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There are a lot of real estate agents that can market and sell properties, but to have a real estate advisor is a different and more valuable experience.
A real estate advisor can tell you what to buy, where to buy it and when to buy it. To do this effectively the advisor must know their numbers. We have here Nick Krautter, principal broker and owner of City & State Real Estate, to talk about the numbers every agent who aspires to be an advisor should know.
Show Notes
Justin Stoddart 0:00
Welcome back to The think bigger real estate Show. I'm your host Justin Stoddart, today's episode is going to be a really unique and valuable one, I hope you stay tuned for the entire thing. It's really helping real estate agents move from being salespeople to being advisors, which is where I think the industry needs to go in order to maintain the value to the customer that the customers happy to pay for your services. So excited to have with me a guy who does that naturally. He's always done that. And his name's Nick Krautter. And Nick, thanks for being on the show to them.
Nick Krautter 0:26
Yeah thanks for having me. This is great.
Justin Stoddart 0:27
Yeah, super fun. Nick, and I go back almost five years. And his kind of claim to fame nationally, is he wrote the book, The Golden handoff, which is how to help real estate agents buy and sell their business. And so in addition to that, maybe what he's less well known for, at least nationally, is he really has an economist type brain. And he really goes deep on helping people understand the numbers where they've been and where he believes they're heading, which gives consumers the ability to kind of have a little bit of a crystal ball to some degree, right? To be able to understand what will actually help them build their wealth, which I think is uncommon. And I'm excited to kind of delve into this topic. But before I do, Megan, I am going to be actually speaking at an event together with our friend James Adair called exponential referrals, if you're in the Portland market,
it is I should have had the date, I'm going to put the date in the comments below, you can be able to hear this guy go in depth on the golden handoff and really house the strategy, not just exit the business, but also to grow the business. And probably one of the things we hadn't mentioned, Nick is you're now under the umbrella of your own brokerage city and state.
Nick Krautter 1:35
Yeah, that's a big, that's the big change for us here. The Celtics team decided to start our own real estate brokerage. So we've had the team together for 13 years, we decided to go out and start our own brokerage. It's called the city and state real estate. And we are working in Oregon and Washington right now and looking to expand into new markets. And we can talk about some of why I decided to do that. And a big part of that was exactly what we're talking about today. Which is there's a difference between being a good real estate broker who executes a plan, helping someone better sell something, but are you asking your clients great questions? Are you understanding what they want? And why they're Why are they selling? Why are they buying? Yeah, I often find that people will be buying or selling real estate because they have a goal or a plan. And maybe that process that they're going through is really not the best way to do it. Or maybe they have a different asset, or there's a different way to go about doing it that in the big picture for them would be much better for their family or their future. And it is sometimes that costs us to sail right then as a broker. But I I believe that building those relationships and building trust is is significantly more valuable in the long run, and it's just doing the right thing. And so our brokerage is really set up for our clients to be working with agents who are there to advise them. And then for the brokers that are there to really understand who are their clients and have a plan of action to staying in touch with them. That's very tangible. And then is your business structured correctly as an agent, you know, are you are you saving taxes are you investing do having retirement plan, and then at the at the kind of the top level for our brokers, it's really about looking at investment property and understanding that because there's a lot of great real estate brokers who don't understand real estate investing. They're very good things. And that's fine. But we have great brokers on our company that understand the investment, and I do to inside out, and so we can basically help build folio to build wealth for those agents because we don't get retirement plans. You know, there's no pension in real estate. So it's all about what can you do for yourself and your family. And we're city and state is built specifically to help people know their clients build their business and build their future. But
Justin Stoddart 3:55
you know, what's interesting, that you said, Nick, is, you know, the tech companies, they're looking to really create algorithms that help people buy and sell, and or empower the customer to buy and sell themselves. What is not really accounted for is how will you know a client, right? It even better than the client knows themselves, right? And even start asking questions where the client is learning something about their future plans, because no one's ever asked him that question. Now you can custom tailor a real estate experience that fits really where they want to be. Right, right, which is maybe not even where they thought they could go. But because you understand real estate, you understand real estate investing, you can be guiding them advising them down a path that they didn't know was even there possible for them. I think that's where, again, kind of the low barriers to entry of real estate and all these tech companies even coming and trying to replace agents, all that becomes irrelevant when you offered that level of service.
Nick Krautter 4:49
Yeah, I believe that technology, we use a lot of technology. And I've always been focused on, you know, having the best tools and resources for my brokers and for our clients. I think that, to me, technology is there to supplement and make the relationship part of the business easier and better. Not to replace relationships totally agree. And there are people there's going to, there are always people that want to do things on their own, or who will want to use a new tool, people that are early adopters. The thing is like real estate is a very, very big asset for most people is their biggest asset. And even for people that are buying and selling all the time. It's interesting because they use brokers. And really smart real estate brokers will hire other brokers. So one of the things to me that's kind of one of our badges of honor is how many seasoned real estate professionals hire our team to think for their personal deals, because they know that we're going to be there to be kind of a sounding board and to to double check their plans and their logic. And so it's one of those things. It's crazy. But a lot of times people think, Oh, well that's properties on by a realtor, so they don't need an agent. Well, we work with a lot of those people because they understand that now they might have a blind spot, or they might not be able to negotiate as well for themselves or they might overprice it or underprice it and so to have someone else that you trust, to me, that's like the biggest sign of respect and appreciation. And I think that technology will continue to get better and better. But the problem is real estate is it's not so much about just the value. It's about how you negotiate. And to try to replace human negotiation, I think is exponentially more difficult and figuring out what is the right value for a home. I think technology will continue to help get us to that point where that's better and better. As there's more and more information because every time a home sells now there's more information out there about it, right. So anything that sold in the last 10 years, there's great data available to any of those companies and to us as realtors.
But if someone's you know, we work with a lot of the states, someone has owned a home. Right now we're working on a deal where the families on the property since 1935. It's now the third generation of ownership. Well, there's nothing on Zillow or anything about praying what that property is like. So what the story is, other than the square footage and the tax records, and so that unless you go in and actually look at it, it's a mystery.
Justin Stoddart 7:08
Yeah. Well, I think it's, you know, one point that I think is not, not without overlooking, is, again, how important it is for someone to be able to come from an experience of being an event an investor themselves. You know, the statistic is this is that 87% of people's wealth in the US is tied up in the real estate. You know, for only 13% of people's wealth, we have financial advisors and Wealth Advisors, which we should know, but 87% of people's wealth is tied up in the real estate. And So wouldn't it make sense to have somebody that understands the numbers, somebody who is a true wealth advisor, right working, acting thinking like that, to give people data and insight and counsel that only an advisor could because you're right, there's no algorithm that can create that.
Nick Krautter 7:55
I think the big problem in the real estate industry is exactly what you said,
advisors in the financial sector for like, Ira 401k is the stock market bonds.
They're not trying to get you to sell everything right now. And I think there's this big fear amongst consumers that if I call a realtor, because I want to know, give it everyone wants to know it to a better level of accuracy, what their real estate is worth, whether they own one home, or they have a portfolio, that's one of the main requests we get from clients is I'd love to know what Everything I have is worth. And we're using some technology and some of our manual brain power to create that for our clients right now. And wouldn't it be great if every year you could find out what your home's worth and how much equity you have? And what your investments are real estate investments are worth as well, because whether it's your home, or it's a true investment property, it is an asset that hopefully will go up in value. And even if it doesn't go up in value, you've got money tied up in it, that you could use for something else. And so the real question for me is,
I've done this with my own portfolio is what property do I own? That is worth basically too much money for how much cash flow it's making. So I had a home I sold two years ago, because we did a portfolio analysis and identified that I had a property that was worth at the time about $600,000, but only made $2,000 a month in rent. And that's because the land value now is worth way more than the house. Interesting. Yeah. And so that was a bad investment. Now when I bought it, it wasn't, and it's so cash flowed. So if you're just looking at cash flow, you might think, wow, that's my best investment. When in reality, that might be the worst use of your money. Because, yeah, maybe your cash flowing because you bought it for $200,000, 20
years ago or 10 years ago, and it's worth more. But if you could unlock that equity and invest that that $600,000 invested in another like say duplex or triplex might create $4,000 a month of income. Right. And that's the difference between, you know, buying, you're selling or understanding what the investment really is doing for you. I think the fear from consumers is if I call someone up, and they come to my house or my duplex, they're going to try to convince me to sell it right? Well,
Justin Stoddart 10:11
it's always a good time to sell, let's say you have a real estate agent.
Nick Krautter 10:13
That's, and that's there's something to be said, that's true for them. And in some ways, you know, we're there to serve our clients. You know, there's plenty of deals I've helped people do that were great for them, that wouldn't have been something I would have done for myself personally. And that's the difference between being a broker and being someone that's working on your own behalf me, I'm working on my client's behalf. And if they want, you know, a super huge mansion that's very expensive that I wouldn't personally want or they want to get a little micro-condo. Because they aren't in town that often that wouldn't work for me either personally, but helping that person get what they need. And negotiating the best we can is really what we're doing,
Justin Stoddart 10:50
knowing where they want to go and get there. And helping them see that. Is that the best option of where they went? Like in their mind, that might be the best place to go. But if one person with another alternative, have you could take that 600,000 and do this with it. Right? Right, it might be a different strategy to get the same good end result that they want. Yeah. What are their numbers? Nick, would you say? Or what are some of the numbers you think a good real estate advisor? The right should know, whether it be about the economy, whether it be about the real estate market? that really gives them a basis and grounding to advise their clients?
Nick Krautter 11:27
That's a great question. I think, at a minimum, every realtor should know what the market inventory is what the average sales prices, and the average days on market
Justin Stoddart 11:36
in how big area right? So if you're set is it by zip code by city by neighborhood, what's your
Nick Krautter 11:43
so I would say you want to know your market area, which would be your Metro, okay, that'll give you your kind of averages across the board. And then for each client, you want to understand their property in the context of where it is because real estate is a location business, right? So the location is super important.
And beyond that, if you're going to be working in investment, real estate, you need to understand zoning, you need to understand occupancy codes. And you need to understand the financial aspects of real estate. And that's not easy. It's something you can learn it takes time, right? And it takes an investment of elevating yourself to a different level. If you want to be above average, you're going to have to put in above average work. And that part of that is studying on your own time and learning that and going to classes and investing in your knowledge meeting with the city or cities. If you have clients, yes, well placed to understand what is allowed in that zone. Because a duplex with this much on a lot that zones for a high rise building versus a duplex over here that sound for just a duplex, those are worth different even though from a cash flow standpoint, they're worth the same. So it's about understanding, what is the value to a developer for the development? What is the value the property based on the cash flow. And then if the property was vacant, what's the value of that property to an owner user? So it's understanding all of those things. Because when we will look at any property, even if it doesn't seem obvious, we will always look at those three factors to make sure that we're marketing the property to the right buyer to get the most money for our client if they're selling. And if we're working with a buyer,
that they have an opportunity to buy a duplex with an extra lot that zone for high rise versus the duplex, three blocks away in the same city, same school district with the same cash flow. Yeah, that is over just a duplex, we obviously we want, we want our client to get the one that's zoned for the high rise because maybe that's not worth more than now. But in 20 or 30 years from now, maybe that's worth four times more than the other one. Yeah.
Justin Stoddart 13:43
Just an experience, right? Rather than great. You want me to sell your property, let's look at comps, here's what it's worth, right? It's all these different layers of what could be possible to identify what's the best possibility? And then how do we properly situate you to take advantage of the best possibility there?
Nick Krautter 13:58
Yeah, that's it. That's you that's about as succinctly as you can put it is really just so we understand everything about this and how it affects the value. And then I would say this like I really drill down on this, I did a white piano event for our local Realtor Association last week. And one of the things I really talked about in the big takeaway I think a lot of people had, from these different mastermind sessions we did was, you have to ask great questions. So if someone says I want to sell my duplex, okay, great. Why do you want to sell it? What are your goals? Where are you going to take the money? How are you gonna reinvest it? What's important about that? I met with an investor, we did a one on one meeting about their portfolio, and they have I think, 12 units right now. And they're like, yeah, I want to get to 50 units was like, Well, why do you want 50 units? And they didn't want 50 units, they wanted a certain amount of cash flow. Interesting. So I was like, Okay, well, based on how much money you have, and what your real goal is, maybe there's a way to do it. That would be quicker and easier than that. Yeah. Let's just get the other question. Was that okay? Well, they said that they wanted to eventually get 50 units. I said, What if we could take what you currently own plus the extra money you have saved for future investments? What if we could get close to 50 units right now? What if by the end of this year, you could have 50 units? What would that do for you? And just kind of challenging people's thinking about what's possible and what resources they have and the process we could go about? Because if someone's goal is to get 50 units, and we can do it this year, versus them doing it over 20 years? Yeah, I'd much rather have them in 50 units now and then having the cash flow for the next 20 years, as opposed to waiting for that 20th year to get their final unit. Because I know that the compounding effect of that will be massive for that.
Justin Stoddart 15:42
Yeah. Great stuff, Nick, as you can tell Nick's really a master of the numbers. Maybe just let's give one more tip, Nick, is there some number that you look at? So you said inventory, right? What's one other number that you think is critical for agents, who aspire to be advisors, what they should whether it be through again, economic data, whether it be through, you know, our RMLS data? There's something else that you always look at to say, Oh, that's interesting.
Nick Krautter 16:10
Hmm. Well, I think one of the things, it's kind of a no brainer when you're an investor is if you can buy a property below replacement value. Okay.
So someone basically said, here's a lot build the same thing if you would cost you more money to do that. And then by the one that's already done, that's usually a big one. Yeah. And again, I think, if you understand what the value of the land is, which a lot of people don't and because you have to understand zoning
it again, kind of that example, the two duplexes across the street, one zone for duplex one zone for high rise. If you know that, many times other realtors will not put the zoning in and they won't know what the value is. So there's sometimes a lot of money just left on the table from agents that don't know this information. And if you're the agent that does that research and understands those values. Sometimes someone could sell a fixer duplex, and they think it's the fixer duplex. Whereas I look at it and go, that could be a 50 unit apartment building. And we could sell it to a developer for double what they're asking. Yeah, I saw an example of that just the other day a property was listed for 500. It sold for 750 because the zoning was much more powerful than the listing agent thought. And the buyer probably got it for cheaper than they would have paid Yeah. For what they're going to be able to build there. And you see examples of that. I've certainly bought properties where it's a fixer house. But yeah,
it's on to lots of the worth of the extra lot what I'm paying for the property.
Justin Stoddart 17:31
Great stuff.
appreciate everything you've shared here, Nick, it's great insight, and really gives I think everyone listening to this, now have something to aspire towards of understanding the numbers so that again, you can be an advisor. I want to give one more, again, plug for the event that's coming up that I'll put in the notes called exponential referrals you'll be able to hear, Nick, he'll be the main dish both James and Aaron. I will be the side dish. But all of us have some really valuable content that's impacting some agents in a great way. We're excited to share that with people it's going to be in Clackamas, I believe is on the 20 seconds. And I believe it's at 11 o'clock starting to come back to me now. So watch for the details on that but would love to have you there if you're not already signed up. So please join us and again want to give a special thanks to Nick for giving us some great insight today. What agents can be doing to really up their game so great stuff.
Nick Krautter 18:18
Thank you.
Welcome back to The think bigger real estate Show. I'm your host Justin Stoddart, today's episode is going to be a really unique and valuable one, I hope you stay tuned for the entire thing. It's really helping real estate agents move from being salespeople to being advisors, which is where I think the industry needs to go in order to maintain the value to the customer that the customers happy to pay for your services. So excited to have with me a guy who does that naturally. He's always done that. And his name's Nick Krautter. And Nick, thanks for being on the show to them.
Nick Krautter 0:26
Yeah thanks for having me. This is great.
Justin Stoddart 0:27
Yeah, super fun. Nick, and I go back almost five years. And his kind of claim to fame nationally, is he wrote the book, The Golden handoff, which is how to help real estate agents buy and sell their business. And so in addition to that, maybe what he's less well known for, at least nationally, is he really has an economist type brain. And he really goes deep on helping people understand the numbers where they've been and where he believes they're heading, which gives consumers the ability to kind of have a little bit of a crystal ball to some degree, right? To be able to understand what will actually help them build their wealth, which I think is uncommon. And I'm excited to kind of delve into this topic. But before I do, Megan, I am going to be actually speaking at an event together with our friend James Adair called exponential referrals, if you're in the Portland market,
it is I should have had the date, I'm going to put the date in the comments below, you can be able to hear this guy go in depth on the golden handoff and really house the strategy, not just exit the business, but also to grow the business. And probably one of the things we hadn't mentioned, Nick is you're now under the umbrella of your own brokerage city and state.
Nick Krautter 1:35
Yeah, that's a big, that's the big change for us here. The Celtics team decided to start our own real estate brokerage. So we've had the team together for 13 years, we decided to go out and start our own brokerage. It's called the city and state real estate. And we are working in Oregon and Washington right now and looking to expand into new markets. And we can talk about some of why I decided to do that. And a big part of that was exactly what we're talking about today. Which is there's a difference between being a good real estate broker who executes a plan, helping someone better sell something, but are you asking your clients great questions? Are you understanding what they want? And why they're Why are they selling? Why are they buying? Yeah, I often find that people will be buying or selling real estate because they have a goal or a plan. And maybe that process that they're going through is really not the best way to do it. Or maybe they have a different asset, or there's a different way to go about doing it that in the big picture for them would be much better for their family or their future. And it is sometimes that costs us to sail right then as a broker. But I I believe that building those relationships and building trust is is significantly more valuable in the long run, and it's just doing the right thing. And so our brokerage is really set up for our clients to be working with agents who are there to advise them. And then for the brokers that are there to really understand who are their clients and have a plan of action to staying in touch with them. That's very tangible. And then is your business structured correctly as an agent, you know, are you are you saving taxes are you investing do having retirement plan, and then at the at the kind of the top level for our brokers, it's really about looking at investment property and understanding that because there's a lot of great real estate brokers who don't understand real estate investing. They're very good things. And that's fine. But we have great brokers on our company that understand the investment, and I do to inside out, and so we can basically help build folio to build wealth for those agents because we don't get retirement plans. You know, there's no pension in real estate. So it's all about what can you do for yourself and your family. And we're city and state is built specifically to help people know their clients build their business and build their future. But
Justin Stoddart 3:55
you know, what's interesting, that you said, Nick, is, you know, the tech companies, they're looking to really create algorithms that help people buy and sell, and or empower the customer to buy and sell themselves. What is not really accounted for is how will you know a client, right? It even better than the client knows themselves, right? And even start asking questions where the client is learning something about their future plans, because no one's ever asked him that question. Now you can custom tailor a real estate experience that fits really where they want to be. Right, right, which is maybe not even where they thought they could go. But because you understand real estate, you understand real estate investing, you can be guiding them advising them down a path that they didn't know was even there possible for them. I think that's where, again, kind of the low barriers to entry of real estate and all these tech companies even coming and trying to replace agents, all that becomes irrelevant when you offered that level of service.
Nick Krautter 4:49
Yeah, I believe that technology, we use a lot of technology. And I've always been focused on, you know, having the best tools and resources for my brokers and for our clients. I think that, to me, technology is there to supplement and make the relationship part of the business easier and better. Not to replace relationships totally agree. And there are people there's going to, there are always people that want to do things on their own, or who will want to use a new tool, people that are early adopters. The thing is like real estate is a very, very big asset for most people is their biggest asset. And even for people that are buying and selling all the time. It's interesting because they use brokers. And really smart real estate brokers will hire other brokers. So one of the things to me that's kind of one of our badges of honor is how many seasoned real estate professionals hire our team to think for their personal deals, because they know that we're going to be there to be kind of a sounding board and to to double check their plans and their logic. And so it's one of those things. It's crazy. But a lot of times people think, Oh, well that's properties on by a realtor, so they don't need an agent. Well, we work with a lot of those people because they understand that now they might have a blind spot, or they might not be able to negotiate as well for themselves or they might overprice it or underprice it and so to have someone else that you trust, to me, that's like the biggest sign of respect and appreciation. And I think that technology will continue to get better and better. But the problem is real estate is it's not so much about just the value. It's about how you negotiate. And to try to replace human negotiation, I think is exponentially more difficult and figuring out what is the right value for a home. I think technology will continue to help get us to that point where that's better and better. As there's more and more information because every time a home sells now there's more information out there about it, right. So anything that sold in the last 10 years, there's great data available to any of those companies and to us as realtors.
But if someone's you know, we work with a lot of the states, someone has owned a home. Right now we're working on a deal where the families on the property since 1935. It's now the third generation of ownership. Well, there's nothing on Zillow or anything about praying what that property is like. So what the story is, other than the square footage and the tax records, and so that unless you go in and actually look at it, it's a mystery.
Justin Stoddart 7:08
Yeah. Well, I think it's, you know, one point that I think is not, not without overlooking, is, again, how important it is for someone to be able to come from an experience of being an event an investor themselves. You know, the statistic is this is that 87% of people's wealth in the US is tied up in the real estate. You know, for only 13% of people's wealth, we have financial advisors and Wealth Advisors, which we should know, but 87% of people's wealth is tied up in the real estate. And So wouldn't it make sense to have somebody that understands the numbers, somebody who is a true wealth advisor, right working, acting thinking like that, to give people data and insight and counsel that only an advisor could because you're right, there's no algorithm that can create that.
Nick Krautter 7:55
I think the big problem in the real estate industry is exactly what you said,
advisors in the financial sector for like, Ira 401k is the stock market bonds.
They're not trying to get you to sell everything right now. And I think there's this big fear amongst consumers that if I call a realtor, because I want to know, give it everyone wants to know it to a better level of accuracy, what their real estate is worth, whether they own one home, or they have a portfolio, that's one of the main requests we get from clients is I'd love to know what Everything I have is worth. And we're using some technology and some of our manual brain power to create that for our clients right now. And wouldn't it be great if every year you could find out what your home's worth and how much equity you have? And what your investments are real estate investments are worth as well, because whether it's your home, or it's a true investment property, it is an asset that hopefully will go up in value. And even if it doesn't go up in value, you've got money tied up in it, that you could use for something else. And so the real question for me is,
I've done this with my own portfolio is what property do I own? That is worth basically too much money for how much cash flow it's making. So I had a home I sold two years ago, because we did a portfolio analysis and identified that I had a property that was worth at the time about $600,000, but only made $2,000 a month in rent. And that's because the land value now is worth way more than the house. Interesting. Yeah. And so that was a bad investment. Now when I bought it, it wasn't, and it's so cash flowed. So if you're just looking at cash flow, you might think, wow, that's my best investment. When in reality, that might be the worst use of your money. Because, yeah, maybe your cash flowing because you bought it for $200,000, 20
years ago or 10 years ago, and it's worth more. But if you could unlock that equity and invest that that $600,000 invested in another like say duplex or triplex might create $4,000 a month of income. Right. And that's the difference between, you know, buying, you're selling or understanding what the investment really is doing for you. I think the fear from consumers is if I call someone up, and they come to my house or my duplex, they're going to try to convince me to sell it right? Well,
Justin Stoddart 10:11
it's always a good time to sell, let's say you have a real estate agent.
Nick Krautter 10:13
That's, and that's there's something to be said, that's true for them. And in some ways, you know, we're there to serve our clients. You know, there's plenty of deals I've helped people do that were great for them, that wouldn't have been something I would have done for myself personally. And that's the difference between being a broker and being someone that's working on your own behalf me, I'm working on my client's behalf. And if they want, you know, a super huge mansion that's very expensive that I wouldn't personally want or they want to get a little micro-condo. Because they aren't in town that often that wouldn't work for me either personally, but helping that person get what they need. And negotiating the best we can is really what we're doing,
Justin Stoddart 10:50
knowing where they want to go and get there. And helping them see that. Is that the best option of where they went? Like in their mind, that might be the best place to go. But if one person with another alternative, have you could take that 600,000 and do this with it. Right? Right, it might be a different strategy to get the same good end result that they want. Yeah. What are their numbers? Nick, would you say? Or what are some of the numbers you think a good real estate advisor? The right should know, whether it be about the economy, whether it be about the real estate market? that really gives them a basis and grounding to advise their clients?
Nick Krautter 11:27
That's a great question. I think, at a minimum, every realtor should know what the market inventory is what the average sales prices, and the average days on market
Justin Stoddart 11:36
in how big area right? So if you're set is it by zip code by city by neighborhood, what's your
Nick Krautter 11:43
so I would say you want to know your market area, which would be your Metro, okay, that'll give you your kind of averages across the board. And then for each client, you want to understand their property in the context of where it is because real estate is a location business, right? So the location is super important.
And beyond that, if you're going to be working in investment, real estate, you need to understand zoning, you need to understand occupancy codes. And you need to understand the financial aspects of real estate. And that's not easy. It's something you can learn it takes time, right? And it takes an investment of elevating yourself to a different level. If you want to be above average, you're going to have to put in above average work. And that part of that is studying on your own time and learning that and going to classes and investing in your knowledge meeting with the city or cities. If you have clients, yes, well placed to understand what is allowed in that zone. Because a duplex with this much on a lot that zones for a high rise building versus a duplex over here that sound for just a duplex, those are worth different even though from a cash flow standpoint, they're worth the same. So it's about understanding, what is the value to a developer for the development? What is the value the property based on the cash flow. And then if the property was vacant, what's the value of that property to an owner user? So it's understanding all of those things. Because when we will look at any property, even if it doesn't seem obvious, we will always look at those three factors to make sure that we're marketing the property to the right buyer to get the most money for our client if they're selling. And if we're working with a buyer,
that they have an opportunity to buy a duplex with an extra lot that zone for high rise versus the duplex, three blocks away in the same city, same school district with the same cash flow. Yeah, that is over just a duplex, we obviously we want, we want our client to get the one that's zoned for the high rise because maybe that's not worth more than now. But in 20 or 30 years from now, maybe that's worth four times more than the other one. Yeah.
Justin Stoddart 13:43
Just an experience, right? Rather than great. You want me to sell your property, let's look at comps, here's what it's worth, right? It's all these different layers of what could be possible to identify what's the best possibility? And then how do we properly situate you to take advantage of the best possibility there?
Nick Krautter 13:58
Yeah, that's it. That's you that's about as succinctly as you can put it is really just so we understand everything about this and how it affects the value. And then I would say this like I really drill down on this, I did a white piano event for our local Realtor Association last week. And one of the things I really talked about in the big takeaway I think a lot of people had, from these different mastermind sessions we did was, you have to ask great questions. So if someone says I want to sell my duplex, okay, great. Why do you want to sell it? What are your goals? Where are you going to take the money? How are you gonna reinvest it? What's important about that? I met with an investor, we did a one on one meeting about their portfolio, and they have I think, 12 units right now. And they're like, yeah, I want to get to 50 units was like, Well, why do you want 50 units? And they didn't want 50 units, they wanted a certain amount of cash flow. Interesting. So I was like, Okay, well, based on how much money you have, and what your real goal is, maybe there's a way to do it. That would be quicker and easier than that. Yeah. Let's just get the other question. Was that okay? Well, they said that they wanted to eventually get 50 units. I said, What if we could take what you currently own plus the extra money you have saved for future investments? What if we could get close to 50 units right now? What if by the end of this year, you could have 50 units? What would that do for you? And just kind of challenging people's thinking about what's possible and what resources they have and the process we could go about? Because if someone's goal is to get 50 units, and we can do it this year, versus them doing it over 20 years? Yeah, I'd much rather have them in 50 units now and then having the cash flow for the next 20 years, as opposed to waiting for that 20th year to get their final unit. Because I know that the compounding effect of that will be massive for that.
Justin Stoddart 15:42
Yeah. Great stuff, Nick, as you can tell Nick's really a master of the numbers. Maybe just let's give one more tip, Nick, is there some number that you look at? So you said inventory, right? What's one other number that you think is critical for agents, who aspire to be advisors, what they should whether it be through again, economic data, whether it be through, you know, our RMLS data? There's something else that you always look at to say, Oh, that's interesting.
Nick Krautter 16:10
Hmm. Well, I think one of the things, it's kind of a no brainer when you're an investor is if you can buy a property below replacement value. Okay.
So someone basically said, here's a lot build the same thing if you would cost you more money to do that. And then by the one that's already done, that's usually a big one. Yeah. And again, I think, if you understand what the value of the land is, which a lot of people don't and because you have to understand zoning
it again, kind of that example, the two duplexes across the street, one zone for duplex one zone for high rise. If you know that, many times other realtors will not put the zoning in and they won't know what the value is. So there's sometimes a lot of money just left on the table from agents that don't know this information. And if you're the agent that does that research and understands those values. Sometimes someone could sell a fixer duplex, and they think it's the fixer duplex. Whereas I look at it and go, that could be a 50 unit apartment building. And we could sell it to a developer for double what they're asking. Yeah, I saw an example of that just the other day a property was listed for 500. It sold for 750 because the zoning was much more powerful than the listing agent thought. And the buyer probably got it for cheaper than they would have paid Yeah. For what they're going to be able to build there. And you see examples of that. I've certainly bought properties where it's a fixer house. But yeah,
it's on to lots of the worth of the extra lot what I'm paying for the property.
Justin Stoddart 17:31
Great stuff.
appreciate everything you've shared here, Nick, it's great insight, and really gives I think everyone listening to this, now have something to aspire towards of understanding the numbers so that again, you can be an advisor. I want to give one more, again, plug for the event that's coming up that I'll put in the notes called exponential referrals you'll be able to hear, Nick, he'll be the main dish both James and Aaron. I will be the side dish. But all of us have some really valuable content that's impacting some agents in a great way. We're excited to share that with people it's going to be in Clackamas, I believe is on the 20 seconds. And I believe it's at 11 o'clock starting to come back to me now. So watch for the details on that but would love to have you there if you're not already signed up. So please join us and again want to give a special thanks to Nick for giving us some great insight today. What agents can be doing to really up their game so great stuff.
Nick Krautter 18:18
Thank you.
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