserves and making sure that you can afford to pay for the lumpy expenses that are in this business, but it still requires a bunch of empathy from our team members when they're communicating with owners and having deliver, you know, have tough conversations.   Michael: That's great.   Tom: You touched on reserves. I'd love your thoughts, Matt, on, you know, what do you think an appropriate like reserve level is?   Matthew: Yeah. If I was in new person getting into the business and I bought a foot, let's call it a fully renovated home. I would probably stay about. And obviously depending on the age or the vintage of the house, I would stay about $3,000 out. So I would keep at least $3,000 available at all times. And then as I got to a bigger portfolio, obviously the per house number would come down because you could dilute that across the portfolio. But getting started, I would say somewhere around two to $3,000, just available to make sure that it doesn't affect your lifestyle. And if you do have one of those expenses that comes through   Michael: And in that same vein, most lenders are going to require a cash reserve amount for PITI. Would you consider that a couple thousand dollars to be that same pool of the reserve bucket? Are you saying above and beyond this? The reserve?   Matthew: Yeah. I'm just talking about expenses and then capitalizable type items. I mean, I may even start as you started to build a portfolio and this is one of the reasons I always tell people don't buy one rental house. I mean, certainly try it on dip your toe in the water, but it's way easier to own 10 rental homes than it is to own one because you all these expenses start to get diluted amongst your cashflow of your portfolio. And then it doesn't become as big of a deal when you have a $500 bill come through. If you have a rental house, a $500 bill comes through, you're literally writing a check out of your back pocket. Sometimes if you have 10 rental houses and a $500 bill comes through, it's just another number on your statement. And you're just calculating your return based on that. So I think of that in excess of that, I'm just thinking of, in terms of repairs and maintenance,   Michael: Tom like you always say peanut butter spreading that across.   Tom: Peanut butter spread the risk. I love that quote yeah, 10 properties, a lot easier than one property.   Matthew: It is, and absolutely if you're not having to manage all of them, any, even if you are, obviously you're spreading that risk across multiple residents with different jobs and different industries. And if somebody invests through you, they can even do it across different markets. So 10 seems to be the magic number in my opinion.   Michael: Great   Tom: perfect segue talking about, you know, as long as you're not managing it, and let's talk in a little bit about the roles and responsibility of a third party property manager that you would hire, what are the different things that services that they would provide in the process?   Matthew: I really think the services of a property manager fall into two buckets. There is the accounting bucket and the communication bucket. And obviously under that communication comes execution, but let's talk about accounting first. Part of our operations is accounting for our homeowners. We want to make sure that the money comes in on time, that the resident's abiding by what the lease term says in terms of money paid. And so we're going to kind of hold the resident to making sure financially that house is getting taken care of. And then we're going to account for all the dollars that come in and of course paying any expenses that we need to pay out of that money that comes in. And then the other side is just operations and communication around those operations. We're obviously going to make sure that the house is taken care of. One of the interesting things, especially around small multifamily and single family.   There's a lot of logistics involved in that. I always say it's a communication challenge and a logistics problem. So it's about, you know, having a one house, one owner or one vendor, you're always communicating with somebody. So you need to be really good at communicating. And our property managers become more like air traffic controllers. They're making sure the vendor knows where to go. What time to be there has the resident's information. The resident knows that the vendor's coming. The owner knows that there's a problem at the house if it exceeds a certain amount of money. And so you're having to keep all of these people in the loop and make sure that the planes aren't running into each other while you're that. And so, again, it just boils really down to accounting and making sure that I's are dotted and T's are crossed and then operations and communications.   Michael: Matt, you said something that I want to circle back to that the owner knows if there's a problem, if it's above a certain dollar amount. So from folks who have never purchased a property, what do you mean by that? And why is that important to highlight?   Matthew: Yes. So you hire a private manager to basically take care of the problems and you don't want to know that something small has happened at your house. That's not really going to affect your lifestyle. It's just kind of brain damage for somebody to call you over a hundred dollar issue. So we have, what's called a $500 kind of threshold. And if one of our maintenance guys goes out there and he sees that this thing's going to exceed over $500, we're going to contact the owner before we do anything and provide them an estimate. But if it's below that $500, we're generally just going to take care of that issue. And then the owner's going to see that happen. You know, see that payment on their statement. You hire a property manager and you will be circled in on all the big issues, but we want to handle all the small issues. That's why we feel like you hire us is for a turnkey solution, not to have to sweat the small stuff.   Michael: Awesome. Thanks for clarifying and Matt, in your opinion, you know what separates the good from the great property managers?   Matthew: Yeah. We go back to accounting and communication again, getting the numbers right. Is so incredibly important and you'd be surprised at how many property managers get that wrong. The other, again, communicating, it's so hard in our business to communicate and trying to make sure as an owner. And of course I was in this position. So I know exactly how they feel. If you don't know what's going on, it's not like you expect the best is happening. And so you want to make sure that you're clearly in the loop and you have the confidence and the trust of your property manager, that if something bad is happening, that you're going to be well aware of it. And also communicated with what we call uncomfortable transparency, which means I'm not going to withhold information from you to make it easier to tell you or more palatable or, you know, easier on me really, because I don't want you to get mad at me.   So we want to make sure that we're giving our owners the truth. And we call that also entering into the danger and telling them, being willing to tell them exactly what's going on with their house so that they, if it is a big issue, they can make the best decision for themselves. And also try to remain as objective as possible when we're communicating, because money can be very emotional for people. And if we can kind of steer them towards the best solution, then we want to make sure that we're doing that based on our experience as a property manager, you know, we do have the benefit of, and especially in the South right now, it's getting really hot and air conditioners are breaking well. We have the benefit of knowing that air conditioners break and things we've done in the past and mistakes that we've made in the past. So, you know, when it becomes a, should I spend 600 or $700 to fix this air conditioner and it may last another couple of years or a $2,000 replacement or a $2,500 replacement. Well, we can give them kind of some objective advice based on what we've seen in the past. And then the owner can make their own decision based on that information.   Tom: That's a great example of being proactive in informing the most decision and using some of the information that you guys have as an investor. We want to get the top dollar. We want to manage the least amount of vacancy as possible. What were some things that you would advise that the owner, the investor can help achieve those?   Matthew: Yeah, the biggest expense and investor's going to have is turnover. You know, you can have a picky tenant that calls in a lot of maintenance work orders, or it feels like they're calling in a lot of maintenance work orders, but truly turnover in my opinion is the biggest expense you have. I think of it and you played football, Tom. It is like going in to score a touchdown. And instead of you throw an interception on as you're about to score, and then they run it back for a touchdown, it's like a 14 point swing that somebody moves out because, and the reason I say that is not only do you have loss of rent, so you're not having money come in, but you're also having to pay money out on deferred expenses when that happens. And so it's very important that you keep residents in homes and the way you do that is you do it through good communication with the residents.   You do that through handling maintenance work orders. One of the things we found was our residents started staying longer when we internalize maintenance because our maintenance team is not out there just fixing a problem. Our maintenance team is tasked with making the resident happy because they're a GK team member. And so if you think about kind of the change in that, if a maintenance team member thinks his job is to just fix something, well, that's a problem if ultimately in the owner's best interest is that resident staying alone time. But if the maintenance team member is out there with the idea, I want to make this resonant as happy as possible, then it makes the resident happy. It's in the owner's best interest because the resident stays a whole lot longer.   Michael: That's great.   Tom: Oftentimes decisions, especially those big decisions that you'll make with an investor it's the repair or replace, or do we want to focus on vacancy or rent growth? And I don't know, I guess one of you just elaborate a little bit on those two important decision points that can make or break deals.   Matthew: Let's talk a little bit about rent growth, because I think what I've always thought of it, the way I mentally look at it is staying a little bit behind the curve. Like I don't want to be on the bleeding edge and I don't think investors want to be on the bleeding edge of pushing grants. And I know there's some institutions out there that will actually do that for us, I think. And I like to stay a little bit behind the curve because I think it's so important that that a doesn't move out. I don't want that resident to feel like they can get a better deal somewhere else. And so what I like to do is stay a little bit behind, but definitely be in tune with rent growth and be focused on it. In our leases, we have some rent growth built in, but that also gives us the ability to go to the resident and say, Hey, you know, the owners being very generous, wants you to stay another year and has decided only to raise it 1% instead of the three to 5%, which may be in our lease or even better, they've decided not to raise rent. And because, you know, they think you're an awesome resident and normally they would raise it 5%, but they're not going to raise it at all. So it gives us the ability to even if you only raise it 1%, it gives us the ability to basically say, Hey, the owner's doing you a favor because you signed up for three or 5%.   Michael: That's great. I think, yeah, like you mentioned Tom investors where they want top dollar and you know, as much as we can push the envelope, we'd like to, but that's really great advice. Cause I think something that I chat a lot about with Academy members is when it comes to pushing rent is do the calculation, do the math for if this tenant leaves and you've got three weeks of vacancy, what does that cost versus what do you stand to make with the 10, 15, 20 bucks a month? You're going to increase the rent. The math kind of works itself out pretty clearly.   Matthew: Yeah. I would think if I'm an investor and I am on a number of rental homes, I think in terms of seven to 10 years, how can I maximize the most amount of money over that seven to 10 years? Not now. And this gets into having reserves too, because if an owner is making short term decisions is going to affect his or her longterm seven to 10 year plan then, and that's a problem. If you have reserves, you can make clear objective decisions based on how much, what the best longterm getting the most money in over that seven to 10 years. And so I think as your clients and investors operate, they need to be thinking longterm because this is a, this is not a get rich quick game. It is a consistently make good decisions over the long period so that they can over the course of owning that rental home, whether it's seven to 15 years, then they end up in a much better place.   Michael: Tom, Matt set you up so nicely for your T-ball swing. What do you like to say? Be what?   Tom: Oh, longterm greedy, be longterm greedu.   Matthew: Yeah, that's great.   Michael: Matt, I want to ask you a question about property management fees specifically around vacancy. And I get the question a lot in the Academy that says, Hey, you know what? It seems like property managers, aren't incentivized to actually keep tenants in place because of the new tenant placement fee being 50% or 75% or a hundred percent of one month's rent versus a lease renewal is typically less. So what would you say to someone that had that question?   Matthew: Yeah, I think it's a great question. You definitely don't want to incentivize your property manager to do something that's not in your best interest. And so when you're thinking about property management fees, what I would tell somebody is make sure that the fees are in line as well as you can with your incentives or with the incentives of the property manager, because you just don't want anybody to have to make this kind of moral decision that affects their income. And so what I would say is the way we look at it is we do need to make money when we're leasing, because we do a lot of work. The way we look at GK Houses is we want it to be an annuity business for our owners and for us. And the way to do that is to keep residents in homes. And that allows us to do certainly we're doing a lot of work while the residents in the house, but as soon as that resident moves out, I mean, it's like a full time job trying to get that home back on the market as quickly as possible. And so we often talk about, and we've structured our fees so that we don't want people moving out. We want to build this big annuity snowball. And so to me, you need to make sure that your property managers fees align with your interests and your interest of being an annuity. So I would say incentivize the manager to renew the lease over a leasing fee. Now the leasing fee may be higher, but what kind of work did they have to do to earn that? I would much rather earn a couple hundred dollars, 200 $5,300 renewal fee that is, that, you know, requires two to three hours worth of work versus the, you know, maybe 20 plus hours of work. I would pour it into a turn.   Michael: And can you give somebody who's listening a real high level overview of what work does go into a turn because I think that's such a great point is there is so much work that goes on into placing a new tenant, but that goes on behind the scenes. Most folks don't have any idea.   Tom: The Duck's legs under the water. That's another episode where we riffed on that for a minute. So, sorry. Yeah, go ahead.   Matthew: Well, we think about this about 60 to 90 days out. So we're trying to renew the resident almost, you know, six to eight months into their lease. We're trying to do it as quickly as possible. And so when they submit their notice and they start to move, you know, we start communication. So we communicate with the unit or, Hey, your resident is submitted. Notice just wants you to know. And then we give them an idea of what we're going to do when they move out. When the resident finally does turn in keys and moves out, we're going to do, depending on the market, we're in, we're going to do a walkthrough. And generally that happens not the same day, but within 24 or 48 business hours of that resident moving out. And we do a full writeup with pictures and it is amazing how many pictures we take, but we really feel like this is part of taking pictures, is communication with the owner.   They can see the pictures and kind of feel what the house looks like. And then one of the things that owners forget is we also have a requirement with the resident to account for their security deposit. So we have all these logistics going on and all this communication with the resident and communication with the owner, we send out a statement or an estimate, the owner that basically dumps all the expenses into three categories. One is these are the expenses we want to charge the resident for anything above normal wear and tear. So, you know, if the carpet has been lived on you can't really charge a resident for that because you expect the carpet to be lived on. But if there's a hole in the wall for some sort of misuse, or you can tell that the home has been misused there, we're going to charge that resonant for that.   And then there's a column that we say are required repairs. And so required repairs are, there's a hole in the wall and we need to fix this before the next resident moves in. You just can't leave a hole. Nobody's going to rent a house with a big hole in the wall, or then the next column is recommended. So maybe there's a room that is kind of in between. It's kind of in a gray area. May if you paint this room, it's going to run faster or you're going to rent it for more money. But if you don't paint it, then it's not going to keep us from renting. So we divide our estimate into those three columns and we'll send it to the homeowner and the homeowner will either approve the required or add on the recommended on top of that, and then approve whether the resident's security deposit. They're happy with how we account for that.   Then we have to basically do the accounting of the resident security deposit and then mail that to the resident. Now, oftentimes sometimes the resident disagrees with how we accounted for that. And the resident obviously did a move in when they, when they, and we did a move in before. So there's some time there's some kind of go back and forth between them and us on it. Was this a definitely misuse or was this like this when you moved in? And so sometimes when we inherit leases, we deal with some issues with that, but we do a really good job of a moving walk through. So we have pictures of the house before it moves in and we can easily compare those to the move out, walk through. Then once we we're done with the resident and everybody's happy there simultaneously, we're going back and forth with the owner on the work that needs to be done to get the house on the market.   And to me, owners love speed. And so that's one of the things we try to do is there is an anxiety that happens with an owner as soon as that resident moves out, that money stopped coming in and the expenses start, but it also makes an owner feel better if it gets done very quickly. So we're trying to renovate that house, turn that house as quickly as possible, and then put it back out on the market as fast as possible. And so, you know, depending on how long it takes to do the work, you know, our goal is to get that house back on the market, just literally as quickly as possible. And the only downtime being the time it takes to get the work done. We also start pre-marketing. So we try to start building some excitement. Some of our markets, we actually pre-market even when the residents about to move out, I just kinda made it hard recently with the pandemic, but you know, kind of a normal world will pre-market and we've been leasing a lot of homes.   We're starting to use some video tours. We're using a Matterport camera and we've been pre-leasing homes without people actually even walking through them. We've done a really good job with these Matterport cameras. And then again, getting it out on the market and getting as many people through it. One of the things that we found though, is if you take somebody through and the work's not done, sometimes there is a misunderstanding of what work needs to be done or what work is going to get done. And there's some disappointment from time to time. So we like to get the work done first, build the excitement, and then generally your first people through are your best opportunities to rent that house. Cause there's a, they feel that sense of urgency. And then we signed the lease and hopefully they move in as quickly as possible so that we get the rent coming back in and stop the expenses from flowing out.   Tom: I had like two questions I was going to, but you kept hitting him. I was, you know, I was gonna ask, Oh, you know, what changes have you guys made with the pandemic? And that's cool. So you guys are doing video tours and   Matthew: Yeah, we're using a Matterport camera now, which is basically you set it up in the middle of the room and it allows somebody to virtually walk through the house and it is really cool and it shows it's got a fish eye on it, fisheye camera on. It allows people to really see what it's like to live in that room. And the other thing is it's really a touchless and we're not using leasing agents as much as we did any more. Now, some areas are starting to let some leasing agents back. Colorado's allowing us to use leasing agents again, but it's still a opened the door. Let somebody go through and kind of obviously socially distancing the whole time. But we also use Rently a lot boxes on our homes, which allows a resident to check themselves in with a credit card and their ID. And they can go through the home by themselves without us having to be there.   There's some, obviously some accountability and the fact that we have a credit card and we have their ID and we know who they are, we have their cell phone number, but then we're proactively following up. So one of the things that we found in the past, we went a little too automated where we wanted somebody just never to talk to us to the point where they just leased our house without ever talking to us. But now we've found that proactively reaching out and talking to somebody on the phone, right after a showing, is that great way to get somebody comfortable enough to submit an app. And we're receiving right now, somewhere around three in some markets and somewhere around five times as many applications, part of that is pandemic driven. I think there's a move right now from multifamily to single family, just cause people don't want to be on top of everybody, but in part of it is the summer, but we're more occupied right now than we've ever been before.   Tom: That's really interesting.   Michael: Yeah. Very interesting. Matt a question. I get a lot in the Academy, especially of folks who are looking at Roofstock inspections is I've got all this repair work that needs to get done. Is this something that I have to do that I have to coordinate? Or is that going to fall on the shoulders of the PM? Are they able to assist in helping coordinate that work repair work to be done?   Matthew: I can't speak for all PMs, but I love it when we do the work in full transparency. So we do make money when we do the work as the general contractor of that work. But when I can control the process for the owner and I can control the communication and I can control what gets done and I have vendors that know how I work and I can get them in and get them out. I always think of it again, it says value and speed. I can get it done so quickly and there's not a lot of coordination and communication. If you're in a market, you could certainly try to do that because you may have the time, the drive over there. And it makes sure that the contractor is getting the work done. The biggest challenge we have is contractors and relationships with contractors. So for somebody to remotely hire a contractor and get the work done for not only cheaper, but on time and all their work done appropriately to me is just too big of a risk to take.   And what ends up happening is they end up putting the burden on the property manager to go make sure that we're gets done. So then it ends up costing them more because we're going to charge them for some of that oversight. So we just say, look, just let us handle it. And we're happy to give people an estimate to get that work done. And then we'll contract it out to the people that are vetted vendors that are insured. And if somebody falls off the proverbial roof, then they're not going to Sue you. And so we just think it's in the owner's best interest to let the PM handle that.   Michael: Great. And what would you say the most difficult part of being a property manager is what do you wake up everyday and go, Oh man,   Matthew: Not to use another football reference, but I am going to, there is no Superbowl in our world. There's no, we won the super bowl and now we can take two or three weeks off when the 31st hits and we collect a hundred percent of our rent. The first comes the next day and then all our rent's due again. And owners need to know this too. It is a thankless business. The whole point of the job is to deal with problems. And so when you're communicating with your property manager, you need to know that they are doing nothing but dealing with the exceptions, all the problems that have happened that day. And so I have a lot of empathy and sympathy for my team because it is hard. You have to keep them excited and it's hard not to get burned out. And so when an owner gets mad or a resident gets mad at them, obviously that takes an emotional toll.   And generally our PMs are not the ones that made the mistake or when something happens and listen, we're people, we're human. We try to execute as well as we can, but we are going to make mistakes. But when an owner kind of takes that out on a PM, because that's the person they see as kind of the face of the company, you know, that takes an emotional toll on people. So the whole, and when you're communicating with a resonant about not paying rent, you're talking to them about their home and the money, you know, money it's, everything emotionally is tied into this one thing that we're doing. So we have a lot of hard conversations. And so that's, what's so hard about being a PM. And I would say, that's, what's so hard about self managing too, you have the ability to be objective in an emotional situation?   Going back to the first rental house that I bought, I had a six month kind of agreement with an insurance company on a house that had burned down or somebody's house had burned down and they moved in for six months. The insurance company paid me additional money over above what I was asking. Well, the house person was living in the house. Couldn't afford the house normally. And when their house wasn't ready, they'd never moved out of my house. And so here I am self managing I'm 23 years old, and I need that money. I am very emotional about needing that money. And so I was probably the worst person to be dealing with that situation because I was overly emotional making bad decisions. Here I am. This is my first rental house I got paid for six months. Everything was great. I thought I was a real estate guru. And all of a sudden, now my resident's not paying, I'm paying a mortgage and it's not like I just have tons of money left over every month. And so I was just in an emotional place. And what I would say is, if you can't be objective, you can't treat that relationship like a business or even worse. Maybe you do have a lot of money or the ability to float things. And you allow things to go on too long because a resident may tell you a story. You know, it becomes very hard to be objective in those situations because either you're emotional about your own finances or you become emotional about the resident situation. And it really is like running a business. Well, listen, we do have a lot of sympathy and empathy for our tenants. We're very resident friendly, cause we know we want them to stay a long time. We want good residents to stay a long time, but you also have to be very objective when you're dealing with them. And, and so if somebody can't separate themselves from the situation, it becomes a lot of conflict. You know, personally, you're not going to do the right thing consistently to self manage.   Michael: I think that's such great insight into property manager, being a thankless business. You know, I personally am going to make this admission on the podcast. I don't think I've ever called my property manager wants to thank them for a full rent collection month, but I know I've called them and asked why the rent was late. So less than to everybody listening go, thank your property managers for the good stuff. Don't just highlight the bad stuff.   Matthew: And we do have some owners that are kind enough to thank us. And we do have some really great owners, but you're right. I mean, the expectation of the owner is full rent collection and no expenses. So as long as that happens,   Michael: Right, right.   Matthew: The bar is at a hundred percent.   Tom: Everybody's good.   Matthew: So anything below that is us not meeting expectations, even though, you know, it's not our house. If the toilet breaks, I've never used that toilet. Right. It wasn't you. Right. But I do understand too, that it's kind of funny, like an owner may move out of the house and then a new resident moves in and immediately owners because they are emotional about, especially a house that they lived in and owner will become very well that toll, it never broke when I was there. And I'm like, well, I don't know what to tell you.   Michael: I don't know what to tell you! Tom, You got any more questions?   Tom: Yeah. I guess, you know, kind of continuing on this theme of, you know, helping this thankless job, how would you say investors could help put their property manager in a better position to be successful?   Matthew: One of the things I would say is around communication is a lot of people want, expect like an email to go out and then an immediate email to come back and we do have RPMs or full time communicating. So we do have the ability to do that, but there are times when they need to be a little flexible about how fast we get back to people, because we do have other fires that are raging from time to time that a PM may be very focused on getting another owner's property fixed. So just having a, you know, not an unrealistic expectation around how fast we're able to get back with people. And look, we that's. One of the things that we measure is we do measure how fast we get back with people.   So we are getting back with people fairly quickly. The other thing is, again, having reserves really helps us out because it gets us into a situation where we're doing the right thing. We're playing the odds. We're placing good bets with these homes and allowing us to help you manage for the long term. So those are two things an owner can do. And then also when they do communicate with us, I know you're going to get frustrated when something happens bad and look, we're frustrated too, but know, it's every bit as hard to make that phone conversation and make that phone call and just know that the PM has been dreading calling you and telling you that there's this $500 expense or whatever it is. And so just having some empathy for that person that is making that phone call is helpful and being problem solvers together. Let's Hey, we're on the same team. We didn't cause this problem, but we're going to both fix it as teammates   Tom: Love it.   Michael: It's such a good point about around the communication timing. I was chatting with a student in the Academy. I won't say from where I was just say it rhymes with smooshmork. And they said, you know, I can't deal with this property manager. I said, what happened? He goes, well, I emailed them 20 minutes ago and have her back. I said, well, that, that might be how you're used to communicating, understand that it's different around the country. And so what I was recommending folks is just ask, when you're chatting with property managers, vetting property managers, ask them what their communication style is and ask them what a reasonable response time is, because the expectation should be set on the front end.   Matthew: Other thing I would add around communication. If you start to get up to, let's say five to 10 rental properties, what you need to is set up a regular monthly call with your property manager. We have found these calls to be so helpful. Again, getting back into being objective. You really solve problems together for the longterm. There's no emotion around it. There's no surprises when you have five to 10 rental properties and it's worth the manager spending an hour with you and kind of making sure that you're on the same page on a regular basis. It would be hard to have those calls for anybody below five houses let's say. But if you're starting to get up into five and continuing to grow, it makes sense for you to have a regular monthly call. And if you get to a point where you have 20 to 25 houses, it may be a weekly call that you would want to have. But I can't tell you how these regular calls have really helped us with our communication with owners, because you're not just hearing about the bad problems. You're also hearing, Hey, we collected this. We collected that. And you're starting to kind of get a better picture of what your portfolio is doing.   Michael: I've got to go set up weekly call. That's a really great idea.   Tom: I know. I love that as a takeaway from today's session... Yeah, I love that. That is a great idea. I really like that.   Michael: Tom, you got anything else?   Tom: That's good for me. Yeah. That's super insightful.   Michael: Love it. Awesome. Well, Matt, we've got some quick fire questions. We'd like to end our episodes with, if you don't mind, it's kind of a yes, no one answer to the other.   Matthew: All right, I'll do it. Alright.   Michael: So high rent growth or low vacancy?   Matthew: Low vacancy.   Michael: Angry resident or angry investor?   Matthew: Ooh, Whats C?. Yeah, definitely angry resident. Although none of those are fun.   Michael: Cashflow or appreciation?   Matthew: I am a cashflow guy.   Michael: Concentration or diversification?   Matthew: I am a concentration guy and I think this is an important thing too, is probably a good nugget for the people that are going to be listening to this, become an expert in an area. First, in my opinion, before you try to diversify too much, I have found that when you become an expert in one area like a Birmingham or even a neighborhood in Birmingham, then you are way more successful at buying than trying to diversify and not being an expert in one area. Sorry. That was more than one word, but..   Michael: No, that's super great insight. Super great insight. Local or remote investing?   Matthew: I think you can do both with technology today. I mean, I would hate to say one over the other because I think if you have access to all the technology that I have living in Birmingham, so it makes no sense for you living in California or in New York or wherever you're living, not to invest in Birmingham because I have the access to the exact same information as you do.   Michael: Great. Single family or multifamily.   Matthew: I'm a single family guy. I think, I think the best opportunities and the biggest opportunities to exploit what is still incredibly inefficient market is in the single family world. I think your points about like the pandemic people wanting a little bit more breathing room, like single family, really great way to go. I'm telling you, Tom we're at over 98% occupied. I've never been on. I've been doing this now almost 13 years. Never been that high and never gotten the amount of applications that were getting approved residents. Great residents are moving into our homes. It is really a good time to be in the single family world. Great turnkey or massive project. Definitely turnkey. Okay. Text message or email. I'm a text message guy. My emails, I forgot like 50,000 unread emails. That's a true story. I can, I can show you.   Michael: That's great. Last one. Olive oil or butter?   Matthew: I'm an olive oil guy.   Tom: Love it. Awesome.   Michael: Awesome. Well, Matt, thank you so much for taking the time to view with us today. If folks want to reach out to you at GK houses, you know, what's the best way someone can get in touch with you or someone on your staff?   Matthew: Yeah. I would say email me, but obviously…   Tom: The jig is up!   Michael: 50,001, right?   Matthew: Listen. The best email to email is support@gkhouses.com and we are monitoring that through a help desk type system. And then that'll get assigned to the right person in our office that can handle that. You can also look us up online and call any one of our offices. So we're a Roofstock preferred vendor in Atlanta and in Birmingham. And am I allowed to say the other two coming down?   Tom: Of course, growing markets all the time.   Matthew: So Little Rock, y'all are in Little Rock now and we're also a property manager there. And then we had a conversation with one of your team members this week about y'all are opening up in Denver, which is super exciting. So glad we're going to be a preferred vendor there too. So just y'all are growing and allowing us to grow right alongside of you. So we appreciate you so much.   Tom: Onward and upward.   Matthew: Yeah.   Tom: Thank you so much for coming on Matt.   Matthew: Yeah. Thank you for having me.   Michael: You got it, take care.   Michael: Okay. Everyone. That was our episode. Thank you so much to Matt Whitaker for coming on today. Really, really appreciate it. If y'all liked the episode, feel free to give us a rating or review wherever it is you listen to your podcast and we look forward to seeing you on the next one.  

Some of the highlights include:  Why Vodafone moved to a cloud native architecture. As Tom explains, the company was struggling to manage operations across more than 20 markets. They also needed to improve the customer experience, and foster customer loyalty.  Why their business and engineering teams were both in favor of cloud native. The benefits of deploying daily operational activities around a single cloud native platform.   An overview of where Vodavone currently is in their overall cloud native journey. Tom also explains how cloud native conversations have changed inside of the company throughout their journey, as various business units have caught on to the benefits of the cloud. Vodafaone's transition from outsourcing roughly 97 percent of their operations, to bringing 95 percent in house. Tom explains how this has improved efficiency and expedited time to market. The challenge that Vodafone faced in trying to apply legacy network security solutions to distributed and dynamic systems.  Tom's thoughts on why Vodafone's cloud native transition and modernization efforts have been crucial to their success over the last five years.  Links: Vodafone Group: https://www.vodafone.com/ Connect with Tom on LinkedIn: https://uk.linkedin.com/in/tom-kivlin-5b469321 The Business of Cloud Native: http://thebusinessofcloudnative.com  Tom's Twitter: https://twitter.com/tomkivlin CNCF GitHub: https://github.com/cncf CNCF Slack: https://slack.cncf.io/ Kubernetes Slack: http://slack.kubernetes.io/ TranscriptAnnouncer: Welcome to The Business of Cloud Native podcast, where we explore how end users talk and think about the transition to Kubernetes and cloud-native architectures.Emily: Welcome to The Business of Cloud Native. I'm Emily Omier, your host, and today I am chatting with Tom Kivlin. Tom, thank you so much for joining us.Tom: You're welcome. No problem.Emily: Let's just start out with having you introduce yourself. What do you do? Where do you work, and what do you actually do during your workday?Tom: Sure. So, I'm a principal cloud orchestration architect at Vodafone Group. I work in the UK. And my day job consists of providing guidance and strategy and architectural blueprints for cloud-native platforms within Vodafone. So, that's around providing guidance to the software domains that are looking to adopt cloud-native architectures and methodologies and also to the more traditional infrastructure domains to try and help them provide their services in a more cloud-native manner to those modern teams.Emily: And what does that mean when you go into the office—or your home office, go into your dining room where your laptop is, I don't know—what do you actually do? What does an average day look like?Tom: It can vary. So, depending on the activity at the time, it could be anything from preparing a global policy that needs to go through the senior technology leadership team, to preparing some extremely detailed requirements for selection process or creating some infrastructures code, or the code artifacts for the deployment of cloud-native services, whether that's in our lab, or to help our services teams within Vodafone.Emily: Tell me a little bit more about what pain made Vodafone think about moving to cloud-native and Kubernetes.Tom: Primarily, it was the challenge of having 25 different markets, or 23 now. We launched a digital strategy to—so back in 2015, we launched a five-year strategy, which we wanted to massively increase the rollout of 4G, of converged network offerings, of improved customer experience. And we found that the traditional way of managing software was not supportive enough in our ambition. And so, having to choose cloud-native technologies, things like Kubernetes, but also the modern operating models, that was the driver: it was to improve our customer experience, and our customer-affecting KPIs, really.Emily: And when you say it wasn't supportive enough, what do you mean specifically?Tom: So, things like time to market, for example. So, if we wanted to offer a new service—so one of the things that 4G started the drive towards was a more granulated service offering to consumers, and so lots of different things could be offered. And if it took you six months to think of an idea and then have to go through—or even longer than six months to get to the point where that could be offered to customers, even if it was just a very minor feature within an existing product, then that's not going to engender customer loyalty. And so, things like the cloud-native mindset, where there's a much closer link between the engineering teams and the customer, there are much shorter periods of time between ideas coming in from the customers and then being delivered back to the customers as product features, that sort of time to market was really enabled by cloud-native technologies and mindsets.Emily: And how does having two dozen, more or less, different markets, how does that play into the decision A) to move to cloud-native in general, and managing the IT infrastructure?Tom: So, one of the things that's really driven it is trying to simplify and reuse artifacts. So, if you've got 23 markets all doing a different thing, then there's obviously a lot of duplication happening across the group, whereas if everyone's using the same technology in the same platforms—take Kubernetes as the example—everyone can write their software for that platform. Everyone can write their operational ecosystem around that platform. So, the deployment artifacts, the pipelines, the day two operational activities, they can all be based around that single cloud-native platform. And so, that enables a huge amount of efficiency from the operational side. And that in turn allows those engineering teams to focus on things that are adding value to the business and the customer instead of having to focus on fairly low-level tasks that are just keeping the lights on, if you like.Emily: What's different for each one of those markets?Tom: So, it might be something like language, it might be something as simple as that. It may be that the offerings are slightly tweaked. So, rather than, I don't know, as an example, rather than Spotify being included as a kind of add on, it might be some other service that's more relevant to that market. It may be that there are particular regulatory requirements that are specific to a market that needs to be considered within the product design and the engineering of it. And so, having a cloud-native response allows sharing and reuse of artifacts where we can, but still allows for that customization where it's required.Emily: Where would you say Vodafone is in the cloud-native journey? Do you feel like you've, mission accomplished?Tom: So, mission accomplished, as in the first step, yeah. So, we set out a goal in 2015, to get a certain number of our applications to the Cloud, and that's largely been reached, I think, especially with our customer channels, so that the kind of points of interaction with the customer, the huge number of those are cloud-native today. And things like automated customer interaction with chatbots, and the like, that's all added to the cloud-nativeness of the interaction. As part of our next iteration, we'll be looking for more cloud-native software and cloud-native platforms, and that will start extending into the network systems themselves, as well as the more digital and easily modernizable layers, if you like.Emily: What sort of business value do you feel like you're looking for as you move to the next step?Tom: So, primarily, it's going to be driven by customer satisfaction and customer affecting KPIs, like I said before. That's always what's driven the business metrics anyway. So, things like being able to support the demand of the customer. So, whether that's the new 5G services, for increased bandwidth. So, obviously, if our network systems themselves are cloud-native, then taking advantage of the auto-scaling, and the auto-healing, and the autonomic nature, then the customer experience, and the customer satisfaction will increase. Improving time to market, so again, part of 5G is that the whole notion of creating more differentiating services, and so if we can do that through the cloud-native mindset with product owners being much more closely engaged with customers, then that improves our product offerings. And we can optimize our network profitability by using cloud-native features like modern big data analytics, and even AI and automation to improve the operations of the network. At the end of the day, the business value is improved customer satisfaction, which improves our financial performance, obviously.Emily: And when you started out in 2015, who was pushing for moving to cloud-native? Was this the business saying, “Hey, how do we improve customer satisfaction?” Was it engineering saying, “Hey, here's an idea for something that could help us move faster?” Who was behind that?Tom: That's a good question. I think it's probably an element of both. It was the opposite of the push me, pull you, I guess. So, there was engineering pushing on an open door, I suppose you could say. So, Cloud was a bit of a buzzword around that time anyway, but I think it's fair to say the concepts of improved time to market, improved stability, the potential for improved security, improved automation, and repeatability, they were all relatively easy sells to product teams who want to be able to sell products to customers. And once you're able to explain what problems those concepts solve, I think it became a bit of a, like I say, pushing on an open door.Emily: Can you tell me a little bit about the process of explaining what problems these things solve? Was there anything that was getting lost in translation?Tom: Yeah. I think the biggest thing that I can recall—obviously, it's a company-wide thing. I'm never going to be aware of everything that happens—certainly, it's critical to try and understand what the target operating model is before trying to say, “Here's the technology solution to it.” So, I think some of the lessons that were learnt in the early stages were, rather than trying to say, “Here's the technology answer to a modern way of working that hasn't been agreed or adopted or even understood yet,” let's do that part first, so people understand how they need to work in this modern kind of culture. And then the technology answers then make a bit more sense to people because they're able to say, “Okay, I understand the problems that's solving now because I'm now working in that way of working.” So, that's probably the biggest learning point I would take from the previous five years.Emily: Do you feel like the conversation, how did it evolve from the first conversations over the course of the past five years, and then what's it like now?Tom: It's very different now. The concept of Cloud and cloud-native has become a given and very well understood across the business, even outside of technology. So, we talked to other business units, and they're quite comfortable in understanding the benefits of Cloud. And it's now about when they mature into cloud-native, and when they mature operating models, rather than if. And it's now talking and giving guidance about how to do it, rather than trying to sell the concept itself. So, it just feels like you're at that next stage of not having to sell the idea anymore, and more into the detail of how to implement that idea.Emily: What would you say were some of the biggest surprises? And let's start with thinking about some of the biggest surprises, not necessarily technically but organizationally, in how engineering was talking with the business, how people were working together. Was there anything about this journey that was unexpected?Tom: Not particularly. I think the biggest change that happened, which was possibly unexpected when we started, was the level of insourcing that we have undertaken to support the cloud-native operating models, the time to market, and the modern engineering teams. So, we used to be around 97 percent outsourced or something like that, in terms of building software that wasn't just vendor supplied. And for all that software now, we're more like 95 percent in-house. And so, that's quite a big change, and I think that probably surprised people that A) we needed to do it, and B) that we have done it, and relatively successfully got pretty wide-scale digital engineering functions across many markets now.Emily: And why do you think that matters?Tom: Because it gives us control of the roadmap, it gives us control of that time to market cadence, and it allows us to use the data that our teams understand and know about, and to share that with other markets. So, as I say, even though an engineering team might be in the UK, they can share what they've done, they can share the artifacts, they can share the data that's driven decisions and software activity with other markets within Vodafone. And that just improves that efficiency, again.Emily: Do you think insourcing also improves customer satisfaction KPIs?Tom: Certainly we've seen that. So, whether that's a correlation or causation is kind of for someone with more access to more data than I've got. But certainly, we've seen an increase in online sales, and our digital marketing is more data-driven. And that has happened in correlation with the in-sourcing of software engineering skillset, yeah.Emily: Do you have any specific examples that come to mind in, maybe you are able to react in a way that wouldn't have been possible if you'd been using the old system?Tom: I'm not aware of any specific examples, unfortunately.Emily: Was there anything about the move to Kubernetes, to cloud-native, that you expected to be difficult, and wasn't. So, that was easier than you expected?Tom: That's a good question. I suspect the provision of multiple clusters. Kubernetes is difficult. It's a complex system, hence why there are so many cluster management vendor offerings available. And I think we chose a couple of partners early on in the journey to help us with that, and I think that really helped, and it made Kubernetes a little less scary for the software teams who were using it. So certainly, I've heard feedback—this is anecdotal, rather than anything that's evidence-driven—actually, just being able to create clusters and deploy into them was easier than people had thought when they were learning about Kubernetes through the quick start tutorials and the like.Emily: Was there anything that sticks out as being far more difficult than expected? The more unpleasant surprises?Tom: I wouldn't necessarily call them unpleasant, but obviously there's going to be a transition period—which we're in—between the traditional data-center-centric networking and network security policies and concepts, and those that work with Cloud and cloud-native platforms like Kubernetes. And there have definitely been challenges in trying to apply the legacy approach to network security with a distributed and dynamic system like Kubernetes, where you can't give everything a static IP address or even have separate subnets within a cluster for segregation, for example. It has to be done in a different way. You can still apply the same controls, they just have to be done in a different way. So, I think that's one of a few challenges that we found that we've had to work through with different vendors, with engineering teams, and with our internal teams to try and update our guidance on how to apply those controls.Emily: And to what extent have there been organizational challenges, and how have you gotten over those?Tom: That's a tricky one to answer, really. I think it all comes down to the balance between understanding and buying into a strategy, but then applying that to application lifecycle and investment lifecycles. So, I think this is probably true for any company: just because a strategy says this is the thing to do, you got a roadmap for your portfolio of applications and services that you need to balance a limited budget. And so, that's been the biggest challenge, is to try and identify how much of each budget at various levels can be spent on strategic activity, and then for which services, and trying to keep that balance, and bearing in mind that there are lots of different things pulling on that same pot of money.Emily: And what have you learned about managing that?Tom: I think primarily that there needs to be a holistic view of strategic projects. It's quite difficult to put the onus on a local budget, to spend the money to do something strategic when the benefits are probably—and the business case is probably seen more widely than the individual budget area. But I think it differs between situations, and between markets, and what's happening. I think the primary thing is to understand the costs of the strategy upfront, and try and work those costs into whatever needs doing over the period.Emily: A slightly different question, which is, is there anything you feel like in the cloud-native journey that you're still working on solving, that you haven't really figured out yet?Tom: I'm not sure whether we haven't figured this out yet, but one of the things we're putting a lot of effort in at the moment, is the use of advanced data and analytics platforms to try and drive even more network automation, and network planning efficiencies. So, I think it was last year at Google Next, we announced a partnership with Google to make use of their data services. And there's a few projects ongoing within Vodafone to try and drive the amount of knowledge and useful information we can gather from the vast quantities of data we have about our services and the customers that use them because the more we can use that data, the more we can respond to customer need in a timely manner, whether that's reactively in terms of operational response or whether that's proactively in seeing trends that we can then meet a need that may be unsaid yet.Emily: And if you were to talk to another engineering leader who was trying to push through the open door as you were saying, what advice would you give them?Tom: The biggest bit of advice is to understand the current way of working for whichever area you're—is on the other side of the door, and understand their pain points because it's not always the same answer. So, generalizing, it may be that one area is more than happy to have a centralized global platform offering, whether that's within our data centers, or public cloud, or both. Another area, just the way it's managed, may require a more distributed model, where the services are offered on a more market specific level. And so, I think that that's the main thing, is to understand the specifics of that area that you're talking to because it will affect how you want to architect and onwardly deploy and manage that technology.Emily: It would affect not just how you want to architect the technology, but also how you want to communicate what your plan is, right?Tom: Absolutely. Yeah. So, in the first of the examples I gave, where an area might be happy with a centralized service, that probably means they're already using one. The way you would communicate that would be via that existing channel, if you like. Whereas on the flip side, that kind of channel may not exist, and therefore running the project or projects and communicating with stakeholders would be much more distributed.Emily: At Vodafone was there ever any challenge selling it, not just over to the business side, but also selling internally inside engineering teams? Or was everyone pretty gung ho to do this?Tom: No, there's always challenges. I think again, it goes back to understanding the pain points of an area and understanding why things are the kind of as they are today, which I guess is general for things outside of technology and outside of Vodafone generally is. If you understand the position of the person you're debating with, then you're more likely to reach a common understanding than if you go into it with your own point of view and being unwilling to listen. So, I think that's the main thing is just being willing to listen, to understand pain points, and to be able to react to those within a strategy. You'd hope that it's flexible enough to be able to meet a wide range of needs without needing to necessarily change the overall vision.Emily: How important do you think this cloud-native transition has been for Vodafone?Tom: I think it's been crucial. I think we couldn't have done what we've done in the last five years without it. So, there's a video that our group CTO has posted on LinkedIn recently which highlighted a few things around improved mobile KPIs, we've got 4G in 21 markets, we've got the largest 5G in Europe, and all of those improvements from time to market I've already mentioned, we simply couldn't have done that without a modernization program to move to cloud-native across a number of our systems. So, yes, that's partly a technology thing, but also, it is such a cultural thing, and having that modern way of working where you have your modern engineering teams who are closer to the customer, but they're also—the different mindset of a modern engineering company where you're not afraid to try new things, and if you fail, you learn from them. And I think that's all part of what I would class as cloud-native, and that has been, like I say, it's been crucial for us to be able to get where we have been.Emily: It's interesting to think cloud-native means if you fail, you learn from it. That's a fairly basic concept, and yet true. I can see how that is, sort of, part of being cloud-native.Tom: Yeah, it's one of those things is quite a basic thing, but I think in traditional ways of working, the focus on the availability of systems and the performance of systems can blind everyone to the possibilities outside of that particular area of focus. And it puts pressure on people at all levels to try and minimize periods of downtime or periods of low performance. And over time, people become less and less willing to be able to try new things, through fear of failing because just the way people work it's difficult to learn from those failings because it affects customers. And so, what cloud-native technologies enable because of the way things are orchestrated—things are dynamic, things are repeatable—it's very easy to try new things, and not affect all customers. Now, obviously, good software engineering practices help as well. But I think the cloud-native technologies and the ways of working really do support the whole “learn by failing” premise.Emily: Do you think it would have been possible to get the customer satisfaction KPIs that you did, without moving to cloud-native, in any other way?Tom: I think the only way you could have done is by a huge investment in people and the traditional technologies. It would have been a much more expensive and slower journey, in my opinion.Emily: Anything else that you want to add about your experience moving to cloud-native?Tom: No, I don't think so. I think one of the things—like I said before, the increase in automation, the increase in the modern technologies is just really helped with those customer affecting KPIs, and that has to be the drive for why you're doing it.Emily: All right, just a couple more questions, then. What is your can't-live-without engineering tool?Tom: Oh, that's a good question. Probably Python. I think so many people use it either as a cross-platform scripting tool to be able to automate things and get on the first step towards cloud-native, or it's such a key part of many cloud-native tools like things like Ansible and other tools, and it's used hugely within our data analytics domain to try and drive the usefulness of the data. So, yeah, that's probably the one I'd choose.Emily: And then this actually is the last question which is, how can listeners follow you or connect with you?Tom: So, I'm on Twitter at @tomkivlin. I'm also on LinkedIn. So, I'm Tom Kivlin, working for Vodafone Group. I am a member of the telecom user group within the CNCF. So, you can find them on GitHub and also in the… I think it's the CNCF or the Kubernetes Slack. And yeah, happy to share experiences and keep learning.Emily: Well, thank you so much. Again, this is Tom Kivlin, and we'll go ahead and wrap it up there. Thank you so much, Tom.Announcer: Thank you for listening to The Business of Cloud Native podcast. Keep up with the latest on the podcast at thebusinessofcloudnative.com and subscribe on iTunes, Spotify, Google Podcasts, or wherever fine podcasts are distributed. We'll see you next time.This has been HumblePod production. Stay humble.

In our second Ask Us Anything, Tom and Michael bring on guest host, Mark Woodling to tackle listener submitted questions on buying from wholesalers, the difference between auction and foreclosure sites, preferences between umbrella policies and LLCs, tax liens, how Roofstock selects markets and more.    --- Transcript     Tom: Greetings and welcome to The Remote Real Estate Investor. And today's episode, we're doing another ask me anything. And on today's episode, we have myself, Tom Schneider. We also have one of our hosts, Michael. Michael, say hello.   Michael: Hey everybody, how's it going?   Tom: And we also have a guest host today with some special expertise in the auction world, as well as some experience on tax liens of wholesales and all that good stuff. So we have Mark with us today. Mark Woodling say hello.   Mark: Hey, thanks for having me on.   Tom: All right, let's do it.   Theme Song ♫   Tom: Welcome back. We have another ask me anything episode, super excited about it and let's jump right into it. So, as we mentioned before, with some of these questions that we saw, you know, they might not be in our wheelhouse, so we wanted to bring in experts and that's why we are fortunate to have Mark Woodling on today. So, Mark, do you want to give the 32nd kind of pitch on all the interesting stuff that you've done in the real estate space to give a little bit of background? Uh, you've been on an episode before, but maybe a brief reminder to folks who haven't listened to that episode.   Mark: Sure, sure. Thanks for having me on guys. I work as the director of local market growth for Roofstock. So really it's a unique role where I work on opening up new markets and how we can really bring new supply into those markets, but it's kind of a unique role. So having a unique background was really why they picked me for this cause I used to go around the country, traveling to tax lien, auctions. I would go and bid for a private equity firm around the country about 26 different States every single year. So a young buck out of college really had no limits, I guess you could say, but learning the real estate game, I've also worked at Fannie Mae in the recession. I was there in their auction group. So we're selling about 18,000 properties a year, just through auction in all 50 States in DC. And then after that worked at a company called Xome X-O-M-E and was their chief auctioneer and with selling glide, the Countrywide portfolio that was kind of leftover toxic asset group after the recession. So, you know, became licensed as an auctioneer in 27 different States and it was doing everything online. So have a bit of a marketplace background as well as just a ton of unique kind of distress real estate background.   Tom: Awesome. Love it. Well, well, let's jump right into it. So our first question we have came in from LinkedIn. This is from Dave and Dave asks, what's the best way to scale your portfolio in the smallest amount of time. And let's see, Michael, do you want to take the first pass at this one? Or do you want me to lead the way?   Michael: Yeah, I would say just get a bunch of money.   Tom: Honestly. The way that I was thinking about this question is kind of twofold. It's like if you have a bunch of money, that's a different answer, right? So if you have a lot of money already, like, okay, getting into portfolios, just buying portfolios outright, or, you know, building a fund with an actual like employment of like acquisition folks like that works really well, but let's go ahead and assume this question is if you don't have a money machine in your basement and you're just scaling and scrapping, what would be your feedback on the quickest way to scale in the shortest amount of time with the limitation on funds?   Michael: I think that there's going to be no quicker way to scale than by partnering with people that have what you don't have. And so if money is tight, you don't have the money go out and make a name for yourself as someone who can put deals together and acquire doors. And I would rather there's this very famous, I don't know how famous it is, but a lot of people say, you know, I'd rather have 50% of one deal than a 100% of no deals. And so if acquisition scaling is the name of the game, go find people that don't have the time or the knowhow or the ability to put deals together and bring them to those people who are looking to get into the real estate game and have the money to do so. That would be my advice. Mark, what do you think?   Mark: I think you're right in line where going to portfolio route really is the easiest way, because then again, you're dealing with one property manager in one city, you know, if you're spreading yourself too thin, you can buy a lot of properties in different markets, but then again, you're having to manage all these property managers and that takes a lot of time. It takes a lot of resources of your own. So I think if you're going to get right to it, you really need to focus on a concentrated area of figuring out diversity, maybe within one market or a few markets, and really figuring out, you know, how to leverage your time when you only have so much time.   Tom: My last little tidbit I'll add on this is the best way to scale your portfolio. My recommendation is really tapping into your, any appreciation and equity that you have in ramping up your leverage as much as possible. Now there's some downsides and risks. If values go the opposite way. And you're only planning on holding these a short period of time. There's some risks for getting under water where the loan is worth more than the property. But if you're trying to squeeze as much dollar as you can into scaling and building acquisitions, it would be basically getting the most leverage that you can. So every single dollar of equity you can have, you're using to scale scale scale. So excellent. Let's go on to the next question. And we have a shout out to Michael on this question, Michael, why don't you read this question?   Michael: This next question comes to us from Ricardo from Walnut Creek and Ricardo is a good buddy of mine. So the question is what's up Roofstock, shout out to my boy, Michael Albaum. This question has to do with working with wholesalers, from what I've seen, you can get some pretty spectacular deals with less competition, but it seems you assume much more risk as far as condition of the property, as well as constraints with financing. What has been your experience working with wholesalers? And what advice would you tell to a new investor who are the wholesalers and what do they do? How do they make money and how do you find them? So, Mark, do you want to take a stab at this one with your background?   Mark: Yeah, absolutely. I go to a lot of mastermind groups and you know, these mastermind groups are really for more advanced real estate investors and many of them are actually wholesalers, but they also and hold. And then, you know, they have their fix and flip models and so forth, but wholesaling could be a very lucrative business because when you put a property under contract, right, you're tying up the contract, that buyer who tied it up under contract is then going to sell their equitable interest, right. They're selling that contract and assigning it to someone else. So they really don't have a specific range of, you know, how much they can make and they don't need to be a real estate licensee. So anybody could be a wholesaler. Really so if you want to get to really who the wholesalers are and what they do, you need to go find guys that are doing this for a living. They go really find great properties that are going to be marketable to the masses. And they will tie up that property. They'll sit down, visit the property, take pictures, you know, run some after repair value type values.   And then they present it to the market as off market deals. So, you know, their job is really go out there when I call bird dog, right? They're the boots on the ground. They're spending a lot of money on marketing and then tying up these opportunities to then sell it without having have any risk or money down besides a small earnest money deposit. So it's not that they own the property ever. They only have it under contract and how they make money. So they'll say at closing, I'm going to make a certain amount of money or they can say, Hey, you're going to have to put $5,000 down and I'll give you my contract. And so they're going to make money one way or the other. And the thing is, you're never connected to the person actually selling the property at the beginning. So, you know, things go a different direction, you know, it can get kind of sticky.   So you really need to know who you're dealing with and really have some trust and not just chase after deals because the property may not be in great condition. And you may never even see the property before you tie it up under contract by how you find them. I'll just finish up on that. You know, the interesting part about that is you can go to Facebook and get on investment groups and say, Hey, I am a qualified buyer. I have cash rate of spend in a specific market. And here's my email address, put me on your buyer list. So you're kind of putting yourself out there and into the worldwide web a little bit and exposing yourself, but that's a great way just to get on these lists and see what kind of flow comes through. But again, these don't sit on the market for very long. So you really need to be able to act quickly in order to take advantage of those opportunities. But yeah, wholesaling's a wild West game. So, you know, proceed with caution.   Tom: Sure. I'm going to paraphrase a little bit. So at a super high level wholesalers, they're out looking for distressed or people need to sell right away. That's right. And they basically get it in contract this wholesaler, and then they sell that contract and never actually take ownership. Right. They almost, it's almost like an arbitrage position. Am I accurately depicting that?   Mark: Exactly. That's exactly the way to put it.   Tom: Awesome.   Michael: Tom, have you ever bought a wholesale deal, a deal from a wholesaler?   Tom: I have not. You know, I definitely have been approached to sell to wholesalers. Their marketing is relentless.   Michael: We buy homes for cash!   Tom: We buy ugly homes. Those guys are all the wholesaler ecosystem. And it's funny, the list of people that they're looking to potentially buy from. It's a kind of a rough list. They're like looking for death divorce, like whatever, kind of like quickly to sell. So, you know, as an investor, there's some potential to buy some off market deals from wholesalers, but you know, to Mark's point, you know, you got to still have a really good diligence process and know the deal. Yeah, no, your buy box. Awesome. All right. So this next question we have is from Andy Dobbs in New Jersey. So Andy asks, does Roofstock provide property management or do we need to find one ourselves? Mark, do you want to take the lead on this guy?   Mark: Sure. So Roofstock doesn't actually provide the property management, but we do guide you through the process of how to find really qualified property management companies. So we take a significant amount of time when we bring on what we call our preferred property managers, we certify them and vet them to make sure that they really do work well with outside investors. So, you know, being an investor from out of state, you do have a different level of expectation with property managers because you will never see that property. You, you may not even be able to drive by it, right? So they can really be your eyes and ears. So we establish that network. So that really transitions to investors, having higher levels of confidence. So we will always guide you in that direction and have great profiles on our website, but you are always free to manage with an outside vendor, but you know, these are always great vendors that we're dealing with on a massive scale. So we do see, you know, how they're acting around other investors and that's great data to make sure that we're always working with the best.   Tom: Yeah. And you know, I think it's great that Roofstock does this initial diligence, but I highly recommend as an investor doing that extra step and giving them a call and asking for some references and making that decision and you don't have to use one of Roofstock's property managers that has gone through this process. It's just available for you as a resource. And if you want to, you can self manage or you can find a different third party, property manager, you have options. It's just kind of giving you a step ahead in that process. Excellent. So this next question we have is from Steve in St. Louis. So Steve asks, so he's seen auction sites, auction.com, an example Xome where Mark used to work at are these sites like actual foreclosure sites and how do they different? What are considerations if I were to buy on one of these auction site, could I use financing? Is there contingencies? What are some of the unique risks? So Mark, this is right in your wheelhouse. So do you want to spiel for a little bit on some of these different auction platforms?   Mark: Absolutely. This is an area that I stumbled into my first job, right out of college back in 2001. So, you know, there there's a lot of different types of auctions in the sense of there's tax lien, auctions. There's an actual foreclosure auction, which is what most people will understand what the courthouse steps. And then there's also REO options that even retail auctions. So kind of walking through, you know, the foreclosure and the REO, meaning real estate owned. That means the property has already been foreclosed on when it's an REO, it's typically bank owned, but what's happened in the last, last real decade is that, you know, after the recession that banks were realizing that there was less inventory available. And there earlier on in the process of buyer can kind of get the edge to buy that property the quicker they can get it off their books.   So again, if a property has been foreclosed upon it, typically in certain States will go to the courthouse steps and you can buy it as a foreclosure. The actual auction is like the final step of the foreclosure process, but in this instance that it doesn't matter there. Then it would go back to the bank and then they can sell it with full ownership. So let's just go into, you know, the foreclosure aspect. If you want to go to the courthouse steps and buy, I mean, it's a great time to be able to buy, but typically you're buying sight unseen. So you really don't know what's on the other side of that door and you cannot use financing. So there may be some really creative ways to get financing, but you're going to need to pay for that property, either at the courthouse step with a cashier's check or you put a certain amount down and then pay the rest soon after.   So that part you're going to have to be really buttoned up for. And these are nowadays being conducted even by auction.com, Xome or Hubzu, which are actually at the courthouse steps and working as a third party to really replace the attorneys who are doing these foreclosure auctions before. So you may see like the full on auction going on, where there's a big tent, big TVs, you know, there's a level of organization that's happened in the last, I would say five, six years to really make those more friend link to anybody coming in from the outside so that they actually have customer service representatives there to answer questions. So if you're really curious about those, I always suggest go, it is fun. It is really exciting. And there may be multiple auctions, like I'm in Dallas. So in Texas, they have what they call super Tuesday and you go to the courthouse steps.   There could be four different companies out there doing four different auctions. So it's really something that you need to get comfortable with and ask a bunch of questions that you'll meet people there they're wholesaling, you'll meet people there they're buying for their own. And then you'll have major institutions that are there and they probably won't talk to you about their strategy. That's kind of holding the cards close to the vest, but I would just say coming from an auction background, the risks, that's really something that you need to understand your own risk appetite because there's online auction portals, where you could go in and bid on properties that may have either been foreclosed upon or are just about to get foreclosed upon. And they're trying to sell it before it goes to foreclosure. So if you are going to take the risk, really understand, you know, what kind of websites you can go to and dig in deep, because if it's going to foreclosure, there may be other liens, whether it's federal liens or just other kind of sticky liens that you may have to navigate through.   So you really need to be prepared for that. But most of the time at the foreclosure, you know, any other liens are wiped out. So study, study, study, understand your risk, understand buying sight unseen, you know, have numbers in mind, don't get caught up in the auction. Cause that's something a lot of people get caught up in because it's that active bidding. It's a lot of energy. That's what the auctioneers do. I come from that background. I only have done online, but I have watched and studied the live auctions and they are entertainers. They want to squeeze money out of you. So go in, know your numbers, understand your risk, understand your rehab, know your numbers, know your numbers, know your numbers, and then proceed with that strategy that you've been putting together.   Michael: Mark, I've got a question. Did I hear you right in saying that the banks might want to get these things at auction before the final step of foreclosure, but did I miss hear you?   Mark: Yeah, well the banks have a few different plays sometimes. So if they bring it to foreclosure auction, they get to set a bid and they are the ones that say here's the amount that I would be owed and that I would set as the reserve. And so if they're going to go in and they are there and somebody is going to bid on that property, they need to meet that certain amount. And if that amount is not met and they can foreclose at that point on the property and then bring it to sell any other way that they would want, they could put it into a retail platform like MLS, or they could bring it to another auction site and try the auction again, because typically these are properties in distress situations, but the bank's goal is typically to sell the property as early on in the process. So they don't need to do all of these asset management post foreclosure, which means they have to have staff. You know, they have a lot of costs to get the property cleaned up and presented and ready for market. So they typically want to dispose of that as early in the process. And some of them don't even let it go to foreclosure auction. They'll sell alone in a 90 day delinquency just to say, Hey, I'd rather sell this off to someone else rather than have to go through this longer timeline, even though they could potentially make more money. It just makes more sense to them to take the money and, you know, let somebody else take care of the risk.   Michael: Got it. Thanks.   Tom: All right. This next question, I think is a good one for Michael here. Gilbert, from LinkedIn asked, what parts of the team should in can be local and what doesn't really matter in your, in your own state, or just thinking about locations of that real estate team that you have, where they should sit.   Michael: Yeah, that's a great question, Gilbert. So I'll just share kind of how my team looks on a personal level. And so I've got property managers and agents and insurance agents local to the property out where the property is physically located and my CPA and my attorney are in California. And so that's kind of how I've set up shop. Now. I was chatting with an attorney, uh, excuse me, with a CPA. We had Joel Jensen on from Tax Sentry on the podcast a few episodes ago, and he's out in Utah and prepares returns in all 50 States for investors. And so I'm realizing now that you know, more and more of your team can likely be remote. I think having an attorney local to where you live in your state, because you're going to be subject to local laws. If you're setting up LLCs in your state, I think it's important to have an attorney locally, but it could also be beneficial to have a local attorney to where the property is since if you are going to get pulled into a lawsuit resulting from that property, the local laws to where the property are, are the ones that are going to be applicable. So understanding how to cover your bases in that state is I think important as well.   Tom: I think an interesting point you make is having the insurance agent be local to the property. I'd love your thoughts on that. It's just, you know, being able to squeeze out the best deal on insurance or   Michael: Yeah just having access to local markets, which isn't the case across the board. So for example, I work with a company in California that doesn't write that, that doesn't write insurance in the Midwest. And so the, a lot of the Midwest insurance agents just have access to different carriers and these carriers are gonna know the markets inside and out. There's a reason why the California insurance companies aren't participating in the Midwest because they don't know the market. And so very similar to having a local lender to the property. They can often be more creative because they know the market better allows them to be more competitive. So again, that's another part, a team member that I left off is lenders. So I have lenders local to the property in which the property is located. I also have lenders that work on the national level and I give them both a shot at it and whoever can come up with the best terms and financing usually gets the cake. So I think it's important. Your property manager obviously should be local. Your real estate agent, I think should also be local, pretty much everybody else. It could go either way. I think it's very beneficial to have local people to the, so at least you can ask those questions as a comparison to the folks that you have locally to where you live.   Tom: That makes sense. You know, one of the markets that Roofstock operates in, in Florida and for properties that go through our certification process, we come up with an insurance quote that is an insurance quote. That will be, that is bindable, right? That a company is willing to agree to. But oftentimes we found that Florida, the national provider that we use is rates are a little bit higher than some of the local ones. So I guess in markets work and be a little bit more tricky and there's more potential liability on the insurance side really worth going in and getting the local quotes. And even if it's not that tricky, I like that. That's a great point. This goes in very nicely to the next question that Corey from Austin is asking. So, Hey, Roofstock a long time listener. First time caller. I'm about to acquire my third SFR with you guys. Awesome. Congrats Corey. And I'm wondering when is hazard insurance enough versus getting an umbrella policy, a related question that we got from somebody else as well, a good umbrella policy help replace the LLC. And I think kind of the hardest question is, you know, at what point do you start kind of bundling properties into umbrella versus like individual? So Michael this is right in your wheelhouse. What are your thoughts on this?   Michael: Yeah, I would say Corey again. Great question. We just recorded a podcast with actually my California attorney and we asked this exact question. So I would say, definitely give that episode of listen. That episode should be released in about two weeks or so, but so again, I'll just share kind of my personal anecdote. When I first started investing in single family homes, there was a couple thousand dollars in cashflow a year coming off each property and to have an LLC in California, it costs $800 a year just simply to have it. So that expense wasn't justified given the amount of cashflow these properties were generating. So I bought three properties prior to opening up an LLC and then put everything, wrapped, everything up, did a quick claim deed and transferred everything to the LLC. Now there's two very distinct camps. There's the pro LLC camp and the no LLC camp.   And the pro LLC camp argues that, Hey, if you can bundle everything, put it into a silo and segregate your assets from your personal stuff. That's really great. The no LOC camp argues that you can get that same type of coverage, that same type of asset protection with a high liability insurance policy and an umbrella policy. Who's right, will only be determined once there's a lawsuit. And so it's all comes down to your comfort level, your comfortability, you can get very high liability insurance limits on the underlying policy itself on each specific property policy itself. And couple that with an umbrella policy and umbrella policies are very inexpensive for the amount of coverage that you're getting. And so you've just got to decide for yourself, Hey, how much do I have personally? And how much am I going to be putting at risk with this investment property that will often lead you down the right decision path to what makes the most sense for you? But I think a lot of people really hung up on is, Oh, I need an LLC though, they're pro LLC camp. And they think I need an LLC before I ever start investing. I would say that soften backwards. And I would say focus on getting the property first, making sure that the property is a good fit, then look to see how that LLC plays into the picture. And what's important to note here on this long soapbox rant is that a lot of lenders won't lend to LLCs if they're purchasing single family homes. So have a conversation with your lender, have a conversation with an attorney about what's involved with setting up and maintaining an LLC in your state. And just look to understand what the implications are of having one and have not having one. And then look to make your decision because it's really not a one size fits all approach Michael out.   Tom: Well, you know that the benefit of the LLC is you can name it something. Cool. Did you name yourself a cool LLC Michael?   Michael: I named… no. I just, well, it's tough because a lot of the cool names are already taken. And so you've got to make sure that it's not a, you know, that name is available. All the cool ones like surfer dude23 was already taken. I was pretty bummed.   Tom: Sounds like your AOL chat bot.   Michael: That's how I got my inspiration from.   Tom: Awesome. Our next question is from front of the show, Bobby from Seattle asks, I've heard of investors making money, buying tax lien. What does this really mean? And is this a viable strategy for investing in real estate? Mark Mr. Tax lien? What are your thoughts there?   Mark: Yeah. Right up my alley. Gosh, you've teed up these questions very nicely. I'm going to sound like the smartest guy. Well, here's really what it comes down to a tax lien is, you know, a municipal tax lien means that you owe money to the government. And that's really what when tax liens are purchased, it's typically because somebody didn't pay their County taxes. Right. And what's interesting about tax liens is a tax lien is a municipal tax lien sits in front of any other liens, like a mortgage. Okay. Now, you know, there's a caveat to that. Like federal tax lien, that's a whole nother story, but most properties don't have a federal tax lien if they have delinquent County taxes. So really what happens is every single state has different state statutes of what they're supposed to do with delinquent taxes, right? Because the County needs money to pay for schools, to pay for police officers, to pay for so many more things.   So they need that money and they sell off those tax liens just like at the County courthouse. And the person that buys them basically is paying the delinquent taxes on behalf of that homeowner. And in turn, they're going to earn a percentage of interest off of those tax liens. And so when you buy a tax lien, you don't just buy the property, but you're sitting in that first position, even beyond a mortgage. So in the event, let's say the, what they call redemption period. It's typically one, two or three years when that redemption period goes by. And if you're still the tax lien holder, you have the right to foreclose on that property and own the property. So when you used to hear about all these old infomercials about buying properties for pennies on the dollar, I guess they would say that's what the tax lien buying was all about.   So what people don't realize is that probably 99.5% of the time, somebody has got to pay off those tax liens. And you can earn anywhere typically between eight to 24% on that investment. And so look at it as almost like buying a note where you're very passively investing in real estate, but the kicker is you may have the ability to foreclose on that property, take ownership and own that property for potentially pennies on the dollar. But again, those stories are the rare ones it's like watching Storage Wars and finding that, you know, old school Bronco sitting in, you know, if the storage unit, you're the guy that bought that yeah. That is made for TV, but it does have, so the tax lien industry, um, it can be safe in some ways, if you're doing your due diligence and really understanding, Hey, if this property takes two years to what they called redeem, or when that redemption period expires, is it going to be in good enough condition where they're still valuing the property? And if you feel comfortable, you can invest knowing they're going to probably get that interest. If not, you could potentially foreclose on that property and own it for very little.   Michael: So we should have a new segment on the show called confessional corner.   Tom: Yeah.   Michael: So I did this, I purchased tax liens, read a book and thought, Oh, this is easy. So I've purchased some tax liens out in Arizona. And the auction is while it was an online auction. And so I did some due diligence and understood, okay, what counties and, and Arizona, what States I should be looking at. So I decided on Arizona. And so I ended up purchasing a bunch. I ended up winning a bunch of these tax lanes and probably 80% of them paid us. And I was like, this is the easiest money I've ever made. This is so awesome. But so what I'm wondering Mark is, so the 20% that haven't paid off, this was probably three, three and a half years ago that I did this. The ones that haven't paid off, I think the redemption period in this County, Arizona is two years. What should I go do now? Because my understanding is that if I decide to for clothes in order to, for clothes, you need to pay off all the existing liens on the property. And so if someone had purchased the tax liens from four, five and six years prior to me, there are still these existing liens on the property that I would need to pay off in order to foreclose on the property. Is that accurate? Or do you know, what do I do now?   Mark: Yeah. So two things I would do. Number one, I would send somebody out there to look at the property. Number two, I would, you know, really understand what the timeline looks like and understand if it's a judicial or administrative state where, you know, when the foreclosure happens, you know, like let's say you can actually file to get the tax deed. You need to know, you know, what all those steps are. And sometimes it's an admitted straight of approach. It's just paperwork. But if you have to go to the judicial approach, it means that you would have to actually have to go before a judge in order to earn those rights and earn the tax deed, where did that person would lose the property? So for you, you just need to understand what positions are out there, where do you fit in? And so a title search would show what other liens are out there.   Or you could go to potentially, yeah, I would say run a simple type of report, but also understand the condition of the property because it's something that you're like, man, I do not want that property. I want to I'll even pay my own taxes off. You can get yourself out of that position. If you happen to be the front runner, I would say, or if you happen to be in a position kind of buried in the middle, you may end up getting paid off at somebody ends up foreclosing and taking ownership of that property plus the interest, of course. So I would just understand your position and then if you need to spend some money to go out there and take a look at the property, because there's a chance you may get it. I would know what you actually are holding the golden ticket to.   Michael: Sure, sure. And let's just say as a thought experiment that I'm in first position that they paid their taxes prior to when I purchased them. And, you know, I decided that I don't want to foreclose on the property. It's a mess. It's something I don't want to get involved in. Is there any risk to me having paid those taxes and kind of being that first position lien holder that I need to then do something or pay additional fees as a result of being that first lien holder?   Mark: Yeah. Every state's going to be so different. I mean, these are state statues written back in like, you know, this 17, 18, 19 hundreds, like early, like way back when, so..   Michael: Four score and seven years ago..   Mark: It doesn't hurt to pick up and review on your own and really get to know, Hey, if I am the first lien holder, you know, and there's no other mortgages and this thing is clear to go, you know, what do I need to do? Do I want this? So there's a lot of questions that come with it. But I mean, if 80% of paid off, you'll probably find as it gets closer to actually redeeming during that period where you could potentially take the property, most of the delinquencies get paid off. Right, right. At the very end. So it may turn into that 99% kind of statistic that I gave you before.   So there's a lot of who knows at this point, but as you get closer, I would definitely want to know more information about, you know, what the condition is, where you fit in, in the front runner position. And it could be something that you could be that a half a percentile that ends up really good. So you never know. I mean, the story I used to tell people was we ended up doing a tax lien in Hilton Head, South Carolina. And it was a condo sitting on the water. I think we had 35 into it with this private equity firm and the kids that they have just lost a father who owned the property. None of them wanted to pay the property taxes there. They were just had a fight. Well, it went all the way through the foreclosure process. We ended up with a tax deed to that property and had 50, I think it was 58,000 into a $700,000 property. It happens, but don't expect it to happen.   Michael: Right, right, right. I think there's a, I just had a couple aha moments. And the vast majority of them is that I had no idea what I was doing and for those listeners, but go get educated. Good. Don't do what I did.   Tom: What is it like, ready shoot aim?   Michael: That's right. That's right. Yeah. That was a good learning experience.   Tom: Gosh, love this tangent right here. All right. Well, we're going to jump into the question.   Michael: Great question. Bobby.   Tom: Bobby K the man. Last question we have from Jessica out of Boston is how does Roofstock choose their markets and a related question, why is restock not available in all States? Mark, do you wanna take a quick pass at this guy?   Mark: Yeah, absolutely. This is a kind of what I work on every day, just for those listeners out there. Uh, you, but Roofstock when we started, they really went to markets with a specific intention and that was around cashflow. Right? That's what most of our investors are always chasing is really quality cashflow. But what we're realizing is that, you know, appreciation may be a different play that other investors are more interested in and, or maybe even a blend of the two. So as Roofstock went to markets from like the st Louis is to the Cleveland's to Memphis and Birmingham, kind of the typical suspects, right? Those are just very highly demanded markets because investors require a certain amount of cash flow. You can get 10% plus cap rates in some of those markets. But what we're trying to do is really balance out different investment strategies for all the different, uh, investors out there. So when it comes to, how do we choose our markets? We want to go to markets where we feel the real estate economy is definitely going in the right direction. That not only from a macro level, but also from a micro level, that there's really healthy local markets where the risk and return really feels good from, you know, the areas compared to what you can make in that cashflow. But we're also looking at kind of expanding that logic where we're saying, Hey, let's just make sure we're going to markets where there's enough supply. Right. And there's some affordability because certain markets like here in Dallas, I mean, it's gotten really tight.   And so there's just not much supply that we can source because there's so many other exit strategies that I would say are more geared towards owner occupants, right? So fix and flippers are sourcing properties and going towards those exit strategies rather than investors, because they think they can get more money. So being a marketplace, we have to really grant it, we have to react to the market and let it ebb and flow where we're trying to be the guys in the middle where supply and demand meet. Right? So that just goes to the whole, whole logic of it. You know, we're not available in every state, you know, Washington state, Oregon, California. Those are very much appreciation markets and you're just not going to have the same level of demand from investors. So we're always trying to cater to our network, but please reach out, be vocal, tell us where you want to go. And it really is a conversation point between what Tom and I talk about all the time. And he gives me a lot of feedback where the demand is. So if there's enough demand, the markets make sense. Like we're about to open up and De Moines, Iowa in Richmond, Virginia. And we feel really good about these markets. They're kind of economics. Those are areas we want to go to, but we want to hear your feedback so we can open up in more States and cities like that.   Tom: Love it, love it. And opening up new markets all the time. Excellent guys. Well, thanks for the questions that everybody's been sending in and please continue to fire them in and don't be shy on how either advanced or how novice the question is. We're going to bring in the right folks. If we can't answer the questions ourselves, I think that's a fun thing about this network that we have. And Mark, thank you very much for joining us today.   Mark: Thanks for having me on always a pleasure.   Michael: No, the pleasure is ours.   Tom: The pleasure is ours. Storage Wars. That was such a great show. My favorite part is when they, that one guy Darren. Yeah. And he's like, Oh, that's a $3 bill or, Oh, that's a $50 bill or a nonsensical bill. $50 is a real bill, like a $45 bill. Anyways. Okay. Enough of that. All right.   Mark: I'll leave you with a good story if you wouldn't mind. So talking about storage Wars. So I had to go to auction school to become an auctioneer, right? And they actually have an auction school where you show up and for eight, you have to do 80 hours in Texas. And for two hours every day, we had to do tongue twisters and we had to do, you know, counting up, counting down five, 10, 15, 20, 25, 30 to 35, 40. What do you do around the rough and rugged rock, the ragged rascal ran, right. And do it all day long. And I'm just scratching my head like, teacher, I'm going to be an online option that really make a difference. So funny enough, but they always did a charity auction at the very end. And guess who walks into my auction school in Texas? It was Walt Cade of Texas storage Wars. I'm like, get out. This is, this is like living in a weird world, but the auctioneer world is really interesting, different real estate to watches, to tobacco and cattle. And there's all kinds of things you learn. But again, I kind of raised my hand, like I'm just here for the real estate online course. We don't have that. Get back to your tongue twisters Mark. So if you really want to talk about some funny stories, it's a great world. Auctioneer's are fun, but you know, there's kind of a new regime coming through more online auctions, which is a fun way for people to kind of get comfortable with, you know, buying from anywhere in the world. Very much like what Roofstock is doing with our marketplace. So yeah. Full of fun stories, but had to share that one.   Tom: Awesome.   Michael: So cool.   Michael: Alrighty, everybody. That was our episode for today. Thank you so much for listening in a big, big, big, thank you to Mark Woodling. Always a real pleasure to have him on as always. If you liked the episode, feel free to give us a rating or review, or even if you didn't like the episode. No, don't give us a rating review if you didn't like the episode, wherever you listen to your podcasts, we look forward to seeing you on the next one.   Tom: Happy investing.   Michael: Happy investing.    

In this episode we do a deep dive with Matthew Whitaker from GK Houses on what makes Birmingham Alabama a unique investment market.    --- Transcript   Tom: Greetings and welcome to the remote real estate investor. And today we have a special episode where we'll be doing a market spotlight today. We're going to be focusing on Birmingham and we have a special guest today and Matthew Whitaker, and I'll be joined with my cohost Michael album. All right, let's do it.   Tom: Matthew, thank you for joining us today.   Matthew: Well, thanks for having me. I'm super excited about being on this new spotlight and excited about being able to present Birmingham to you.   Tom: So Matt, why don't you tell us a little bit about your, your background and GK housing as well?   Matthew: Yes. So I got into investing when I was 23 years old and bought my first house using a home equity line of credit off of a little house that my wife and I, or a girlfriend, fiancé at the time owned and started buying and selling houses and got really excited about it and quit my job, day job. I was doing it on nights and weekends and started flipping houses for a living thought. I was a big shot real estate investor at 23 and did that for about four or five years and pretty successfully we flipped about a hundred houses. I had some partners, I always joke that they had a lot of money and no time. And I had a lot of time and no money and we got married. So we formed a partnership. I was the operating partner that was out there buying and selling homes. We did about a hundred deals in four years. So for a 25 year old kid, that's out there wheeling and dealing. It was the good old days.   And I thought I had the tiger by the tail. And then as y'all know how the story ends in 2008, 2009 becomes the real estate market crash. And as Warren buffet says, when the tide goes out, you realize who was swimming, found any shorts on? And I looked down and I was one of the ones that didn't have any shorts on. So had I owned about 30 rental houses at the time or 30 homes that we were 15 of, which we were trying to flip 15 of, which were already rentals and we just moved everything into a rental portfolio. And so we started managing, we started out managing as a way to sell more homes though. We were kind of on the front end of turnkey world. And it was very new. The idea of selling homes or packages of homes to investors was very new at the time. And so we did that for three or four years and helped put together a big fund of local investors that bought up a bunch of Birmingham houses. But back in, let's see, 2013, we decided that we enjoyed managing more than the kind of deal of buying and selling.   We were more of a, we call ourselves grinders the more of the plotters. And so we enjoyed management. So we, I still invest on the side about, about 30 or 40 houses a year, still personally, with a partner. And, but my, my day job is I'm the CEO of a company called GK houses. And we started here in Birmingham and started, I always tell the story started with those 15 or 30 houses, depending on how you looked at it. And then started just growing that business. In 2013, we managed about 250 homes. And today we've moved out of Birmingham into eight different markets and manage about 26, 2,700 homes. But Birmingham is still my home. It's where our corporate offices it's where all of our back office accounting and all of our corporate team is. And so, um, Birmingham is the market. I know really well and, and still spend a lot of my time investing in   Tom: Yeah, Matthew and GK houses are great friends of rootstocks and a great partner that we love to advocate for. And we actually are double dipping our podcast. We are having a podcast dedicated specifically to property management that is going to be coming out very soon with Matthew as well. But today, where is the market focus? So great partner.   Matthew: I love anytime I get to get on and sing Birmingham's praises, it has come from having a bad reputation for some certain things that happened in the past, but I'll tell you where Birmingham is a great place. And one of the things that people consistently say when they come here is number one, how green it is. So when you watch a movie about the state of Alabama, it's all red clay. And there are areas of Alabama that are certainly like that. But where I live is very green and very hilly. And they're amazed at how progressive, not just politically I'm, I don't want to get into that, but in terms of how it's moving forward. And we're really known for our food scene, our arts and culture scene. So very excited to get on and get to talk about the city that I live and have no desire to move. I get to travel a lot, obviously with my role as the CEO here at the company, but I have no desire to move because Birmingham is such a great place to live.   Tom: Excellent. So the way that this episode is going to flow is we're going to start with some high level quantitative overview of the market. And then we're going to needle into math to talk about some of the specific qualitative of employer's points of interest and, and all that good stuff. So why don't we go ahead and start in our quantitative breakdown, and we're going to make this consistent for all the markets that we talk about first, the MSA. So the greater area of Birmingham, it has a population of 1.313 million, and this was based off of the last census data and map. What are the major cities that consists of the greater Birmingham area?   Matthew: Great question. So Birmingham proper the city Birmingham is about 350,000 people, I think. And then it is made up of a group of municipalities. So one of the things that an investor would need to understand about Birmingham is it's not a County based government, but it's a very city-based government. So it's very fractured in terms of each little, like I live in Homewood, which is just South of Birmingham. And we have our own city government that manages our own school system, manages our own trash. Whereas somebody like a Nashville or a Kansas city would have a County based government. So that 350,000 people is Metro Birmingham. And then we have a bunch of municipalities in the kind of suburbs, so to speak what we call South of town and over the mountain area, which is all South of town. And then that also includes the Tuscaloosa area, which is where the university of Alabama is, which is about 45 minutes from Birmingham Southwest.   And obviously that area has grown a lot with, uh, with the university of Alabama, as most university towns are starting to grow. So that's where they make up that 1.3 million. There's probably 1.1 ish, a one to 1.1 in what I would consider really proper Birmingham. We don't manage specifically down in Tuscaloosa than Bessemer, which is about halfway between Birmingham and Tuscaloosa is the, is one of the other big towns or cities. And then Hoover, which is due South of Birmingham is another. So generally when you talk about the MSA, you talk about the Hoover Birmingham Metro area. And so Hoover and Birmingham are really the two largest communities in that MSA.   Tom: Got it. I'm looking forward to needle again, a little bit on those specific, uh, as it relates to thinking about those areas as investors. So that area has seen pretty significant population growth. According to the information we have with census plus 2.8% over the last couple of years, it has a median household income of $57,500 as a medium household income. This is coming from the John Burns data, and there's a pretty significant amount of units. So when I say units, single family homes, there is 520,000 homes in this MSA where 26% of them are renters. And this is again, John Burns along with some census data. So continuing looking at some of these metrics that we have on Birmingham. So a major uptick in new permits to build single family residence. The last value in 2019 is 3,280, and that is up 17.2% year over year. A couple of other metrics to throw around the entry home value within Birmingham is about $134,800.   And this is coming from core logic. And the median rent, this is 1030 $2. Again, this is core logic where this is coming with a really steady rent growth. We'll actually have all the metrics, all the markets that I've seen as one of the highest that 6.5% increase in rent. The last couple of metrics I'll hit on before we get in to the quality of stuff that we'll talk with Matthew about is the rent tiers. So we see a rent tier, and this is again at John Burns metrics on the lower end of an $827, the mid $1032. That's that same median level and at the high tier $1,408. So those are the bands at which are identified in the Birmingham market. All right. So let's get back in talking about those specific main cities and other cities within the Birmingham market. So are the majority of the rental market, is it just an at Birmingham proper, or tell us a little bit about that. The distribution of rentals.   Matthew: Let's talk about Birmingham, because I think I need to kind of set the scene. So if you're listening at home and you wanted to bring up a map of Birmingham, what you will see is that Birmingham appears to flow from the North Eastern side of town down through the Southwestern side of town. And so one of the reasons for that is there is the start of the Appalachian mountains, just South of town and runs from the Southeast to the North are excuse me, from the Southwest to the Northeast, and then runs all the way up through South Carolina and in North Carolina. And, and so it starts here. And, and so if you think about when Birmingham was built, it was built in the early 19 hundreds, 1920s, and it was built because this was kind of the Pittsburgh of the South. It was a steel based industry.   So you had a lot of wealth here, and then you had a lot of workers to support that steel industry. There's a lot of mining happen up underneath the mountain. And so when you think about the housing stock, the housing stock started kind of from the Northeast and flows down through the Southwest. And that is the older housing stock that was built on flat land. So if you look at the map and you look at places like Bessemer, which I talked about going up, I 20 through midfield and Fairfield, and then the Western side of town is called West End. And then you get to the Eastern side of town, which is, and starting to head North towards the airport, Woodlawn, Terrant Roebuck. You're talking about, East Lake, you're talking about areas that were built a lot of times in the, uh, some of those areas started in the twenties and then were built through about the forties or fifties.   So when you think about investing in Birmingham, you need to kinda know what the age of the home is. And that's kind of the first thing I think is important is when houses are built and 19 hundreds, they were built with the idea, there was no air conditioning. And if you've never been to the South in the summer, it is really hot here. And we're, we're recording this during the summer. So I'm coming right out of the heat and it's a hundred and something degrees, heat index with almost a hundred percent humidity. And, and so that is really hot. So you can imagine the ceiling, sometimes in those homes were 12 feet tall so that the heat would rise. And so when you're investing, you want to make sure that either those ceilings have been lowered, because now you're going to be required to have air conditioning in them.   And if you buy this older housing stock, you just need to know that it's older housing stock. So your repairs and maintenance are going to be a little bit higher. And what you'll probably want to dig into some of those, but let me, I'll give kind of the 20,000 foot view. And then we can dig into some areas. As move Northeast. And as you move North, and as you move further West, you get into more homes that were built in the fifties and sixties. So there was another kind of housing boom, around that time, those are more of your brick ranchers, more of your wood, three bedroom, one and a half, one to one and a half, two bathroom homes. And these, I call these your tanks. I mean, they're built for modern amenities because we started to use an air conditioning back then, but they're very efficient.   They have closets, but they're not huge closets. They're just a very efficiently built house. So you might find a 1200 to 1400, 1500 square foot home in these areas. And they are great rental houses because again, their tanks, they just hold up really well. They're again, they're very modern people enjoy them. The one bedrooms obviously rent a little bit less than the two bedrooms. Anytime you get multiple, excuse me, not the one bathrooms, uh, rent less than the two bathrooms. Anytime you get multiple bathrooms. Very important. Now, one of the interesting things too, is what I would consider the more A-class housing stock is South of town. So imagine in the sixties and seventies.   Tom: Is that Hoover?   Matthew: Yes, you're talking about Hoover. You're talking about Vestavia, Homewood, mountain Brook, and these areas, these homes are hard to buy and make the rental numbers work, but these are all built up on the mountain. So when we say over the mountain, you had more, as technology came in along and building, you are building these homes on the side of mountains. And so the housing stock is much younger as you get more vertical in Birmingham. And now if you're listening to this in Denver, you might fly into here and wonder where the mountains are. There's all rolling Hills, but we call them mountains. And then as you get further North, just like any city, it grew out, right? You're going to get into areas like Fultondale and Gardendale North. You're going to get into areas like Trussville to the East. You're going to get into areas like Hoover and kind of the Indian Oak mountain Indian Springs area, where my wife grew up, where Oak mountain state park is. And then as you go West, you're going to get into Hueytown and pleasant Grove.   Now these are your B plus neighborhoods that are kind of out a little bit further great areas to buy for high appreciation, but there's suburbs there. People are going to be driving into the city to work. And so, you know, just like any town, you can pretty much dictate what the pricing is of the house based on when it was built and what the housing stock was built for.   Tom: I think one of my favorite adjectives for a rental property is a tank property. That just goes on. You didn't mention what cities you said it was in the West or the Southwest. Is that like pleasant Grove and Fairfield or…   Matthew: Yeah, Hueytown pleasant Grove. Our Fairfield's more of that first area that I was talking about that was built more of a C class neighborhood. But when you get into Hueytown and pleasant Grove, you're talking about B plus B plus properties with high possibility for appreciation, a lot of home ownership in those areas. So really if you talk to some of the local investors, those are some of the areas that they like to hit the hardest.   Michael: Got it. Matthew, I've got a question for you. What I want to know is why are people living in Birmingham and are moving there? You know, there's gotta be job, pull job growth. Can you talk to us a little bit about who some of the major employers are and why folks are headed that way?   Matthew: The biggest employer in Birmingham is university of Alabama at Birmingham, the hospital and the university. So when you combine that it is a teaching hospital, it's one of the, in the Southeast, it's probably one of the biggest teaching hospitals. So it has a huge draw. You can imagine from Mississippi, from all parts of Alabama. And so we have a bunch of doctors and students that are learning at UAB. And then of course the school university of Alabama at Birmingham, the next thing that's a huge employer is Alabama power, AlaGasCo, kind of the utility companies that service the state. And then another thing that's exciting is we have two, no, excuse me, three different car automobile manufacturers within about an hour and a half of Alabama. So to the Southwest, as you go towards Tuscaloosa, which we talked about earlier, there is an area down there called McCalla.   It is where I 459, which has kind of the bypass meets back up with I 20. And if you keep on going down, [inaudible] right there. That is where the Mercedes-Benz produces the M class Mercedes. So the SUV Mercedes, and so McCall is a great area to buy rental homes. You're talking about a lot of new builds going on. That is where a lot of, and they continue to add square footage onto that facility to build more M class Mercedes. And that obviously feeds jobs. People traveling from Tuscaloosa and people traveling from Birmingham. If you go East on I 20, you have the Honda Odyssey van is produced in Leeds. So great area. Trustful sees a lot of their executives that come in from Japan. One of my old partners used to rent to all Honda executives, and they would come in from Japan and live here for two or three years, and then go back to Japan.   So, and obviously the having building the Honda Odyssey van, there's a ton of you don't think of just Honda, but you also need to think of all the suppliers that have to support a big operation, like building that Honda Odyssey van, building that M-Class. And then if you go due South, you breach Montgomery and just South of Montgomery, and that's, this is only about 60 or 70 miles South. You find the Hyundai plant, and I'm not sure exactly what build there. I would imagine most of the Hyundai workers work in Montgomery, but you still have some of the suppliers that are supplying all three of those in and around the Birmingham area, just so they can be very centrally located. So we have a, so that's pretty exciting. I mean, Mercedes has been there probably 20 years, maybe a little bit longer, maybe 25 years building that M class Honda came about about eight, 17 or 18 years ago.   And then the Hyundai plant is newer, probably 10 to 12 years. There's just a lot of exciting things going on. Amazon is building a facility now in Bessemer. So there's a big kind of gold rush in the Bessemer area just because they know there's going to be, have to be a lot of people that are going to support that Amazon distribution facility. Birmingham has been doing a great job of investing in the city has built new hotels in and around the downtown area. And we're also building a brand new football stadium too, for the UAB blazers. And it's going to hold things like concerts. And so there's just a lot of money right now being invested in and around the Birmingham area. So really a lot of exciting things going on.   Tom: That's awesome. You know, we already touched a little bit on education, major colleges, but UAB, as well as university of Alabama,   Matthew: Yeah, University of Alabama is down in Tuscaloosa, which is about 45 minutes to an hour Southwest of Birmingham. You have, let's see, you have Sanford university in Birmingham. You have Birmingham, Southern college is also obviously located in Birmingham. Yeah, you Auburn is about an hour and a half to two hours, South East of Birmingham and a place called Auburn, Alabama, which is pretty obvious Auburn in Auburn, but it is almost a when you get to Georgia. And so there's a lot of kind of university life. You see a lot of university students in and around. And of course the medical school at UAB brings a lot of people in. We have rented a lot, especially when we have homes in and around the South. What we call the South side of Birmingham, which is basically South of the entrepreneurial district. We have a lot of med students, dental students that rent with us.   Tom: And is that in the general Southern part? You said Southern part of Birmingham.   Matthew: Yeah, It is. If you kind of zoom in on Birmingham and you look what I would call in between Homewood, if you look where Volkan is, which is a statue that was dedicated to the iron ore industry in and around their five points South, all of that is where a lot of the young people live that are going to those universities.   Tom: Very cool. How about let's touch on transportation? So in looking at it, it looks like it is almost like an X from 65, 22, 20, 59. So it looks like a major central hub of a freeways in the South that all go through Birmingham.   Matthew: It absolutely is a Nashville about two hours to the North. Atlanta's about two hours to the East Jackson. Mississippi is about two or two and a half hours to the West. And then Montgomery is about an hour to the South. So it's very centrally located. Half the people here are Atlanta Falcons fans. The other half are Tennessee Titans fans. And so it is a very centrally located city and very easy to get to. And then in transportation, within the community, most people drive everywhere here. It is not a, unless you just live downtown and work downtown, which is, it's not an overly big downtown area you're going to drive to work. So kind of the main corridor where a lot of the, where it gets clogged during the week would be that 280 as you go South and East is a very heavily traveled road. I 20, I 65 coming from the South and from the South West. And that kind of tells you where the people are, right. It tells you where the people are and what they're doing. And then I 65 South into Birmingham in the mornings is very busy. So Birmingham is kind of spread out just because it, as you moved across the mountain, it does flatten out a bit and it allowed for the city to kind of expand,   Tom: I'm smiling as I'm hearing this, I'm so excited about this series of market spotlight. I'm learning so much about Birmingham and I'm like, so excited dip my toe into the investing market, continuing down. Well, there's also an airport right in Birmingham.   Matthew : Yeah. We've got what we call an international airport. I'm not sure where that international flight flies. I think it flies at The Bahamas, which is good. I mean, everybody's got to go to The Bahamas, right. But what I tell people is we have major flights in from Denver, obviously, and from Atlanta into Detroit, into New York. So it really is a two flight place. We fly obviously Dallas and Houston direct, but unless you're going to one of those kind of major cities, you're really going to, it's going to be a two flight place, which is fine though. I mean, Birmingham so easy to get around. I always tell people, you know, Atlanta is one flight away from everywhere, but you took two hours to get to the airport. Birmingham takes me literally 10 minutes to get to the airport and then another five minutes to get to my gate. And then I can fly to Atlanta and in 45 minutes. So it really saves me. I get placed as faster than people do in Atlanta.   Michael: And Matthew, speaking of getting places, do you all have traffic and understand you're speaking to a couple of California, so we gotta be careful here.   Matthew: Look, I've been in Atlanta on the bypass, the two 85 bypass. And it is really bad. There's only a couple areas in Birmingham that are probably that bad or, or could even like sniff being that bad. That two 80 corridor is really tough in the morning. It may take you an hour to come 15 miles, 20 miles in, but a lot of people do it. Like it's amazing to me. We keep making it wider and wider and wider. And as you know, it also makes it worse before it gets better. And then by the time they finish it, it feels like it needs to be wider. And that's where I would say a lot of the housing growth is going right now is South and East down to 80. So you can see Chelsea down there in the bottom right hand corner of the map. If you're looking at it, Chelsea is a really growing thriving area.   Again, anywhere around McCalla is really growing. That's where they're building a lot of homes. I've got some great friends that are one of the largest builders in Birmingham, and they consistently build in those areas and build in Trussville, which is just East of town. So they're still building in the suburbs. There's not a lot of infill building going on right now. And they continue to sell homes. Even during this market, when we're recording, this is kind of coronavirus world, and they're still selling homes. They're still building them. They still have people that are interested in buying them. So we really feel like in Birmingham, we've got a little bit of a shortage in the housing.   Tom: Yeah. I mean, it's one of the highest SFR applications for building new houses way up there. And looking at the beginning of some of those metrics, let's touch on investor friendly related matters. So is there any concepts of rent control or, you know, legal concerns around unlawful detainers or three-day notices I'd love just kind of, you're taking, you're probably an expert at this as a property manager, as a CEO of a property management.   Matthew: Yeah. Unfortunately, sometimes, unfortunately, fortunately. Yeah. So Birmingham is a very conservative, well, Alabama let's say, cause because most landlord tenant laws are state specific. Alabama is a very conservative politically state. Birmingham is a very progressive city though. And so, but still most of the laws are driven, are state driven, landlord tenant laws. So evicting a tenant is easy technically to get done, but it does take a while to get done. And in Birmingham that's probably the biggest drawbacks to Birmingham is sometimes it takes as many as 60, sometimes as many as 90 days to get someone set out from the time you fall an unlawful detainer to the time you actually set them out. So that is a really long time, even in a place like California. I think that's a long time. The good thing about Birmingham though is again, it is a very landlord friendly laws. The landlord tenant law is very, is it really written landlord friendly. We have very low property taxes, relatively speaking. So as a percentage, it's way less than a lot of the other communities around the country. And look, there is no rent control. I don't ever expect that we might be one of the last places in Birmingham to have that. So it's again, pretty much landlord friendly, but you want to make sure you get a good resident in your home so that you don't have to evict them.   Tom: Makes sense. My other kind of question on, I guess this is sort of landlord friendly. I know some areas have a lot of HOA ways and some of these hos, you know, they have sneaky little rules and the bylaws about being an owner occupant. And is that common in Birmingham?   Matthew: It's not, we managed in places like Nashville and Atlanta where that's very common. So very familiar with that. Birmingham is not that way right now. It could come that way. As the housing stock that's being been built in the last 10 to 20 years, maybe it becomes more rental stock, but right now it is definitely not that way, especially in the areas where investors are buying.   Michael: So it sounds like Matt, from the descriptions that you've been giving, this is a very seller friendly market. It's really a sellers market at this stage of the game. Is that fair to say,   Matthew: Is it is an investor market. It is absolutely. You can definitely sell a house right now, but there's, I mean, it's just a really healthy, it's like very aggressive sellers and very aggressive buyers right now. But yes, if you're selling a home, you could even do a good job. You could make out really well selling homes right now, too.   Michael: Okay. Great.   Tom: Any other thoughts on points of interests? I saw there's the Birmingham barons, AAA baseball team.   Matthew: They are AA, but yes, they are in downtown. They used to be down in Hoover and we moved them. They built a new facility that won a lot of awards in the downtown area. So that is down there much like many of the other communities, some of the things that draw people or we've, we've got a number of local breweries that are kind of fun places to hang out that a lot of people are enjoying doing. We have the food scene's really good here. So last year we had a Frank sta won the James Beard award for the best chef in the country or the best restaurant, excuse me. So we've got an, and then he's got, I always call it the coaching tree, but he's got all these other chefs that he's trained now that have gone out and started their own restaurants.   Tom: Diaspora. What's the name of his restaurant?   Matthew: His restaurant is called Highlands Highlands bar and grill. Nice. And so it's kind of an upscale, kind of a New York style bar and grill.   Michael: Awesome. Man Tom, we gotta make it out there.   Tom: I know   Matthew: That's the one of my favorite places to go.   Tom: Awesome. Michael, do you have any other questions?   Michael: Yeah. Just curious, Matt. So for all of our listeners who were previously unfamiliar with the Birmingham market, hopefully now they're a bit more acquainted with it. What would be your final thoughts if some of those needs, what, what would you want someone's final takeaway to be from, you know, about the Birmingham market?   Matthew: It'd be a long ending, but I think it's kind of important is our average rent somewhere in the $900 range. So you're talking about when you look at Birmingham, I would think more about investing in forties, fifties, and so homes in the forties, fifties, and sixties. If you're looking at investing in C class properties, maybe 60 seventies or eighties, or even some of the two thousands, we have some homes that are in the two thousands. If you're looking for B class kind of high appreciation, lower cashflow, where you're going to find those C class properties are in areas like East Lake was a, which is three, five, 206, zip code Western, the free five, two one one, Inslee three, five, two Oh eight. Midfield is three, five, Oh man. I own a house in Midfield. And I can't think of it. I'll think of in a second, but you're talking about Roebuck, which is three, five, two one five, Center point 35215.   You're going to talking about Grayson Valley area. Now you're starting to get into more B class neighborhoods that would be Trussville, Calera, a Chelsea, Hueytown, Pleasant Grove. So, and you're talking about rents now that are more in the $900 to $1,200 range. That's what we would consider B class, which kind of lines up with the statistics you were giving earlier in terms of just kind of a price brackets. We manage about six or 700 homes right now. And it is a great time to be in the rental business because we're at about 98% occupancy. We're actually north of 98% occupancy, which we've never been before. What we are seeing as a shift from people wanting to live in multifamily, to live in single family homes. So that's pretty exciting for us, obviously because the pandemic and I just don't see that going away anytime soon.   Like people just don't forget about the pandemic after it's over. They're not going to forget about it immediately. So I do think there's a shift to single family rental and in the South, this things may change, but the pandemic doesn't feel as bad as I, my friends tell me, you're experiencing in California where people are experiencing in New York, we are renting homes like crazy here. I know that our cases are up in terms of virus, but it doesn't feel that different than normal life down here right now. So all that may change, but I will tell you things are really good right now. And it's not like people are gonna stop paying rent. Obviously if they lose their job, that may be a problem. But everybody seems to have adjusted to kind of coronavirus world down here pretty well. So that's what I would say is most of our investments are in the C class and B class neighborhoods.   And look, another area I would want to highlight is Northwest, which is Forestdale and Adamsville another great area. One of my favorite areas to invest. If I could buy everything up there, I, I definitely would. And so, but I also want to be a reference for any of your potential clients. So, you know, if they have any questions, we obviously have people, I always say you, you date your real estate agent, but you marry your property manager. And so I want you to know that before we get married with any one of your clients, we want to make sure that they're buying the right thing too. So we don't, we have a vested interest in it's a longterm relationship. We can't just put somebody in any home, regardless of what that home is. So I know that was a long ending, but I thought it was important just to kind of give some numbers and some feedback on what's going on at the grassroots level.   Michael: That was great.   Tom: I love it. That's one of my favorite pieces of advice to give is, you know, leverage your property manager early and often, even in the acquisition process. I mean, it's a teamwork and you know, the earlier you can kind of start to build that trust, uh, so much value to it.   Matthew: Well, our, all our incentives are right. I don't want you buying a bad house because I've got to manage it. Like you don't have to manage it. I know you've got to pay for it, but I'm the one that has to manage it. So I don't want you buying something that's going to cause me a lot of headaches in the future. Just like any business owner. Obviously we want to work really hard and earn our money, but we don't want to do extra work just because we put you in a bad property.   Tom: Awesome. This is fantastic. Thank you so much for your time. This was super interesting. The Pittsburgh of the South. I love it.   Matthew: We used to be called the magic city because we grew so fast. And so now it's starting to grow again and I'm super excited to be a part of Birmingham.   Michael: Matt, before we let you go, if folks have any questions about the Birmingham market, where can they reach out to you? And a little birdie told me also that you've got a podcast of your own.   Matthew: Yeah, no, I appreciate you mentioning it. We actually started a podcast that helps people just like you're, you're trying to help people with Birmingham's specific information. It's called the Birmingham rental investor and they can get that on Spotify or Apple or wherever somebody listens to their podcast. If they want to reach out to us specifically, we again would love to help somebody. We want to make sure that you're getting into the right house. And the best way to do that is to reach out to our support support@gkhouses.com. And what we have is essentially a support ticketing system that we'll get into our sales department and they can help you understand questions about our management services, but most importantly, make sure that you're getting into the right house so you can send them addresses. We'll give you rental reports of what we think that'll rent for. We just want to be a supplier of good information so that you can make the best decision possible. So thank you.   Tom: All right. Thank you, Matthew.   Michael: Thanks so much, Matt.   Matthew: Thank you.   Tom: Thanks again to Matthew, that was super informative. Learning about the Birmingham market. If you have any other questions, other markets for us to deep dive into, please reach out to us. You can hit me up at tom@roofstock.com and as always, this episode is brought to you by Roofstock Academy. It is your one stop shop to getting to the next level, from on-demand online educational lectures, coaching, the SFR playbook, all of that good stuff. So just check us out at roofstockacademy.com and happy investing.    

This is our first ever AMA, where we answer listener submitted questions.  --- Transcript:   Emil: Hey, everyone. Welcome to another episode of the remote real estate investor. My name is Emil Shour and I am joined by Tom Schneider, Michael Albaum. And today we are doing our first ever AMA, ask me anything. So we posted an episode, a short episode last week, asking you guys to submit any questions you have to us. And, we also posted on social. So we've got a combination of people dialing in people asking us questions on social that we're going to tackle in today's episode. So let's start answering some questions.   Theme Song   Emil: All right, guys, tell me how excited are you to answer these listener submitted questions today?   Michael: Before Tom goes, I'm the most excited I win.   Tom: Aah, I'm really excited. And honestly, I think this can be kind of a recurring segment. So some of the stuff that we all do is we also do webinars with rooftop webinars, go check it out. Really great webinars. Anyways, we just like save time at the end for questions. And there's always so many good questions that we don't have time for. It's like it could be its own segment. So I think this whole AMA thing on the podcast could have some legs and be as core sort of a recurring thing. Like maybe we throw an episode in the middle of the week or talking about this before. So with that said, do not stop submitting questions. Just keep firing them in, and we will get to them. I think it could be a longterm thing that we do on the podcast.   Michael: We're going to start a question bank, so to speak. So it keeps sending the questions like Tom said, and we will get to them as soon as we can. Whenever we have time on these AMA episodes, I think it's just so great because the whole point of this podcast was to give the people what they want. And so now that we're getting questions directly from listeners, I think that's super, super valuable. And chances are, if you have a question, somebody else has it as well.   Tom: And I mean, what's fun about it is we as the host, like have some experience, but if there's stuff that's like outside of what we know we're going to bring in folks to help answer those questions. We have access to a lot of resources and a lot of smart people, so do not be shy about if it's a question, a little more novice or it's a little more advanced, we will get the right people in front of the microphone.   Emil: Yeah. And we actually, we've got a lot of good questions. A lot of these I'm curious about myself, so I'm hoping maybe you guys can help answer them. Cause I'm like, Hmm. Some of these are really good. I don't have experience with these. So, all right. Let's start, let's start tackling. Some are the first one we have is submitted by Shailen. Let's, listen to that question right now.   Shailen: All three of you have spoken about how you live, I think in Southern California, but you manage properties all over the country. How are you familiar with those other areas? Have you lived there before? If not, is there, do you travel there to figure out what a good neighborhood is? Rootstock has neighborhoods, but it's hard to know exactly what these mean for renters. If you've never lived there or visited there, can you elaborate more on the remote investing concept? Should you have three to five properties in one city or town before you go to the next town? Or are there some locations where you only have one property that you own?   Emil: All right. So great question all around. How do you choose a market as a real estate remote real estate investor? So this is a massive topic and we actually covered it on a previous episode, episode 21 called the art and science of choosing a real estate market, where we do a deep dive on how do you actually choose a real estate market? It's a long conversation. We spent about 40 minutes talking about it. So Shailen, definitely recommend you go check that one out. Some of the other things you asked about, do you choose one market and buy one property there or do you choose a market and buy several from personal experience? I have, but single properties in different markets. I have markets where I just have one property and I actually recommend people not do that. Now, just from my personal experience, I think it's probably better to choose one or two markets get really knowledgeable on that. Know what properties sell for. You're just, it's harder to be good at many markets versus choosing one or two and, and getting really good there. So even though I've done the one property in multiple markets, it's not necessarily what I recommend for other people. You guys have anything else to anything that there?   Tom: Yeah, you don't necessarily, I mean, just, you know, we had that episode, but to kind of just a Tom note on the topic is you don't necessarily have to go to the market, but have some parameters in the way that you're selecting a market. Be it population, be it like what type of economy is going on and diverse economy. So don't do the, throw the dart at the map method, like have some insight on how you select a market, but you know, you definitely don't need to, necessarily to go there and also to get educated on the market with regards to the different pockets and know what kind of expected returns that you would get be it gross yield. So when you're evaluating a deal, you have some context of this is a good property based on this area, or just wherever you decide to do an investing in market, just get educated on the market. Okay.   Michael: And just to echo that Shailen last thing that I'll add is if you're going to be remote investing, you're going to be relying on a lot of people to be your eyes and ears. Anyhow, most notably is probably going to be your property manager. So this is a great opportunity to start putting that relationship to the test and utilizing people that are remote. Anyhow, because if you go, if you need to go and physically be there in order to make decisions, well, anytime a big decision needs to be made. If you need to go get on a plane or get in the car and go drive there, that makes for just a tougher ownership process. So just consider that when you're thinking about investing at a distance property, managers can be your best friend   Emil: And Shailen asked about the Roofstock neighborhood rating. And so for people who aren't familiar with that, Tom, can you give a background on that? I know you have on previous episodes and you always describe it very well.   Tom: Neighborhood score, excellent point. So I think in a future episode, we're going to bring on someone from the data science team to get a little bit more into the weeds, but at a very high level, Roofstock pays a bunch of money for data. A data that has to do with historical population changes, changes in the economy, crime school, as well as forecasting out. So the neighborhood score is the synthesis of all that data that Roofstock collects. And it presents a simple one to five star score of five being, wow, this is a neighborhood that we think would make a great investment with regards to lower risk and better opportunity for appreciation where a one-star would be higher risk though. So that is the neighborhood score at a super high level, but I'm writing down as a note, we're going to bring on the data science team on an episode and grill them into the details of the Roofstock neighborhood score.   Emil: Awesome And again, for anyone who wants a real long, deep dive of how to choose a remote market, make sure you listen to Episode 21 called The Art and Science of Choosing a Real Estate Market.   Tom: All right, Robin from Wisconsin says, I love the show. You guys are super helpful in past episodes. You guys have mentioned you prefer investing in Metro areas versus suburban. How do you define Metro and why is it your preference? Do you consider cities with populations close to 200,000, like Akron, Birmingham, Greensboro to be Metro areas? Is there a population cutoff? So I'll take the first stab at this when I think of a Metro and I'm sure there is like a technical definition for that, but I think of a collection of cities that would like make an area. And also just to be clear, like, I don't think suburbs are bad. I think rural areas are a little bit risky just because there's typically not a very diverse economy, but I think suburbs are great. And actually a lot of my investments are in the suburbs of big cities, but back to kind of asking about defining a Metro, I think of it as a greater area. So if I'm thinking about Dallas, I would be inclusive of Arlington Fort worth. They're all kind of like within striking range of each other. I live over in Northern California in the suburbs of San Francisco. And I would say the Metro of that, you know, San Francisco would be Oakland, San Jose, Walnut Creek, Concord. So I think of Metro as kind of the broader, this wouldn't be too crazy of a drive to do, you know, maybe like an hour to drive across that area.   Michael: To piggyback off Tom's point. I don't have a population cutoff. I don't really think about Metro in the traditional sense because in different parts of the country, it can mean different things to different people. And so I'll usually call a property manager and say, Hey, if someone's going to work in the main employment corridor or whatever that looks like, whether it's financial district, that's the downtown area I'll ask, where is someone willing to live? Where are people that are working here living? And if the property manager tells me, Oh, and these areas great, that's my radius. If you will. I've invested in pretty rural areas, several hours outside of st. Louis. And there wasn't a whole lot of economy there, but there was a military base. And so that for me said, okay, this is good enough. Granted, I was pretty green, not, I don't know if I would make that investment again, but I got really lucky. So I'm less scientific when it comes to identifying a Metro and looking for markets to invest in and the population regard.   Emil: Yeah. I'm with you guys. I mean, for me, it's not even about urban or suburban. I dunno if that was part of the question, more so it's choosing a market that I think is good. And so like you mentioned St. Louis, St. Louis is one I invest in as well, and I'm in a suburb. That's probably like 20 minutes outside of the city. And I'm okay with that. As long as, like you said, people are usually commuting from the suburbs into the city as well. What I care more about is how is that city doing overall in terms of population growth are the returns there for what I'm looking for, those kinds of things. And so one thing that Tom had mentioned in one of our previous episodes that I really like is, is it a big enough city where there's at least one professional sports team? I think that's kind of like 1% rule, 2% rule. I think that's a great just first sniff test to make sure a market is even worth investing in, at least for me, I know people will invest in some of these, some tertiary markets let's call it like a Birmingham or something where there isn't..   Tom: We're going to count AAA base And the Birmingham bombers or whatever they're called. That counts, their in.   Emil: They're going to break through to the MLB soon   Tom: AA baseball is smaller, but AAA, it counts. Yeah!   Emil: So, you know, there are people investing there who are doing really well, but just for me personally, I've always liked that as a good test. Like, is there even a professional sports team? Is this a big enough city to have a professional sports team? And those are the kinds of cities I choose to invest in.   Tom: And just to correct myself, it's the Birmingham barons and they're affiliated with the Chicago white Sox from 1986 to the present. Yeah. So go ahead. Continue.   Emil: That's it. I'm done.   Michael: All right. Let's move on. Alright, Maddie from Facebook is asking and big shout out to Mattie. She's a friend of mine. She says, what is your advice for a first time home buyer looking to invest in real estate or buy their first property? So I talk a lot in the Academy about this and something that's kind of a hybrid of the two, because it's not necessarily a black or white decision of, I have to invest in rental property, or I have to purchase a property for me to live in is a house hack. And so if you are willing to kind of be a bit of a landlord in your own home, how's, that can be a really great way to go. And for those of you who don't know what a house hack is, basically what it involves is buying a property that has more space or rooms than you need for yourself or your family and renting out the other space or rooms.   So whether that's buying a four bed house and renting out their three rooms or buying a duplex triplex or quad, you can live somewhere and make cashflow alongside living potentially for free. So it's a really great way to get involved with real estate investing as well as tackle having a to live. And so if that's not within your budget, something that I talk a lot about is that I invested out of state for 10 years and was renting the whole time. And so in my market that just made sense to do. And so I said, you know what? I'm going to invest in, invest and invest and generate enough cashflow to ultimately at one point in time, purchase a property and have my cash flowing assets pay for that primary residence, which is something I've been lucky enough to have done.   Tom: Yeah. Similar situation I rented for a while, while owning rental properties. I think you're right, Michael, in that it's a product of where we live in that getting into a house to own and live in is just wildly expensive versus being able to buy an investment property. But my piece of advice would be two parts. One have a process, have a buy box. And so you're making these decisions, not subjectively. And the second one would be to have a bias for action. And I've been saying there's a lot lately. I think a lot of people get into paralysis by analysis. They overthink it. They're trying to make their best deal, their first deal. But that's, I guarantee you, that's not going to be the case. And there's just so much value to getting into the game.   Michael: Put me in coach, give me a chance.   Tom: Yeah.   Emil: Yeah. I love what you guys mentioned here. My only addition here, and this is a personal opinion, a lot of people might look at their primary residence as an investment. And I never look at it like an investment. I think it's a place where you call it your own. It's a place to raise your family. And there's a lot of benefits of owning your own home. It might end up being an investment, right? You could choose somewhere that appreciates. And if you think about it, your mortgages in a way, like some for savings as you pay down your loan and you build some equity, but considering that they front load a lot of the interest in your principal, payment is low in the beginning. I don't see it as much of an investment. So if you're looking at this as which one is the better investment, I think you're better off going and buying rental properties. Cause those are, you treat those like an investment, whereas your home, it's a personal decision that you make because you want a home. You want to, for whatever reason. So that's the only thing I'd add here.   Tom: I'm going to digress just a little bit. It's really funny. The offer making process of an investment property versus your personal residence. Cause like with an investment property, it's like, you know, I feel really good saying no and walking away, this is my firm number. Oh, you don't want, I'll get outta here. And then with your personal property, it's like, you know, you have your significant other. And it's like, Oh, they countered this much. I'm like, Oh, we should probably do it. I really want that house. The psychology of the negotiation process is just, I'm not good at doing it on my personal property, but for like my investment properties, I'm pretty disciplined. It's just really funny how the psychology of it is pretty different.   Emil: A hundred percent   Michael: Just to add to that. The primary property that I bought, I knew that it would one day become a rental. So I evaluated it like a rental. And so I was able to go in with the offer because I would have that same issue Tom so I treated it like a rental throughout the entirety of the process.   Tom: Incepted yourself   Michael: That's right!   Emil: It's such an emotional decision buying your primary residence. You know, you walk in, you're like, we love this. We love the location. We love the kitchen, the layout. And you're like, it's, it changes things. It becomes an emotional purchase, not one that's necessarily rational. All right, next question is from an anonymous voicemail. We bats. So let's listen to it on that one.   Anonymous: Hey there Roofstock. What's the best type of loan or a short term, single family home, an arm, a balloon loan, 30 year fixed, what would you guys recommend. Thanks.   Tom: All right. So good question. So when you say short term rental, that could mean a couple different things. Is it a short time horizon that you're owning the property? Cause I think that's really relevant for the type of lending that you're getting. If you're talking about short term rental, as in just like a vacation rental, I would say, get, you know, whatever best terms you can get, I'm going to riff for a second on your hold period. Cause you can get a lot of cost savings in thinking about what type of loan to choose if you know, how long you want to hold the property for. So if you're planning to hold this with like a five year time horizon, that could be a good scenario where you would get an adjustable rate mortgage like you were referencing, just because the rates that you can get with an adjustable rates, those during that initial period can be significantly less expensive. There's risk in that if you're planning for a longer hold time, say like a 10 or 30 or whatever, how long, just because after that initial teaser period, the rates will jump up to whatever market rate is. So you get yourself in a little bit of risk. So my answer to your question and to paraphrase really quickly is if you plan to hold for a short period of time, it would definitely be advantageous to look at what kind of rates you can get with either a five to one arm or a 10 to one. But if you're planning to hold for a longer period, I wouldn't recommend that just because it's hard to say where interest rates are going to go and you're going to be subject to wherever the market rates are at. And if it is like a short term, as in like a vacation rental, I'd say get whatever best rates that you can get according to your planned hold time.   Michael: Piggybacking off Tom's answer. I think whole time is really the end all be all the determining factor here. And what's going to dictate kind of looking backwards. What type of loan you should get. I would say that if your whole time is five years, look at a seven year arm. And if your whole time in seven years look at a 10 year arm, because we have no idea what the market conditions are going to be like in five years from now. So you don't want to be forcing yourself to sell a property in five years because well, the market's in the tank. And so you can't sell for... Can't make a profit on your deal and interest rates have gone up. And so that will often lower sales prices and purchase prices because their purchasing power has been diminished. So give yourself a little bit of breathing room. I would say above and beyond what your plan hold period is. And also a lot of times the savings to be held on arms aren't materially significant. And what I mean by that is if you're different than monthly payment is 50 bucks a month, you've got to decide for yourself, okay, is that $50 a month savings with a lower interest rate, worth it to have a shorter term interest term versus getting the 30 year fixed, which you know is never going to change the life of that loan. You could always refinance if rates drop that kind of thing. So the 30 year long time horizon should be significantly more expensive in order to deter you into an arm, I would say.   Emil: All right, next question is coming from Elan, who submitted on Facebook, Elan is asking, how can we estimate flipping costs? How deep should we go into flip? I, how much should we spend on a remodel? All right. So Elan's question is around flipping costs. How do you estimate those out?   Michael: There's a really great book that Bigger Pockets put out that's titled Estimating Rehab Costs. I'm pretty sure that's the title. And I think that can be a really great place to start. Um, and there's no substitute, I would say for getting a quote, an estimate from contractors and get numerous quotes and estimates and bids from numerous contractors, because everybody's going to have a little bit different price. That would be your best way as to how to estimate those costs. And then also chatting with local investors, local property managers, as to ballpark costs, they're going to have rough ideas of what things cost in that given market. And that's going to vary from market to market. So we can't say, Oh, do we have a house in San Francisco is going to cost the same to rehab a house in Northern Kentucky. Those two markets just aren't the same.  And as far as how far to go on your rehab or on your remodel, that also, I would suggest talking to your property manager because they're going to be able to give you some insight into what upgrades are going to bring you the most rent. Also chatting with an agent about what upgrades are going to bring in the most resale value. Once you've targeted your demographic, who you're going to sell to whether that's owner occupants or whether that's in other investors, because an investment flip is very different than an owner occupant flip. So that's what I would say on that.   Tom: Yeah. And my feedback, a really common process for these type of flippers is you partner, you have a general contractor who knows exactly what you're doing that you trust and you have some sort of relationship with, and you get a property in contract and during your inspection contingency, that's when you can have him go and price everything out. So you have that contingency to get out. If the deal doesn't pencil out, but the real key takeaway is don't buy a property and then try to figure out what the costs are like, have that as a part of your process is during your transaction contingency. So you can get out if it doesn't pencil, you know, you make your best guess when you're submitting an offer on what you think the costs are going to be. And that's where the, you know, books like Bigger Pockets books is really great. But once you actually have money, skin in the game with an earnest money deposit and you're in a transaction, you want to get that number of what it's going to be. And sure, there's sometimes going to be surprises of when they open up a wall or whatnot, but you're putting your best foot forward during the transaction period of getting an actual cost from contractor partner or, you know, vendor that you're using, that you can use real numbers when making that decision to close the transaction. So that would be my feedback.   Emil: Cool. And then, yeah, last thing is, you know, if you're working with an agent in the area and they're going and looking at homes for you, depending on how you're buying. So one thing I like to do when I'm vetting agents is ask them if they are not like, can they walk through the property and give you at least some idea of estimation, right? Like, okay, a new floor, this much square footage, how much is that going to cost? A lot of them will actually be pretty upfront with you. They'll say I'm not really good at that, but I have a general contractor I work with who can come with me when we inspect it and look at it and do all of that. So that's kind of one thing I like to vet and ask for. Just cause again, we're relying on a team boots on the ground there. So leveraging their knowledge and experience to help us make all these estimates. All right. So we still actually have a lot more questions that we didn't get a chance to go through today that we're going to cover in a future episode, like Michael mentioned, keep submitting these questions. We'll just keep doing future AMS to tackle whatever questions you guys have. And with that, we'll catch you guys in the next episode.   Tom: Happy Investing   Michael: Happy Investing  

In this episode, we have Katrina Phillips from Investor HOA Services on to explain everything investors should know about investing in properties that are a part of HOAs.  --- Transcript   Tom: Greetings and welcome to The Remote Real Estate Investor. On today's episode, we have one of the most knowledgeable persons I know on HOA. We have Katrina Phillips, who's the founder and CEO of investor HOA services. So are you, you are interested in investing in a property that is in an HOA. This is a great episode to listen to. All right, let's do it.   Theme Song   Tom: Hey, Katrina. Thank you so much for jumping on with us.   Katrina: Thank you. Thank you so much for having me today. It's my favorite topic to discuss.   Tom: Perfect. Well, why don't we go ahead and start, give us a little bit of a background about yourself.   Katrina: So I started in the single family industry back in 2012. Prior to that, I was actually a contractor and had several properties that we bought refurbished and sold. And so I spent about 20 years in construction learning it from every aspect so that I can learn it from. And then I started working with American residential property and really develop their operating platform or was their first hire on their operations team. And people really hadn't done this in the past. The first multifamily, we were able to pull things from, but really we were writing the policies and procedures, the books and utilities and HOA were two things that people hadn't really thought about. It wasn't even a line item on people's profit and loss that they were considering in their, you know, when evaluating investments. And so we really began to build that piece of the process. How does that work? How does, you know, the fact that we own 70% of our properties are in an HOA? How do we interact with them and how does that work? So that's how I kind of got into this side of the business.   Tom: Awesome. It's funny to think about 2012 and I was there too. It was the wild West where, you know, a lot of these companies such as yours and the ones that I was working at was raising a ton of money, buying these houses. And it's just kind of learning as we go and, you know, HOA and utilities, you know, came to be pretty important, parts of the details in doing this at scale.   Katrina: It did. And it was so much fun. I thoroughly enjoyed every minute of it. And, uh, you know, we learned a lot and grew it, and here we are today.   Tom: That's awesome. And you have since gone on to start a new company, right? Why don't you tell us a little bit about your company that you are running right now?   Katrina: So I was actually sitting in a meeting and, um, we were working with a utility provider that function very similarly to what we have structured as well. We actually asked them the question of if they'd like to take on HOA as, you know, as part of their process and has it was becoming a really growing concern and issue and having some pretty significant impact on the bottom line for companies. So they said, absolutely not that they wanted to stick with what they specialize in and that really planted that seed for me. And so that's where investor HOA services came into play, where, you know, we took a singular focus to build an operations platform around that that also integrates pretty seamlessly with other companies, systems and process. I knew I couldn't go in and say, throw away what you're working on right now and use what I'm saying to use. I also knew that we had to get it so that people could kind of go to one place to access information and things that they needed to manage the property. And so that's what we began developing back in 2017 is really an operations platform that can be used in several other areas. We just chose to focus on HOA because we could see it with a growing concern, making bigger and bigger impacts to the bottom line of companies. So we focused in there first, so that is investor HOA services.   Tom: That's awesome. So to sort of paraphrase investor HOA services is a provider for investors to manage basically all things related to the hos for the properties that are located at those hos. Is that right? Is that a good summary?   Katrina: That's correct. So everything related in the full life cycle of compliance, which could be a city code, HOA, rental, registration, municipal permitting, and all of those kinds of things on the compliance side of property management.   Tom: Very cool. Very cool. Awesome. Well, let's go ahead and dig into some of the meat of this learning a little bit more about H ways and how they relate to investors who are evaluating. So why don't we take a step back and why don't you define what is an HOA and, you know, high level, what are they   Katrina: So HOAs can be actually kind of several different things. And of course there's no consistency across the country of what an HOA physically is, but in general, in HOA is a nonprofit company that manages common areas, common elements within the community amenities. And there's also of course, condo owner associations, there's civic associations that are often voluntary membership, and we're starting to see more and more different types of HOAs, such as a borough and a neighborhood developments. Of course, in Florida, you actually see a lot of community development districts. There's some really fun, fancy development districts in Florida that have waterslides and water parks and all kinds of fun things in those. And so to be a member or participate and utilize those amenities items, then you pay your assessments fee on an, you know, either quarterly or annual or semiannual basis. And the HOA then kind of takes care of all those common area elements.   Tom: Got it. And that's interesting about some of the, those new amenities that are poking up around water slides. I mean, he made it sound it optional at all to join the HOA, or is it like, you know, since your property's located there, or is it kind of built into the deed that you have to join the HOA? I'm curious about that.   Katrina: Yeah. Civic associations are voluntary. Often they'll have a community pool or something that is shared amenity there or a park or something along those lines. We'll see a lot of lakes and that kind of thing within a civic. So that's voluntary. You also have something called a club membership, which will be, you can pay for different levels of membership within that. So for example, most often they include a golf course. You know, they might include a workout facility that's extra above and beyond what a standard membership would be. And so those are voluntary in regards to what the levels are that you can buy into. But in general, yes, if you're in an HOA, just kind of a standard HOA, then you are required to participate in their program.   Michael: And it sounds like there's kind of numerous different styles of HOA. I know for me, when I hear HOA, I just automatically think of condo association, but what you're telling us is that they could apply to single family homes, town homes, you know, planned communities. Is that fair to say,   Katrina: Yes, they can be commercials, commercial spaces. There's just all kinds of different options out there.   Michael: Interesting. Got it.   Katrina: There's probably about 10 that are standard that we see standard across the board. And then in different parts of the country, you see kind of different nuances within that. Like I said, you'll see boroughs, of course, in New York and New Jersey, that's a little, you know, structured similarly to a civic or community development, but they all have a little bit of different nuances to them.   Michael: Okay. Interesting. And you touched on amenities a little bit, and I was curious if there is such a thing as kind of a common or a standard set of amenities that you get as being part of an HOA, or do they vary as drastic as the style of HOA that there could even be out there?   Katrina: They vary very drastically. So we have especially see this a lot in Georgia where maybe it was built in the eighties, especially, well, pretty much any community built within the 1970s and eighties when HOAs first kind of started coming on the scene, they are just more of a planned community. So you'll see the coldest actual see similarities in regards to finishes on the exterior and, you know, mailbox requirements and that kind of thing. And then it's kind of more where it evolves as time went on. And that's where you kind of see some standardization on what I guess they were into in that moment. So then you hit into the two thousands and, and then now into the late two or 2020 range, and you're seeing these, you know, fun things like that are going on in Florida. So really it varies pretty tremendously. And that's a big part of what we do is we look at okay, what amenities are available, where that assessment money going to, and what's the benefit you're receiving from that.   Tom: That's interesting. I never thought about it that way about, you know, the vintage of the property. Like what was the fad for developments in the way that they structure these communities? So depending on what year you bought it, it is kind of a different flavor of the way that they were structuring. Super interesting. So I got a question. So if you put your investor goggles on and just think this is very high level about evaluating a property with an HOA, what would you say generally speaking, like what are the good things about buying a rental property that's in an HOA and what would be some of the detractors of buying a property in investment property? That's at an HOA. So we'll start with the positive.   Katrina: Yeah, let's start with the positive. So one of the things we learned and identified very early on is here, we are an investment firm and we're based out of Scottsdale Arizona. And our house is in Georgia and the HOA begins to function as kind of your eyes and ears and helping you monitor and keep an eye on that property. So I think as an investor, that's a huge value to you. You don't have to actually have people on the ground, you know, checking that property, the HOA is doing that for you. So I think that's probably the biggest positive as well as from a leasing perspective, of course, you know, you're leasing a property that has most likely some upgraded amenities and features that are desirable to people leasing. So, you know, it assist with that, it making it a home to that person occupying that property, not just a rental, they feel like they're part of a community and part of a home on the flip side of that, that can actually, that community sense is something that the HOA have expressed that they're concerned about when institutional investors come into their community, will there be that loss of sense of community because it's a renter there and they're not going to actually participate in the HOA itself. So that can be a con I think one of the other issues that has occurred over the last several years and kind of my number one thing that I focus on is rebuilding communication bridges, because what happened was when institutional investors came into communities, the HOA did it kind of feared that and was a little concerned that the property values would degrade and there would be issues. So one of the things that has been, I guess, a missed out by the industry is that they didn't work to keep those communications open with the HOA and the HOA began to grow very frustrated. So what they've done out of their frustration is began to really Institute some rental restrictions to either prohibit institutional investment in that community, or really eliminate it and control it. So that's been kind of the, the other side of it that's evolved since 2012, when we first got into the industry, they were happy and they were excited about us coming into the communities. We were remodeling the property and making things better. And then that slowly started to shift in 2013 and 14, where they began to grow skeptical. So there's been a lot of work to alleviate that situation, but there's still some work to do there. So that's kind of the flip side of it, where the HOA is, are frustrated and they're kind of lashing out in these different ways to really essentially get some people's attention and get things cured. And together,   Michael: You touched on it a little bit ago, Katrina, but I wanted to circle back to it for my own edification. We said that HOA is our nonprofit businesses, who is the HOA when we talk about HOAs.   Katrina: So the HOA for the most part is a voluntary board of directors of owners within that community. So I we're seeing fewer and fewer of those, maybe it's because most HOA has gone out and decided to have a management company come in, such as associate or for service residential and come in and manage that. So the HOA is just meant to collect dues, cover the expenses of maintaining those common elements. And then that's pretty much it, that's all their job that's there. And then of course, to ensure that people adhere to the CC&Rs for that community and, you know, don't let their grass get to leave their garbage cans out, all that fun stuff.   Michael : Okay. And so when you talk about the HOA members or board being frustrated with institutional investors coming in and looking to crack down on that a little bit, that's just a group of owners in that specific community that are feeling that way and expressing those frustrations?   Katrina: Correct.   Michael: Got it.   Tom: Gosh, I love your point about, on the good side of thinking of as another eyes and ears. I think a lot of times, you know, we ask these questions, I kind of have an idea of which direction, you know, we're going to get a response, but I never thought about that way of thinking of the HOA as, as kind of part of your team love that. So you touched into a great transition point CC&Rs and, you know, making owners out here, what are some of the recourse that the HOA companies have and with owners that are not adhering, and I'd love for you to get into that and CC&Rs and rules around that.   Michael: And Katrina for those of our listeners that might not be aware, familiar, what does CC&R stand for?   Katrina: Covenants codes and restrictions? So it of course varies by state. Each state has some extra nuances. You know, Florida has some really interesting ones, New York, New Jersey as well. So the CCNR are put into place and in those CC and RS, it's really spelled out what the recourse is. We have some, we've had some interesting updates over the last several years in regards to what the HOA can charge you because previous to this, and it kind of started in an Arizona, which is where most HOA has, you know, kind of evolved from. But the previous to this legislation that came through the HOA, kind of do whatever they wanted in regards to getting your attention and having you pay fee. So we're seeing over the last five years or so where they're really standardizing that across the country, which is wonderful. We like standardization. And so they're making it so that they have to go through a very specific process to notify you of that violation, give you a period of time to cure. If you don't cure, then it goes to the next step. And so usually it's a courtesy warning, one, two, and three, then by warning three are incurring a fine, and those generally start at $25. But in a lot of States, we also have, what's called a stair set process, which is another thing that investors, there's a way to work around this or work with the HOA to do what we call the clean slate program. So the HOA in some States, the fines violations and assessment costs falls the property, not the owner. So you have a new tenant move into that property. And the prior tenant kept violating with trash cans being sent out. And that violation was then go into a monitor status from anywhere from six months to one year. And if they re-violate within that timeframe, it, it goes right back to where it left off.  So if you were at already at $75 in fines, it'll go to a hundred or it'll go to a hearing. So that's something that investors aren't aware of, but you can work with the HOA to, again, wipe that slate. Clean, say, we've had a new occupant in it. We're a new owner. We're going to do things differently now. And we promise you that we won't have those violations incurred. So like I said, it's been really interesting to see over the last several years where they've kind of standardized that with the HOA is, can do kinda maintaining some control. And that has to be documented in their CC and RS, what their fee schedules are now, which really helps you kind of plan for that and be prepared for what's going to come your way.   Tom: So what are the more common? So talking about, you know, people, you mentioned putting trash cans out, what are the other kinds of issues where people incur fines from HOA, those would be all in those CC&Rs and what are the common issues that you think most investors deal with or violate?   Katrina: So the number one thing, and we track this, we look at it, we break down and give a lot of granularity to the types of violations that are coming in. And number one on the list is always landscaping and specifically weeds, especially in April and October, when they're doing those inspections on that, and you can get almost weekly fines for that or notices of fine. So landscaping is number one, and I would say two is two and three are usually pretty close and it's trash cans and parking violation. So we have a lot of residents to try to park on the lawn, try to park, you know, on the street when street parking is not allowed.   Michael: I own a property in an HOA and I get nasty grams all the time. Trash cans are still out. It's been a week. I don't think God, God, God, I got to get ahold of the tenants and pass the message along.   Tom: Did you say nasty, nasty grams? Is that the nastygram?   Michael: Exactly, but a letter informing me of a violation, I call the nastygrams.   Tom: So how about when you do have some issue, can you guys push that to the tenants that are living at the property, if they're violating these rules? Like, are there any laws or registrations like around that? Like if they violate an HOA rule, should it be the tenant that has to pay it or fix it, or I'd love to hear your thoughts on that.   Katrina: Yes, indeed. So what we call that the tenant charge back process. So we actually have a whole workflow that goes through, we've received a courtesy notice. It gets sent to the tenant. The tenant actually, um, for most of our clients has about seven business days to return photos to us and make sure it's care. We're trying to really alleviate that even courtesy notice from going any further than that is we're trying to alleviate aggravation that the HOA is feeling about institutional investors. So we really work on the front end, as well as tenant education to let them know you live in a HOA, here's the rules and regulations that you need to be aware of. And most of the hos are now taking their several hundred page CC&R document and really narrowing it down to the top things to be aware of. So we make sure that that is available at the fingertips of the leasing team so that they can educate the tenant.  We find we have a much better experience with them. And so that all gets documented so that we can see very clearly, okay, is this an HOA issue or a resonant issue? The resident keeps leaving their trash can out every week. And now it's a thousand dollars in fines because they've been incurring daily fines, which always just makes me cringe because a thousand dollars just for leaving your trash can out, we see it all the time, but it's unfortunate to say the least. So there is a whole system and process where we educate the tenant. We notify the tenant every time we receive documentation and really keep them in the loop and engaged and involved with being part of that solution there versus, you know, ongoing continual issues. And then we also work with the leasing team so that they're aware of, Hey, I think you may need to have a conversation with us, this occupant here and see if you can alleviate that. And then the third piece of that is of course, communication directly with the HOA is to let them know we have informed the resonant. We have received these photos. Do you consider this violation cured and closed? That's then the issue that I've spoken to, a lot of, of the SFR groups out there where they have that $8,000 mailbox, because they sent out a contractor to fix the mailbox post, but they didn't fix it according to what the HOA was looking for. So we make sure we really communicate with the HOA and let them know what the care was and how it was fixed and make sure that they're good to go with that. And then if they, if there is a fine, we establish with our clients a list of what will be a charge back versus not. So for example, a trainees trend and it's above seven feet where it needs to trend. Most of our clients don't want their residents getting on a ladder. So they'll not charge that back. But if they do, if it's under the seven foot mark, then, and there is a fine incurred, then that gets put onto the tenant ledger to hold them accountable for that.   Tom: Got it. Jump just the other kind of aspect of the CC&Rs and the rules, not necessarily fines, but you know, percentage of the units that can be rented. So there's some other really important aspects of those rules that an investor would need to know that's in those CC&R. Do you mind touching on some of those,   Katrina: Right. So we complete a review of all CC and RS that come into us and we're looking for a rental or leasing restrictions. We're also looking for sign restrictions. And other thing that people don't often think about is that certain hos don't allow you to put a sign for lease sign in the front yard, or they don't allow, you know, you can put it in the window, but you can't put it anywhere else, or it has to be a certain size. So we'll look through that, the CCNRs to identify any of those kinds of issues. And then the rental restrictions kind of break down into three categories, either have category one where they just do not allow leasing in their community. And we will recommend that you dispose that property or they'll have the second category. Is there some kind of restrictions where they require a background check and approval of your resident before they move in, or there's a cap in place of 10%?  Usually there are things that you can work through on those rental caps, they're called hardship letters. And you can put in a hardship letter to that HOA requesting them to review and make an exception to that 10% cap. And then there's also in that category where you can't lease the property for anywhere from 12 to 24 months, it has to be owner occupied. So we then document that information in our systems so that you can see the breakout of that. And then they use third category is they just want a copy of the lease and to know who's renting the properties basically. So those documents are captured and sent over to the HOA,   Michael: Shifting gears here a little bit Katrina, I want to talk about HOA fees because you mentioned at the beginning that are nonprofit bodies or organizations. If you will. I feel like me personally, sometimes that they might be for profit, but so what are the fees usually go towards paying?   Katrina: So the piece should be going towards paying for those common area. Upkeep. There should be a capital reserve account noted on their budget. They should be issuing the budget to you on an annual basis and it should be reviewed and make sure that there, the other concern that I know a lot of investors have expressed is we keep paying these assessments, but the money is not going to what we've been paying into. And the HOA is virtually insolvent. So they're carrying a negative balance. They have some sort of debt again and against the HOA something's going on in their financial stability is in question. So that is what the money is supposed to be going to. And as well as management of that HOA collecting the assessment funds, paying for an inspector to go on and stacks for fines and violations and those kinds of things, that's where the budget should be going. And like I said, they should have a healthy capital reserve accounts to complete any upgrades that are needed to that age away.   Michael: Okay. And so you bring up a great point about upgrades. Would upgrades be a reason for an HOA fee increasing from year to year?   Tom: Yeah. Do they change? Yeah. I'd be interested to hear your feedback.   Katrina: They do. And you know, 2020 has been interesting for several different reasons. But one thing we're seeing from the actual AEs is a lot of special assessments that are hitting people's accounts. And I have to say, this is the first year I've seen where so many are being instituted and put into place. And so there's actually two levels to that where they don't even have to have a board meeting to vote in a special assessment, depending on what the cap is of that, that amount. So that it could literally just show up on your doorstep one day that you have a $20,000 assessment do so generally speaking in a normal year, we'll see about anywhere from a three to 5% increase of assessments year over year. So several years ago when we started the company in 2017, we've actually seen quite a bit of increases over the last three years.  And I think that's HOA is trying to make up for some of the depositions and things that they have in their capital reserve accounts. So what we're normally would see would be a three to 5% increase, but since 2017, we've seen average across the country of assessment dues go from three 30 to 440. So it's quite a good jump, healthy jump over the last few years, but know normal would be three to 5% where, you know, just cost of things have gone up. So cost of their power bills for the common areas. And those kinds of things have gotten a little bit more expensive. So, you know, on average, I would say anywhere from a $5 increase to about $25 would be pretty normal. Anything above that, then I'm starting to look at the budget and kind of see where that money is going. What's going on.   Michael: And you mentioned special assessment. Can you talk a little bit about that? What that is?   Katrina: So it's more common of course, in the condo world and the townhome world. Uh, but a lot of our SFR investors have condos and town halls and things like that. So that would be to replace a roof on ability repaint the exterior in a standard single family development. It would be to put a new roof on the clubhouse, replaster the pool, those kinds of things, where they should be putting aside a capital reserve fund. But what we've seen is, you know, with the change in the economy in 2008, 2009, I think a lot of hos did, you know, ended up dipping into that reserve fund to keep going and keep solvent. And so now they're kind of trying to make up for that. And so we're just seeing a lot more this year than we have in the past. It could also be to do with the average age. And most of our clients' portfolios are just kind of hitting that Mark where they're starting to need some major items completed.   Michael: Okay. And is there a good ballpark or kind of range or estimate you would anticipate based on size or age of an association or community for how much reserve they should have? The reason I asked the question is I live my primary. Isn't an HOA. I have a condo and there was, I got, there was a study done that showed the financial stability of the association and it showed that they were way under-funded, but they had several hundred thousand in cash in reserve. And so I said, well, that seems like a lot, but I have no idea how much they should be. This, this company thought they were underfunded, but I feel like they're adequately funded. Is there a good ballpark or general rule for that?   Katrina: No, because there's just so many factors that go into place there, you know, have they managed their funds over the last several years? I would say that HOA is probably managing pretty well with a couple of hundred thousand in there. I've literally seen some with nothing in their capital reserve budget. So I think as our housing inventory ages, uh, you know, it is just becoming more and more of an issue, but yeah, I don't think there's a standard number you guys can count on to tell your investors that, you know, set aside this much because you may, you know, have this come up at some point. It really varies wildly.   Tom: If you're buying properties within an HOA, is there a way for you to get on the HOA, like a seat or, you know, if you get enough properties or I don't know, I'd be curious to hear your experience. If you can't beat them join, that's not the right way to say it. If yoou can't beat em, join em, but like basically getting on the inside, I would imagine like having multiple customers, like it's probably pretty big sway potentially within certain hos.   Katrina: Yes, definitely. Especially with institutional investors, you could potentially own 30% or more of a community. So some have instituted in their CCNRs where even if you own several properties, you're still only get one vote, um, board items, but for the most part, yes, it definitely can help sway those voting items. I actually, one of the questions you guys had further down here was have I been on a board and, or joined a board of the company that I worked with previously? And yes, I was on a board in North Carolina and attended several board meetings. What we had done was we were doing a build to rent a pilot projects at the time. And so we were going in and doing infill in a community that was already established a really nice HOA. We did the same thing in Georgia as well. And we actually attended several of the board meetings just to say, this is who we are, what we're about.  These are our goals as a company and what our know kind of core values as a company are. We're not just a nameless faceless corporation where, you know, people that really care about your community. And so it actually really, really helped. It was very, you know, contentious at first, they weren't really excited about us being there, but we were able to really turn that around and then, you know, create a really good relationship with that HOA in the longterm. So there is definitely benefits if they can get some notes, your company and the people at your company, you know, they don't sign you or, you know, put violations on unless you've broken the rules. But I feel that it goes a long ways to kind of alleviate how often they're going to, you know, hit you with those kinds of things, if they know who you are. And, and then instead of doing a formal final email you directly before they even document that, so you can go in and get it taken care of and never even hit your account. So that was a lot of fun, but it had some pretty tremendous impact. And then we've been a member of a few different boards throughout the country and, you know, same kind of thing where you identify an HOA that seems to be a, maybe elevated in their feelings about your company and whatnot. And you want to, you know, stay in that community and not sell out of it and continue to lease your properties there. I think it's always a great idea to participate in board meetings and discussions with the HOA, because again, remember their biggest issue and concern was that they would lose the sense of community than an HOA brains because it's, you know, it's a corporation coming in and investing in here. So if you can kind of guide them to a different philosophy on that, it has a pretty tremendous impact. Yeah.   Michael: That makes a lot of sense. Makes a lot of sense. Katrina, can you talk to us a little bit about the value that you've seen in your experience from a rental perspective and then maybe from a sale perspective as well that a well run HOA can bring to an investor? Of course the poorly run ones might harm the value, but as far as rentability and resell value for an HOA property, how have you seen that impact things?   Katrina: It's definitely positive on both ends of it, right? Because you've got the tenant who now has access to a pool and other things that, you know, if they were to purchase a home, they maybe wouldn't have access to those same things. So by renting, they have that added benefit. And on the South side, you know, I haven't seen data on exact numbers of, you know, increases the value by say $5,000 because of course, then you're paying dues and stuff in there. And I haven't seen any data pull to see how it impacts the sale, but, you know, I definitely know, well run H ways you'll see them move a lot faster. We'll sell that home much faster. People are clamoring to get into that community and be a part of it. So, you know, especially like those really fun ones in Florida, you know, they almost have a wait list of people trying to purchase homes in there cause they want to be there.   Michael: The water park in the backyard makes sense.   Katrina: Yeah. I mean, how great is that? So, you know, it definitely impacts leasing, you know, several years ago, stock saw statistics that it definitely on average knocks several days off of the lease up timeframe. So it does seem to help.   Michael: Interesting. Okay, great.   Tom: Awesome. My last question I have right now, and this is, I guess, sort of an aggregation, probably of some of the topics that we've talked about, but just at a high level, if you're talking to a newish investor, who's thinking about buying a property, that's in an NHOA, what advice would you give them on how to go about evaluating and owning a property in an HOA?   Katrina: I think they should definitely, and most people don't do this. I think one thing they should look at is is it, if this HOA is financially solvent and how is it being run because you're right. If that HOA is not being run well, it will certainly have an impact on your resident experience in that home. The very quickly start to feel like, you know, they're being picked on and you know, that's not the resident experience that any of us want. So, you know, as an investor looking at an HOA, I would definitely take a look at that. What does this HOA look like? Are they keeping up with things, are the common elements and go to order in good shape? Are they easily accessible? You know, is it kind of making sense? What if they're charging $300 a year? Can I see where that money is going essentially? So I think visually kind of inspecting the community would be really helpful. And, you know, in evaluating that decision to lease there or not,   Tom: How would one get the financials related to an HOA?   Katrina: So in when they're purchasing home, they should be asking for an estoppel. And in that estoppel gives you your statements, your CC&Rs, and ours, all of your documents that you would need. And I think also, like I said, I've spoken about tenant education before, but it's so critical again to the whole kind of overall experience and whether or not you're going to keep that tenant in that home longterm. And of course that's a goal for most SFRs is really going to keep them in the house, you know, two, three, five years. And so, you know, by obtaining that estoppel, now that becomes challenging when you're purchasing via auction or other avenues. But if you're purchasing through MLS and through I'm sure groups like yours, where you can have some of that documentation in place, then I would encourage everybody to go in and take a look at that because it definitely will have an impact to kind of the longterm viability of that investment.   Tom: Great communication. Well, thank you so much for coming on. This has been super interesting, you know, hos there's so much value in having that kind of preset neighborhood look and feel that is desirable and a good standardization. And I love the feedback about getting to know the HOA and partnering with them on your team has been super helpful. And I want to thank you for coming on.   Katrina: Yes, I've really enjoyed it. Thank you guys.   Tom: Awesome.   Michael: All right, thanks. Have a great one.   Tom: Thank you to Katrina Phillips for today's episode, super knowledgeable. It got a lot out of that. If you liked today's episode, please subscribe to us on your podcast. Send us a note. My email is tom@roofstock.com. I love to talk investing. I love to talk podcast content. I love to talk investing education hit me up. This episode was brought to you by Roofstock Academy. Roofstock Academy is a holistic program with one on one, coaching group coaching, over 50 hours of on-demand lectures covering getting started to scaling up. A special bonus Roofstock Academy is now giving $2,500 towards Roofstock marketplace credits. That's right. You can pay $1,250 for $2,500 of marketplace credits. All right. Happy investing.   Theme song

In this episode, Micheal, Tom and Emil take on some common worries that friends and family have when you tell them that you are considering taking up remote real estate investing and provide solid arguments for reasoned responses.  --- Transcript   Michael: Hey, everyone. Welcome to another episode of their motor real estate investor. I'm Michael album, and today as usual, I'm joined by Tom Schneider and Emil Shour. In today's episode, we're going to be talking about kind of an interesting topic. Do those around you, not support your remote real estate investing dreams. We're going to be giving everyone today some tips, tricks, and fodder about how to speak intelligently about remote real estate investing. So let's jump into it.   Theme Song   Michael: Alright guys, before we get into this episode, I just wanted to check in with you all, how are you guys doing? There's some new quarantine issues that just came out from the governor and wanted to check in how you guys are doing.   Emil: Welp. Can't go surfing this weekend because LA beaches are locked down.   Michael: Oh no!   Emil: So that's unfortunate, but I got out there this morning in anticipation of not being able to,   Michael: How was it ?   Emil: It was crowded a little bit slow, but it was fun. You know? It's good. Anytime you start the day out on the water.   Michael: Yeah, absolutely.   Tom: Is a bad day on the surf. Better than a good day, not on the surf guys.   Michael: Yes!   Emil: Of course. Michael would say yes, because he's the eternal optimist, I would say. Yes. There's times. I get really frustrated. Sometimes I get out of the water and I'm like, damn it. And I'm just like huffing and puffing on my way to my car and just like, but yes, in hindsight, it's always like, at least I got out on the water and did something fun   Michael: Without being too cliche. I think every time I get into the water, I'm able to think about stuff and I go in with problems and come up with solutions. Even if it's not a great day, it's way more fun. If it is a great day, given the choice between the two, I would absolutely choose better day, but I don't think I've ever had a bad day out in the water   Emil: Hashtag no bad days.   Michael: That's right.   Tom: What I've been doing lately is our community pool… I live in this neighborhood that used to be part of an HOA and there are still some of the HOA amenities, but now it's just like people have the option to join. And I joined cause it's like a really cool feature, but they have really, they need a monitor at the pool just to make sure that people are not bringing in guests and they limit the number of people and a bunch of other County related restrictions. But anyways, so I've been doing that and I've been working from down there. There's really good wifi. I'm out in the sunshine. I've been having some of my meetings with my background, with Emil, Michael and Pierre, where there's like, you know, a pool in the background and every, you know, couple of hours instead of going on a walk, I'll do a Cannonball and a that's the latest little update. And it's been a really, I don't know, I think there's something about being outside and being creative and that feeds into that. So that's been my, my new thing work from pool.   Michael: I'm curious to know what the HOA, you know, if they just everyone mutinied like, no more HOA!   Tom: Right. I think it fell apart. I think in like the seventies or eighties, I gotta, I gotta get to the bottom of it, but uh, yeah, really just random, big pool. Um, I don't know. Yeah. It's cool.   Michael: Killer. That's awesome.   Emil: How about you, Michael? What's new in your world?   Michael: Um, not a whole lot. I've been staying up quarantining at the in-laws and just kind of hanging out in here. It's been hot as ever like the surface of the sun. They lived just outside Sacramento, so it gets really, really hot up here, but we've been playing a lot of tennis, which has been really nice, cause there's nobody on the tennis courts. Cause it's so hot. And I think people drive by and like what a bunch of schmucks, like who's playing tennis, it's a hundred degrees outside. So it's, it's been a lot of fun to just get out and sweat and be outside.   Emil: Nice man.   Tom: Pierre with so many hobbies. I'd love to hear. I think you might mentioned getting in some woodworking again.   Pierre: Yeah. Yeah. I moved into a new place in Alameda and needed some furniture to fit my record collection in this little nook that we have. So I built like a little mid century modern table with some cubbies, for my records and a rack to hang my guitars.   Tom: That's a fantastic quarantine hobby and practical!   Emil: I give up, Pierre's just the coolest out of all of us. Let's just,   Michael: Oh, it's not even, yeah, it's not even close.   Pierre: Now. I got the edge though. I want to build all my furniture. We were looking at buying some online but now it's not seeming as attractive.   Michael: You can build a better.   Tom: I love it.   Emil: Awesome. And for anyone who's new to the show, wondering who that voice was. That is our producer Pierre.     Michael: All right, guys. So I want to break down some of the very common aversions to remote real estate investing and then talk through some of the counterpoints to each of those. I think any real estate investor at some point in their investing career has likely come up against some aversion or caught some flack. So I want to talk about the first one that I think might be one of the most common ones. And that is how could I possibly ever invest in real estate remotely? I don't know anybody in inter X market here. Tom, do you want to take a shot at this one? And then, you know how you would respond to someone who's throwing this at you?   Tom: Yeah, totally. And what a relevant first topic for the remote real estate investor. So I think a common misconception about real estate investing is that it, you are a lone wolf in and out doing on your own. And that is so far from the truth, especially, uh, as a remote investor. So what I would say for this is you should invest as a lot of time in building your team just because you are not in the region, you're specifically your local property manager. That's really going to be a key key point of being able to do this remotely. So a way to, you know, go about that is have a very thorough vetting process of identifying, sourcing and vetting your local property manager. And one of the great things that Roofstock does is when we open a market, what we'll do is we'll find from word of mouth and looking it up online, the top 20 local property managers. And from there we'll do phone interviews. And from there, we'll cut more down to where we have about five of them. And then we'll go into the office and visit them, get their standard operating procedures, get their, a copy of their lease that they use, get all of these different and then say, okay, yup. These are good guys that we would recommend. Now me as an investor, if there's a company that's doing that, that's great. That gives me a head start, but I will still take the time to vet them myself. One of the aspects we have within Roofstock Academy is some pretty thorough interview templates for talking to property managers and identifying good ones. But to combat that is you have a really thorough process of building your team local there on the ground. So, you know, once you have identified that property manager that is going to be your remote eyes and ears is really not that different than doing any kind of local investing. Once you have that trusting partner   Michael: And Tom breaking down that big rock into an even smaller bite sized rock, how do you go about finding these people? If you're not investing through Roofstock and they are not doing it for you, what's the actionable step that people can go take to go meet or start talking to these folks.   Tom: I always put an extra points on referral from people that I trust and know. So I'd say if you can get referrals that way from either lenders or other investors, you know, that's a great place to start, but you should expect what you inspect. So you need to go in and expect it in, inspect it to now that is a mouthful.   Michael: That's a tough one to say.   Tom: Yeah, yeah. We use that saying a bunch of our, the last company that I worked at, but the gist is if you don't do the work to verify, you should expect that it's not going to be that awesome. So you need to put in a little bit of the work of talking to these partners. So I digress a little, I guess let's see. I'm going back to your question. What was your question?   Michael: It was how can someone go find these people?   Tom: How can they find people? So, okay. References number one, number two, don't shy away from looking on the internet of just searching the city of who are the major property managers. And you know, this, isn't making the decision on who you're picking. This is just building that initial list to widdle down with conversations on the phone and potentially in house visits to make sure that it's all buttoned up and such. But I'd say again, your greatest resource would be getting referrals. Bigger pockets, I think on their forums have some references of some potential local property managers, but I would definitely expect what you inspect. So make a point of doing that. Like work.   Emil: One of the thing, I want to point out with this one, cause I remember getting this one a lot. When I first started investing, you know, people would be like, you're going to invest where across the country, like that's insane. What if something happens to the property? What if it gets vandalized? What if this and that? And the thing is, is those things happen, whether you're local or you're investing remotely, right? It's not like if you live 15 minutes away from the property, things aren't going to happen. Things are still going to come up no matter where you invest again, it's just making sure you have a partner. And that's why we keep talking about this property manager. Who's invested, who cares and who is a good member of your team. That's one of the big things we're going to be talking about is, you know, you hear a lot of real estate investors say you have to build a team. This is a team thing, especially if you're investing remotely. So that's the big thing is things will still happen. It's just a matter of getting the right partners to help you handle all these things.   Michael: You guys nailed it. I have nothing to add. The one thing I would add is that it really forces you, which I see it as a pro. Some people might see it as a con, but it forces you to get really good at time management. Because then they'll just like you said, stuff's going to happen. Whether it's next door or whether it's across the country. So if it's across the country, you've got to rely on people to take care of that. You've got to have set the systems up and placed on, like you were saying, to be able to have that dealt with without you needing to become involved. So if it's next door, you're going to be tempted to go fix it yourself or go deal with it yourself. But if it's across country, you physically can't. So being really good at time management and task delegation is I see it as a big pro.   Tom: I guess one last thing I'll say is, you know, ideally the home that you own and you're renting out is close to you, but there are so many benefits to investing remotely. Like you have access to so many more properties, so many different types of returns, such different like economies, like that makes it a little bit of barrier to entry is doing that extra homework of finding that great partner. So for me, being able to access these cash, flowing properties all over the US that extra work of finding the good property manager and then vetting them and building that relationship is worth it.   Michael: Yeah. And to that point, I mean, what's the alternative here, not investing or not investing remotely. And if you're in a really expensive market, you might not ever be able to break through. So if it's invest remotely and learn a bunch of stuff or not, I'd say you can't afford to not learn how to do some of this stuff.   Tom: Word.   Michael: Okay. So let's move on to the next one. Uh, so many times I hear people say this, I know someone who tried to investing in real estate and they would take these midnight calls, fixed toilets. I don't want to do that. Why would you ever want to do that? Emil, you wanna run with this one?   Emil: Yes. So this is another common one, right? So people say, okay, I get why you want to invest remotely, but are you going to handle fixes? What if someone calls you? And again, this goes back to what we were just talking about. It's this is why you hire third party, property manager, again, building the team, right? I would say the property manager is one of the most important pieces of your team. And the thing here is I don't know how to fix most problems, right? I would call a handyman or whatever anyway. Right? So the property manager is just, they're just your barrier. They're taking in those calls and they're finding a local specialist. Again, you're not going to be good at everything in your business. What you want to do is hire the professionals who are in the property. Management is the best that operating your property.  I would probably do a much worse job and I'd spend way more time than a property manager who does this for a living. So the rebuttal to that question is while I'm going to hire a third party property manager, who's an expert in the area. Who's going to manage it for me. And in return, they take a certain percentage of my rent each month. The other thing is the important thing here is this frees up a lot of your time, right? If you're constantly dealing with your operational stuff, you're not going to be thinking about how can I grow this? How can I scale it? A lot of us who are doing this, we have full time jobs, right? Like instead of fixing things on the weekend, I could be thinking about how can I start a side gig, earn more money or whatever. So I can go buy more properties, which I would argue is more important than handling the day to day stuff.   Michael: It's so interesting. I think people in the day to day world in life can really wrap their head around hiring professionals to do things, right. Nobody says, I'm not going to go buy a car because I don't know how to fix it. No, we all take it to the mechanic. I think it's the same thing with real estate and with investing where people are. So whatever reason can't get their head around that you might not have to do that, that kind of stuff. There are professionals that will take care of it for you.   Tom: Right. It's such a great point. I, I love that, your, uh, isms, Michael isms. I think we'll say, I think in talking to a lot of people who are interested in investing in real estate locally, they're like, yeah, then I can go and I can run out and paint the house when, or do these things that happened. It's like, no, you don't have to do that. And you know, we were talking about these costs that you incur with either repairs or maintenance or paying your property manager, but those are good costs to pay. And also at the end of the day, it's going to help you on your tax basis. It, you know, there's just so many tailwinds in doing this.   Emil: One last thing I want to add here is you can always later down the road, maybe you're ready to retire, right? Maybe you have X amount of properties. You have enough cashflow coming in. You want to retire. Maybe at that point, you feel confident enough where you do want to self manage. If you go back to episode five that we did with Chris Bennett, he talks about how he self his properties from thousands of miles away. I personally probably won't get to that point. I'd rather let somebody else deal with it. But it's always one of those things where I think you can even just observe your property manager for years, learn how they kind of run everything. And then if you want to down the road, you can switch back or switch to self managing. If that's interesting to you.   Michael: Funny, I think the longer I invest, the less I want new self-manage. I realize how much goes into like yeah, no way.   Emil: Yeah, same. I had somebody who I was talking about. Who's looking to buy a property on Roofstock and they were asking me the same thing. It's like, should I self man? He's like, I'm actually thinking about self managing first, just to like, get an idea of how all these things work and then handing it over a property manager. And I was like, if anything, I would do the complete reverse for all the reasons I just mentioned. Like, dude, you're brand new. Don't don't do it. It's going to be a nightmare. And you're never going to want to invest in another property again. Promise   Tom: That's the Emil Shour guarantee.   Michael: Awesome. Okay. So the next one I want to touch on is something I'm sure we've all heard a lot about, and it's that real estate is such a risky investment. Look at what happened in 2008. And so I'll take this one. If you guys don't mind, you know, my response is you're spot on don't invest. No, just kidding. I would say, you know, 2008 was the direct result of poor lending practices and those have definitely since changed. And so I don't anticipate seeing a financial disaster as a direct result of poor lending practices again. Don't misinterpret that as me having a crystal ball, that's just my personal opinion and be very may well see a financial disaster from other, but the poor lending practices seems to have gotten cinched up pretty tight. So I would actually argue that real estate is often a safer investment than the stock or the bond market.  And I think so often people say, okay, real estate is risky, but these other things aren't, there is also people that say real estate is risky, put your money in the bank. And to that, there's all kinds of counter arguments and counterpoints that are all based in fact about inflation and how you actually lose money. If it's just sitting in the bank, if you're not earning at least the inflation return, but so in looking at growth, the comparison to simply stocks, bonds, and real estate. So with real estate, there's just such a higher degree of control. The tax benefits and potential returns are typically going to be better than your average year in the stock market. I think it's pretty well accepted that stock market returns average between six to 8% in any given year real estate, you can do significantly better with that from a pure cash on cash return perspective that doesn't even account for the tax benefits associated with it, as well as the appreciation and loan pay-down equity that you're essentially buying into your property. So I personally I'm drinking the Koolaid. I think there are tons and tons and tons of facts and figures that you can throw at someone that's saying, Oh, it's such a risky investment. My guess is that they probably haven't invested in real estate. And if they have, they aren't looking to do the same type of thing you're doing remote investing with a property manager. So I just want to make sure that everyone's comparing apples to apples. Whenever they're hit with something like this, you really want to understand what's being talked about.   Tom: That's great and a good overview of like all the benefits of why, at least in our opinion, like the benefits outweigh the rewards. And what I love about drinking the Koolaid is there's so many different flavors of the Koolaid. So I kind of switch off on which one I'm most excited about. So the tax advantages is great. The immediate cashflow is great. The appreciation is incredible, but the Koolaid I've been sipping a little bit more of is the loan pay-down aspect. And it's just crazy. You can borrow like a hundred thousand dollars and someone else will pay it off for you. Like, I don't know, like wording it that way is really kind of mind boggling of how incredible investing is. So even if you're not cash flowing, say your cashflow is zero, but you still have a loan on the property. And you're not paying that loan. The person who was renting the property has paint alone. It's like obscene right property after you get a free property. So anyways, just kind of in your, going through your ran, I was just thinking of what is currently spinning through my mind a little bit heavier on like, wow, it's unbelievable. How much of an opportunity is. So anyways,   Michael: I thought you were gonna say that you're really excited about sour green, Apple Kool-Aid flavor.   Tom: That might be the loan pay-down is the sour green Apple.   Emil: Oh man. Kool-Aid when you're a kid and   Michael: The best, the best. How do you guys feel about Hawaiian punch?   Tom: I think American tastes have gotten a little bit less sweeter. At least I could rant on this for a little bit, but I'll finish it. There's been a shift in American culture kind of going to more subtle. Like if you look at like Hintwater LaCroix, if you compare like the drinks that are consumed today, versus the drinks that were consumed like 10 years ago, it's like hummingbird water back then. So I think I have a feeling if you had some Hawaiian punch, like you would be like, what the heck is, this is this like, meant for like a hive of, of hummingbirds, like anyways,   Michael: And it's that bright red too!   Tom: But the great thing about Koolaid is you don't have to put all the powder in. You can make it culturally adjustable by just putting a little bit of it in and boom, welcome to 2020, just 10% of it and have it. All right, go ahead.   Emil: I don't know how I can follow that up with something serious, but just to finish this section, I remember we had this blog post on the Roofstock blog talking about how did single family rental returns compared to stocks and bonds. And the Roofstock team did a little study. It was from 1992 to 2017. So a 25 year period. And if we found that single family rental returns were nearly identical to stock returns and the outperformed bonds with far less volatility. So that was one other thing I wanted to highlight here as well. Plus all the other benefits, like we talk about like tax advantages and all that, which I don't think was factored into this study.   Tom: I'm almost sure it wasn't.   Michael: Yeah, that makes sense. Because everyone's going to have a different tax basis.   Emil: Yeah. This was just looking at returns.   Michael: Okay, cool. So one of the last ones I want to touch on which we can all kind of tag team, but I kind of want to give it to Tom to give him a runway to rant. But so many people I've heard say owning real estate makes you a greedy landlord getting rich off the backs of other people. Tom, what would you say to all those people?   Tom: I think that people need safe housing, people need housing, and this is just kind of part of the wheel of providing that. So like I think above all, and we've talked about this before an earlier episode, like at the end of the day, it's about like habitable safe places for people to live. And I think as an owner, that's like a key part of the responsibility, so sure. Their incomes earned. It's like a little business that you own with every single one of the houses. But at the end of the day, like at this, we're talking about people's where they live and being able to provide that is valuable.   Emil: I think anyone who kind of believes this, I think you should a hundred percent become an owner because then you'll have a better idea of both sides of the coin. Right. You'll have owned, you'll have rented, I've rented, I've owned. I think having been in that spot right where you're a renter and you know, you've dealt with a landlord. I think it makes you more empathetic to your tenants. Like I want to provide a safe habitable unit, like Tom mentioned for those reasons. Like, if you're, if you're a good person, you care about other people, it's not like you're going to become an owner and all of a sudden just be like terrible person not providing for them. So I actually just, if you believe that, I think you should become an owner and just have experienced on both sides personally.   Pierre: As a renter, I have to say that it's way better to have a cool landlord.   Michael: Yeah. It's way better renting experience to have a cool landlord. Someone that's a real person as opposed to just a machine.   Tom: Yeah. And I don't, it has to be so black and white at that. Like you're only trying to maximize your return at every single look. I think there's a lot of places where that makes sense, but there's this humanity aspect. So one of my tenants, you know, started just recently had some issues around payment on like an employment and stuff. And you know, I talked to the, reached out to the property manager and said, Hey, you know, is this, is this something, you know, that has to do with the virus or they cause I'm very open to helping them out. Like if we need to make some adjustments or some concessions, you know, as an owner in real estate, you don't have to put on the monopoly outfit and just, you know, drill people into the ground, like, like half a conscious, like this is a good business to build wealth, but it's multidimensional, right? Because you're owning a place where somebody's living at. I think that's a really important aspect to have some humanity as an investor. So it's not, you have to go down this one path, right. You can do business consciously.   Michael: Yeah. And to anybody out there that thinks this or anybody out there that you know, is, is catching this type of comment from other people, I'd say, look, you need to understand what actually goes into real estate investing and real estate investors pay tons of money every single year to local school districts in the form of property taxes. So I'm not sure how that makes them greedy, but I would also follow that up with asking them how much money they contribute every year to their local school districts and see what they say. So there's so much money that gets poured into the local economy via real estate investors. And that comes in the form of real estate taxes, property management fees, paying local vendors for goods and services. So, so many investors spend a ton of money on these properties and local neighborhoods that actually are making them more attractive and welcoming, which can often lead to safer communities. So it's so easy for someone to just see one side of the coin and say, Oh, you you're collecting rents. You're making money off this person. Well, yeah, but also there's the other side where I'm contributing to society, paying taxes and making the schools better. So if you want me to stop doing that, that's a different conversation, but you really have to understand both sides of that coin to have an intelligible conversation about it.   Emil: Bravo, sir, drop the mic, please.   Michael: Mic drop it and walk away from that person. And just kind of in this same vein, I would also encourage anyone who comes up against any kind of resistance to really try to have a discussion with that other person about why they feel the way that they do. And try to understand why what they're talking about may or may not be applicable to your personal situation. Because I think real estate investing is this huge, huge topic. On the podcast, we talk about the remote real estate investing, which is one kind of niche of that, but there's so many other different topics and variances on real estate investing. So a lot of people here real estate investments like, ah, they're evil, they're the worst people in the world. Well, okay. Yeah. There might be some that are evil. It might be some of the worst people in the world, but you don't know me necessarily. And so let's try to understand what you're talking about and what I'm talking about. Cause so often they're not all the same thing.   Emil: I like that well said.   Michael: So just curious. I mean, have you guys ever run into any type of these comments? Have you gotten any flack for, you know, doing something that's maybe perceived as different from what your peers or others were doing? Emil: Yeah, definitely. I mean, I've mentioned on other episodes. My dad is a real estate investor here locally in Los Angeles and he thinks, you know, I'm kind of crazy. It's still, uh, when I was first starting, especially like what you're gonna buy property, where again, and it's common for people to feel that way because traditionally, everyone felt like, you know, my dad's whole thing is like, if I can't see it, touch it, feel it, there is no way. And that's fine. I think for some people, it just doesn't work mentally as just a blocker. But like Michael said, I think it's about being open to different things. And again, if the option is, do nothing or invest somewhere else to me, I'm not going to let that stop me personally.   Tom: Yeah. I think so many people have preconceived notion of what it means to be a real estate investors. And they have this idea of them running out with a hammer and taking the call and it's like, no, it's different than that. It's way more passive. It is way more team-driven, which has kind of been a theme of this episode. So throw away or assumptions on what it looks like and, and come to Roofstock Academy. No, but throw away your assumptions on what it looks like and look at some of these different strategies that we're talking about. If you're looking to do it in a more passive way and not throwing so much of your time of trying to make it work. The other comment that I've heard from some friends is, and this goes again, I think the greedy landlord piece is, you know, someone teasing, I was talking about real estate investment, like, Oh yeah. Always money and being a slum-lord. I'm like, you know, get outta here. Like I think, as I said, like there's a wellbeing aspect and like having these safe habitable places and working with your property manager to make sure that's part of your brand at the properties that you have, you know, it's, it's not about cutting corners and like maximizing every dollar. There's so much more to that.   Michael: Yeah. I totally agree.   Tom: And several of my friends have now invested, so I, uh, won the day. So go ahead.   Emil: And that was the point I was just about to make is I think when you network with other remote real estate investors and you realize there is an ecosystem of us doing it, it makes you feel a lot more confident. So if you don't know anyone else who's doing it, I highly recommend getting in touch with somebody network with them, talk, join groups, join, whatever. Just say, like build that network. I think it's, it's invaluable to have people around you who are doing things similar to you.   Michael: Yeah, absolutely. You know, when I first started investing, like you both, I caught so much of that flak of you're going where to invest, you know, why, what, that's stupid, you're there. You're crazy. And I'm like, yeah, well it makes sense to me. So, and now most of those friends I haven't since invested to, Oh, they see what's going on here. But yeah, so much of it too was I felt like this lone wolf, I didn't know there was a community out there. I didn't know the other people doing this. I just heard, yeah. People invest in real estate, but I didn't happen to know very many of them to ask them, you know, am I crazy? Is this insane? But now I realize no I'm laughing all the way to the bank. All right guys, any final thoughts on this stuff?   Pierre: I have a question in this vein of remote versus local investing. When would it make more investment sense to invest in your local market as opposed to remotely, if you live in an expensive area?   Michael: Super good question. I'll let you guys take it first.   Tom: I'll take the first stab at it. So excellent question Pierre of, when does it make sense to invest locally versus is remote. And I think it all has to start at what is your investment thesis? Like? What is your end game map? If I live in an area where I don't necessarily need the cashflow right now, and I'm pretty bullish on appreciation, I live in Northern California where properties are a little more expensive. Maybe it does make sense to invest in a property out here locally. If I'm looking for a property where there's a little bit more of a blend of appreciation and a bit more immediate cashflow, then maybe it would make sense to invest remotely. And to kind of get us to rephrase a little bit is, you know, what kind of returns are you looking for? Like if I had to make this analogous and that's right to like the stock market, like, am I investing in a growth company or am I investing in a new startup, but am I setting a value investing? Like what kind of strategy? And I think that will answer the question on where you're doing your investing at.   Emil: The only other thing I would add there is I think comes down to your comfort level. If you just can't for whatever reason, get yourself to invest remotely. I don't think you should just not invest. I think if you can invest locally, go for it, right. If you just can't get over the remote factor and you know, like you could be making better returns elsewhere. The thing is, is there's people investing locally doing insanely well and there's people investing remotely doing insanely well, I don't think this is a, you have to go local. You have to go remote. I think it's just by your comfort level, how much money you have to invest, you know, just your strategy and that your thesis, like Tom mentioned   Tom: Price point, great point. And also the volume of homes available. I mean, you're limited just in your own backyard of how many homes are for sale. Go ahead, Michael. I see you.   Michael: Yeah. I see you too buddy.   Tom: The light in me sees the light in you!   Pierre: Namaste!   Tom: Namaste   Michael: You know, from avatar, we need to hook up our ponytails.   Tom: Yeah. I'm touching the microphone.   Michael: So the last, I think those are both really great points. The last thing I want to add too it, is what the goal is and what are you trying to accomplish? But one thing I don't think that it has mentioned is the idea of house hacking, which is kind of this concept of you buy a house bigger than you need or a place bigger than you need and you live in it and rent out the other room. So you're kind of getting the best of both worlds and a kind of hybrid approach with, I have a place to live now and I'm making some rental income alongside with that. And so if you do that well enough, you could absolutely see similar returns to a traditional investment property at distance, but get the benefit of living in a house locally. And so what I think is really important to look at as the true opportunity cost and true total cost, because if you're investing somewhere else and continuing to rent while there's a cost associated with that, versus if you buy a house hack locally and are living in it, well, there's a different cost associated with that, but you're not paying rent anymore. So look at the whole picture. And I think just like Tom mentioned, you know, look define what your goal is. So I think I ha how's hacking is a really, really great way to get started in real estate investing and kind of get two birds with one stone and then just like Emil said, what the price point is and what your, you know, you're only going to qualify for X amount of dollars in a loan if you're going that route. And so that's going to be a limiting factor as well.   Pierre: What about buying from a family member would buying from a parent, make it more interesting in the way of tax benefits or anything like that?   Tom: I mean, a huge way to get ahead in real estate is any kind of discount to valuation. So like if there's any kind of sweetheart deal with that, I mean, you don't want to take advantage of your parents, but like if they're like open to giving you a little bit of a discount, like, man, that could be an immediate, huge head start because you already have like a little bit of equity in the house where some of the tools that we talked about pulling out equity, like cash out refi or HELOCS or all of that stuff like that can give you an advantage there in just the question of like, let's say you're paying fair market value. It really depends on if that house fits your investment thesis. So looking at the type of returns that you would get, then if it fits that then great. That makes sense. I'd say just kind of like specific to your question around family members. Like if you're able to get a little bit of, maybe it's not sweat equity, it's love equity. That's a huge step up.   Michael: One other thing too, that I've seen here that works really well. Especially if the house is owned free and clear is your family can finance it for you basically be the bank and you pay them a monthly payment as opposed to getting a mortgage. You can just get, you know, you guys decide what the terms are amongst yourselves. And it's so much easier. The one thing that I definitely would encourage people to look out for and I harp on this literally every day in the Academy is property taxes and especially if it's in California, because I asked my attorney once I was like, what if I just sell this house to my wife for a dollar? Because my property tax base is X, what my property tax has dropped to a dollar. And she's like, yeah, no, that's not how it works. If it's, if it's priced way under market, they're going to assess it at the fair market value and tax you on the fair market value. So even if you're getting a discount on the purchase price, that's great. You just want to be aware of what the taxes are going to look like after the fact. And especially with a lot of these family properties, they've been in the family for so long, they were purchased at such a low tax rate. So being aware of the tax rate and what that's going to jump to is really important for sure. It's going to move in California, but you just want to be aware of it. If you're in another state doing this type of deal, just be, you know, find out what that tax rate looks like. But great questions, man.   Tom: I got one more for this. So in the theme of this episode of your friends being able to speak intelligently, when you're, when people try to talk you out of investing in real estate, why aren't you just buying somebody else's property? Isn't there like a reason they're selling it? Why, why, why, why   Michael: Is it trash?   Tom: Isn't it trash if somebody's selling it, it must be a bad deal or something wrong with it. Michael, would you like to lead this one?   Michael: Yeah, it's a super great point and a really great question. I think I hear all the time in the Academy. I mean, it's just goes back to one. Man's trash is another man's treasure, but also you're probably not buying trash. I mean, people sell for any number of reasons. So we'd never know a motivation unless we ask. And so often sellers are selling out of desperation, whether that's, you know, divorce or they need cash for something. So it could be a really great property, could be really great deal. They're just selling it because they need the cash. They could also be selling because they got a nonperforming assets to be performing. And now it's really great. And so we talk about that a lot is adding value. You buy a crummy property, you fix it up. And now it's a really nice property. I mean, that's what turnkey is. Someone is selling a perfectly functioning and performing asset. And so giving people an opportunity to buy it means that they get to make some profit in the middle. So I definitely definitely disagree with that wholeheartedly. I think that people need to understand that there are so many reasons why someone could be selling a property.   Emil: No, the only other one I would add is what we call a tired landlord. So someone who just been doing this for 30, 40 years, they're done right. They've maybe they've been managing it this whole time by themselves. And they're like, I'm just, I've made my money. My market has appreciated. I'm going to do well on the sell. I just want to get out of the business. So they're tired and they just want to move on. That's another one.   Michael: I love how you said that. They're just, they're just exhausted.   Emil: Just, just tired man. I could,   Pierre: Did you have your dad in mind when you're commenting on this?   Emil: My dad is such a, such a tired landlord. He's an exhausted landlord. He is. He is just like, pardon me. Thinks he loves complaining about being a landlord though. It's just like in him that he likes to compete. It gives him a discussion topic.   Tom: Yeah. My comments would be on this is concerns around, you know, why is the sellers have a process and the way that you evaluate the homes that is consistent. So once the property goes through the ringer where you're looking at, you know, condition value, tenant, if they're, it is occupied, all that stuff, you can really make the assessment. If it's a good or a bad deal. And don't overthink seller motivations, just like Michael said, there's going to be any number of reasons within Roofstock there's all kinds of different types of sellers. There are individuals, there are bigger institutions, there are funds and sometimes the funds just expire or sometimes they move, you know, the geographic concentration, they might move to a different market. So I wouldn't overthink it and just do your homework and follow the right steps and doing your evaluation of the property.   Michael: Okay. So now I've got a question for you guys kind of a fun one. And just so all of our listeners know, I didn't tell a meal pier and Tom, what the question was before we started recording this. So they are totally going to be blindsided by this. And it's a, it's a pretty traditional question. It's one that, you know, I think is asked pretty regularly of people, but I put a little bit of a spin kind of unique twist to it. So the question is you're stranded on a desert Island. There's the very typical question that I want to know the answer to of what two items would you sum into your location to help you escape to survive? But also I want to know where's the most ideal setting for said deserted Island,   Emil: Bali, a surf board, because the waves are going to be amazing deserted Island. I'm just, I don't even know if I'd want to leave. Honestly. I'm not trying to get out of there if I'm just stranded in Bali, no one around amazing waves.   Tom: Do you guys watch naked and afraid?   Michael: Yeah. It's so good.   Tom: What would your survivor score be?   Michael: Oh, I would start it probably a six and end at a 7/8. Oh, underdog performing. Sorry. I interrupted. Go ahead.   Emil: Alright, so I'd want to surf board item two…   Tom: Are we picking locations or picking what we're bringing with us? What's the situation?   Michael: Both! Emil: A laptop that has a never ending battery and access to internet.   Michael: No dude, we're not playing this “imagine if the best invention” game.   Emil: You did, you did not give me any rules, constraints. It's up to my imagination. Creativity.   Michael: All right. That's reasonable. And the first thing I would do is use said computer magical computer to get a ticket for my wife and daughter to come join me at the Island.   Tom: So, if you're going down, you're dragging them with you.   Emil: That's right. Tom, what would you, what would you bring and where would you be?   Tom: I think I'd be on the oldest Island of the Hawaiian islands. I'd be in Kauai just because it's, you know, lots of fish around there. I would bring some Kool-Aid from 2000 just cause I know it's diluted. I could just use a little bit. That's going to last me a very long time to match my 20, 20 taste buds. It would last a very long time and yeah, I think I would somehow finagle my wife and son to come join me too with that magic computer that I would borrow from Emil. So there we go. I got Kool-Aid and magic computer.   Michael: All right, Pierre, where are you stranded and what would you bring?   Pierre: Hmm, maybe somewhere in the Mediterranean, like Malta and I would bring a guitar and a hatchet.   Michael: Nice see. Pierre's the real survivor here.   Tom: Which guitar?   Pierre: I'd bring my acoustic. Probably my Taylor. Yeah, my guitar and a hatchet. Cause I forget what the saying is exactly, but it's with a pocket knife, you can survive, but with a hatchet you can live like a king. a nice I'd built some stuff for sure.   Michael: Nice.   Tom: You're already practicing. You're hurting right now. We go to peers does desert Maltin paradise and he's mid century. Nice couches beds built. Starts a popup shop.   Tom: You're turn Michael.   Michael: I would probably go to be in Bermuda because I hear some crazy stuff happens there. I'd be very curious to see what's going on. My two items would probably be a satellite phone so I could order all kinds of great stuff. And if I say anything other than hatchet, I'm looked like a chump. I think I should also bring a hatchet.   Tom: Your survival skill just went down. Your Pierre's survivors went down because you had advanced tools.   Michael: I could have brought a chop saw.   Tom: Yeah. You just went to a 5.5.   Michael: Oh, it's such a ridiculous show. Naked and Afraid. But it's so interesting to see what people bring I'm waiting for the day with two people bring the same thing. Like they both bring a lighter and like, Oh crap. Like we didn't talk about this beforehand.   Michael: Well, that was our show. Everybody. Thank you so much for listening. We hope you enjoyed it. Don't forget to give us a rating or review wherever it is. You listen to your podcasts, subscribe as well. And we look forward to seeing you on the next one.   Tom: Happy investing.   Emil: Happy investing.  

In this Episode Tom, Michael and Emil share their systems that take the headache out of acquisitions and ownership to effectively scale up.  --- Transcript:   Tom: Greetings and welcome to the remote real estate investor. My name is Tom Schneider, and I'm here with Emil Shour and Michael Albaum. And today we're going to be talking about something that is near and dear to my heart. We're talking about building systems. We're talking about automation. We're talking about scaling. We're going to touch on these topics and a couple of specific strategies as it relates to acquisitions and ownership. All right, let's do it.   Tom: All right. Welcome back to The Remote Real Estate Investor. Before we get going today, we're going to do a quick introduction from the host a little bit about ourselves and our experience and background and all that good stuff. So, Michael, why don't you go ahead and lead us off?   Michael: Sure. So I'm Michael Albaum. I used to work in my past life as a professional fire protection engineer in the commercial property insurance industry. So everyone has to bear with me if I speak in math terms, cause I'm a reformed engineer. I've been an investor for the better part of a decade and started very traditionally with single families. And now I've found a, found my stride and niche with multifamily value, add projects out in the Midwest. And I'm also the head coach of the Roofstock Academy program and meal. Can you introduce us to yourself and your mustache?   Emil: Hey everybody. My name is Emil Shour. I work on the marketing team here at Roofstock. My fun fact is I actually bought a couple properties through Roofstock before I was ever working here. It was a big fan of what the company was doing and now lucky enough to get to help spread the word. And I own a couple single family rentals across the Southeast and Midwest.   Tom: And my name is Tom Schneider. I am the director of investor education here at Roofstock. My career has been focusing on putting technology process to scale and build systems. So this episode is particularly exciting for me is how I do this personally, with my investing. I've been in real estate investing for over the past 10 years, and I'm also a California broker.   Michael: Nice.   Emil: The only one of us who's licensed. Where do you have your license hung somewhere as a broker?   Tom: You can just hang it right around here.   Michael: Yeah. Hang it on yourself.   Tom: Hang it on myself.   Michael: The broker test. Isn't so much more work than just the agent test, right?   Tom: It is. They've made it harder when I got my broker's license, it wasn't quite as difficult, but they made the experience requirements a lot more difficult. It was kind of funny. I initially worked in acquisitions for one of the publicly traded rates and literally the day that I passed the broker test, the person who was leading our technology says, Hey Tom, we need a can-do guy to help build out a bunch of systems. And I was like, okay, cool. Let's do it. So I got my broker's license and then proceeded to never use it until I did use it when I bought my own house. So I guess it paid for itself there.   Emil: What is the difference between an agent and a broker?   Tom: I'll tell you, I should kind of have an idea on this. So an agent needs their license to be hung underneath the broker. The idea is a broker understands the business a little more and folks who are agents can eventually become a broker. If they wish to, they basically can operate on their own. So within California, you can apply for an agent or a broker. And the broker aspect of the test is a little bit harder and the requirements to get it is a little bit more difficult.   Emil: Got it. So a broker can do everything an agent can do, but an agent can't do everything a broker can do.   Tom: Yes. Yes, that's correct. That's a good way to put it.   Michael: Getting ready for my broker tests.   Emil: Awesome. I've already learned something on this episode!   Tom: Early and often, baby early and often. All right. We'll jump into some system stuff. So we have a variety of different things and we're going to have a different one of the hosts take the lead in talking about. So we're going to start with acquisitions. And Emil, why don't you lead us off on some systems, some practical systems that folks can do on their own.   Emil: It might be a little obvious, but I still think it's worth stating. Set up automated filters and alerts on the places you look for properties. If you're on Roofstock. If you guys are familiar with stock is our marketplace where people can buy and sell single family rental properties. You can go and filter by whatever meets your criteria and save that filter. So you get notifications when new properties hit the site that meet that filter requirement, same thing on other sites like Zillow or Redfin or realtor.com, wherever you're, once you've figured out your buy box. And I'll talk about that in a second. Defining it, plugging it in as a filter so you get automatic notifications cause you want to be on top of those listings, right? When they hit the site, right? It's a lot more effective than just constantly going on them and checking your listings. Even though I do that all the time anyways,   Michael: I don't know about you guys, but I constantly get notifications from Zillow and Redfin about new properties that have hit the market, but I didn't save a filter even, you know, I searched there twice or three times and now I was like, Oh great. You're super hungry for properties in that market. So I'm just getting blasted by these emails. Yeah.   Emil: Every time I look@realtor.com, like I was curious the other day about like, what do multifamily in Bakersfield sell for? And now I've just, I've been getting Bakersfield filter notifications from realtor.com. It's like, man,   Tom: What's cool about these websites and the filters, a little pro tip is you can get really granular with your filters and set up multiple filters. So what I'll do is on my inbox that I have all set up multiple inboxes and I'll set up a filter within my I'm gonna, we're gonna do filters on filters. This is a very layered,   Michael: Filter-ception   Tom: Yeah. Very meta. So within my inbox, shout out Gmail, just kidding   Emil: @Gmail, let us know if you want to sponsor us.   Michael: Yeah. I've never heard of this Gmail, but this Tom Schneider guy talked about it.   Tom: Anywho, I set up like a master folder for like incoming property leads. Right. Then within that I'll set up additional folders for each different type of either region or property type. So as new listings that meet my criteria are hitting. I have them in a nice clean folder, so, Oh, great. A new Florida property. That's a duplex in this area and I have a special folder for that. What I'll also do is oftentimes timing can be pretty important and moving quickly, instead of setting up a filter that comes just once a week or once a month, since I have this infrastructure within my Google Gmail, shout out again, I'll have it actually doing real time. So I'm not getting pinged in my main inbox if I'm working on some other stuff, but I have a way to see immediately based on whatever that criteria it's hitting that inbox. So again, the super simple paraphrase, but this isn't that complicated. I have a bunch of different inboxes within my Gmail. And then within the, my buying platforms, I'll set up many filters and many alerts and many immediate alerts. So it'll hit right into my Gmail and I'll know at that time, all right, this one looks pretty good and I can move pretty quickly. And I don't have that issue of, Oh, Property. It's already pending. Like I'm not passively looking for it. It's proactively hitting me as soon as it hits the market and I can act and jumped on it. So that was my extra tidbit on that piece of mill,   Michael: That description Tom was amazing. It gave me such a visual of kind of how you operate. And it made me reflect about how I operate. And you, I'm picturing this nice, neat cubby with nice section organizers. And mind's like just a fricking melted pizza, but it's just crap everywhere. It's, I'm so jealous. I want to be like you and I grow up and have these systems, but in place, I love that.   Tom: That's why we make a great team, Michael. That's why we make great team   Michael: Coffee-man, and melted pizza.   Emil: Oh yeah. I'm not surprised Tom is like the most organized out of all of us internally. And I'm not surprised when it comes to acquisitions. You're equally as organized with the pick and choose you pick and choose. There's definitely lots of messages. So one thing, if you're going to one of the sites we mentioned, and you're not sure how you should set your criteria, just know that it's okay to start a little wider. And then as you've looked at more and more listings, I think you'll get better at defining your buy box. I know we talk about it a lot and we say, okay, build your buy box. And sometimes it's hard to just like, know what to choose. Right. I kind of started larger. For example, I chose a couple of different markets, couple of different properties, size, like a bigger property size.   Tom: I like it. You feel that you need to shoot with a sniper. I keep using these weapon analogies, but it's okay if you're not sure to start with like a broader spray and then work your way down as you refine what you're looking for. But I'd say it's better to keep it an open, an open range, and then, then shrink that down.   Michael: Nick it down.   Emil: Yup, exactly. And also because sometimes whoever uploaded the listing, sometimes they don't include that information. Right? So if you have like really, really specific defined criteria, you may miss something where whoever listed at the seller or the agent or whatever, just didn't submit that information. It doesn't hit the filter. I've noticed that on a couple of things.   Michael:   And just a pro tip for everybody listening to, if your budget is a hundred grand on the high end, set your filter up to one 20 to include properties that are listed above that because you might offer a 100K and get it. Versus if you set your filter criteria right at your end budget, you might never have seen those properties.   Emil: Yeah great tip, go like 10, 20% above what you are actually planning on spending.   Michael: It also gives you an idea of what the next tier of property looks like. So if you did want to ultimately spend more, no. What would that buy you?   Tom: One last piece of advice on building a bike box is to think about how many properties do you practically want to evaluate at a given time? And yeah, you can control this with your buybacks by how targeted it is. So if I have a lot of time and I want to look at a lot of product properties, I'm going to have a really wide buy box. If I don't have a lot of time right now to evaluate properties, I'm going to tighten my buybacks down a little bit. So one way to think about it is to work backwards about what your kind of capacity is for evaluating effectively.   Emil: It's also, I think when you're first starting out, I think it's okay to, again, to nail this point of going a little broader, I think with time and experience and having different property types, you'll start to get an idea of like, this is the exact property I want in this exact area.   Tom: Awesome. Michael, do you wanna jump on your next acquisition system?   Michael: Yeah, absolutely. So, so much of this, in addition to searching, can be done socially kind of quote unquote. And so just talking to everybody who's willing to listen and maybe even some of those who aren't, about what it is that you're looking for. So just in everyday conversations, talk to friends, family members, people in your network about what it is you're doing and what it is you're looking to do because so many eyes are going to be better than, than just one set. So if someone then comes across a property just in their everyday life and thinks, Oh, well, I remember Tom mentioning that he was kind of looking for something like this. That can be a great deal funnel for you as well. Property managers can also be a fantastic, fantastic source of deals for you, which is pretty automatic. You just tell them, Hey, this is what I'm looking for. You, you set your filter, so to speak with them and any property that comes across their radar. Oh, Hey. Yeah. I remember, you know, Emil, I kind of managed this property for him. And he's looking for something like this. It becomes so easy. And so automatic that it's one of those things you can just kind of say it and continue saying it and then forget it. There's not a whole lot of nurturing that has to be done with those types of things, other than some, you know, reminders. And don't be the person that, Hey, have you found any properties yet? Have you found any properties? Just put it out into the universe and just kind of let it, let it bake for a bit and see.   Tom: It's like The Secret. You guys remember that book?   Pierre: I'm still waiting for that check in the mail.   Tom: It's coming! Wasn't it The Secret and then The Answer as a followup or something.   Emil: Yeah.   Tom: Incredible. Incredible marketing.   Michael: I didn't read that one. What's The Secret about?   Pierre: It's the laws attraction.   Michael: Uh, okay. Okay.   Pierre: It's when you focus on something for long enough and eventually it comes to you, essentially.   Emil: That's right. You don't have to actually do anything. Just think about it every day. Hope for it every morning, but no action required. Just think about it.   Michael: Million dollars, Million dollars! So it's interesting. So for the Academy book club, we just did Think and Grow Rich. And I thought that, you know, that was such a great title by Napoleon Hill and we read it and I thought it was really awesome and talked about a lot of kind of high level things, mindset type stuff. And it was talked about very similar type stuff. And it was, it was interesting. They're all talking about, you know, if we stand around here and talk about blue cars, we'll probably go out and see a bunch more blue cars. And it's not so much that there are more blue cars on the road. It's just that now we're cognizant of that thing. It's kind of front of mind. So it appears more often for us.   Tom: Yeah. I love that example, Michael, cause not all systems are digital or not all systems are technology, but it's, it's leveraging the people side of your network of funneling in deals through that. So at the end of the day, like a lot of real estate is a people business and nurturing that and building a system that you want and funneling them in deals is excellent.   Michael: All the real estate meetups that I went to, um, pre COVID, they all talk about they'll usually start or end with the needs and wants section. So people talk about, okay, this is what I need or is it “have and wants”   Tom: Maybe it's a “give and a take”, I think I know what you are talking about.   Michael: Yeah. You announced to the group, what it is that you have to offer to the group and then what it is that you're looking for from the group or from in general, until people say I have money and I'm looking for a deal or whatever. And so it's that those are great opportunities as well. And so again, just kind of reiterating, put it out to the world, don't be embarrassed by it. Don't be shy about it. Just make it known what it is you're looking for. Cause it's tough to help people if they haven't told you what it is that they're looking for.   Tom: Awesome. Great example. All right. So I'll touch on the last acquisition related systems slash tip slash ways to scale. And this is a special perk that we have within Roofstock Academy is that members can actually export the listings on Roofstock into Excel. And whenever you can do things evaluating a lot of deals at once, like doing it in Excel, that's a great way to do it. So I guess that the main theme is, you know, try to batch processes together. And in this particular example of being able to download all the listings in Excel, batch that whole evaluation of the whole inventory, you know, in one run where, okay, I'm filtering down to these particular property types or, Oh, I'm filtering down for this particular return. So being able to, if you can get a spreadsheet of what you're evaluating or any kind of way, being able to batch it together, do it saves time.   Michael: And for anybody that's really intimidated by Excel because I know it can often seem very intimidating. There are some really great free courses on YouTube and there are also paid courses. If you want to get more in depth with it, about how to use Excel and maybe how to do some of that batch sorting because it's a really powerful tool. So I guess we're plugging Excel and Gmail in this episode.   Emil: Shout to Google and Microsoft!   Tom: Let's continue on. We're going to go into ownership now and Emil why don't you lead us off.   Emil: Cool. All right. So the first one we're gonna be talking about is cash flow automation. So the first thing I do and you guys let me know if you do this as well. I set up auto pay on all my mortgages. I don't want to think about, did I pay this mortgage? I have to mail a check. I auto pay everything just to make it super easy. Especially when you have multiple properties automating. It is like, step number one. You guys do that as well.   Michael: Yeah, definitely. Absolutely.   Tom: Do you also impound your insurance and property taxes when you pay your mortgage payment?   Emil: I do. I know a lot of people won't because they want that capital and would rather use it throughout the year versus giving it to your lender, to hold it to whatever you like to be able to use that capital. I just don't want to have to think about like, okay, I need to come up with X amount to pay my property tax and insurance. It's kind of like duping yourself into thinking you're richer than you are.   Michael: I don't, I don't use the impound accounts. I will, if they'll give me a better rate for the mortgage. And then as soon as the loan closes, I cancel the escrow account and just pay it myself.   Tom: Sneaky move Michael.   Michael: It's something I'm considering doing just from like a meal mentioned ease of operations. It's just one less thing to think about. So it can be great either way.   Emil: Why do you not impound it?   Michael: For the exact reason you mentioned there are significant funds that are going to be paid to property taxes and insurance on an annual basis. And so I'd rather have that kind of, well, that one time hit is kind of a bummer. I'm able to use that cash. I mean, it's a significant amount such that it's usable on a monthly basis to do other stuff with. And so I just know in the back of my mind that, okay, come this time of year, I've got this big, big property tax bill that's going to be due.   Emil: Yeah. I wonder if there is something there in terms of like at a certain scale, it's a lot more money to be working with versus like, let's say you have one to five properties just for ease and it's not that much extra capital that you'd be able to do something with.   Michael: Yeah, no, that's a good point. I mean, I think everyone should think about it for themselves because even at that five property level, one to five, your property tax bill could be, you know, $25,000 if we're talking about.   Emil: Yeah, that's true. Yeah. Good point.   Tom: Just to clarify impounding your taxes insurance is if you haven't deduced this or don't already know this, it's when you pay your mortgage payment, the mortgage company will also collect a percentage of the annual taxes.   Michael: They'll take one 12th of the annual tax bill, one 12th of the annual insurance bill with your mortgage payment on a monthly basis. So that you're paying equal payments every month. You're not getting hit with your tax bill or insurance bill just at one time.   Tom: And then the mortgage company will just pay it for you. So you don't have to think about it. So, boom, that's another system. So that's a good question about, you know, do you use that money in the meantime, if you don't have to pay it for 12 months, but that could be another potential system. Alright. Emil, I broke your flow.   Emil: Finishing up there. My favorite thing is when they audit your account and you have an excess balance and they send you like a check for a couple of hundred bucks and you're like, Ooh, it's like a Christmas bonus or something. Hanukkah bonus baby. For me,   Tom: I think I might've mentioned this on another podcast. I like it, but it pisses me off. Cause I'm like, oh geez, what check am I missing? Yeah, it makes me think like, okay, this is great having this check. But I'm like, like honestly concerned that like I may have missed something in the mail because man, there's just so much junk mail as a real estate investor. The wholesalers that email you all kinds of things and like just general, getting a lot of mail. I just get really concerned that I see a check here. That's awesome. But what checks am I not seeing? Because they're buried in between a Serina and Lilly or whatever, a  catalog, that's like five pounds and 500 pages. Anyways, go ahead, please continue your answer.   Emil: No, please continue your rant. I want to hear that.   Tom: I got to build it up a little bit. I got to build it up a little bit.   Michael: Tell us more about what other junk mail you received.   Tom: We Buy Ugly Houses Houses. So many of those. Yeah. If there's any wholesalers listening, I want off your mailing lists.   Emil: Okay. So the next one, this one's probably obvious a lot of people, setting up ACH auto payment from your property manager. So they collect your rent checks. I don't even know if any property managers do this, but like sending you a check in the mail. I imagine most people already set up you raising your hand, Michael. Cause do you do that?   Michael: I used to get paper checks because my property manager was pretty old school and I said, okay, please, please, please, please, please, please, please. Can we do this and other way? Yeah, this is just not awesome anymore.   Emil: I mean, so that should be like, even part of your PM property management vetting, right? Like, do you do, do you have an online portal where you ACH payments to me? So just make sure you set that up. If it's an option, most property managers in 2020, you will have that.   Emil: Maybe Michael went to one that was established in 1925 or something.   Michael: 1833    Tom: Is this is the one in Alaska?   Michael: No, it's actually properties that I've since sold, but out in Missouri kind, of rural Missouri. And so just to expand upon this a little bit is I think we've talked about in another episode, but my property manager, there was only willing to use a certain bank or the local bank branch wasn't anything that we had locally or that I use. So they would go to this bank deposit, the rent check and then would cut me a check to my bank. It was just a whole pain in the butt kind of thing. So what we've automated is now they'll deposit the rent check and then those rent checks we'll get bill paid from that bank to my local bank where I actually do my banking and then from there and get distributed. And so if you can automate as many of those processes as possible, it becomes much easier. So ACH transfer a potentially from multiple bank accounts to multiple bank accounts,   Tom: Are you're hiding something Michael? I'm just kidding.   Michael: I don't know. You ever been to the Cayman islands?   Tom: That's interesting that a local property manager had a preferred bank that they worked with and yeah, yeah.   Michael: They're just like no Wells Fargo or B of A or union bank out there. So they're like, this is what we use. It's like cool, pony express it over to me.   Emil: Carrier pigeon that's right. So the last one in this section, we recommend I do this. I have a separate bank account for all real estate stuff. It just makes things easier, especially come tax time. I also just like having it separate cause I try to treat real estate investing like a business to have its own checking account checking account. I use Chase, it's free to set up another checking account and it's just much easier to track things going in and out and it'll make your CPA's life easier. Do you guys do that as well?   Michael: I was going to ask if you guys have separate accounts for every property?   Tom: You know, it's funny, I just got off a Roofstock Academy coaching session before we started recording this episode and we were just jumping into it with a member exactly on this topic. I don't, I use just one account for all properties. It's just, I don't know, easier. And I don't understand necessarily see the value. Not that it's a lot of overhead to have different bank accounts because you can set them up for free on so many different banks, but I just use one for all the rental properties and yourself, Michael,   Tom: I have one account per LLC. And so I've got LLCs that own multiple properties. So all that was kind of funnel into that one. Yeah. What about you, Emil?   Emil? I'm just one checking account where everything funnels into nice. Just for ease. Makes it easy.   Pierre: What would be one of the benefits of setting up an individual bank account for each property?   Tom: The benefit of setting up, if you were to set up a different bank account for each property, you know, what I like about it at a portfolio level is I just have a really tight grip on cashflow within that portfolio. If I was to do it at an individual property, man, it would be just so clear if I'm making money or losing money. You know, we have these assumptions that we use when we are acquiring properties, but ultimately, you know, when the rubber hits the road, you hope to hit those or even exceed them. But you know, by having an individual bank account for that property, you have a really immediate, transparent view into, is this property performing to how I was projecting it with the cashflow.   Michael: I was going to say, it's a really good question Pierre. I'm glad you asked it. So because I only have the one bank account set up, I think I'm echoing Tom's viewpoints and opinions that, yeah, it's very easy to see what the actual numbers are, but I found that I just keep an Excel file, very detailed document of, Hey, anytime there's an expense on a given property, I log it the date, the expense, and then the dollar amount. And so that for me, suffices as a very similar type of scenario without the headache, I would argue of having 10 different property accounts searching through which one has what I've got it all in a file for me, that's worked really, really well over the years.   Emil: And your property manager, a lot of them you'll have a portal where you'll be able to see all your rent, all the management fees they've taken, they handle a lot of the smaller maintenance. So you'll see those expenses as well. So you also have your property manager, you can lean on, that's going to keep track off a lot of this stuff. The only other thing to track outside of that would be your payments to your lender and then property taxes and insurance.   Michael: There's all kinds of miscellaneous stuff that you'll likely have to pay outside of that. So like business licenses, if you're required in that state or LLC fees, franchise tax fees in, you know, wherever you live and wherever it's registered, just misc miscellaneous stuff. And I just attach that to each property and whatever it's paid for, you know, even might have to pay a contractor, something if they're that's outside the scope of what your property manager is doing. And so having a place to document all of that, I find it to be very, very, helpful.   Emil: Yup. I also keep a detailed Excel. I don't do it every month. I do it like bi-annually.   Michael: Do you do it when you incur the expense or you do it as a reconciliation, every, you know, twice a year,   Emil: The latter I do reconciliation. It's probably not the best, but I don't know.   Pierre: Yeah. I mean, we're talking about automation,   Emil: We're telling you what to aim for. We're not necessarily saying we all do this all the time.   Michael: Do, as I say, not as I do.   Emil: Exactly. And you know, you don't have to be perfect in all these areas. We're giving people just different ideas, you know, what makes sense to automate.   Pierre: Cool   Michael: It's one of those too like, we all have bad habits that we've fallen into over the years. And now in hindsight, we'd say, man, I wish I had formed this better habit. So here's what I would do differently. And it's so hard to break those bad habits. Like it's so hard.   Tom: Getting the grove for sure.   Michael: Yup. Very true.   Emil: One other thing, we don't have it here, but I want to talk about it as well. This kind of goes back to acquisition automation, but, it goes back to the concept of paying yourself first. So a lot of us, you know, we have a full time job or we have W2, whatever it is, make sure you set up like an automatic percentage that every paycheck coming in is going towards your investing. So right now, like my process is 20% of every paycheck automatically gets taken out of my checking, put into a separate investing account. And I highly recommend people who are listening, check out a website called I will teach you to be rich by Ramit Satie he has this awesome guide. If you look up, I will teach you to be rich, personal finance guide. It shows you how to automate all this stuff, like having separate accounts for different things you're saving up for. I found that super easy and like a really good way to separate your money and like have kind of different categories and use them for separate things. So I have a separate investing savings account that automatically, you know, income coming in goes into that. So that's another automation thing I do.   Michael: Piggybacking off that a meal I've also automated paying myself first from the rental amount every month. So when we do our analyses, we see, okay, we've got the mortgage payment, property taxes, all these other expenses that may or may not actually occur on a monthly basis, but we modeled them that way. So it makes the cash flow easier to understand. And so your property is going to collect rent. They're going to take their fee and are going to give you the rest. Well, now that's a huge chunk of change, but we've still got to pay some of these other expenses. And so we all have calculated on a monthly basis what our cash flow should be. And so I will automatically set up that deduction amount from my property bank account, going to my personal bank account, if I'm planning on using that cashflow for everyday life stuff. So if it's a hundred bucks a month, I just receive rent on the 10th or whatever of the month. And then I automatically have a hundred dollars transfer into my personal account. Everything else stays in the property account to then pay all those other expenses for. And at the end of the year, you had a good year. You might have some extra dollars left over and you can pay yourself again. Or if you had a bad year, you might need to put some additional money back into that. But it's a really easy way to just start collecting money from your properties without overdoing it.   Tom: I like it. So the next operational system I'll jump on, has to do with documentation. So if you're an active investor, you will be regularly buying new properties. You will be regularly refinancing had a good episode, I guess it would be two weeks ago. Once this episode is launched on ways to take out equity, anywho, when you are going through that exercise, you're going to need the same documents again and again and again, you're going to need a copy of the current lease. You're gonna need a certificate of insurance. You're gonna need a sample mortgage payment. And what I like to do with this is to streamline this process is set up a folder structure that is secure. There's a couple of different platforms out there, Dropbox, maybe even Google drive, but you know, in a secure folder online, I'll have my relevant documents in there.And then I can use sharing functionality to give it specifically to my lender or specifically to my CPA. That way I'm not needing to constantly track down these documents that I'm going to need again and again and again, and I can safely share it with whoever needs it. So the main takeaway for this system, I guess you can call it that is, you know, don't sleep on it, just have that document structure set up a do it once and do it right and do it early and then have that available for whenever you go through one of these maneuvers, be it refinancing or taking on a new loan or going through tax time.   Michael: It's so valuable. I know for my first property, I didn't have these systems really set up in place. I thought I did and then came tax time and I was like, Oh my God. So this is going to take so long to figure this out and go back and collect all these things. So, you know, it's one of those things. It's tough to know what you're looking for until you know what to look for. So ask somebody, ask, you know, ask your CPA, ask your tax professional. Hey, I'm investing in real estate. What things you're going to need from you at the end of the year, they're going to tell you, okay, we need your 1098. We're gonna need all your expenses, property tax, receipts, all these types of things. So that way you can start that ahead of time developing and building these good habits and systems. It makes it so much easier. Come tax time.   Emil: I don't have anything else that neither does my mustache. Good job guys. Excellent.   Tom: I actually thought of this while you were talking about it. So I love the concept of paying yourself first, right? And with paying yourself first, when you get your paycheck, it's pretty straight forward, right? You take the first 10%, 20%, whatever, and either save it or spend it. However, I like to think about this with your day. So paying yourself first, the first 10% of your day, how are you guys going to pay yourself first with the first 10% of your day? And you're not allowed to say surfing,   Emil: I'll go one level up then and just say exercising. I think exercising for me has become as equally as important for my mental wellbeing for the day as it is physical. So for me, that's how I pay myself first to start the day, right?   Tom: What are you doing for exercise?   Michael: Surfing!   Emil: I wish more surfing. Having a small child will put a dent in your surfing ability and it's summer, so the waves were a little slower. I will do. I'll either go for a run or I will do a combination of like pushups pull ups. Or I also use this thing called the seven minute workout app. It's literally a seven minute workout. I don't do long workouts. I don't like, I don't know. I used to spend more time working out, but for me, it's just a matter of like doing it almost daily to just start the day right. Whether it's seven minutes or 30 minutes.   Michael: Classic Emil fashion, he stole my answer. But that's why I went first because you're going to try to take that out. So not surfing, but I like to do kite surfing and I also work out. Do you exercise in the morning? I find that getting my blood pumping helps kind of burn off that haziness in the morning. But since the meal took that already, I really liked journaling in the morning. Just even for a few minutes, a few paragraphs, just kind of what I'm thinking about. What's going on personally in my life and what my goals are. I read that book think and grow rich. And that reaffirm that journaling is a super powerful tool. I've always known it, but again, it's one of those bad habits that it's hard to break into if you're not used to doing it. So starting slow and just trying to get my thoughts out on paper outside of myself, I find it to be helpful and worthwhile. What about you Tom?   Tom: So the first 10% of my day has gotten a lot earlier with a small child. So, you know, it's, it's now like the, you know, late five's early 6:00 AM is the first 10% of my day, but excellent partnership with my wife helping out. Well, she has the lion's share for sure, but on the extra early days, all right. I'm digressing. Okay. Going on a walk. So, I mean, I guess this is exercise. Sure. Why not? So getting the baby early morning, throwing him in a little jogger or the stroller walking around the street in the morning when like everything's still quiet and the sun's just creeping up over the Hills and the fog is kind of lifting journal in my head. I dunno. So like walking around in the early morning when nothing else is going on, I know that's a fine first 10% of the day way to pay yourself first.   Michael: As the only person without a baby, just a PSA, you know, you probably shouldn't throw babies into or at anything whether it be a jogger or cribs.   Tom: Oh, they're, they're pretty durable, but yeah, for sure,   Emil: They are very durable.   Pierre: Antifragile.   Emil: Antifragile.   Tom: Antifragile! Yes, they get stronger with it. Yeah. How about yourself Pierre? Your first 10% of the day?   Pierre: I like to save my working out for the end of the day so I can have a break between my work day and the evening. So the morning is a good time for me to read.   Emil: I used to read a lot in the morning, baby killed that.   Tom: Got anything good? Any good books going?   Pierre: I'm a little bit behind with the book club, but I'm reading the book that Michael chose for the RSA book club, Never Split the Difference.   Emil: Great book.   Pierre: And this morning I read the ebook that email sent me and the article on how to write better titles for the podcast.   Emil: Got to keep the audience clicking.   Michael: Yeah, that's great. Speaking of our audience, if anybody has any thoughts, suggestions, insights, hot topics they want to hear about. Please feel free to let us know at eshour@roofstock.com, malbaum@roofstoo.com, or tom@roofstock.com.   Emil: Or hit us up on Twitter. I'm @emilshour, Michael you're @albaummichael. and Tom you are.   Tom: I am not positive… I'm @tscnheido   Michael: Freaky deaky Tom   Tom: Yea, created like whatever, 15 years ago, something like that.   Emil: I like it.   Michael: Skater dude, 27 with an eight.   Tom: Exactly. Awesome guys. Well, thank you so much for listening today. To our episode, we hope that you got some value out of it. If you liked it, please don't be shy. Please rate us. Please subscribe as a meal set. And like Michael and Emil said, reach out to us. We love to hear your feedback on future content to do and to keep driving. So, alright, happy investing.   Emil: Happy, investing.   Michael: Happy investing.    

In this episode we have David Young from RCN Capital tell us all about the world of private lending: what it is, how it works, who might want to use it, where the money comes from and how it differs from traditional lending.  --- Transcript: Tom: Greetings and welcome to the remote real estate investor. In this episode, we're going to be talking about what investors should and need to know about private capital. We're connecting today with David Young of RCN capital to answer all of our questions. Alright, let's do it.   -Theme song-   Tom: Awesome David. Well, first off, thank you so much for joining us. And, why don't we start by telling us a little bit about yourself.   David: Thanks to Tom and Michael for having me, really appreciate the opportunity. Yeah. My name is David Young. I'm the director of business development with RCN capital. We are a direct private lender headquartered in South Windsor, Connecticut, just outside of Hartford. And we do lend nationwide. I'm actually located personally in Boston, remote to the office as are some of our employees. And my background is pretty diverse, prior to arriving at RCN where I got to RCN in 2014, the company started in 2010 in response to the previous financial crisis. If you will, now, we're certainly going through another challenging period, but if you go back to the 2007/2008/2009 nine meltdown RCN was started in response to that, and I'll get to that a little bit more. So my background is spreads across a variety of things. I graduated from the United States military Academy. At West point, I was in the army active for about seven and a half years upon leaving the service. I took on a variety of roles, many of which were oriented around sales business development. I had executive level positions as a division vice president as well. I also ran a small business in central Massachusetts as a VP running a outbound and inbound call center and a variety of other roles spread across a lot of different types of skills and levels of experience that cover a lot of different ranges of medical, home improvement financing, and several others as well.   Tom: All right, that's great David, let's jump right into the meat of questions around private lending. So a lot of remote investors, they like to invest with debt, lot of great benefits to investing with debt. And there's this decision right of private capital versus more traditional loans that you would get in your personal home mortgage. Why don't you break down some of the differences between private capital and a more traditional mortgage?   David: Sure. So, you know, the more traditional route of a mortgage say going to a bank of America or Wells Fargo and applying for your typical 30 year mortgage is certainly an option and might be the best option for somebody depending on their particular situation. In fact, private lending essentially exists and evolves in response to those that can't be served by the traditional sector. So it's filling a gap that isn't being met in the traditional sense. So, you know, a traditional mortgage may be suitable if there are no issues to consider in terms of, you know, damaged credit, if there's not an extreme or even a high sense of urgency in terms of time and being able to complete a transaction in a very rapid amount of time, perhaps if there is no issues with, you know, citizenship, you know, private lending, a lot of the firms such as ours will work with foreign nationals, you know, with traditional mortgages or other, you know, hoops, if you will, that you have to jump through. There's a lot more that goes into the underwriting with a traditional mortgage in terms of looking at income verification, tax returns and so forth. So, but again, it may be the right route. Generally, the rates are going to be lower and a traditional mortgage, as you see right now, 30 year mortgages are somewhere in the low to mid threes and on private lending, you're not going to be able to get that low, but that's because you're being represented in a different asset class and there's different variables that come into play. So why would somebody pursue a private loan in terms of making a real estate transaction? That could be a variety of reasons. Let's just look at a typical fix and flip, if you will. Timing might be very critical. Somebody might be analyzing an asset that they want to move on and they need to line up financing on that. There may be competition for that particular asset, perhaps there is perhaps there isn't, but either way investors tend to feel a sense of urgency when they identify something that they want to acquire and then renovate and eventually flip. So private lending, generally speaking is going to give you a much faster response time. In other words, you can link up private lenders, such as RCN capital and fairly quickly get through the process and get approved and actually get funded on that loan. Why? Well, there's generally a lot less that goes into the underwriting and there's general early, a lot less in terms of a regulatory issues and traditional banks, you know, going back to the bank of America in order to administer and process your typical mortgage, there's a lot of regulation involved. There's a lot of issues that they have to consider. They're not necessarily the ones that are thrusting that upon you. Those are things that they must comply with, private lending, not as much, for example, we're not at least in RCN and many others as well. There's no check on tax returns. There's no check on income verification in terms of you don't necessarily have to have a W2 type wage job in order to be approved. And it certainly wouldn't hurt, but you don't necessarily have to have that private lending, particularly if we look at hard money fix and flip, you know, residential real estate where RCN focuses on non owner occupied residential it's asset based. So the focus is on the asset itself. And then other key factors tend to be the experience of the borrower. So how many transactions have the borrower has the borrower completed? We tend to look at the last, most recent 36 months by verifying if their name is on entity that completed a transaction. And then there's going to be a look at other things like credit score. But for example, in private lending, there are requirements or expectations on a credit score typically lower. In fact, maybe even much lower than in traditional mortgages case in point right now, just in response to the COVID crisis. In some tightening of lending standards across the board, both traditional and private lending, a lot of your traditional banks have really ratcheted up their standards and expectations. Credit score minimums have gone way up liquidity requirements, et cetera, that in and of itself is going to bump a lot of people over to the private lending space and private lending. Currently at RCN Capital, the minimum FICO is 650. If you look across all of our product categories, you're not going to find that at a Wells Fargo. So speed, credit requirements, the ability to be perhaps a little bit more creative with an approach and how to go about getting something done and being rewarded much, much more so for the asset itself. So is this a good deal that you're going for? You know, that's going to be a very high concern to a private lender. Yeah, nd the experience that you bring to the table. So do you know what you're doing? Do you have the experience, do you have the liquidity to accomplish it? That is what really matters as opposed to what, you know, a Wells Fargo or bank of America is forced to look at.   Michael: That's a really great point. Yeah, I was just going to ask you, you mentioned it in passing hard money is private capital and hard money. Are those two synonymous or do they really differ?   David: Yeah, that's a great question. Now again, I've been with RCN since 2014. Initially I wasn't directly on the real estate side, but a lot has changed as RCN originated in 2010. What private money consisted of in hard money was what a lot of people I hear now refer to as you know, kind of the old school where, you know, you know, a guy who might know a guy who could get you alone. And then when we say asset based, I mean, it's, there may, there may not even have been, and this still exists today, by the way, we compete with this and RCN where leverage, LTVs loan to values. If you will, to keep it simple, tend to be lower and you're more old school had money, maybe even no doc may not have require barely any documentation. And certainly not necessarily an appraisal or even running a credit score and for the purposes of just adding it to a file. So now when you kind of, it's almost, you know, a point of contention or even something that people joke with each other about in the industry where, you know, hard money has really evolved into a much bigger and more sophisticated ecosystem where more money comes in, where there's more requirements like just looking at the FICO, FICO requirements, FICO minimums. A lot of that is tied to where the capital is originating from to fund these loans. So there's institutional capital that helps. And not in all cases, there are funds. Well, there are private investors that buy loans directly, but institutional capital tends to come with certain expectations. The FICO is one of those where you have to check the box. If you will, the old school, if you will hide money, probably shrug their shoulders at that. Um, they're not concerned with that. They're not necessarily concerned with an appraisal. They want to see the asset and they're going to protect themselves by, in all likelihood having a lower level of leverage, lower LTV we had prior to COVID essentially the whole private lending, hard money space fix and flip space was getting, you know, leverages, you know, up to 90% or even higher with some particular vendors out there where you were getting 90% of LTV, plus a hundred percent of the rehab funding to close a loan on a flip, as an example, someone doing your so-called old school, hard money. I mean, I haven't heard of anybody doing that high of leverage in that space, but it's still out there. There's those people that, whether it's a lot of times it's speed, somebody will close alone very, very quickly with minimal underwriting work done aside from looking at the asset itself. So there's still a market for that, but there's a lot to your question, a lot of crossover or kind of a lot of blending they're one and the same in some ways. And then they separate from each other as well in different segments of the marketplace, depending on who you ask, different people have different interpretations as well.   Tom: One piece you touched on is room for, I don't know is creativity is the right word, but there's a little bit more variability in the different products in that it's just, there's way less regulation I'd say on it. Would you mind touching on that on some of the different products that, and maybe one of the more popular products specifically as a remote investor that you guys originate?   David: Yeah. One of the ones that really took off, uh, heading into COVID and we've now just activated it again is our 30 year long term rental. Okay. So this is a 30 year fixed, fully amortized loan, much like what many people are familiar with with your traditional 30 year mortgage that we talked about a couple of minutes ago. So 30 year fixed non owner occupied residential. We have that available on one to four units. This really came into play. It. This really took off like a rocket, uh, in March of roughly in the spring of 2019. I don't remember the exact date when we launched it, to be honest with you up to COVID. This thing was already approaching 40% of our originations at that point. And it gives people a lot of flexibility. We could look at portfolios of assets, so you'd have investors out there with say they had 10 single family residences and they had 10 different financing situations on each one. Maybe two of them were with a particular guy. I know a guy who knows a guy who gave them a bridge loan a couple of years ago. Maybe one of them was with someone else. And there was just all spread out everywhere. The 30 year longterm rental, you could take a whole portfolio and roll it into one transaction and get that entire portfolio into a 30 year fixed fully amortized mortgage. At that time, back in February, you know, rates were getting as low as four 449 on that, which is very low for non owner occupied resi. So you had that, you had the ability to look at those assets. So you may have one particular, if we stick with that example, one house perhaps was not cash flowing as strongly as the others. You weren't necessarily penalized for that. You weren't necessarily told that that one couldn't join the party, so to speak. That one was weighed against the portfolio as a whole. So we could look at the whole portfolio, also look at the investors level of experience, their level of liquidity and take all of that into account to make a decision. We have an executive committee at RCN Capital that looks in each and every transaction and they can exhibit, you know, a certain amount of creativity, if you will, at any point in time to see if the transaction truly makes sense, as opposed to trying to run that through a large bank, traditional bank could potentially be an entirely different experience.   Michael: That's so cool. David, it's something I talk a lot about with students in the Academy about portfolio loans. It's something that I've used on the commercial side of things, and I think it's the best thing since sliced bread. So I've always thought that they existed for single families, but that's great to hear that they do indeed. So anybody listening that have spoken to me within the Academy about getting, go for portfolio loan, go call David Young at RCN Capital.   Tom: in coming up with what the rates are. Is there a little bit of a discount for larger pools, larger portfolios, or how does that typically work?   David: Yeah, that's a great question. So we have generally, you'll see, uh, and right now, as listeners are hearing this, uh, allow me to emphasize if I can, that things are changing very quickly. So in terms of pricing as a whole rates points and whatnot, we saw a very high level of liquidity is kind of sloshing around the system, heading into a COVID and then things really tightening up seizing up even, and then starting to now loosen up. We've seen changes on almost a daily basis over the last couple of weeks here at RCN capital. So the way those rates are determined, you know, in terms of the price at anything is which is, you know, in large part driven by supply and demand as things seized up and there was less or no liquidity for this paper and the secondary market, it became very difficult to price it, you know, because we didn't know what it was trading at when there was a lot more trading volume and activity on this paper and the secondary. Then you could determine pricing a lot more clearly. Furthermore, you had a lot more of the competitors actually active and lending in the last couple of months, people have pulled back. So we don't necessarily know what this company over here is doing because they've completely ceased lending at this current time. So a lot of that is supply and demand driven, how much volume and activity is there for this paper behind the scenes. And then that results in, you know, subsequent pricing that the retail sees factors that we look at from an underwriting standpoint, and to determine kind of how to bracket that again, back to experience and also the size of the loan. So generally speaking again, pre and post and kind of while we're still with COVID here for the time being, it's a little different, but generally speaking, more experience and a higher loan value dollar absolute dollar value would generally lead to better pricing to the retail client. And through our wholesale channels. My role primarily is with our correspondents that work on our private lending platform, other hard money lenders, private lenders out there in the community that are looking to leverage our infrastructure to grow. We also work in that capacity as well, but the pricing, the borrower's experience and the size of the loan, we have systems in place. Whereas the loan exceeds a certain amount in dollar terms, you may get some relief in terms of the yield. There may be some relief in terms of the origination, but those would be the two main things experienced in the loan size.   Tom: Got it. And for the kind of ongoing ownership, you know, so there's a secondary market where you guys are selling the mortgages that you guys originate from the experience of the person who was getting their loan originated, or do you guys ongoing service them after you, it, of the loan,   David: Yeah, depending on the product, but actually RCN Capital. What we have here is, is pretty unique in the industry. And I leveraged this a lot with our wholesale partners when they're looking to find somebody to work with in terms of a capital partners that we have essentially everything in house now, right now, a lot of folks are remote. In fact, almost everybody is given the scenario, but if you'd look past that for the current situation, when we talk about servicing the loans, yes, we have our own servicing team at RCN capital. A lot of lenders in this space are set up with a situation where they're outsourcing that, which is fine. That's a decision. A lot of people make. We actually did that ourselves for a certain amount of time and decided to internalize that and make that organic to RCN, to place that amount of value on the customer experience. So yes, we're doing that, not all do that, that also holds true for another good example is our legal team. A lot of these transactions involve, you know, somebody originating and kind of setting the table if you will. And then the actual closing of the loan document prep and so forth, working with attorneys, which that can be intimidating and frustrating as a whole to a lot of people that is sent out to some other entity to conduct that business where we have that internally. So we have that an entire legal staff. That's all they do all day long is work on legal issues, closing stock preps, et cetera. We have our accounting team, our marketing team and everything actually in house in RCN. And that really helps as well. Not only does that help the retail client by providing them, they get a loan from us that they're to get an exceptional level of service, everything under our control. If there's a problem, we identify it, we fix it. But also with our, you know, our B to B or our wholesale partners, if you will, other lenders brokers, when they choose to work with us, they have that entire team, all organic to RCN capital to support them and help them grow their business by using our infrastructure and platform.   Michael: Great. David kind of a specific question for you around some of our CMS product, but anytime someone's using hard money, they want to get out of it as soon as possible because it's typically more expensive than traditional lending. So do you guys have any type of prepayment penalties that would prevent someone from getting out or is that really too specific of a question it's kind of on an ad hoc basis based on the product?   David: No, that's a great question. It depends on the product. I'll walk you through each of them here briefly. So on our long-term rental. Yes, we do encourage investors to be, you know, fully aware and committed to the asset for that exact purpose. You know, long-term rental and holding of that asset. There is a five, four, three, two, one step down. In other words, you can choose, you know, at what level you are, what time period and what penalty would be associated with that if you were to try and refinance out of that loan. So, you know, obviously that's a big decision to make that you have to be aware of that on our midterm product, which actually now is presenting all kinds of interesting opportunities for investors. It's a two years of interest only we call it a two plus one and already has built in an option to extend for a year. We have this available on one to four units, multifamily five-plus and mixed use, as long as it's at least 51% residential by square footage. On that product, there's a six month prepay penalty. So if you think it through, if you were to enter into that product to interest only for two years, perhaps you have an asset that you do want to rent, but you're not entirely sure you could change your mind. You may try to sell it. You make, you know, you may rent it for a year. And then at that point, you may want the flexibility to see if you want to do something different with it. The two plus one with only a six month prepay gives you that exact flexibility because after six months you could theoretically enter into a new transaction to get out of that one without a penalty applying. So there's that on the short term, I won't get into specifics on that. It can be on a case by case basis, but there's nothing to dissuade you from completing your project as quickly as possible. You know, as a lender in particularly with the yield component, you know, there's origination, which are the economics kind of front loaded to the front of the transaction. And then there's the yield component in terms of collecting the actual payments as each month goes by. So there can be challenges that a lender or a transaction ends up being very short. There wasn't much time to collect yield, but again, we don't want transactions that drag out for long periods of time and have to ultimately potentially approach modification as well. So on a 12 month, you know, a flip, if you will, our transactions show that, you know, investors are not penalized for, you know, being expeditious and efficient with their work. And we also have incentives to, you know, not, uh, enable them or make them feel like they should consider trying to extend it or go past a certain point. We try and we want to position them so that the project is done efficiently. According to the data that we have that shows, you know, what success looks like.   Michael: Awesome. Kind of taking a step back and looking more high level at private lenders. I mean, you touched on it briefly, but who where's this money coming from to fund some of these loans?   David: That's a great question. When you let's compare it to conventional, you know, just here in COVID, this, this could go in a lot of different directions, but in COVID what we saw was the federal reserve came in and really just threw the kitchen sink at everything essentially. I mean, they've, they've done things that are truly unprecedented that that's cannot be overstated, but one of the things they did is something they've done before. They certainly did it as part of so-called QE, quantitative easing since the 2009 crisis, which was to come in and provide a backstop to mortgage backed securities MBS. Now, even just saying that they're going to do that can have a huge effect regardless of how many they ultimately buy, but those are the traditional mortgages that are originated from, you know, you know, Fannie Freddie type stuff from a bank of America type of transaction that are sliced and diced into exotic securities, and then sold the fed comes in and says, look, we'll back up those, you know, we're gonna, we got your back on that, that helped that particular sector kind of spring back from the depths of the COVID crisis, if you will. And private lending, you know, we don't have such a backstop from the government. So this money is coming from, you know, private capital sources. However, there's been a big evolution, you know, for a period of time, a lot of this was from a private, you know, private investors, private investors would form funds. So you might form a fund with a group of investors that has, you know, I don't know, $20 million together. And then that funds purposes to invest in these various private lending transactions in whatever area that they choose to focus on. So they're out there lending and recycling that cash and doing their thing. And that's with, you know, that amount of money that they've been able to put together. There's also one off transactions that occur when an originator may take a loan and say, look, here's a loan. We have, do you want to fund this? So they take this loan, it's a 500 K transaction. They present it to that particular investor and they get a yes or no answer. And it's funded that way. RCN can help in those scenarios where you run out of capital and then you can come and jump on our platform. If you happen to be in one of those positions, any of the listeners out there. And then as the industry grew, you know, you have yields here that are pretty juicy compared to traditional. You look right now. Uh, if I pulled it up, I know from looking recently, uh, the 10 year note is what around 0.7%. So you're lining the government money for 10 years, for .7% annualized. A lot of institutions are, you know, they have to do that, but if you can lend as an institution into the private lending sector for loans that are collateralized by real estate and get five, I don't know, I'm just throwing these numbers out there. A lot of pricing is bounced around, I don't know, five, 6% versus less than one on government notes, government bonds. Then that's certainly a decision that you might want to take a look at. So a lot of that, I think yield differential investor demands for yield, the thirst for yield. You've had interest rates just being destroyed down to nothing. You have negative interest rates in some parts of the world. A lot of folks speculate, you know, rates could even be driven negative here in the United States. So pension funds, you know, other people that manage money institutions, there's no yield. It's very difficult to get yield secured and then incomes private lending, where you have these loans that are backed by hard assets. And as the ecosystem grows, becomes more mature. You have more underwriting standards, you have more eyes looking at it. You have more ability theoretically to, uh, make better loans, uh, minimize the faults and kind of feed the whole beast, if you will. Institutions look and they say, Hey, that's pretty juicy yield. I wouldn't mind getting some of that. And then you have that type of money coming in institutional level. So say, you know, you have funds, people put funds together, you have private investors to do one off transactions and then institutional capital.   Michael: Super great description.   Tom: That's a great overview. I'd love to learn a little bit more about the different types of customers and the different flavors of customers that use private capital. So there's individual investors, perhaps there's syndications, I'd love just to learn a little bit more of the different kinds of avatars or profiles of people that use private capital.   David: Right, yeah. So back to our discussion on experience. So when RCN creates products and underwriting standards, generally speaking, that experience factor is huge. So we do lend to people that have no experience. In many cases, those are, you know, kind of a mom and pop, maybe, you know, an individual that's looking to get involved with their first flip transaction. And that person might be someone that could come from a variety of backgrounds. It may be somebody that was working with someone else on these transactions actually executing the labor, the work, you know, watching a project, go from A to Z with their own eyes, and then deciding that they want to dive in on their own. Maybe it's a husband and wife, couple that are, you know, have a little side hustle going on. So you've got that. You certainly have the mom and pops. Then you have the call it a small business. If you will, maybe that tends to have multiple projects going on at one time, they may have their own crew in terms of contractors and a more sophisticated setup in terms of having a, you know, a playbook on exactly how to execute a transaction and already having the resources lined up or even on their own staff, you have that. And then you have even bigger organizations that are doing this in big numbers. You know, maybe they may have 20, 30, 40 transactions going on at any given time. They may, you know, they talk in terms of flips. In many cases, they may flip a couple of hundred houses in a given year. You have that as well. We're also seeing, you know, more activity and more interest in the multifamily space. So multifamily five-plus units, you know, these are small balance apartments. Generally. I know in Boston and other areas on the East, you see these spread throughout the communities, a building that may have eight, 10, 12, 16 units. You know, there's estimates, there's about 10 million of these out there in the country. And those are starting to get more activity as well. And for those, you know, that's probably a project that's going to require more than just a couple of guys working together on a side gig and some more sophistication. So you see a variety of different flavors out there. You see people that have made this, their, their living. This is how they make a living. This is their job. This is their career. This is everything. So we've seen different variations.   Tom: Awesome David, I think people hear private capital or private money tossed around a lot, like we were saying before, and you've given us such a great overview and background of kind of the institutional side of things, if you will, but from a private lending perspective, if I'm looking for money and I happen to know someone that has some extra, could I just go ask them to lend it to me and I think work out some kind of agreement with them, or do I have to go through maybe the more traditional channels of private money?   David: Yeah. I mean, we have actually specific to my role. We have investors lenders, if you will, that were doing exactly that. Or maybe they may even still do that, where they are providing kind of one off direct transactions between themselves and an individual investor out there looking to flip a house or what have you. So to your question, can you do that? I mean, there's nothing that I could say that's could literally stop somebody from doing that. There may be other things to take into consideration in terms of making sure everything is within compliance. I mean, the compliance is certainly looser on the private lending side than it is on traditional, but you want to make sure that you're working with, you know, it may be worth considering to take a look at working with an established organization or entity. That's been doing this to ensure that all documentation is done correctly, to ensure that all procedures are done. They'd probably be, it's in their vested interest to help you, help you to look at the project and make sure it makes sense. And there's ROI available there for you to capture, obviously to be able to pay back, pay them back and make the monthly payments. So I, yes, you can still, you know, there's nothing stopping someone from, I suppose, from approaching an individual saying, Hey, do you think you could give me X amount of flip this house? And that's kind of how it all got going, you know, looking at, you know, maintain a certain leverage level minimum or no doc, you know, obviously securing with a lien, putting that money out, collecting interest, only getting it paid off and then getting the balance back, you know, your principal balance back. So there's nothing per se stopping you. I think there's other things to consider in terms of, you know, working with an established entity that, you know, has a strong reputation has done this before, and they may have a lot more options. You know, you're kind of guy on the corner of the street, if you will, may have certain options that might fit certain people, but you go to a lender such as RCN Capital, and there may be more choices there for you that might be a better fit to your situation after you take a complete and thorough look.   Michael: Okay, great.   Tom: That's awesome. I think we're, we're getting close to covering all the questions we have. I guess another question, practical question is geographic footprint. So do you guys have any limitations on where you originate loans?   David: Yeah, that's an excellent question. Anyone that's curious, it's a better description than here in me, you know, yap about it would be to go to rcncapital.com and see if I can get some traffic to our website. Here are capital.com and scroll down to the bottom. You'll see the map and that will show, but yeah, we can originate and close loans in the entire country everywhere except for a few States, Alaska, Oregon, Nevada, the Dakotas, Minnesota, Vermont. So the bulk of where the business is and where the volume is not nothing against those other locations where we're not currently able to do that. We have that covered. So any investor that is looking to do whether it's activity locally, or perhaps even dabble in other areas, you know, another benefit of an established entity such as RCN capital is the fact that we have that footprint nationally already. So we're already established in those areas. If you have something in Tennessee, great, but you may also have something in Oklahoma, we can do both of them. So we've got a pretty well covered.   Tom: My last question has to do with a product that I'm not that familiar with, but very interested. I'm just not sure I'm interested. If you guys carry it like a revolving credit where you can add properties in and out of a facility, do you guys offer any type of products like that? And this is a self serving question. Just something that I've heard about and just interested in learning more about,   David: Yeah. I mean, what I can say on that and thank you for that. It is a great question for investors with a certain level of experience, you know, a strong level of experience. If they get connected to RCN Capital and a loan officer, they can certainly take a look at pursuing what we would call a line of line of credit in the precise definition of that is probably not the best description, but we, it comes up a lot in the, in that, in those terms. And people use that to describe it. It's not exactly what it is, but we could potentially consider and look at that for someone with a certain amount of experience in the sector and has that documented and demonstrated. And what that could look at like is just use a million bucks to keep it simple. Perhaps someone being granted exposure of a million dollars every 12 month period, every annual designated period at certain terms. And in that case, they're, you know, why would it benefit them? Why would they care about that? It could be improvements in terms of speed and efficiency. If the borrower's already underwritten, ie. the entity, you know, on these short term loans in particular can only lend to a legal entity. So if that entity and the owners of it are already underwritten, then that's all locked and loaded. And now you're presenting each asset as you identify it and decide to move on it into the mix from an underwriting standpoint. So you still have to follow procedure, you know, appraisals and whatnot, but you've got some of the things out of the way to expedite the process and make it more efficient and make it a cleaner experience for your high volume, high experience clients. And that also would take into account. You may be able to add more fuel to the more logs on the fire in terms of supporting your own case, by adding in, like, if you have other things that contribute to your liquid net worth, you could provide that to perhaps support your case. If you're trying to obtain a certain amount of exposure that you're granted annually, you could look at doing things like that on.   Michael: Tom you gotta get on that.   Tom: I know. Yeah, definitely.   David: It sounds like, Tom was thinking about that one,   Tom: For sure. Yeah. Okay Michael, do you have any other questions?   Michael: I think that's it for me that this has been awesome.   Tom: David, this is great. Yeah. So we're going to end this David with a couple of what we call quick fire questions, and these are just general investing philosophy. It's great having smart guests, such as yourself, come on the show and just love your thoughts on this either or type of question. So are you ready to do it?   David: I'm ready unless you got a bunch of trick ones in there. Tom: All straight forward ones. All right. So consolidation or diversification. David: You want me to give a quick answer? Speaker 4: All quick answers, all quick answers. Yes. You can say both. I'll always... Speaker 1: I'll say both, I always tend to, when I, if I may, when I identify a trend, I tend to favor something. If it depended on my belief in it, I tend to consolidate, I'll give you an example, crypto. I can consolidate Bitcoin. I don't need to mess around with the others, but in other scenarios, I might favor diversification. Tom I think a good way to say that is either shallow and wide or deep and narrow. David: Yeah.   Tom: Deep and narrow, I like it. High property taxes or high income taxes?   David: Neither   Michael: That's the best answer we've had yet. Tom: High rent growth or low vacancy?   David: Probably say low vacancy. On that type of thing, I like to play it more safe.   Tom: Yup. Yup. Cashflow or appreciation?   David: I'm going to say cashflow. Cause I look at real estate as the primary benefit to me is a hedge against the inevitable destruction of your purchasing power over time. So I feel like that will happen when a hired asset, if it's chosen properly. So I'll go for the cashflow. If you pinned the two against each other.   Tom: Debt or equity?   David:   From the standpoint of real estate, debt.   Tom: Love it. Single family or multifamily? David: Tough to go against SFR right now.   Tom: I like it. Alright. Last couple of questions. Turn key or massive project?   David: How cheap did you get it? Being realistic, turnkey. You know, assessing my own situation.   Tom: Yeah. Midnight oil or early bird worm?   David: Early bird worm   Tom: Text message or email?   David: Neither. No, I'm kidding. I'm either, probably either.   Tom: Alright. And the last one kind of an off the wall, olive oil or butter?   David: Well, I do like that butter that is allegedly made with olive oil. Tried that on a steak and that worked out pretty well, but..   Tom: I know what you're talking about.   David: Yeah. It's olive oil or butter with olive oil. I'm not sure what brand it was, but I tend to use olive oil fairly consistently. So I have to be true to myself and to you and this excellent show we're on.   Tom: Awesome. Well, well, that's it. You made it through the quickfire questions. Want to give you a chance to yeah. Where can people find you get a hold of you and get ahold of RCN?   David: Folks can find the company at rcncapital.com, blue and white colors there. If you're Googling around looking for it, usually you'll find it. You can link up to myself. You could certainly shoot me an email if you'd like a first initial, last name dyoung@rcncapital.com. You can hunt me down on LinkedIn as well. Love to make connections with folks and expand the network and learn from people. So those are probably the best ways to get ahold of me and the company.   Tom: Awesome. David. Well, thank you so much for coming on.   Michael: David. Thanks so much. This was great.   David: Thanks guys. Really appreciate you having me and I'd love to do it again. Appreciate it. Thanks.   Speaker 1: Thanks again to David Young for answering our questions. Today's episode was brought to you by Roofstock Academy and we're running a special promotion right now. For a limited time you can receive a $100 discount with the promo code JULY4. With Roofstock Academy we have all these benefits: coaching, on demand lectures, the tools, the SFR paybook, on and on, but the Roofstock Marketplace credits just got that much sweeter. So initially it was a $750 credit when you buy, now it is a $2500 credit. So you buy Roofstock Academy and for your next 5 transactions you will $500 back at the close of your transaction. Happy Investing!       

In this Episode Emil, Michael and Tom discuss the pros and cons of the HELOC, cash-out-refi, 1031 exchange and buy and sell strategies. --- Transcript:   Emil: Hey everyone. Welcome back to another episode of The Remote Real Estate Investor. My name is Emil Shour, and today I am joined by my lovely co-hosts Michael Albaum and Tom Schneider. And today we're going to be talking about how you can use trapped equity to actually help you scale your portfolio. So let's dive into this one.   Tom: Before we get into it, I want to give you a heads up on a promotion that we're running right now. So with Roofstock Academy, we have always benefits coaching on demand lectures, the tools, our SFR playbook, on and on, but the Roofstock marketplace credit's just got that much sweeter. So initially it was a $750 credit when you buy now it's a $2,500 credit. So you buy Roofstock Academy and for your next five transactions with no time limit, you're going to get $500 back at the close of your transaction.   Michael: That's right, Tom. Thanks so much for sharing. And for all of our listeners, we're actually giving out a hundred dollar off coupon for an enrollment into the Rootstock Academy. So go ahead and use JULY4 at checkout and that's JULY and the number 4, at check out for a hundred dollars off every sock Academy enrollment. And that coupon code is good through July 4th of 2020.   Tom: Take advantage of today. Happy investing. Awesome.   Emil: Thanks Tom. All right, guys. So we're going to be talking about how to tap into trap equity to help you scale your portfolio before we get into the different ways. Why do you guys even think this is an important topic for investors to know about?   Tom: This is gasoline to growing your portfolio? You know, buying a rental property is expensive, right? You know, it's not as expensive of buying an apartment complex, but once you start appreciating, having these properties appreciate and building equity, to being able to flip that appreciation into new rentals, honestly like that's really like a catalyst for growing your portfolio so much faster than needing to, you know, come up with all the new cash all at once.   Michael: Totally, totally agree, Tom, just to echo and piggyback off that if you're taking a hundred dollars a month cashflow, just for sake of discussion from a property that's 1200 bucks a year, that's several years of saving that cash flow before you're ready for your next down payment.So being able to tap into the appreciation side of things, which tends to grow a lot faster and appreciating markets than the cashflow does, can be a really great way to just leverage into additional rentals. Just like Tom said. So hopefully I added some value there and didn't just say the same thing in different words, but I totally agree.   Emil: It's funny because we're all I think in the same boat of we're all cashflow investors and we don't want to bank on appreciation, but when it does happen, there's all these benefits you can take advantage of to help you grow, right? Like most people probably think, Oh, I have to keep saving from my W2 or whatever you're doing to save up for properties. But there's actually a lot of different ways you can come up with the funds to keep acquiring new rental properties.   Michael: Absolutely. It can come from a number of different buckets.   Emil: Yep.   Tom: Something that's, similar to us three is where we're not necessarily need to use the returns we're making on our investment properties right now where I think we both think of it, of the cashflow reinvest that dividends into new properties, as well as the appreciation reinvest that appreciation is new properties. And today's episode is just about that ladder of return and how to actually actualize that to investing in new properties with the appreciation.   Emil: Yep. All right. So now let's get into the specifics of how you can actually tap into that trapped equity. And we're going to be highlighting four different strategies. You can use first one being HELOC or home equity line of credit. Second one is a cash out refinance. Third is a 10 31 exchange and the last one is selling a property and using those funds to buy a new property.   Michael: Yeah, absolutely Emil. So, a HELOC, like you said, as a home equity line of credit and it's something that I'm super excited about. It's something I've used a lot. It's a very, very powerful tool in the real estate arena. So basically what it is is it's a line of credit. Think of it like a credit card that gets established on the equity in your home. So if you've got a primary mortgage, call it a hundred thousand dollars and you've got a hundred thousand dollars of equity in the property, a lender might give you 80% or 70% of the equity in a line of credit, which means they might give you a 70,000 or an $80,000 line of credit. And what it is, it's basically just like I said, a credit card. And so you actually get a check book in the mail and if you need access to that $70,000, you can write yourself a check and you'll have $70,000 as soon as that check, clears your bank. So this can be really great. That can be used as a down payment that can be used to go buy a new car that can be used for home improvements. I definitely wouldn't recommend the car thing because that's a depreciating asset. It doesn't give you any kind of return on your money, but it's just a really, really, really flexible way to have access to quick cash. And then really nice thing about a HELOC is that you're only paying on the balance if it's outstanding. So let's say I set up this HELOC for $70,000 day one. I don't use any, I just have the line sitting there. There's a closing cost associated with setting that lineup, but it's usually pretty minimal, but so now I have access to that $70,000 and I can use it in any increment that I'd like. So let's say next week I want to buy a property. And $20,000 is my down payment. I'll write myself a self, a check for 20 grand close on that new property. Now I'm off to the races. And now let's say a month from now, I get a bonus for $20,000 at my job. And I decide that I want to pay back that line of credit. I can make a $20,000 payment back to the line of credit. And now my outstanding balance is zero, which means I have no monthly payments on that line of credit. The other nice thing about HELOCs is that they're typically interest only payments. So on that $20,000 example, I just gave that I had outstanding. I'd be making interest only payments, which as we all know are going to be significantly smaller than a fully amortized principle and interest payments, some important things to note about HELOCs and their interest only payments, typically they are going to be variable interest rates, which means they're going to fluctuate from month to month. So if I have a 5% interest rate this month, I might be at five and a half or six or 7% month next month. So we just need to be aware of that. But again, if we look at the math and just go back to our $20,000 example, the difference between a 5% interest rate and a 7% interest rate in terms of interest, only payments on a monthly basis is pretty negligible. So I, you know, when I first started using a HELOC and I'll get into it at the end, I thought, wow, the interest rate is 6%. That's crazy. I can go borrow money at 4%. Why would anyone use this, this HELOC thing at 6%? But again, as it comes back to the interest only payment, it's a so much, it's often a much more affordable and digestible payment amount to be allowing you to do things with that money that you might not ordinarily be able to do. So that was a super long winded answer. I know Tom thoughts, feedbacks opinion, additions?   Tom : Love a HELOC. It's like basically a bazooka in your back pocket. Like if you need to like a bunch of cash real quick, like let's say a great deal comes up and you're like cash of like actual, you know, liquid position is low. If you have an open HELOC, you can quickly tap into that and use it. Like for opportunistically, the rates that are available now are pretty incredible. I have one through right now from third federal. Yep. That's the name of it? And it is like hovering like mid two per two point somewhere in the middle. Holy smokes. I'm looking at my app right now and it's unreal and it's, you know, I jumped into it without knowing a little bit about it, but kind of just Guinea pig my way through and setting the line of credit up on my personal residence. And it's as wonderful as it sounds, but just having this huge cash, I'm using the capital right now, doing some improvements to the house that I live at, but what's, what's great is there is no HELOC police. You can use the funds to on whatever you want to use it on. You can use it for buying rental property. You can use it for buying a car. As Michael said, I think you said it was a good investment to get a car. Anyways. I don't remember.   Michael: Yeah a Lamborghini is the best.   Tom: Yeah, HELOC really powerful way to dip into your appreciation that you have. Something that I'm thinking about on the risk side is I don't, who knows what's going to happen with rates? I think into 2021, it could potentially go either way, but I don't want to leave. Myself on the hook for if there is a spike up, just because like Michael said, they are variable rates. I don't want to leave too big of a balance that I can't get out of, but it's a really great resource to have. If you're able to set one up.   Michael: Such a great point, talking about risk Tom. One thing that's really important to note is that a locked is actually a second position mortgage. And so if you've got an outstanding balance that you don't pay on your house or the property that the HELOC is established on could be foreclosed on via that he locked. Even if your primary mortgage or your first mortgage is up to date. So it's gotta be treated with respect. It's it's still a mortgage. It has all the ramifications of a mortgage. So just be aware of that, but they are such, such a flexible tool.   Emil: Nice job guys. You guys covered this one. Well, I have a couple questions for you as someone who's never done a HELOC, never used a HELOC, Michael, you mentioned there's some closing costs. How do those compare to a cash out refinance or just, you know, when you're regular, when you're getting financing, those closing costs, how do they compare to that?   Michael: Super, super minimal? I think I set up my line for like 500 bucks. It was the cost of the appraisal. And then like some miscellaneous minor fees. It was super, super cheap.   Tom: That's right. And on the appraisal, they didn't even send someone out to appraise the property.   Michael: Someone did a desktop appraisal.   Tom: I think they may have even waive that fee on that  one, the one that I did, but yeah, it's marginal costs.   Emil: Okay. I was going to ask you guys about appraisals as well. How do they do that? Do they send somebody out? Do they do desktop?   Michael: So depending on the size of the property, they might send somebody out. But yeah, for mine, it was just as on a single family home.   Emil: Got it.   Tom: Another piece about HELOCs is, as Michael said, you know, it's a delta between the value of the home and the, your first mortgage, different companies. That issue HELOCs may have a different percentage that they go up to, to the value. So the one that I'm in right now, it's the balance of my mortgage, excuse me, 80% of the value of my home that the appraiser comes up with minus the balance of my mortgage. So the point that I'm making is for this particular lender, it's 80%, but I've seen HELOC companies, I believe the San Francisco Fireman's credit union or something, they go up to 90%. Don't quote me on that. But there are some HELOCs that go up to 90% of the value of the home, which, you know, if you're trying to build a, a big arsenal of having HELOC funds, going up to 90% of the value is pretty, pretty incredible. But this was a while ago when I looked at this. So I'm not sure if it's still available, but the point is it's not a one size fits all. Just like mortgages are not one size fits all.   Emil: Nice, good job guys. Well covered. Alright. So any, anything else before we move on to cash out, refinance?   Tom: Might as well do it, go get a HELOC   Michael: Yeah, I was gonna say one last point is it's one of those things that there is very little consequence to doing it and not using it. So I would so much rather have it and not need it than need it and not have it. And so for the $500 expense, I mean, these typically have a five to 10 year drought period. So they'll reevaluate in five or 10 years. If they still want to grant you this line, if you don't use it for five years, okay. Not a big deal. It cost you 500 bucks, but if you do use it, you are going to be so, so, so thankful. I promise you that you establish your future self will thank your past self for having set this up on a property, especially when values seem to be quite high at this moment in time, kind of throughout the markets.   Tom: I'll come in with one last question. Michael, do you have. On your rental property? Cause I know a lot of lenders don't like doing HELOCs on rental properties,   Tom: Like I have it on my personal house. What I'd love to, for you to riff on that real quick.   Michael: Yeah. I've got it on a rental property that I own free and clear. So it was much easier to do because most lenders don't like to come in and a second position lien. Uh, so if you have a free and clear property, you have a primary with some equity in it. Those can both be really great candidates for, although I was talking with a student within the Academy and they were saying that they found a headlock provider that would come in and second position behind a mortgage company on an investment property. So those, you know, everything exists under the sun. So you've just got to go out and find it.   Emil: I don't know if you guys answered this or mentioned it, what's the period on a HELOC usually when is that payment due? Is it five years, 10 years down the road.   Michael: So typically it's it's between five and 10 years, depending on what the HELOC stipulates, but it's, again, it's an interest only payment. And so if you're paying it back slowly over 10 years, and then you still have a balance, usually it'll just convert to a standard mortgage at that point, whatever interest rate is, and that all be stipulated by the lender specifically.   Emil: Got it. Okay. Thanks for clarifying. All right. Let's move on to the cash out refinance now. So basically a cash out refinance replaces your current home loan with a new mortgage that's higher than your outstanding loan balance. And what you're doing is that difference. You're pulling that back out as cash. And what's awesome about this. Just like the HELOC is that this is money you're getting and it's not taxed your, your home appreciates. You're redoing the loan and taking out that difference. And it's untaxed, which is really, really nice as an investor.   Michael: Can you give us some like math, some, some number of breakdowns in meal about what that might look like for an investor?   Emil: Yeah. So let's say you let's make it simple. You purchase a property at a hundred thousand dollars and you put 20% down. So you have a outstanding loan of 80,000, your home appreciates to 150,000. So your equity has gone up 50K. So now you basically redo the loan at an 80%. Some lenders only can go up to 75% loan to value. So you're making, what is that? What does that difference? The 50 K times 75%, Michael's doing the math 112. Okay. So your original loan was 80 and now your new loan is for 112. So the difference is $32,000. So minus some closing costs, let's call it 3000 bucks. You're able to pull out around $29,000 in your cash out refinance. And now your new mortgage is for 112,000 instead of that original 80,000. So some of the things to be conscious of here, you might, let's say you, your home appreciates like the example we just gave. And before you had a cash flowing property, you may, you want to be careful to not over leverage yourself. So now you have a property that's not cash flowing. Maybe you were making a hundred, $150 of cashflow a month before with very conservative estimates. Now your new loan you're basically breaking even each month or maybe even paying into the property. So that's when I think of some of the cons with a cash out refinance, I think some people may over leverage themselves to get that extra cash, create, turn a cash flowing property into one that's negative cash flow.   Tom: An alligator   Emil: An alligator as our friend Michael Zuber a likes to call it.   Michael: So I've, I've got an opinion on this. And so I always say, especially within the Academy with a lot of people I coach consult with that, we have to look at cash out refi is as really a two step process. Step one is getting the cash. And step two is what are you doing with that cash? Because if we can go then buy a second property that will yield us $250 in cashflow a month, as opposed to are just single at one 50, as long as our cumulative sum is greater than its parts. I think that's a good move. Even if I have to have a negative cash flowing property in order to obtain a better one, I'm willing to do that. Tom, what do you think? Whose side are you on?   Tom: It really depends on what your situation is. If you are not needing the cash flow. Now, you know the scale I would advise if you build your portfolio, there's a lot of value in that. As long as you're cognizant of your LTV as a whole, cause you know, with doing a cash out refi, your loan to value is going to go up. So being conservative with that, but if you have the opportunity to scale your portfolio and you don't need the cashflow now, I think you're going to have two lines in the pond with multiple properties of doing that cash out refi and buying another unit with that would be what I would recommend. Does that answer it?   Michael: Yeah, totally. You're on team Michael. That's awesome. Team michael for the win.   Emil: You guys are being silly, don't have negative cash flow on properties. Come on, rule number 1.   Michael: But if your cumulative cashflow is now greater than your single positive cashflow, does that carry any water for you?   Emil: Okay. In our example, what do we pull out? Like 30 K you'd have to use that 30 K as a new down-payment.   Michael: Correct.   Emil: Let's say your, your old property was cashflowing a hundred bucks and now it's at zero. So your 30 K would have to go find a new property. That's going to cashflow. I mean, yeah, at least a hundred bucks, 150 to make it worth it.   Michael: I would argue that it would need, yeah, we need to need to cash flow significantly more than what you were previously making because you could have done nothing and ended up with the same cashflow. So I need, in my opinion, should cash out at least 200. Yeah.   Emil: I mean, it sounds good on paper. Is that possible? Can you take that and go steamroll into more cashflow?   Michael: Watch me, challenge accepted. No, I have, of course I think the numbers have to work and we're, we're just using examples numbers for the sake of discussion to illustrate a point. But I guess the point that that I would take is that if I'm comfortable and again, like Tom said, it's a very personal decision and you've got to evaluate everyone at their own specific point in life and what their, what their properties look like and what their business looks like. But I'm comfortable killing the cashflow on property a to have a increased cashflow on property B that is cumulatively greater than just a alone.   Emil: Yeah. You're more of a risk taker than me. I'm a little more conservative, but to each their own.   Michael: To each his own!   Emil: All right. Cool. Anything else on cash out refinance we should cover. When do you guys think the cash out refinance is better than the HELOC and vice versa?   Tom: Well, the nice thing about the cash out refinance is if rates, as they are now are at a very low number. When you do a cash out refinance, you're going to lock that rate in for 30 years or, or whatever the terms are versus the HELOC. You know, you're still on the rollercoaster on where rates are going. So for me right now, just basically cash out refi the majority of my portfolio to tap into these super low rates that we have. So thinking longterm, looking at the rate.   Michael: I totally agree. I think it all comes back down to what your plan or what the individual's plan is for that cash. If they know that they're going to be buying something in the next three to six months, you know, cash out refi could be a great way to go if they don't know what they're going to do with the cash, but they know that they want cash, HELOC can be a great way to go because you're not paying on that cash to just sit in your bank account, like you are with it with a cash out refi. So, and there's nothing to say that you can't do a hybrid approach, take a little bit of cash out and also set up a HELOC for that remaining equity balance. That can be a really, really great way to go and a really powerful tool. It's something else that just keep in mind is that your rate is going to change from your original mortgage when you do a cash out refi. So you're basically wiping that first mortgage clean and getting a brand new, totally new mortgage. So whatever the rates in terms are of that new one, that's what you've got to come to terms with. And then the last thing to think about is I've heard this said from a number of different people, is that if you're a, towards the end of your mortgage, when go do a refinance that resets the clock back to year one on a 30 year payback for a single family home conventional mortgage. So if you're at the end of your mortgage cycle, you're paying this significant balance towards the principal. You are just gobbling away at that principal balance, which is really, really nice. Versus if you resetting the clock. Now we're paying the vast majority of that payment is going to the interest. So the balance is going to be decreasing at a slower rate than if we're towards the end of our, of the life of our mortgage. So again, just something to consider, to keep in mind, to be cognizant of, as you're looking at considering doing our cash out refi,   Tom: Great point. Hybrid, and it's not a one size fits all you can, if you could use both, have both guns and missiles.But that example, I would say that the HELOC would be the gun and the cashout refi would be the missile, like the kind of a bigger, you know, locked in.   Michael: I thought that HELOC was the bazooka man. Now you're changing it up   Emil: So destructive today Tom.   Michael: Someone played command and conquer as a kid.   Tom: Too much coffee.   Emil: Man, you guys are making my job easy. Like I don't have anything to add on top of like your final notes. Cool. Let's let's move on to the next one, 1031 exchange. Tom, you want to take the lead on this one?   Tom: Yeah. So we'll hit this one pretty quickly. We had an episode earlier episode, I think four or five somewhere in there. Anyway. So at 1031 exchange is deferral. So it is selling a property, not paying any taxes on the proceeds from that sale and rolling all of those proceeds into buying a new property. So with a 1031, there are some rules that you need to adhere to. And a high level example of those rules is you need to identify properties within a specific period. There is rules around the value that you're selling to what you can buy. And we recommend talking to a 10 31 professional company to understand those rules, but the big shtick for a 10 31 exchange is you're selling your property. You're making a bunch of money and you're not paying any taxes on those. You're deferring those now eventually when you do sell and do not use the proceeds to buy another property, which we'll talk about.   Michael: The thing that you're getting at Tom, is that you can continue rolling that deferment via 1031 exchanging every property that you then buy and then subsequently sell. So if you sell property via 10 31 exchange to buy property B, when you're ready to sell property, be 10 31, exchange that into property C and so on and so forth, such that you're deferring, deferring, deferring your capital gains tax until the point at which you might not be around anymore. And then whoever you leave that building to gets a step up in basis. And that basically wipes away the capital gains tax that they would have to pay. So, yeah, echoing what you said, go talk to a 1031 professional before attempting this go to the episode that we did on 1031 exchanges, it's really, really informative, but it's a really, really great way to sell properties and not have to worry about paying the capital gains tax.   Emil: Yeah. And I looked it up. It was episode 15 was a 1031 episode.   Tom: Awesome, reasons that you would want to do a 10 31 is perhaps you're moving your portfolio, moving geographies. Perhaps you're changing to more of an appreciation asset to more of a cash flowing assets. Perhaps you want to take one property and use the proceeds to buy multiple properties or the other way around. There's so many different use cases for doing a 1031 exchange and the mechanics of it, of deferring the tax payment are available for all of them.   Emil: Yeah.   Michael: So what would be a con, why wouldn't you want to do it today?   Tom: You wouldn't want to do a 1031. I mean, you're, you're selling the property. So if it's an asset that you like, like, you know, you are changing assets, you know what other ones cons are?   Emil: Oh, the, the timeline you have, right? So sometimes I think it's like a 45 day or 60 day timeline to identify the next property that you're going to re 1031 into. And so sometimes I think you could feel like it's forcing your hand into maybe a so so deal versus something where you wait, you know, maybe you pay the capital gains on it, but you finding a better property cause you, you're not restricted to this short time window.   Michael: Mhm   Tom: Other con I would put is versus those initial two with the HELOC and the cash out refinance, you have a very good idea on how much money you're going to have available from that maneuver. But with a 1031 exchange, you're selling the property. So there are just a lot more variables on what you're going to get when you for when you sell the property versus like knowing what the, what the rates are and whatnot with a, with a HELOC and a cash out refi.   Michael: Yep. And one additional point to add on top of that time, I always seem to be picking piggybacking off you cause you've got such great points. Is your back tired yet from carrying me?   Tom: I'll call you Jansport. Go ahead   Michael: Is, you know, in the first that we talked about, we're tapping into the equity and now have a usable cash. In addition to still controlling the asset. When we go to sell as with the 10 31 and selling a property straight up as we're going to talk on in a minute, we now no longer own the asset. And in the example of a 1031, we don't have the cash because we need to use all of that cash to buy a new property. Now, of course, if we don't use all the cash, that's called boot and that can be taxed at capital gains rate, whatever. But if the idea is to pay as little capital gains possible, we want to be using all of that gain into a new property. There's going to be nothing left over for us and usable cash.   Emil: Talk about boot a little bit. You mentioned it briefly. Michael, do you know that? I think it's the boot is, let's say you sold your property at 200,000. You go and find another property for 150 K you still have $50,000 that isn't used in the 1031 exchange. And so if you don't use that within your 1031 timeline, you're still taxed on that $50,000 capital gain or whatever.   Michael: Exactly whatever that Delta is, whatever is not used up is leftover and that's called boot,   Tom: Yeah. And that's a con example, you know, you're, you're fitting a little bit more of a piece of a puzzle and you can't fit it just right. You're going to have some taxes. Sorry Emil, go ahead.   Emil: All right. Michael, do you want to close us out on selling a property straight up without a 1031 exchange?   Michael: Yeah. So last and final way to tap into the trapped equity is just sell a property straight up. So instead of doing a HELOC or a cash out refi or temporary one, just sell the property. If you bought it for a hundred, now you can sell it for 120, sell it for 120. You'll walk away with 20 K and you'll have to pay uncle Sam, the capital gains on that. And depending on what your personal financial situation looks like, that's going to dictate what that game might look like. So if we call it a cool and easy 25%, you'll walk away with 15 grand in your pocket, not a bad payday at the end of the day. So I think a lot of people get hung up in, Oh, I've got to do 10 31. So I've got to do cash. Every fire, I've got to do a HELOC. If you just need the cash quick and you just want to be done with the property, for whatever reason, you just want the cash, you don't want to have to worry about it. Just sell the property. It can be a really, really great option. And again, depending on your personal financial situation, that's going to dictate how much tax you may or may not have to pay on that gain. So Emil, do you have any pros cons to this type of thing? Okay.   Emil: Yeah. So I have a personal example of this recently. So I bought a property about two years ago and recently decided to sell it, ended up selling it for the same price I bought it for, for me. So I didn't have to worry about a 1031. I didn't have any capital gains to worry about. I basically ended up a little bit below break even. I lost $1,200 you factor in cashflow and selling and all that stuff. But for me, I wanted, I wanted this down payment back, right. I put 25% down on this property. I wanted my down payment back to be able to go use it on something better that that property was okay. Cashflow property, but I'm pursuing a little bit different of a strategy right now. And there's, again, there's all these different ways you can tap into money. This, this property hadn't appreciated. So cash out refi hayloft weren't really options for me, but I wanted to get a nice chunk of cash right now. And so I just decided to sell this property at basically no gain. So this is something I used recently.   Michael: So that's a massive pro. Okay.   Emil: Right, exactly.   Tom: I like that example because you know, you got you, you dipped your toe and you know, maybe it wasn't like the property you wanted, but I think that the takeaway that I hear from it is, you know, when you do these maneuvers and nothing is locked in stone and you know, these are all, some excellent tools that you have in your back when you are investing in real estate. And there is some appreciation, some extra equity, but ultimately, you know, doing, you have a lot more options within this type of investment and to have these options available, you got to get in, you know? Yeah,   Michael: Absolutely. And Emil is something too that I don't think we touched on yet is, is the tax advantages that you've had for the last two years as a result of owning that property. So if we looked at the total total, total return factoring in loan, pay down appreciation, tax benefits, all this kind of thing, my guess is you're, you're gonna end, you're still gonna end up in net positive. So even though you didn't see any true dollars gained in your pocket, if we turn the clock back and look, two years in reverse, you probably did better on this than you would have had otherwise.   Emil: Right. And, and to echo Tom's point, it's a learning experience. I didn't lose that much. Right? Like obviously there's an opportunity cost of that money making money over the last two years versus losing. But I think that's part of it, right? I think a lot of real estate investors only talk about the big wins and sometimes it's not always rosy, there are some things that happen that were isn't what you expected. But the important thing is you learn something from each, each maneuver each step   Michael: Nicely said, Tom, do you have any good examples of any instances where you've maybe used one or multiple of these strategies to grab some tap equity, some trapped equity?   Tom: Yep. So HELOC on my personal house, have that line of credit, uh, did a cash out refinance. It was two years ago on some properties and actually going through a couple of them right now getting a lot of dry powder available if using a lot of, yeah. Of a weapon analogies,   Michael: A lot of pirate puns today,   Tom: A lot of pirate puns, dry powder anyway, and then did a 1031, a couple of years ago, getting out of a specific geography or I guess a better way to say it is concentrating into a different market than that current, that property was in. And just like we were talking about earlier in doing these exercises, you get experience and kind of understand them that much better   Michael: Love that.   Emil: How about you, Michael? Any stories you want to call out on using these strategies?   Michael: Yeah, sure. So I bought a property, all cash awhile back and then day one cash out refi, 80% of the sale price, which the lender was gracious enough to give me and then basically took all of that cash and put it into the rehabbing of that property. And now that property is worth a whole lot more. And so I intend to go cash out refi again. Now at the higher value after the rehabs all said and done, everything's leased up. So some important things to think about are the refinance costs that I incurred now twice. Thankfully the lender that I work with, the refinance costs, it's the same lender I use for my, HELOC their refinance costs are pretty minimal. So it's not a big deal as far as the costs are concerned, but it's a really great way recycle that cash and only needing to have that initial chunk of change to buy the property, all cash. Obviously we have to make sure that the rehab costs aren't going to exceed the, the 80% refinance of the initial purchase, but that's a really, really, really great tool that I like to use a really great strategy is buying all cash, turning around, refinancing, getting that cash out and then go, go doing it again somewhere else. So then again, I've already spoken about the HELOC I've used. So using those two things in conjunction has been a really, really great way for me to be able to scale pretty rapidly and take advantage of some killer deals that have popped up on the radar over, over the last couple of years.   Tom: So one more thing I'll add real quick is knowing what your loan to value is. Um, that's just really important with any of these tools. You want to just make sure that you have an appropriate balance between the total mortgages or HELOC value or whatever out on the property versus the value of the property. And I think, you know, at a minimum, you know, 75%, 80% loan devalue, more conservatively, you can get down to 60%. Well, I'd love to hear what you guys think is an appropriate loan to value ratio.   Emil: I'm probably personally pushing it to like the 75 80% cause I'm in growth mode right now. I think later on at some point, just for peace of mind, it's going to switch to, okay, how do I increase my equity on these properties? Maybe sell properties to own certain other properties free and clear, but right now it's kind of just grow. And then I think it will be switching to how do we make this more efficient.   Michael: Yeah, anytime I get this question, I think of that song, push it to the limit, push it to them. Cause I totally echoing Emil. I levered up as much as I could when I was in growth mode. And I've talked about this in other episodes. Now I'm looking to really streamline and become super, super lean, super efficient and reduce my loan to value and just being able to do more with less. I also think that depending on the deal itself, I mean, if the, if the value isn't there, but you've got a high loan because it just, the property isn't super valuable, but it cashflows really well. So your debt service coverage ratio, the amount of income that you're bringing in compared to the debt on the property is, is really powerful. Then I'm more okay with that. You know, if I've got the cashflow to cover the debt, even though it might be a very high debt ratio, I'm, I'm comfortable with that. And so everybody's got to reconcile that for themselves and determine what their risk appetite looks like and how comfortable they are with the values that they're working with. But no, I like him he'll have, have levered up as much as I possibly can. What about you, Tom?   Tom: Yeah. Growth, growth mode. I mean, debt is cheap right now. So keeping it at, you know, 70% I think is a number that I keep in a keep in the back of my head, and not getting, getting beyond that. Cause once you start getting involved that you risk where if there is like a downturn in the, in the market, getting under water where the value of the loan is greater than the cost of the house, I think it's pretty unlikely, but that's how a lot of people got in trouble in that 2008 crisis is the value of the loans greatly exceeded the value of the houses. And that's not a position that you want to get in. So that's why you want to build that buffer. It's kind of, it's similar to the alligator expression, a property that cashflow is negative. The version of that for value is a property that's underwater. So the worst animal in the real estate investing zoo is the underwater alligator.   Emil: Yes. Don't be an underwater alligator finishing strong.   Michael: Yeah.   Emil: I have a question for you guys. Let's say you have a rental property and does go underwater, right? As long as you have a tenant, who's covering rent, your mortgage, all that stuff. Does it matter? Like as you know, real estate goes in, cycles goes up and down. Let's say you temporarily go underwater, but you're still cash flowing. You're still able to pay everything off. Do you guys think that matters?   Tom: It really depends on your situation. Like if you are an ultra growth mode and you are not at risk of not servicing your debt payments, even if you do have a vacancy or something, I think that's fine, but it's pretty situational. So if you have good other sources of income to be able to cover those shortcomings, I think that's fine, but you need to have a, an end game plan as well as some contingencies, if things go sideways, which sometimes they do.   Michael: Yeah. You know, it's a great question Emil one that comes up a lot within the Academy. And it's something that I don't pay a whole lot of attention to as far as the value, because I agree that it doesn't really matter. Nothing about that. Snapshot in time has changed. If you have a rental renter paying the rent, your income has not changed. It's totally independent of the value. So as long as you don't need to do anything with that property, either sell it or refinance it or try to get a heat lock on it. It has no impact on the financial picture. In that snapshot of time, of course it'll affect your net worth and all that kind of a thing. But again, it doesn't affect the property's performance. And it's kind of like a stock. If a stock has gone down in value, we don't automatically say, okay, we now we're going to sell it. It's an unrealized gain or loss until we do something with it. Buy, sell refinance.   Emil: Yeah. Yeah. I think the same thing I think about it a lot, I guess it's just the unknown of will you need to sell for some unknown life events, right? And then it's, you're putting yourself at risk in that way.   Michael: Exactly. Exactly. But that gets into the bigger discussion of having reserves and not, not ever being in that position because you never want to have to fire sale something.   Emil: Sure. Cool. I always think about that one. I was curious to get your guys' thoughts on it too.   Michael: What's your guys's spirit animal and the real estate investing zoo?   Tom: An Eagle. No.   Michael: Why?   Tom: Agile. Peregrine. Falcon. Fastest animal. Next question.   Michael: Yeah, but you're at the zoo. So you've got your wings clipped. Same answer?   Tom: I'd fix them. I'm like a lizard.   Michael: Grow new wigs that are better faster stronger. Emil, what's your real estate spirit animal?   Emil: Oh man. My monkey swinging from property to property. I don't know, man.   Michael: That's a good one. Eating bananas the whole time, right?   Emil: Exactly. Yourself. Michael?   Michael: I'm a duck man. I said it before. I'll say it again. I'm floating. Looking calm on the surface underwater. I'm paddling hardest.   Emil: Well, thank you as always everybody for tuning into this episode, make sure you go and subscribe wherever you listen to podcasts, you get new episodes. And if you enjoy the show, please leave us a review. We want to know what you think and we'll catch you on the next episode. Happy investing.   Michael: Happy investing   Tom: Happy investing  

In this episode, Emil and Tom talk with Leandra Figueroa, the Valuations Manager at Roofstock, about what goes into our valuation reports. --- Transcript:   Emil: Hey everyone. Welcome back to another episode of The Remote Real Estate Investor. My name is Emil Shour, and today I got my co-host Tom Schneider, and we're going to be talking to our valuations manager here at Roofstock. Her name is Leandra Figueroa. We're going to be learning all about what goes into our valuation reports, how Leandra and her team compiled those and what it means for investors. So let's hop in   Emil: Leandra. Thanks for coming on the show. We're excited to have you guided to be here. So like we do before any episode, anytime we have a guest on I go and I scour their LinkedIn, creep on their LinkedIn just to get a background on them. And I noticed that you've been appraising and running valuations for over a decade now, but can you tell our listeners a little bit about yourself and what you do here at Roofstock?   Leandra: So here at Roofstock, I started as a pricing analyst, basically looking at the properties that the sellers are looking to list on Roofstock and looking at the sales comps for that specific property, you know, the same size similar condition, and actually seeing what the property could sell for in our marketplace.   Emil: Nice. And how long have you been at Roofstock   Leandra: Just made three years last month. Thank you.   Tom: 21 years in dog years as a startup,   Leandra: It feels that way.   Emil: So run me through kind of just, you and your team day to day. What are you guys really focusing on?   Leandra: So we have a couple of variations of tasks that come through their valuation tasks. They could be initial pricing tasks. This is where the sellers first engaging with our account managers and kind of just feeling out to see what we feel the price range could be, what they could sell this property for. And then we have another set of tasks where right before a property gets published, you know, the inspection is completed through the certification team, and then we're actually able to give a more accurate opinion of value because we have an inspection report. So that's another step. Those are another bunch of tasks that we do prior to publishing. And then another one that we look at, I guess, similar to the initial pricing is the seller self service. This is where the seller actually requests the valuations themselves and kind of just try to flow through the roof, that process. And so that's another way that we also value the properties that come through.   Tom: That's really interesting. How you talking about this funnel? You're talking about, you know, you do this initial pricing and then you get more information with condition. How big of swings do you see? And I'd love to learn a little bit from an appraiser. Like what is the ways that an appraiser thinks about condition? Because I understand there are categories, right?   Leandra: Correct. Correct. So there's a C1 through C5 and C5 being new construction, never lived in. Though funny enough, some of our sellers, they have a 1960s home and they'll select C1 as the condition.   Tom: But it's beautiful. It's beautiful. Just kidding.   Leandra: What do you mean it's not C1?   Tom: That's literally brand new build, right?   Leandra: Yes. It's absolutely only for new builds and this is in the appraisal world and then C2, maybe more high end rehab renovation. C3 is average, maybe some updates here and there. C4 no updates like normal wear and tear. C5 and C6 is almost like uninhabitable and, and needs major repairs. So yeah,   Tom: How big of a swing do you get in valuation based on condition? You know, if you had to do it like…   Leandra: From our initial pricing?   Tom: Yeah, just kind of a curious question   Leandra: I wouldn't say there's too much of a difference. I think if anything, like I said, some sellers will say, it's the one and then the inspection report comes back and it's more like C3. So we know when sellers say C1, it's just, it's just telling us that they've done some rehab work. And so we kind of try to value it as a C3. And then if it turns out that, you know, after reviewing the inspection report that they did do these high end upgrades, then we're actually going to look for the right comparable and not just stick it at C3. We're going to look for the C2 comps. So it's rare that there's a large variance, I would say maybe five to 7% of the time. It's completely out of range from where we were initially   Tom  (04:47): Trust, but verify, trust, but verify. I got it.   Leandra: Yep.   Emil: Some people who are listening, they're not even sure where, so we publish these valuation reports with each listing that goes on our site. Can you tell the listeners where they can access that with each property?   Leandra: In the analysis tab for each listing, you'll be able to see the valuation report. Initially when you first look at the listing, you'll see the range, you'll see the value range, you'll see the rent range, but clicking on the analysis tab would actually show you the PDF of the report.   Tom: And in that PDF, it's pretty much all the homework, right? You can see the actual comps and the sale date and the square footage.   Leandra: Correct. And if you wanted to see photos of the comparable to kind of just for your own knowledge and how we're comparing it to the subject, you know, just a quick Google search on those comps would be able to show you some photos of the comps we use.   Emil: Got it. Yeah. I was going to ask what's in there besides, I mean, valuation range, obviously you guys pull comps as well. I think neighborhood score is in there. Is there anything else that we add in there?   Leandra: I believe just the subjects data, just your bill bed back, count footage, lot size neighborhood score. I believe school score that's in that as well. And sales comps are going to be in there. Perfect.   Emil: Awesome. Okay. Can you run us through someone who's never done evaluation? Just what does that even look like? Where do you start? What are the processes you go through to get all these comps and come up with the evaluation report?     Leandra: Well, at Roofstock, I mean, the first thing is like, that's verify the data. You know, the seller comes to us with a three bedroom, two bath with 700 square feet and it's like, Ooh, something seems off here. So then we want to look at County records. We want to just see what other data we can find. Funny enough, I have a situation that I ran into this morning where it's a 900 square foot triplex with four bedrooms and three bathrooms. What we found was there was a finished basement that actually has two units. And so what you want to do in those situations, so first verify the data. You want to make sure that we are going to value this properly and you wouldn't be able to use in that situation that I had this morning, priplex comps were all the square footage is above grade. You really want to find one where, you know, there's a main floor and then there's a finished basement with a unit down there. Like that's going to be your best comparable sales. So going back to just the process itself, it's verifying the data before you actually can find what you're looking for, find the right comps, because you want to make sure that you're looking at sales that are recent, especially with market changes. And you want to look at sales that are similar in size, similar in bed bath, count your build location and condition.   Emil: Where are you looking for those comps? Is it Zillow? Is it somewhere else?   Leandra: So we actually have a couple of third party vendors that we use that generate data, sales data, probably from the local MLS or just County record data for prior sales. And so we're taking all that data and actually looking at the ones closest in proximity to the subject. That's really going to define the neighborhood and what that property could sell for. Cause like we know values can differ from one block to another. You see that a lot in Chicago or neighborhoods that are vastly different from blocks of blocks. So we look at third party sources sometimes we'll look at Zillow, but for the most part to sales, we see on Zillow, we've also seen from the data that we pull.   Tom: I think there's this interesting art and science to an appraisal. And you know, you're talking about finding properties that are close in proximity and recent sale. And ideally, you know, you find something that was sold right next door, exact make model. At what point do you put, you know that, Oh, that's too old of a sale that, that shouldn't count in my analysis or, Oh, that's too much square footage. I'd be curious. It's just some general that you, as a longtime appraiser, think about as not valid in comparing.   Leandra: I mean, if the house right next door sold within 12 months, I would still use that as a comp because you have to do this side by side comparison to even see if there was an adjustment in value for that market, for that property. So you have to take more than one comp to figure out what the adjustment is for size, what the adjustment is, if any, for bed bath count and what it is for time, you know, if any, from what the value is today versus where it was last year. So you have to do that analysis with at least three properties. And that's why appraisals tend to have at least three sold comps. So you can really dial it down and figure out what the adjustments are for the different features of the subject.   Tom: Yeah. So that makes sense in that appraisal, it will be much more difficult in areas or more subjective if there isn't a lot of sales. Am I understanding that right?   Leandra: Yeah, that is correct. It's really just based on, and lenders tend to give the most weight to sales comps just because it's kind of like insurance for them. We know we can sell it for this price, should the borrower default or you know, something along those lines. So in areas where there's less sales happening within 12 months, it tends to be difficult. Sometimes we'll have to expand further, go back 18 months and actually apply a time adjustment for those comps that we're using. And even then, it's kind of still just hard to figure out we're having to expand outside the subjects, immediate neighborhood to try to find at least three solid comparables.   Emil: That makes sense. I wrote down a question, I forgot to ask you, as you were going through how we do the evaluations, you mentioned there was a finished basement in that triplex, I'm curious are finished basements included in square footage on a home, or it has to be above ground or whatever you would call it.   Leandra: Correct. On the standard appraisal form. Basements are separated from the above grade square footage. So although this property has two units that are clearly generating income for the owner, that value would be in line on the sales comp grid with the basement and not that above grade level. So it's super important that we find a comp with a similar unit in the basement, which can sometimes be a needle in a haystack, but, but we'll keep expanding and we'll keep doing those time adjustments. If we need to just to find that one, that's really going to help us figure out what this could sell for. So, yeah, you're right. It's not included in the above grade square footage   Tom: Leandra. I know a lot of investors both on the buy and the sell side. They look at Zillow, right? It's super easy. It's kind of tasty, just a single number. What would you have to say to investors who are really banking on that number either as a seller, as a buyer, as that is the truth about what the valuation is on the property?   Leandra: I would say, don't. No, I mean on the surface, it's nice to see, but I wouldn't just stick with one, right? Like look@realtor.com. Look at Redfin, look at Zillow. And more importantly, Zillow has a really nice tool where you can actually dial it down to properties that are more similar in size, kind of how we look for comparable properties when we're valuing our listings, you could do the same thing in Zillow. There's a filter section where you can filter out the small stuff, the big stuff, the stuff different in size. I mean, I'm different in age, different in size and kind of like narrow your search radius to really get a good idea of what your property could be worth. But definitely don't be fixated on that zestimate or that Redfin estimate. Do your own research and do your own comp polls super easy. Zillow has that nifty tool. And I would definitely start there.   Tom: That's great. So get into it. Look at the actual sales comps before leaning so heavily just on that one number they pull up. That's great.   Emil: I want to second that actually. So I track my Zestimate pretty regularly and the first property I bought, it's been about three years since I bought it. And it looked like on paper, according to the Zestimate that it had appreciated like $40,000. So I went to do a cash out refi and it was significantly less just because I think this is just not knowing any better. You really, really have to take into account the quality, like you mentioned, right? Like they're just probably doing it more so based off size, square footage and the surrounding area, but off all the homes in the area where they're coming up with that, or the kitchens are brand new, the bathrooms are brand new in your home. It's a little more dated. You're not going to get in that range.   Leandra: Right. You're right.   Tom: You think you're a C2 Emil, you're a C3 Emil.   Emil: I'm a total C3.   Leandra: No, you hit it right on the nose with that. I mean, Zillow takes all the sales and Zillow doesn't know what the condition is of your property or the property, the other properties that have sold. So that's where really takes that human touch to really figure out and dig deeper. Like, you know, is this actually a good comp.   Emil: Right   Tom: My other question that I have is, so you look at tons of comps all the time. I'd be interested if you've noticed any trends we're roughly, I don't know, two, three months going into a pandemic. Have you noticed any things with the sales price or do you think it's still too early to notice any adjustments and I'd love your thoughts on it?   Leandra: Yeah. I mean, still valuing properties today. Honestly, I have not seen yet any big price drops to where it's significant. What I have seen is a slowdown in actual sales. So a lot of sales data is more from like March, December, January. There's really not too many recent transactions. And then rightly so, right. People may are a little nervous, but I haven't seen a decline in crisis yet.   Tom: It's the function of doing transactions have been stalled up with shelter in place and not being able to go out and do appraisals and counties shutting down. That makes a lot of sense.   Leandra: Yeah, definitely.   Emil: One of the last things I wanted to ask you, so these valuation ranges we have on our reports, what percent of the time is the appraisal coming back in that range? How often are we basically missing? Do we have any data around that   Leandra: we do. It's a small percentage that we're missing. I would say less than 10% of the time. We might have an appraisal that comes in below our value range, but nine times out of 10, almost the appraisal or the actual sell price is within our value range.   Emil: I'm curious, have there been any scenarios where the appraisal comes in lower and someone uses our valuation report to go back to the bank or the appraiser to actually rebut it and it comes in higher?   Leandra: Yes. Whenever that happens, the transaction team reaches out to my team and we review the appraisal report. We review our report and the sales comps we use versus the comps the appraiser used and just see what type of adjustments the appraiser will used in their reports. I had one recently where the appraiser didn't even review the purchase contract. So they don't even know how much this property is being purchased for. And a lot of people just see this as a non MLS sale. So they think there's a discount applied to our properties when there's not. So in those cases, him, I will prepare a rebuttal and send it to the lender. And then the lender would send it back to the appraiser just to kind of review. We might give them additional comps to consider or comment on why it wasn't used in their report.   Emil: Nice. Okay. That's awesome. I didn't even know he provided that. That's great.   Tom: Another question into the crystal ball of appraisals and valuations. So I know right now for originating loans, right? You'd get your appraisal done. And they've always been very particular about doing the full shebang, like an appraiser going to the site. And my understanding is they're getting a little bit looser, at least on the refinance where they're allowing what's called a desktop appraisal. I'd love for you to touch on your thoughts on, you know, where this is going and maybe touch on a little bit about kind of like a desktop appraisal. Like how is that different? And then also, where do you think the, uh, the crystal ball going? I like it, how my voice gets higher as I'm at the end of my sentence. It's like aggressively like full off. Okay, go ahead.   Leandra: You know, even pre COVID Fannie Mae was already working on some sort of desktop reports to help lenders kind of speed up the appraisal process. There's markets today where it takes two weeks to get an appraisal done, maybe even longer, because there's not a lot of appraisers in that area. So in an effort to try to speed up the process, that transaction process or the processing of alone, they were already working on what the industry calls a 1004 P and it's basically a desktop report for appraisers, but an inspector goes and does the inspection. And somehow this was supposed to speed up the process because then appraisers are not having to go out and do the inspection themselves. There's someone else doing it, doing that part of the work, and then giving that information to the appraiser. And the appraiser is just sitting at home, cranking out these desktop reports.   Leandra: So now with COVID-19, I've seen a lot of lenders lean towards, and this is great for everyone's safety is using desktop reports. The only setback to a desktop report is if you had like a brand new remodel done on your house and you're refinancing the, appraiser's not going to know that, um, the appraiser's going to do just based on exterior or what I've seen. There's a company that a couple colleagues work for where they're doing this inspection report. Having the owners actually take photos of their interior and send that to the appraiser. So there's ways around it without, you know, having to expose anyone to anything, you know, for the safety of inspectors and appraisers and for the safety of the homeowners and the people that live there. I have seen more desktops being ordered right now, which is great. I think we could still do an accurate appraisal without having to go inside the property.   Tom: That's great. Yeah. I want to get credit for that C2.   Leandra: You really do. I'm seeing like a $500,000 difference. One of my colleagues did an appraisal in Montclair and it was valued at 1.2 million. And then the borrower's like, hold on. I did all this work. Like I know my house is worth more. And then my friend went back and actually was like, Oh my gosh, this is nothing like the prior MLS photos. Like I was completely wrong. And the value came back at 1.7M. So it's important to actually see if you've done any remodeling for an interior, some sort of interior inspection to be done, whether it's the borrower taking the photos or, or the appraiser just doing the inspection.   Tom: Makes sense. All right. Time for some quick fire questions. Hope you're ready. I hope you're ready. So we do this with some guests. It's a quick either or decision some real estate related some not really real estate related, but all right. So are you ready for this Leandra?   Leandra: Okay.   Tom: High rent growth or low vacancy.   Leandra: Wow. That's tough. No vacancy.   Tom: Good choice. Safe play. I liked that one too. Yeah.   Leandra: Yeah. Slow and steady wins the race. I mean, at least it's consistent.   Tom: Yeah. Flow or appreciation cash flow.   Leandra: Cash flow   Tom: Ooh. Is surprising from an appraiser. Not thinking about that appreciation, but yeah. Debt or equity?   Leandra: Equity   Tom: Equity, love it. Local or remote investing?   Leandra: Ooh. I mean, if I was local in Memphis, then I might say local, but remote. Definitely   Tom: Single family or multifamily?   Leandra: Ooh, that's a good one. I actually have a lot of people ask me about that. Multifamily.   Tom: Ooh. Do you notice a big difference in appreciation between the two, like over the last several years?   Leandra: No. No, not at all. Not really. I think why I would choose multifamily is just a higher cash flow. You know, more rents coming in and again, with the low vacancy, you know, it just sounds like a win for me.   Tom: Turnkey or massive project?   Leandra: Turn key.   Tom: All right. My last three questions, midnight oil or early bird worm?   Leandra: Early bird worm.   Tom: Love it. Text message or email?   Leandra: Text   Tom: And the last question. Olive oil or butter?   Leandra: Olive oil   Tom: Love it. All right. You did it. You made it through. Excellent.   Emil: Well done.   Leandra: Oh my God. That was so fun.   Tom: Well, thank you so much for coming on Leandra. This was enlightening. I love to talk about valuations with you and always learning a little bit. This is fantastic.   Leandra: Thanks for having me. This is great.   Emil: Thanks again to Leandra for coming on our show. This week learned a lot. I hope you did as well before you guys go, wanted to tell you about some new we have going on at Roofstock. It is our referral program. So if you invite your friends and they buy or sell a rental property on Roofstock, you get $250. And so does your friends. So just head over to [inaudible] dot com slash my dash referrals, and you'll be able to invite your friends with a simple link. And again, if they end up buying a property or selling a property through the Roofstock marketplace, they'll get $250 and you'll get $250 for every friend. You refer to check that out and we'll check you out on next week's episode. See you later. Happy investing.   Tom: Happy investing

In this Episode, Tom, Michael and Emil talk about the element of luck in real estate investing and how to put in the work to be ready to move when opportunity arises.  --- Transcript: Tom: Greetings and welcome to the remote real estate investor. In today's episode, we're going to be talking about the concept of chance luck. It goes by many names. And how does it apply to real estate investing? How can you tip the scales in your favor and what are the hosts thoughts on the different aspects of luck? All right, let's do it.   Tom: All right, guys. So today's episode, as we alluded to in the intro, we're going to be talking about the elements of luck and how it applies to real estate investing. And before we get into any specific, I'd love to hear from both you guys, a meal and Michael, are you guys lucky? What are your thoughts on luck and real estate investing at a high level and lucky that's, you know, I ask that questions in your life. And it's a interview question that a lot of companies use where they ask if an applicant is lucky and they take luck, which I think might be a theme, at least for me, in this episode of, by putting a lot of little things in your favor, it can generate luck in your favor. So anyways, Michael, you go first, go ahead and spiels your kind of thoughts on luck.   Michael: And yeah, so, you know, I thought for a long time that I was a very lucky person, things kind of seemed to go well for me overall. And then I think it was my dad who first told me that luck is just preparation, meeting opportunity. And I wholeheartedly believe in that. I think that people who are lucky or who appear lucky from the outside are probably doing a lot of things that go unnoticed. And an  analogy is like a duck treading water on the surface of like super calm. But underneath there is so much going on and the surface wouldn't look the way it did, if what was going on beneath the surface wasn't happening. So I do consider myself a lucky person, but I also think that I spend a ton of time, energy and effort preparing for the opportunities that I seem to encounter.   Tom: I love the visual, the visual just got me.   Michael: Yeah Emil, what about you?   Emil: Michael, you're such an optimist. Every time I talk to you, I'm like, I need to be more like Michael and just be just super optimistic. I'm kind of, it depends on the day you ask me, I was chatting with somebody the other day and it feels like the moments you're unlucky things just pile on, right? You have a tenant issue or things that feel like headaches and make you feel unlucky. A lot of times in real estate investing for whatever reason it is, they pile on top of each other at the same time. And then you have these mud like months go by and you're seeing your property value go up. You haven't had any tenant issues, no big maintenance costs. And you're like, man, I'm so lucky. I'm collecting passive income, not doing anything. So for me, I'm kinda, there's times where I feel super lucky and times where I feel unlucky. So I don't know.       Tom: I like that for you.   Emil: Straight answer for you.   Tom: It comes in bunches.   Michael: Yeah. When it rains, it pours. Yeah. Who's got any more platitudes to pile on.   Emil: We're getting real basic on this episode.   Michael: What about you Tom? Do you consider yourself lucky?   Tom: Yeah. I consider myself a lucky person. For sure. I think it's similar to, like you were saying, Michael it's where preparation meets opportunity. There definitely are things outside of your control where no matter what you do, like things can go up or things can go down. But as a whole, I'd say the arc tends to go towards, you know, taking care of the little things and all that stuff adds up or not taking care of the little things and all that stuff adds up and tends to bend towards whatever. I don't know how you would put it either your work ethic or just taking care of knowing where to put the work in is really important. So I, you know, yes, there is definitely some elements of chance and luck that are real, but generally speaking, I think a lot of times people create their own luck. So how I want to apply this to remote real estate investing is I've broken down categories where I think chance exists and we're going to go through all of them and talk about them. The ways that we can tip the scale in our favor and the categories I have selected. And you guys, we can add some other ones, but we're going to jump into each one is property value. So appreciation kind of like neighborhood related stuff, the tenant. So either evictions or renewing leases or the rent going up, the property condition, repairs and maintenance and acquisitions, those are going to be our four key categories. And we're just going to spend time in each category, knocking them down and onto the next one. So it makes sense, guys, let's do it. Let's do it. Alright. Property value, Emil. Why don't you lead us on this one? So let's talk about the different aspects of luck in property value.   Emil: So for me, the big one here, the luck part of it is choosing an area that appreciates, well, I think it's probably two things choosing a market that appreciates well and choosing an area within that market that seems to be appreciating is more desirable than the other parts of town. Those I would say are probably the two luck aspects. Do you guys have anything else to add on property value?   Tom: Yeah, I'd say there's, you know, with property value, a way to get above the fold of the luck is just looking at all those variables that go into appreciation and there are several of them. So crime population growth, different major economic centers. So I mean, my thought with property value is, you know, it's not throwing a dart at a board, there's doing your homework and looking at some of those key contributing factors to appreciation. You can get ahead of the curve with that.   Emil: So I have some examples of good luck and bad luck I'm gonna lead with the bad luck story. So a property I bought about two years ago out in Memphis, bought it for around 63,500 has a one, a half or two star neighborhood rating on Roofstock. I ended up holding it for about two years, decent cash flowing property, but I ended up just selling it last month, took me a couple months to sell it. And I ended up selling it for basically what I paid for. So even after two years, the market's been great across the country, took me several months to sell it and it didn't appreciate at all. And we had just made some repairs to the property. So that was an instance where I probably bought, I lean too hard on cashflow, right. And bought in a one and a half star neighborhood, so lower quality neighborhood and the property, it didn't end up appreciating as much as some of the properties I have in other markets where the neighborhood is just better and the market better as well. One of the other things I probably could have accounted for is Memphis. I learned this later, Memphis has a lot of great cash flowing properties, but there's a lot of rental properties. And it's just one of those markets that you're not going to see a lot of appreciation here. So my goal wasn't when I bought this, I didn't think I'd be selling it two years down the road and my goal wasn't appreciation. But…   Michael: Did you anticipate to see some appreciation from the property in addition to cashflow?   Emil: I mean, I think we all do, right. I think we're all cashflow and we've talked about what do we want cashflow or appreciation? We're all cashflow investors, but you start to realize that appreciation is really an amazing cherry on top. And it allows like if you hold for a small period of time, your property appreciates, you can just steam roll that, snowball that into another property. That's maybe bringing you more cashflow. So it's, I've realized it's a little shortsighted to just think about cashflow.   Tom: I think that's a good example. You know, in thinking about appreciation is it's in property value. It's luck if you close your eyes and just kind of throw a dart at the board, but if you're proactive in evaluating, what are the different underpinnings that make for appreciation, it becomes less of a luck thing. Right? So talk about an example where you would say you were lucky with appreciation and how maybe it wasn't so much luck looking at it in hindsight.   Michael: So my very first property I bought in Southern California, I had no idea what I was doing. And we talked about it in a prior episode, or we talk about our first deals. And so I had no idea what I was doing, but I knew the market a little bit just anecdotally, because I had spent time there as a kid. So I thought of my first investment, I'll just buy into their California, great, whatever I bought that house. And it's since appreciated North of a hundred thousand dollars since I've owned it, which is super, super exciting. And that was dumb luck, some would say, but that was also a little bit, a little bit of preparation meeting opportunity. And in hindsight, looking at that market, it has, it would be a five star neighborhood if was on Roofstock, the schools are all 10, 10 tens. It constantly gets rated amongst some of the best schools in the state. And it's in a small HOA association. So the neighborhood around it is maintained really well because everybody is subject to the same HOA rules, looking at that whole picture. It's obvious that that house is likely to appreciate, but I didn't have the whole picture going into it because I didn't know to look and zoom out at all these things. I just thought, Oh, here's a neighborhood that I know, and here's a house that I can afford. So I think that's a kind of prime example of luck mixed with a little bit of preparation.   Tom: I like that story in that, you know, in going through it, you were fortunate to be in that neighborhood and just to buy it, but over time it seems like that would, I think that the big arc of the story is what started as a luck thing, turned into less of a luck thing, as you have learned more about the different elements that go into appreciation like your school scores.   Michael: Absolutely. Absolutely. And I know for me that I'm able to then convert that luck into now more of a science, because I understand what's going into that. As you say, what's going into the sausage making right understand at school scores play a role that neighborhood's scores play a role that physical property attributes play a role. So those all things have been a tip in my favor and this one particular example. But now that I understand that I can go take those lessons learned and make the process repeatable in any other market.   Tom: That's great. I'm going to go ahead and flip us to the next category of tenant. And what I mean by this is vacancy is, you know, touching into evictions a little bit. And I would say that at a high level, a lucky situation with a tenant is a tenant that never moves out that always pays rent on time. That is always renewing right? Continuing the lease to keep vacancy down. And I think there is a lot of things you can do upfront to tip these scales in your favor. And I think thinking about either buying occupied or vacant, there's different things that you can do to help you out here.   Michael: Tom, what would you say are some of those things?   Tom: So let's talk about an occupied property first. So if I buy a property that is occupied and the next day I find out that the tenant is an eviction and wants to leave and whatnot. I know now knowing what I know there are some things I could have done to put the odds in my favor that that wouldn't be an issue. So you could say I'm on, I'm unlucky. Some of the things that I could do with a property that has occupied is no. What was the screening criteria for that tenant, with the seller? So was there a debt to income ratio? How was that tenant vetted before the seller brought them in? Did they talk to previous landlords? If I go into buying an occupied property without knowing some of this stuff? I think then yeah, this is definitely you're rolling the dice and getting lucky, but as an investor who wants to push the luck in their favor, getting to know what is that criteria of the occupied owner I think is really important.   Emil: I have a couple of things we can add here in terms of tipping luck in your favor. So you can find a lot of us lean on property managers to handle finding tenants, dealing with tenants. So there's some property managers who put some skin in the game when it comes to tenants, they'll do things like if the tenant requires an eviction, they will handle replacing the tenant for free. So usually most property managers charge you a new lease fee like half of a first month's rent or full month's rent. And some of them will just waive that and find you a new tenant. And they won't also take their management fee from that first month to replace them. So I think one thing you can do to tip the scales in your favor is make sure your PM has some type of skin in the game when it comes to tenant quality. So that's something I've learned over time. And I like property managers who offer that another one I'll quickly mention is it kinda has to do with the tenant it's every year lease will come up for renewal. And a lot of times people will just always want to go and get the market rate. And so I talked about an example today on Twitter, and I'll just kind of read off what it was. So let's say you want to increase your rent from a thousand dollars to 1,050, and you're not willing to be flexible. And the tenant decides to leave. So let's say you have to pay $1,500 to get the place rent ready, and you lose a month of rent finding a new tenant. So $2,500 you have to make up. Now, if you're generous and assume you'll be able to get $1,100 per month from the new tenant, that's a hundred dollars more than you were bringing in before. Right? So stick with me. I'm gonna try to bring all this together. So it'll take you 25 months to make up that $2,500 difference, right? So $1,500 for making it rent ready. And the thousand dollars of one month of lost rent. So 2,500 divided by a hundred, you have 25, takes you 25 months, more than two years to make up that small increase in rent. So another thing you can do to tip things in your favor is having some type of flexibility in making sure you don't lose tenants, right? Don't just say I'm a hundred dollars under market rent. I'm going to get 50 to $100 more per month. And if they leave, they leave, it's actually theirs. When you do the math, it's better to be a little bit under marketing. Keep that tenant in for longer. At least for me.   Tom: What I love about that example, Emil is, another element of luck is, you could say at the end of the year, you're looking at your cashflow and you're like, Oh, I was, you know, up X amount or down X amount by that exercise that you just went through in calculating out the difference of what your return would be on driving up market rent and maybe dealing with vacancy or, you know, well maybe a less market rent growth. You're being super proactive at what those end of the year cash flow is. And having that information as a tool in your arsenal when going to the table with the tenant on what the rent renewal is. So I think that's a great idea of at the end of the day, this is maximizing your cashflow. And you're doing that by being data driven and looking at the numbers on making that type of decision. So another great example,   Michael: related to that point a meal, I think that not enough people talk to their tenants and whether that's themselves personally, or through their property manager. And so when a tenant moves out, owners are often like, Oh, bummer, the tenant moved out. Now have to go through that exercise. And Neil just mentioned of turning the unit and getting the market rent if they so desire. But there's so much that you can do proactively before that tenant moves out by asking them questions, Hey, what would you like to see done to the property? Are there things that I could do as an owner or the manager can ask on your behalf to do to the property, to incentivize them to stay? And so that's really, again, some opportunity and some preparation that are meeting. And so if someone has a tenure tenant, someone might look at them and say, Oh, they're so lucky. They haven't had a vacancy in 10 years. Well, really that owner might've been talking to that tenant the whole time.   Emil: That's a great example. I like that a lot.   Tom: Be the duck legs, the duck legs,   Michael: Swim, swim stroke stroke.   Tom: The last thing I'll say on tenant before we move on to property condition and RNM is it puts yourself in the position of a tenant. So instead of just sort of blindly looking at an address and a bed count, bath count, do the Google street view, is this property on a thoroughfare? Is it going to be a place that you would want to live? I love the golden rule of putting yourself on the other side of the tenant and saying like, Oh, is this some place I'd want to live at? And one of our new and all that good stuff. And if it checks those boxes, chances are you're going to probably going to be luckier and have tenants that stay longer and renew longer and all of that good stuff. All right. Let's jump into property conditions. So this is about RNM. How can you be lucky when it comes to repairs and maintenance and costs of turn Michael, you want to lead the way?   Michael: Yeah, sure. So I think the biggest thing that you can do to be proactive and get lucky is just set expectations on the front end, give the tenant a very clean place to move into, keep it well maintained, keep it safe. There are more likely to feel a pride of ownership or rentership rather in a nice, clean, safe environment. And if you make it very clear that look, we are giving you this safe, clean place to live. We expect it to be safe and clean when, when it gets returned to us. And if you don't, these are the consequences. It's not threatening. It's just very level setting. This is what we expect of you. This is what you can expect of us. And again, someone who has a tenant move out and has a sparkling clean unit, someone might say, wow, you're so lucky. You're so lucky right at that happened. When in reality, no, you spent the time, energy and effort on the front end to set the expectation and make it very clear. Who's responsible for what.   Speaker 4: Yeah. Love it. It's building trust and being the duck legs under the water.   Michael: That's right.   Emil: Lots of duck legs, lots of duck legs.   Tom: Well, how about yourself? Any thoughts with regards to property condition and repairs and maintenance and turn costs and how do you tip luck scale into your favor?   Emil: Yes. One thing it's going, gonna kind of go off what Michael mentioned, but I think when you take over a property to set a, a good example or a new precedent, right? When you take over, let's say there's a couple of things in the inspection report that you could maybe defer, just taking care of them up front, especially if they're on the inside where the tenant they're in front of the tenant's face, right? Like holes in the wall, broken things, right. Fix those things and just clean up the place, make it more of that pride of ownership. When you take over, I think that kind of helps set the precedent for your tenants to know that this is under new management, you care, and you want this place taken care of. So it kind of goes along the lines of what, what Michael mentioned.   Michael: I just wrote down that note too, that I wanted follow up on. I'm so glad you touched on it. That it's showing, being responsive when it comes to repair requests or maintenance requests really shows that you as the owner care and thus will often incentivize the tenant to care because if you don't care as the owner, why should they care being a tenant in your property?   Emil: Yup. Tom, anything else?   Tom: So getting, building luck on property condition stuff, I would say quality is going to go a long way. And what I mean by that is you could, you know, there's always a decision when things come up repair versus replace with costs. There's a third element. I think of the quality of the work that is done. And it doesn't matter as much if you choose to repair or replace, if you do it with really bad quality. So when you're thinking about the vendors that you're using, making sure that they have a track record and a history and are reputable by sometimes you may pay a little bit more upfront to do work versus other options in doing the work. But if it's by a vendor that is reputable and does good work, a lot of times it's gonna end up being a lot cheaper because it's, you're not gonna need to go back, redo the type of work. And I know for myself, I lean on third party, property management, pretty so instilling, you know, my expectations with that, with the property managers and having a relationship and being the Duck's legs under the water and saying like, okay, Laura, who's my property manager. You know, if you're in my position, this is what I'm thinking about. I'd much rather have the quality work done. I'm willing to pay a little bit extra. What are your history of work with this vendor versus that vendor? If they're bringing me multiple bids. So really making sure that if you're going to spend money, which stinks on like repairs and maintenance, but it's really important, right? Because we need to have safe habital spots getting the work done by a, that has a really good track record of doing work. So I can measure twice cut once and just get it done with,   Michael: To piggyback on that. Tom, I also think that doing proactive steps physically to improve the property and making it more tenant proof can also tip the luck scales in our favor, such as you know, instead of cleaning the carpet or replacing the carpet, tearing it out and putting in hardwood or laminate flooring. And so that's going to reduce our costs in the long run, likely to have that stuff clean at every tenant turn, it makes the property more durable. It can often make the property more attractive. And so again, the Duck's legs being proactive on the front end, doing things that are going to increase our likelihood of success, I think is huge. When it comes to the physical property itself.   Tom: Regular inspections. That's a good one, too.   Michael: Absolutely.   Tom: Sometimes stuff can fester and it just gets way worse over time. It's if you pay for it right now and deal with it, it can be significantly cheaper versus letting it fester, especially anything that has anything to do with water, water. If it's wet, you're going to pay a lot I bet.   Michael: Did you just come up with that?   Tom: I did. Trademark.   Michael: That's really good.   Emil: What do you guys think about potential? Where can you set yourself up for bad luck with property condition? One thing I wrote down, let me know if you guys agree with this is let's say you buy a property. That's not in the best part of town. And you know, you're probably not going to get the type of tenant that takes pride in ownership and where they live. I think one thing that can set you up for failure is over renovating or making it too nice. Right? Getting stainless steel appliances, granite countertops, like making it look like a five-star neighborhood property would have when it's actually an, a one and a half or two star neighborhood. What do you guys think? Do you think there's a, that sets you up for bad luck if you over renovate or make things too nice if you're maybe not in the best part of town.   Tom: Yeah, I would say so. I would say being really cognizant of keeping it consistent with the neighborhood. I mean, there could be a situation, you know, it's not a one size fits all with everything. There could be a situation where you might be able to get a little extra boost on the rent by putting in the granite countertops in an area that's maybe a two star, but I'd say generally speaking is knowing that neighborhood and keeping it consistent, right? Cause you could be just dumping money into, you know, getting the fancy gold toilets may not be necessary. So, and this is being the duck legs, knowing the neighborhoods that you're in   Michael: I think to echo Tom's point, chatting with property, local property management and getting an idea and understanding of what's neighborhood. By that same token though, you could be the spark that ignites the dynamite, so to speak of a neighborhood changing, it's got to start somewhere. So if you're going to be that person that over rehabs, the property that could get everyone's attention and saying, wow, look at what's going on in this neighborhood money coming in, let's start also rehabbing our properties because clearly this neighborhood is changing. So that's kind of the opposite end of the spectrum is you could be the change investor.   Emil: That's a good point.   Tom: I like it. Let's jump into this next aspect of luck, which is on the acquisition side. So finding deals, buying deals who wants to start us off here talking about acquisitions and getting lucky with acquisition.   Michael: Why don't you start us off Tom?   Tom: I like it. I had some stuff in my back pocket. So I..   Michael: Always.   Tom: The biggest thing about acquisitions is always having the lights on always being up to evaluate a deal and to just beat this into the ground as being the duck underwater. I know, sorry, but here's the thing though. Like the machine doesn't turn off, right? So there's always deals coming up. That's available. And the people who are lucky are the people who are constantly looking through what is available. Now I understand life gets busy and there's times where you can put in a little bit more time or you're in more of an acquisition cycle. But even if you're not an acquisition cycle, still be constantly having your finger on the pulse and having enough dry powder available where if that screaming deal does come along, good news, you're going to be lucky and then you to buy it. And the reason you gotta be lucky is because you're constantly looking at stuff. And I feel pretty adamant about that is how you get lucky with acquisitions. It's just always knowing your market, always seeing stuff coming through, being persistent.   Michael: Yeah. To echo that. I think having your head on a swivel, even if you're not in a buying cycle, we've talked about this a lot on other episodes about kind of where we are in our own personal business, what cycle we're in. And many of us are not in a buying cycle, but absolutely keeping our eyes open our ears peeled, listening, looking for those great deals. I think in addition to knowing the market, being able to foreshadow a little bit and forecast a little bit above and beyond what you're seeing today and looking at trends and interpreting those trends to see where things are going to end up can be a huge, huge, huge advantage, and can often make people appear lucky. I bought in a neighborhood like I share with you guys numerous times in the Midwest and Northern Kentucky that has some really amazing government, local government incentives. And so I saw that and I understood the writing on the wall to mean that this area is really up and coming. And I did the homework to understand what's going on historically. And what's happening currently to then project on, where do I see this place? I'm going to go. I'm going to bet big on it. And that's seemingly proving to pay off. And so again, being the Duck's legs, you know, doing all that stuff on the front end to understand where this is going to end up.   Emil: I like that. Other things I would add here is if you are in a buying cycle, maybe you have multiple deal finders, right? So either have a couple of agents out there. You tell your PM, you're looking for a property you're on, Roofstock sending filters, get notifications. And also, I, you mentioned keeping your eye on the market, even when you're not in a buy cycle. I think that's so important because let's say you're buying a property once a year. If you buy a property, don't keep your eye on listings. Aren't keeping a temperature read on the market. You take a year off, you come back, you may have the bias you did a year ago and the market has changed the bunch. So I think keeping your eye on the market and looking at listings, seeing how quickly things are selling, how much are they selling for? I think that that just always pays whether you're buying or not.   Michael: One other thing to mention is we talk about, again, the opportunity for success and where preparation meets opportunity. I think the greatest deal of the century could come around, but if we're not prepared to execute on it, we're never gonna get it. We're never gonna seem lucky. And so being educated above and beyond understanding your market, I think is so, so, so hypercritical. And I know for me, if I had been educated prior to when I started investing, I would have been able to have invested sooner and hit even more home runs even more grand slams. So getting educated on how to purchase real estate, what that looks like, how to evaluate markets is so, so critical. I really can't stress that enough. And that's something I talk a lot about with people inside the Academy of, you know, the fact that you're here, getting educated is going to put you in such an advantageous position to be able to execute on things when they present themselves.    Emil: Well said. All right. So transitioning away from real estate investing, I'm curious to hear what you guys think is the luckiest thing that's happened to you in your life. So outside of real estate investing, what do you guys think is the luckiest thing that's happened to you?   Michael: I am going to force my wife to listen to this because meeting her is far and away, the luckiest thing that's ever happened to me in my entire life. You're welcome Claire. And thank you.   Tom: Oh, and we cannot repeat any of these ones that we have. So Emil, I'm going to leave you with a bunch of scraps.   Emil: Don't you, don't you say your kid!   Tom: Was definitely going to, I mean, people talk about the lights from the sky, getting a little bit brighter when you meet your offspring, your first child and it's real, man. I'm just love struck such a crazy life experience of meeting a child that is related to you. I'd say. And thank goodness, yeah, mom as well. But Michael already took that one and my beautiful wife. Gosh, I'm trying to think of, I could go on any other stuff. I mean, just generally speaking, I think I'm pretty lucky. Gosh, luckiest thing, luckiest thing.   Michael: I I've never heard anyone. Tom, I think say that they met their offspring, but it makes sense. Did you shake their hand?   Tom: Yes. I shook his hand, formally. Nice to meet you, sir. Tom Schneider pleasure is mine. Pleasure is mine damn glad to meet you. So yeah, I'm going to go son, meeting son, really crazy mind blowing stuff.   Emil: So awesome. So I get to be the direct that doesn't get to mention his wife or, or his baby daughter. I love them both. They are the luckiest things that have happened to me outside of those two. I'd probably say learning marketing. I mean, that is my profession and it's not what I started doing out of college. It was my third job out of college that I got into marketing. And to me, I see it as a skill that will always be there. I don't see robots or automation overtaking that I think they help marketers, but I don't see those types of things overtaking the marketer. And so for me to just have found something that I really enjoy doing that creates a good livelihood and that I think will be in demand. And I think it also just teaches you a lot about human psychology. You know, a lot of people look at marketing like ads and tools and all these things, but really it's learning how it's understanding people and how people work and what motivates them. So outside of my daughter and my wife, I'd say the luckiest thing that happened to me is learning about marketing and taking that on as a profession.   Michael: Emil, did you find marketing or did marketing find marketing find you?   Emil: Marketing found me. You know, I was, I was lost and I found my way through marketing.   Michael: That's awesome.   Emil: I was face down in a ditch somewhere. Yeah.   Michael: Marketing's like, Hey, are you okay? I can help   Emil: Marketing parted the clouds and shined its light on me.   Michael: That is lucky.   Tom: Alright. What else? Anything else? Alrighty then.   Alright, thanks for listening to today's episode, we hope you found it valuable. If you found this lucky duck episode to be valuable, please rate us on your podcast platform that you're using and feel free to reach out to us. You can reach out to us on Twitter or on Instagram. If there's any content you would like to hear, we would like to hear from you any questions, comment, and happy investing.   Michael: Happy investing   Emil: Happy investing.

Guest: Dr. Thomas WesselTrailhead Chiropracticwww.trailheadchiro.comwww.ampednow.comHost: Kimberly Henrie, www.kimberlyhenrie.com Special thanks to Fruition Studio www.fruitionstudio.com This is living the good life podcast episode 2003, I’m Kimberly Henrie. Today, in our Vibrant Living series, we’ll be talking about the benefits of chiropractic, how to choose the appropriate professional technique and professional for you, why chiropractic may be beneficial and what to do if you can’t get to your chiropractor right now. We’ve got a lot to talk about, so let’s get started.Kimberly: Our Guest today is the owner of Trailhead Chiropractic, a graduate of the Palmer College of Chiropractic, and specializes in pregnancy and pediatrics with a certification in the Webster technique, and practices Torque Release Technique in his offices at Trailhead Chiropractic, where he is the owner and I think Smoke (dog) is the manager. Welcome. Dr. Tom Wessel. Dr. Tom: Hi, Kim. You so much for having me. I really appreciate it. Kimberly: We appreciate you jumping on here and helping us learn a little bit more about how we can take control of our situation, our circumstances, and create the best life possible. That's what it's all about. Right? Dr. Tom: That's the goal. Kimberly: Exactly. Yeah. So, how are you spending this time during the quarantine this the stay-at-home order. Dr. Tom: We are spending our time just getting outside as much as possible. Just enjoying the sunshine. We live in a rural area and so get outside enjoying the sunshine staying active, you know, just not let trying not to let that boredom take over.Kimberly: Right. Well, we live in a beautiful place. We both live here in Colorado. So we're very fortunate. There's a lot of things to get out and do and a lot of space to do it. That's awesome. And I know you're looking forward to getting back into the office very much. So what do you think folks should be doing right now if they can't and we want to talk about Chiropractic and why that's a benefit but there's a lot of folks who can't get in to see their chiropractor right now. So what kind of recommendations do you have for them? Dr. Tom: Yeah. So Chiropractic is all about adapting the body to deal with stress and so in a time where you cannot further adapt your body to deal with those stressors in your life, what you want to do is limit your stress even more than you normally would now stress comes down to three things and that's thoughts traumas and toxins. Okay, those are all types of stress and so keeping your mind active not letting those negative thoughts take over would be one part of that staying active staying healthy exercising eating correctly. So you're not putting toxins in your body. Basically just living a healthy lifestyle as best as you possibly can will not only increase your body's ability to adapt to stress. It will also increase your body's ability to adapt to other things such as what's going on right now currently with this virus pandemic. Kimberly: Right. I love practicing daily breathwork. Breath work for me is a total stress reliever along with the exercise and getting outside just brings everything down to a nice calm gentle level. Tell me, let's kind of go back to your journey here. Why are you a chiropractor? What drew you into the profession? And what do you find helpful and beneficial about offering that service? Dr. Tom: It's interesting. I think I think you and I have talked about this before. I don't remember but I was drawn into Chiropractic at a very young age. I grew up in northern Wisconsin and my father was a Forester. So instead of paying for daycare, I would just go to work with him every day....Thanks again to Dr. Thomas Wessel for educating us today. You can reach out to Dr. Tom at trailheadchiro.com. As always, special thanks to Fruition Studio for supporting us. Fruition Studio specializes in heart-centered marketing and content creation. Learn more at Fruition Studio.com. And to hear more episodes of this show or to reach out to me, visit kimberlyhenrie.com. That’s it for this week and this episode of Living the Good Life. Thank you for joining us!

"Shameless Hagan, driving the milk-van down to the park, in the dark. Why does he get up each day, do the same old shit? Nobody knows... Shameless Hagan..." Mount Pheasant returns! Oh yes! In this second offering; the unemployable Richard Pheasant is still sick. But just how sick? And how unemployable? Join us now as we descend into some 'Man Country...' Dick: Ooh, that Tuborg gives ya an awful wind. What you lookin’ at Tom? Yeah, I see you starin’. Shakin’ that shovel, shakin’ that shovel… Heard the news I suppose yeah?Tom: No, Dick, eh (cough) I’m not, I’m sorry, sorry, I don’t understand that sort of thing- Dick: Hah? You takin’ the piss? Ah of course, you’ve never been unemployed. Always cleanin’ up for the council. Well I hope you’re happy Tom Kendall, Dick Pheasant is on his knees, a doley once again! Tom: No, no, no… I- I wish you nothing but the best of luck, and I-I mean that. Dick: Ah go on with yourself. Tom: Look, the anger’ll pass… I know. I read Rock Hudson’s book, he said- Dick: G’luck Tom, don’t know what yer sayin’ as usual.(Walking) Dick: This fuckin’ place. Spiteful, secrets! Mount Eidel with its crispy, clean Chemical Factory… With their big salaries and their Hyundais. I tell ya, this town just pulls at the rage in ya. Ah, fuck it, just get some cans, head up home, have a couple of drags on me emaciated penis… Lisa: Oh! I- Dick: Ah howaya Lisa, lookin’ well! Lisa: Howaya Dick, are, are ya alright? You look fierce pale. Is, is that what happens? Dick: Nah, nah, just a little dose of the- hah? Lisa: Ah don’t say it love. Listen, if you need anyone to talk to, or if you would like someone to read your favourite book to ya, I’m here. Dick: Eh, thanks Lisa, but, what, me favourite book? Lisa: That one you showed me that time. ‘Morris’ was it? By some ‘Forster’ lad. Dick: I’ve no idea what you’re on about Lisa. Lisa: Aw no hun, it takes the memory away too does it? Dick: Hah? Lisa: Ponkin said just because it’s not the 80s... Ah stop, I wasn’t even born in the 80s, what do I know? But I do know that I’m with you every step of the way, we all are, we’re all behind you Dick Pheasant. Here, here’s a six pack of Tuborg, on the house. Dick: Bidda F- eh thanks Lisa! I never knew you liked the metal as well- Lisa: I’d flash ya a tit an’ all but I guess it wouldn’t work on you now. Dick: Ah stop it Lisa, I’m only sick. Lisa: Breaks my heart. It really does. Oh look, there’s Linda in her Pajero. Dick: Oh no. She’ll be all over m- eh, howaya Linda! How’s- (Footsteps pass quickly) Lisa: Fuck. Did you see the look she gave ya? Dick: Like I was dead! Didn’t even say- Lisa: Here, you go home with these, I’ll see to that bitch in the shop. Kiss ya hun. (Scooter zooms in) Cottle: Dick! Dick! Have ya a moment? Dick: Eh, Jaysus Cottle, thought you were Ponkin with the scooter there. Did you borrow it? Don’t let him forget it was you. Cottle: No, it’s Eidel Radio’s, so we can get the word on air even quicker. Do you have a minute? Dick: I’ve many minutes now sure. A man of long days of leisure. Cottle: Dick, I need a human interest story, somethin’ from the heart yunno, that the listeners will identify with, someone who can show the real side of things… Dick: Have ya tried Tom Kendall there? He’s a shovel up close to his heart, as he leans on the cunt half the time! Bidda lord! No, don't read this bit, keep listening! Top quality audio adventures from Amplevoicepod. Biff! Bam! Snot! Podcasting done right.

Combine the open road and exquisite classic cars with a trip to the Motte Historical Museum in scenic Menifee, CA. The Motte Historical Car Museum is off the beaten path.  But when you go you'll surely agree it's well worth the trip. Menifee in Southwestern Riverside County plays host to the cozy museum with a collection of very cool classic cars.  And they're displayed in a building that, while fully restored as well, helps turn back the hands of time just like the vehicles it houses. Who else but our own Professor, Clinton Quan, made the recent trip and shares the complete report in this iDriveSoCal Podcast.  Click play below and take a look at some of the classic beauties he spotted during his trip. ***Transcription*** Recorded in Los Angeles, CA The Motte Historical Car Museum - Menifee's Hidden Automotive Gem Clinton "The Professor" Quan: They're like, "Wow, I didn't realize there are so many car shows and I didn't realize that there were so many car museums." Tom: This is the Motte Historical Museum, out in Menifee, California Clinton Quan: There's definitely cars from the 1920s, Tom: Made me think Great Gatsby. Professor: Yes. Tom: Like, that time period, right? Tom: Welcome to iDriveSoCal, the podcast. All about mobility, from the automotive capital of the United States, Southern California. Tom Smith here with the good Professor, Mr. Clinton Quan. Say hello, Clinton. "Made me think Great Gatsby." Professor: Hi, Tom. Tom: Hello. This podcast, we're talking about another automotive museum, one that the good Professor kind of pulled out of his bag of tricks… I don't know. We've almost come to a year of doing the iDriveSoCal podcast and you're still surprising me with some of these little pocket events in museums and whatnot that you find. So, keep that up. Let's see how long you can keep that up until I'm like, "Oh, this one again?" Professor: I'll try. But I think a lot of people are really surprised at how many car museums and automotive events in Southern California. Tom: There's so much. 1931 Cadillac Professor: Yeah. Tom: There's so much. Professor: Because a lot of my friends, they're like, "Wow, I didn't realize there are so many car shows and I didn't realize that there were so many car museums." Tom: Yeah, all you got to do it look and you can keep yourself busy year-round. Professor: Yes. Tom: And hey, partially that's what iDriveSoCal's gonna help. We're gonna be a... Is the right word "repository?" Professor: You could say that. Southwestern Riverside County Tom: I'm making myself laugh because I'm thinking about other... And whatever. So as we have been, your go-to place. iDriveSoCal.com. Professor: Resource. Tom: Yeah, your resource. Thank you. But not only automotive but also the future of mobility. And a lot of the future of mobility is... Well, we'll see what it's gonna be, but it's an exciting time, right? 1924 Electric Ford Model T Professor: Yes. Tom: But for always and all time, there's going to be a large segment of the population that happens to be in love with cars. Cars that are coming out of manufacturers right now, rolling off the assembly lines right now, and for some time to come. For a long time to come, and certainly, the history. Professor: Yes. Tom: And this is the Motte Historical Museum, out in Menifee, California, which I guess that's considered Inland Empire? Professor: I believe that is considered the Inland Empire. It's a little east of the city of Perris, which is spelled P-E-R-R-I-S. Not to be confused with what everyone assumes. "It's a little east of the city of Perris... it's off the 215." Tom: Of course, I've buzzed by there and I know that I've buzzed by Perris, as well as Menifee, and I don't know what else comes to mind for Menifee, but I know I've been through both. Professor: Yeah, it's off the 215. Tom: Okay. So,

In this episode, we talk with Tom Brennan from Rootstock. Tom discusses the pitfalls of 'FrankenCloud' (multiple cloud systems roughly connected). He also digs into the role of the data-driven CFO and shares how companies can move from a transactional to a strategic approach. FrankenCloud - 3:45Tom: People are adding more clouds, and we're in a 'FrankenCloud' stage where you've got multiple clouds and on-premise. You try to draw inferences about that customer and it's very difficult to do. Andrew: I agree. I'd argue it's probably the number one problem that we see. Managing Acquisitions and Mergers - 6:32Andrew: These disparate systems are often the results of acquisitions. I often feel like there's not enough time, energy, or money that's being spent to think about that as a part of the acquisition strategy. Tom: Yeah. You know, some companies will replace their ERP system wholesale and move everything to one cloud to solve the problem... [Or] they can put in another ERP system such as ours alongside Salesforce pretty easily. Because if they have Salesforce in place, they've already got a cloud stack, and they already know how to administer users, they know how to write reports, do workflow, use chatter... So adding another piece-system is not as intrusive as it would be otherwise, where you'd have to put in a brand new stack, new skillset, new everything. So if people want to get there incrementally, they can, they can add on an app like ours into their Salesforce environment. Artificial Intelligence in ERP - 9:06Tom: ... I think AI, in particular, provides the ability to triangulate all this information that we have about a customer and to predict what's going to go on. And so you'll be able to look easily — and especially when it's all in one platform — across maybe outstanding opportunities for the customer, across quotes... And then look at service cases and activities in your call center. Then maybe look at shipments made or returns that have happened... things under warranty, uh, credits that have happened, where they are in their payment cycle, how good of a payer they are... Early Warning Signs - 10:37Tom: This is one way to get an early warning sign as to what's really going on. The customer may be ordering a lot of things, but returning a lot. There's a lot of credits on it after rebates and things like that. And they're not profitable. So you really need all of what's in ERP and all of what's in CRM to get that view.The Data-Driven CFO - 12:18Tom: [We've] been looking at how finance pros can move beyond doing the day-to-day transactional things and into a more strategic role. One of the critical underpinnings to making that move is data. These CFOs are "data masters." They're able to provide more insight as to what's going on as opposed to just saying, here's your P and L.Links:Connect with TomLearn more about RootstockBrian Sommers on FrankensoftHow to be an effective finance business partner: Insights for manufacturing CFOsHow to get started with Cloud ERP

In this 2019 Volkswagen Tiguan review, we take a look at VW's new compact SUV that's as stylish as it is big!  So big that VW even offers up the option for the third row of seating.  And so stylish that many find it more appealing than Volkswagen's former Toureg model. Additionally, this second-generation Tiguan comes in a trim level to suit every driver's needs.  Even offering up the sporty R-Line package! 2019 VW Tiguan Top-3: 1. Exterior Styling 2. Interior Tech & Design 3. Engine Power & Torque We picked up a 2019 VW Tiguan to review from our friends at Ontario Volkswagen for a recent fun day of driving Southern California.  Click play below to hear the complete details in our podcast or you can continue reading below and check out the pictures from our test drive. 2019 Volkswagen Tiguan Review April 24, 2019 2019 Volkswagen Tiguan Review Clinton "The Professor" Quan: This is one of the biggest compact, crossovers on the market.  That extra third row, it's a nice feature to have. This is one of the most attractive compact crossovers out there.  I'm a huge fan of the interior as well.  It's got plenty of torque, plenty of pick up, very, very smooth. "We're looking at about 22-city, 29-highway... that's solid for a vehicle this big, because this is one of the biggest compact, crossovers on the market." Tom: Welcome to iDriveSoCal the Podcast, all about mobility from the automotive capital of the United States, Southern California. Tom Smith here with the good Professor, Mr. Clinton Quan. Say hello Clinton. Bold new Tiguan! Professor: Hey Tom. Tom: Hello my friend. This podcast is a vehicle review, the good Professor, Mr. Quan went on out to our friends at Ontario Volkswagen in the Los Angeles suburb of Ontario, California, just off the 15 there and he picked himself up a Volkswagen Tiguan. Tiguan Toureg Comparison And I've been eyeballing that Tiguan I tell you. I recently drove the Atlas and obviously the Tiguan is the Atlas's smaller sibling, but I've seen a Tiguan sitting next to a Touareg and we talked about this a little bit. A lot of people love the Touareg. The Touareg's no longer, but it's still an awesome truck. But the Tiguan looks just about as big as the Touareg when you're looking at them side by side from the rear. Now I know they're not. I know that the Touareg's still a little bigger. Tiguan design is reminiscent of Touareg Professor: Just a little bit bigger. Tom: Yeah, but we were talking and I don't think you looked this up, I didn't look it up. I'll bet with the enhanced engineering technology as far as the interior goes, that the current Tiguan has more interior people and cargo space than the past Touareg. Professor: I wouldn't be surprised. "...the new Tiguan is so much bigger. It's a little over a foot longer than the previous Tiguan." Tom: Probably just a little bit of trivia, but nevertheless, to kind of bridge the gap of Volkswagen before and Volkswagen now. Professor: And that's I think another reason why the Touareg was discontinued because the new Tiguan is so much bigger. It's a little over a foot longer than the previous Tiguan. Tom: Yeah, it's a much bigger vehicle. So at any rate, out to Ontario Volkswagen, picked up the Tiguan… Thanks to our partners at Ontario Volkswagen, Mr. Earl Reed, General Manager, Randy Halcomb, our go-to guy, Shant Bashian, General Sales Manager, Jim Straley, Service Director, love everybody at Ontario Volkswagen. For all your Volkswagen needs, head on out to Ontario Volkswagen, just off the 15, in the Los Angeles suburb of Ontario, California. That being said, Professor, take it away. Tiguan Trim Levels Professor: Yes, I drove the 2019 Volkswagen Tiguan, SEL Premium which is one of the top-of-the-line trims in the Tiguan family. There's let's see, six different trims, well if you include all the different... if you include the four motion trims,

更多英语知识，请关注微信公众号: VOA英语每日一听Joel: Hey, Tom, when you were in Thailand, did you, were you good at bargaining? You know how you have to haggle to get the price lower. Tom: Once I got started it was OK, but, oh, getting started was so difficult.Joel: What do you mean?Tom: I just knew that when I walked up to a market stall, that I'd pick up something, and if it was something that I wanted, to get it, I'd have to start fighting. I'd have to get through his argument it felt like, and I was really uncomfortable about doing that.Joel: That's the problem with me, too. I was always too nice. It's like, you know, I'd give them one price and then, they would never go for the price that I ask for so I, if the price was a 100, and I said, "OK, 50", then they would say, "Well, OK, 95", and I usually wouldn't take it much further than that.Tom: Oh, no, that's complete, I'm completely different. If I started it was because it was something that I really wanted, and I'd already had an idea of the price, so once I started that whole deal, oh it could take quite a long time. I'd, we'd chat, you know, it's a very friendly way of doing it in Thailand. We'd talk about the price. I'd do a lot of smiling. I'd pick up some other things that were similar and I'd really go for it and take a long time.Joel: I heard that the trick to it is you really need to tell them a whole story, like you can't just say, " Oh, I want the price lower", you have to say like, "Oh, well, you know, I don't have any money and I really need to get this for my family and this is the last time I'm going to be here, you know, I've run out of money, can you give me a deal on it. You can't just tell them you want a lower price. You have to give them a good reason and you have to have a dramatic story to go along with it.Tom: I've done that in the past. I've emptied out my wallet, and I've said, this is for my lunch. This is for the taxi. This is all I've got left for you. Right, and then you take a bus home. A bus is a lot cheaper than a taxi.Joel: I've also heard like you can get, usually if, as I've said before if the price is, the quoted price is 100, then you should shoot for, not a third of that but, even like, half of that. You can get it for 50, not 75.Tom: Yeah, I think the first price is always, you can always get a big reduction on that, but I remember the last time I went shopping in Thailand I was buying stuff for my mum and I'd left it really late and it was pouring down with rain and my mom wanted something, it was very specific, some silk trousers and she wanted 10 pairs to give them away to her friends, and I trolled around this big bazaar with hundreds of shops looking for this very specific product and eventually I found it and the shopkeeper only had half a dozen; I wanted more, and she said her price and I just gave her the money. I wanted to get home as quickly as possible, so I got half a dozen ties on top of the trousers because I hadn't bargained. She gave me something extra just for not trying.Joel: Are you going to Thailand over this break?Tom: I'm going at Christmas, yeah.Joel: I'm wondering if, I got really big feet, and I'm having a hard time getting shoes here. Do you know, I know you have big feet too, I'm wondering, is it possible to get big shoes?Tom: Yeah, they definitely have them. They make them there and they're all these outlets.Joel: And. they're cheap too, right?Tom: That's right.Joel: I'm wondering if you can pick me up some when you're out there, like any kind of business shoes.Tom: You want business shoes?Joel: Yeah.Tom: OK.Joel: Just black business shoes, any kind you find is fine.Tom: Lace-ups?Joel: Yeah, lace-ups are fine. And like a size 12, American.Tom: You want one pair or two pairs?Joel: Yeah, maybe two pairs, that's even better.Tom: Sure, I'll see what I can find.

更多英语知识，请关注微信公众号: VOA英语每日一听Tom: Hey, Joel, you got your hair cut.Joel: You can notice that. I don't have much hair left. You can see that it got cut.Tom: Yeah, why don't you grow it out?Joel: Actually, you can't notice right now cause it's cut so short but my hair's curly, so if I let it, and I'm bald on top now, so if grow it out I look like Bozo the clown.Tom: Did you have long hair before?Joel: Actually in college, I had long hair. I grew it out pretty long and then, you know, my hair is really blond. I don't know if you can tell now. It's gotten a little bit darker, but it was down to my shoulders and really curly.Tom: Wow.Joel: Yeah.Tom: When did you start losing it?Joel: I noticed sort of at the end of college, when I had long hair because it didn't grow nearly as long in the front. I always wanted it to be really even: long in the front and back, but it was, it grew much faster and much thicker in the back than in the front.Tom: So when it's all gone, are you going to start combing it over?Joel: No, I don't want to have the comeover. I, actually, my wife likes bald heads, so I'm lucky, so I just cut it really short.Joel: It's funny though. When I was really young, well when I was born, I was bald until I was maybe one year old or so, and I had very thin white straight hair, so it was perfectly straight, until I was about 13 years old, and as soon as I hit puberty, "booing"! My hair suddenly got curly, so as a self-conscience young adolescent, that was a but of a shocking experience for my hair to go from straight to curly almost overnight. Yeah.

Join the marriage after God movement today. https://marriageaftergod.com Quote from Marriage After God chapter 6 "Walking in autonomy is not only dangerous for your marriage, it is also rebellious. Our relationship with Christ cannot be separate from our relationship with other believers." In this chapter of marriage after God we end with this encouragement: “Don’t wait to be pursued; be the pursuers. Don’t wait to be served; be the faithful servants. Don’t wait to be loved and invited. Love and invite. Be transparent with your marriage, be honest, and love well. We are all connected. We are all one in Jesus Christ, and He is our head, leading us and guiding us to do His will in this world.” Dear Lord, Thank you for the gift of your body. Thank you for the gift of fellowship and friendship. May we be people who are motivated by love to reach out and be a friend to others. We pray we would have the courage and confidence to be people who welcome others in, who are transparent, who are there for others, who lift others up and who pray for others. Use our marriages to be an encouragement to other marriages. Use us as a team to bring you glory, Lord. Help us to never live in isolation. Help us never to be divided. We pray the enemy and we pray our own flesh wouldn’t get in the way of fellowship. May our desire to participate in your body increase even more! May the way we treat one another be a light and an example to the rest of this world. In Jesus’ name, amen! READ: [Aaron] Hey, we're Aaron and Jennifer Smith with Marriage After God. [Jennifer] Helping you cultivate an extraordinary marriage. [Aaron] And today we're on part six of the Marriage After God series and we're gonna be talking with Tom and Heidi Celaya about the importance of Christian fellowship. Welcome to the Marriage After God podcast where we believe that marriage was meant for more than just happily ever after. [Jennifer] I'm Jennifer, also known as Unveiled Wife. [Aaron] And I'm Aaron, also known as Husband Revolution. [Jennifer] We had been married for over a decade. [Aaron] And so far, we have four young children. [Jennifer] We have been doing marriage ministry online for over seven years through blogging and social media. [Aaron] With the desire to inspire couples to keep God at the center of their marriage, encouraging them to walk in faith every day. [Jennifer] We believe that Christian marriage should be an extraordinary one, full of life. [Aaron] Love. [Jennifer] And power. [Aaron] That can only be found by chasing after God. [Jennifer] Together. [Aaron] Thank you for joining us in this journey as we chase boldly after God's will for our life together. [Jennifer] This is Marriage After God. [Aaron] We just want to invite everyone that's listening to leave a review. That helps other people find the podcast. It's how iTunes works, it's how all the podcast apps work. A review helps us get reach. And also if you would like to support this podcast, we'd love to invite you to go to our store, shop.MarriageAfterGod.com, and pick up a copy of our new book, Marriage After God. It's what this whole series is about. It's our newest book and we're excited to get it into your hands. And yeah. [Jennifer] Okay. So Tom and Heidi, thank you so much for being with us today. [Heidi] Thanks for having us guys. [Jennifer] People don't know this, but we've been friends for a really long time. What is it like nine or 10 years? [Heidi] Nine years, actually this month. [Jennifer] Crazy. Okay, so why don't you just share a little bit about who you guys are, how long you've been married, and how many kids you have, what you do for work, that kind of thing. [Tom] Yeah, I guess this is my part, she said. So, we're Tom and Heidi. We've been married 11 years and three months, four months, October of '07. So we just yesterday passed our 14th dating anniversary, which she made me feel like garbage 'cause I didn't get her anything and she got me a couple things. [Heidi] I did not. [Aaron] You're like, I didn't know we were celebrating our dating anniversary-- [Heidi] I was at Sam's Club and got him a pair of shorts. [Tom] Yeah, I didn't know we were celebrating. And you got me cookies as well. But anyways, we have two kids, a nine-year-old daughter, eight-year-old son. And yeah, we've been living in our home currently for five years, and I'm in medical sales for a job and Heidi runs the house here and handles our crazy kids. So yeah, we're kind of a normal, somewhat normal family I think. [Jennifer] Awesome. Okay you guys, we're gonna go into our icebreaker question, which, Aaron, you want to ... [Aaron] Yeah. What is one of your favorite memories of us from our friendship over the years? [Heidi] Oh man. Favorite memory. [Tom] I don't know. [Jennifer] 'Cause there's so many. [Aaron] 'Cause all of your memories are your favorite of us. [Tom] Right, that's the whole-- [Woman] Yes. [Tom] I've got a few. I don't know exactly which one I would say my favorite is. Gosh. [Jennifer] I feel like when we think about this question, I was telling Aaron, all the late nights, all the late nights we spent at your guys' island eating ice cream and just chatting and laughing. [Aaron] They don't own an island. Their kitchen island. [Heidi] Yep. Thank you. I didn't understand what she was-- [Tom] I was gonna say, one of my, one of the ones I think of and laugh about, because I think it's disgusting, is the fact that we would go get ice cream and you would get a shake or a malt with half and half instead of, like, low fatter. I remember just thinking just, oh my gosh, that's disgusting, I can't believe he's drinking that. And we would probably-- [Aaron] Yeah, what was it? Circus animal ice cream? [Tom] Yes. [Heidi] Yes, with half and half. [Aaron] With half and half. Half and half cream-- [Tom] In Clairemont, yeah. And you would just, you loved it and you would feel a little sick afterwards, but it was, we were always just laughing about it for a long time. [Aaron] It was so worth it though. [Jennifer] I think that's really abnormal. I don't think a lot of people would relate to you on that, Aaron. [Tom] No. [Heidi] No. [Aaron] You're making me, I want one right now. [Heidi] I think my most-- [Aaron] That's a good memory-- [Heidi] Story of you two is how we were kind of desperate for friends, married couple friends, and when we met you at Fuse kind of offering, hey, if you guys ever want, we are about 20 minutes away, but we'd love to have you over for dinner. And you actually took us up on the offer and I think-- [Tom] A lot-- [Heidi] What was it, three to four times a week over at my house, and I loved it. I think when you throw out that, hey, we should have you guys over sometime, it never really ever happens and you kind of feel a little bit hurt that they didn't take you up on the offer, but to have you guys take us up on the offer and for us to get so close and dive so deep into both of our marriages was definitely my favorite because I mean, we both put ourselves out there and opened up so much that-- [Aaron] Yeah, we loved that-- [Heidi] It couldn't have happened otherwise. [Jennifer] And I think we were in a place in our marriage where we really needed it too. So I think that's really cool. [Aaron] We definitely were, yeah. That's what this episode's about, actually. [Jennifer] Yeah, this episode is all about friendship and fellowship and so we're gonna dive into a quote from Marriage After God from this chapter. [Aaron] And it's walking in autonomy is not only dangerous for your marriage, it is also rebellious. Our relationship with Christ cannot be separate from our relationship with other believers. [Heidi] So true. [Aaron] Yeah, so that's from chapter six of our book, Marriage After God, and the chapter title's called Walking Autonomously Doesn't Work. And when we thought about who we can interview for this episode, you guys were the first people that we thought of because in our life when we needed fellowship the most and when we were afraid of it the most, we found you guys and you found us. [Jennifer] Well, yeah, I was gonna say, it was that you guys wrapping your arms around us and inviting us to your table at that marriage bible study, which Heidi mentioned earlier, it's called Fuse. That was a turning point in our relationship and our marriage, and it just stands out to us and I think it forever will. And I'm just really excited about this because other people listening will be able to hear your guys' side of the story because if they read Unveiled Wife or if they're gonna read Marriage After God, we mention you guys and we mention your impact in our lives surrounding fellowship with other believers. And yeah-- [Aaron] Have they read what we wrote about them yet? [Jennifer] No. But now you're here and they get to hear from you guys. So I love that. [Aaron] Awesome. And you guys haven't read the chapter yet, right? [Tom] No. [Heidi] No. [Aaron] Okay, good. It's all good stuff, I promise. Yeah. [Jennifer] Okay, so speaking of that night at Fuse where we showed up, our marriage was in turmoil and we were just looking for that last ditch effort, kind of like, what are we doing? We step into this bible study, there's a lot of marriages and people there greeting one another and we're like freaking out on the inside. Kind of look at each other like, let's get out of here. [Aaron] It was terrifying. Walking into that big old, a huge open room, and how many people were there when we came? It was like probably-- [Heidi] Probably 600. [Tom] No, no. Probably about 350. [Heidi] You think so? [Tom] Yeah. [Aaron] Yeah, 350 people. It was a lot. It wasn't as full as it got, but it was pretty full when we came. [Tom] Yeah. [Jennifer] And anyways, we were trying to sneak out. We were trying to find a way to just walk back out the doors and Tom comes up and sticks his arms around Aaron and I and he's like, hey, you guys new? [Aaron] I remember getting startled by it actually. 'Cause we were walking backwards, which I know is-- [Heidi] And he's not a small guy either, so, big old mitts on your shoulders. [Jennifer] So you guys brought us to your table and that was kind of the beginning of our friendship together. So Tom, you've mentioned that Aaron's appearance at the time, he had plugs in his ears, he had a beard and-- [Aaron] Yeah, tattoos on my wrist. [Jennifer] Not the typical guy you would have been friends with back then. But can you just share, what was going through your mind at that moment? [Tom] Yeah, let's state for the record, clearly I'm not a very judgmental person. At least I don't think though, but yeah, at the time, just, here's ... I am the non-talkative one of Heidi and I's relationship. To be very clear, Heidi loves the talking and doesn't stop. So, and that's just not my style. And so God has placed us in this marriage, which is a story in and of itself or in this marriage ministry where we took over this table at this marriage group, and he just blessed it. It became a huge group of probably around 30 people, so about 15 couples, and they really, what they wanted was 10 couples or 10 people at each table, five couples. And so we were big and it was, it's something I loved. Most of those people are still friends to this day, but it was a lot for me and just how I like to operate, so yeah, I look up that night and see these two. And we are also one of the younger tables there at the time. [Aaron] Yeah, I remember that. [Tom] Seeing you guys walk in, I was like, oh gosh, they're our age group. They're probably our life experiences as of right now, whether it's young kids or no kids and some are looking over there and thinking, uh, no thanks. I don't know this girl who is an all American gal is standing next to this guy who's got plugs in his ear-- [Aaron] A little weird-- [Tom] Short hair, a beard, all these things, I'm looking. Like I am 100% as I said a minute ago, I'm not judgmental, I was 100% judging and thinking, I would never hang out with that guy. That gal looks like a great friend for my wife, but I would never hang out with that dude, we've got enough people at our table, I'm good. And there's those times that God whispers and you're not sure it's God, and there's other times where you just kind of move. You're like, what the heck is happening, because I don't really want to be doing this and perfectly honest, that's what was happening. Is I just felt the nudge and the pull, and so I got up and walked over and yeah, and you guys were ready to move out. You actually were on the way out. [Aaron] You saw it. [Tom] I remember Jen's face was one of sheer terror, of, oh God, we almost got out of here and this guy just ruined it. And Aaron's was more of a, okay, okay, good. This, okay, we'll do it. [Aaron] I needed it. I was, I needed someone to hold my hand in that moment because like, I wanted it, but I didn't know-- [Tom] Yeah, so we moved towards the table and that was literally one of those, it changed our life, changed our marriage, and it was one of those things, I'm darn glad I got out of my seat and went and did it. Because not only was that good for us, but I can also speak to others who have zero desire to include other people or you know, you hear a comment a lot like, I have enough friends or whatnot, which I think is a bad comment to make. One I've probably made my own, but it moved me out of my comfort zone and changed our lives for the better. [Jennifer] I love that you shared all of that. And so much of this book is about saying yes to God in moments like that where he nudges you or he pulls you out of your chair and you say yes to him and you do it anyways. And I'm just so you guys know, we still really appreciate that you did that for us. [Aaron] Yeah, and we not only have written about it extensively, but we share the story often and we, a part of the, what we talk about in this chapter, specifically with what you guys did in our life is when you, Tom and Heidi, said Yes to God in that one little moment, which was a series of yeses, becoming the leaders of that table and wherever God had led you before that, you wouldn't have known back then what kind of effect, lasting effect it would have in the fact that that one moment would not only turn into a lifetime friendship and relationship with us, but would also impact thousands and thousands of other marriages and people through your one act of obedience. [Tom] Yeah, there's-- [Aaron] So I, go ahead-- [Tom] We've met people, or not met, I shouldn't say that. Actually, we have. People we've met and then also people we knew that years later we talk to or run into or Heidi meets randomly in a grocery store and like I said, she talks to everybody. We're mentioned right, as you helped our marriage or you were instrumental and perfectly honest, we did nothing. We were fools, of sorts, used by God because we didn't even know we had any impact on these people, let alone strangers, but then people we knew years later say, you have no clue what you did for us. It's just, it's humbling, it's neat, and just to understand that if you allow God to use you, you have no clue what he's gonna do. And probably by the time Heidi and I are in graves, we'll have no clue what impact we had. But that's what we're supposed to do, we're supposed to be used by God for his greater good. [Aaron] Yeah, and I hope those that are listening right now, and that's exactly why I wanted to interview these people like you is because people don't know. They may think, what can I do? How can God use me? And you simply got up and said hi to us. Now, it's lots of laughter and tears after that, but still just that one act of obedience, the fruit from that is exactly what God's looking for from all of us and that's, I just love that you highlighted that. So, man, I'm loving this interview so far. Is this the one we want to go with? Okay. So what kind of barriers do you think keep believers from close fellowship with other believers? Because that's what we had. We grew in close fellowship with each other. What do you think it is that stops believers from making that deep connection and walking in obedience with fellowship with other believers? [Heidi] Oh, man. Honestly, I'd have to say pride. A lot of times, especially with social media age, you want to give your best face, you want to show pictures of your kids perfectly dressed and their hair perfectly done and you'll move things out of the background of the picture just so that way the background looks nice. But I think, unfortunately, I think people don't want to share their stink. They don't want to say, we're going through this issue or I have this deep seated issue or they just don't want their stuff out there for people to judge or question how perfect they thought their life was. And I think it's uncomfortable for people to let down that wall and share who they really are and share what their marriage is really going through. [Jennifer] Yeah, you guys have been really good at being an example of how to live transparently with other people, 'cause you guys were open with us and that opened the flood gates for us to be open with you guys because of that example. And I think it's so important for people to hear, how would you encourage someone to walk transparently with one another? How do you do that? [Tom] I think there's another aspect to it too, is from a good friend who joined the group as well that said he was tired of bible studies with people that weren't like him. And not necessarily weren't like him as in same exact life experiences, but as I kind of said with Aaron, looked at him and thought I'd never hang out with that guy. He was always turned off by, well, I tried this group, I tried that group, it didn't work. All those guys were nerds or none of those guys played sports or things of that nature. And there's a constant, I get that part, but if you're open to it, you might find that, as I tell my kids, right now in school, you may, there may be differences and clicks or different things like that, but as you get older, those things really do melt away. And especially if it's a brother or sister in Christ, you have a really deep bond that many don't understand. But there's a part to it too, when you hang out with those who aren't like you. For instance, Aaron, when you and I were in the men's fellowship group together, gosh, you were obviously younger than me, but we were both vastly younger than anyone else in that room and just-- [Aaron] Yeah, I remember that. [Tom] Stuff that we picked up from those guys who one was divorced, one was married, he was married but they were both from divorced families and kind of had a Brady Bunch type of union now. The things that I learned from that group, including on how not to talk to my wife and ended up actually causing some stress in my marriage when I told her how I shouldn't be talking to you, even though I have been, then all of a sudden she picked up on what a jerk I had been. [Aaron] She's like, yeah, you shouldn't talk to me like that. [Tom] Yeah, it was a total backfire move on my part. But it just, the things you learn from people when you continue to give it a shot and be open to it. If you go in with walls, you're gonna come out with walls. If you go in-- [Aaron] That's good-- [Tom] Being willing to hear or listen, I think everybody can find that community and like Heidi said, if you're willing to lower your walls and lower your pride, you'll find out everybody's just as jacked up as you are. It's just different levels, 'cause no marriage is perfect. [Aaron] Oh, I love that. And it's like the, it's this idea that recognizing what we do have in common, which is Christ, and being okay with that being the thing that we connect on because that's what God wants anyway and being able to throw out those preferences of like, well, I only want to spend time with this kind of person, which is hard to find the right person. It's rare that we have that kind of relationship, right. So I love that. How have you two navigated being a part of fellowship with the body of Christ? [Jennifer] And maybe how are you currently fellowshipping with other believers? [Tom] I got nudged, so this one's mine. So we no longer attend a church where it's facilitated by the church. So we met via a group that was facilitated by the church. And to be honest, thank God for them, they made it easy, right. Childcare and a building and all those things. So that doesn't exist where we live anymore, and so, and we don't attend a church that really has that. So now it's become harder work. It's no longer the ease of high school, seeing your friends every day and then you become an adult and go to different colleges or go to different jobs. It takes work for those relationships, and so that's where we are now. It's a lot of work to continue this. And so there's an aspect of that that's more rewarding. There's also an aspect that's more frustrating. So we totally get the part where continuing in this type of ministry or this type of group is not easy, but it's so important. When we take breaks from it, I don't want to call it a toll because it sounds negative or like it's destructive, but the toll it takes on our marriage is seen. It's very easily seen in that we just don't vibe as well. A marriage becomes more difficult than it has to be when we're not in fellowship with others. [Aaron] So even if it's not as easy as it was, you guys recognize that it's still a necessity and a vital part of your Christian faith is that you must be in fellowship, whatever that looks like. [Tom] Yeah, there's something to it when people ask, I work with so many people who will ask like, how often do you and Heidi fight or what do you do this, or how do you handle this? And yeah, and I explain that to them. There's a part where you share life with others and these can be people who are non Christians. Just when you share life with others and share your experiences, your victories, your struggles, that's what we were created for. And again, if I'm talking to a non Christian, I don't have, I throw God in there, but there's an aspect for them too, that even if you're not a believer in Christ, if you're not fellowshipping with people who help you get better or can take some of the load off or even just share life with, you're missing something. And so, yeah, there's a definite need for us every day, if not at least once a week, like a marriage group that we have now, we have to do it or else there's just a hole and there's a window that-- [Aaron] So you're saying is it's just a basic, it's the way God created us as humans is we need deep human connection, we need deep human relationships and that we can't just walk autonomously. And then especially for the believer, we need Christian fellowship to be around other Christians to sharpen us, to grow us. That's what I'm hearing you say. [Tom] Exactly what I'm saying-- [Aaron] Is that it's not something we can just, we can't just throw it out. Right, that's what, which is what a lot of Christians do. I use this word autonomous. A lot of believers are totally fine with autonomy because that seems easier. Like, oh, just, you can have what Heidi said. You can have this facade and long as you, let's be cordial and we'll be nice and all, we'll hug on Sundays, but then you're not allowed to know who I am, you're not allowed to see the dirt in my life, you're not allowed to call me out on anything, you're not allowed to know that the dark parts of me. [Jennifer] How do we grow and mature if we're not letting people see who we are? [Aaron] Well, we can't. [Heidi] We don't. [Aaron] That's the point is, I don't want to grow and therefore I don't tell anyone or show anyone who I am. [Jennifer] But a marriage after God wants to grow. [Aaron] Exactly. [Jennifer] So a marriage after God's going to be doing this. You touched on a point about your church not facilitating that easy fellowship time currently. And so for people who are listening right now, what would you say is an action step for them to be an initiator in this, so that they're not waiting around, waiting for an invitation or waiting for it to be easy. What can someone do today? What can a couple do today to-- [Aaron] Be the starters-- [Jennifer] To be the starters of-- [Aaron] Be the initiator. [Jennifer] Yeah. [Aaron] Do what Tom did and get up and walk over and put his arm around us. [Jennifer] Yeah. [Tom] Yeah, I think the first and easy start for me would be at a church you're at, you obviously, if you don't, if you go in and out of that building and don't connect or talk to anybody, you're doing yourself and that body a disservice. So it'd be just connecting very simply with people at the church. Again, maybe somebody that you have, when you pick up your kids from childcare, obviously there's somewhere you can connect. There's so many spots to just start there. The other might be just friends in general. And Aaron, you brought up a point, the autonomy. There's something to it, right, where there's a couple of good friends of mine who I'm not as extreme as this, but literally don't like to talk to somebody. And it's funny though when you ask the question, well, what happens when you're out in public and there's a Christian connection of sorts, like somebody mentions something or you see somebody praying and somebody mentions it to you. There's an instant spark, there's an instant connection because out in the world when you find somebody who has that fearlessness of being able to say, yeah, I'm a Christian, or lives it out in front of you, there's a spark that you automatically have a bond. And so at your church, I think it's the easiest spot to have where it's reached out, somebody needs somebody or friends that you have now that you know are believers. Talk to them about getting together in a marriage study, whether it be one of your guys' books, whether it be something on DVD where there's a series going on, just starting somewhere or getting together on a bi-weekly basis just to hang, to chat. Because from that, as you guys know we used to do, we used to have dinners at the house, from that just hanging out, will spur those conversations and start something that you can then morph into, hey, why don't we start getting together on a weekly basis or bi-weekly basis. [Aaron] So true. I'm gonna take one of your guys' strategies. You guys had an open invitation to us to come over to eat with you guys. And not everyone is gonna, like you said, not everyone takes you up, but you said, hey, come over. And we said yes. So there was times that we went over and you didn't even know we were coming over. We just, we just texted you when we were around the corner. Was like, hey, hope dinner's ready. [Tom] You guys make it sound like that's the exception. That might've been the rule, that it was, you guys popped in a lot, and again, we loved it. It was not, we do it to people now. We'll just show up at their house with ice cream or something. [Aaron] They're like, uh-- [Tom] Yeah, their faces, they're not happy to see us. And then it ends up being a half hour, hour visit and laughing and fun and then we leave, and we'll get a, hey, thanks for stopping by, even though we showed up at the door. There's been many wives who looked at me like, what are you doing here? So yeah, it's-- [Aaron] Yeah. I think it's just the, it's not common for people 'cause we think like, oh no, you don't want to bother, you don't want to invade someone's privacy. You don't want to. But I think that's what we're supposed to do as brothers and sisters. Now, we don't want to step over boundaries and be rude and be, but like actually go into, hey, I'm in the neighborhood, would you love, I'd love to bring you a coffee. Hey, I'm grabbing a doughnut, you want one? Or a breakfast sandwich or whatever it is, just to spark that. You guys were a great example of that, opening up your home to us, giving us an invitation to be over and actually following through with it and making a meal with us and making it a night. Like we would stay at your house until two o'clock in the morning sometimes. [Woman] Sometimes we-- [Aaron] This was before kids. [Woman] Yeah. [Aaron] But yeah, I think that's a great idea. Just starting where you're at, looking around at you and saying, hey, there's a bunch of believers around me. I should not be hiding. There should be no reason that I can't go spark up a conversation and say, who are you? How can we know each other more? [Jennifer] And in this chapter of the book, I share a story of when Heidi invited me over to her house for one of the first times that we would actually spend girl time together-- [Aaron] This is a good story, yeah. [Jennifer] And I don't want to give too much away because I want them to read it, but I basically said I was busy and felt the conviction of the Lord prompt my heart to call you back, Heidi, and I had to apologize for lying and I did go over there. And so I just want to share that briefly because I think so many times, we do excuse ourselves or justify why we can't hang out or maybe we're afraid or maybe it's too uncomfortable. But I just want the people listening right now to know it is so worth it. It's worth it to get out of your comfort zone and it's worth it to build these friendships and these relationships with other believers because they will impact our lives for the better. [Aaron] Yeah, just like you guys have impacted our life. And in what you're saying, Jennifer, it makes me think of this. How many times have I said, hey, why don't you call so and so and see if they want to hang out, and you say, no, they're doing this thing today or they have this-- [Jennifer] I give other people excuses. [Aaron] And I tell them, I'm like, did they say that? And she's like, well, no. And I'm like, so they didn't tell you no? So I think sometimes when we feel that nudge, that Holy Spirit draw to reach out and to call or to connect with, and we say, no, they're probably this or they're probably that, and we say no for people before they say no. And to avoid that, to let the person say no. [Tom] To this day, that's me and Heidi. I think one of the better compliments she was given, whether it was a compliment or not, was you're a spiritual nuisance, because she doesn't let, she won't let you off the hook. [Jennifer] That's true. [Tom] She'll keep coming-- [Aaron] It's true, Heidi's got a gift. [Tom] It's truly a gift of God to her. It annoys the heck out of me sometimes. But especially when we're trying to be somewhere. [Aaron] But look at the fruit in your life because of it. [Tom] Yeah, exactly. So I have to balance that when I do get annoyed and remember how it's blessed me. But yeah, I mean, she's very good at this and doesn't, kind of tracks people down. [Aaron] So cool. [Jennifer] Awesome. Okay you guys, well, as we wrap up this awesome interview, in your own words, what is a marriage after God? [Heidi] Honestly, I think a marriage after God is putting God first and not your spouse and not other people, not celebrities, not your own image, but putting God first in your marriage to bless yourself, bless your marriage, bless other people. Just really living for God and not for the world. [Tom] What does that look like? I had a conversation with our daughter two days ago. We were driving back from somewhere and she says, so you love God first and then mommy and then us. And I said, yeah, it doesn't make sense, does it. And she says, no, it doesn't. Because one time I was a stupid dad and I answered the question honestly when she said, well, who's your favorite girl? And I answered mommy immediately. To an eight year old at the time, that was a really stupid answer on my part. But I mean, it was just not smart because it broke her heart and I had to try to come back and explain that to her because she's eight, she's not supposed to completely grasp that yet-- [Aaron] I don't have faith like that yet-- [Tom] But yes, sure, and a couple of days ago in the car, I said, it doesn't make sense and here's why. It's because God wants your focus on him. But in doing that, he opens you up to everything else and gives you a greater appreciation, gives you a greater understanding and gives you a greater love for other things. And so by mommy and daddy focusing on God first, it allows us to be better husband and wife to each other and allows us to be a better mommy and daddy to you. Even though a lot of times you probably don't think we're that great, that's what it does. And I said, and it's hard for you understand, I understand that, and you won't until you are married or have kids, but in the end, people have asked, why have we had such a great marriage. And it hasn't been perfect, but it's been the best decision I ever made in my life. And for a male to say that to another male, in our day and age is, Aaron, I'm sure you see it on people's faces when you do it. They look at you like you're crazy. And yeah, it's the absolute best thing I ever did in my life, and we just, if we focus on God first, right, though Sunday mornings you don't feel like getting up and going to church and you do and you walk into a sermon that's on marriage and you get, and God just talks to you there. It's putting him first whether you want to or not on that particular day. None of us are perfect. And then it just, everything else unlocks. Churches, I know I'm rambling. Churches know this fact. If they want to grow their church, they can get the wife, that's fine, and you'll get the kids maybe. But if you get the husband, you get the entire family and that's how you grow your church number, and that's a different topic, but again, if as a husband-- [Aaron] No, what you're saying is husbands need to be leading spiritually and setting the tone in their home. That's good. [Tom] Yeah. Before you rudely cut me off, what I was saying is, if we as husbands lead, it's infectious. It doesn't always happen, but it's infectious. The wife then follows, then the kids then follow and it's a beautiful thing. And I've noticed for me, if I slip and I'm not focusing on God, my house slips. So long winded answer to your question is both of you focusing on God, it's funny how the rest just seems to, not easily sometimes, but it does, it falls into place. [Aaron] Good. Thank you, that was really good. [Jennifer] That's so good. Thank you guys so much for sharing with us today. We just want to invite everyone to take a moment to join us in prayer. Dear Lord, thank you for the gift of your body. Thank you for the gift of fellowship and friendship. May we be people who are motivated by love to reach out and be a friend to others. We pray we would have the courage and confidence to be people who welcome others in, who are transparent, who are there for others, who lift others up and who pray for others. Use our marriages to be an encouragement to other marriages. Use us as a team to bring you glory. Help us to never live in isolation. Help us to never be divided. We pray the enemy and we pray our own flesh wouldn't get it in the way of fellowship. May our desire to participate in your body increase even more. May the way we treat one another be a light and an example to the rest of the world. In Jesus' name. Amen. [Aaron] Amen. So Tom and Heidi, we love you guys. We miss you guys. [Tom] Thanks for having us. [Aaron] We need to see you soon. [Tom] Sincerely. [Woman] Miss you guys. [Aaron] And thank you so much for giving us some time today and in blessing everyone that's listening. So hey everyone that's listening, thank you so much for joining us on this sixth week of the series, and we look forward to having you next week. Did you enjoy today's show? If you did, it would mean the world to us if you could leave us a review on iTunes. Also, if you're interested, you can find many more encouraging stories and resources at MarriageAfterGod.com, and let us help you cultivate an extraordinary marriage.

Is it better to lease a Volkswagen or buy one? If you're like me the answer has been 'buy!'  Because no way was I going to pay for something that I didn't own.  But then, slowly, I began to realize I never really own my cars. And that's because I'm making payments forever.  Plus by the time I'm done making payments I want something new anyway!  And that doesn't even mention the cost of repairs once the vehicle is out of warranty.  Another factor not being mentioned is the breakneck pace at which technology in our cars is progressing.  (Why would we want anything more than a few years old?) So, in this iDriveSoCal podcast, long-time Volkswagen expert Shant Bashian from Ontario VW joins me to sort out the options.  Perhaps leasing a Volkswagen is the way to go for you.  Or maybe buying. The answer is different for everyone.  But leasing has been increasingly popular over the past several years and for good reason.  (I think, because, yes I've converted and now always lease my vehicles.)  Got Specific Questions? Shant's offered to answer your specific Volkswagen lease questions too.  Email is SBashian [at] OntarioVW [dot] com. Continue reading or click play below.  Either way, here's you need to know about VW leasing. ***Transcription*** Recorded @ Ontario Volkswagen in Ontario, CA Should You Buy Or Lease A Volkswagen? Shant: The first question's gonna be, "What are you gonna do with the car? How many miles are you gonna put on it, and then where do you see yourself three years from?" Then we'll determine if you should lease a Volkswagen or buy, and then we'll outline both the lease and the purchase. You could see the monthly payments on both scenarios and then you decide which one is more fit for you. Tom: Welcome to iDriveSoCal, the podcast all about mobility from the automotive capital of the United States, Southern California. Tom Smith here, and I am excited to be at Ontario Volkswagen with my good pal, Shant Bashian, the general sales manager of Ontario Volkswagen. "What are you gonna do with the car? How many miles are you gonna put on it, and then where do you see yourself three years from?" The topic du jour today is one that's on a lot of people's mind when they go to buy a new car and that is just simply, "Do I buy or do I lease?" I've formed some personal opinions on it myself, but we are going to hear from the man here at Ontario Volkswagen. Interested In Buying Certified Pre-Owned?  VW's CPO warranty and program benefits explained here. Mr. Bashian, thank you so much for joining me yet again. VW Lease & Buy Factors To Consider Shant: Thanks for having me Tom, and that question comes up all the time. I find that most people know whether they want to buy or lease a Volkswagen because they understand it now. There's a lot of information out there. For us, we have a different perspective regarding buying versus lease. We're in the business and we like to get the upgraded product rather quickly, but it really comes down to this. Shant is always happy to layout the Volkswagen Lease versus Buy options. What are you planning on doing with the vehicle? What's the purpose of the car? How many miles are you gonna drive it? And, are you the type of person that likes to have something new rather quickly? Do you get bored of your vehicle? Warranty Consideration For Leasing Or Buying You have to look into that. Buying a car, it's more of a long-term commitment, really. So, most people right now will purchase a vehicle and finance it for 60 to 72 months. Most vehicles will come with three year or four-year warranties backed by the manufacturer. When it comes to Volkswagens, we have a six-year, 72,000-mile warranty right now- Tom: Yeah, big one. "When it comes to Volkswagens, we have a six-year, 72,000-mile warranty..." Shant: ...that covers bumper to bumper and the powertrain. So, when it comes to purchasing a Volkswagen throughout your m...

2018 Volkswagen Passat GT The 2018 Volkswagen Passat GT packs a whole-lotta sports sedan into a ridiculously reasonably-priced package. The Passat GT's exterior and interior Euro-styling beckons its luxury sister-brand Audi with every detailed element of fit and finish. Randy Halcomb from Ontario Volkswagen recently invited me for an afternoon test drive of the 2018 Volkswagen Passat GT. In this iDSC Podcast he joins me for a detailed and exciting review. And, as a special bonus for iDSC Podcast listeners, Randy shares his personal cell phone. If you're interested in the Volkswagen Passat GT, or curious about another model in the German carmaker's line-up, you can reach Randy directly @ 909-772-1728 or email him @ RHalcomb [at] OntarioVW.com.   ***Transcript*** Recorded July 17, 2018 at in Ontario, CA 2018 VW Passat GT Tom: I got to drive the 2018 Volkswagen Passat GT. And that's a top-of-the-line sport version of the Passat, and V6 engine with 3.6 liter, 280 horsepower, putting out 258 pound feet of torque. Randy: It definitely had enough giddy up and go. It's very responsive. As soon as you touch the gas. Tom: Welcome to iDriveSoCal, the podcast all about mobility from the automotive capital of the United States, Southern California. Tom Smith here with my good buddy, Randy Halcomb from Ontario Volkswagen. Randy, thanks for joining me again. Randy: Hi, Tom. Thank you for having me again. Tom: We are out at Ontario Volkswagen in the Los Angeles suburb of Ontario, California. And this little ditty that we're about to head down the path of -- It's cute, isn't it? This little ditty we're about to head down the path of. Vehicle review, the 2018 Volkswagen Passat GT. I just drove that thing, and fun, F-U-N. If I can take a page out of the Professor's little playbook here. Well, I got to drive the 2018 Volkswagen Passat GT. And that's a top-of-the-line sport version of the Passat, and V6 engine with 3.6-liter, 280 horsepower, putting out 258 pound-feet of torque. And as Randy can attest as he drove with me in this test drive, I had a hard time not chirping the tires every time we came from a dead stop to accelerating. It was fun. Randy: Yeah. It definitely had enough giddy up and go. It's very responsive. As soon as you touch the gas, almost a little too responsive, it kind of felt. So, take a little while to get used to. 2018 VW Passat GT Value Tom: Yeah. The tires just chirped a little. I didn't stay on it in a sense that they were sliding too much, but that's a very, very fun car. The price point on the 2018 Passat is kind of ridiculous. I mentioned to Randy, every time I hit the accelerator, I realize the sticker, just MSRP, doesn't make sense. I mean, the MSRP on the vehicle is how much? Randy: It was like $30,000, somewhere in that range of low 30s. To think of getting a vehicle with 280 horsepower for $30,000, a German-engineered is unthinkable. Tom: Yeah, yeah. Beautiful car too. It has that that Volkswagen red line on the grill that is oh so distinctive, as well as oh so sharp. The one that we drove was silver or gray. I'm not exactly sure what Volkswagen is calling that color. Randy: Yeah, it was the silver. Tom: But the outside of the vehicle is just absolutely gorgeous. The sport wheels, very cool. Nice accent with the red brake calipers that can be seen through the sport wheels, also very cool. That red line with the bold black grill, I think, they call it a honeycomb, if I'm not mistaken, it just really, really is a sharp look to the exterior of the vehicle. And in going inside the vehicle, the carbon fiber accents, very cool as well. And the seating and overall comfort, very sporty, but, yet, still very, very comfortable, and surprisingly spacious. Spacious Interior  Randy: One thing is seating. Probably more so in the passenger seat that I noticed was the amount of shoulder space. And the room that I had sitting in the passenger,

2018 Volkswagen Tiguan - All-New Generation The 2018 Volkswagen Tiguan is a tremendous improvement over the vehicle's first generation. Because it's been completely restyled - inside and out.  In fact, it even has an optional third-row of seating!  And for a compact crossover SUV, that's a very big deal. Plus, third-row is not only accessible but functional.  Sure, it's for smaller adults and kids but nevertheless VW gets high marks for this all-new redesign. We sent Bernadette Sanicola to Ontario Volkswagen to pick up a 2018 Tiguan for this review. -->Continue reading or click play below to listen.

Muckenthaler Motor Car Festival  The Muckenthaler Motor Car Festival is Orange County's oldest running auto show and one of iDriveSoCal's favorites. And that's because our very own Professor, Clinton Quan, has it at the top of his to-do list.  So, the two-day event happens only once a year. Upcoming Muckenthaler Motor Car Festival event details HERE. As the local, Southern California, summertime auto show season heats up we dispatched the Good Professor to the Muckenthaler Mansion.  Hear the details in this iDriveSoCal Podcast. ***Transcript*** Recorded May 21, 2018 @ Benztown Studios in Glendale, CA Orange County's Oldest Running Car Show Clinton: The Muckenthaler Motor Car Festival, they say it's the oldest running auto show in North Orange County. It's a two-day event, and that's why it's called a car festival. On Saturdays, it's hot rods and customs. I always go on Sunday, the big day, the Concours d'Elegance. These are the car shows that I really enjoy attending the most, are the ones that are once a year, because it really is something that's special. Tom: Welcome to iDriveSoCal, the podcast all about mobility from the automotive capital of the United States, Southern California. Tom Smith here, and I am joined by The Professor, Mr. Clinton Quan. Say hello Clinton. Clinton: Hi Tom. Tom: Today's topic is going to be an auto show, a very special auto show that The Professor attended, what was that, just yesterday, I guess it was this past weekend, huh? Clinton: Yes. It was just yesterday. Tom: The Muckenthaler Motor Car Festival in Fullerton, California. That was at the Muckenthaler Estate, which is now a museum. Clinton: Yes. It's a museum, cultural center art gallery. Tom: Okay, very cool. And you've been to this show before right? Clinton: I've been the show a number of years. It's one of the shows that I attend annually. Tom: Tell us all about it. Fullerton, California - Muckenthaler Motor Car Festival Clinton: Well, the Muckenthaler Motor Car Festival, they say it's the oldest running auto show in North Orange County. It's a two day event, and that's why it's called a car festival. On Saturdays it's hot rods and customs. I always go on Sunday, the big day, the Concours d'Elegance. Tom: You didn't go on Saturday this year. Have you ever been on Saturday? Clinton: I've never attended on Saturday. I always go on Sunday. Sunday is the big day with all the classic cars and sports cars. There's also a big Jaguar showing there, The Jaguar Club. That's probably one of their biggest events of the year. Tom: Yeah, and speaking of which, I was just looking at Clinton's pictures. If you've seen Clinton in some of the images on iDriveSoCal, you know that he can bust out some pretty interesting outfits. I like to call them costumes. Clinton was definitely in full regalia for yesterday's event. He was dressed as if he was just out of a James Bond movie, driving a Jaguar perhaps, something English, with the top down through the English countryside. But, another fantastic costume as always for The Professor at an automotive show. Clinton: Oh, thanks Tom. Tom: Tell us about your experience there this Sunday. And it's just once a year right? Muckenthaler Mansion Clinton: Yeah, it's once a year. These are the car shows that I really enjoy attending the most, are the ones that are once a year, because it really is something that's special. It's one day... Well, the Concours, it's a one-day event. I usually get there early, so I can take some really nice photos. There was a special appearance by the original Batmobile. I don't know if this was the actual one used in the television show, but it looked just like it, even the interior. Tom: Nice. Clinton: That was really, really cool. That definitely made my morning. Tom: We're going to try something new with this podcast. If you listen, sometimes everybody listens to podcasts a little bit diffe...

E. B. Moss: Hey, it's E.B. Moss from MediaVillage and this is Episode 12, basically live from the Consumer Electronics Show in Las Vegas. I’m with MediaVillage Journalist David Polinchock who’s an expert at CES. So... We're mic’d up together and we're going to walk around, enjoy the ambient sounds of CES 2018, and I'm going to tap your brain... a Vulcan mind meld!, appropriately for CES. We're going to ask you to give us some insights. INTRO: Ready for some insights from those inside the media, marketing and advertising industry? Welcome to Insider Insight from MediaVillage. MediaVillage.com is the home for exclusive thought leadership with content by, for and about agencies and networks. From digital experts and add tech providers to CMO's and CRO's. With villages of content focused on everything from Wall Street reports to women in media. Now let's get some insights. David: First stop? We're here at the Google Home gallery. They've put together a kind of cool exhibit of what you can do with Google Home and how it's changing how we all live. E. B. Moss: Wow, great. Google has been sponsoring everything including the city monorail where they even piped in some pretty compelling audio. So when you're a captive audience on the monorail it's instructing you to learn how to utilize Google Home like saying, "Hey Google play me some soothing music" - which is good for when you're trapped on the monorail to hear little bubbling brook sounds. They really have done a good job in their convention sponsorship presence. David: This kind of new audio assistant is what we're getting in homes and in the rest of our lives. One of the AR head manufacturers announced a partnership with Alexa so you get voice control in your heads-up display now so you can see how this is changing how people are really doing things at home. One person on my last tour had one of the voice connection systems all throughout their house and realized they had to take it out of the kids room because the kids were doing their homework by asking it all the questions and just getting all the answers. You know, there's good and bad with everything. But this ability to ask a simple question, or check my schedule works because if I already have "Hey Google" phone I can use it and I get information there but now I can move it around from thing to thing. I think what people are looking for at large is a connection of all their things so it's not "I have this list over here and this list over here". So the fact that I can ask Hey Google on my phone but when I get home at night I can follow up the conversation with my Google Home Assistant because it's all connected. E. B. Moss: Oh, so the connectivity. Got it. David: The other thing they've been working on are ear buds that translate something like 70 languages. It literally is the communicator that we saw for 20 years on Star Trek. E. B. Moss: So, I can date a person who doesn't speak English! David: That's correct. And, if you look over here we also have it in air conditioners and washing machines and a variety of things now. So that's what, to me, becomes really exciting about this: you're seeing Hey Google as you're seeing Alexa and other products leave the single device and being incorporated into all of our lives. E. B. Moss: Google Home really was everywhere at CES; trying to connect the dots with audio and smart speakers and voice assistants. The other thing that was everywhere was Audio. I spoke to Tom Webster of Edison Research, as well as the head of marketing for Audio-Technica who had some unique ways to use headphones. E. B. Moss: Tom Webster was on the panel on the smart speaker research that just came out from Edison Research in conjunction with NPR. So I grabbed him afterwards. ...Hey Tom... That was fascinating. I know that you're going to be sharing some more of this information though MediaVillage in general, but specifically, a couple of things jumped out at me today were the fact that gifting over the 2017 holiday season really should've exponentially upped ownership of smart speakers. So that was good? Tom: Yeah, we've seen the initial adoption of smart speakers grow at a clip more than we saw smart phone adoption grow when we first started tracking. It's certainly both Amazon and Google coming out with $29 units had a lot to do with that but I think eventually we're going to stop caring about the devices themselves because that technology is going to just be baked into everything. E. B. Moss: So, that's an interesting point because Google is all over the show and promoting their digital assistant, Hey Google, but it's still only about 70% in devices own versus Alexa. What do you think it needs to do to compete more? By the way I think you said we're at about 16% ownership in America right now, so there's still plenty of growth opportunity there. What do you see the differences being and how do you see it competing more? Tom: I think, first of all I have no doubt that they're both going to be very competitive devices for a long time to come and for a lot of people it's just learning the use cases. We do know from the previous iterations of Smart Audio Report that we found with NPR 88% of the people who have an Alexa are Amazon Prime members. So there is a natural connection there. They're already being marketed to, in a way that is contextual for them. I think the more that Google educates listeners about what these devices can do and just more devices. Again the technology is just going to start being baked into everything and by the way it's already on your phone. One of the interesting things we found in our research is that 44% of smart speaker users tell us they're using the audio assistants on their phone more as a result of using the smart speaker. So it's just learning education and getting people context. E. B. Moss: And a brand that has good social media followers will do a service to those followers and enhances its own position by teaching them how to use smart speaker skills that they've created, right? Tom: Absolutely. I think we used to ask ten years ago "What's your mobile strategy?" Now I think it's a valid question to ask what your audio strategy is because people want to communicate with brands. They want to communicate with brands that they care about and they want to have those kinds of relationships and those kinds of experiences. E. B. Moss: So last question.... You mentioned a couple of the obstacles that we still have to continue to overcome: the perception of trust and the perception of security. What do you see happening? Tom: Well, those are valid concerns. First of all far be it from me to poo poo them because they are in fact valid concerns and when we interviewed people who don't own a smart speaker but who are interested in the category; three of their top concerns were all related to security, privacy, insuring their data, having the government listen in on their data. These are all valid concerns and all of the makers of this technology are going to have to find ways to address them because it's one thing to say "O.K. Google or Alexa play some Fleetwood Mac" it's another to start reciting your credit card number into it or something and those concerns are going to have to be addressed. E. B. Moss: ...So now I'm heading to Audio-Technica. You might know them for their turntables and headphones. They are giving me a welcome treat of a chair massage...I'm going to put my noise-canceling headphones on right now.... Speaker 5: "Let's begin by centering on the breath. ... slowly exhale and imagine your breath moving out through your ears as well. Cleansing them, forcing out all the toxic noise you've observed from the show floor and setting it a flame to burn off like so much painful gas..." E. B. Moss: That was one of the funnest ideas on the show floor. It was practical and sort of like a forced pre-roll listen in a good way. So I'm speaking to Director of Marketing Communications for Audio-Technica, Jeff Simcox. Jeff: Hi. How are you doing? Are you relaxed? E. B. Moss: I'm so much more relaxed. How did you come up with the idea? Jeff: Well, what's one of the reasons for wearing noise-canceling headphones? You want to relax, knock out all the annoying sounds and get into yourself, into the music. We just thought on the CES show floor we'd add that little extra thing to help you relax and lose yourself and have a massage while you're enjoying the headphones. My boss is like "You've got them in the chair so give them a sales pitch." And I'm like "who wants to lay there and just hear a dry sales pitch"? So it was our way of saying "Okay, you know, [inaudible 00:11:30] in that we can give you a little bit of entertainment, give you a little bit of a laugh. Now feel the tension escape from your ears like so much painful gas." It was one of my favorite lines.  E. B. Moss: As we made our way though CES you couldn't help notice autonomy everywhere. From autonomous cars to the super sonic Hyperloop; also autonomous public transportation helping the lesser abled. E. B. Moss: Initiating autonomous drive. I'm about to experience it, in 90 seconds. What it's like to be on the road and not in control. I'm at the Intel booth right now. Very cool. But I think it might drive me a little bit nuts if I had to hear all of the play by play of the autonomous driver. Pedestrian detected, anomaly detected, slow down. E. B. Moss: Now we're at Hyperloop and I'm talking to the Director of Marketing Ryan Kelly. Ryan, It looks like a long monorail pod from the future. What is it? Ryan: Elon Musk in 2013 had a vision for a new form of transportation. A bunch of VCs at Silicon Valley got together and founded Hyperloop One. Now we are actually Virgin Hyperloop One, three years later, which is very exciting. So now Richard Branson is now our chairman. Ryan: I'll tell you a little bit about the technology. Hyperloop basically the pod that you're looking at just broke a speed record, which is really exciting. We went 240 miles per hour in 300 meters at our test site 40 miles outside of Las Vegas. We're really excited about. So how does that work, how did we get there and why do we think it's the future of transportation? Hyperloop is in a tube so this pod was in a tube, we suck out almost all the air out of the tube to almost zero atmospheric pressure. It's not a full vacuum but very, very close. What that does is it provides frictionless travel. What does that mean? That means we can reach higher speeds than Maglev trains that you might see in Japan, in niche markets. It also means that it's more energy efficient and effective because we're using passive magnetic levitation. So that means once we start and accelerate at that point we're floating. So this actually levitates above a track, which is pretty unbelievable. From a cost perspective that's huge cost saving, not only for energy efficiency but also for building track, et cetera. E. B. Moss: I know the sustainability aspect is very important to Mr. Branson. Ryan: Huge. Yeah, it's absolutely. So sustainability is definitely something that we're looking towards. We'd like to get something up and running by 2021 and if you think about where we're going to be in 2021 with autonomous vehicles, with cleaner energy and we're completely energy agnostic solution, which we're really excited about. Not only going fast but thinking about how the future of transportation works. David: Right, so being both New Yorkers I know you've gotten some approval for New York track, from discussions. Ryan: Well, there's discussions. We are a very ... even though some people might see this as a cry in the sky opportunity a lot of our executives have worked in government before. We know how the system works in the United States. You have to go through a regulatory and safety process. We don't want to be seen as a paperwork company that's going to disappear in two years faking all these different things. Ryan: So we have directors of policy here that are working with the federal government. We've made headway in places like Colorado where legislature has signed a memorandum of understanding to look at these. That's actually started already but you have to remember that we need to make sure that it's safe for passengers and we need to go though our safety process. So we kind of understand that but I think it's really interesting because we kind of have a VC type philosophy and coming and working with government. Those are some of the slowest movers. So kind of working that out, working for structure has historically been or seen as a slower moving process. Merchants of VC digital world and then combining this with structure is a really interesting combination. Not only have we seen progress in the United States, we've seen progress in the UN [inaudible 00:16:52] road and transit authority there, we have a proposal to them. The Netherlands and some Scandinavian countries. Started to talk about the UK as well. So we've made some groundwork. David: So, if I'm inside what's my experience? Ryan: Sure. Actually we're partnering with Here Technologies and this is the booth that we're outside of right now. This is the first time that we're talking about the passenger experience in public. 2017 for us was what we call our kitty hawk moment, prove the technology works. Now 2018 is about lets get real, how do we commercialize, what's the experience going to look like, how we work with regulators, et cetera. In the same way that in the digital space we expect fast on demand and we expect a personalized, customized experience we're trying to bring that into the infrastructure mind frame, which hasn't necessarily been the case because this is one of the first new forms of transportation over 100 years, We're trying to incorporate this thing. Ryan: Let's say I book a ticket for the Hyperloop. I want that experience to be one, for example, where I'm here in Las Vegas I have turn by turn walking directions so if I'm inside this crazy convention center I see yes I know I have to walk down the stairs and to the right of the Starbucks to go get my Uber, which will already be there because they know that it takes ten minutes for me to walk out of this craziness. Take my Uber to the Hyperloop get in the Hyperloop, they know that I'm having a meeting with three other people that I met at CES so they're going to give me a customized pod with meeting table et cetera. Versus I've had enough of CES and I don't want to talk to anyone I know and I just want a silent pod and then when I get off the Hyperloop powered by Here Technologies in the future when we get this thing up and running. My Uber's already there and potentially maybe there are other apps like Seamless, et cetera, that by the time I get home my pizza is there. E. B. Moss: Will this exercise for us also because you just eliminated all of the walking that we do. Ryan: Well, I don't think it's there. All the pieces are there so I don't think it's that far of a stretch to get there. Imagine all the pieces and components are there we just got to put it together. E. B. Moss: Yeah, a much different experience than trying to get on the monorail with 5000 other people all crammed into one car, which took me 40 minutes. Ryan: Let's talk about that because that brings up a really good point. So what we'd like to do with the Hyperloop is have pods leaving, seconds; fast, fast, fast. When you have a train that has certain point A to B stops everyone is crammed on the train and then pushes out at the same time. Here we're aiming for consistency so that the other modes of transportation that we're connecting with create more of a flat traffic environment versus these waves where they're not ready. E. B. Moss: I love it. Ryan, thank you so much. Ryan: Thank you so much. E. B. Moss: So we stopped at the booth called Accessible Olli and I'm speaking with Brittany Stotler of Local Motors. So tell me what the connection is Brittany. Brittany: So we are here to show a new project that was announced last CES with CTA Foundation, IBM, and Local Motors. Talking about what it means for people with disabilities or that may not have the function that everyone else has and then as well as the aging community. Trying to make vehicles that are going to be pulling the drivers and age out of them because they're self driving vehicles. Trying to figure out how these people are going to start interacting with the vehicle, making it easier for them and ideally providing them more freedom. We based this on personaes, such as Eric who, though blind legally, he did not start out blind; he's actually an engineer from IBM and was one of the big people behind trying to help us figure out how to make a vehicle and make an Olli stop accessible for somebody who is visually impaired. Another persona is wheelchair bound but doesn't like to call attention to that aspect. So having the accessible Olli be able to communicate with them and use these vehicles allows them the freedom to be going out without someone else there to continually load them because they would roll onto Olli themselves and it automatically secures their wheelchair. Push a button to release them, they can roll back out of the Olli stop and they're all set to go. So ideally you'll have an app on your phone requesting to get on the next Olli that's coming into the station with your preferences set, so if you are in a wheelchair, if you visually have issues or maybe it's your hearing Olli can actually sign back and forth to you though the stop and through the actual vehicle. We’ve got a couple of different options that we're working with so ultrahaptics - a really neat technology system which, for those who can't see or have limited mobility they can actually ... rather than having to press a button ... can just wave their hand in front of it and you feel it and it creates like a virtual button for them. But there's also extendable to some vibrations that can actually drive them to an open seat so they don't have that awkward moment they maybe have to deal with on a daily basis of maybe actually sitting on somebody that's already there but they couldn't see them. E. B. Moss: What's the revenue model for this? Brittany: We are selling Olli and Ollie stops to cities - master planned communities, which is where a lot of the elderly will come into play - and then into large campuses and theme parks. Everybody across the board is thinking about how to integrate Ollie because it helps pull down costs: they can move people out of a bus driver position and turn them into another position, gives them a few new skill sets hopefully.  E. B. Moss: Is there an opportunity or a plan to take advantage of some of the data capture via the app? Brittany: There is potential. Currently we would own all of that data though our app but depending on the partnership it could potentially be a white label for a city’s Olli. They can wrap it however they want on the exterior. There's potential for glassine products, you can put text, you can have a video playing, and it'll go on any of our windows so it turns into almost mobile advertising. David: For our readers and our listeners in this case, I think, this is an opportunity to reach this new audience in a very compelling way. Brittany: Right. You're just the only [crosstalk 00:24:35]. So you're on a university campus and you have all these students that are getting on, they're going from their parking structures to a certain place on campus but they're going to go by Pete's Coffee every single morning and as they're rolling up or they're getting ready to go up to that stop Pete's Coffee advertising comes up on the app or it comes up within the bus to show come inside tell us you were just on Olli and here's your code and you get a discount. It starts driving traffic and then that's another way that the whoever's purchasing to actually operate the vehicles they can start recuperating and making money on the advertising piece. E. B. Moss: So a traffic driver driving traffic. Brittany: We're trying to get rid of traffic. E. B. Moss: Thank you so much for your time [inaudible 00:25:21] Beautifully stated and a very important application for all members of our community to be able to be more mobile ... Brittany: More freedom for them so thank you to all of our partners. E. B. Moss: For a less autonomous but very elevating experience we spoke to the Head of Marketing for Workhorse. He described their octocoper. E. B. Moss: So what are we officially calling this? This is experimental [crosstalk 00:25:54] Workhorse: That's a good question. We've just been calling it personal electric octocopter. Octocopter, eight things octo. David: What's the range on it? Workhorse: 70 miles. David: That's pretty good, that many miles. Workhorse: Gasoline generator that powers it so once you go 70 miles toward hop you gas up ready for the next hop. Not waiting for the lithium-ion battery for hours to charge up and all that stuff. You can just keep going. Normal helicopter you have to have pedals and those handles. This doesn't have any pedals or any of that stuff. We fly like a drone. So it'd be, you know ... David: You don't fly it like a drone. Workhorse: I mean we had this on display in Paris and all the kids that came in 15 they could jump in there, let's go, let's take it up because they're so familiar with the video game and all that stuff. So that's the way this flies. E. B. Moss: So what's the flying experience like? I mean I've been in a glider and I've been in a helicopter, somewhere in the middle? Workhorse: Yeah, I would say so. It wouldn't be as much as a glider, which is just pretty basic but it is also not as complicated as the helicopter. See this only has a ceiling height of flying of 4000 feet. Okay, so it's just enough that you're up and you're flying. So, it's meant to be like a different method of transportation. In America the helicopter's been here for 78 years, last year in America they sold 1000 of them new, that's not that big of a market. So we're not really planning on taking market share from commission on helicopter. We're kind of planning on creating a new category. So you've got to think of it as a new way of transportation, like we were kidding around about the New York City and all that stuff. David: And what's the price point on it or what will it be? Workhorse: We have price point at 200,000 dollars and at this show we can take your name and ... E. B. Moss: Take Credit Cards? Workhorse: $1,000 and your place is saved in line and then we would probably start delivering them in 2020. E. B. Moss: It looks like a Workhorse experimental aircraft. Workhorse: The name of the craft is Surefly. So it's Surefly with safety and that and background.  E. B. Moss: David and I saw AR, audio, autonomy, everything at CES and we talked about how it all came together. David: So one of the trends we just to look at in general is we just saw with Olli and what they're doing. There's a huge population growing old. E. B. Moss: Yes. David: And it's a key population that has a certain expectation level of service and experience and technology and that's only getting bigger. You're seeing a lot of brands really trying to figure out how do we deal with population that's having vision problems and mobility problems and hearing problems. All the things people my age are starting to think about. E. B. Moss: The 25 year olds. David: The 25 year olds. Again, when ... as we joked ... but when you think about the 25 year olds they are very tech savvy. They're the Hyperloop audience, they don't want to be waiting on the street corner for the M35 without having any idea, in the rain, when it's coming, when was the last time it was here, did I just miss it. You know, the stuff we do every day. So you're seeing mobility things like Olli and transportation systems and whole ecosystems. You're seeing companion bots. You're seeing machine learning, artificial intelligence, computer vision coming into play to do things like my mom lives far away it's hard for me to necessarily be on top of her. And I don't know if she wants me to be on top of her; all that family dynamic. E. B. Moss: So, we actually have a theme here and it kind of wraps things up beautifully because we've seen the connected appliances, connected home. We've seen the connectivity between devices and how to make things easier in life and not having to pick up one device to do one thing and one device to do another. We've seen the continuity between I want to get some place and how do I get there. So everything is connecting us whether it's virtually or physically like with Olli, like with the experimental aircraft, like everything we've seen today is all about connectivity. David: It really is and the big thing is it's connectivity that has value to you and me not connectivity that has value to some corporation. That's where people really get the difference. I'm excited about a technology that will help my life be better and in the course of my life being better the company makes money off of that, that's great. E. B. Moss: Like the last example with Olli. Where there is branding opportunities on and within it but it's giving me something of value. David: That's correct. There equates down when the consumer feels there's no value it's changed for them. Gen Zs might say, "We get that brands trap us every day and we're okay with that, that's the world and we're fine. But what they're not okay with is that you track me every day and then you don't know who I am, if you're going to watch everything I buy you should know what I buy. You should know what I've bought and stop telling me what I've already bought.” E. B. Moss: So if you're going to connect with me, connect in a meaningful way, connect in a valuable way and ... David: Imagine you have a friend who asks you the same question over and over and over again. Right, then eventually you stop hanging out with that friend. So that's where this connectivity has great value to us as human beings. Great value. E. B. Moss: David thank you so much. This was invaluable to have a guide like you. This is Insider Insight live from the Consumer Electronics Show. I'm E. B. Moss, Managing Editor for MediaVillage. Check us out MediaVillage.com and thanks for listening.  

Tom Poland is a Marketing Mentor who started his first business at age 24 and has gone on to start and sell four others, taking two of them international. In that time he’s managed teams of over 100 people and annual revenue of more than 20 million. These days Tom’s thing is “Leadsology: The Science of Being in Demand” which is a blended learning program that gives professional advisors a model for generating a flow of high-quality, inbound, new client enquiries into their businesses almost every week of the year. Over 2000 business owners across 193 different industries and 4 continents have been through his programs and many have gone on to add millions to their earnings and their testimonials are available on his website. Tom’s work has been published in 27 countries and he’s also shared international speaking platforms with the likes of Michael Gerber of E-Myth fame, Richard Koch from the 80-20 Principle, Brian Tracy and many others. Find Tom at http://www.leadsology.guru   Here's the transcript from the interview Hugh Ballou: Greetings, welcome back to Orchestrating Success: Converting Your Passion to Profit. Today, this session, we are going to focus on your message. How do you really let people know what your superpower is? I am recording this in the evening in Virginia, and my guest for the interview is drinking his morning coffee in Australia. Tom Poland, welcome to the podcast. Tom Poland: Good morning, good afternoon, good evening, depending on where the heck everyone is. It’s morning here tomorrow. Hugh: It’s always interesting making appointments with people. I’ll call you at 2:00. Okay, what time zone? Tom: Which 2:00? Hugh: In your case, it’s Thursday here, but it’s Friday where you are. Tom: Correct, yeah. Coming up on 20 past 8 in the morning. Hugh: It’s 6:18 pm here in Virginia. Tom, you and I connected somewhere. You graciously invited me to this small group encounter that we had a week ago, a video session where you taught us some things about marketing. You taught us about our message. You taught us about quite a few things. I took a whole bunch of notes, and then you gave us one of your books. Tell us who you are, what is your superpower, and how did you develop this? How did you get where you are today? Tom: Great questions. Tom Poland. I call myself the chief leadsologist at Leadsology. Presently, I live near the beach in Castaways Beach in a place called the Sunshine Coast in a place called Queensland, Australia. It’s about nineteen hours’ drive north of Sydney. A pretty long way up the coast. Australia is like the US. It’s quite a big country. The difference is 80% of it is desert here. Back to what I am doing. My superpower is lead generation. I work with people who are marketing the invisible, people who have an idea, a service. Most of what we’re going to talk about will apply to people who have physical products as well, whether you are making sandals or you are a New Yorker acquisition consultant. The principles are the same. How you apply them is a little different depending on whether you have something that’s invisible or something that’s physical. The magic is around setting up four separate lead generation systems. There is a weekly flow of high-quality inbound new client inquiries. We don’t do cold-calling or anything dumb like sending out 10,000 letters to anyone. We don’t do trade shows. All those things deposition the person providing the service or advice. That is the superpower. It’s creating these four different lead systems so the leads are coming in systematically, automatically into the person’s business. How I came across that—good question. When I was 16, my father suggested I leave home because he said I knew everything and I could start forgetting things soon if I didn’t leave home. So I did that. I left home. A few years later, in 1995, I found myself in a very similar mindset. I had come out of a senior executive role in a multi-national corporate, and I started my own business again. I thought I knew something about sales and marketing since I had spent 20 years in corporate. So I set up the new business and put all this marketing in place, and nothing happened. So I literally flew and sat at the seat of great marketing masters and read every book and went to every workshop I could. I am a pretty good implementer; I put everything in place, and the best I could do was break even on my marketing efforts. I sat down and thought, I gotta figure this thing out myself. I put all the books away and put all the workshop notes away and started what is now known as Leadsology. I discovered, Hugh, there is a whole bunch of people out there that are really good marketers, but when you actually buy their stuff, it turns out their marketing is a 10 and their product is a 2. Most of your audience and my clients, when I start working with them, they have a 10 service. If they could get in front of the right people, then the conversions happen, and the clients love them. Most people have a 10 service trapped in a 2 marketing. That is what Leadsology is all about. Sorry, I knocked over my microphone in my excitement. That’s how my Leadsology journey started: trying to figure this thing out as a coach, consultant, and trainer. How do you get the leads coming in without having to stay awake all night stressed about it and without having to engage in these random acts of marketing? Hugh: Random acts of marketing. You used a word there I tried to capture. Cold-calls and what I call push marketing, you used the word… What is the word you used? Tom: Deposition. Hugh: Deposition? Tom: One of the most powerful psychologies known to mankind is reverse psychology. If I had kids at home and it was raining outside and I said to the kids, “Don’t go outside and play because it’s raining,” then the first thing they are going to want to do is what? Hugh: Go outside and play. Tom: Yep. I said to my teenage daughter, “I’m going out with your mom. We’re going to a nice restaurant. We’re leaving the second car here, and the car keys are over there. Do not touch the car keys. Do not drive that car.” A more subtle degree is this. There is a spectrum. The moment we know we can have something, our desire for it decreases. People get blasé. They get apathetic. I can have that anytime I want. What else is there? Somewhere in the middle of that spectrum, can have it, don’t want it, is the sweet spot called reverse psychology where people will want more of what you’ve got if they think they need it more than you need their money. Hugh: Say that again. That is a key piece of information. Tom: Let me say I’m a prospective client of Hugh’s, and I’m thinking if I should work with Hugh or not. If Hugh is sending out mail drops and offers every day of the week and I’m getting bombarded with “Pick me” from Hugh, I get apathetic about that. I can work with Hugh anytime I want; he obviously needs more clients because he is sending all these offers out, and every time I go to a trade show, he’s there and he is always handing out brochures. I’m getting letters and emails. Maybe not on Hugh. But if I perceive my belief is that I need what Hugh’s got more than Hugh needs my money, I get much more interested. Hugh: Wow. Tom: Cold-calling depositions that. Can I work with you? Going onto LinkedIn and going, “Hey, we do SEO. Do you need help?” depositions that. Sending out 10,000 letters or direct mail pieces depositions that. What we want is to invoke that sweet spot psychology where your audience perceives they need you more than you need their money. Hugh: Wow. That is just the opposite of what the marketing people are trying to tell us to do, isn’t it? Tom: Hugh, it’s so different if you are selling a product. Particularly, if it is a commodity, then it will come down to price. There is a massive gulf of difference between marketing a thing and marketing a service because a service is actually a relationship. It’s like going into a marriage. If I am buying a house off of a realtor, and I don’t like the realtor, then if the house is okay, I will still make the buy because I don’t have to live with the realtor. But if I am looking for a wife, which I kind of was 12 years ago, that prospective bride whom I fell in love with instantly and could have married her on the spot, within 90 seconds I was gone. If I had gone up to her and said, “Look, I’ve just fallen in love with you. My name’s Tom by the way. Could we get married, or at least could I come home with you tonight?” When you are offering a service or advice—I didn’t do that honestly, we had some dates first, anyway—but when you are offering a service or advice and are popping the question to people and going, “Work with me,” it’s like going, “Marry me.” With a thing, when we buy it, that relationship is over. We are left with the golf clubs or the boat or the house or whatever. But with an advisory service, consultancy, training, coaching, architecture, CPA, even a lawyer, we’ve gotta enter into a relationship of trust with this person. That means we are probably going to have to have a few dates first before we pop the question of engagement. Hugh: That is so good. You and I had talked before we went live about coffee, and we both have this love of freshly ground, brewed espresso. I talked about doing the beans, and sitting over here on the couch, my bride of we’re starting 12 years next month, she’s a conductor and I’m a conductor. We met at a church music conference in the same room, and we crossed paths. I was smart enough to pay attention. It took a year to build a relationship and have conversations. It was a year before we talked again. I understand that dynamic really well. You know what? I got it right. It’s not about pushing. There is a synergy here with what I teach my clients. Leadership is a position of influence. We influence people, and we don’t do it by telling people what to do if you are responsible for a team. You create the space for people to raise a functioning around the common purpose. There is synergy with what I teach. I have the invisible, which is my coaching, my facilitation, my culture creation for corporate clients. But I have something in the middle. It’s not a product; it’s an online program. Where does that fall? Is that the invisible? Is that a product? Tom: That’s the invisible. So is software by the way. There are a few exceptions. Software, is that a thing? Software development fits in with the invisible as well. I developed and had a software business quite a number of years ago. It’s selling the invisible. Online courses and programs, there is a duration, whether it’s eight weeks, six weeks, six months. I have to be able to trust three things when I buy into that program. I have to be able to validate Hugh and say, “I trust Hugh. He cares. He has integrity. He’s going to be reliable.” I have to validate the service or program. This is true with an architect, consultant, coach, whatever. I have to validate the service. Does this service have integrity? Is it a fit for my needs? The third thing that most people trip up on is: am I going to implement when it comes to a program? I bought these programs before. I have done these workshops before. I got excited, took all the notes, and came back to my business, and then the emails came in or the meetings happened, sitting in this nice little folder in a pile somewhere. There are three points of validation. The first one is: Do I know, like, and trust Hugh? The second point is: Does the program have integrity? Is it going to fit my needs? The third point is: Will I actually use this thing? Hugh: Do they use it? Is it so hard I can’t do it? That’s a big deal. Tom: Implement. We have all bought those $197 downloadable workshop training things and gotten excited. Where are they now? I don’t even know where they are. They are sitting in a digital file somewhere. I have a password to that membership site somewhere, but I don’t know where it is. When it comes to programs, and it’s a bit of a red herring I guess, but whatever we do, whatever service we deliver, if people don’t implement it and get value. Even though it might be money in my bank account, I want people to implement because I want them to get value because I want the good karma. Hugh: How do you define red herring? Tom: Implementation is off the subject of marketing. There is an indirect link in that if people implement it, then they get value and refer. There is an indirect link. Hugh: Your site, we are going to give them a special link before we’re done here. Your link is leadsology.guru. You are in fact the guru. You’ve written some books. Tom: I am a little embarrassed every time I hear that .guru, but .com was taken. We tried to buy it. So it’s kind of like these people who write their own bio and say, “I am the world’s expert on XYZ.” Who said? Hugh: Well, it was there. Tom: Leadsology.guru, yeah. Hugh: It was predestined. You were pulled into that. I have one of your books. It’s in my digital folder queued up to read over the holiday here. We have a holiday in America. Read that to me. Tom: Is that Leadsology: The Science of Being in Demand? Hugh: Yes, that’s it. Leadsology: The Science of Being in Demand. Oops, I am making a note. It’s a science. Tom: Yeah, it is. Hugh: Can people find that on Amazon? Tom: Yes indeed. Kindle, paperback. Hugh: Who needs that? Who needs your methodology? I assume the book gives people an overview and gives them what you didn’t find in the seminars and the courses you took before. It gives them a snapshot or maybe some courseware. Tell me what’s in the book and who needs it. Tom: The book is for anyone who is marketing the invisible and who wants the security and pleasure and enjoyment, satisfaction if you like, of having a regular flow of new clients coming into their business. It’s a systemized approach to lead generation. The book is quite extensive. Some books you buy and end up disappointed because they tell you what you need to do, but they are very light on how to do that. I get into all sorts of things there. There are ten parts to the model. We start with what did you call it? Your superpower? I call it your magic. One thing for example I say to people is you can’t have seven types of magic. A Canadian client of mine who is a consultant/trainer/coach, Susan, who is a genius at what she does, but she had like nine different things on her website you can pick from. It’s 360 degrees, leadership training, productivity, engagement, human dynamics, whatever that is, organizational change, and Susan was very good at all of these things. I have no doubt about that. The first thing I said to her was, “Pick one.” She said, “What do you mean?” I said, “You can’t market nine things. You can market one thing. Everything else needs to go off your website, off your LinkedIn profile, off your business card. You are going to market one thing. Why don’t you get clients happily engaged in that one thing, getting great value, so they can ask, ‘Susan, what else have you got?’ Then you can show them the other stuff.” The book goes in a step-by-step model with ten parts to it. It starts with your magic/superpower. Pick one. The first four parts are about your magic, pick one; the market, which is all about focusing your niche; the message, which is the session we had last week on the marketing message and the three characteristics that create an effective marketing message that cuts through and motivates someone to want to know more; and finally the mediums. The mediums are quite important. For example, the medium could be a webinar, a book, an online session, a lunch-and-learn, a guide of some sort, a challenge. A lot of different ways you can attract people into your list and give them great value. But the mediums are interesting because the mediums have to fit. They have to fit first of all your style, your personality. For some people, running webinars makes them feel like they want to be physically ill. My wife calls herself an e-tard. When we met, she barely knew how to do email. But you know, she is getting better and better. For someone like my wife, running a webinar would cause her sleepless nights for weeks. Don’t do that because it’s not part of your personality style. Pick a medium that fits your personality. I love writing. I could just lock myself up in a cave with a keyboard, and I could write 24/7, just about. Pick a medium that you’re inclined to want to engage in because then you will actually do the frickin’ thing instead of saying it should be done. Pick a medium that works with the market as well. If I was marketing to tradespeople, say plumbers, I wouldn’t pick webinars as a medium because it’s not a medium they are naturally instinctively drawn to. If I was talking to consultants, I would certainly pick webinars because they are in front of computers all day. You have to match the medium to the market. I got Monty the Marketing Wonderdog here. He is a Border Collie, and he has a dinner bowl out back. I have a beehive as well. If I get a bunch of flowers and put them in Monty’s dinner bowl, that is going to be a hard sell. But if I put it in the beehive, then they are all over it. Vice versa with a nice steak. Put it in front of the bees, and they’re not too interested. Put it in front of the dog? There is no selling required when you match the message to the market and the medium. Zero selling required. It’s like bees onto flowers. Hugh: There are certain trends in what people are doing online. I think it changes from time to time. What worked last year doesn’t work this year. Sometimes what worked last week doesn’t work this week. You’re honing on some fundamental principles that probably supersedes the fad of the day. Is that making sense? Tom: Yeah, it makes perfect sense. If you want to go to the highest helicopter view, the strategic view of lead generation, there are two things that intersect when the lead is generated. That has been the case for the history of mankind for thousands of years, and it will always be the case. Whatever changes with online funnels or Facebook advertising or social media, whatever else changes, this never changes. A lead is generated when an ideal client is intersected with an effective marketing message. An ideal client is someone who is aware of their need, so my ideal client is not waking up in the middle of the night, they are waking up in the middle of the morning and saying, “I have to get some systems in place to get leads.” They are aware of their need. They have the money and the timing is perfect. Those are the three characteristics of my ideal client. When that person sees my marketing message in almost any form, and there is about 12 different forms they can see it in, they get interested. That is how inbound inquiries are generated. Hugh: That is how we connected. Somehow, I was interested in meeting you. We have talked twice now and emailed. I am fascinated by what you do. What do you think it was that got my interest? Do you remember how we connected? Tom: Yes, we connected through LinkedIn. I invited you to a marketing message maker session. I made a bit of a song and dance about the fact that I was a bestselling international author blah blah blah. There was some credibility in there. Don’t get offended at this, but you were metaphorically speaking a bear in the woods. My message via LinkedIn, we established a 1st-level connection first. I had given you something. I think it was a little bit of a guide like this PDF. We had a couple of little mini dates. Then I invited you to this marketing message maker, which was essentially a 75-minute session where I was showing you how to create a marketing message that cuts through and motivates an ideal client to want to know more about what you do. I said leave your credit card at home because there is nothing to buy. We minimized the sense of risk or just another sales trap. When I talk about a bear in the woods, the metaphor is this. This describes how Leadsology works pretty well and how you don’t need any sales or manipulative sales techniques. Imagine there is a big forest and there are a bunch of grizzly bears all asleep. I have some honey in a honeypot. I want the bears to eat my honey. The bears are a metaphor for potential clients, and the honey is a metaphor for what it is I do. I think, How am I going to get the bears to eat my honey? I go to a bear-eating-honey seminar. The guy stands up on stage and is holding this big, long, stick with a sharp point at the end, a lance. He says, “Look, I’ve done this. If you want the bears to eat your honey, this is how you do it. You grab the stick, go running through the forest, find a grizzly bear, poke it really hard on the bum to wake it up, and then you wave the pot in front of the bear’s nose. If it is hungry, it will eat the honey. If it is not hungry, it will eat you.” That is selling. That is going out with your marketing message, annoying people, poking them with a sharp stick going, “Pick me, pick me, pick me.” With Leadsology, what we do is put the honeypot outside the forest, and the bears that are hungry will start dreaming of swimming in honey. Then they will wake up and go, “Darn, just a dream. But hang on. I can still smell the honey,” and they come out of the forest. That’s what Leadsology does. Leadsology is a series of four honeypots, each systemized, different mediums, going to the same market with the same marketing message, and the bear is coming out of the forest. People are making inquiries. Hugh: So it’s imperative that your message is very clear. You have one product, and you are targeting a specific person. Tom: The message is what I call the first domino. You see those Guinness Book of Records. You line up one thousand dominos, and you only have to push over one domino and the others go on their own. The marketing message is not what people think it is. It’s not a USP, it’s not an elevated pitch, it’s not a slogan, and it often even won’t mention your service or product. But it’s got to be benefit-rich and differentiated, so it’s got to sound like nothing anyone else is saying. It’s got to contain some specifics. That is where the magic lies in those specifics. Hugh: What are the top things that people do wrong? Tom: Number one they do wrong with their marketing message is they tell people what they do for a living. I am an accountant, and I help with your taxes. I am a marketer, and I will help you get your leads in. I am a Facebook Messenger bot guru, and I help you get a better open rate. Hugh: Why is that a mistake? Tom: Because people don’t want Facebook Messenger bot gurus, and they don’t actually want bigger open rates. They want the thing the bigger open rates give them, which in this particular example we are talking about, a very exciting product. You can get a 100% open rate with them. But people don’t want 100% open rates. They want the thing the 100% open rate gives them. In this marketplace, this particular marketer is an online marketer, whose marketplace are beauty salons. Beauty salon owners don’t want Messenger bots, and they don’t want 100% open rates. They want more bums in their seats every single day, please and thank you very much. His marketing message should not be, “I am an expert on Facebook bots,” and it should not be, “I can get you 100% open rates on messengers.” It should be, “I can get you another two customers walking through your door every single day without any print media, advertising, or cold-calling.” That’s it, period. If you are a beauty salon owner, you want two more extra customers every single day. That’s where your profit is. I don’t know if it’s two or five, where the sweet spot is. The sweet spot in the message, if you are talking about specifics, has to be big enough to generate desirability, but it has to be small enough to generate believability. If he goes out and says, “I can get you 50 new customers every single day,” even if that is true, people aren’t going to believe it. It’s not going to work. If he comes out and says, “I can get you a new customer every single month,” no matter how excited he says it, people are not going to get turned on by that. I don’t know what the number is for the sweet spot, but something like another 2-5 customers every single day. When that beauty salon owner hears that, then they will want to know more, and that is when the lead is generated and the inquiry is made. The question at that point is: How do you do that? That is when messenger bots come in, not before. Hugh: Okay. Boy this is really helpful. It’s unique. I just changed my LinkedIn messaging from what I do to what my results are like two weeks ago. I am amazed. Between Facebook, LinkedIn, and Twitter, I have like 250,000 followers. Tom: Wow. Hugh: I am amazed that 249,500 of them are just pushing out, “Buy my thing. Buy my thing.” They haven’t done any dating. They haven’t built any trust or credibility. Tom: There is no validation. Hugh: It is just amazing. There is a whole bunch of noise. Somehow, you got my attention, and you cut through the noise on LinkedIn. I don’t know how that happened, but you got very skilled at that. You have a way of getting right to it and attracting the right person. When I say, “Who needs you?” people like a consultant, people like a speaker, people like a coach, is that the space of invisible? Tom: I have done a lot of work with architects, accountants. Right now, I have a merger acquisition consultant, an American guy who is operating out of London, works a lot in Europe. His specialty is matching big companies up with smaller tech companies so they maintain a competitive difference. An architect operating out of Oregon who designs luxury apartments in China. A foreclosure lawyer in Philadelphia. It’s pretty diverse. Merger acquisition consultant in Germany. A lot of clients in Australia and New Zealand. A lot of trainers, coaches, consultants. Wealth planners. A new client who is—forgive me, Kevin, I can’t remember where you are, but he is somewhere in your country—he has developed a business where he operates a brokerage for real estate agents. He gets the listings, which is the hardest thing to do, and he brokers them out to real estate agents. So it’s a service. The physical product is there, of course, but he is not directly selling the physical product. So it’s anyone who has a service or advice or develops software; that is the exception—who wants to quit stressing about where the leads are coming from and have predictability. A lot of good consultants- The classic is they are really good at what they do, so they get a lot of word-of-mouth referrals, which is great and can go on for a few years, but one day it will dry up. Who knows. Something weird happens, like a dictator fires a missile over Japan. That would never happen, right? Hugh: That would never happen. Tom: Or someone drives a tank into a desert in Kuwait from Iraq. I don’t know. Stuff happens. Or there is an election. And everything slows down. For some reason, word-of-mouth marketing dries up. Then they go, “Oh wow, I don’t control this thing. There are no buttons I can push or levers I can pull. I need some predictability around lead generation.” Those are the people who need Leadsology, the people who want to set up four different systems so the leads are coming in from four different sources. Hugh: For instance, you said that before, and I meant to ask you. Give us an example. Tom: Sure, okay. Let’s just put social media to the side at a moment because it’s not a lead generator. It’s great to keep people’s brand in your brain until they are ready to buy. So you should be doing social media. A blog, a podcast, Facebook, something to keep your brand on the brain until people are ready to buy. But the direct lead generators: a book when it’s well-written will bring in leads. One of the things I do, when you open the book up, you will see this page here. Leadsology Resources. And there is a bunch of free stuff. We drive people from the book back to the website. We have a few dates with them, as many as they need until they start to validate that Tom is an okay guy and the services are effective. A book is one of those mediums. A webinar can be a medium. You attended what I call a makeover session, a group of people, the bears who come out of the forest interested in a marketing message makeover. Those small sessions. Breakfast meetings or lunch-and-learns, they are all mediums with which you can get your message out to the marketplace. There is a lot of them: surveys, diagnostic tools, interactive models. What I was saying before just to refresh people’s memory is that choosing the mediums, and there are a lot of different ways you can get your message to the market about your magic through the mediums, is it has to fit your personality. You have to look at it and go, “Yeah, I can do that. I quite like that actually,” whether it’s a webinar, book, whatever. It has to fit the marketplace, meaning it has to fit the market. Flowers in Monty’s bowl is not going to work. And finally, it has to fit your budget, be it your time or financial budget. Most people have one medium. Most people do one thing to get leads. I don’t know if they go to a business networking medium, which depositions them. Or they do webinars, or they have a book. It’s like a one-legged stool. Eventually, a one-legged stool tips over. I want my clients to have four legs on their stools. Four different ways that the leads are coming in. Each of those ways is systemized, whether it’s a LinkedIn strategy, whether it’s a webinar strategy, whether it’s a Facebook or Google Adwords funnel taking you through a series of steps, they are all systemized. We have security because we have a diversification of leads. I see this lady in the States with something like $800 million in the lottery. She is not going to put it all in one place, I hope. The uncle needs to invest in his business—don’t give it all to the uncle. Here’s $800 million; make me some money. The security comes in the diversification of the lead generation. Hugh: So you said earlier that social media is not for lead generation, but that is how you got me interested. Tom: Social media- LinkedIn, is it social media? Probably. LinkedIn is good to keep the brand on the brain until people are ready to buy. Most of the posts you get on LinkedIn have the wrong reasons. They have a message that is like putting the flowers in Monty’s dinner bowl. People post articles on LinkedIn, and they get traction. It doesn’t matter if you have 500 reads if you got no more connections or followers or subscribers. Then you haven’t really done a lot. Put aside the fact that the messages are not often aligned to the marketplace. Social media is best for keeping the brand on the brain until people are ready to buy. By all means, have a LinkedIn strategy. Post on LinkedIn some good quality stuff. But understand that you are not going to get a lot of people going, “I want to work with you please.” This is a great example of a terrific added value social media thing, a podcast in this case, that is going to help keep Hugh’s brand in people’s brains until they are ready to buy. Hugh: You associate with people who are competent, and it raises the value of your brand. Social proof. You have a photo of me with Tom Poland, and it raises the value of me because of your credibility. Tom: Some people would debate whether it raises your brand, Hugh, but I’ll accept it. I’ll drink to that. It’s water by the way. Hugh: People can decide for themselves when they hear it. There is a lot of really rich content here. I really resonate with this because I show up in groups and I am starting- I just moved to a new city, so I am starting a series of lunch-and-learns. I am targeting people who run charities, nonprofits. Some of the programs I offer are specifically tailored for them. I have 31 years of experience in that market segment. I am also doing other places. I show up where my clients are. The other segment is mid-cap corporations, $5-50 million in revenue. That is a sweet spot, so I am showing up where those people hang out. I think one of the mistakes people make is they attract the wrong people. This came up in the session I was on. I asked you point blank, “What happens when you keep attracting broke people?” You had a really good answer. Do you want to have a go at that again? Tom: Yeah. Unfortunately, I only have a couple minutes left so let’s touch on that. There are a series of filters you can set up depending on which part of the process people are in. Typically, what happens in my sort of business is say I am an international law firm, book a free consult, and then I am in danger of talking to a lot of people I can’t actually help significantly because they can’t afford to do anything with me. It’s actually worse than not speaking with them because I can tell them what to do, but if they go and try to do it, they will probably mess it up because there are so many subtleties to it. They are wasting time and effort and will end up disappointed. It’s not good for them if I speak with them for free, and it’s not good for me if I speak with them for free. It doesn’t really make sense. But if I charge $1,000 an hour regularly, then I will say, “I will give you an hour but just charge you $100.” That’s a filter. That cuts all those people out I can’t help. I am doing a disservice to them by meeting with them because it gives them false hope. If I am doing an event, charging $20 will kick a lot of tire-kickers out. Or you can set up an enrollment page where you actually have to click some buttons and say, “Yes, I understand that in order to implement what I hear at this lunch-and-learn, I will probably be required to make an investment. I’m okay with that.” You can put in filters depending on where they are and how much you want to fill them out. If I was going to a new city and doing lunch-and-learns, I wouldn’t put in any filters. I would get my ass out there and build the list and accept the fact that not everyone is going to be perfect. Hugh: I love it. Tom: The type of honey you put out will attract certain bears. Hugh: We’re going to give people a link to leadsology.guru/five-day-challenge. That is a gift you are giving people. It’s a five-day challenge. They have to do a little work, but they will learn something, right? Tom: More than that, they are going to get more leads in. They are going to get a new client. If people do what I tell them to do in this challenge, it’s like 15 minutes a day over five days. It’s not hard. I get so much positive feedback for this because you will actually put into place your first marketing system potentially, you will generate five fresh, inbound inquiries, and convert at least one of them into a feedback client. Hugh: Tom Poland, you have offered great value to the listeners of Orchestrating Success. I am going to ask you- I know you have no minutes left. Just give us a closing thought or tip for this interview. Tom: Okay. The closing thought is, just be smart enough to know how dumb you are. That is the secret to success. The enemy of growing is knowing. I wouldn’t represent myself in court because I’m not a lawyer. Don’t try to do this at home. Find someone who can teach you how to do lead gen because it is a science, and it doesn’t have to be me. Just be smart enough to know how dumb you are with marketing. Hugh: Tom, thank you for the gift of your time. I thank you, and my listeners thank you. This was so great. Tom: Thank you. What a pleasure. I look forward to continuing the conversation. Cheers.  

It's the inaugural episode of the podcast and we're coming out swinging! We start off by discussing the one thing that seems to pre-occupy all of our clients whenever they go into the process of buying or selling a home -- FEAR. You'll find ways to overcome being so afraid and embracing the process, the most primary of which comes from a very odd source -- the works of Plato! Tom then takes a look at how investors took advantage of everyone's fear of the market during the crash, when everyone was running the opposite way, and made a killing buying houses when no one else was even thinking about it. We then start the conversation about what types of agents you want to avoid (the Weak Agents or WA's -- and Salesman Agent SA's) and what type of value an agent should bring to your home purchase or sale. We wrap up with our 10 Commandments or promises we pledge to provide to our audience. It's a jam-packed first episode and we're incredibly excited to be bringing it to you! [spp-transcript] Announcer: Welcome to the Clarified Realty Podcast — exposing the real estate secrets your agent doesn't want you to know. Here's your host Tom Clary. Tom: Hi there and welcome to our inaugural podcast Clarified Realty episode 001. We're so happy to took the time to give us a listen. I'm hoping that we'll have some great adventures ahead of us and we'll be able to learn a lot about the great big world of real estate together. Some introductions are in order. My name's Tom Clary. I'm a licensed real estate agent here in the state of California. My practice is located specifically in the beautiful San Fernando Valley. I'm a valley boy, born and bred, and while I handle real estate transactions in pretty much all areas of Los Angeles — Downtown, Hollywood — this is really my specialty. I work with both buyers and sellers and my office is located in the tony and prestigious enclave of Calabasas, California. You might know it as the home of a Kardashian or two and it's pretty much the Beverly Hills of the Los Angeles suburbs. Joining me today and on the rest of our podcasts will be my friend, sidekick and amazing lender, Ron Bruno. Hi there, Ron. Why don't you give us a little about yourself. Ron: Tom, thank you so much. My name's Ron Bruno. I'm with the firm, Guaranteed Rate here in beautiful Pasadena. I'm a Chicago guy originally — born and bred. We moved, my family we moved. when I was seven. Grew up in Hilton Head Island, South Carolina a nice little resort town — and as my wife likes to say, I'm a cabana boy — she she married a cabana boy. It is true. Tom: It happens! The dream happens. Ron: It does happen, exactly. I went to college at Emory University in Atlanta, Georgia and moved out here fourteen years ago. Tom: Wow, you've been out here a while. Ron: I've been here for a while. I moved originally for a girl and stayed for the weather. Yes. Tom: Understandable. Sometimes the girls change. The weather here in California relatively stays the same. Ron: It's true and my professional background I for the first ten years I was in various realms in sales and marketing. Wy first job actually was advertising. Tom: OK. Ron: I've been in professional, personal finance and professional services for over eight years now starting in wealth management and moved over to the wonderful world of residential lending. Tom: Awesome, awesome, Ron… And we'll be going more in depth with Ron in our upcoming podcast number 002, where we'll be taking more of a deep dive into mortgages and how they are really the first sign post on our trip up the mountain of home ownership. Yes, even before talking to a real estate agent like me. But for this episode this is really going to be the two of us giving you a preview of what we're really trying to achieve here and give you an idea of what to expect moving forward. You know, when I first spoke to Ron about starting this podcast I told him that I wanted to make sure that if we were going to do you know to get together and talk to you guys once a week to humbly request the gift of your very valuable attention, I wanted to make sure that we were saying something completely different. I wanted it to be something that had a completely different voice and point-of-view. It had to be nothing that you could hear on another real estate-centric podcast or any other real estate content. If you're going to take your very precious time to download this podcast, how can I just, you know give you information you could just hear in a hundred of other places? And Ron and I really, you know, talked about it and I started circling around different concepts and nothing we really came up was really clicking. So I thought about it and I thought about it and I started thinking about all the clients I've worked with. Was there something about them that seemed to be a common thread? Was there something on, you know, either the buy side or the sell side that seemed to keep on coming up? And then it hit me. There was something that seemed to keep on coming up, over and over, every deal for whatever reason it just for some reason couldn't escape it. Every potential buyer I talked to was preoccupied with it. There was something here and I thought, well I could do something about that — and that thing that kept on coming back and back and back — fear. It's such a simple concept but it seems to rear its ugly head constantly in real estate. I mean everywhere I looked in my business I saw it. Fear about timing. You know? “Is now the right time to buy or sell or should I wait until next year?” Fear about inspections and disclosures… “Uh, what if I buy this amazing house but then I find out there is mold in the walls?” It's the one thing that united all these deals and it was an element of fear and I could only imagine that this fear sets in even before the process gets started, before people even make the decision to buy or sell a home. It paralyzes them. They sit in their studio apartment all huddled up on the couch under a blanket, saying “Oh, I sure would like to buy a house but what's the best choice? Should I rent? Should I buy? What if I lose my shirt, you know, like all those people did when the bubble burst?” “I'd love to start looking for a house but then I'd have to talk to one of those awful real estate agents giving me a hard sales pitch and I'm sure they won't leave me alone!” Actually that one is really a scary one. Ron: That's true. Tom: But look don't get me wrong. All of these are valid concerns, but they shouldn't ever be fears. At the end of the day, buying or selling a home or condo is not rocket surgery. Trust me I've spoken or done transactions with agents that I would consider to be the absolute best and brightest agents in the business, I mean the cream of the crop. And trust me no one is mistaking them for Mensa members or Nobel laureates. If they can understand the process, so can you, right? So getting back to fear. Look… Let's take a look at really, really good example. What do you think is the number one question I get asked over and over and over again as an agent? The first question anyone asks me when I walk into a party or some sort of networking event? Ron, you've probably got the same… The same story. What's the number one question you get asked whenever someone sees you that hasn't seen you for a while? Ron: How's the market? Tom: Yep — or is now a good time to buy? Or, is now a good time to sell? I mean am I right? It mean it's sort of cliche. Ron: It is. It is. You get people asking questions about, you know, where rates are going… What's the Fed going to do? You know, is now the right time? Should we wait? Is the… You know, are we in a bubble? Tom: Right. And it's and its foundation is really coming from fear. It's coming from a place of either, “I could lose my shirt or you know am I going to make some sort of mistake?” So, if someone comes up to me and asks me this… I mean, I'm talking about a person that that actually wants to buy, right? Not, you know, somebody who's just kind of, you know, waffling or whatever. They actually do want to buy, but they — they're asking this question seriously… What they're really saying to me is, “Listen, Tom, if I buy my house now, will I lose my money?” Fear. That's what's really at the root of it — and I'm going to let you in on the secret… About seventy to eighty percent of agents are not going to be exactly forthcoming about it if the market isn't going that person's way. They're going to twist it and turn it in a way that still gets you hooked. So, I mean, seriously? What do you think they're going to say, right? You think they're going to go, “I don't know — I hope you don't like that shirt you're wearing ‘cause you're going to lose it if you buy a house right now.” I mean, no. They're going to say whatever they can to get you to sign on the dotted line. Period. And they are everything I despise about this business and I'm sure you despise it too. So that's why it's so important you can find an agent who you can trust. And we'll go into this into a more in depth in a future episode — ways to weed out the good agents from the bad — but right now we're going to stay on topic about what this whole podcast is going to be about. So which is the fear — what can you do to reduce that paralyzing fear? Well, when I was in college at U.S.C. I took what I guess could be considered a general philosophy course, where we read Socrates and all the great philosophers and I basically learned how to argue with people using the Socratic method, which pissed my parents off to no end, right? Because I'd like, I'd come home and they'd say, “Clean your room.” and I'd say, “Is there really a room?” But there's one thing that always stuck with me. In the class that we read one of these books was called the Protagoras by Plato and I can't remember what the general gist of the whole thing was but there was this one part that really stuck with me and I think it's really important to this conversation. And, in that part, Plato — he's writing as Socrates, but it's Plato — is convincing his disciples that, you know, the five important human virtues: there was courage, temperance, holiness, justice, and wisdom — are all just names for the same exact thing. And his disciples, you know, they like go crazy. They disagree with him. “Oh oh. Whoa, whoa Socrates! How could these be the same things? How on earth could courage and wisdom be the same thing? That makes absolutely no sense!” But then Socrates, or Plato, goes through and systematically proves it. If someone has knowledge of the battlefield, they in turn have courage. If they make themselves educated about successful tactics and successful strategies, they have courage. Or, should we say — a lack of fear, right? What Plato was was trying to really teach us was that cowardice is really ignorance — and more importantly even — ignorance is cowardice. Ron: That's deep. It's a little deep — but I'll tell you something, it struck me so hard, even when I was eighteen, that I still carry it around with me, every single day — that basically, the more knowledge that I have the more courageous I'm going to be. So, anyway… If we, if we look at and if we look at real estate from this perspective — who do you think are the folks out there that aren't afraid? Well, it's the guy or girl with the most knowledge about the real estate market and real estate period. They're the ones that have you know taken time to educate themselves. The person who understands the battlefield as it were. They understand that fear keeps the scaredy cats on the sidelines while they jump in and they grab all the best deals. Look, after the crash, it's understandable that people got skittish. I get it. I mean people watched as friends and family, I mean lost their homes and lives were turned upside down. It only makes sense that there be a level of fear when people thought about the possibility of re-entering the market. But here's the thing. There were a lot of people who took advantage of this. They sat back until everyone was so afraid to buy and they swept in and basically bought everything with four walls. Usually with cash. Now, what do we have? Now, there's still a lack of inventory out there. We went from months worth of shadow inventory just sitting there to basically being in the desert looking for an affordable glass of water. I mean we're dealing with a housing shortage at least at least here in Los Angeles and the San Fernando Valley that has made home prices climb and climb. I mean sure I'm starting to kind of see that stabilize a bit but when things are all scary out there there were there were very few people that came in, investors, that took advantage of that atmosphere of fear and ate our lunch. I'm going to come… I'm going to come right out here and I'm going to let you know that I'm firmly in the camp folks who believe that homeownership is a good thing. I mean, it would be sort of weird for a real estate agent to be bearish on homeownership. So, right? You buy a house you keep it for a period time and you get more money than you started with. You can make changes and additions that add value and historically, at least, historically we're talking about an asset that appreciates. It gets more valuable as time goes on. Not to mention you don't flush your money down the toilet once a month in the form of rent. When you buy a home the money effectively goes theoretically back into your pocket. Yes, you need to come up with a larger portion of money to begin with in the form of a down payment and the payment each month may be a bit more but it's really hard to argue against the benefits. Ron: You know, Tom… You bring up a really good point and back when I was in the Wealth Management days… You know I was in wealth management in two thousand and eight, if you can believe that's when I actually got my start. Tom: Geez, you're old. Ron: It's like I timed that absolutely perfectly. But what was really interesting is you saw people like Warren Buffett and they saw companies and they saw a stock where that company was on sale. So, the value of that company didn't necessarily mean that it lost half the value. Japan, when they had the tsunami the E.T.F. for the Japanese economy didn't all of a sudden go away after the tsunami and it just so happened the next day that E.T.F. was down twenty five percent. So, real investors… They're looking at value when it's on sale and they are you know it just you know your wife she goes to Bloomingdale's and sees something that's half off doesn't mean that, “Oh my gosh, you know, the value of that bracelet is now half of what it's worth.” No. She sees it on sale and that's what investors do they see things that are on sale and when it comes to real estate when it comes to stock, there are a lot of people who see it as it's all of a sudden worth half the value. Tom: Yeah. And we'll go. I'm going to go into that in depth a little bit later on and he's but he's entirely right. I mean it's it's like a let me get to that but what I'm what I'm getting at is well look I don't consider myself a conspiracy theorist at all, right? I don't own a tinfoil hat to keep the aliens from talking to me and I don't think there's a one percent that is doing all they can to keep the other ninety nine percent down at least in any sort of organized way, but because of the scarcity and the scarce nature of real estate, we're fast becoming a nation of haves and have-nots. And when I say scarce I mean there's, there's only so much real estate out there, folks. Housing starts aren't what they used to be. Not a lot of new houses out there. Developers aren't building like they used to and when they're building it's predominantly rentals. Right? That's important. That means there are less and less places to buy and if you don't jump on the train that's speeding by you might not ever be able to get on. When the economy was burning down and and everyone else was grabbing their hats and heading for the door — a lot of very smart, informed people were running toward the fire and end up making a lot of money in the process. They didn't let fear overwhelm them and now they're in the catbird seat, holding properties that were worth more than they were then you know they were worth even two, three years ago. Even though… Even though you're not here when we're recording this I can already hear a lot of you and you're basically probably saying, “Hey, buddy… I'd love to buy a house… A condo… But I, but I can't afford it. I don't have the downpayment. I don't even make that kind of money to make a monthly payment in this market.” I get it. I get it. But that's — that's not what we're talking about here and we'll go into depth in later episodes about how you can go from having zero in the bank to saving enough for a down payment or or how you can use a down payment assistant plan… Assistance plan to purchase a home. Ron will definitely be talking about that later but you can make it happen if you want to but I'm not I'm not going to B.S. you — it's hard freaking work and takes a lot of sacrifice but it's totally worth it. But we'll get into that later. So I keep on talking about things we're going to go back into later, but I swear, we're going to get back to them later. So, so no… What I'm talking about now though is I'm talking to those of you that are still standing on the sidelines and you're hemming and you're hawing — and, Oooo… Is this the right time to buy? Should I wait another six weeks? And you're vacillating back and forth… I'm going to let you in on a little secret. If that's what you're doing, you probably don't really want to buy a house in the first place. Because — want to know how I know this? Because you didn't come off the bench during the last bottom of the market. You already missed the chance — this quote-unquote bottom you keep waiting for! So, don't B.S. me and tell me that you're some sort of junior economist or something. “I keep on hearing I should wait until next summer to buy.” Well, you know what? Those folks still out there buying houses know something you don't: you buy the property, not the market! Alright, and what the hell does that mean? OK. Well, let me give you an example. And this is right off of… This stands on basically what Ron was just talking about it was it was Saks Fifth Avenue and the bracelet. But, I'm going to I'm going to put in more kind of every day corner market kind of terms. Right? So, so you… You've probably been to a Whole Foods, right? Now, let's say this Whole Foods is right next door to a Ralphs or a Vons, right? Something like that. Now most of the time because I am not made of money, I'm going to head over to the place where there's lower prices — usually the Vons or the Ralphs. I'm not a moron. Am I going to spend more money for almost everything just for the honor of walking home with a snazzy green canvas Whole Foods bag on my arm? No. But let's say one day I'm walking into the Ralph's and I glance over and I see that Whole Foods is selling bags of grapes for fifty cents a pound — and that's a really good price. Do I say, “Oh, no, no, no… That market is way too expensive. I'm not going over there!” Once again, Hell no! I'm going to go to Ralphs and do the majority of my shopping over there and then I'll go right on over to “Whole Paycheck” and pay you know buy a few pounds of their very tasty fifty cents a pound grapes. The same goes for real estate. You buy the property, not the market. There are a lot of savvy buyers out there still finding homes they can afford. They're not sitting on the sidelines waiting for the sea to change. No! They're out there, educating themselves every day in a way that these opportunities reveal themselves to them — and then they strike. And by the way that reminds me of one of my really big frustrations about people that want to buy but are still sitting there doing, you know, watching the world pass them by. You tell me, “Well, I'd love to do it but there's nothing I can afford out there.” Or, “I can't qualify for a loan.” Oh, really??? And what exactly are you basing that on? Have you spoken to an agent like me? Have you even given Ron a call and talked to him? Has he told you that you can't? Then how can you have any real idea about what your situation is? Because reality might be something completely different. I'm going to let you in on another big secret — for buyers? You don't have to pay us for this information! You actually don't ever have to pay us at all. That comes from the seller after you move in. So what the hell do you have to lose to pick up the phone and have us run some numbers? Or for me to look around at things that may not be on Redfin or Zillow yet. Or maybe I know of areas you haven't even thought of yet. Areas that make you say, “Oh, I didn't know this neighborhood was here!” You know, it drives me crazy! And we love those kind of clients because they give us a call that you know to find out stuff because we're like, “Cool! This sounds like someone who's actually taking the time to understand the reality of where they are!” Don't get me wrong, sometimes Ron's going to give you bad news. Or, I'm going to tell you that maybe moving into Beverly Hills isn't in the cards for you when you can only afford five hundred grand. But isn't it better to know the actual facts? Knowledge cancels out fear! It at least cancels out ignorance. Am I right, Ron? Ron: Yeah absolutely. I mean when you look at having the information at your fingertips… You can go online and run every scenario and look at what the general consensus says about your particular situation and you could paralyze yourself in fear where you're not actually really doing anything. You're just basing your situation off of what the general populace says versus actually running the hard numbers. And when I look at a client, I look at them from the standpoint of “OK, here's what you qualify for now.” Right? And if that's not the number that they're looking for, then we start talking about a path of either changing the expectations — or this is how we're going to work to get you into that position. Tom: Yeah, it's an actual getting your butt off the chair and doing something instead of sitting there and going, “Oh, I probably can't. I can't. You know? Oh, I read this and I read that…” You know, you could literally… It's like the snake eating itself. You'll never, ever, ever be able to get enough information to get you off the couch unless you actually do it. You actually have to do it and the first really good step is actually calling us and finding out. We'll be happy to tell you one way or another whether you can do it. And, by the way, I want to make sure everyone understands this. This is not some sort of you know get rich quick infomercial B.S. This is, this is an actual strategy for you to really become self-reflective enough and get the real solid information about your financial situation. You know, to overcome your fear and become a homeowner instead of just being a perpetual spectator. So, anyway alright… So what is this podcast going to be really? Well, we're going to be looking in-depth, really drilling down into each facet of the process. Whether you're a buyer or seller, you're going to hear things that could potentially give you an advantage. In each episode, we're… We're planning to a look at whatever you know whatever the topic is, whether it's escrow, title, lending — from both sides of the fence. Sort of like, you know, how Law and Order does… They do the whole police work first and then they switch sides and they go to the you know the whole court/prosecution side — that's that's what we're going to be doing here. We'll start with the buy side, discussing how you can get the best deals, things you should look out for when looking for a house. Things to look for in inspections. You know, things like that. Then we're going to switch gears and go the other way. We'll grab our sellers hat, put it on, and talk about how you can avoid certain pitfalls like disclosures and negotiating repairs and end up getting the best net for your home. On each side we will go deep to really try and provide insight and advice that you've never heard before. The last thing I want you to be thinking as you listen is is, “Jesus I've heard all this stuff before” I will struggle… You have my promise to you I will struggle with every episode to make sure that you take away incredibly valuable information that you can't get anywhere else. Another thing that I really want to do — and don't get me wrong, I'm running into very uncomfortable territory here… I want to provide a very honest look at what the real estate business is really like. For a long time now, real estate agents, Realtors — there is a difference by the way, I will tell you about what that difference is — have earned a pretty despicable reputation. They're like a very small step above used car salesman, with like new car salesman sort of running neck and neck with us — and it's incredibly well earned. Sometimes, I hear stories stories and I go. “Yep, that's why everybody hates us.” But I've got another maybe not so big surprise… Sometimes it's even how we're trained by our brokerages to do business in the first place. It's really, I mean it embarrasses me and this whole comedy of errors has a cast of characters and we'll definitely go into this more in-depth in later podcasts — but just to give you a little bit of a taste — there's basically, there are basically three types of agents. First, there's what I call the “WA” or “Weak Agent.” Generally they're the young and inexperienced agent. They just haven't been through enough deals, or they never had a good mentor, or they haven't been in the trenches long enough to really have gotten any kind of seasoning — or even worse, they just don't care about being informed or knowing about how things work. They don't learn about their area or how to analyze comps, so they can add value to your home search or your home sale. They just — like they just passed the agent exam by the hair of their chinny chin-chin, right? These kinds of agents can be really dangerous to you and can definitely end up costing you money and a lot of hassles. They make for a very stressful transaction. Then, the second type of agent is is what I call an “SA” or a “Salesman Agent” and you probably know the type if you watch Million Dollar Listing and other T.V. shows. They wear the totally slicks suits and have perfectly shaved stubble and perfectly waxed Jaguars. And by the way, they may have lots of knowledge but it really, really becomes a question of are they really using that knowledge for your best interests or is it to get the best deal or bottom line for them? After you sign the listing agreement with them are they doing the hard work? Are they there for all the inspections? For the photo shoots, are they moving furniture around to get the best shot? Are they are they making phone calls to your lender to make sure contingencies are hit on time — or did they they just make the deal and run, right? Is there some quote-unquote team, made up of usually WA's, by the way, in the background doing the work for him or her? Well this this type of agent is slightly better than the WA, they're still dangerous to you in other ways and and we'll get into that in the future podcasts. And the last type of agent is what I call the “PA” or the “Protector Agent.” This is the type of agent you should always, always be looking for. They're the ones that not only take care of issues but they take the time to make sure you understand why there are even issues in the first place. They have a portfolio of transactions behind them and have heard about most if not all of the pitfalls that might lie upon the road ahead. Every transaction is different and has its own moving parts but generally the P.A. knows how the engine works and even when there are unique and crazy curveballs they can find the best way to solve the problem and make sure you stay protected. I know I'm a protector agent because I'm looking out for problems before they even become problems. If we're going to breeze past contingency during escrow you bet your butt, I'm going to see it coming a mile away and be trying to fix the issue before it kills the deal and makes everybody's life miserable. So, look… My ultimate goal… What I want to achieve here and I think what Ron wants to achieve here as well, is that when it comes to picking an agent or a lender, I want to give you the knowledge and ability to really see through their mindset and find an agent or loan broker that is truly looking out for your best interest. Look, I'm not going to name any names. I'm not going to call anybody out, but I do think there needs to be a real self-reflectiveness in terms of agents really coming to terms with how we are perceived by Joe Home-Buyer or Josephine Home-Seller. When I'm, when I'm with my clients, I don't consider myself a salesman — like at all. I want to be more like like a professional with them, more like a doctor or a lawyer than any kind of, “Hey kid… Hey, hey, hey… Can I help you today?“ You know, B.S. salesmen. I wear a completely different hat when I'm with my clients. And yes, if I'm selling your house, I need to market or sell your property — or if I'm trying to get you into your dream house, you know, when there are ten other offers — I'm trying to sell you and your offer, but I should never be a salesman to my client. You're the person I work for. You're my boss. I'm supposed to advise you to the best of my ability and then you tell me what to do. So, we'll discuss this a lot more along the way too. Ron: You know Tom, you bring up a good point, because there's… There's two types of professionals out there. You have professionals that are transaction oriented, which means they will do anything to close the deal, right? It's A.B.C.. Yeah right. It's Glengarry Glen Ross. Always be closing. But then you have those professionals like Tom and myself — we're relationship focused. We're looking out for your interest and we're always thinking of the long term. Because we want to help you, we want to help your family, your colleagues what have you. So if you're looking at a particular home and it's not going to be a fit and we know that, we're not going to be pushing you into anything. Tom: Right. And you know it's… I've literally had this exact same conversation with all my clients, where I basically say, “I'm not trying to sell you this house. I'm trying to sell you the house ten years, twenty years, thirty years down the line.” That's what we're talking about here. It's not in my best interest, by the way, to just sell you this — like do everything I can to hard pressure you to buy a house “I don't know if I can do it” because all you're gonna do is be thinking all the time “That Tom, he just kept, you know, kept pushing and kept pushing and I would never go back to him again. I would never recommend…” No, no, no… I want, I want you to when you walk into that house, I want you to have a feeling of, “I'm home. I'm home. This feels great. That Tom…” That's really what I'm looking for. I want to hear “Tom” associated with that amazing feeling you have about walking into that house — and I think that works the best for anybody involved in that transaction. Ron: Absolutely. Tom: And and by the way while we're talking about like the high pressure thing and everything… I was thinking about this the other day… And I'm talking to Ron, because I don't know if you have you ever heard the utter exasperation of a homeowner after their listing expires? Ron: Oh, yes. Tom: If you don't know what that means when a home is put on the market and doesn't sell in ninety… one hundred twenty days, whatever days it says in the contract between you know the agent and the seller, it's then considered to be quote end quote “Expired” and it's up for grabs. Any agent can come in and try to, you know, get the listing again. And oh, boy… oh boy do they come. Holy moly. These these poor homeowners… Look, They've already experienced the humiliation of the market rejecting their home for whatever reason, whether, you know, there wasn't enough marketing — or they just didn't want to put in, you know, the resources to change the crazy pink walls in the living room to you know some color the didn't make people throw up when they looked at it. Or, you know, more than likely you just didn't listen to the agent and priced it way too high. Right? But for whatever reason your dream of packing up and moving to Bermuda has been totally shattered — and then what happens? Ron? Ron: Yeah, so what happens is… It's in the new Realtor's handbook. You get barraged by expired listings… There is this term, “door knocking” you are essentially you assault everybody in your neighborhood. Tom: I mean they literally get inundated with a barrage of phone calls from low-life WA's and SA's and they get easily, easily fifty to sixty phone calls, all in one day. Like they come out of the woodwork — it's like a zombie movie. I've been in places, brokerages, right? Where they call the receptionist they finally call the receptionist at the front desk and they plead for the calls to stop. I mean it's disgraceful and we wonder why we have such a horrible reputation as human scum. It's ridiculous. And it's like the crowd never stops. But I mean look I take a look at that stuff. It really makes me totally understand why people want to even nix real estate agent out of the mix completely, right? “I mean I've got Zillow and Redfin — they give valuations… They tell me what's for sale. I mean, why do I need an agent anymore? How are real estate agents not just a middleman You know that does X, Y, or Z, when I can do X, Y, or Z on this here smart phone of mine? When is someone going to come along and disrupt or Uber-fy the real estate business?” Well OK. OK, right? Point taken, but listen. Two things. Two things… First, speaking for real estate agents, we really need to listen to that. That means that people either think of us as unnecessary at beset or complete a-holes at worst. We are doing such a horrible job with how we deal with our clients or potential clients that they just don't want to deal with us at all. They want to cut us out of the process completely! And the second thing really… The other side of that coin is that not only are we horrible, but we're not doing a good enough job letting them know what value we do bring to them — and by the way we do bring value, an enormous amount of value but it just may not be in the way that they necessarily expect. There was a there was an incredible article I read the other day on Inman.com. It's a… That's a… If you don't know what that is, it's a website mostly for folks in the real estate business like me and Ron — and actually this article is more like a transcript from a presentation by a guy named Jed Carlson from a company called Adworx… And he was talking about this this exact stuff and he was comparing real estate to other businesses that had, you know, gone through the quote/unquote disruption. His biggest example was the music industry where you know basically Napster came along and changed the way that we think about music. Before, when you wanted to hear your, you know, favorite song that you had, you know, you wanted — you had to go out and buy this big black disc called an album or a CD — and you couldn't just have the one song you wanted, right? You needed ten other not so great songs that came along with it. But, like, with Napster you could choose the one single you wanted and listen to it as many times as you wanted. So he started thinking if technology like this could disrupt an industry like the music business could things like Zillow or Redfin, you know, etcetera do the same with real estate? So, he was reading an article — he was reading an article. So I'm reading an article of a guy who was reading an article — from an industry expert who was asked if you could boil down what a service provider really does for the client — what would it be? And this is what he said the guy said. I'm going to read it here. “I think it's three things. The first one is they help reduce the risk. They reduce the risk of the transaction. The second one is they help carry the load, grunt work, leg work, all that stuff. And the third one is they comfort the client along the way.” Now, it sounds exactly what a real estate agent should be doing. Funny thing, he wasn't talking about real estate agents. The guy was an expert in mountain climbing and was talking about Sherpas, Sherpa mountain guides. I'm going to read from the transcript here because what he says I think is very important. So listen up. He says, “Now for those of you who don't know what a Sherpa is, what they are… They are a culture of about fifty thousand people that live in eastern Nepal and they're famous for their hard work ethic and being acclimated to high altitude and a lot of them make their living taking climbers up Mount Everest and K2, the most dangerous mountains in the world. So the Sherpa, I think, make a great analogy to the real estate agent in a lot of ways because they share an eerily similar set of core value propositions, right? Reduce risk. Carry the load. Comfort the client.” End quote. So, that's what — that's what real estate agents really sell — confidence. You're going through one of the biggest purchases or sales if you're a seller in your life — you want someone who has been up the mountain enough times so they know when there's an outcropping that is extra slippery… Or “Oh, those clouds on the horizon are looking pretty scary over there. We should probably camp out here for the night.” And then this guy Jed goes on to say — and he's talking about the role of the real estate agent here — talking to the client, quote, “I'm going to take you through the most difficult and treacherous and biggest transaction of your life. I cannot guarantee it will be painless or easy, but it is my job to protect you…” There's that word “protect” you, “…during the process and make you as comfortable as I can. My experience will prevent errors and when something unexpected comes up we're going to benefit from my experience. Listen, I've got your back all the way through the process, even beyond the close until you are satisfied. I am your Sherpa.” So when you tell us that you can find the house on Zillow? You know, awesome! You know, that means we can save time finding you a place. I mean, but if all you think a real estate agent is is a dog running around to find you a bone — you're mistaken. That's not where my value is. An agent's value is being your Sherpa, guiding you up the mountain, doing some of the grunt work — and if the weather turns bad, as it does sometimes in a real estate transaction — you want them to have enough experience and knowledge to guide you to a safe place. And that's that's also what I, what I'm hoping to do here. I want to help guide all of you up that rocky slope of buying or selling a home. Remember… It doesn't have to be scary. I mean, not if you know where the handholds are, or the footholds are, and I'm I'm going to help you find where they are… Guiding you… Being your Sherpa. And whomever you choose to be your agent will take you the rest of the way, you know… Ron: You know, Tom you bring up a really good point and I really, really like this and you know professionals like us being Sherpas. You know, I think a very important piece to that is also transparency. You know, we want our clients to share everything and what's going on. They don't have to necessarily share everything with everybody in the transaction, right? But, at least with with us… Because what it helps is— it actually helps us create a path. So when we find, you know, just like you're hiring a Sherpa to take you up a mountain… If you have a heart condition, that's probably something a Sherpa would want to know. Tom: I was literally about to say if you, like, if you have asthma or something like that… You know, you're probably going to want to tell the Sherpa that. “I don't know if I can make it up this mountain.” Ron: Exactly exactly. Tom: Or, if you're afraid of heights, right? You know, you might want to reconsider. Ron: But you know those are things that, you know, once we know this information — knowledge is power. So, being transparent. If you're going to go on vacation a week before we close escrow, well these are things we need to know because we need to make sure that we lay out the path and that just helps us navigate and help. Tom: Well and to go into really and hopefully not to belabor the whole sharper analogy. We're basically if you have these issues. Well then we have to pack differently. I mean we literally have to if you. You know have a heart condition we're going to we're going to make sure that we're going to have you know adrenaline or some sort of being a deferred later inside of our back just in case that somehow you start clutching your chest you know at eight thousand feet and it's much easier to plan for this you know we set foot on the mountain. Right exactly. So when you're in the middle of escrow OK yes it's good to know if these these things pop up but it's a lot easier to know all of this in advance before we're helping you with your offer and helping you get into escrow and everything else because it helps us plan and strategize when advance because we don't have we don't have the clock or I don't have a gun pointed at our heads right. Great so here I'm going to be closing up here and basically what I'm closing up with is and what I'm calling my ten commandments for this podcast The first one commandment number one I will tell you the truth once a week. Even if it hurts me what does that mean. Well that means total honesty if you need to know something as a buyer or seller My duty is to let you know even if it's counter to my best interest. It's the podcast version of fiduciary. Duty basically But here's the other side of that coin. I'm going to and like you know we were just talking about on I'm going to ask you to be honest about things too if you're you know going to take a bigger role in finding your home or selling your home than you need to hear when you're screwing up to I'm not going to coddle you here. This is about you learning the most you can and then turning around and taking action effectively losing your fear and taking action effectively if I hurt your feelings in any way please try not to take it personally but there's a chance. It's going to happen next. Commandment number two I'm going to throw more value at you then you could ever need in this podcast in this pocket as you will hear everything the kitchen and the sink. There are times where it will be very kind of inside pool and nerdy and maybe too technical but I think it's important for you to hear it in order to get the whole picture and in between you will find you'll find things that resonate with you and then you can use personally. Number three. Every episode will have a riginal information and perspective that you can't find anywhere else. So basically if you say I X I could've gone on the internet look that up. I and Ron have failed and I definitely want to hear about it. Number four. I'm going to answer your questions. If you have anything specific you want to hear about do not hesitate. Email me at Tom at clarified Realty dot com and I'll be happy to answer it for you but don't be surprised if you hear it on the next episode of the pod cast. If you're asking a question then somebody else is probably asking that question to command number five shenanigans. I am going to be on the lookout for all the latest shenanigans and cons that you need to be on the lookout for in the market your protector agent should be looking out for these two but I'm going to try to do all I can to let you know before you get burned. Harmed in any way commandment or six you will learn ways to hold your agent and other real estate professionals accountable. What should you expect for the commission you pay what behavior and ethics of the protector agent personify each episode will include specific things you should be looking for when you're working with that command and over seven. I will introduce you to incredible experts in the field when I have a guest they will be bedded to make sure that they truly know what they're talking about and are professionals I consider to be the best in the business and you will hear amazing advice you won't hear anywhere else. Straight from their own mouths commander number eight. And this is an important one. I'm going to be learning right along with you. And that's going to be one of my big criteria when planning these pod casts have I heard that stuff before is it new to me and you know and I've been doing this a while. There's probably a good chance you guys haven't heard it either. If I haven't heard it command number nine is that I'm always listening. If you have something to say whether it's some way this podcast can improve or become better I want to hear about it. I want to read your comments. We're going to be building this plane mid-flight and I always want to hear ways to make it better as a matter of fact that's why I'm leaving command number ten open. It's going to stay empty in the off chance that one that you know once you hear this. You know if there's some way that the listener has a way to make this show better and more useful to each other then maybe might have a commanding number ten. Because in the end it's. It's my show. But ultimately it's for all of you and I can't wait to see everyone get involved and do what you can to make it even better. So that's just a small glimpse at what I really hope to achieve with this pocket as I think that if you listen to these pop cast episodes I'm going to you know consider it a success if you go into your first home purchase or your first home sale and say hey this that wasn't so scary. I can do this. I got this so wrong. You got anything else you want to. Here I think only covered and I'm really excited to hear everyone's responses and feedback and I mean the ultimate joy is listening to someone who. They didn't qualify or thought I can't buy a home. They've been turned down in the past and then ultimately through the right resources they come out at the other end and we get to celebrate that. That's what I'm most looking forward to. It's an incredible feeling. And it's literally like I can only compare it to you know I'm not a drug addict but if I can only compare it to a drug. I mean I love the feeling of helping people to get into homes and and if I can help any of you in that way in terms of giving you information and making the process smoother. This is going to be a success. So thank you again for listening. I'm begging you to not let this be it. I appreciate that you've taken your precious time to listen to this podcast but I hope you come along for the ride. Well we'll have new episodes each week all packed to the rafters with a great information. Listen to the podcast interact with other listeners and let's make this a truly amazing and useful experience for everyone. I want to thank Ron and his company guaranteed rate for Linux record i Pod cast in the offices here in Pasadena. If you want to get more information or ask me questions please email me at Tom clarified Realty dot com for more exclusive bonus content between episodes please check out our website www dot clarified Realty dot com and I am on Snap Chat Twitter and Instagram my call. Sign is act clarified reality. And please check out our clarified realty page on Facebook. I beg of you please please please leave feedback and reviews on i Tunes or in the comments section on our page as Gary Bain or Chuck likes to say the back is my oxygen so I want to hear what you all are saying my amazing theme song Hey now is from the band Wolf. So that's what two apps and please go check them out and like them on South Sound Cloud will also leave a link to the song in the credits if we can they rock show frickin hard makes my teeth hurt. Go check them out for amazing tunes and just a little disclaimer Ron and I are licensed by the California Bureau of real estate my Emma last number a license number is zero one seven one five three five three Ron's is integrate and two six one five eight seven The advice we give is only for properties located in the state of California for all the other states. Please contact your local real estate agent or real estate professional and that's about it. Ron you good. All right thanks for coming by everybody and remember the greatest feeling is making someone feel at home. Take care and we'll see you next week. [/spp-transcript]  

Yehuda Katz and Tom Dale join us to talk about the road to Ember 2.0 and "Fast Boot". They share insight about why they stick to a 6 week release cycle, and why they think JS frameworks might be the future of all web apps (especially content sites). We also chat about what "indie open source" means, and exactly how much design goes into the Ember project and community. Yehuda Katz (Twitter) Tom Dale (Twitter) Tom Dale's Klout score is 66 Tilde.io Erik Bryn Yehuda at Hack Summit: "Indie OSS" HTMLBars FastBoot: Ember's Server-Side Rendering solution Tom on Shop Talk Show on Server-Side Rendering Rendr JS Yehuda's RailsConf keynote: "10 Years!" Skylight.io: Make your Rails apps faster with actionable insights Transcript: FILE NAME: The Frontside 16 - Yehuda Katz & Tom Dale Talk About Javascript DURATION: 55:59 minutes CHARLES: Everybody, welcome to Frontside the Podcast, Episode 16. We've got Brandon and Stanley here with me on the podcast and some very special guests who need no introduction, so I'll let them introduce themselves. TOM: Maybe we just start with Yehuda because he's the most famous. Are we starting by number of Twitter followers? STANLEY: Actually, Cloud score. TOM: Yeah, it's Cloud score based. YEHUDA: I think Tom has a higher Cloud score than me. BRANDON: All right, Tom. Go for it. TOM: Hey, what's up? I'm Tom. I had the idea for Ember JS in the shower. [Laughter] YEHUDA: Hey. I'm Yehuda. I work on standard stuff and Ember a lot these days, and now Rust also. TOM: Yehuda just joined the Rust core team. I don't know if you guys saw that. BRANDON: I did see that. Rust is a programming language. YEHUDA: Programming language. STANLEY: Are we going to get to talk about that later? BRANDON: Sure. TOM: We can talk about whatever you want. I'm not going to have any insights on that. YEHUDA: We'll have some insights. TOM: Yeah. I don't know if you guys ever saw the Pokemon Movie, but basically Yehuda is reenacting that with core teams. You've got to catch them all. [Laughter] BRANDON: That's great. STANLEY: That's not just the movie, Tom. That's literally everything around Pokemon. TOM: Oh, okay. STANLEY: That is the tagline. TOM: I will definitely defer. You seem like an expert here, Stanley. STANLEY: You know; I know the most important facts of all time. BRANDON: Stanley is on the Pokemon core team actually. STANLEY: I actually just made a new Pokemon that's like a guitar, a chair, and a microwave put together. BRANDON: What's it called? STANLEY: Rock-On. TOM: That is the worst Pokemon name I have ever heard. [Laughter] TOM: Oh, my gosh. BRANDON: All right, well, off to an auspicious start here. So the two of you and Leah formed the original core team for Ember. Is that fair to say or were there other people involved at that time when you kind of were switching SproutCore 2.0 to Ember? YEHUDA: I don't think I would call the original group that switched SproutCore over to Ember necessarily the core team. I would say that there was a bunch of people that were working on what was called SproutCore 2 at the time at Strobe, and it doesn't -- what we were doing there doesn't really meet my requirements for a good core team or a good Indie Open Source project. But one of the things that we did after switching over to being Ember and announcing the separate project was to make the core team more like what I would want. TOM: Well, I would say that there was never one moment where we were like, hey, let's create a core team. I think one thing that I learned from Yehuda about managing an open source project is that it is extremely important to start delegating way before you feel ready or comfortable. So there was a point early on where we were just totally overwhelmed as people started using it and people came along and were interested. And so we just gave them commit bit without really thinking about the bureaucracy of it or the structure of it. And then it definitely got to a point where it was like, "Why is there no core team yet?" because there's a ton of people with commit. So we should probably think about this a little bit more. YEHUDA: Of the people who are on the core team now, Erik, Chris, and Steph were all involved extremely early. I think Erik Bryn was the second contributor. Well, the first contributor after people working at Strobe, and Chris and Steph got involved really early because they were building an app on Ember that was very, very mobile focused. Well, it's a mobile app, and so they needed heavy performance, and we were not necessarily focusing on that, so they got involved pretty early also. BRANDON: And you gave a really awesome talk about this recently at Hack Summit. We'll throw the link to that in the show notes. I thought it was terrific, and I thought there was a lot of amazing ideas that were clearly born of painful experience. And I want to talk about that in a moment and kind of basically running and maintaining an open source project that keeps the open source ethos, I think, was kind of the thrust of the talk and keeping the Web and Open Source Indie. But before we jump into that, I wanted to get kind of a -- without going into, like, a full state of the union, there's a really lot going on in the world of Ember right now. It can be actually kind of hard for individual developers to just keep up with the news of it. There are just so many cool things happening at once. And there are a few things in particular that I wanted to get an update about. You guys are doing some really interesting stuff right now, but some things that are shipping soon: HTMLBars is actually happening. YEHUDA: It's in the beta. BRANDON: Yeah, it's in the beta, so people -- we tested it in our app already, and with one exception with, I guess, Ember list view isn't quite ready for it yet, but. YEHUDA: I think that's ready now too. BRANDON: Oh, really? TOM: Yeah, that just got updated. BRANDON: So, yeah, it was phenomenal. I mean it just works. Like, it was pretty amazing. So the benefit to users for that has been kind of already gradually been implemented where the metamorph tags in the DOM were gone. TOM: Right. BRANDON: What else can people expect to see once HTMLBars is in place? YEHUDA: So let me just reiterate a thing that you just said that maybe people weren't clear about before I let Tom a little bit about HTMLBars, which is, one of our major goals now and probably forever is to continue to update things incrementally and without breaking apps. And that's something that takes a lot of effort, so I want to reiterate it because it's probably the driving force of everything that we do, so like you said, there's a lot of news. We've been talking about a lot of stuff. We can talk for hours on it, probably. But the key thing is that a lot of times you hear there's a lot of news in a project, and it feels overwhelming. It feels like, oh, my God, if there's that much news, it probably means I'm going to have to spend the next five years catching up with all the things that are happening. And with Ember, our major goal is to make sure that all that, all those new features don't affect your app. I mean there will be a 2.0, and at 2.0 there may be some breaking changes, but even with the 2.0, all the breaking changes will land before 2.0. They'll land on the 1x brands together with deprecation warnings so you'll learn about them as you upgrade. TOM: Yeah. YEHUDA: And so I think this is the driving force of everything we're doing now. TOM: Yeah, I think, with 2.0, it's not like oh, my gosh, there's all this new stuff I have to learn. Instead, what it's going to be is us removing stuff that you probably never even learned about anyway. YEHUDA: Or that we told you in 1.10 or 1.11 to switch away from and you had plenty of releases to remove. TOM: Yeah, you'll have ample warning, and you'll definitely -- it's not going to blindside anyone. But I think this is exactly the point is we're on a six-week release cycle, and it is impossible to do big bang stuff in six weeks. Right? Think about any big software project anyone listening to this has worked on. It's hard to build a huge thing in six weeks, which maybe seems like a limitation, but actually I think we both see that as a huge strength, which is that it really forces you, as an engineer, to think about, okay, I want to move mountains. But I need to do it six weeks at a time, so how do I basically touch back down to reality as often as possible? With HTMLBars, if you think about it, it's a pretty dramatic thing, right? We're basically entirely replacing the rendering engine of this pretty large JavaScript framework, which in some sense is like trying to change the engine on a 747 mid flight. And the only way that we can get away with doing that is to do it very incrementally. And the only way we can do it without breaking people's apps, I should say, is to do it incrementally. Step one was metal-views, which removed metamorphs. But, fundamentally, all view rendering was still string concatenation. And then the next step after that was to get actual HTMLBars in with creating DOM instead of creating strings. YEHUDA: There was actually another step in between, which was to change all the -- so the internal, whenever you use a curlies and handlebars, those curlies, in the old version of the templating engine, would go and they would have ad hoc code to observe something, observe paths, and there was all this complicated code at each point where a curlies was used anywhere in the templating engine, and the new system -- and this is again behind the scenes, so it's easy for even Tom to have forgotten about it. We refactored everything internally so that it used a stream-based system so that all the parts of the templating engine don't have to know exactly how that's all structured internally. And that makes it a lot easier to do performance optimizations, but also makes it a lot easier to avoid mistakes and bugs that cropped up from time-to-time. So that was another step in the direction that was necessary to get all the way to the end. TOM: So now that's in, and I think the next step is to actually -- the next step will be now that we've got HTMLBars integrated in a backwards compatible way, the next step is introducing nice, new syntax. So just one example of this is this gives us the ability to remove the bind-attr helper. Most people that I've noticed when I'm teaching them Ember intuitively think that they should be able to do attrf equals curly, curly URL, and that doesn't work together. You have to do bind-attr. But because HTMLBars is a much smarter parser, we're able to have that context, and we can actually just dramatically simplify the whole model. BRANDON: Okay. And you also answered another question I had, which was, there are a lot of people basically talking about how they should be building apps for 2.0 friendliness, but it sounds like if they stay with the point releases, there'll be very little work involved in moving to 2.0. So you don't have to kind of like today sit and architect your app in a certain way as long as you're staying up to date with the point releases. Would you say that's relatively accurate? TOM: Yeah, I think so. 2.0 is not going to have any new features, and one feature that Teddy Zeenny is working on for the Ember Inspector, you know the Chrome and Firefox plugin for the developer tools, is adding a deprecations pane. So what we expect to happen is that people should just keep upgrading their apps on the 1x point releases and then, every upgrade, you may see one or more deprecation warnings pop up, either in the console or in this pane in the developer tools. And you just fix those at your leisure. Then when 2.0 comes out, all that will happen is that the payload size of Ember will shrink. YEHUDA: Yeah. I think another way to put all that is, when we looked at React, so we looked at React a lot as part of the run-up to 2.0 for the past, like, six months. And when we looked at React, initially we saw a programming model that actually wasn't that different from how we thought people should build Ember apps, so things like you should have data flowing down from a single point and, in Ember, that single point is the model hook in your route, and then we always thought about data flowing down. And you should have events bubbling up, and you should use actions mostly for communication. I remember Erik Bryn very, very early on said, "I think people are overusing data bindings. People should use events more." And that's when we started adding the evented system to a bunch of the parts of the framework. TOM: Actions. Actions weren't there originally … two-way bindings. YEHUDA: Well, we added actions, but we also added, like, Ember.evented. TOM: Yeah. YEHUDA: And I think we kind of knew all this, right? And so idiomatically the way that Ember 2.0 works is actually not that different from how we thought Ember 1.x should work, but I think one of the things that ended up happening is that because data bindings are so -- two-way data bindings can be very nice and clever, a lot of times people would reach for two-way data mining because it was the first thing that was sitting there. And then they would end up building somewhat complicated systems that rely on communication through two-way data mining. TOM: The syntactic sugar pushed you in that direction. YEHUDA: And so a lot of what Ember 2.0 is is about making syntactic sugar more honest about what is the right default, and that does mean that there may be applications that were heavily relying on communication, especially communication channels through two-way data bindings. And that will work much less nicely in Ember 2.0, and it might feel painful to upgrade if you're trying to be both idiomatic and upgrade to 2.0 at the same time. But I think, for most people who are using actions and were using data down through the model hook, I think a lot of it will feel very familiar, will feel very much like how you've been doing things all along. CHARLES: Cool. I actually had a question about HTMLBars landing, and that's when we upgrade our apps, everything should just work seamless. Like Brandon said, we actually did a spike of that, and it mostly seems to be the case. You said that there are no new features, but are there more, like, newer development stories around? Like, given that the templating engine or the view layer understands the DOM, what power or APIs will users have to interact with it, like to do animations or bring things in and out and stuff like that? YEHUDA: Oh, yeah. CHARLES: Is there any of that stuff planned? YEHUDA: I don't think we meant to suggest that there are no new features in number 2.0. Just that they will land in the 1x series, I think, is the point. CHARLES: Ah, right, right. I see. TOM: I think probably the biggest feature is just speed. And I think, also, what HTMLBars' architecture unlocks is the ability to better integrate with other libraries by adopting kind of a diffing approach similar to what React does with the virtual DOM. Basically, in my mind, HTMLBars is all about a bunch of infrastructure work that allows us to make the programming model feel more natural for people who are…. YEHUDA: One way to think about it is that it's the first templating engine that was ever built specifically for Ember. Handlebars templating engine before was built as a general-purpose templating engine, and we pushed it as far as it could go to be real useful for Ember. But things like bind-attr and the metamorph tags kind of crept in as necessary because the templating engine wasn't really built for this purpose, the exact purpose that Ember was designed for. And the HTMLBars engine, part of it is that it's DOM based, and part of it is that it supports diffing, and part of it is that it's faster. But I think, ultimately, it allowed us to look at a lot of areas that are annoying about using templates in Ember and make them nicer. And, yeah, so I think that it's -- TOM: I'd say it also unlocks things like we're working on server side rendering right now, and a lot of that is due to the power of HTMLBars because we can run it in so many different environments, and we can model all of these things as streams internally. It gives us a lot of flexibility about what we can do with your applications. You know, we can do things like server side render your applications even though, of course, you never designed your app for that case in mind. But because of how expressive the templating and, in fact, the entire application architecture is, and because we all agree as a community that this is how we architect our apps, it unlocks a lot more stuff. And I think there'll be more things like server side rendering in the future that we all benefit from by sharing this very declarative application structure and very declarative templating language. YEHUDA: Yeah, I mean honestly, under the hood, the fact a lot of the innovations of the templating engine are not things that any user will ever see directly because they're just implementation. And if we wanted to go around pimping things like streams or the way that the diffing algorithm works internally and the way we clone fragments and all this stuff, we could probably spend a lot of time pimping it, and maybe that would even make a lot of people, some people happy. But I think you'll see, over the next year or so, these things will all lead towards better features or to more features that will be nice, and that's how I think we'd like to roll -- TOM: I think Web components integration is a big one. YEHUDA: Ah, yeah, that's a good point. TOM: I think HTMLBars makes it very easy. And so, in terms of actual improvements coming on top of HTMLBars, the component syntax, instead of being curly, curly to indicate that you want a component, you'll be able to use just regular angle brackets, so that'll be nice. And another thing that we're really keen to get rid of is: You know how today when you're building an Ember component if you want to customize the element associated with that component, you have to say, like, tag name, class name, bindings. You guys know what I'm talking about? BRANDON: Mm-hmm. TOM: So that's kind of annoying because all of those special properties on the component class that you used to customize the element are all duplicating features that already exist in the templating language. So it's just kind of this weird bifurcation of the programming model where, if you want to customize the element for this top level, do it in JavaScript. Everything else, do it in the template. So HTMLBars will allow us to allow you to customize your component element purely in the template, and you won't have to -- basically there are far more cases now where you'll be able to get away with a component that's just a template file, and you'll reduce the number of JavaScript classes in your app. YEHUDA: Yeah, I think, from a high level, the biggest -- the high level of the internal technical improvements are largely that it allows for contextual work. So the old templating engine wouldn't necessarily know that you're inside of an attrf when you have curlies, so we would have to spit out a bunch of extra stuff and maybe make you use extra helpers. It wouldn't necessarily know that you're in image FRC or a video tag or a component. It wouldn't be able to tell if you were using a polymer component that implements the bind protocol, right? But the new templating engine basically lets us see exactly what's happening at every curly, and that just has a large number of positive effects. BRANDON: So you said something else that I felt like was a good segue into the next part of the discussion that this basically allows you to do server side rendering, which you guys are really, like, in the thick of it right now. But for me, a lot of the talk I've seen a about server side rendering comes across as a little inside baseball. There's this sort of discussion between people who are really into React because they're suddenly doing a lot of stuff with server side rendering, and they're seeing some benefits out of it. And you see this stuff kind of pop up in the JavaScript community, but I'm curious to know if you guys can explain a little bit about the benefit of server side rendering that this is a major new feature coming to Ember now. YEHUDA: I'll let Tom maybe give the full pitch, but I think one thing that I feel somewhat strongly about is that, for most people, if you don't have a system that actually gives you something that works pretty well out of the box, in other words it doesn't ask you to do a lot of the work yourself, the idea of isomorphic server side rendering where you run your same app on the client and the server, I don't think that that ends up being worth it. And if you look at a lot of apps that use Ember today, a lot of them have spent relatively little time building non-isomorphic solutions for specifically SEO that have been very, very cheap in terms of time and very, very effective. But I think there's the: I want to not have to write that, even that little bit, and I think that that you get a lot of benefits out of if you just have your framework do it. In other words, if it's not just like your framework does 20% and you do 80%. If it's your framework does 95% and you do maybe a little bit, or you have some constraints, I think that is worth something. And I think the rehydration of fast boot is worth something, although that has even more issues and even a larger percentage that most people have to do on their own. Basically, I think the TLDR for me is that I've always saw server side rendering as indeed somewhat inside baseball because, for most people historically, and I think this is even true largely about React, the solution that you're offered is the framework will do a little bit for you, and you have to go figure out a lot of the details about how to make this work for real. And I think most people just don't have the time to figure all those details out. TOM: So it's been kind of interesting to watch this play out over the last year or two because I think there's been a big split between the JavaScript application community and old school people that create content for the Web who are really keen on this idea of progressive enhancement. And so there's kind been this split. And, for me, for a long time, I personally didn't really care about this case because, in my mind, JavaScript apps were really good for what I'll call workspace apps, which is most of them are behind a login. You log in. You have these very rich interactions. You're editing something. You know, I worked on the iCloud apps. It's a feature, not a bug, that Google can't index your calendar and your email, right? So to me that was the use case for JavaScript apps. But that was until I saw content sites. Like, I remember the first time thinking, "Wow, maybe JavaScript apps are actually the future of all Web applications," was when I saw Bustle, actually. When I saw Bustle, it was just a content site. It was just news articles. And if you would've asked me, I would have said you should probably use Rails or some other server rendered framework for this. But then I saw it, and it felt just like a website. I couldn't actually tell the difference other than how damn fast it was. And I kind of had to step back and question all of my opinions about how people should be building these kinds of applications. And especially for content sites, I think that the server rendering is really important, right, because historically your user has had to download all of this JavaScript and all that JavaScript had to be downloaded and evaluated and run before they saw anything. So having the ability to bootstrap that process on the server and have the first bits that the user starts downloading not be the JavaScript payload, but be HTML and CSS, so that the first thing that they see is useful, I think that's really going to change how people build applications because you get the benefits of server rendering while still retaining the kind of interactions that you can build with something like Ember that you just can't do with Rails. YEHUDA: But again, I think people trying to do this on their own and taking maybe a half solution and then trying to figure out how to make this work reliably ends up producing things that are pretty buggy and feel pretty bad on first boot, or they end up requiring tremendous amounts of engineering resources. And it's possible that, like, huge companies can make this work. But I mostly think about startups, and startups simply do not have the engineering resources to take on the server side rendering task on their own, so this is why I think we care about it for Ember because, as Tom said before, Ember is already pushing you down a pretty conventional path, and we think -- our hope is that by having people do that conventional path and us taking charge of server side rendering will have something that works mostly out of the box for a lot of users. Again, assuming they follow some additional constraints about what you're allowed to do on the server. TOM: And I think we should be clear here because there's, as always happens, there's ambiguity in the terminology. So first is the term isomorphic app, which I don't really love that term, but I guess we better get used to it, Yehuda. YEHUDA: Yeah. TOM: But there's really a spectrum. On the one side of the spectrum you have something like Airbnb has a library for Backbone called Rendr (with no e - well, one e, but not the second e). And that kind of lets you wire up some of the server side rendering. But again, it's very, very manual. And the whole purpose of this is just to make sure that the first thing that you deliver to the browser is HTML and not JavaScript so that the user, even if they don't have JavaScript enabled or they're on a slow connection or whatever, they get something useful. But then on the other side, you have things like Meteor or Asana where the whole idea is -- and to me, I'll be honest with you. It strikes me as extremely silly, but the idea is that you're writing both your server and your client in the same code base, and then you're deploying them both. You describe it, and it sounds like this magic bullet, but it also just seems really silly to me. YEHUDA: Well, I think the fact that even the first releases of Meteor had if Meteor.isClient and if Meteor.isServer, and even the first demos had large blocks of content…. TOM: Yeah. Conditionals. Yeah. YEHUDA: Basically means that people hadn't really figured it out exactly right yet. TOM: Yeah, the point is that even if you have a client side app, your server still has a lot of responsibilities, especially around data access to the database, authorization, authentication, and so on. And putting that in the code base with your UI and your drag and drop code just does not make any sense to me. So I want to be clear to everyone listening that that is not what we're going for. The idea is not that you're writing your json API server in Ember. The point is that you're writing the same old app. In fact, we hope that you don't have to make any changes to your app. And you can deploy it, and it will do a render using the same code. It's basically like your app running in a browser on the server, and then we'll have some way of -- YEHUDA: Except not actually a browser. TOM: -- it's actually a transferring state. YEHUDA: Except, importantly, it's much, much cheaper than being an actual browser. We're not using phantom JS or a zombie or anything. TOM: Right. Conceptually a browser, but we don't want to pay the cost. Phantom JS is a source of great pain for many people, ourselves included, so we want a pure JavaScript environment. But conceptually it's a browser. YEHUDA: I think the reason I hopped in there is I just want to be clear that the goal of conceptually a browser is actually not to be a browser, but to make Ember itself internally abstract enough so that the most expensive parts of being a browser can be replicated in a cheaper way on the server. Obviously the most important part of that is the DOM. And that's the part that React worked out for server side rendering is use the virtual DOM on the server and not a real DOM, right? And that means you don't need real phantom JS and the full scope of DOM. But there's also other stuff like how your routing works and how the model hook runs and how it makes requests, how it makes "XHRs" to get the data in the first place. Right? There are a lot of details if you think about what it takes to boot up an app in the first place. For us, the goal is to go through that whole process of booting up an app all the way through, but not including the did insert element hooks in your DOM and make sure that all that stuff doesn't require -- it has really constrained and clear abstractions, right? So rendering has a render abstraction and routing has a location abstraction, and the DOM has the HTML bars, little dom, lower case dom abstraction, right? So instead of saying we're running it inside of something that pretends to be a browser, we're saying Ember doesn't actually care whether it's in a browser or not, but it has very, very clear abstractions for what it means to be a browser. BRANDON: Okay, so is there--? It sounds like it could be a little like -- is this a little ways off? It sounds like there are a lot of benefits. Like, if you see the hand rolled stuff that Discourse has done, clearly this is something that Bustle cares enough about to sponsor, this is probably a little ways off for Ember developers. Is there anything that you want people doing Ember to know right now about server side rendering in terms of how it's going to affect them or some of the technical stuff that you're learning through this or anything like that? TOM: I think we've been thinking about this particular problem for a very long time. And in fact, we've intentionally designed the architecture of Ember specifically to handle this case, even from the beginning, even like three years ago. We knew that this is something that we wanted or at least we didn't want to paint ourselves into a corner around. So I think there are two aspects of this, and one of them, I think, is pretty well bounded and pretty straightforward. The other one is definitely going to require a little bit more research. The first step is simply getting rendering happening on the server. So because we designed Ember for this case, we were actually able to get Ember as a framework booting up in node in about a day's worth of work. So a couple things have crept in. There were areas where we had been a little bit sloppy and introduced dependencies on things like document.body, jQuery, things like that. So it was about a day to kind of encapsulate those, make sure that they weren't hard requirements for booting the framework, and that was about a day's worth of work. And then, by the end of the week -- we've only been working on this for about a week now -- at the end of the week, we actually had an app booting in node and handling route requests. So in terms of progress, it's been really great. But I guess all that we're saying is that, in a week, we were able to capitalize on the last three years of work we've been doing. That's not as impressive as it sounds. YEHUDA: It was nice that there were relatively few regressions, right? TOM: Yeah. YEHUDA: That the list of things where people were accidentally doing things that assumed the browser was actually relatively small. TOM: Yeah. And the way that we did that is basically introducing an abstraction that provides your environment to you, so a node that's different than in a browser. So that's the first part is to get the app booting, and the second part is to get it rendering. I think what's really cool is that, even though HTMLBars, of course, is a DOM based rendering engine, or despite that, we still use an abstraction around DOM access. What we're going to be able to do when we start, again, in earnest tomorrow, on Monday, is basically replace that DOM helper that we used to create DOM in the browser with something that we'll be able to build up strings so that you can build up your HTML on the server and serve that to the client. That's step one: rendering. I think we'll be able to make quite quick progress on that. I would guess probably about -- I don't know if I should give timelines here. I think we're ballparking around a month before we can at least beta it, the server rendering. BRANDON: That's a little faster timeline than I had assumed. TOM: That's purely rendering. I want to make clear that that is purely for things like SEO, for Web crawlers, for curl, things like that. Then the next phase after that, and this is where it gets into the tricky bit, is being able to -- YEHUDA: Rehydration. TOM: -- is rehydration, what people call it. What we call fast boot. And with fast boot the idea is that whatever state that we use to build up your application on the server, we also transfer that state, not just the HTML, not just the output, but the state that we use to build that output is somehow seamlessly transferred from the server to the client. And the client basically just takes the HTML that we've given it and reconnects all these bindings and goes from there, so it's totally seamless to the user. YEHUDA: And I think there's some complexity there. For example, there may be some part of your page that you can't actually render on the server because it says, like, "Hello, authenticated user," with the user's name. So thinking about ways to make sure that you can mark those as needing to be rendered on the client without causing jank. There's a bunch of stuff like that where, at first glance, it seems not too bad, but I guess the high level if there's a determinism issue, right? So the goal is to make sure that roughly what you did on the server is the same thing that you do on the client because if it's too far off, then you end up having to throw -- no matter how smart our algorithm is, we're going to end up having to throw away everything and replace it again. The idea is how to structure your app, how to structure the way that you set up your app in Ember CLI so that you tend to be putting out output that's deterministic on both sides. And, like Tom said, I think state is maybe overbroad. It's mostly modeled batter, right? Making sure that the model batter that you got on the server is equivalent and transferred together with the HTML payload so that the model hooks that you have in your client will not have to go make another XHR. They'll just have the data that the server already collected, and then hopefully rerender an equivalent DOM on the clients with relatively low…. TOM: There are just a lot of tricky cases, like imagine you have a bound helper that shows relative dates, like 30 seconds ago. So you have a clock on the server, and then you have a clock on the client. How do you reconcile those two? YEHUDA: Yeah, so the good news there -- the good news with all that, without getting too much into the weeds, is that the HTMLBars' engine is already broken up between rendering the parts of your DOM that are static, that are like the hello, the text hello inside of an H1, and updating the static parts with dynamic content. And today that's purely a performance optimization, and so that we could use the same document fragment over and over again after cloning, but that will also allow us to use server rendered content where, instead of expecting to have an empty text node that is to be filling in with dynamic content, we'll have a filled in text node. And we see, in that case, Tom, that the time that is in there already is not the correct time. It's not the equivalent time, and so we'll update it. So that's sort of like the React diffing strategy. I'm less worried about, like, there's a single text node with the wrong content because I know we can deal with that. And I'm a lot -- although if it's too much changes, it will look very bad. It will look very janky. I'm more worried about, like, this entire conditional change. So you're looking at something and then, like, your sidebar swaps out for a different sidebar, which I think would be a pretty unacceptable UI. CHARLES: Obviously there are a lot of different server side environments that people use. What requirements of the server is there going to be if I'm using a Rails app or something in Python or Java or whatnot? How am I going to interface to this? TOM: Well, you definitely need a JavaScript runtime, right, because your Ember app is written in JavaScript. Unless you're planning on pouring it into Ruby or whatever, we're definitely going to require JavaScript runtime. And I think we're starting with just supporting node. But what I would like to see, and maybe you guys can write this, is a Rails gem that you can install that will install dependencies in everything and basically get set up in a production environment. YEHUDA: I think one thing people often forget is you can definitely -- you could you have a node app running. People try to embed JavaScript. They try to use, like, The Ruby Racer, and embedding JavaScript is quite a disaster. BRANDON: [Laughter] I'm sorry. I don't know if you know. Charles wrote The Ruby Racer, and it is a disaster. STANLEY: It's cool. It's a disaster. YEHUDA: So let me be clear. It's a great idea. I use it a lot, but it just fundamentally doesn't now work. Right? It fundamentally cannot -- you cannot embed two VGCs in the same process. BRANDON: Right. YEHUDA: Okay. BRANDON: This is the greatest moment in the history of our podcast. I just want to say that. CHARLES: No, I know. There's no way to collect…. YEHUDA: Yes, exactly. CHARLES: -- for example. YEHUDA: I was about to use cycles as an example. CHARLES: The APIs just don't exist. YEHUDA: Yeah, so basically cycles, so this is why. The reason why I feel strongly about this is that we use Rust for Skylight, which is our product. And we need to embed something, and I would never in a million years embed something with a garbage collector. And I think The Ruby Racer was a pretty good -- I think, for constrained cases, it works fine if you know what you're doing, but people basically tried to use it as, "Oh, I'm just going to write part of my program in JavaScript. And, by the way, both languages have closures, so good luck," basically. The Ruby Racer is cool, but I would not -- I don't think that that's the correct strategy for having long-running JavaScript programs like Ember, like complicated stuff like Ember. I think a better thing for people to do would be to figure out a simple IPC protocol so that they could run their Ember app and then have a simple way of talking over a socket or something with the node app, so booting up your Rails app will also boot up the node app. And, if necessary, and you're serving through your Rails app, you could communicate. TOM: I think, to be clear, the Ember app, even when running on the server, still talks to the database server using json, right? So it's the exact same data marshalling flow. It's just presumably it'll be a lot faster because probably your API server and your application server are in the same data…. YEHUDA: Well, at a minimum, it'll be a lot more consistent, right? TOM: Yes. YEHUDA: I think when people -- when Twitter complained about somebody from some country connecting and getting a really slow connection, the issue there was that they were downloading the app shell and then who knows how long it took to download the json payload, right? But if the json payload is coming from the same data center, then it's, by definition, going to be downed within some range, reasonable range. BRANDON: Okay. Awesome. I'd like to shift gears and spend a couple minutes talking about something that most of the questions that I had originally for this were actually answered in your talk. But I'd like to go over it just a little bit. You alluded earlier to the way that you're running Ember as an ideal, sort of your ideals, discovering your ideals about open source projects and the Indie Web. And I think it's a really important topic, and I want to ask a little bit about that because I don't think a lot of people understand this. I think, especially I see in the JavaScript community, a lot more people establishing open source projects that are corporate run and that being considered a benefit rather than a drawback. And I've seen you push back on that a little bit, and I wanted to ask you, Yehuda, about what your definition of the Indie Web is and why you specifically run the Ember project the way that you guy run it. YEHUDA: Sure. I think there are basically two parts of what it means to be Indie, and the second one sort of derives out of the first one, but I think it's -- you wouldn't necessarily arrive at it yourself, so I'll make it explicit. The first one is that you have a diversified core team. What I mean by that is essentially diverse in all the ways you could possibly think of, and things that I learned from other projects are, like, functionally diverse. So make sure that if there's a person on your team -- if there's a person around somewhere running your events or doing documentation or doing evangelism or running user groups, make sure that if there's a person who is very skilled at doing that that they are the top person on your team in charge of that. The counter, the alternative that I've seen a lot in the open source community is that the person running events essentially reports to the core team, right? There's a person who is maybe a professional event runner, and they are not in charge of events. They're in charge of coming up with ideas for events that they run by the core team, and the core team decides yes or no. The problem is the core team has no skills in doing that, so this person ends up spending huge amounts of time being frustrated trying to explain to the core team something or other, right? That would be the equivalent of somebody on the core team writing some area of code, having to come to the rest to the core team and talking about really tiny, nitty-gritty implementation details. Of course, unlike code where I think people have an intuitive sense that you're deep in the weeds of some performance thing, and I don't really understand that. In a lot of areas that are not code, code people have a very high sense of their own understanding, right? The core teams, I've seen a lot of core teams that people come and they say, well, I happen to know a lot about how people want to read docs in this country and so I'm going to help with the translation effort. All of a sudden the core team is an expert on, like, Indian documentation. And they have all these opinions that are totally unwarranted. Step one is have a functionally diverse group of people, and have people that are not necessarily hardcore coders, but are talented and professionals in their area. Have them do that work at the top level. And I spent a little time on this just now because I feel strongly that this is an area that people miss, and it's just an area that code people are too high on their own supply. They're too impressed with their own skills. They cause a lot of pain for the people who are good at areas that are not hard-core code, so that's one. Two is be diverse in terms of the set of people that own decision-making in your project, so this is what you were talking about with the company run open source, and this is something companies can do. I've seen, for example, I worked with the Rust Project, and the Rust Project originally started at Mozilla. But they've been spending tremendous amounts of effort to try to increase the set of people who are on the core team of Rust that are not working at Mozilla. And this is something that maybe takes a lot of effort once you have an established project at a company. There's all the internal company politics you have to deal with. But the reality is that if you have a project that's at one company, you're kind of at the whims and the mercies of that one company's how they do resourcing, whether they think it's important, what their actual goals are. Maybe the thing that they built the project for doesn't necessarily match what the community is doing, right? So become diverse in the companies that own it. I think projects like Rails, Postgres, Ember, increasingly Rust are good examples of this. And, of course, I mean the regular meaning of the word diverse here, just because if you become more diverse in all areas, you actually find yourself being more function diverse just because of who ends up being in what areas. You end up finding yourself having a lot better insight. You end up sitting in a room, and when there are people of diverse backgrounds, the kinds of questions that people ask. And I can only say this. This is the thing that I've noticed personally. It's not a thing that I can empirically measure. I've just noticed that the kinds of questions that people ask, when you're diverse in all kinds of ways, ends up being -- they end up being stronger, better, and they end up pushing back on the kinds of decisions that you can make as a monoculture with group think, right? The harder it is to have group think, the harder it is for everyone to sit around and say, "You know what we're going to do? We're going to rewrite everything," right? That kind of thing is hard to do when you have a lot of people with a lot of different backgrounds with a lot of different interests. So that's, I think, the higher order bit of what in the open source means is be very diversified in a lot of different ways. But there's a specific thing that I think comes out of it that is very important, which is to do the work that you're doing incrementally. Again, the reason I think that this is a derive is that if you have a lot of people with a lot of different interests with a lot of different projects, I think it becomes very difficult for you to do full on rewrites because everybody has interests, and maybe a few people are excited about doing a rewrite, but everyone else says, "Oh, my God. What about my app?" Then you have the docs guy saying, "Oh, my God. Now we have to maintain two sets of docs?" And you have the evangelism guy hearing all the pushback from the community about the rewrite. So it becomes very difficult for you to have this situation where you're not doing things incrementally. But I think, in my talk, I spend some time on what it means to do things incrementally and what the benefits are and how to adopt the six-week release cycle and all that. I talked about that in more detail because, even though I think it's a natural consequence of being diversified, it's also something that you have to think about if you want to do it well. BRANDON: Yeah. It seems to me that that would require, like it's kind of a chicken and egg deal, but to me it seems like there was a lot of discipline in switching to a six-week release cycle, and that's important. It seems, for us at least as consumers of Ember as an open source framework, that's benefited us greatly. We find the framework much, much easier to keep up with on the six-week release cycles than pretty much most other open source projects we've worked with. YEHUDA: Which is kind of like a paradox, right, because you expect that six-week release cycle means you can never keep up with it because it's always changing. But in fact, six-week release cycle means you don't have time to ever change that much. BRANDON: Well, and even for apps that go dormant for a while, we find that, okay; we'll bring it up to one. Bring it up to the next one. The upgrade path becomes extremely obvious. YEHUDA: Yep, exactly, and there's deprecation warnings, and there's ... I think people should watch my talk on this specific area because it took me 15 minutes or something to lay out the whole thing. But I think the basic idea of just doing things incremental, and incrementally has this bad sense. It's like, oh, maybe you're hunting for the local maximum or something. All I mean by incrementally is the same way that the human body replaces its cells, right? You don't do it all at once. Maybe over an extended period of time, the thing that you're looking at is completely different. But because you did it a little at a time, you were able to move the whole community together in the direction instead of people, many, many people getting left behind, which is what used to happen a lot with Rails. I think Rails has gotten better at this over time. But it used to happen, like Rails 3 came out and a lot of people were stuck on Rails 2.3. BRANDON: I think when people hear incrementally, they can think about possibly incrementally be led in circles, right? You could incrementally be every day wake up and decide to change one degree or the other. What matters is if you have a compass that's pointing somewhere. For the Ember project, that incremental stuff doesn't work unless it's pointed somewhere very clear. And you and Tom are basically the keepers of that vision. And I wanted to ask about that, what the vision of the framework is that keeps guiding everybody. Is it sort of implicit to the project? As you use it, you recognize it. Or is it something that you've explicitly outlined somewhere? YEHUDA: I'll take this for a second and then Tom can jump in. I think, fundamentally, the main vision is just we ultimately wanted to have a full stack solution that solved the majority, the vast majority of the problems that a regular person would have writing a Web app, but we knew from the beginning that if we tried to take on that whole project, I mean even Meteor, who took on that whole project, is still struggling to have to complete the vision. And they tried to sort of boil the ocean. And so, we knew from the beginning that we were going to get it wrong if we tried to do a CLI tool and a framework and a data library and all this stuff all at once. And so I think we started off with the V in MVC, basically, right at the beginning and added routing and other stuff over time. But the mission always has been to build the thing that's a full stack of what you need to build front-end tools. Tom, you can take it from there. TOM: Yeah. I think, in the JavaScript world, I think, because JavaScript for so long was treated as a toy language that people didn't do serious stuff in, it attracted a certain type of developer who is -- which is a totally legitimate opinion, but they tended to be kind of hackers who would do these one-off experiments. And because of that, the notion of convention over configuration and having shared solutions is still a somewhat surprisingly controversial opinion in the JavaScript community. And so I think the role, as you said, for Yehuda and I, is to basically be willing to stand up and take the tomatoes that get thrown at us and say, "You know what? No, there is benefit in having a shared solution, especially when it's not just one-off hackers in their basement, but when it's a team of engineers working at a company, and you have a product that you need to ship, and it needs to have good interaction. It needs to be done yesterday. Those people need tools too. People like that deserve tools." And I think that's our goal is to have a framework that will last for at least the next ten years that is willing to incorporate good ideas as they come out and as they're embedded, move the community together, as Yehuda was saying, but without chasing the hype dragon where every six months: "Throw away everything you know because the next big thing is coming out. Rewrite your apps." I see Ember as a way of kind of tempering that instinct for engineers to chase the new and shiny constantly in a way that basically we have a community that agrees together what the next big thing is, and then we start moving towards that. I think, right now, major things that we're thinking about are one server rendering, as we talked about. Getting the CLI tools in place, that's a thing that we've wanted for a long time. But as Yehuda said, we didn't want to try boiling the ocean. And then the new HTMLBars view layer, which unlocks a lot of the cool things that React is able to do around, like, DOM diffing and so on. YEHUDA: Yeah. I usually tell people -- recently, I've come to a line, which is, if you want to tell me that there's not a place for shared solutions in some area or some abstraction, I think the burden is on you, actually. I think people in the JavaScript community, and there's a small group in the Rails community that feels the same way, they assume that the burden is on the person who is trying to abstract, right? If there's a common problem that a lot of people have, they think it's your job to prove that abstraction is a good idea. I think it is your job to prove that a particular abstraction is a good idea. But I think my de facto, my default position is that if a lot of people are solving the same problem that there's a shared solution worth hunting for. And I would say the JavaScript community is really -- big chunks of the JavaScript community are pretty anti this approach. But I think it's really the only way that you could build -- like Tom said, the only way you could build projects with large teams is to have some sense of what the shared answer is and to not have it be some genius on the fourth floor somewhere that does everything. And if you want to make any changes, you have to go to them. I've seen a lot of companies that work like this, and it works fine. Anther facet of this is that pretty much every company deciding to adopt, like, Ember, Angular, React, or Backbone, whatever, they do like this "taste test," right? A taste test is like a two-week project where they see which one is faster. By definition, the taste test doesn't successfully analyze what happens over a longer period or when you have a bigger set of developers, right? It's by definition optimized for short projects with a small number of developers, and so -- TOM: And usually it's the guy on the fourth floor conducting the taste test. YEHUDA: He's either conducting it or he is actively attacking it, right? He is saying we should not -- for example, Firefox OS refused to adopt any framework for an extended period despite the complaints of many people on the Firefox OS team because of the fact that they had a religion against frameworks. They didn't like frameworks as a concept. I've heard this from large numbers of people working on the periphery of Firefox OS and many complaints, right? And so I think we, Ember, one of the things we had to learn was that we can't get away with just saying that. We can't get away with saying, oh, you'll learn. If you just use Ember for a year, you'll figure it out. We had to really improve the getting started experience. But I think, on the flipside of that, there's no way that we could ever -- even if we get to be as nice as to optimal getting started framework, getting started tool, we're always going to have benefits that are not part of that that are very difficult to see when you're doing a quick analysis. Actually, recently we've seen a lot more big companies come out and talk about the benefits of Ember for long-lived projects, and I think that helps a lot just having people testify that they used Ember for a year within a team that wasn't three people, and they found it to be productive in these specific ways. I think that's helped a lot of people feel comfortable. BRANDON: That's been my experience, certainly, as well, just seeing that increase. I think everybody should -- honestly, I believe everybody listening to this should drop what they're doing and go watch the Hack Summit talk. I thought it was phenomenal, and I think it made me think a little differently because it's a little confusing out there, like what some of the tradeoffs are in these open source projects that are run in that kind of echo chamber. And the fact that you guys work so hard to pierce the echo chamber is really cool. I know that there may be some technical questions. We don't get a chance to have you guys on the podcast very often, obviously, so I wonder if anybody has any more questions. STANLEY: Before we get back to technical questions, I just want to cut in and say I really like Yehuda's talk from Rails Conf as well. It was really eye opening for me as somebody new to the Rails community, even though Rails has been around for a while, and kind of understanding the value of shared solutions and kind of the philosophy behind that. YEHUDA: Yeah, that was definitely the first time I tried to formulate a general theory for what shared solutions look like and why they're good, and essentially why Rails hit the nail on the head with the right amount of shared solutions and where the experimentation is happening and all that stuff. STANLEY: Cool. Back to you, Charles. CHARLES: I just had a quick question I wanted, before we wrap up. I had another question about the server side rendering, kind of a general one. I know I've definitely been burned by server side rendering in the past, you know, because it's been something that people talk about on and off, it seems like, for the last five, six years. I remember when mustache first came out. The first time that I tried it, it's like, oh, I've got this templating thing that I can run inside on my Rail server, and I can run it. There's a JavaScript implementation too. One of the things that I found was I was able to get up running very quickly, but then I felt like I was eaten alive by the edge cases. It was actually -- I think it was a blog post that you wrote, Tom, where you were talking about kind of the justification for resolving, always resolving RSVP promises asynchronously. Because, to not do so, have a different context, different stack sitting on top of the resolution was like releasing Zalgo into your application. I actually, when I read that thing about promises, it actually made me harken back to my experience with server side rendering. I was like, oh, with server side rendering I was releasing Zalgo onto my client. I had a very different context. TOM: Yeah, the thing you're describing is sharing templates across two different apps, right? CHARLES: Right. TOM: The data model diverges, and then the things that you need diverge. That specifically is something that we are going to avoid. The idea isn't, oh, you can reuse your model on the server, and you reuse your templates on the server. The point is it's your app, the same exact app, same code base that you would run in the user's browser just happens to be running on the server. YEHUDA: And I think there's also -- I think there's another important point, which is that if you look at how people do SSR, I think historically people have said, "Well, I'm going to use a view layer that's very good at SSR." And then you would have this pile of hacks that was involved in booting up your app. Honestly, Ember, in the beginning, had piles of hacks used to booting up your app. I definitely remember that period. Now the view layer maybe is very good at running on the client server and, like you said, originally was just like the template. But now maybe the whole view layer is good at it. But now the process of actually booting things is a source of non-determinism. You're saying Zalgo. I'm saying non-determinism. Zalgo is a better word. CHARLES: [Laughter] YEHUDA: And Ember has definitely held off on tackling server side rendering seriously until we felt confident that we had the full stack handled. In other words that, as a framework, we had the whole lifecycle handled. Then actually, if you look at technically what we've been doing recently, a lot of it is like separating out. We have an application right now, an application only -- there's only ever one instance of it. Now we're saying, well, there could be multiple sessions. And so we're really looking at the whole lifecycle of the application and, because we own the whole lifecycle of the application, we can actually feel confident that the path that we're going through is correct, so that's one part of it. The other part of it is essentially what React figured out at a high level. I think what we're doing is equivalent, which is you don't necessarily assume that you got exactly the same thing on the client server because probably in practice there's always going to be some thing or other, like the clock case that Tom talked about, or the hello Yehuda case that I talked about before, the authentication case. What you do is you rerender the template, and you don't say if it's not exactly the same, throw it away and start over. You say parts that are the same you can keep, and parts that are different you replace. Therefore, it's not so much a whack-a-mole problem. It's more like how much replacement can I tolerate and have it not feel janky, right? So you go use it, and if you see that there's an area that's popping in and replacing, that's an area that you have to go and figure out so, first of all, it will work. Right? It will work. It will not be broken. It might feel a little bad, and that's an area for you to go and improve the Zalgoishness of your solution. In practice, in Ember, it will almost always be something weird like you're relying on a non-deterministic DOM API or something like this, or you're relying on some XHR that even though we serialized it, you're getting a push notification, and it's different, and it happens quickly, so it's janked. Right? I think the basic point of try to control everything and also only replace things that are needed will get you to a much better starting place out of the gate with Ember than you will have if you try to do the old solutions. It may turn out to be a lot of work. And if it turns out to be a lot of work regardless, then I think it will still, even with Ember, be a thing that is used by people who really need it and not so much by people who don't. But I'm hopeful that the fact that we own the whole lifecycle of your application will let it be useful for a bigger set of people than people who are desperately in need of it as a solution. BRANDON: Awesome, so I think we're going to wrap up. Is there anything you guys want to give a shout-out to or anyone? YEHUDA: Please sign up for Skylight to make your Rails apps faster. TOM: Yeah, please. Make my Christmas a merry one. YEHUDA: We didn't talk about this at all. TOM: And sign up for Skylight. YEHUDA: We didn't talk about this at all, but Tom and I, much of our day job is working on Skylight. And if you watched my talk at Hack Summit, one of the things that I advocate and I really feel it in my gut because of Skylight is I advocate spending, even if you're full time in open source, spending some time, even a day a week or two days a week, would help a lot working on something that you have to maintain over the long haul because, like I said before, maintenance over the long haul is very difficult for you to market. It's something that you have to feel in your heart. If you're working on an open source project, work on -- use it for a real thing that you spend significant time on that you have to maintain over the long haul so you could feel, in a year, whether you're practice is holding up to being maintainable. And, yes, now that I've talked about Skylight for a second, please sign up. This is how we fund our ability to do any open source. Working on Skylight has definitely been the most enjoyable thing I've done in my career so far in the sense that I've had a lot of control over it, but it's also the most harrowing in the sense that we are responsible for getting all the revenue, so please sign up. BRANDON: All right, well, thanks very much, you all, for coming on. Everybody, go sign up for Skylight. It's very cool, very beautiful, and very actionable insight for Rails apps. Tom, Yehuda, thank you so much for joining us on this. It's been super enlightening. Again, everybody, please go watch Yehuda's talk on keeping the Web Indie. And if you've got a little extra time, the Rails Conf talk on layers of abstraction is also, I found, something that changed my views on a lot of stuff as well. Thanks again, both of you all, for coming on. YEHUDA: Thanks a lot. TOM: Thank you, guys. BRANDON: All right, talk to you later. CHARLES: Thank you, guys.