Agent Lawsuit Ends in Settlement & Why Dave Ramsey Thinks You Should Sell

Dave:
Hey everyone. Welcome to On the Market. I’m your host, Dave Meyer. Joined today by Kathy Feki, Henry Washington, and James Daner. Good to have all three of you here. Appreciate you joining us. Coming back from some very fun sounding trips that you were all on. Henry, I thought we lost you to Hawaii permanently.

Henry:
Yeah, I did. I did I think of taking up permanent residence in Hawaii. But, I would just get Allen fever, man. That flight’s a long flight to get out of there. But, we love being there.

Dave:
I feel like there’s this thing with real estate investors, specifically in the BiggerPockets community that they all just wound up in Maui at some point. They all just find themselves there.

Henry:
I obviously went to hang out with Brandon. But then, realized Josh Dorkin lived down the street, walking distance. And then, every night, just random real estate investors show up at Brandon’s house, and then just food shows up and people sit around until one in the morning. That’s just a thing there. I had no clue.

Dave:
Really?

Henry:
Yeah.

Dave:
James, is that on your list of places you’re going to move? Maui?

James:
Absolutely not.

Henry:
Why?

James:
I would go so stir-crazy if I was stuck on an island.

Henry:
That makes sense.

James:
I got to move. I need to be able to move around. But I do enjoy visiting.

Dave:
Kathy, did you do the same thing when you were out there? Did you stay up to one in the morning talking to Brandon about real estate?

Kathy:
Yes. No, probably three in the morning. But yeah, we had a great time.

Dave:
I guess, Kathy’s more interesting than you Henry.

Henry:
It’s not a surprise.

Dave:
Well, we do have a great show for everyone today. We are doing a headline show. We’re going to talk about some of the most important and interesting things happening in real estate today. So, what we’re going to cover today is an update on the major lawsuits that are potentially going to be impacting how agents are compensated and could have all these cascading ripple effects throughout the industry. We have a big update there. We’ll talk about construction trends, which I think, is particularly interesting given how important they are for inventory these days. We’ll also talk about a new type of home called a passive home. And lastly, we will visit our friend, Dave Ramsey, and hear about some advice that he has been giving young landlords, and I want to see if the three of you agree with what advice Dave Ramsey is giving. So, that’s what we’re getting into today. It’s going to be a great conversation. We will take a quick break, and then we’ll jump into it.
The first headline today is that RE/MAX, one of the biggest brokerages in the country has settled in the two lawsuits that have been ongoing and allege that some of the NAR rules and some of the rules instituted by brokers around how, in some ways, or this is what they allege, sellers are forced to pay the buyer’s commission, and how that is not legal or violates antitrust rules. RE/MAX has decided to settle this lawsuit for 55 million. And if anyone is not familiar with these lawsuits, it does have this huge potential to change the industry. It’s too much for us to get into fully here, but we did do an episode with James Rodriguez on this a couple of weeks ago. It was called New Agent Lawsuits Could Have Profound Effects on Buying and Selling Homes. So you can go check that out On the Market feed if you want to learn more.
But basically, it sounded like, these lawsuits are trying to get agents and brokerages to change the way they do business and not force sellers to pay the broker commission. So I’m a little confused by the settlement here, right? Because, RE/MAX, it says, they will “change some of their business practices,” which hopefully they will. But it doesn’t really sound like it’s changing all that much. So, Kathy, let’s start with you. What do you make of this settlement?

Kathy:
Oh, wow. Well, a settlement is a way of saying, “I don’t really want to go to court on this. And I don’t want a jury to decide, so let’s just settle.” It doesn’t necessarily mean there’s any court order for them to change things. But, the question is, will this affect real estate? I guess, for me, the biggest issue is, it is still the buyer at the end of the day, who’s paying for it, right? What could hurt the buyer is if they can’t finance those fees. So, in other words, if now the seller no longer pays for the buyer’s fee in the price of the home, and the buyer has to come out of pocket, could that still go on the closing cost? Could it still be covered in the loan? Because if they have to come out pocket, that hurts to me, in my opinion, the buyer the most.
Also, changes are happening, right? And technology is changing a lot of things. And I think a lot of people thought that realtors would see their fees go down anyway now that people could go find their own property, and go to the open house, and all they really need is some guidance through the contract process. And, anyway, change is coming. It just is actually surprising to me how long it’s taking.

Dave:
Yeah. This seemed like it was going to be one of the more successful, or at least interesting lawsuits or challenges to the status quo. And now, I’m curious if maybe it was overblown and it was just more, yeah, posturing or a cash grab. But, James, you are the most active agent among us, so what do you make of all this?

James:
I mean, as far as I have felt that these lawsuits and threaten of lawsuits, they have made zero impact. Everybody’s still advertising, at least in the Pacific Northwest, the average commission is 5 to 6%, 3% to the buyer, 3% to the seller, and it’s paid by the seller. What Kathy brought up is a good point. I do think it won’t really matter and the financing would change. But yeah, it could have impact on especially that first time home buyer that’s putting down 3%. Now, all of a sudden, if they have to pay another 3%, that’s 100% more they got to come with on a down payment. But I think, this whole thing, all it does is add another level of complexity to a complex deal in general.
In real estate, there’s all these negotiations going on, and now there’s just an extra thing of negotiations where buyers are going to go out, and they’re going to shop, and price out their brokers. And, what it’s going to come down to is the brokers that are going to charge 3%, or what has historically been the average, they’re going to provide a very good service. And the ones that aren’t providing the good service are probably going to need to charge less. And, I mean, I have no problem with that. I just feel like now it’s this open negotiation before you even go into a negotiation. So it’s just another thing that you have to talk to your client about.

Dave:
Well, yeah, I think it could end up that way. But just want to be clear that this settlement doesn’t make that necessary. We don’t know yet if that’s going to necessarily happen. But, I at least thought James, that that was the intention of these lawsuits, is that, that’s what the plaintiffs wanted is for you to be able to negotiate more easily.

Henry:
They wanted money.

Dave:
The plaintiffs, yeah. They just wanted to see if they could get someone to settle.

Kathy:
And they got it.

Dave:
Yeah. Is that all you make of this, Henry? You think it’s going to be over?

Henry:
I mean, based on this settlement, I don’t think anything’s going to change. I mean, they don’t have to change anything. Why would they want to? They’re not incentivized to change. I don’t think anything seriously around the laws is going to. Now should it change? I think there should be some change. I think it’s silly that one side pays for both agents commissions. Yes, and I think that could cause a problem for these buyers who have to go out and find their own agents, right? But, down payments are expensive, closing costs are expensive, and because they’re so costly, there have been programs and things that provide assistance for those as well as you’re able to finance some of those things into the loan. I just think this will be another one of those things where some assistance will be provided to those who need it, or will be able to finance it into the loan.
Now, will it hurt some people? I think, yeah. I mean, any law change, there’s going to be people that it benefits and people that it hurts. I think the issue is people think agents are just opening doors and pushing papers, until you get into a situation or a negotiation where that agent actual skillset is truly needed. And then, they are a lifesaver. Right? And then, you’re so glad you got a good agent and the right representation for that deal. Now, what percentage of deals get done or just pushing papers and opening doors versus the percentage of deals where you really need your agent to act like your advocate and rockstar for you? I don’t have those numbers. But I know I’ve been in deals where I sure I was glad that I had the right representation and would’ve gladly paid 3%, 4%, 5%.

Dave:
No, totally.

Henry:
In that situation. And so, do I think this needs to be looked at and potentially some change needs to happen? I think so. Does it need to happen the way that they’re indicating it needs to happen? I’m not sure. I don’t have the answers for that. But, I do think it’s silly that one side pays for both agents, and I can understand why that’s frustrating.

Dave:
Yeah, I tend to agree with you, Henry. I think, it doesn’t seem like an optimized system for anyone. And I totally agree that agents deserve to make a fair commission off of these things. They’re extremely valuable. It does just seem like overly complicated and this strange weird thing, and some re-imagining probably could happen to benefit everyone involved. I just don’t know what that is. But I will say that I doubt anything’s going to change. NAR is a professional lawsuit destroyer, that’s all they do. They just have so much money.

Kathy:
That’s their expertise.

Dave:
Yeah, it’s literally their whole job is just squashing lawsuits. So I think that they are probably going to succeed at squashing this one too.

Henry:
And, I advocated for agents. And so now, I’m going to play the other side. I think part of the problem is there’s too many agents, there’s way more agents than there are homes available On the Market for sale. It’s too easy to be a bad agent and make a little bit of money here and there. Right? I think, no matter what rules change, the agents who are good, and are doing the right things, and taking care of their clients in the right ways, and great at showing their value will continue to make money. And those that suck, and are just in there to pick up a commission here or there, and don’t really work that hard, and want to pick up all the easy dollars off the ground.

Dave:
Like James.

Henry:
They’re going to struggle.

Kathy:
Yeah, it’s not like one side is paying, it’s the buyer who’s paying. The buyer’s paying for the cost of the sale, right? At the end of the day, it’s in the price of the property. So, it’s not like the seller is coming out of pocket. It’s the buyer at the end of the day who’s paying all the fees and commissions. So, I don’t really care how that’s done. But to me, if it’s lumped into the price of the property, then that’s easier, because it can be financed. But, back to your guys’ point, a good realtor is worth every bit of it. A bad one is a bad one no matter what and is going to screw up your deal.
I just saw that happen recently, where somebody hired their buyer’s agent who’s not from the area, it was just a friend. Please don’t do that. This isn’t a friend industry. Hire someone local who has done a ton of business in your neighborhood, because they’re going to know… In our case, we’re on septic systems. The person that was representing this guy who lost out on the deal didn’t know anything about septic systems. So if you used a local agent, they would know everything about the soil, about the area, the problems that have existed over the past 10 or 20 years that they’ve been helping people in the market. So, to buyers out there, get someone local and experienced who’s done a ton of deals directly in the area where you’re buying.

Dave:
Well, to James’s point, I feel like that’s the fear, is that, if buyers are shopping around for the cheapest available agent, then many of them not knowing the difference between a 1% or a 3% agent will choose the cheaper option, and ultimately, wind up with someone who either doesn’t have their best interest or is not capable of providing the level of service that a home buyer, but particularly, an investor who has their own set of needs is going to need in a transaction.

James:
We do a lot of transactions in the Pacific Northwest. Typically, we’re doing about 250 to 300 transactions a year. When we have to work with discount brokers, and there’s nothing wrong with a discount broker, but I will say, we have more contract issues with all those files, because they’re not properly explaining the contracts to people. People are going for a discount, they’re looking for their kickback, and they think it’s just simple, and then they come back, and they’re upset about something later. It’s like, “Well, read the contract.” That’s the job of the broker is to properly explain the contract and what the client is getting into. And because there’s discounts out there, they’re not getting explained, and then people are upset at the end. So, I will say, it’s going to get transactions a little bit more messier if we start just cutting costs everywhere. But, I mean, hopefully people realize that a costly mistake will cost them way more than 1% on a purchase.

Dave:
Yeah, it’s like the saying, you think a $200 an hour plumber’s expensive, try $20 an hour plumber. You’re better off just paying upfront. But yeah, I digress. All right. Well, we all agree that the importance of agents, if you do want to meet a trusted investor, friendly agent, BiggerPockets can match you with one completely for free. Just go to biggerpockets.com/agents. You put in a couple of stats, information about yourself, and you can get matched with someone who can help you and represent your best interests. With that, let’s move on to our second headline, which is that U.S. housing starts dropped to the lowest level since June of 2020. Basically, from July to August, construction of new homes fell about 11%, to the point where at an annualized rate it would be about just under 1.3 million. And, that is probably not what people want to hear, given that there is such low inventory right now. James, you’re pretty involved in the construction and you do a little bit of that yourself. What do you make of this, I found it, surprising decline in home starts?

James:
I’m actually not surprised about the home starts, because right now, [inaudible 00:15:17] call also did references, permits for single family homes rose by 2%. And so, it was back on the rise again. But what happened is when the interest rates really jumped, builders locked up immediately. And rates started increasing, what, about 13, 14 months ago? Builders froze for a minute, at least in the Pacific Northwest, where our transactions on dirt probably went down by 95%. Builders were walking away from sites. They were very nervous that the market was going to crash. And what it did is it created this big lull in the permits. And so, we’re actually seeing more permits starting to roll out of Seattle right now, because there was just this backlog of permitting, in addition to builders, because cost of money’s gone up, and that cost of construction is still elevated and now pricing is more flat. They’re having to buy this land cheaper and it’s taking a minute for the seller’s mindsets to reset on the new basis of what the land can be sold for.
And so, we had this six month stalemate in the market between sellers and builders too. And now, what we’re seeing is builders are now transacting a lot more, because the values have just compressed and they can work inside their margins. So, I do think permits are going to increase over the next 6 to 12 months. But, there was this weird lull and anytime builders stop buying, a lot of times, the permits aren’t issued for 6 to 12 months. And so, there’s this delay going on.

Kathy:
And, in addition to that, when you really dive into the article, the construction pace of single family homes fell by only 4.3%, but it was a apartment building construction that fell by 26%. And that’s obvious with apartments with higher rates, it is so hard for these builders to be able to sell for what they thought they were going to be able to sell for, and they’re just giving up, they’re like, “Forget about it.” So there were all these headlines about all this new supply that was going to be coming in with apartments, and a lot of that is slowing down or not going to happen for a while, at least until rates come down. So, that’s part of the issue. Single family falling a little bit because rates are a problem. But single family home builders can buy down the rate. And so, they’re still able to keep it going. But with apartments, not the case. If they’re building to sell, they’re not going to be able to sell for what it’s costing them to build. So they’re just pausing.

James:
Yeah. And on that new construction apartments, those sites, they take a lot longer to permit typically too.

Kathy:
Mm-hmm.

James:
And so, what happened is that these builders, they perform at cheaper money, cheaper bill costs, and now they finally got their permits two to three years later and their costs have exploded. And, we bought in two sites, one recently, when there was a 50 unit permitted apartment building, it took them four years to get them to that completion. He marketed it to try to sell it, no one would buy it, because costs are well out of whack. And we just bought it for… I think the seller lost about a million dollars after a four-year project. And we are scrapping his whole permit and we’re building 22 town homes there instead. And so, I think, the multifamily, the math won’t work at all. Those permits are going to continue to decline and not be built out right now.

Henry:
Yeah, I’m seeing similar here in our local market. I’d say, about two years ago, all you saw was new construction apartment buildings going up everywhere. And now, you’re starting to see that slow down quite a bit. And the ones that are up, man, they’ll change hands two or three times before the project is even complete. People are getting into the project, and then realizing it’s not going to work out, and then they’ll get out of the project and somebody else will get into it. And, even on my own projects, I’ve got a multifamily deal that I was building. We were going to build eight units ground up. And, from when I bought the land to now, when I’m at the point where we’re going to construct, the cost to build has gone up so tremendously, and the cost of money has gone up tremendously. I can’t make the numbers work. I can’t make the numbers work if I want to keep it, if I want to sell it.
And so, that’s why we’re actually just selling the land to a developer who can probably build it deeper than I can build it. And then, they can monetize it differently than I can. A, I’m not built for that. But B, when I bought it, the numbers made great sense. Interest rates were half of what they were now. The cost to build was down, it was less than it is now. And, I don’t see how the numbers are making sense. So, I can understand why multifamily is trending down. But, single family construction around here, crazy. There’s new developments going in all over the place. And A, it’s needed. And B, so I was surprised when I saw this article, and then once I dug into it, I can see how multifamily is doing a little worse.

Dave:
Yeah, absolutely. There’s just a huge glut of oversupply in multifamily. No one wants to add on top of that and get into be the last in an already oversupplied market right now. But, single family as everyone knows, undersupplied. So, I think builders are very happy. There’s no inventory. I think we’ve talked about this on the show, but in a typical times, new construction makes up about 10, 11% of all home sales. Now it’s about 30%, just because the existing home market has completely dried up. So, this is an interesting headline. But I think, the more interesting thing is what you all were talking about, keep an eye on single family construction, because I think that is, in my mind, probably going to keep going up.
All right, for our third headline, we are talking about a brand new type of home design. It is called a passive home. It comes from Rode Architects and Passive Home Construction, they created their first passive homes in Boston. Basically, the idea is that these homes are sustainable. They feature airtight designs, I guess, like a spaceship. And they include solar panels and shading to maintain internal temperatures. The idea here is that although it is more expensive to build, they claim 5 to 15% more than a traditional home, that it will save home owners on utility costs in the long run. Henry, I just would love to hear your thoughts about this concept.

Kathy:
It sounds like you have an opinion.

Dave:
I just feel like Henry has something to say here.

Henry:
Yes, look, I get it. I understand that you’re saving on utility costs. But, the cost to build these, I think, are drastically more. We talked about these homes and we looked at some of the architecture. And it’s cool, they do really make the homes essentially airtight, so that you don’t have to have a traditional HVAC system that’s running all the time to keep your home temperature regulated. And, that savings along with the seller savings allows you to… Essentially, these people are making money on their utilities. There was one story of a guy who, he had so much energy store that he was able to give that to his parents and his parents would be able to pay for their utility bills through the savings he was creating through his passive home. And that’s a cool story.
But you think about it, these people could afford probably more home than they purchased. They’re not looking to save money on energy, they’re buying it because it looks pretty, and it was a unique design, and I’m sure that there was some pride element in that. But, the people who need the energy savings aren’t going to be able to afford to build them. So I don’t know how realistic this is.

Dave:
Yeah, I know.

Henry:
For the people who really need it, I don’t know how realistic it is for them to be able to get into it.

Dave:
This reminds me, I don’t know if you guys have heard, it’s used a lot in the tech industry, this concept of crossing the chasm or jumping the chasm, where it’s just basically, anytime there’s a new technology, the way it gets off the ground is by real enthusiasts, like what you’re saying, Henry, which is people who don’t do it for the cost saving, they do it because they’re interested in sustainability, or they like the architecture, they like the design. Basically, probably people who live in Kathy’s community. I don’t know. But, it’s people who are going to support the industry before the efficiencies of scale come in and make it affordable to everyone else. And I feel like, this is just, that’s where this industry is right now. It’s extremely expensive. It’s a proof of concept stage. But, it’s way too inefficient to actually become cost-effective.

Kathy:
Yeah, that’s exactly what I was going to say, is I was nominated or I won the award of top 100 most intriguing entrepreneurs by Goldman Sachs in 2012. And, it was a really cool thing. I got to meet Elon Musk.

Dave:
Cool.

Kathy:
Yeah, it was really cool. And, he had just come out with the really expensive Tesla, the first one. And that’s exactly what he said. He way overpriced them intentionally to help cover the cost of the innovation of it. And, those wealthy people who bought them, first of all, got to have the ego about that, to be one of the first to have it. It’s a beautiful car, and it was original, and I knew lots of people… I mean, yeah, you’re right. I live in an area where everywhere you looked, they had them. And it was a big deal. I remember the doors would go up and the car would dance and all that stuff. So, there’s plenty of people who are willing to pay for that innovation. And the way Elon explained it to us was, “This is what’s going to allow me to give it to everybody.” And he said, “Someday, we’re going to be able to come out with the $30,000 one.” Which is the one I bought.
So, when people put up their nose to me that I drive a Tesla. It’s like, “Yeah, but I paid less for my Tesla than you might’ve paid for your car because of those people.” So I see it the same way. There’s enough people who don’t blink about it. What they’re really looking at is more of a climate change. It’s more of a passion project, and they’re happy to put down the money. I think it’s really cool. And, we bought a lot years ago that was super cheap, believe it or not, people don’t believe it, but lots in Malibu are actually pretty cheap. This one was $99,000. We saw it. And so, we have had this lot and we been looking at all the different ways to put something on there that would be unique and different. But the key is affordable. And we haven’t been able to find the affordable one yet, but we’re waiting, because maybe like Elon Musk, it will come down in price eventually.

Dave:
James, you think you could build this for 5 to 15% over normal build costs?

James:
Absolutely not. There’s no off on the cost. I mean, just your core things. Your heat system typically is radiant versus HVAC, that costs you three to four times as much. Your installation is triple. Your window package is 5X more expensive. Then you have an airtight house. And not only do you have to spend four times as much on your radiant heat system, then you have to buy an ERV system, which is three times more expensive than an HVAC system to recirculate the air. It is so expensive to build these houses. And your premium you get on the backside is not really there. And then, the buyer who’s paying that premium, it usually takes them 10 to 15 years just to get their energy savings back. And right now, they’re buying it with a 7% rate.
And so, they’re essentially just financing their savings down the road. It just doesn’t make sense. We tried this when the built green energy started becoming a big trend in 2010, 11, and 12, we started doing four to five star renovations, where we were putting in triple pane windows, upgrading these things, and we thought we were going to get this huge premium. It was a net loss every time. As far as an investment goes, it just doesn’t make sense to build it.

Dave:
Yeah, I mean, I think we see this all across real estate. This is clearly one focused on energy reduction. But, you look at 3D printed homes, the idea is that eventually they will be cost-effective. But, right now, they’re not particularly cost-effective. But, I’m all for construction innovation, wherever it comes. I feel like, I wouldn’t buy one of these right now. But, I think, the more innovation we see in the construction industry, the better. It’s still pretty antiquated, low-tech industry. And, the more people taking on these projects, the better in my mind. All right, for our last headline, we’re going to be talking about good old Dave Ramsey. So the headline here is Tired of the Crazy Train, Dave Ramsey tells Frustrated Young Landlord to Ditch the Duplex and go get a House. Basically, what happens is a young Michigan landlord named Joe called into the Ramsey show for advice about what to do with the duplex he no longer cares for.
I should probably explain if anyone doesn’t know who Dave Ramsey is, he is a talk show host, personal finance person who gives advice. It’s a talk radio. Obviously, it’s not just on the radio anymore. But, that’s what it is. But basically, he called into the Dave Ramsey Show with a duplex. He bought it with his girlfriend in the fall of 2020, around 164 grand. Lived in it, basically they house hacked it, did some renovations, think they could sell it for a pretty nice about 20, 30% profit. But he’s tired of having tenants and living underneath his tenants. He’s unsure how to handle his investment. Dave Ramsey responded, “I would sell the crap out of this thing.” So, Dave Ramsey suggested, end the house hack, sell your duplex, and invest in a home yourself. Henry, I know you’re a big house hacking advocate. Is this the advice you would give?

Henry:
I would’ve just said, move into the top unit.

Kathy:
You’re the freaking landlord. Do what you want.

Henry:
It’s yours.

Dave:
That is a very simple solution. Yeah.

Henry:
Don’t live under your tenant then.

Kathy:
That’s hilarious.

Henry:
But, look, yeah, I’m a big advocate of house hacking. I did it. It changed my life. But I will say, it wasn’t comfortable. I don’t know that anybody says it’s supposed to be comfortable. I think there are ways that you can do it that are more comfortable than others. But I think the general gist is it’s going to be uncomfortable. Wealth isn’t built within a comfort zone. That’s not how it works. Nobody wealthy got wealthy by being comfortable. Unless your wealth was inherited, then you got really uncomfortable at some point in order to build wealth.
And so, if the goal for this young person was to house hack their way into building wealth, I think it’s a huge first step. If their goal was just, “I don’t really feel like paying a mortgage for a little while, so I’m going to house hack.” Then, you probably accomplish that, sell it, and move on. It depends on what your goal is. Just because they house hack doesn’t mean they want it to be real estate investors for life. That may not have been their goal. But, for me, house hacking was a way for me to take a giant leap towards financial freedom. And, it was an uncomfortable leap. But, Lord, I’m glad I did it.

Kathy:
I’m so with you. I’m so with you, Henry.

Henry:
I had so many problems in my house hack. It was on a septic system, and the septic system just started backing up sewage into my tenant’s place, and then into my place. And so, we had to deal with that issue. I mean, we had all kinds of issues. It was in no way, shape, form, or fashion comfortable. But, Lord, did it give me a giant leap towards financial freedom. So I think it’s silly advice on a financial show to tell someone to sell something that’s probably going to get them to the financial freedom they’re looking for a lot faster than just the savings route that he’s probably preaching to them to do.

Kathy:
Well, Henry, he missed a huge point, and that is, okay, they paid $164,000 for this duplex. If they put 3% down, what was that? The $5,000 that they put down, and they made 35,000. What is that? A 5X on their money? So, that little part was left out of the comment. If they put 20% down, which they didn’t have to, if it was their first property, then they still doubled their money. So, there’s that.

Henry:
Pretty sound financial advice.

Kathy:
So, I agree. And Henry, when I house hacked, we lived on the top floor, and we had to wear socks, and slide across the floor. So, no, it wasn’t comfortable. But it also helped us build wealth. We took that money we made, and we’re able to buy investment property. So, yeah. You know what? You got to be uncomfortable when you’re starting out. If you’re somebody who has a bunch of money when you’re starting out, then maybe you don’t have to be. But that’s not the case for most of us. Most of us have to house hack your way up. So, anyway, at this point, if they’re wealthy enough, yeah, sure, go buy your own home. But I would still put a ADU on it.

Dave:
Or buy a home and just keep the duplex and hire a property manager, and not do the management. There’s plenty of other ways that you could sustain this investment without selling it and going to buy another house.

Kathy:
Yeah.

James:
Yeah, I think Dave missed the biggest concept of that whole house hacking first time home buyer program you can use. You can go buy a house, live there for 12 months, and then you can go do it again, and lock it into finance. It’s the best way to grow your portfolio with the least amount of money. And, they just did a great job. They got the right price. Yeah, you shouldn’t have to live there either. Just go find the next one. And then, make sure it’s a side-by-side duplex next time. That also makes it a lot better.

Kathy:
And they’re probably locked into a really low rate if they bought in 2020. I mean, why would you walk?

Dave:
Can I tell you guys a funny story about house hack?

Henry:
I would love to hear that.

Dave:
So, just this last weekend, I was at a wedding in Portugal. And, it was a friend of mine from Amsterdam, but used to live in Denver where I invest. And, I was talking to this guy. Something came up and I was talking about, “Oh, I own this triplex in Cap Hill.” And he was like, “Oh, where is it?” And I told him the cross sheets. He’s like, “Oh yeah, I used to party around there quite a lot.” And I was like, “Oh, where?” And he gave the address. And I was like, “That’s my house.” And, I was like, “When were you partying there?” And he gave me the years. And I was like, “Yeah, I lived upstairs above that party house.” Because I lived in the 600 square foot, one bedroom, it was a nice place. But, I gave up. It’s this beautiful five bedroom old Victorian in Denver. And he was like, “Oh, man. I feel so bad. We were always just partying until three in the morning. Oh, that’s so terrible.” I was like, “Yeah.”
It was mostly fine, except one time, it was 4:30 in the morning and I had something to do and I faked a police call. I called the tenant and I was like, “Hey, I’m cool. I don’t mind. But the police just called and said that they had a noise complaint.” But it was completely fake. I just made it up. And they were like, “Oh my God, I’m so sorry.” And they wounded up shutting down the party. So, I got to go to sleep. But, they were actually great tenants, but it was so funny, it’s just so random.

Kathy:
Oh my gosh.

Dave:
Yeah.

Kathy:
Why weren’t you at the party, Dave?

Dave:
We used to a little bit. Out in the back porch, we used to all hang out together. But, I tried to keep my distance a little bit. All right. Well, that’s what we got for our show today. Thank you all so much for joining us. As a reminder, let us know where people can find you, Henry. Where should people check you out if they want to learn more?

Henry:
Yeah, best place to find me is on Instagram. I’m @thehenrywashington.com. Or you can check me out online at Www.seeyouattheclosingtable.com.

Dave:
All right, James.

James:
Our easiest way is on Instagram @jdaneflips, or you can check it out on jamesdaner.com.

Dave:
Kathy?

Henry:
Realwealth.com or on Instagram @kathyfeki.

Dave:
All right. And I am @thedaviddeli on Instagram. Or, you can always find me on BiggerPockets. I am quite responsive on both platforms. Thank you all so much for listening. We’ll see you for the next episode of On the Market. On the Market was created by me, Dave Meyer, and Kaylin Bennett. The show is produced by Kaylin Bennett, with editing by Exodus Media. Copywriting is by Calico Content. And we want to extend a big thank you to everyone at BiggerPockets for making this show possible.