As a top agent in the country and Principal of the Huckaby Briscoe Conroy Group, Karen has an unlimited amount of great advice for agents, brokers, and investors alike. She has published a book on real estate success and speaks nationally about it. Karen shares fundamentals that every investor should be looking for when comparing markets to invest in. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Karen Briscoe Real Estate Background:
-Principal of the Huckaby Briscoe Conroy Group
-HBC Group has been named to the Wall Street Journal Top Realtor® Team List
-Group has sold over 1,000 homes valued at over $1 billion
-Author of Real Estate Success in 5 Minutes a Day: Secrets of a Top Agent Revealed
-Contributor to both INMAN and Real Trends and speaks nationally on her book
-Based in McLean, Virginia
-Say hi to her at http://www.hbcgroupkw.com/ http://www.5minutesuccess.com
-Best Ever Book: Real Estate Success in 5 Minutes a Day: Secrets of a Top Agent Revealed
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Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.
We have spoken to Barbara Corcoran from Shark Tank, Robert Kiyosaki, the author of Rich Dad, Poor Dad, Emmitt Smith, hall of famer and also real estate developer, and today I’m pleased to say we’re speaking to Karen Briscoe. How are you doing, Karen?
Karen Briscoe: Hey, thanks for having me, Joe.
Joe Fairless: My pleasure, nice to have you on the show. A little bit about Karen – she is the principal of the Huckaby Briscoe Conroy Group. She is an author of Real Estate Success In 5 Minutes A Day: Secrets Of A Top Agent Revealed. She’s a contributor online to both INMAN and Real Trends, and speaks nationally on her book. Her group has sold over 1,000 homes valued at over one billion dollars (that’s with a B). She is based in McLean, Virginia. With that being said, Karen, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Karen Briscoe: Well, my career has been predominantly in the residential home sales, even though I did start out as a commercial real estate developer and have worked in that venue as well. The last year I published my book, Real Estate Success In 5 Minutes A Day, so I devote quite a bit of time with talking to and sharing top tips of real estate, and that certainly applies to the investor, as well as the owner-occupied.
Joe Fairless: What are some of the tips that you’ve written down in the book that you think would be relevant for us.
Karen Briscoe: One of the top tips that applies to investors in particular is what I call “New York, New York” – the song by Frank Sinatra with the chorus “If you can make it there, you can make it anywhere.” That is a tool or technique that an investor can use. If you look at the fundamentals of a certain market and you find that investors are being successful in that market, then you want to go to the next market, or like Wayne Gretzky says, “Go to where the pocket’s going” – if you wanna go to where the market is going, then find the markets that have similar fundamentals but are on the edge, or soon to be the next place where everybody wants to be, because that’s where the best values are, right?
For example, this is what Starbucks does, or McDonald’s did in their pursuit of real estate locations. They would look for those trends that hallmark an emerging market. So remember the New York, New York theme – “If I can make it there, then I can make it anywhere”, so that’s where you find those fundamentals.
Joe Fairless: And what are the fundamentals that we should look for?
Karen Briscoe: Well, there’s “Location, location, location”, obviously… It starts with everything. The good pool of — if you’re looking for residential for being a tenant-occupied and that type of product, you would be looking for a good rental pool… So obviously, jobs schools, metro access; you could just apply the Starbucks effect, the frappuccino effect that is talked about, how there has been found that there’s a halo effect around Starbucks. So you could maybe go to that next ring around it and look in that area for what is upcoming neighborhoods that could be trending into better values over time.
Joe Fairless: When you work with your clients – I’m not familiar with where McLean is in Virginia, so is that part of a larger market?
Karen Briscoe: Yes, it’s the Washington DC Metro Area.
Joe Fairless: Got it, okay.
Karen Briscoe: It’s [unintelligible [00:04:57].17] of Washington DC and part of the suburban Maryland, Washington DC… McLean is just right across the river Potomac from DC. When I’m working with investors, I share this — I think a little bit of a paradigm shift on the concept of getting into real estate investing, and that is the idea that a million dollar asset… Who wants to be a millionaire? Many people do, and they wanna use real estate investing in order to achieve that…
The asset that cashflows, the equivalent to a million dollars is what they’re trying to achieve. So if you were to invest in, say, financial funds or stocks or bonds, it would require a million dollars in order to cash-flow on a typical rate of return over — the U.S. in terms of the stock portfolios, they found that 6% is an average annual rate of return, for example. So let’s say we’re gonna work with that. So if you work with a 6% return and that is a return over a year of $60,000, or a monthly cashflow of $5,000. If you have an asset that brings in $5,000 a month, you in fact own a million dollar asset; well, the beauty of real estate is that if you were to buy a million dollars in financial assets (stocks), you would need a million dollars. You actually need more than that, because you have to earn that money and pay taxes on it, so you’re probably looking at as much as a million and a quarter to a million and a half.
Well, what the beauty of real estate is – you get the hundred percent asset with just investing a portion down, in most cases 20-25%. So what other asset can you go out there and acquire and invest only a portion to own the asset, and then you have someone else paying that debt, right? So the idea is the tenant pays the mortgage, you have control over the asset, and then as time goes on, you raise rents, you pay down the mortgage, or just the value increases, and over time you are going to end up owning a million dollar asset. And that is a true paradigm shift or epiphany that many of my investor clients once they have that, they are so sold on investing in real estate… The next is just finding the good opportunities out there. But that is one of the first conversations I have with people – the benefit to investing in residential real estate. I actually am a licensed broker.
Joe Fairless: Okay, cool. If you have gotten to that level — I didn’t wanna just say agent, so… I know there’s different terminology. So as a broker, it’s interesting that you mentioned that you typically bring that up to your clients… Is that something that you see from a business standpoint that could help you make more money per customer? And I know I’m putting it very bluntly and you can back off of that direct statement that I just made, but I’m thinking about it from a real estate broker standpoint – I make money when people sell or when they buy, but if I can convert my clients into real estate investors, then I’m gonna make multiple fees on transactions, versus just a one-off.
Karen Briscoe: Absolutely, that is certainly one aspect to it and train of thought. I look at it as serving the entire real estate needs of the client. So if they are wanting to diversify their portfolio into real estate, then this is an opportunity that I can present to them. We’ve done investor seminars in conjunction with local lenders and other professionals like CPAs and financial advisors, because they too have a pool of clients who want to have real estate as part of their portfolio.
It is truly a proven wealth-builder, as you know… I mean, you’ve interview how many people? And the countless stories of how people have achieved wealth through investing in real estate, so it’s a component of the services that we offer our clients. And yes, it does create a long-term relationship with them. Most of people, they move once every seven years; you don’t have as many opportunities to serve their real estate needs, but if you could help them, show them how to be a real estate investor, then you have that additional opportunity to work with them and their portfolio.
Joe Fairless: You mentioned that you have seminars with CPAs and other professionals – how do you organize one of those seminars?
Karen Briscoe: The ones that we’ve done that have been successful is each one of the groups of the professionals will invite their clientele… We have a very sophisticated and market-savvy clientele in McLean, Northern Virginia area, and we keep it invitation-only… I know that there are many agents that have done seminars that they open up, but we keep it invitation-only, and then that way these professionals are inviting their clients and offering a value-add service for their clients who have an interest in real estate investing, then they can find out more about it, under the umbrella, if you will, of professionals that they vetted.
Joe Fairless: Okay. And I’m asking just so that some Best Ever listeners who are not in your competing market, but across the country or wherever, if they want to do something similar, then they know what’s working for you… So you’ll reach out to a CPA or multiple CPAs and say to him or her “Hey, I’d like to do an event. You bring your clients, I’ll bring mine. We’ll add value to their life, and it’s invite-only.”
Karen Briscoe: Yes, and mortgage lenders also, who want to expand their clientele often are wanting to invest in real estate, so partnering with them is another segment of the ancillary industries that have similar clients who are having interest. Obviously, you have to have some financial capability, because it does require either financial assets to pay cash, or the ability to get an investor loan and qualify under those. But these people typically do, and so they’re inviting a high-level or a high-quality potential investor.
Joe Fairless: What does that meet-up look like? If you could just pretend that we just arrived, what do we experience?
Karen Briscoe: We’ve had them at your small restaurants that have a private room, we’ve also done them in more of a conference room setting, in say a CPA office… We have the greeting, if you will, from all the people that are there; typically, someone will open and just describe why real estate investing should be part of their portfolio, or why they may want to consider that as part of their wealth-building strategies.
Then where I come in, I talk about the market, opportunities in the market where some niches that we feel like there’s good value and there’s good return on investment over time. Then there’s a lender to talk about portfolio options or options for different products that would be available to them, and then many times there’s a CPA that will — you know, they have to be careful, because they obviously aren’t giving tax advice, but they could talk generally about some of the advantages to real estate investing from the tax perspective.
And you know, there’s coffee, or a little bit of refreshments for some discussion, open up the conversation for some questions, and then a little bit of time afterwards for all the parties to get in a little bit more one on one in-depth conversation if people want to get more information. And then there’s the follow-through, right? So each one of these professionals now has other people that are interested in the real estate investing, and they can reach back to them and see how they can service their needs.
Joe Fairless: I love that. I participated in one of these as an attendee about three months ago; a bank put it on, and they had a lawyer, and they had a CPA… I didn’t even make the connection to what you’ve just described as to what I participated in, and during the event I met a banker who my friend works with, and since that event I’ve bought two properties, and the LLC and the account is with those two banks.
Karen Briscoe: See, because we now recognize them as being involved or able to offer those services, so you’re more likely to go with them… Not that people don’t “shop” or already have an agent or already have a CPA, but often times they’re interested in working with the people that are there, so it’s a networking opportunity.
Some of it is that they’ve mentioned it, so it’s meeting a need that they would probably don’t pursue somewhere else, if we weren’t proactive about finding a way to meet their needs.
Joe Fairless: Yeah, absolutely. How much in advance do you schedule this, and what budget do you think someone should allocate for this type of event?
Karen Briscoe: If you partner with other professionals… We split the cost of the refreshments – which was really minimal – and then it’s the venue that’s a little bit more challenging. A part of the challenge is that if it was in one particular company, then sometimes people construe that as being an endorsement of that particular firm or company… So as a real estate professional, I prefer to host it either with the CPA, the financial planner – those types of professionals, or at a neutral location, often times restaurants. If you’ll just purchase the food and the beverages, they’ll give you a space.
So it can be as minimal as that, or it can be more elaborate. I’ve known people that had full sit-down dinners, so they could capture your attention… So that really is dependent on somebody’s clientele and the budget that they’re wanting to invest into it. But the idea is to have a conversation, because as much of it is the conversation before, with the invitation, and to connect with the person and the follow-through, as much as it is at the actual meetup, as you said. So it’s just one way to build a clientele of investors. There are other ways to build clienteles as well, but that’s one way that we’ve used to success.
Joe Fairless: I’m glad that you’ve talked about this and gave us a peek behind the curtain of what it takes to do — and I’m gonna ask you probably a pretty obvious question, but I’m still gonna ask it… Have you gotten business from these meetups?
Karen Briscoe: Oh, absolutely. I have a number of my “regular” investors came from these conversations. Now, some of them were already clients, and so this just took it to the next level; they already had an interest. Some of them were actually people that I met at the event, because they were clients of the other professionals that were associated with it.
I think that many people have interest in real estate investing, but they don’t know where to start, so having the professionals all together in one place, and the recognized fact that if they’re associating with — a lender is coming, that’s associated with their financial planner, then they’ll go “Okay, there’s some credibility here. I’m not starting from scratch, trying to pull together a team”, because you’ve talked about that before, getting your professional team together. This is kind of a one-stop shopping for those people.
Joe Fairless: Absolutely. Well, Karen, based on your experience, what is your best advice ever for real estate investors?
Karen Briscoe: My best advice is to start now. When if not now? I mean, people sometimes go “Well, the market is…” — whatever it is that they say, and they have all these reasons not to. There’s a Chinese proverb that the best time to plan a tree was 20 years ago, and the second best time is now. [laughter] I would say the same thing about real estate investing. I think the best time to invest in real estate was 20 years ago, and the next best time is now. I think many people become paralyzed with it, and I’m not discounting the fact that it has a lot of logistics associated with it, but the idea is just find yourself a real estate professional that you trust, find a lender that can work with you on getting financing that you can structure that works for you, and do it.
Joe Fairless: With your own investments, what’s been the most challenging investment that you’ve done?
Karen Briscoe: The most challenging investment that I’ve done? I have recently looked into purchasing a condo, and I’m normally not a fan of condo, as it’s not real estate, right? It’s not real. There’s no land associated with it, and there’s a lot of logistics associated with condo ownership in the sense that you’re dependent on the building and the management, and the other owners of the condo, and when you get investor ratios too high, then the lending requirements make it very challenging – if not prohibitive – to invest in a condo.
This one particular situation, we made a no-go decision. It was a relatively small building; it had 17 units, and it had one owner that was [unintelligible [00:19:13].18] which put the ratios into a risk level one. Then we discovered in the condo questionnaire that there was a risk level two, because the reserves were not sufficient. And at that time the rents were really strong, so it was very compelling, but I was like “What if there’s a special assessment? Because the reserves are low and they’re gonna all recognize this…”
I’ve seen this happen, where people have purchased into a building that’s small like this, and then it gets too investor-heavy, and then it pretty much there’s only cash purchasers that can buy, and that reaches a tipping point where then values go down because of only cash purchasers can buy in. So because of that, I normally shy away from condo investment, but this one looked so sweet… It was really tempting.
My preferred investment is townhomes. The benefit of a townhome is you have — the Homeowner Association is usually pretty active in keeping the homeowners and owners keeping the exterior maintained, and have less likelihood of owners doing things that would bring the value down from an exterior point of view. The exterior maintenance costs are less with a townhome, and the homeowner association fees are normally more in line with keeping the monthly expenses in the returns that you wanna see.
Single-families, obviously, are a great investment, but they can present some challenges with the maintenance issues and what can happen in neighborhoods. So I’m more of a fan of townhomes. I think with this last condo experience, I think I’m gonna continue along that line.
Joe Fairless: Stay with what’s been working for you, right?
Karen Briscoe: Yeah… You know, that formula that you know that works in a certain market, there is a reason why it works. Back to my original comment, “New York, New York” – there is a reason why it works, and so if you find a formula that works, then that’s a savvy investment advice there as well.
Joe Fairless: Yeah. I experienced something similar on my first four purchases. One through three went very well. Number four, I deviated from my formula, and not so much with a single-family house that I bought from a wholesaler, that needed to be fixed up… Even though I was living in New York City and it was in Texas. It just was not a recipe for success.
Karen Briscoe: That is a rule of thumb; particularly for new investors, I really encourage people to stay within 30 minutes of their investment, because you could go see it, and I have had clients who become — I think one of your topics was the accidental landlord… They become accidental landlords because the market shifts on them, they don’t wanna sell for the market price, so they say “Oh, I’ll just rent it for a few years, for the market to come back”, and then they move back to California, or whatever. Those are the situations where I find that it becomes challenging, because by the time you paid the property management expenses, and you’re not there to just be there, if you will, then people often get into situations that are more challenging.
Joe Fairless: Are you ready for the Best Ever Lightning Round?
Karen Briscoe: Absolutely.
Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.
Break: [[00:22:42].09] to [[00:23:38].09]
Joe Fairless: Karen, what’s the best ever book you’ve read?
Karen Briscoe: The best ever book I read — well, I have to say mine, Real Estate Success In 5 Minutes A Day. [laughter] The beauty of it is it’s in daily five-minute increments, so most people can read five minutes a day, and then you have one strategy, one tip, one technique to take away for your success.
Joe Fairless: Best ever deal you’ve done that you haven’t mentioned?
Karen Briscoe: Well, our first deal was actually our best ever deal. That often happens, and we stumbled on it… Our soon moved back to the area after college and couldn’t find a place to live in Arlington, which is a very popular suburb of Washington DC, and we’re like “Okay, you could be our first tenant.” So it’s turned out to be the first deal we’ve ever owned.
Joe Fairless: What’s a mistake you’ve made on a transaction?
Karen Briscoe: The biggest mistakes, or the mistake I’ve made on a transaction is when you don’t count all the costs, and you get kind of starry-eyed with the idea of the potential, and don’t really pay attention to other things that are perhaps evident, but you’re distracted by what you see as the opportunity.
Joe Fairless: Best ever way you like to give back?
Karen Briscoe: We have a charity group that we give back, and in our local market, that’s what we do – we partner with a couple of other local sponsors (restaurants) and do a monthly charity event. But I see my doing podcasts and my book as a way of giving back, because what often happens when people achieve a high level of success, many people come and wanna know how you do it, so by writing the book, that’s my way of giving back to my industry.
Joe Fairless: What’s the best place the Best Ever listeners can get in touch with you, Karen?
Karen Briscoe: My website, which is 5minutesuccess.com. On Facebook, 5 Minute Success, and also the book is available on Amazon, so you can find me there, too.
Joe Fairless: And is it the number five Minute Success, or is it spelled out?
Karen Briscoe: It is the number, and it’s 5 Minute Success.
Joe Fairless: Okay, 5minutesuccess.com – that will be in the show notes of this episode.
Karen, thank you for being on the show, thanks for talking about a lot of things, a couple of them that really stood out to me – one was the focusing on fundamentals, and also how you have created these meet-ups locally and partnered with other professionals, bringing in their clients, you’re bringing your clients, it’s invite-only, and together you all benefit, and you have gotten regular investors from those meet-ups. Also, your approach with the condo versus townhome investing.
Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you soon!
Karen Briscoe: Thanks, Joe.