Recently on the BiggerPockets Podcast, I interviewed Ashley Kehr, who shared how she started investing in real estate with no money by offering other services, such as finding the deal, bringing the knowledge, and providing property management.
Learning on the Job
In the BiggerPockets Podcast #348, I asked Ashley how she got her very first deal and what her first investment looked like. Here’s what she said.
So, when I graduated college I got an accounting job at a CPA firm. I lasted six months—OK, tax season.
And I decided I was just going to be a stay at home mom. Then, my friend’s dad absolutely needed someone part-time to manage some apartment complexes. So, I agreed to do it.
It was a little tiny room with boxes of papers and a drawer full of keys, and he’s like, “Here you go. Can you work with this?”
It started with 40 units; now it’s 80 units. So, I just looked at what he was doing. He has a bunch of commercial properties, too. And I just said, “Why can’t I do that?”
I found a partner who had money, and I said, “You know, I’ve been doing this for a year for this big complex. I know what I’m doing, and I can handle a duplex.”
We looked at one duplex, and we bought it right away. There were no other offers. It was in a really small town.
And then, from there, I just started growing and going out on my own. That was how I got my start. I took a job where I was involved in the day-to-day. And it really made me take action.
I think, if I didn’t leave my accounting job and go to this, I probably never would have gone into real estate investing at all.
I agree with Ashley! That’s such a good point.
I think that getting started that way is a great idea. I think a lot of people overlook that—the idea of getting started in a job situation, rather than just jumping right in. It can be the first step or baby step or training wheels that somebody needs in order to move toward investing.
I used to paint houses for my mentor Kyle. I painted houses for him for like 300 bucks. I was the cheapest house painter ever to live.
But that’s what got me more and more comfortable with owning rentals, as I worked with him more and more. We still have a great relationship today. So, it’s a really good way to start.
Power in Partnering
I wanted to know more about how Ashley found partners early in her investing career. Here’s what she said.
It was actually the guy who hired me [initially], his son.
I said, “Look what your dad is doing. You should do this, too. And he’s like, ‘You’re right.'”
So, I broke down the deal for him, explained how it worked, and he put up the cash to buy the first property. We formed an LLC together, and then we purchased the property in cash. He held the mortgage.
Well, a couple of months later, we found another apartment we wanted to buy. We went to the bank, put a mortgage on the first property, and took his cash back. He’s held the mortgage on the second property, and that’s still how it is today—those two properties.
The biggest thing was pitching to him how this can work and showing him examples of what his dad was doing and pointing out that he could do it, too.
I just showed him what kind of money he could make, because he’d be building equity in the building, he’d be getting some of the cash flow, and he was getting interest on the mortgage, too. It was actually a pretty lucrative deal for him. Then, I managed everything. He does nothing for it, which sounds like a bad thing but he’s the money guy and I take care of everything.
I love, love, love that, and I talk about this on webinars a lot.
If you can bring some experience and you can bring some knowledge to the table, you don’t need to bring the money. Find somebody else who’s out there who has the money and doesn’t have the knowledge, the experience. You leverage that. I think people undervalue it. Ashley continued:
So, we’ve worked together for a while now. Right now we have four properties together and one is a six-unit. And then we’ve also sold two that we had in our portfolio.
I started with another partner probably two years ago. He was just a friend, and he had a couple of his own properties. We found this town that just… it was a renter’s town. People just couldn’t afford the housing. So, we bought a couple of properties there. We did everything 50/50; we split the money.
Then, when we refinanced, we both were on the mortgage. He does the maintenance side of things, and then I do the leasing and tenant relations.
So, this is my second partner. I have two now.
This is definitely something worth noting. Partnerships can be different. Some partners are money partners, and they put up all the money and don’t do any work. I have some partners like that, too.
And other times, your partner is 50-50. You just divide up the roles and divide the money. That’s fine, as well.
So again, when people feel stuck and like they can’t invest because they don’t have any money, there’s always a way to figure it out.
There’s always a way to find money, too. Learn.
Approaching Potential Partners
Next, my co-host David Greene wanted to know exactly what Ashley said when she went to her boss’s son and told him they should do a deal together. How did she pose the proposal and help him see it was a good idea?
OK. The first thing that I did—and I remember it actually pretty miserably—is I just put little nuggets of information in his ear. I didn’t overwhelm him with the numbers or anything like that. I just gave him examples of people we knew, including his dad.
I told him, look at the success they’ve built. His uncle had done the same thing with real estate. I just put little nuggets in his ear. And then when I actually found the property, I brought him the numbers and everything. And by then, he had already had an interest in real estate investing and I had piqued that in him.
He looked at the numbers, and he went with me to see property. He actually had a roommate at the time who was pretty handy. His roommate was like, “Hey, I can help you guys renovate and be a part of this.”
So, it was just kind of putting the bug in his ear and just building it up. Then, when I was ready to take action—like hey, look here’s this opportunity right now—I showed him what he would be making off interest over 15 years and what the potential cash flow was.
And then just the equity we would build in it.
This is great. The key is having the whole thing figured out already. He didn’t have to do something he was uncomfortable with. She said: Here’s what I need from you. Here’s how the deal is going to look. Here’s what we’re gonna do.
It makes it very easy for him to say, OK, I’m on board. She made it easy for the person to partner with her.
Lesser-Known Excellent Advice
One thing we did was start the LLC, and we got life insurance policies on each other. So if something were to happen to him, I could use a life insurance policy to buy him out and vice versa.
Wow, I thought. We’ve done 350 episodes, and I don’t think we’ve ever given that tip. That’s such good advice.
It speaks to people’s fear of losing money more than “here’s all the money you can make.” She came out and showed this person how they are protected before saying what she needed from them.
We did an operating agreement and then the life insurance policies. I was married, and he wasn’t at the time. So if something happened to him, it would go to his family members. And I didn’t want to run these properties with his two siblings and his parents. And he didn’t want to run the properties at all.
So if something happened to me, he’d rather just buy my family out and then just sell everything probably.
We used an attorney to structure the agreement. The same one that we did for the closing on the property. I had actually used her before for when I built my own house. We’ve used it for various things, so it’s just a small, local attorney.
She actually gave me the draft that she uses for the operating agreement. And she let me go in and make it specific to how I wanted it. And then she approved it, reread it, and everything. But it saved a lot of legal costs of me actually filling in the information.
I think it was maybe $200 at most.
What an awesome way to spend 200 bucks—to get your investor to feel comfortable partnering with you.
For more helpful tips from Ashley, watch the full podcast interview here: https://youtu.be/GMMMgcgrE28.
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